CAPROCK

MINING CORP.

FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2024 AND 2023

CLEARHOUSE LLP
CHARTERED PROFESSIONAL ACCOUNTANTS

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of
Caprock Mining Corp.

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Caprock Mining Corp (the Company), which comprise the statements of financial position as at August 31, 2024 and 2023, and the statements of loss and comprehensive loss, statements of changes in equity and statements of cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at August 31, 2024 and 2023, and its financial performance and its cash flows for the years then ended, in accordance with International Financial Reporting Standards, in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the 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 financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with those requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Relating to Going Concern

We draw your attention to Note 2 in the financial statements, which indicates that the Company incurred a comprehensive loss of $577,325 during the year ended August 31, 2024. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 2, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements for the year ended August 31, 2024. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to the matter described in the Emphasis of Matter - Material Uncertainty Related to Going Concern section of our report, we have determined the matter described below to be the key audit matter to be communicated in our report.

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

Description of the matter

As described in Note 6 to the financial statements, the carrying value of the exploration and evaluation assets amounted to $1,989,000 as at August 31, 2024.

During the year ended August 31, 2024, an impairment of $154,010 has been recognized in the statement of loss and comprehensive loss, which relates to the Ackley property, on the basis of an option termination notice issued by Caprock to the property optionor.

2560 MATHESON BLVD E., SUITE 527, MISSISSAUGA, ON L4W 4Y9 | (647) 969-7382 | [email protected] | CLEARHOUSE.CA

CLEARHOUSE LLP
CHARTERED PROFESSIONAL ACCOUNTANTS

E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable amount. 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. Management groups mineral claims that are contiguous and specific to an area that encompasses the same prospective minerals, into one area of interest and assigns a name to this mineral property. Each named mineral property is considered an area of interest and subject to impairment assessment.

In undertaking this assessment, management is required to apply judgment whether the following factors would be considered an indicator of impairment:

The period for which the entity has the right to explore in the specific area has expired during the financial statement period or will expire in the near future and is not expected to be renewed;
Substantive expenditures on further exploration for, and evaluation of, mineral resources in the specific area is neither budgeted nor planned;
Exploration for and evaluation of mineral resources in the specific area has not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; and
Sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or sale.

Why the matter is a key audit matter

We determined this as a key audit matter as it represented an area of significant risk of material misstatement given the magnitude of the E&E assets and the significant management judgment involved in assessing the existence of impairment indicators. In addition, significant auditor judgement, knowledge and effort were required in evaluating the results of our audit procedures.

How the matter was addressed in the audit

The following were the primary procedures we performed to address this key audit matter.

Reviewed management's E&E impairment analysis and ensured it was reasonable and complies with IFRS 6 guidance;
Verified the status of the Company's mining claims and confirmed good standing or lapse of claims with Government registers;
Considered evidence obtained in other areas of the audit to assess the Company's continued ability and plans to further develop the E&E properties; and;
Reviewed National Instrument 43-101 Technical Reports noting the potential commercial viability of the properties.

Information Other than the Financial Statements and Auditor's Report Thereon

Management is responsible for the other information. The other information comprises the annual management's discussion and analysis but does not include the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated.

2560 MATHESON BLVD E., SUITE 527, MISSISSAUGA, ON L4W 4Y9 | (647) 969-7382 | [email protected] | CLEARHOUSE.CA

CLEARHOUSE LLP
CHARTERED PROFESSIONAL ACCOUNTANTS

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 Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters relating 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 Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the 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 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.

2560 MATHESON BLVD E., SUITE 527, MISSISSAUGA, ON L4W 4Y9 | (647) 969-7382 | [email protected] | CLEARHOUSE.CA

CLEARHOUSE LLP
CHARTERED PROFESSIONAL ACCOUNTANTS

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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 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 of 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 Pat Kenney.

Clearhouse LLP

Chartered Professional Accountants
Licensed Public Accountants

Mississauga, Ontario
December 24, 2024

2560 MATHESON BLVD E., SUITE 527, MISSISSAUGA, ON L4W 4Y9 | (647) 969-7382 | [email protected] | CLEARHOUSE.CA

Caprock Mining Corp.
Statements of Financial Position
(Expressed in Canadian Dollars)

	As at August 31, 2024	As at August 31, 2023
	$	$
Assets
Current Assets
Cash	131,408	235,699
Receivables (Note 4)	14,958	19,747
Prepaid expenses (Note 5)	6,564	34,606
Total Current Assets	152,930	290,052
Exploration and evaluation assets (Notes 6, 8)	1,989,000	2,071,600
Total Assets	2,141,930	2,361,652
Liabilities
Current Liabilities
Accounts payable and accrued liabilities (Note 7)	390,625	212,772
Total Liabilities	390,625	212,772
Shareholders’ Equity
Share capital (Note 8)	3,742,065	3,605,824
Reserve for restricted share units (Note 9)	85,368	99,027
Reserve for share-based payments (Note 10)	85,773	146,313
Reserve for warrants (Note 11)	43,509	408,500
Accumulated deficit	(2,205,410)	(2,110,784)
Total Shareholders’ Equity	1,751,305	2,148,880
Total Liabilities and Shareholders’ Equity	2,141,930	2,361,652

Nature of operations and going concern (Note 1)
Contingencies (Note 17)
Subsequent events (Note 18)

Approved on behalf of the Board of Directors:

“Vishal Gupta”
Vishal Gupta, Director

“Jim Kirke”
Jim Kirke, Director

The accompanying notes are an integral part of these financial statements

Caprock Mining Corp.

Statements of Loss and Comprehensive Loss

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

	2024	2023
	$	$
Expenses
Professional fees (Note 14)	274,755	347,093
Exploration and evaluation expenditures (Note 6)	82,221	71,536
Share-based compensation (Notes 9, 10 and 14)	-	66,852
Office and general	18,197	36,538
Travel and entertainment	14,810	24,837
Shareholder costs	20,594	21,225
Advertising and promotion	12,738	12,187
Impairment of Exploration and Evaluation Assets (Note 6)	154,010	11,000
Net Loss and Comprehensive Loss	(577,325)	(591,268)
Weighted Average Number of Outstanding Shares
– Basic and diluted	42,511,343	41,102,637
Net Loss per Share – Basic and diluted (Note 12)	(0.014)	(0.014)

Caprock Mining Corp.

