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Cantex Mine Development Corp. Annual Report 2025
44657_rns_2025-11-27_02580331-aa3e-4451-b739-0a7fd7aa11f6.pdf
Annual Report
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CANTEX
Cantex Mine Development Corp.
Consolidated Financial Statements
Expressed in Canadian dollars
July 31, 2025
Cantex Mine Development Corp.
July 31, 2025
Table of contents
Auditor's Report 1 - 3
Consolidated Statements of Financial Position 4
Consolidated Statements of Loss and Comprehensive Loss 5
Consolidated Statements of Changes in Shareholders' Equity (Deficit) 6
Consolidated Statements of Cash Flows 7
Notes to the Consolidated Financial Statements 8 - 31
DAVIDSON & COMPANY LLP
Chartered Professional Accountants
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of
Cantex Mine Development Corp.
Opinion
We have audited the accompanying consolidated financial statements of Cantex Mine Development Corp. (the "Company"), which comprise the consolidated statements of financial position as at July 31, 2025 and 2024 and the consolidated statements of loss and comprehensive loss, changes in shareholders' equity (deficit), and cash flows 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 July 31, 2025 and 2024, 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 has incurred cumulative losses of $96,865,117 and as at July 31, 2025 had negative working capital of $151,546. 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 manner.
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.
Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our auditor's report.
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.
A member of Nexia International
1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, B.C., Canada V7Y 1G6
Telephone (604) 687-0947 Davidson-co.com
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 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 Kyle McElwee.
Vancouver, Canada
November 27, 2025
Chartered Professional Accountants
Cantex Mine Development Corp.
Consolidated Statements of Financial Position
(Stated in Canadian dollars)
| As at | Note | July 31, 2025 | July 31, 2024 |
|---|---|---|---|
| Assets | |||
| Current assets | |||
| Cash | $ | $ 212,078 | $ 3,436,640 |
| Receivables and prepaids | 4 | 171,747 | 245,022 |
| 383,825 | 3,681,662 | ||
| Non-current assets | |||
| Reclamation bonds | 5(c) | 59,276 | 59,126 |
| Equipment | 6 | 450,088 | 441,264 |
| Right-of-use assets | 7 | 60,897 | 304,487 |
| $ | 954,086 | $ 4,486,539 | |
| Liabilities | |||
| Current liabilities | |||
| Trade and other payables | $ | $ 271,144 | $ 633,845 |
| Due to related parties | 8 | 151,824 | 513,758 |
| Current portion of lease obligations | 7 | 112,403 | 175,129 |
| Flow through premium liability | 10(b) | - | 32,549 |
| 535,371 | 1,355,281 | ||
| Non-current liabilities | |||
| Lease obligations | 7 | - | 114,375 |
| Asset retirement obligation | 9 | 604,000 | 536,000 |
| 1,139,371 | 2,005,656 | ||
| Shareholders' equity (deficit) | |||
| Share capital | 10 | 95,130,826 | 94,514,124 |
| Subscriptions received in advance | 10 | 85,000 | - |
| Equity reserve | 10 | 1,464,006 | 5,159,718 |
| Deficit | (96,865,117) | (97,192,959) | |
| (185,285) | 2,480,883 | ||
| $ | $ 954,086 | $ 4,486,539 |
Nature and continuance of operations (Note 1)
Subsequent events (Note 10(c))
Commitments (Note 10(b))
Contingencies (Note 11)
Approved by the Board of Directors:
"Vernon Frolick"
Vernon Frolick
"Chad Ulansky"
Chad Ulansky
See accompanying notes to the consolidated financial statements.
Cantex Mine Development Corp.
Consolidated Statements of Loss and Comprehensive Loss
(Stated in Canadian dollars)
| Note | Years ended July 31, | ||
|---|---|---|---|
| 2025 | 2024 | ||
| Expenses | |||
| Accretion | 9 | $ 58,205 | $ 35,851 |
| Depreciation | 6,7 | 244,561 | 239,116 |
| Exploration expenditures | 5,8 | 2,764,463 | 4,662,728 |
| Office and administrative | 8 | 182,295 | 644,010 |
| Professional fees | 81,727 | 86,120 | |
| Stock-based compensation | 8,10(c) | 57,800 | 14,925 |
| Transfer agent and filing fees | 66,305 | 70,408 | |
| (3,455,356) | (5,753,158) | ||
| Other items | |||
| Flow through premium recovery | 10(b) | 152,549 | 388,130 |
| Foreign exchange gain | 26,627 | 30,105 | |
| Interest income | 51,410 | 136,251 | |
| 230,586 | 554,486 | ||
| Loss and comprehensive loss | $ (3,224,770) | $ (5,198,672) | |
| Loss per common share, basic and diluted | $ (0.02) | $ (0.05) | |
| Weighted average number of common shares outstanding, basic and diluted | 129,474,226 | 107,758,625 |
See accompanying notes to the consolidated financial statements.
Cantex Mine Development Corp.
Consolidated Statements of Changes in Shareholders' Equity (Deficit)
(Stated in Canadian dollars)
| Note | Number of common shares | Share capital | Subscriptions received in advance | Equity reserve | Deficit | Total | |
|---|---|---|---|---|---|---|---|
| Balance, July 31, 2023 | 90,368,412 | $ 87,239,598 | $ - | $ 4,804,593 | $ (91,994,287) | $ 49,904 | |
| Shares issued for cash - private placement | 10(b) | 35,734,658 | 7,954,275 | - | 319,400 | - | 8,273,675 |
| Shares issued for services rendered | 10(b) | 1,023,074 | 266,000 | - | - | - | 266,000 |
| Share issuance costs | 10(b) | - | (632,749) | - | 124,800 | - | (507,949) |
| Flow through premium | 10(b) | - | (417,000) | - | - | - | (417,000) |
| Stock-based compensation | 10(c) | - | - | - | 14,925 | - | 14,925 |
| Reserves transferred on expired warrants | - | 104,000 | - | (104,000) | - | - | |
| Loss and comprehensive loss for the year | - | - | - | - | (5,198,672) | (5,198,672) | |
| Balance, July 31, 2024 | 127,126,144 | 94,514,124 | - | 5,159,718 | (97,192,959) | 2,480,883 | |
| Shares issued for cash - private placement | 10(b) | 4,000,000 | 600,000 | - | - | - | 600,000 |
| Recovery of share issuance costs through cancellation of shares and warrants | 10(b) | (188,462) | (45,700) | - | (3,300) | - | (49,000) |
| Reserves transferred on recovery of cancelled finders warrants | 10(b) | - | 63,300 | - | (14,300) | - | 49,000 |
| Share issuance costs | 10(b) | - | (73,398) | - | 9,200 | - | (64,198) |
| Flow through premium | 10(b) | - | (120,000) | - | - | - | (120,000) |
| Subscriptions received in advance - private placement | 10(b) | - | - | 85,000 | - | - | 85,000 |
| Stock-based compensation | 10(c) | - | - | - | 57,800 | - | 57,800 |
| Reserves transferred on expired warrants | - | 192,500 | - | (192,500) | - | - | |
| Reserves transferred on expired options | - | - | - | (3,552,612) | 3,552,612 | - | |
| Loss and comprehensive loss for the year | - | - | - | - | (3,224,770) | (3,224,770) | |
| Balance, July 31, 2025 | 130,937,682 | $ 95,130,826 | $ 85,000 | $ 1,464,006 | $ (96,865,117) | $ (185,285) |
See accompanying notes to the consolidated financial statements.
