Argenta Silver Corp. — Interim / Quarterly Report 2024

May 28, 2024

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Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024 and 2023

(Expressed in Canadian Dollars) (Unaudited)

NOTICE OF NO AUDITOR REVIEW

Under National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed interim consolidated financial statements of Butte Energy Inc. have been prepared by and are the responsibility of the Company’s management.

Butte Energy Inc.

Condensed Interim Consolidated Statement of Financial Position

(Expressed in Canadian Dollars) (Unaudited)

		March 31,	December 31,
	Note	2024	2023
		$	$
Current Assets
Cash		99,636	146,925
Amounts receivable		3,848	3,521
Reclamation deposits	3	105,800	104,375
		209,284	254,821
Current Liabilities
Amounts payable and accrued liabilities		58,328	46,964
Provision for environmental liabilities	4	42,018	42,018
		100,346	88,982
Shareholders' Equity
Share capital	5	22,457,469	22,457,469
Equity reserve		1,351,063	1,351,063
Deficit		(23,699,594)	(23,642,693)
		108,938	165,839
		209,284	254,821

NATURE OF OPERATIONS AND GOING CONCERN (Note 1) SUBSEQUENT EVENT (Note 9)

Approved on behalf of the Board of Directors:

/s/ Geir Liland

Director /s/ D. Jeffrey Harder Director

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

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Butte Energy Inc.

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

	Three months	ended March 31,
	2024	2023
	$	$
Expenses
Advisory and consulting	30,000	30,000
Professional fees	22,197	7,120
Regulatory and transfer agent	4,247	4,777
Office and administration	3,390	3,445
	(59,834)	(45,342)
Finance income	2,933	1,252
	2,933	1,252
Loss and comprehensive loss for the period	(56,901)	(44,090)
Basic and diluted loss per share	(0.00)	(0.00)
Weighted average number of common shares outstanding - basic and diluted	65,662,841	64,356,212

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

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Butte Energy Inc.

Condensed Interim Consolidated Statement of Changes in Shareholders’ Equity (Expressed in Canadian Dollars) (Unaudited)

			Equity		Total Shareholders'
	Number of Shares	Share Capital	Reserve	Deficit	Equity
		$	$	$	$
Balance at December 31, 2022	63,876,841	22,092,597	1,169,243	(23,228,131)	33,709
Exercise of share options	136,000	117,372	(49,372)	-	68,000
Loss and comprehensive loss for the period	-	-	-	(44,090)	(44,090)
Balance at March 31, 2023	64,012,841	22,209,969	1,119,871	(23,272,221)	57,619
Balance at December 31, 2023	65,662,841	22,457,469	1,351,063	(23,642,693)	165,839
Loss and comprehensive loss for the period Balance at March 31, 2024	- 65,662,841	- 22,457,469	- 1,351,063	(56,901) (23,699,594)	(56,901) 108,938

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

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Butte Energy Inc.

Condensed Interim Consolidated Statement of Cash Flows

(Expressed in Canadian Dollars) (Unaudited)

	Three months ended March 31,	Three months ended March 31,
	2024	2023
	$	$
OPERATING ACTIVITIES
Loss and comprehensive loss for the period	(56,901)	(44,090)
Items not involving cash:
Interest earned on reclamation deposits	(1,425)	(993)
Changes in non-cash working capital items:
Amounts receivable	(327)	161
Prepaid expenses	-	(11,705)
Amounts payable and accrued liabilities	11,364	4,539
	(47,289)	(52,088)
FINANCING ACTIVITIES
Proceeds from the exercise of share options	-	68,000
	-	68,000
Change in cash	(47,289)	15,912
Cash, beginning	146,925	15,160
Cash, ending	99,636	31,072

Supplemental cash flow information: Fair value adjustment on exercise of share options

• 49,372

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

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Butte Energy Inc. Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited)

1. NATURE OF OPERATIONS AND GOING CONCERN

Butte Energy Inc. (the “Company”) is incorporated under the Business Corporations Act (British Columbia). The Company’s head office and principal address is 3123-595 Burrard Street, Vancouver, British Columbia, Canada, V7X 1J1. The Company lists its common shares on the NEX board of the TSX Venture Exchange under the symbol BEN.H.

The Company had been engaged in the acquisition, exploration and development of petroleum and natural gas reserves in Western Canada. In 2017, the Company sold its last remaining asset and has no active operations other than the completion of reclamation activities on previously abandoned wells.

These unaudited condensed interim consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has an accumulated deficit of $23,699,594 and working capital of $108,938 as at March 31, 2024. The Company incurred a loss of $56,901 for the three months ended March 31, 2024. In order to fund future operations or acquisitions, the Company will need to raise additional funds by way of equity or debt. There is no assurance that the Company will be able to raise such funds on terms acceptable to it.

These factors indicate the existence of a material uncertainty 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 may be necessary should the going concern basis of accounting be inappropriate.