Statements of Changes in Shareholders' Equity

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

	Notes	Share Capital		Reserves			Accumulated Deficit	Total
		Number of Shares	Amount	Reserve for Restricted Share Units	Reserve for Share-Based Payments	Reserve for Warrants
		#	$	$	$	$	$	$
Balance, September 1, 2022		40,372,500	3,553,824	74,722	131,118	408,500	(1,546,868)	2,621,296
Shares issued on Ackley Property option acquisition	6, 8	1,300,000	52,000	-	-	-	-	52,000
Share-based compensation	9, 10	-	-	24,305	42,547	-	-	66,852
Cancellation of options	10	-	-	-	(27,352)	-	27,352	-
Net loss for the year		-	-	-	-	-	(591,268)	(591,268)
Balance, August 31, 2023		41,672,500	3,605,824	99,027	146,313	408,500	(2,110,784)	2,148,880
Balance, September 1, 2023		41,672,500	3,605,824	99,027	146,313	408,500	(2,110,784)	2,148,880
Shares issued on Ackley Property option acquisition	6, 8	1,300,000	45,500	-	-	-	-	45,500
Shares issued on Amended Option Agreement	6, 8	100,000	3,500	-	-	-	-	3,500
Shares issued on Private Placement		8,716,667	87,241	-	-	43,509	-	130,750
Expiry of RSUs	9	-	-	(13,659)	-	-	13,659	-
Expiry of options	10	-	-	-	(60,540)	-	60,540	-
Expiry of warrants	11	-	-	-	-	(408,500)	408,500	-
Net loss for the year		-	-	-	-	-	(577,325)	(577,325)
Balance, August 31, 2024		51,789,167	3,742,065	85,368	85,773	43,509	(2,205,410)	1,751,305

The accompanying notes are an integral part of these financial statements

Caprock Mining Corp.

Statements of Cash Flows

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

	2024	2023
	$	$
Operating Activities
Net loss for the year	(577,325)	(591,268)
Adjustments for non-cash items:
Share-based compensation (Notes 9 and 10)	-	66,852
Amended Option Agreement Compensation (Note 6)	3,500	-
Impairment of Exploration and Evaluation Assets (Note 6)	154,010	11,000
	(419,815)	(513,416)
Net change in non-cash working capital items:
Receivables (Note 4)	4,789	(655)
Prepaid expenses (Note 5)	28,042	2,609
Accounts payable and accrued liabilities (Note 7)	177,853	87,872
Cash Flows (used in) Operating Activities	(209,131)	(423,590)
Investing Activities
Ackley property option (Note 6)	(25,910)	(30,600)
Cash Flows (used in) Investing Activities	(25,910)	(30,600)
Financing Activities
Proceeds from private placements (Note 8)	130,750	-
Cash Flows from Financing Activities	130,750	-
(Decrease) in cash	(104,291)	(454,190)
Cash, beginning of year	235,699	689,889
Cash, end of year	131,408	235,699

The accompanying notes are an integral part of these financial statements

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

1. Nature of Operations and Going Concern

Caprock Mining Corp. (“Caprock” or the “Company”) was incorporated as Blingold Corp. under the provisions of the Business Corporations Act (Ontario) on September 14, 2020. On July 12, 2021, the Company filed Articles of Amendment to change the name from Blingold Corp. to Caprock Mining Corp. The Company was incorporated to explore and evaluate mining properties in Canada. The registered address of the Company is 36 Toronto Street, Suite 701, Toronto, Ontario, M5C 2C5, Canada. On January 26, 2022, the Company’s common shares commenced trading on the Canadian Securities Exchange (the “CSE”) under the ticker “CAPR”.

The Company is considered to be in the exploration stage and has not yet determined whether its mineral properties contain economically recoverable reserves. The continued operations of the Company and the recoverability of amounts shown or expended for exploration and evaluation (“E&E”) assets is dependent upon the ability of the Company to obtain financing to complete the exploration and development of its mineral properties, and if they are proven successful, the existence of economically recoverable reserves and future profitable production, or upon the Company’s ability to dispose of its interest on an advantageous basis, all of which are uncertain.

The Company’s future viability depends upon the acquisition and financing of mineral exploration or other projects. If the mineral projects are to be successful, additional funds will be required for development and, if warranted, to place them into commercial production. The expected primary source of future funds presently available to the Company is through the issuance of common shares, or sale of an interest in any of its properties or assets in whole or in part. The ability of the Company to arrange such financing will depend, in part, on prevailing market conditions as well as the business performance of the Company. These events and conditions indicate the existence of material uncertainties that cast significant doubt on the Company’s ability to continue as a going concern. There can be no assurance that the Company will be successful in its efforts to arrange the necessary financing, if needed, on terms satisfactory to the Company.

For the year ended August 31, 2024, the Company incurred a net loss of $577,325 (2023 – $591,268) and negative cash flow from operations of $209,132 (2023 – $423,590), and as at August 31, 2024, the Company had an accumulated deficit of $2,205,410 (August 31, 2023 – deficit of $2,110,784). The Company’s ability to continue as a going concern is dependent upon the Company achieving profitable operations to generate sufficient cash flows to fund continuing operations, or, in the absence of adequate cash flows from operations, obtaining additional financing to support operations for the foreseeable future. It is not possible to predict whether financing efforts will be successful or if the Company will attain profitable operations.

These financial statements have been prepared on the basis that the Company will continue as a going concern and do not reflect the adjustments to the carrying values of assets and liabilities, reported revenues and expenses, and any classifications of statements of financial position that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.

2. Basis of Presentation

(a) Statement of Compliance

These financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”). The accounting policies set out below were consistently applied to all periods presented unless otherwise noted.

These financial statements were reviewed, approved, and authorized for issuance by the Board of Directors (the “Board”) of the Company on December 24, 2024.