Cantex Mine Development Corp.
Consolidated Statements of Cash Flows
(Stated in Canadian dollars)
| Years ended July 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Operating activities | ||
| Loss for the year | $ (3,224,770) | $ (5,198,672) |
| Items not involving cash | ||
| Flow through premium recovery | (152,549) | (388,130) |
| Accretion | 58,205 | 35,851 |
| Depreciation | 244,561 | 239,116 |
| Stock-based compensation | 57,800 | 14,925 |
| Interest on lease obligations | 21,024 | 8,365 |
| Unrealized foreign exchange gain | (150) | (3,133) |
| Changes in operating assets and liabilities | ||
| Receivables and prepaids | 73,275 | (191,823) |
| Trade and other payables and due to related parties | (742,397) | 207,431 |
| (3,665,001) | (5,276,070) | |
| Investing activities | ||
| Refund of reclamation bond | - | 10,323 |
| Purchase of equipment | - | (2,287) |
| - | 8,036 | |
| Financing activities | ||
| Issuance of common shares | 600,000 | 8,273,675 |
| Deposit for shares issued subsequent to year end | 85,000 | - |
| Share issue costs | (46,436) | (241,949) |
| Lease liability for right-of-use assets | (198,125) | (114,375) |
| 440,439 | 7,917,351 | |
| Change in cash during the year | (3,224,562) | 2,649,317 |
| Cash, beginning of year | 3,436,640 | 787,323 |
| Cash, end of year | $ 212,078 | $ 3,436,640 |
| Supplemental disclosure: | ||
| Taxes paid | $ - | $ - |
| Interest paid | $ - | $ - |
| Transfer of reserves on expired options | $ 3,552,612 | $ - |
| Transfer of reserves on expired and cancelled warrants | $ 210,100 | $ 104,000 |
| Flow through premium liability | $ 120,000 | $ 417,000 |
| Return of shares and warrants on cancellation of finders fees | $ 63,300 | $ - |
| Share issuance costs included in accounts payable | $ 17,762 | $ - |
| Asset retirement obligation included in equipment | $ 9,795 | $ 94,149 |
| Finder's warrants issued as fees on private placement | $ 9,200 | $ 124,800 |
| Residual value of warrants | $ - | $ 319,400 |
| Shares issued as share issuance costs | $ - | $ 266,000 |
| Recognition of lease agreement for right of use assets | $ - | $ 324,787 |
| Lease payments included in accounts payable | $ - | $ 83,750 |
See accompanying notes to the consolidated financial statements.
Page 8
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
1. Nature and continuance of operations
Cantex Mine Development Corp. ("Cantex" or the "Company") is incorporated under the laws of the Province of Alberta and is considered to be in the exploration stage with respect to its mineral properties. To date, the Company has not generated significant revenues from operations and has not yet determined whether its mineral properties contain ore reserves that are economically recoverable. The Company's common shares are listed on the TSX Venture Exchange under the symbol "CD" and on the OTCQB Venture Market under the symbol "CTXDF".
The head office, principal address and registered and records office of the Company are located at 203-1634 Harvey Avenue, Kelowna, BC V1Y 6G2.
These consolidated financial statements have been prepared by management on a going concern basis, which assumes the Company will continue in operations for the foreseeable future and be able to realize its assets and discharge its liabilities in the normal course of business. The ability of the Company to continue operations is dependent upon the existence of economically recoverable reserves, successful development of the Company's mineral properties (Note 5), completion of equity financings (Note 10), and generating profitable operations in the future. It is not possible to predict whether economically recoverable reserves exist, the Company's financing efforts will be successful, or if the Company will attain a profitable level of operations.
As at July 31, 2025, the Company has incurred cumulative losses of $96,865,117 (July 31, 2024 - $97,192,959) and has negative working capital of $151,546 (July 31, 2024 - positive working capital of $2,326,381). Additional financing will be required for the Company to continue operations. The above conditions may raise significant doubt regarding the Company's ability to continue as a going concern. Should the Company be unable to realize its assets and discharge its liabilities in the normal course of business, adjustments would be necessary in the carrying values of assets and liabilities.
2. Basis of presentation
(a) Statement of compliance
These consolidated financial statements have been prepared in accordance with IFRS Accountings Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB"). The material accounting policy information applied in these consolidated financial statements are based on IFRS in effect as of July 31, 2025.
These consolidated financial statements were approved for issue by the Board of Directors on November 27, 2025.
(b) Basis of presentation
These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Cantex Gold Corp.
| Name of Subsidiary | Country of Incorporation | Proportion of Ownership Interest | |
|---|---|---|---|
| July 31, 2025 | July 31, 2024 | ||
| Cantex Gold Corp. | USA | 100% | 100% |
Page 9
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
2. Basis of presentation (continued)
(c) Adoption of new and revised standards and interpretations
New Standards Adopted During the Year
IAS1 "Classification of Liabilities as Current or Non-current – Deferral of Effective Date" is an amendment to the standard that is applicable to fiscal years beginning on or after January 1, 2024. The amendments to IAS1 affects only the presentation of liabilities in the statement of financial position, and not the amount or timing of recognition of any asset, liability, income or expense, or the information that entities disclose about them. They:
- clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the "right" to defer settlement by at least one year and make explicit that only rights in place "at the end of the reporting period" should affect the classification of a liability
- clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and
- make clear that settlement refers to the transfers to the counterparty of cash, equity instruments, other assets or services.
The amendment was applied effective August 1, 2024 and did not have a material impact on the Company's consolidated financial statements.
New Standards Not Yet Adopted
IFRS 18 "Presentation and Disclosure in Financial Statements" is a standard to help ensure that financial statements provide relevant information that faithfully represents an entity's assets, liabilities, equity, income and expenses, which will be effective for fiscal years beginning on or after January 1, 2027. The standard includes discussion surrounding the following matters:
- General requirements for financial statements, including what will comprise the primary financial statements;
- Aggregation and disaggregation of information in the primary financial statements; and
- Specific requirements for the individual primary financial statements.
The Company is not yet able to determine the impact to the financial statements from the adoption of this standard.
IFRS 19 "Subsidiaries without Public Accountability: Disclosures" is a standard allowing subsidiaries to keep only one set of accounting records, which will be effective for fiscal years beginning on January 1, 2027. This will meet the needs of both the parent company and the users of their financial statements, and reduces disclosure requirements. Subsidiaries can apply IFRS 19 if they do not have public accountability and their parent company applies IFRS Accounting Standards in their consolidated financial statements. A subsidiary does not have public accountability if it does not have equities or debt listed on a stock exchange and does not hold assets in a fiduciary capacity for a broad group of outsiders. The Company is not yet able to determine the impact to the financial statements from the adoption of this standard.
3. Material accounting policy information
(a) Basis of consolidation
These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiary. Control is achieved when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the period are included in the consolidated statement of loss and comprehensive loss from the effective date of control or up to the effective date of loss of control, as appropriate.