2. BASIS OF PRESENTATION

(a) Statement of Compliance

The Company prepares its annual financial statements in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and interpretations of the IFRS Interpretation Committee. These consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting and follow the same accounting policies and methods of application as the Company’s most recent annual financial statements. Accordingly, they should be read in conjunction with the Company’s most recent annual financial statements for the year ended December 31, 2023.

The Company’s board of directors approved the release of these condensed interim consolidated financial statements on May 27, 2024.

(b Basis of Measurement

The consolidated financial statements have been prepared on a historical cost basis except where noted in the accounting policies. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

(c) Functional and Presentation Currency

These consolidated financial statements are presented in Canadian dollars, which is the Company’s, and its subsidiaries functional currency.

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Butte Energy Inc. Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited)

2. BASIS OF PRESENTATION (Continued)

• (d) Basis of Consolidation

These consolidated financial statements include the accounts of the Company and its inactive wholly-owned subsidiary, being 1289087 B.C. Ltd. (British Columbia). 1289087 B.C. Ltd. was incorporated under the Business Corporations Act (British Columbia) on February 16, 2021.

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. The financial statements of subsidiaries, including entities which the Company controls, are included in the consolidated financial statements from the date that control commences until the date that control ceases. All intercompany transactions and balances have been eliminated.

• (e) Management Estimates and Judgments

The preparation of financial statements requires management to make estimates and use judgment regarding the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the year. By their nature, estimates are subject to measurement uncertainty and changes in such estimates in future years could require a material change in the financial statements.

Accordingly, actual results may differ from the estimated amounts as future confirming events occur. Significant estimates and judgments made by management in the preparation of these consolidated financial statements are as follows:

• (i) Amounts recorded for the provision of environmental liabilities require the use of estimates with respect to the amount and timing of reclamation expenditures. The ultimate amount and timing of the restoration expenses are uncertain and cost estimates can vary in response to many factors. Based on a review of the expected timing of future cash flows, it was management’s judgment that the time value of money was not material and therefore did not need to present value the expenditures expected to be required to settle the obligation.

• (ii) Tax interpretations, regulations and legislation are subject to change. As such, income taxes are subject to measurement uncertainty. Management assesses deferred income tax assets at the end of the reporting period to determine the likelihood that they will be realized from future taxable earnings.

• (iii) Going Concern presentation of the financial statements which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due.

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Butte Energy Inc. Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited)

3. RECLAMATION DEPOSITS

In January 2018, the Company was required to provide a security deposit to the Alberta Energy Regulator in order for the Company to proceed with the finalization of the reclamation on previously abandoned wells. These deposits are refundable upon final acceptance of the reclamation certificates by the Alberta Energy Regulator.

The deposits are held in trust in an interest-bearing bank account. Interest income on the account is recorded in finance income in the statement of loss and comprehensive loss.

4. PROVISION FOR ENVIRONMENTAL LIABILITIES

The Company recorded a provision for the completion of reclamation activities on previously abandoned wells.

	Provision
	$
Balance, December 31, 2021	73,944
Additions	3,074
Settlement of liabilities	(35,000)
Balance, December 31, 2023 and 2022, and March 31, 2024	42,018

5. SHARE CAPITAL

(a) Authorized

Authorized share capital consists of an unlimited number of common shares without nominal or par value and unlimited number of preferred shares without par value.

(b) Issued and fully paid common shares

As at March 31, 2024, there were 65,662,841 common shares issued and outstanding. On March 9, 2023, the Company consolidated its outstanding share capital on the basis of five (5) pre-consolidated shares for one (1) post-consolidation share.

On May 8, 2023, the Company closed a non-brokered private placement for gross proceeds of $250,000. The Company issued 1,250,000 units at a price of $0.20 per unit consisting of 1,250,000 common shares and 1,250,000 share purchase warrants. The share purchase warrants are exercisable at a price of $0.30 per share for a period of one year from the date of issuance, expiring May 8, 2024. The fair value of the share purchase warrants issued was determined to be $nil using the residual value approach.

On February 8, 2023, 136,000 common shares were issued pursuant to the exercise of 136,000 share options for proceeds of $68,000.

During the year ended December 31, 2022, 400,000 common shares were issued pursuant to the exercise of 400,000 share options for proceeds of $140,000.

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Butte Energy Inc. Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited)

5. SHARE CAPITAL (Continued)

(c) Share options

The Company has established a rolling Share Option Plan (the “Plan”). Under the Plan, the number of shares reserved for issuance may not exceed 10% of the total number of issued and outstanding shares and, to any one optionee, may not exceed 5% of the issued shares on a yearly basis. The maximum term of each option shall not be greater than ten years. The exercise price of each option shall not be less than the market price of the Company’s shares at the date of grant. Options granted to consultants performing investor relations activities shall vest over a minimum of 12 months with no more than 1/4 of such Options vesting in any three-month period. All other options vest at the discretion of the Board of Directors.