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

2. Basis of Presentation (continued)

(b) Basis of Measurement

These financial statements have been prepared in accordance with IFRS, on the historical cost basis with the exception of financial instruments classified as at fair value through profit or loss (“FVTPL”), which are measured at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

(c) Functional Currency

These financial statements are presented in Canadian dollars (“$” or “CAD”), which is the functional currency of the Company, unless otherwise noted. The functional currency is the currency of the primary economic environment in which the Company operates.

(d) Significant Accounting Judgments, Estimates and Assumptions

The preparation of these financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, revenue, and expenses. On an ongoing basis, management evaluates its judgments and estimates in relation to assets, liabilities, revenue, and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments and estimates. Actual outcomes may differ from these estimates under different assumptions and conditions. These estimates are reviewed periodically, and adjustments are made as appropriate in the period they become known. Items for which actual results may differ materially from these estimates are described as follows:

Going concern

At each reporting period, management exercises judgment in assessing the Company’s ability to continue as a going concern by reviewing the Company’s performance, resources and future obligations. The conclusion that the Company will be able to continue is subject to critical judgments of management with respect to assumptions surrounding the short and long-term operating budgets, expected profitability, investment and financing activities and management’s strategic planning.

Fair value of financial assets and financial liabilities

Fair value of financial assets and financial liabilities on the statements of financial position that cannot be derived from active markets, are determined using a variety of techniques including the use of valuation models. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. Judgments include, but are not limited to, consideration of model inputs such as volatility, estimated life and discount rates.

Warrants and options

Warrants and options are initially recognized at fair value, based on the application of the Black-Scholes valuation model (“Black-Scholes”). This pricing model requires management to make various assumptions and estimates which are susceptible to uncertainty, including the expected volatility of the share price, expected forfeitures, expected dividend yield, expected term of the warrants or options, and expected risk-free interest rate.

Restricted Share Units

Restricted share units (“RSUs”) are initially measured and recognized at fair value, based on the market price from active market if available, and based on management judgment using various estimation techniques and valuation models if information from active market is not available.

Shares issued for non-cash consideration

The Company is required to recognize these transactions at fair value which requires judgment in selecting valuation techniques and other factors.

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

2. Basis of Presentation (continued)

(d) Significant Accounting Judgments, Estimates and Assumptions (continued)

Impairment assessment of non-current assets

Long-lived assets, including E&E assets, are reviewed for indicators of impairment at each reporting period or whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is defined as the higher of: (i) value-in-use; or (ii) fair value less cost to sell. If the carrying amount of an asset exceeds its recoverable amount, an impairment charge is recognized immediately in profit or loss by the amount by which the carrying amount of the asset exceeds the recoverable amount.

These are determined through the exercise of judgments and are dependent upon estimates that take into account factors such as economic and market conditions, frequency of use, anticipated changes in laws, and technological improvements.

Restoration, rehabilitation and environmental obligations

The Company’s mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The Company recognises management’s best estimate for asset retirement obligations in the period in which they are incurred. Actual costs incurred in future periods can differ materially from the estimates.

Income taxes

Income taxes and tax exposures recognized in the financial statements reflect management’s best estimate of the outcome based on facts known at the reporting date. When the Company anticipates a future income tax payment based on its estimates, it recognizes a liability. The difference between the expected amount and the final tax outcome has an impact on current and deferred taxes when the Company becomes aware of this difference.

In addition, when the Company incurs losses that cannot be associated with current or past profits, it assesses the probability of taxable profits being available in the future based on its budgeted forecasts. These forecasts are adjusted to take account of certain non-taxable income and expenses and specific rules on the use of unused credits and tax losses. When the forecasts indicate the sufficient future taxable income will be available to deduct the temporary differences, a deferred tax asset is recognized for all deductible temporary differences.

In addition, future changes in tax laws could limit the ability of the Company to obtain tax deductions in future periods. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted.

Expected credit losses on financial assets

Determining an allowance for expected credit losses (“ECL”) for amounts receivable and all debt financial assets not held at FVTPL requires management to make assumptions about the historical patterns for the probability of default, the timing of collection and the amount of incurred credit losses, which are adjusted based on management’s judgment about whether economic conditions and credit terms are such that actual losses may be higher or lower than what the historical patterns suggest.

3. Material Accounting Policies

(a) Cash

Cash in the statements of financial position comprises cash on hand and in deposits held at call with financial institution in Canada.

(b) Financial Instruments

The Company classifies and measures financial instruments in accordance with IFRS 9 – Financial Instruments (“IFRS 9”). A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The Company recognizes financial assets and financial liabilities on the statement of financial position when it becomes a party to the financial instrument or derivative contract.

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

3. Material Accounting Policies (continued)

(b) Financial Instruments (continued)

Classification

The Company classifies its financial assets in the following measurement categories: (a) those to be measured subsequently at FVTPL; (b) those to be measured subsequently at fair value through other comprehensive income (loss) (“FVTOCI”); and (c) those to be measured at amortized cost. The classification of financial assets depends on the business model for managing the financial assets and the contractual terms of the cash flows. Financial liabilities are classified as those to be measured at amortized cost unless they are designated as those to be measured subsequently at FVTPL (irrevocable election at the time of recognition).

The Company reclassifies financial assets when and only when its business model for managing those assets changes. Financial liabilities are not reclassified.

The Company’s financial assets include cash and receivables. The Company’s financial liabilities include its accounts payable and accrued liabilities.

Fair value through profit or loss

This category includes derivative instruments as well as quoted equity instruments which the Company has not irrevocably elected, at initial recognition or transition, to classify at FVTOCI. This category would also include debt instruments whose cash flow characteristics do not meet the solely payment of principal and interest (“SPPI”) criterion or are not held within a business model whose objective is either to collect contractual cash flows, or to both collect contractual cash flows and sell. Financial assets in this category are recorded at fair value with changes recognized in the statements of loss and comprehensive loss.

Financial assets at fair value through other comprehensive income

Debt and equity instruments that are held for collection of contractual cash flows and for sale, and where the assets’ cash flows represent solely payments of principal and interest, are classified as FVTOCI. Movements in fair values are recognized in other comprehensive income (“OCI”) and accumulated in fair value reserve, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses, which are recognized in profit and loss. When the financial asset is derecognized, the cumulative gain or loss recognized in OCI is reclassified from equity to profit or loss and presented in “other gains and losses”. Interest income from these financial assets is recognized using the effective interest rate method and presented in “interest income”. As at August 31, 2024 and 2023, the Company did not have any financial assets at FVTOCI.