Page 10
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
3. Material accounting policy information (continued)
(a) Basis of consolidation (continued)
All intercompany transactions, balances, income and expenses are eliminated in full on consolidation.
(b) Income
Interest income from financial assets is accrued by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.
(c) Foreign currencies
The functional currency is the currency of the primary economic environment in which the entity operates. The Company’s reporting currency and the functional currency of the Company and its subsidiary’s operations is the Canadian dollar as this is the principal currency of the economic environment in which the Company operates and is the principal currency in which the funds from financing activities are generated.
Transactions in foreign currencies are initially recorded at the rates of exchange prevailing at the date of the transaction. At the end of the reporting period, monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the date of the statement of financial position.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.
The resulting exchange differences are included in the foreign currency exchange gain (loss) on the consolidated statements of loss and comprehensive loss.
(d) Equipment
Equipment is stated at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of equipment consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Depreciation is recognized using the straight-line method, over 60 months for Field equipment and 36 months for Computer software.
An item of equipment is derecognized upon disposal, when held for sale or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in the consolidated statement of loss and comprehensive loss.
The Company conducts an annual assessment of the residual balances, useful lives and depreciation methods being used for equipment and any changes arising from the assessment and are applied by the Company prospectively.
Page 11
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
3. Material accounting policy information (continued)
(e) Leases
The Company assesses whether a contract is or contains a lease at inception of the contract. A lease is recognized as a right-of-use ("ROU") asset and corresponding lease liability at the commencement date. Each lease payment included in the lease liability is apportioned between the repayment of the liability and an interest expense in profit or loss. The lease liability represents the net present value of fixed lease payments. The Company's sole lease relates to drills and an excavator for the Yukon project; as such, the interest expense is included in Exploration expenditures.
(f) Exploration expense
Mineral property acquisition costs and exploration and development expenditures incurred prior to determination of the feasibility of mining operations, periodic option payments and administrative expenditures are expensed as incurred. Such expenses incurred subsequent to the determination of the feasibility of mining operations are deferred until the property to which they relate is placed into production, sold, allowed to lapse or abandoned. These costs will be amortized over the estimated life of the property following commencement of commercial production, or written off if the property is sold, allowed to lapse or abandoned or when an impairment in value has occurred. Proceeds from property option payments received are netted against exploration expenses of the related mineral rights, with any excess being included in operations as administration fees earned.
(g) Stock-based payments
The Company has a stock option plan that is described in Note 10(c). Stock-based compensation to employees or those that provide similar services as employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Stock-based compensation to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The costs of equity-settled transactions are recognized over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ("the vesting date"). The cumulative expense is recognized for equity-settled transactions at each reporting date until the vesting date and reflects the Company's best estimate of the number of equity instruments that will ultimately vest. Stock options with graded vesting schedules are accounted for as separate grants with different vesting periods and fair values. The value attributed to options that expire unexercised are reclassified in Equity.
No expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied provided that all other performance and/or service conditions are satisfied.
(h) Taxation
Income tax expense represents the sum of tax currently payable and deferred tax. If the current and deferred tax relates to items recognized directly in equity or in other comprehensive income, the related taxes are recognized in equity or other comprehensive income.
Page 12
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
3. Material accounting policy information (continued)
(h) Taxation (continued)
Current income taxes
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are substantively enacted by the date of the statement of financial position.
Deferred income taxes
Deferred tax is recorded using the liability method, providing for temporary differences, between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences are not provided for relating to goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable loss, and differences relating to investments in subsidiary to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates substantively enacted at the statement of financial position date.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized.
(i) Loss per share
Basic loss per share is computed by dividing the loss by the weighted average number of common shares outstanding during the period. Diluted loss per share reflects the potential dilution of common share equivalents, such as outstanding stock options and share purchase warrants, in the weighted average number of common shares outstanding during the year, if dilutive. The calculation assumes that proceeds upon the exercise of the options and warrants are used to purchase common shares at the average market price during the period. During the years ended July 31, 2025 and 2024, all outstanding stock options and warrants were anti-dilutive.
(j) Financial instruments
Non-derivative financial assets:
The Company's non-derivative financial assets comprise of cash, accounts receivable and reclamation bonds.
Cash consists of amounts held at major financial institutions that are readily convertible into known amounts of cash and which are subject to an insignificant risk of change in value and are measured at amortized cost. The Company's cash is invested in business accounts.
Accounts receivable are amounts due from related or third parties, and are initially recognized at fair value, with transaction costs expensed in profit or loss. Realized and unrealized gains and losses arising from any change in the fair value of the accounts receivable are included in profit or loss in the period in which they arise.
Reclamation bonds are financial assets of a fixed amount not quoted in an active market and held by the relevant counties in the State of Nevada. Such assets are initially recognized at their payment amount. Subsequent to initial recognition, reclamation bonds are measured at amortized cost using the effective foreign exchange rate.
Page 13
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
3. Material accounting policy information (continued)
(j) Financial instruments (continued)
Impairment of financial assets at amortized cost
The Company assesses all information available, including on a forward-looking basis, the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as the reporting date, with the risk of default as at the date of initial recognition, based on all information available, and reasonable and supportive forward-looking information.
Non-derivative financial liabilities:
The Company's non-derivative financial liabilities comprise of trade and other payables, due to related parties and lease obligations.
All financial liabilities fall within the classification of other financial liabilities versus financial liabilities through profit and loss and are initially recorded at fair value net of any attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method.
Financial liabilities classified as FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Transaction costs on financial liabilities classified as FVTPL are expensed as incurred.
Financial liabilities classified as other financial liabilities are initially recognized at fair value less directly attributable transaction costs. After initial recognition, other financial liabilities are subsequently measured at amortized cost using the effective interest method. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.
At the end of each reporting period subsequent to initial recognition, financial liabilities at FVTPL are measured at fair value, with changes in fair value recognized directly in profit or loss in the period in which they arise. The net gain or loss recognized in profit or loss excludes any interest paid on the financial liabilities.
Derivative financial assets and liabilities
The Company does not have derivative financial assets or liabilities.
(k) Impairment of non-financial assets
At each date of the statement of financial position, the Company reviews the carrying amounts of its long lived assets to determine whether there is an indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the assets belong.
Page 14
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
3. Material accounting policy information (continued)
(k) Impairment of non-financial assets (continued)
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the statement of loss and comprehensive loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years.
(l) Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) that has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the obligation. Any increase in a provision due solely to passage of time is recognized as interest expense.
(m) Related party transactions
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence; related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.
(n) Asset retirement obligations
The Company accounts for the recognition and measurement of liabilities for statutory, contractual or legal obligations associated with the retirement of equipment, and mineral properties when those obligations result from the acquisition, construction, development or normal operations of the assets. When determinable, a liability for future site reclamation costs, or other obligations, would be recorded at net present value and the corresponding increase in the assets carrying value would then be amortized over the remaining useful life of the asset.
Management has reviewed the Company's likely retirement costs of its equipment, and mineral properties for known obligations under contract, common practices or laws and regulations in effect or anticipated. The Company has determined that there is a material asset retirement obligation associated with the Yukon project, and accordingly, has accrued this amount in the consolidated financial statements.
Page 15
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
3. Material accounting policy information (continued)
(o) Significant accounting judgments and estimates
The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ materially and adversely from these estimates.
Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:
i) The inputs used in calculating the fair value for stock-based compensation expense included in profit or loss and share-based share issuance costs included in shareholders' equity. The stock-based compensation expense is estimated using the Black-Scholes options-pricing model as measured on the grant date to estimate the fair value of stock options. This model involves the input of highly subjective assumptions, including the expected price volatility of the Company's common shares, the expected life of the options, and the estimated forfeiture rate.
ii) The recognition of deferred tax assets. The Company considers whether the realization of deferred tax assets is probable in determining whether or not to recognize these deferred tax assets.
iii) The accrual of unresolved tax assessment. The Company has recorded an estimate of the amounts payable as a result of tax audits by the Government of Yemen. In the event that the circumstances surrounding this matter changes, the effects will be recognized.
iv) The inputs for future asset retirement obligations. The Company has capitalized an asset retirement cost and accrued a future asset retirement obligation. In the event that the assumptions used by management change, the effects will be recognized.
v) The valuation of right-of-use assets. The Company has capitalized drilling equipment leased to it from a related party based on the estimated interest rate that the Company would be able to obtain.
(p) Share capital and flow-through shares
Common shares are classified as share capital. Costs directly attributable to the issuance of common shares are recognized as a deduction from share capital. The proceeds from common share units (where common shares units are comprised of common shares and warrants to purchase commons shares) issued as the result of private placements are allocated between common shares and warrants using the residual value method. This allocates value first to the fair value of the common shares, with any remaining balance allocated to the attached warrants.
Share issue costs relating to private placement financings that are ongoing as of the end of the Company's fiscal year are included in equity in the period in which they are incurred, rather than being recognized as a deferred share cost in current assets. These costs have been incurred under the basis that shares will be issued subsequent to year end, with the Company receiving sufficient documentation and proceeds in good faith prior to July 31.
Page 16
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
3. Material accounting policy information (continued)
(p) Share capital and flow-through shares (continued)
Under Canadian income tax legislation, a company is permitted to issue flow-through shares whereby the Company agrees to incur qualifying expenditures and renounce the related income tax deductions to the investors. The Company has adopted a policy to (i) allocate the proceeds between the offering of the shares and the sale of tax benefits when the shares are offered and (ii) recognize a provision upon filing of appropriate renunciation forms with the Canadian taxation authorities for qualifying expenditures previously incurred. The allocation of the proceeds is made based on the difference between the quoted price of the shares and the amount the investor pays for the flow-through shares, and any potential residual value attributed to warrants. A liability is recognized for the premium paid by the investors. The liability is reduced and the reduction of premium liability is recorded in other income upon filing of appropriate renunciation forms with the Canadian taxation authorities for qualifying expenditures previously incurred.
(q) Warrants
As part of its private placements, the Company has issued warrants and brokers' warrants. Any warrants that expire or are exercised during the year are transferred back to share capital, if originally determined to have a value. The Company values warrants as part of a private placement offering under the residual value approach.
4. Receivables and prepaids
| July 31, | July 31, | ||
|---|---|---|---|
| 2025 | 2024 | ||
| GST receivables | $ | 20,834 | $ 109,768 |
| Prepaid expenses | 150,913 | 135,254 | |
| $ | 171,747 | $ 245,022 |
5. Mineral property interests
The Company has not yet determined whether any of its mineral properties contain economically recoverable mineral reserves. Although the Company has taken steps to verify title to the mineral properties in which it, through its subsidiary, has an interest, in accordance with industry standards for the stage of exploration of such properties, those procedures do not guarantee the Company's title.
Title to mining properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mining properties. The Company has diligently investigated rights of ownership of all of the mineral concessions in which it has an interest and, to the best of its knowledge, all agreements relating to such ownership rights are in good standing. However, this should not be construed as a guarantee of title. The concessions may be subject to prior claims, agreements or transfers and rights of ownership may be affected by undetected defects.
Page 17
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
- Mineral property interests (continued)
| Yukon (a) | Yemen (b) | Nevada (c) | Total | |
|---|---|---|---|---|
| Cumulative expenditures to July 31, 2023 | $ 46,491,026 | $ 26,949,327 | $ 3,376,191 | $ 76,816,544 |
| Consulting and engineering | 592,815 | 27,503 | 1,751 | 622,069 |
| Geophyics | 55,250 | - | - | 55,250 |
| Licenses and permits | 35,585 | - | 11,165 | 46,750 |
| Travel, field and other | 2,356,075 | 107,485 | 1,956 | 2,465,516 |
| Wages | 1,319,358 | 153,785 | - | 1,473,143 |
| Net expenditures during the year | 4,359,083 | 288,773 | 14,872 | 4,662,728 |
| Cumulative expenditures to July 31, 2024 | 50,850,109 | 27,238,100 | 3,391,063 | 81,479,272 |
| Consulting and engineering | 419,127 | 26,383 | 2,483 | 447,993 |
| Licenses and permits | 20,580 | - | 13,227 | 33,807 |
| Travel, field and other | 1,216,522 | 117,149 | 1,942 | 1,335,613 |
| Wages | 843,746 | 103,304 | - | 947,050 |
| Net expenditures during the year | 2,499,975 | 246,836 | 17,652 | 2,764,463 |
| Cumulative expenditures to July 31, 2025 | $53,350,084 | $27,484,936 | $3,408,715 | $84,243,735 |
(a) Yukon program
As of July 31, 2025, the Company holds certain claim blocks, which are located northeast of Mayo, Yukon, Canada. These claims are 100% held by the Company and were acquired by staking.
(b) Yemen program
(i) Exploration license
During 1996, the Company was granted a prospecting permit in the Republic of Yemen. The Company has held an exploration license granting exclusive exploration rights and the right to obtain an exploration contract since 1999. Under the terms of the exploration contract, the Government of the Republic of Yemen has the right to offer to acquire, on commercial terms, an undivided interest of up to 49% in this exploration license. In this event, the Company's interest (and that of any partner) would be diluted proportionately.
In January 2012, the exploration license containing the Al Hariqah project was renewed under the new Yemeni mining code. The new license is valid for an initial four year period and can be renewed for two further four year periods.
In October 2014, the Company, in conjunction with Piedmont Lithium Limited ("Piedmont", formerly known as WCP Resources Ltd), declared a state of force majeure in regards to the Al Hariqah project. Due to the current political climate, notice was given to the Chairman of the Geological and Mineral Resource Board of Yemen that the Company no longer felt that the project area was secure. Operations at the Al Hariqah site have since ceased; the Company's current expenditures on the project relate to maintaining our Yemen office and employing office staff to continue to promote our interests in the country.
Page 18
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
5. Mineral property interests (continued)
(b) Yemen program (continued)
(ii) Agreement for Al Hariqah property
In December 2011, the Company entered into an agreement with Piedmont wherein Piedmont can earn an interest in the Al Hariqah gold project by funding advanced exploration and mine development to commercial production. The staged earn-in agreement allows Piedmont to earn up to a 70% interest in the project after funding a minimum of US$30,000,000 over a seven year period.