On May 15, 2023, the Company granted 1,000,000 incentive share options to certain directors, officers, and consultants at a price of $0.29 per share, exercisable until May 15, 2033. Using the Black-Scholes valuation model, the grant date fair value was $231,192, or $0.23 per option. The following weighted average assumptions were used for the valuation of the options: risk-free interest rate of 2.94%, option life of 10 years, annualized volatility of 75%, and dividend rate of 0.00%.

On February 8, 2023, 136,000 share options were exercised for proceeds of $68,000.

During the year ended December 31, 2022, the Company granted 850,000 incentive share options to certain directors, officers, consultants and charitable organizations at a price of $0.35 per share, exercisable until July 13, 2032. Using the Black-Scholes valuation model, the grant date fair value was $237,799, or $0.28 per option. The following weighted average assumptions were used for the valuation of the options: risk-free interest rate of 3.14%, option life of 10 years, annualized volatility of 75%, and dividend rate of 0.00%.

A summary of the changes in share options is presented below:

	Options	Weighted Average
	Outstanding	Exercise Price
		$
Balance, December 31, 2022	1,950,000	0.47
Exercised	(136,000)	0.50
Granted	1,000,000	0.29
Balance, December 31, 2023 and March 31, 2024	2,814,000	0.40

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6. RELATED PARTY TRANSACTIONS

Butte Energy Inc.

Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited)

5. SHARE CAPITAL (Continued)

The following table summarizes information about the share options outstanding and exercisable at March 31, 2024:

Outstanding and
Exercisable	Exercise price	Expiry date
	$
1,364,000	0.50	October 8, 2030
450,000	0.35	July 13, 2032
1,000,000	0.29	May 15, 2033
2,814,000

(d) Warrants

A summary of the changes in share purchase warrants is presented below:

			Warrants	Weighted Average
			Outstanding	Exercise Price
				$
Balance, December	31,	2022	-	-
Issued			1,250,000	0.30
Balance, December	31,	2023	and March 31, 2024 1,250,000	0.30

The following table summarizes information about the share purchase warrants outstanding and exercisable at March 31, 2024.

Outstanding and
Exercisable	Exercise Price	Expiry Date
	$
1,250,000	0.30	May 8, 2024
1,250,000

Key management personnel are those people who have authority and responsibility for planning, directing, and controlling the activities of the Company, directly or indirectly. Senior management personnel include the Company’s executive officers and members of the Board of Directors.

There were no transactions with key management personnel for the three months ended March 31, 2024 and 2023.

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Butte Energy Inc.

Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023

(Expressed in Canadian Dollars) (Unaudited)

7. FINANCIAL INSTRUMENTS

Financial Risk Management and Fair Value Measurement

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s financial instruments consist of cash, amounts receivable, reclamation deposits and amounts payable and accrued liabilities. Their carrying values approximate fair value due to the short-term nature of these instruments.

Financial Instrument Risk Exposure

The Company is exposed in varying degrees to a variety of financial instrument-related risks. The Board approves and monitors the risk management processes.

Credit Risk

Credit risk arises from the potential for non-performance by counterparties of contractual financial obligations. The Company is exposed to credit risk on cash. The Company reduces its credit risk on cash by maintaining its bank account with a large international financial institution. The maximum exposure to credit risk is equal to the carrying value of its cash.

Liquidity Risk

The Company’s cash is invested in bank accounts which are available on demand. As at March 31, 2024, the Company had working capital of $108,938 and requires additional funding to continue operations for the next twelve months (Note 1).

Market Risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign currency and price risk.

a) Interest Rate Risk

The Company is nominally exposed to interest rate risk. The Company’s cash earns interest at variable rates. Interest rate exposure is considered to be insignificant.

b) Foreign Currency Risk

The Company is nominally exposed to material currency risk.

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Butte Energy Inc. Notes to the Condensed Interim Consolidated Financial Statements Three months ended March 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited)

7. FINANCIAL INSTRUMENTS (Continued)

c) Price Risk

The Company is exposed to price risk with respect to equity prices. Equity price risk is defined as the potential adverse impact on the Company’s earnings due to movements in individual equity prices or general movements in the level of the stock market. The Company closely monitors individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company.

8. MANAGEMENT OF CAPITAL

The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern such that it can continue to provide returns for shareholders and benefits for other stakeholders.

The Company considers the items included in equity as capital. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions, business opportunity and the risk characteristics of the underlying assets. In order to maintain or adjust its capital structure, the Company may issue new shares or return capital to its shareholders. The Company is not subject to externally imposed capital requirements.

Management reviews its capital management approach on an ongoing basis. There was no change in the Company’s management of capital policies during the periods presented.

9. SUBSEQUENT EVENT

On May 6, 2024, the Company granted 1,000,000 stock option to certain directors, officers, and consultants at a price of $0.14 per share, exercisable for a period of 10 years.

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