Amortized cost

Debt and equity instruments that are held for collection of contractual cash flows where those cash flows represent SPPI are measured at amortized cost. Interest income from these financial assets is included in interest income using the effective interest rate method.

The Company’s classification of financial assets and financial liabilities is summarized below:

Cash	FVTPL
Receivables	Amortized cost
Accounts payable and accrued liabilities	Amortized cost

Measurement

All financial instruments are required to be measured at fair value on initial recognition, plus, in the case of a financial asset or financial liability not at FVTPL, transaction costs that are directly attributable to the acquisition or issuance of the financial asset or financial liability. Transaction costs of financial assets and financial liabilities carried at FVTPL are expensed in profit or loss. Financial assets and financial liabilities with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

3. Material Accounting Policies (continued)

(b) Financial Instruments (continued)

Financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of the subsequent accounting periods. All other financial assets including equity investments are measured at their fair values at the end of subsequent accounting periods, with any changes taken through profit or loss or OCI (irrevocable election at the time of recognition). For financial liabilities measured subsequently at FVTPL, changes in fair value due to credit risk are recorded in OCI.

Expected credit loss impairment model

Under IFRS 9, the Company recognizes a provision for ECL on financial assets that are measured on amortized cost. The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Company in full or when the financial asset is more than 90 days past due.

The carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts.

Derecognition

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity.

The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled, or expire. The Company also derecognizes a financial liability when the terms of the liability are modified such that the terms and/or cash flows of the modified instrument are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

Gains or losses on derecognition are generally recognized in profit or loss.

Determination of fair value

The determination of fair value requires judgment and is based on market information, where available and appropriate. The Company classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements.

The fair value hierarchy has the following levels:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

(c) Exploration and Evaluation Assets

Pre-exploration costs are expensed in the period in which they are incurred.

Once the legal right to explore a property has been acquired, the Company expenses exploration and evaluation expenditures as incurred. These expenditures include such costs as materials used, surveying costs, drilling costs, payments made to contractors and depreciation on property, plant and equipment during the exploration phase. Costs not directly attributable to exploration and evaluation activities, including general administrative overhead costs, are expensed in the period in which they occur.

Acquisition costs of mineral property rights, property option payments and equipment related to exploration and evaluation activities are capitalized.

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

3. Material Accounting Policies (continued)

(c) Exploration and Evaluation Assets (continued)

Once a project has been established as commercially viable, technically feasible and the decision to proceed with development has been approved by the Board, related development expenditures are capitalized. This includes costs incurred in preparing the site for mining operations. Capitalization ceases when the mine is capable of commercial production.

The Company may occasionally enter into farm-out arrangements, whereby the Company will transfer part of a mineral interest, as consideration, for an agreement by the transferee to meet certain E&E expenditures which would have otherwise been undertaken by the Company. The Company does not record any expenditures made by the farmee on its behalf. Any consideration received from the agreement is credited against the costs previously capitalized to the mineral interest given up by the Company, with any excess consideration accounted for E&E assets as a gain on disposal.

When a project is deemed to no longer have commercially viable prospects to the Company, E&E expenditures in respect of that project are deemed to be impaired. As a result, those E&E expenditure costs, in excess of estimated recoveries, are written off to the statement of profit or loss.

As the Company currently has no operational income, any incidental revenues earned in connection with exploration activities are applied against the asset first and then to profit or loss once the asset has been brought to $nil.

The Company assesses E&E assets for impairment when facts or circumstances suggest that the carrying amount of the asset may exceed its recoverable amount. When this is the case, the Company would carry out an impairment test on the asset or group of assets, which requires estimate and judgement in determining the recoverable amount with reference to the fair value of the assets or group of assets less costs to sell or the value-in-use calculation. Where the recoverable amount is determined to be less than the carrying amount, an impairment loss may arise.

Although not an exhaustive list, one or more of the following facts and circumstances indicate that a specific CGU should be tested for impairment:

The period for which the entity has the right to explore in the specific area has expired during the financial statement period or will expire in the near future and is not expected to be renewed.
Substantive expenditures on further exploration for, and evaluation of, mineral resources in the specific area is neither budgeted nor planned.
Exploration for and evaluation of mineral resources in the specific area has not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area.
Sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or sale.

An impairment loss may be reversed in a situation where there is a change in the circumstances that had initially dictated that impairment had occurred. An example of such a situation might include, but not be limited to, the recommencement of exploration activity on a mineral property due to a significant change in commodity prices.

Recoverable amount is the higher of fair value less disposal costs 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.

Once the technical feasibility and commercial viability of extracting the mineral resource has been determined, the property is considered to be a mine under development and is classified as 'mines under construction'. E&E assets are also tested for impairment before the assets are transferred to development properties.

E&E assets are classified as intangible assets. Cash which is subject to contractual restrictions on use is classified separately as reclamation deposits. Reclamation deposits, if any, are classified as loans and receivables.

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

3. Material Accounting Policies (continued)

(c) Exploration and Evaluation Assets (continued)

Restoration, rehabilitation and environmental obligations

A legal or constructive obligation to incur restoration, rehabilitation and environmental costs may arise when environmental disturbance is caused by development or production. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalized to the carrying amount of the asset, as soon as the obligation to incur such costs arises. Discount rates using a pretax rate that reflects the time value of money are used to calculate the net present value. These costs are charged against profit or loss over the economic life of the related asset, through an amortization method as appropriate. The related liability is adjusted for each period for the unwinding of the discount rate and for changes to the current market based discount rate, amount or timing of the underlying cash flows needed to settle the obligation. Costs for restoration of subsequent site damage that is created on an ongoing basis during production are provided for at their net present values and charged against profits.

The Company has no material restoration, rehabilitation and environmental costs as at August 31, 2024 and 2023.