Piedmont had two years from February 2012 to exercise an option to commence the earn-in to the project, after which they may earn an initial 40% interest in the project by expending US$5,000,000 within two years. As of May 31, 2014, Piedmont gave notice that they felt they had reached this 40% level; the Company does not agree with this statement. In October, 2014, Piedmont gave additional notice that they would no longer be funding the project. Allocation of ownership of the project has not yet been finalized. In May 2021, the Company received notice from Piedmont that it had assigned its interest in Al Hariqah to Lantern Resources Pty Ltd ("Lantern"), an affiliate and subsidiary of Piedmont. During the year ended July 31, 2023, the Company received notice that Lantern was selling its interest in Al Hariqah to a third party; negotiations to determine and settle the percentages of ownership for the project have not been completed to date.
(c) Nevada program
As at July 31, 2025, the Company had two gold exploration claims in the state of Nevada. Reclamation bonds of $59,276 (July 31, 2024 - $59,126) have been posted with the State of Nevada.
Page 19
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
6. Equipment
| Field equipment | Computer equipment | Total | |
|---|---|---|---|
| Cost | |||
| Balance July 31, 2023 | $ 644,479 | $ 10,480 | $ 654,959 |
| Additions | - | 2,287 | 2,287 |
| Disposals | - | (7,913) | (7,913) |
| Adjustment to Asset Retirement Obligation (Note 9) | 94,149 | - | 94,149 |
| Balance July 31, 2024 | 738,628 | 4,854 | 743,482 |
| Adjustment to Asset Retirement Obligation (Note 9) | 9,795 | - | 9,795 |
| Balance July 31, 2025 | $ 748,423 | $ 4,854 | $ 753,277 |
| Accumulated depreciation | |||
| Balance July 31, 2023 | $ 251,247 | $ 7,325 | $ 258,572 |
| Depreciation | 49,515 | 2,044 | 51,559 |
| Disposals | - | (7,913) | (7,913) |
| Balance July 31, 2024 | 300,762 | 1,456 | 302,218 |
| Depreciation | - | 971 | 971 |
| Balance July 31, 2025 | $ 300,762 | $ 2,427 | $ 303,189 |
| Carrying amounts: | |||
| As at July 31, 2024 | $ 437,866 | $ 3,398 | $ 441,264 |
| As at July 31, 2025 | $ 447,661 | $ 2,427 | $ 450,088 |
7. Right-of-use assets and lease obligations
| Field equipment | |
|---|---|
| Balance July 31, 2023 | $ 167,257 |
| Additions | 324,787 |
| Depreciation | (187,557) |
| Balance July 31, 2024 | 304,487 |
| Depreciation | (243,590) |
| Balance July 31, 2025 | $ 60,897 |
In July 2022, the Company entered into a lease agreement with Kel-Ex Developments Ltd. ("Kel-Ex"), a related party (Note 8), for the lease of two drills and an excavator for a two-year term, which ended June 30, 2024. Payments over the term of the lease totaled $396,250 plus GST; monthly payments varied based on the timing of the drill program and whether the equipment is in use or not.
In July 2024, the Company renewed the lease with Kel-Ex for the drills and excavator. The lease is for a sixteen month term, ending October 1, 2025. Lease payments over the term of the lease total $350,625 plus GST; monthly payments vary based on the timing of when the equipment is in use.
Page 20
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
7. Right-of-use assets and lease obligations (continued)
Interest expense on lease obligations for the year ended July 31, 2025 was $21,024 (July 31, 2024 - $8,365) and is included in exploration expenditures. There are no variable lease payments not included in the measurement of lease obligations.
| Lease obligation | |
|---|---|
| Lease obligation, July 31, 2023 | $ 154,477 |
| 2024-2025 lease obligation | 324,787 |
| Principal payments | (198,125) |
| Interest on lease obligation | 8,365 |
| Lease obligation, July 31, 2024 | 289,504 |
| Principal payments | (198,125) |
| Interest on lease obligation | 21,024 |
| Lease obligation, July 31, 2025 | $ 112,403 |
Total minimum future lease payments for the equipment over the next three years are: 2026 - $114,375; 2027 - $nil; 2028 - $nil
8. Related party transactions and balances
During the years ended July 31, 2025 and 2024, the Company had related party transactions with the following individuals and companies related by way of common directors or shareholders:
- C.F. Mineral Research Ltd. ("CF Minerals") – a private company owned by the Cantex Chairman. CF Minerals provides heavy mineral geochemistry services to the Company, as well as storage of samples and supplies.
- Kel-Ex Development Ltd. ("Kel-Ex") – a private company owned by the Cantex Chairman. Kel-Ex provides administration, payroll and office services to the Company, as well as some shared exploration costs and equipment rentals.
- Element 29 Ventures Ltd. ("Element 29") – a private company owned by the Cantex CEO. Element 29 provides geological consulting services and equipment rentals to the Company.
- FourIrons Consulting ("FourIrons") – a private company owned by the Cantex CFO. FourIrons provides financial consulting services to the Company.
- Metalex Ventures Ltd. ("Metalex") – a publicly listed company with common directors and management. Metalex shares office space with Cantex and thus have certain shared expenditures which get re-billed on a cost-recovery basis.
- Dimac Consulting ("Dimac") – a private company owned by Kathrine MacDonald, a Director of the Company. Dimac provided administrative and consulting services to the Company.
The key management personnel of the Company are the Directors, Chief Executive Officer, and Chief Financial Officer.
Page 21
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
8. Related party transactions and balances (continued)
(a) Related party expenses
The Company's related party expenses (net of recoveries) consist of the following amounts:
| Years ended July 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Laboratory and mineralogical costs, including storage fees* | $ 162,356 | $ 185,769 |
| Geological consulting fees* | 161,763 | 278,614 |
| Consulting fees** | 45,051 | 108,408 |
| Shared field expenditures* | 867,642 | 1,615,021 |
| Shared office and administrative costs** | 39,689 | 34,106 |
| $ 1,276,501 | $ 2,221,918 |
- Costs are included in Exploration expenditures in the Statement of profit and loss
** Costs are included in Office and administrative expenditures in the Statement of profit and loss
(b) Related party liabilities
The Company's related party expenses to the following related parties:
| Years ended July 31, | ||
|---|---|---|
| 2025 | 2024 | |
| C.F. Mineral Research Ltd. | $ 162,356 | $ 185,769 |
| Dimac Capital Corp. | - | 52,000 |
| Element 29 Ventures Ltd. | 458,434 | 795,675 |
| FourIrons Consulting | 46,051 | 56,408 |
| Kel-Ex Development Ltd. | 556,065 | 1,068,723 |
| Metalex Ventures Ltd. | 53,595 | 63,343 |
| $ 1,276,501 | $ 2,221,918 |
The liabilities of the Company include the following amounts due to related parties, which are due on demand and unsecured. Overdue amounts due to C.F. Mineral Research Ltd. may be charged a service charge of 1.5% per month; the remaining balances are non-interest bearing:
| July 31, 2025 | July 31, 2024 | |
|---|---|---|
| C.F. Mineral Research Ltd. | $ 43,246 | $ 74,095 |
| Element 29 Ventures Ltd. | 41,207 | 129,223 |
| FourIrons Consulting | 3,623 | 4,468 |
| Kel-Ex Development Ltd. | 60,065 | 293,851 |
| Metalex Ventures Ltd. | 3,683 | 12,121 |
| $ 151,824 | $ 513,758 |
Page 22
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
8. Related party transactions and balances (continued)
(c) Key management personnel compensation
| Years ended July 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Consulting fees (1) | $ 167,798 | $ 293,615 |
| Stock based compensation (2) | 53,700 | 13,900 |
| $ 221,498 | $ 307,515 |
(1) Consulting fees includes amounts paid or accrued for geological consulting fees, financial consulting fees and administrative consulting fees. Geological consulting fees are paid to Element 29 for the services of the Chief Executive Officer; financial consulting fees are paid to Fourtrons for the services of the Chief Financial Officer; administrative consulting fees have been paid to Dimac for services provided by a Director of the Company.