Impairment of non-financial assets

Impairment tests on intangible assets with indefinite useful economic lives are undertaken annually at the financial year-end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount, which is the higher of value in use and fair value less costs to sell, the asset is written down accordingly.

(d) Provisions

A provision is recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be reliably estimated. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract.

(e) Income Tax

Income tax expense consists of current and deferred tax expense. Current and deferred tax are recognized in profit or loss except to the extent that it relates to items recognized directly in equity or OCI.

Current income tax is recognized and measured at the amount expected to be recovered from, or payable to, the taxation authorities based on the income tax rates enacted or substantively enacted at the end of the reporting period and includes any adjustment to taxes payable in respect of previous years.

Deferred tax is recorded for temporary differences at the date of the statements of financial position between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The carrying amount of a deferred tax asset is reviewed at the end of the reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at the end of the reporting period and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset if, and only if, they relate to income taxes levied by the same taxation authority and the Company has the legal rights and intent to offset.

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

3. Material Accounting Policies (continued)

(e) Income Tax (continued)

Estimates

Provisions for taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date an additional liability could result from audits by taxing authorities. Where the final outcome of these tax-related matters is different from the amounts that were initially recorded, such differences will affect the tax provisions in the period in which such determination is made.

(f) Share Capital

Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset.

In situations where the Company issues units, the value of units is bifurcated and the value of warrants is included as a separate reserve for warrants of the Company’s equity. The proceeds from the issuance of units are allocated between common shares and warrants on a pro-rated basis using the relative fair value method. The fair value of the common shares is determined using the share price at the date of issuance of the units. The fair value of the warrants is determined using Black-Scholes.

Costs incurred in connection with the issuance of share capital are netted against the proceeds received. Costs related to the issuance of share capital and incurred prior to issuance are recorded as deferred share issuance costs and subsequently netted against proceeds when they are received.

(g) Restricted Share Units

The Company operates a restricted share units plan (the “RSU Plan”). RSUs are equity-settled share-based payments and are measured at fair value on the date of grant. The fair value of RSUs is determined by the greater of (i) the weighted average of the trading price per share on the CSE for the last five trading days ending on the grant date; and (ii) the closing price of the shares on the day before the grant date. Share-based compensation is recognized over the vesting period with a corresponding credit to restricted share unit reserve. Under IFRS, the Company’s RSUs are classified as equity-settled share-based payment transactions as they are settled in common shares at the sole discretion of the Company.

RSUs which do not vest on or before the expiry date will be automatically cancelled, without further act or formality and without compensation. If a recipient ceases to be a Director, Officer or Employee (“Eligible Person”) as a result of retirement, death or total disability, or termination of employment or removal from service by the Company or a related party without cause, the RSUs will not be cancelled but will remain outstanding for a period of one year following the date upon which such recipient ceases to be an Eligible Person.

(h) Share-Based Payments Transactions

The Company operates a stock option plan (the “Option Plan”). Share-based payments to directors, officers or employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of the goods or services received, or at 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 provided. The fair value of options is determined using Black-Scholes. The fair value of equity-settled share-based compensation transactions are recognized as an expense with a corresponding increase in the reserve for share-based payments.

If an optionee ceases to be an Eligible Person of the Company for any reason (whether or not for cause), the optionee may but for only within the period of ninety days (unless such period is extended by the Board or the Committee, as applicable, to a maximum of one year next succeeding such cessation) next succeeding such cessation and in no event after the expiry date of the optionee’s option, exercise the optionee’s option.

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

3. Material Accounting Policies (continued)

(i) Loss Per Share

Basic loss per share is computed by dividing the net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share is calculated by the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding for the calculation of diluted loss) per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period.

(j) 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.

(k) Foreign Currency Transactions

Monetary assets and liabilities denominated in currencies other than CAD, are translated into CAD at the rate of exchange in effect at the statements of financial position date. Non-monetary assets and liabilities are translated at the historical rates. Revenues and expenses are translated at the transaction date's exchange rate. Foreign currency gains or losses resulting from translation are reflected in net comprehensive loss for the period.

4. Receivables

	2024	2023
	$	$
Sales tax receivable	7,507	12,296
Other receivables	7,451	7,451
	14,958	19,747

5. Prepaid expenses

	2024	2023
	$	$
Prepaid insurance	6,564	6,564
Other advances	-	28,042
	6,564	34,606

6. Exploration and Evaluation Assets

Big Ridge Property

On March 11, 2021, the Company entered into an agreement with Big Ridge Gold Corp. ("Big Ridge") (the "Big Ridge Agreement"), to acquire an aggregate of 523 mining claims and 15 leases located in the Province of Ontario known as the Mud Lake, Golden Heart, Brookbank East, three Towers, Miner Lake and Green Oaks properties, subject to royalties (collectively the "Big Ridge Property") for the purchase price of 10,000,000 common shares at a deemed price of $0.10 per common share. As a condition of closing, the Company was required to have all necessary approvals to complete a going public transaction, which occurred on January 26, 2022, when the Company's common shares were listed for trading on the CSE. The Big Ridge Property acquisition closed on February 28, 2022, and 10,000,000 common shares were issued at the price of $0.20 per share, being the closing price of the common shares on that date.

During the fiscal year ended August 31, 2023, the Company relinquished the mining claims at Golden Heart, Brookbank East, and Three Towers, leaving the Company with 408 mining claims collectively covering an area of 6,418 hectares. Management exercised judgement in assigning value to the relinquished claims based on total reserve for the claims on the Big Ridge Property and assigned an impairment of $11,000 to the relinquished claims.