(2) Stock based compensation represents the vested portion of share options issued to management and directors based on the Black-Scholes option pricing model (note 10(c)).
9. Asset retirement obligation
The Company's sole asset retirement obligation is based on its ownership of a remote camp location in the Yukon and right-of-use assets in said location that will eventually need to be removed. Management estimated the cost to remove the camp structures and equipment, and the estimated time period during which these costs will be incurred in the future. These costs are expected to be incurred in approximately 4 years. The undiscounted amount of estimated cash flow required to settle the asset retirement obligation is $795,000 (July 31, 2024 - $781,000). The discounted amount of estimated cash flow required to settle the asset retirement obligation as at July 31, 2025 using discounted at a rate of 8.95% (July 31, 2024 - 10.5%) is $604,000 (July 31, 2024 - $536,000).
| North Rackla camp and equipment | |
|---|---|
| Asset retirement obligation, July 31, 2023 | $ 406,000 |
| Accretion expense | 35,851 |
| Adjustment - Change in estimate (note 6) | 94,149 |
| Asset retirement obligation, July 31, 2024 | $ 536,000 |
| Accretion expense | 58,205 |
| Adjustment - Change in estimate (note 6) | 9,795 |
| Asset retirement obligation, July 31, 2025 | $ 604,000 |
10. Share capital and reserves
(a) Authorized share capital
The authorized share capital of the Company is an unlimited number of common shares without par value. All issued shares are fully paid.
Page 23
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
10. Share capital and reserves (continued)
(b) Issued share capital
i) April 2023 financing
The Company received proceeds of $1,268,500 from the issuance of 3,713,851 common shares, which were issued as a combination of units and flow-through units ("FT Units"). A flow through premium liability of $80,000 was recorded on these flow through funds; as at July 31, 2023, the Company had a remaining commitment of $27,245 in flow through funds and recovered $76,321 in flow through premiums in the statement of loss and comprehensive loss. The Company fulfilled this commitment during the year ended July 31, 2024 and recovered $3,679 in flow through premiums in the statement of loss and comprehensive loss.
ii) October to November 2023 financing
The Company received total proceeds of $3,823,485 from the issuance of 13,435,207 common shares, which were issued as a combination of units and FT Units; 5,176,923 units were issued at $0.26/unit, comprising of one non-flow through share and one half of a non-flow through warrant, and 8,258,284 FT Units were issued at $0.30/unit, comprising of one flow through share ("FT Shares") and one half of a non-flow through warrant. A total of 6,717,607 warrants were issued as part of this tranche of the private placement, with each whole warrant exercisable at $0.39/share, for a period of two years from issuance.
The Company paid cash commissions of $54,535 and incurred other share issuance costs of $56,006 in conjunction with this deal. In addition to cash commissions paid, the Company settled $154,000 in commissions through the issuance of 592,308 units, each unit comprised of one non-flow through common share and one-half of a non-flow through warrant. As part of the commission agreement, the Company issued 772,678 finder's warrants valued at $49,100 using the Black-Scholes option pricing model with the following factors:
| Tranche 1 | Tranche 2 | |
|---|---|---|
| Expected life | 2 years | 2 years |
| Volatility | 96.57% | 80.84% |
| Risk free rate | 4.89% | 4.45% |
| Dividend rate | 0% | 0% |
| Expiration date | October 17, 2025 | November 16, 2025 |
The finder's warrants have the same terms as those issued as part of the Units and FT Units.
During the year ended July 31, 2025, a portion of these finders fees were rescinded by the vendor and 134,616 units valued at $35,000 (134,616 shares and 67,308 warrants) and 134,616 finders warrants valued at $8,200 were returned to the Company's treasury.
A flow through premium liability of $330,000 was recorded on these flow through funds; as at July 31, 2024, the Company had fulfilled its commitment to spend these flow through funds, and recovered the full amount in the statement of loss and comprehensive loss for the year ended July 31, 2024.
Page 24
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
10. Share capital and reserves (continued)
(b) Issued share capital (continued)
iii) December 2023 to January 2024 financing
Over the course of four tranches, the Company received total proceeds of $3,000,190 from the issuance of 10,216,120 common shares, which were issued as a combination of units and FT Units; 1,616,154 units were issued at $0.26/unit, comprising of one non-flow through share and one half of a non-flow through warrant, and 8,599,966 FT Units were issued at $0.30/unit, comprising of one flow through share and one half of a non-flow through warrant. A total of 5,108,063 warrants were issued, with each whole warrant exercisable at $0.39/share, for a period of two years from issuance. The Company incurred commissions of $177,100 in conjunction with this tranche; of this, $65,100 was settled with cash payments, and $112,000 was settled with the issuance of 430,766 units, which were comprised of one non-flow through common share and one half of a non-flow through warrant. The Company also incurred other share issuance costs of $29,613 in regard to this financing.
As part of the commission agreements, the Company issued 647,766 finder's warrants; the finder's warrants have the same terms as those issued as part of the units and FT Units and were valued at $75,700 using the Black-Scholes option pricing model with the following factors:
| Tranche 1 | Tranche 2 | Tranche 3 | Tranche 4 | |
|---|---|---|---|---|
| Expected life | 2 years | 2 years | NA | 2 years |
| Volatility | 87.10% | 83.89% | NA | 98.46% |
| Risk free rate | 4.05% | 3.94% | NA | 3.91% |
| Dividend rate | 0% | 0% | NA | 0% |
| Expiration date | December 7, 2025 | December 15, 2025 | (No finders warrants for Tranche 3) | January 16, 2026 |
During the year ended July 31, 2025, a portion of these finders fees were rescinded by the vendor and 53,846 units valued at $14,000 (53,846 shares and 26,923 warrants) and 26,923 finders warrants valued at $6,100 were returned to the Company's treasury.
A flow through premium liability of $87,000 was recorded on these flow through funds; as at July 31, 2024, the Company had a remaining commitment of $965,254 in flow through funds from this private placement and had recovered $54,451 in flow through premiums in the statement of loss and comprehensive loss. During the year ended July 31, 2025, the Company fulfilled this flow through commitment and recovered the remaining $32,549 flow through premium in the statement of loss and comprehensive loss.
iv) July 2024 financing
In July 2024, the Company received total proceeds of $1,450,000 from the issuance of 12,083,331 non-flow through common shares, which were issued at $0.12/share. The Company incurred commissions of $24,500 in conjunction with this financing, which was settle with cash. The Company also incurred other share issuance costs of $13,185 in regard to this financing, of which $12,195 were incurred in the year ended July 31, 2024 and $990 were incurred in the year ended July 31, 2025.
Page 25
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
10. Share capital and reserves (continued)
(b) Issued share capital (continued)
v) December 2024 financing
In December 2024, the Company closed a private placement of FT Shares and received total proceeds of $600,000 from the issuance of 4,000,000 FT Shares, which were issued at $0.15/FT share. The Company paid finders fees of $36,000 in conjunction with this private placement and issued 200,000 finder's warrants, with each whole warrant exercisable at $0.15/share, for a period of two years from issuance; the finder's warrants were valued at $9,200 using the Black-Scholes option pricing model using volatility of 80.48%, a risk free rate of 3.03% and dividend rate of 0%. The Company also incurred other share issuance costs of $4,996 in regard to this financing.
A flow through premium liability of $120,000 was recorded on these flow through funds; as at July 31, 2025, the Company had fulfilled the commitment of eligible flow through expenditures from this private placement and has fully recovered the flow through premiums in the statement of loss and comprehensive loss.
vi) July to August 2025 financing
In July 2025, the Company announced a private placement to raise up to $3 million in funds, through a combination of charity flow through units ("CFT Units"), issuable at $0.21/CFT Units and hard units ("Units"), issuable at $0.14/Unit. The CFT Units are comprised of one flow through share and one non-flow through warrant; the Units are comprised of one non-flow through share and one non-flow through warrant. Each whole warrant issued in connection with either a CFT Unit or a Unit entitles the holder to acquire a non-flow through share at a price of $0.21 for a term of three years.
As at July 31, 2025, the Company had received proceeds of $85,000 towards the issuance of shares and incurred finders fees of $2,450 and other filing costs of $19,762.
Subsequent to July 31, 2025, the Company received the remaining proceeds from the issuance of 5,731,372 Units and 21,333,332 CFT Units; total proceeds from this financing was $5,282,392. In August 2025, the Company paid an additional $34,202 in finder's fee and settled $115,317 in finder's fees through the issuance of 823,696 Units; a total of 1,067,966 non-transferrable finder's warrants (the "Finder's Warrants") were issued, with each Finder's Warrant entitling the holder to purchase one common share (a "Finder Share") at an exercise price of $0.21/Finder Share for a period of three years from the date of issuance of the Finder's Warrant. Additional share issuance costs of $59,249 were also incurred.
(c) Stock options and warrants
The Company, in accordance with its shareholder approved stock option plan, is authorized to grant options to directors, officers, employees and consultants, to acquire up to 7% of the aggregate issued and outstanding common shares (5% prior to the 2022 AGM). The exercise price of the options issued under the plan is determined by the Board of Directors at the time the options are granted. The options vest immediately upon grant, unless otherwise determined by the Board of Directors or Exchange regulations, and are exercisable for a period of up to ten years from the date of grant.
Page 26
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
10. Share capital and reserves (continued)
(c) Stock options and warrants (continued)
During the year ended July 31, 2025, the Company recognized share based compensation of $57,800 (2024 - $14,925) in profit and loss. This represents the vested portion of stock-based compensation granted in April 2024. Unlike previously issued options, the options granted on April 26, 2024 did not vest immediately; it was determined by the Board of Directors that these will vest pro-rata over a five year period and will become fully vested on April 26, 2029. They will expire on April 26, 2031. The weighted average fair value of the options granted was valued at $0.14 per option using the Black-Sholes option pricing model. The assumptions used in calculating fair values include an expected life of 7 years, volatility of 114.41%, risk free dividend rate of 3.81% and dividend rate of 0%.
Stock option and share purchase warrant transactions are summarized as follows:
| Stock Options | Warrants | |||
|---|---|---|---|---|
| Number of options | Weighted Average Exercise Price | Number of warrants | Weighted Average Exercise Price | |
| Outstanding, July 31, 2023 | 1,519,000 | $ 2.76 | 26,358,436 | $ 0.49 |
| Granted/Issued | 2,100,000 | $ 0.50 | 13,757,651 | $ 0.39 |
| Expired | - | $ - | (20,956,104) | $ 0.46 |
| Outstanding, July 31, 2024 | 3,619,000 | $ 1.45 | 19,159,983 | $ 0.39 |
| Granted/Issued | - | $ - | 200,000 | $ 0.15 |
| Expired/Cancelled | (1,519,000) | $ 2.76 | (5,685,025) | $ 0.38 |
| Outstanding, July 31, 2025 | 2,100,000 | $ 0.50 | 13,674,958 | $ 0.39 |
| Exercisable, July 31, 2025 | 528,452 | $ 0.50 | 13,674,958 | $ 0.39 |
The following stock options and warrants were outstanding as at July 31, 2025:
| Number | Exercise price | Expiry date | |
|---|---|---|---|
| Options | 2,100,000 | $ 0.50 | April 26, 2031* |
| 2,100,000 |
*Of the 2,100,000 stock options issued in April 2024, 528,452 stock options have vested as at July 31, 2025.
| Warrants | 1,760,980 | $ 0.39 | October 17, 2025** |
|---|---|---|---|
| 5,531,227 | $ 0.39 | November 16, 2025** | |
| 292,308 | $ 0.39 | November 23, 2025** | |
| 2,937,159 | $ 0.39 | December 7, 2025 | |
| 2,151,616 | $ 0.39 | December 15, 2025 | |
| 416,667 | $ 0.39 | December 29, 2025 | |
| 385,001 | $ 0.39 | January 12, 2026 | |
| 200,000 | $ 0.15 | December 24, 2026 | |
| 13,674,958 |
**Expired unexercised subsequent to July 31, 2025.
Page 27
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
11. Contingencies
As at July 31, 2025, the Company has accrued a total of $159,869, relating to the Yemen branch tax audit of the years ended December 31, 2007 to 2012 ($79,069USD) and for the years ended December 31, 2013 to 2018 ($36,410USD).
A notice of assessment was received from the Government of Yemen in December 2014 of $432,845USD for the years ended December 31, 2007 to 2012, which the Company objected to on the basis that incorrect bases were being used in the calculations. In April 2022, the Company received Notice of Assessments from the Government of Yemen in the amount of $271,186USD for the years ended December 31, 2013 to 2018. For both tax audits, the Company provided further evidence to the Government of Yemen regarding the bases used to calculate the assessment and a lower amount was assessed for both. Due to the state of affairs in Yemen, there has been significant delays in finalizing these amounts. During the year ended July 31, 2025, the Tax Court of Yemen finalized the amount owed for the 2007 to 2012 years; final say on the 2013 to 2018 tax years has not been received to date. While the Company has not yet been able to finalize payment terms of the assessments, the reassessed amounts have been accrued as a liability.
In March 2023, the Company received a Notice of Assessment from the Government of Yemen in the amount of $12,565USD relating to the 2019 tax review. In August 2023, the Company received a Notice of Assessment from the Government of Yemen in the amount of $11,889USD relating to the 2020 tax review. As with the assessments received in 2014 and 2022 regarding the 2007 to 2018 tax audits, the Company prepared objections to the 2019 and 2020 assessments using the argument that the bases used to calculate the assessments were incorrect. Notices of objection were filed with the Government of Yemen in October 2022, March 2023 and August 2023, respectively. In November, 2024, the Company received the original assessments for the 2021 and 2022 tax years; objections to these assessments have been filed using the same bases as the other years noted.