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

6. Exploration and Evaluation Assets (continued)

Ackley Property

On January 31, 2023 (the “Effective Date”), the Company entered into a binding option agreement (the “Option Agreement”) to acquire a 100% interest in the Ackley Lithium-Tin-Molybdenum-REE property (the “Ackley Property”) located in south-eastern Newfoundland. The Ackley Property comprises 182 mining claims collectively covering an area of 4,550 hectares. Under the terms of the Option Agreement, the Company was required to make the following share issuances, Optionor cash payments, and exploration expenditures over the course of three years (which may be accelerated at the Company’s option) from the effective date:

Issuance of 5,200,000 common shares (“Consideration Shares”) of the Company with 1,300,000 issued immediately on January 31, 2023, 1,300,000 Consideration Shares issued on January 31, 2024, and 1,300,000 Consideration shares to be issued each on January 31, 2025, and 2026 until fully issued;
Payment of $125,000 in cash with $20,000 paid immediately on January 31, 2023, $25,000 paid on January 31, 2024, and $30,000 payable on January 31, 2025, and $50,000 on January 31, 2026;
Incurrence of qualified expenditures on the Ackley Property totaling $750,000 of which $150,000 is incurred within the first 12 months until January 31, 2024, an additional $250,000 within 24 months until January 31, 2025, and an additional $350,000 within 36 months until January 31, 2026; and
A one-time payment of $10,000 to a consultant for the staking costs and over 100 kilometers of detailed high resolution ground magnetic data generated on the property in recent years.

Following the transfer of the Optionor’s interest in the Ackley Property, the Optionor would retain a two percent (2%) Net Smelter Returns royalty (“NSR”), subject to the right of the Company to buy back 1% of the royalty for cash consideration of $1,000,000.

In February 2023, the Company made an additional stake in a block at Ackley West comprising of 40 claims for $600. This brought the total claims at the Ackley Property to 222 claims.

On January 18, 2024, the Company entered into an amendment of the Option Agreement (the “Amended Option Agreement”) to make up for the shortfall in the qualifying expenditure obligation that ought to have been incurred during the first 12 months of the effective date per terms of the Option Agreement.

On January 30, 2024, the Company issued 100,000 common shares valued at $3,500 as consideration to the Optionor of the Ackley Property pursuant to the terms of the Amended Option Agreement.

On January 31, 2024, the Company made a cash payment of $25,000 and issued Consideration Shares of 1,300,000 pursuant to the terms of the Option Agreement.

Impairment of exploration and evaluation assets on the statement of loss and comprehensive loss for the year ended August 31, 2024, reflects an expense of previously capitalized assets, and amounted to was $154,010, related to the Ackley Property, due to management’s decision to focusing on completing an option agreement on Destiny (see Note 18)

As at August 31, 2024 and 2023, the carrying value of the Company’s E&E assets was comprised as follows:

	2024	2023
	$	$
Opening balance	2,071,600	2,000,000
Ackley Property Option	71,410	82,600
Impairment of E&E assets	(154,010)	(11,000)
Closing balance	1,989,000	2,071,600

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Caprock Mining Corp.
Notes to the Financial Statements
For the Years ended August 31, 2024 and 2023
(Expressed in Canadian Dollars)

Exploration and Evaluation Assets (continued)

The Company’s cumulative E&E expenditure incurred on the Company’s mining properties from inception until August 31, 2024 are as follows:

	Big Ridge Property	Ackley Property	Total
	$	$	$
Balance, September 1, 2022	164,435	-	164,435
Claims management	2,310	-	2,310
Geology	37,500	12,563	50,063
Prospecting	-	2,400	2,400
Sampling	-	9,412	9,412
Assays	-	2,989	2,989
Storage fees	4,362	-	4,362
Total E&E Expenditures for the year	44,172	27,364	71,536
Balance, August 31, 2023	208,607	27,364	235,971
Claims management	8,769	-	8,769
Report	-	44,876	44,876
Prospecting	-	4,400	4,400
Sampling	-	3,447	3,447
Assays	-	1,822	1,822
Project management	-	975	975
Survey	-	7,000	7,000
Mapping	-	575	575
Field costs	-	3,822	3,822
Storage fees	2,595	440	3,035
Other	-	3,500	3,500
Total E&E Expenditures for the year	11,364	70,857	82,221
Balance, August 31, 2024	219,971	98,221	318,192

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities of the Company are principally comprised of amounts outstanding for trade purchases incurred in the normal course of business.

	2024	2023
	$	$
Accounts payable	99,526	10,886
Accrued liabilities	291,099	201,886
	390,625	212,772

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Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

8. Share Capital

Authorized share capital

The Company is authorized to issue an unlimited number of common shares without par value. All common shares are ranked equally with regards to the Company’s residual assets.

The movement of share capital for the years ended August 31, 2024 and 2023 are as follows:

Issuance Date	Number of shares	Amount
	#	$
Balance, August 31, 2022	40,372,500	3,553,824
Shares issued on Ackley Property option acquisition(a)	1,300,000	52,000
Balance, August 31, 2023	41,672,500	3,605,824
Shares issued on Amended Option Agreement(b)	100,000	3,500
Shares issued on Ackley Property option acquisition(c)	1,300,000	45,500
Shares issued on Private Placement(d)	8,716,667	87,241
Balance, August 31, 2024	51,789,167	3,742,065

Share capital transactions for the year ended August 31, 2023

(a) On February 7, 2023, the Company issued 1,300,000 Consideration Shares towards the option acquisition of the Ackley Property (see Note 6). The Consideration Shares issued had a fair value of $52,000 based on the Company’s share price of $0.04 per share on the date of issuance.

Share capital transactions for the year ended August 31, 2024

(b) On January 30, 2024, the Company issued 100,000 common shares at $0.035 per share to the Optioner of the Ackley Property as consideration for entering into an Amended Option Agreement (see Note 6).

(c) On January 31, 2024, the Company issued an additional 1,300,000 Consideration Shares towards the option acquisition of the Ackley Property in line with the terms of acquisition (see Note 6). The Consideration Shares issued had a fair value of $45,500 based on the Company’s share price of $0.035 per share on the date of issuance.

(d) On August 30, 2024, the Company closed a private placement in which the Company issued 8,716,667 units priced at $0.015 per unit for gross proceeds of $130,750.

Each unit is made up of one common share of the Company and one half of one common share purchase warrant, with each whole warrant exercisable to buy one additional common share at a price of $0.05 for a period of 24 months from the date of issuance thereof. The fair value of these warrants was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: share price of $0.01; expected dividend yield of 0%; risk-free interest rate of 3.33%; volatility of 457% and an expected life of 2 years. The fair value assigned to these warrants was $43,509 based on a relative fair value calculation.