As the Company believes that the Notice of Assessments will be reversed or significantly reduced after the objections are reviewed, the tax amounts for 2019 to date have not been accrued as the eventual amount of the taxes owed is not known as this time.
Page 28
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
12. Segmented information
The Company manages its business as a single operating segment: mineral exploration. The Company operates in both foreign and domestic countries as follows:
| Year ended July 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Loss | ||
| Canada | $ 2,960,282 | $ 4,895,027 |
| Yemen | 246,836 | 288,773 |
| United States of America | 17,652 | 14,872 |
| $ 3,224,770 | $ 5,198,672 | |
| July 31, | July 31, | |
| 2025 | 2024 | |
| Reclamation bonds | ||
| United States of America | $ 59,276 | $ 59,126 |
| Equipment | ||
| Canada | 450,088 | 441,264 |
| Right-of-use assets | ||
| Canada | 60,897 | 304,487 |
| $ 570,261 | $ 804,877 |
13. Income Taxes
(a) Corporate income tax expense
Income tax expense differs from the amount computed by applying the combined Canadian federal and provincial income tax rates, applicable to the Company, to the income (loss) before the tax provision due to the following:
| 2025 | 2024 | |
|---|---|---|
| Loss before income taxes | $ 3,224,770 | $ 5,198,672 |
| Expected income tax recovery | (870,000) | (1,404,000) |
| Change in statutory, foreign tax, foreign exchange rates and other | 6,000 | - |
| Permanent differences | (25,000) | (101,000) |
| Impact of flow through shares | 423,000 | 1,112,000 |
| Share issue cost | (20,000) | (101,000) |
| Adjustment to prior years provision | (667,000) | - |
| Changes in unrecognized deductible temporary differences | 1,153,000 | 494,000 |
| $ - | $ - |
Page 29
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
13. Income Taxes (continued)
(b) Temporary differences
The significant components of the Company's temporary differences, unused tax credits and unused tax losses that have not been included on the consolidated statement of financial position are as follows:
| 2025 | 2024 | |
|---|---|---|
| Temporary differences | ||
| Exploration and evaluation assets | $ 39,435,000 | $ 37,687,000 |
| Property and equipment | 607,000 | 678,000 |
| Right-of-use assets/Lease liability | 52,000 | (15,000) |
| Share issue costs | 322,000 | 453,000 |
| Asset retirement obligation | 604,000 | 474,000 |
| Allowable capital losses | 636,000 | 636,000 |
| Non-capital losses available for future period | 8,423,000 | 5,172,000 |
(i) The Company has income tax loss carry-forwards of approximately $5,401,000 (2024 - $5,172,000) for Canadian tax purposes. These un-recognized tax losses will expire between 2026 to 2045.
(ii) The Company has net-capital loss carry-forwards of approximately $636,000 (2024 - $636,000) for Canadian tax purposes. These un-recognized tax losses are carried forward indefinitely.
(iii) The Company has income tax loss carry-forwards of approximately $3,022,000 (2024 - $1,766,720) for United States tax purposes. These un-recognized tax losses will expire between 2026 and 2045.
The remaining tax assets have no expiry date or dates in line with non-capital loss carryforwards.
14. Capital management
The Company includes share capital (comprising of issued common shares), equity reserves and deficit, in its definition of capital.
The Company's objectives when managing capital is to maintain its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders.
The Company's primary objective with respect to capital management is to ensure adequate liquid capital resources are in place to fund the exploration of its mineral properties while maintaining its ongoing operations. To secure the additional capital to pursue these plans, the Company may attempt to raise additional funds through the issuance of debt and or equity.
The Company expects its current capital resources will not be sufficient to complete its exploration plans through its current operating period and it will be required to raise additional funds through future equity issuances or secure other financing. To date, the Company has relied on advances from related parties to fund its operations and exploration activities and expects continued financial support through the next twelve months. The Company is currently not subject to externally imposed capital requirements. There were no changes to the Company's capital management during the year. The Company does not pay out dividends. The Company's investment policy is to invest its short-term excess cash in secure deposits in large Canadian financial institutions.
Page 30
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
15. Financial instruments and risk management
As at July 31, 2025, the Company's financial instruments are cash, receivables, reclamation bonds, trade and other payables, lease obligations, and amounts due to related parties. Except for reclamation bonds, the amounts reflected in the statement of financial position are carrying amounts and approximate their fair values due to their short-term nature. The reclamation bonds amount reflected in the statement of financial position is its carrying amount, adjusted for foreign exchange rate, and approximated its fair value due to the fixed nature of the asset. These financial instruments are classified as follows:
- Cash and reclamation bonds are comprised of balances held at major financial institutions (in the case of reclamation bonds, these are held through the related government body) that are readily convertible into a known amount of cash and which are only subject to an insignificant risk of change in value, are classified as fair value through profit and loss, and are measured at amortized cost;
- Receivables are classified at amortized cost; and
- Trade and other payables, amounts due to related parties and lease obligations are classified at amortized cost.
The Company's financial instruments are exposed to certain financial risks, including currency, credit, liquidity and price risk.
Fair value is defined as the price what would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are described below:
Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2 – Quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liabilities.
Level 3 – Prices or valuation techniques that require inputs that are both significant to fair value measurement and unobservable (supported by little or no market activity).
Currency risk - The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company operates in Yemen and as such, a portion of its expenses are incurred in the local currency and US dollars. A significant change in the currency exchange rates could have an effect on the Company's results of operations, financial position or cash flows. The Company has not hedged its exposure to currency fluctuations.
At July 31, 2025, the Company is exposed to currency risk relating to funds held in U.S. dollars and Yemen rials with a value of approximately $88,747 (July 31, 2024: $114,652). The impact of a 5% change in the exchange rates for these currencies to the Canadian dollar would not materially affect decisions of the Company's operations plans.
Credit risk - Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The majority of the Company's cash is held through a large Canadian financial institution with a high investment grade rating.
Page 31
Cantex Mine Development Corp.
Notes to the consolidated financial statements
July 31, 2025
(Stated in Canadian dollars)
15. Financial instruments and risk management (continued)
At July 31, 2025, the Company has no financial assets that are past due or impaired due to credit risk defaults. The Company’s receivables consist mainly of GST receivable due from the Federal Government of Canada. The Company is subject to the risk that its partners will default on amounts owing for their portion of exploration expenditures.
Liquidity risk – Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due (Note 1). The Company manages its liquidity risk through the management of its capital structure and financial leverage as outlined in Note 14 to the consolidated financial statements.
Trade and other payables are generally due within 30 days. No significant amounts are past due.
Amounts due to related parties have no fixed terms of repayment, are unsecured and are non-interest bearing, with the exception of invoices received from CF Minerals. This related party has implemented a policy whereby invoices are due upon receipt and past due accounts may be subject to interest of 1.5% per month. As at July 31, 2025, there was $Nil in payables to CF Minerals that may be charged interest (July 31, 2024 – $34,930; these were paid subsequent to the year ended July 31, 2024 with no interest charged).
Price risk – The Company is exposed to price risk with respect to commodity prices which can impact the Company’s ability to raise funding for its exploration and development programs. The Company closely monitors commodity prices to determine the appropriate course of action to be taken by the Company.