9. Reserve for Restricted Share Units

On March 10, 2022, the Company implemented a restricted share units plan (the “RSU Plan”). Under the RSU Plan, Eligible Persons (as such term is defined in the RSU Plan) may, at the discretion of the Compensation Committee of the Board, be allocated a number of RSUs, which are subject to a maximum vesting term of one year from the calendar year in which the RSUs were granted.

The maximum number of common shares that are issuable under the RSU Plan is limited to 10% of the number of issued and outstanding common shares. As at August 31, 2024, the Company had 4,344,917 common shares available for issuance under the RSU Plan (2023 – 3,244,250).

The Company recorded $nil in share-based compensation attributable to the vesting and issuance of RSUs for the year ended August 31, 2024 (2023 - $24,305)

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

9. Reserve for Restricted Share Units (continued)

The following table summarizes the RSU activity for the years ended August 31, 2024 and 2023:

	2024			2023
	Number of RSUs	Weighted average exercise price	Number of RSUs	Weighted average exercise price
	#	$	#	$
Outstanding, beginning of year	923,000	0.12	1,012,000	0.12
Expired	(89,000)	0.12	(89,000)	0.12
Outstanding, end of year	834,000	0.12	923,000	0.12

The expired RSUs, valued at $13,659, are RSUs that were not exercised by Eligible Persons one year after resignation from the Company.

10. Reserve for Share-Based Payments

The Company maintains the Option Plan whereby certain key officers, directors and consultants may be granted stock options for common shares of the Company. The maximum number of common shares that are issuable under the Option Plan is limited to 10% of the number of issued and outstanding common shares. Under the Option Plan, the exercise price of each option may not be less than the closing price of the Company's common shares on the trading day prior to the grant date or the grant date itself, whichever is higher. Vesting of options is determined at the discretion of the Board.

As at August 31, 2024, the Company had 4,216,917 common shares available for issuance under the Option Plan (2023 - 2,526,250).

The following summarizes the stock option activity for the years ended August 31, 2024 and 2023:

	2024			2023
	Number of options	Weighted average exercise price	Number of options	Weighted average exercise price
	#	$	#	$
Outstanding, beginning of year	1,641,000	0.12	1,988,000	0.12
Expired	(679,000)	0.12	(347,000)	0.12
Outstanding, end of year	962,000	0.12	1,641,000	0.12

During the year ended August 31, 2024, a total of 679,000 stock options expired, and the value of $60,540 previously attributed to these options was transferred from the reserve for share-based payment to accumulated deficit (2023 - 347,000 stock options expired at a value of $27,352). The expired options are options that were not exercised by Eligible Persons three months after resignation from the Company.

The Company recorded $nil in share-based compensation attributable to the vesting and issuance of options for the year ended August 31, 2024 (2023 - $42,547).

The following table summarizes information of stock options outstanding and exercisable as at August 31, 2024:

Date of expiry	Number of options outstanding	Number of options exercisable	Exercise price	Weighted average remaining contractual life
March 9, 2027	#	#	$	Years
	962,000	962,000	0.12	2.52
	962,000	962,000	0.12	2.52

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

11. Reserve for Warrants

The following summarizes the warrant activity for the years ended August 31, 2024 and 2023:

	2024		2023
	Number of warrants	Weighted average exercise price	Number of warrants	Weighted average exercise price
	#	$	#	$
Outstanding, beginning of year	10,400,510	0.15	10,400,510	0.15
Expired	(10,400,510)	0.15	-	-
Granted	4,358,333	0.05	-	-
Outstanding, end of year	4,358,333	0.05	10,400,510	0.15

The following table summarizes information of warrants outstanding as at August 31, 2024:

Date of expiry	Number of warrants outstanding	Exercise price	Weighted average remaining contractual life
	#	$	Years
August 30, 2026	4,358,333	0.05	1.99
	4,358,333	0.05	1.99

12. Basic and Diluted Loss per Share

The calculations of basic and diluted loss per share for the year ended August 31, 2024 were based on the net loss of $577,325 (2023 - $591,268) and the weighted average number of basic and diluted common shares outstanding of 42,511,343 (2023 - 41,102,637).

13. Income Taxes

Reconciliation of statutory tax rate

The reported recovery of income taxes differs from amounts computed by applying the statutory income tax rates to the reported loss before income taxes due to the following:

	2024	2023
	$	$
Net loss before recovery of income taxes provision:	(577,325)	(591,268)
Combined statutory income tax rate	26.50%	26.50%
Expected income tax recovery	(152,991)	(156,686)
Share-based compensation and non-deductible expenses	64,084	40,781
Permanent differences and others	(31,971)	(5,609)
Change in tax benefits not recognized	120,879	121,514
	-	-

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Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

13. Income Taxes (continued)

Deferred tax

The following table summarizes the components of deferred tax:

	2024	2023
	$	$
Deferred Tax Assets
Mineral property	87,236	55,372
Share issuance cost	4,412	11,617
Non-capital losses carried forward	522,160	425,941
	613,807	492,930
Less: deferred tax assets not recognized	(613,807)	(429,930)
Net deferred tax assets	-	-

As at August 31, 2024, the Company had 100% valuation allowance against deferred income tax balances as it is not considered probable that sufficient future tax profit will allow the deferred tax assets to be realized.

Non-capital loss carried forward

The Company’s non-capital income tax losses will expire as follows:

	$
2041	513,805
2042	672,794
2043	465,022
2044	318,795
	1,970,416

14. Related Party Transactions

In accordance with IAS 24 – Related Party Disclosures, key management personnel, including companies controlled by them, are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company. The remuneration of directors and key executives is determined by the compensation committee of the Board.

The remuneration of directors and other members of key management personnel during the years ended August 31, 2024 and 2023 were as follows:

	2024	2023
	$	$
Management salaries and consulting fees	175,000	212,500
Professional fees	68,000	94,060
Share-based compensation	-	66,852
	243,000	373,412

Effective June 7, 2021, the Company entered into an executive management agreement with Windmark Financial Limited (“Windmark”), a company controlled by the Company’s President and Chief Executive Officer (“CEO”) to pay the CEO $175,000 per year, paid in $14,583 monthly installments as follows:

(i) $7,292 per month, with the balance accruing; and shall increase to
(ii) $10,000 per month, with the balance accruing, upon the occurrence of a Liquidity Event; and shall increase to
(iii) $14,583 per month upon the earlier of (a) a Financing, or (b) Asset Acquisition.

During the year ended August 31, 2024, the Company recorded consulting fees of $175,000 (2023 – $175,000) in relation to the CEO’s consulting compensation. As at August 31, 2024, $305,279 (August 31, 2023 – $173,750) was owed to the CEO and included in accounts payable and accrued liabilities.

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

14. Related Party Transactions (continued)

During the year ended August 31, 2024, Branson Corporate Services Ltd. (“Branson”), where the Company’s Chief Financial Officer (“CFO”) is employed, charged fees of $68,000 (2023 – $94,060), for CFO services provided to the Company, as well as other accounting and administrative services, which are included in professional fees. As at August 31, 2024, $25,750 was owed to Branson (August 31, 2023 – $nil).

During the year ended August 31, 2024, Nebu Consulting, LLC (“Nebu”), where the Company’s former Vice President Exploration is employed, charged fees of $nil (2023 – $37,500), for professional consulting services provided to the Company for a period of six months. As at August 31, 2024, no balance was owed to Nebu (August 31, 2023 – $nil).

15. Capital Management

The Company’s capital under management includes equity of $1,751,305 at August 31, 2024 (2023 – $2,148,880). The Company’s objectives when managing capital are to: (i) safeguard its ability to continue as a going concern, (ii) provide an adequate return to shareholders, and (iii) provide sufficient funding to support on-going exploration and capital development plans.

While the Company does not yet have any revenues, management monitors its capital structure and makes adjustments according to market conditions to meet its objectives given the current outlook of the business and industry in general. The Board of the Company does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the management team to sustain the future development of the business.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company manages capital through its financial and operational forecasting processes. The Company reviews its working capital and forecasts its future cash flows based on operating expenditures, and other investing and financing activities. The forecast is updated based on activities related to its business activities.

The Company’s capital management objectives, policies and processes have remained unchanged since the Company’s most recent financial reporting period.

The Company is not subject to any externally imposed capital requirements.

16. Financial Risks

The Company is exposed to various risks as it relates to financial instruments. Management, in conjunction with the Board, mitigates these risks by assessing, monitoring and approving the Company’s risk management process. There have not been any changes in the nature of these risks or the process of managing these risks from the previous reporting periods.

Credit risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. Cash is held with reputable Canadian chartered banks, which is closely monitored by management. Management believes that the credit risk concentration with respect to financial instruments is minimal. The maximum exposure to credit risk at period-end is limited to the receivable balance.

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company manages its liquidity risk by reviewing its capital requirements on an ongoing basis. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company. The Company generates cash flow primarily from its financing activities.

As at August 31, 2024, the Company had a cash balance of $131,408 (2023 – $235,699) to settle current liabilities of $390,625 (2023 – $212,772).

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

16. Financial Risks (continued)

The following table summarizes the carrying amount and the contractual maturities of both the interest and principal portion of significant financial liabilities as at August 31, 2024:

	Carrying amount	Year 1	Year 2 to 3	Year 4 to 5
Accounts payable and accrued liabilities	$ 390,625	$ 390,625	$ -	$ -

The Company manages liquidity risk by maintaining adequate cash reserves and by continuously monitoring anticipated cash flows to identify financial requirements. Where insufficient liquidity may exist, the Company may pursue various debt and equity instruments for short or long-term financing of its operations.

Management believes there will be sufficient capital to meet short-term business obligations, after taking into account cash flow requirements from operations, the Company’s cash position as at period end, and its strategic financing plan over the next 12 months.

Foreign exchange risk

Foreign exchange risk is the risk that the Company will be subject to foreign currency fluctuations in satisfying obligations related to its foreign activities. While the Company’s operations are based in Canada, it may have, from time to time, transactions denominated in foreign currencies. The Company’s primary exposure to foreign exchange risk is that transactions denominated in foreign currency may expose the Company to the risk of exchange rate fluctuations. Based on its current operations, management believes that the foreign exchange risk is minimal.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company does not hold any instruments subject to interest rate risk as at August 31, 2024.

Fair value

Fair value estimates of financial instruments are made at a specific point in time based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values. The Company’s financial instruments consist of cash, receivables and accounts payables and accrued liabilities.

As at August 31, 2024, the Company’s financial instruments consist of cash, receivables and accounts payable. The fair value of cash, and accounts payable and accrued liabilities are approximately equal to their carrying value due to their short-term nature.

The Company classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements.

The fair value hierarchy has the following levels:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

	Level 1	Level 2	Level 3	Total
Cash	$ 131,408	$ -	$ -	$ 131,408

As at August 31, 2024, the Company’s financial instruments carried at fair value consisted of its cash, which is classified as Level 1. There were no transfers between Levels 2 and 3 for recurring fair value measurements during the years ended August 31, 2024 and 2023.

Caprock Mining Corp.

Notes to the Financial Statements

For the Years ended August 31, 2024 and 2023

(Expressed in Canadian Dollars)

17. Contingencies

The Company’s E&E activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. As at the date hereof, the Company believes its operations are materially in compliance with all applicable laws and regulations. The Company expects to make future expenditures to comply with such laws and regulations.

The Company also believes that there are no environmental-related liabilities that will have a material adverse effect on the financial position or operating results of the Company.

18. Subsequent Events

Destiny gold property

On December 3, 2024 the Company entered into a binding option agreement to acquire a 100% interest in the Destiny gold property (“Destiny”, or the “Property”) located near Val D’Or, Quebec from Big Ridge Gold Corp. (the “Optionor”) (the “Transaction”). As the Optionor is the holder of approximately 19.3% of the outstanding common shares of the Company, the Option Agreement constitutes a related party transaction under applicable securities laws.

Destiny comprises 127 mineral claims that collectively span an area of 5,013 hectares located less than two hours’ drive from Val D’Or.

The Company has an option to acquire 100% interest in the Property by incurring the following obligations over the course of three years (which may be accelerated at Caprock's option) from the date of the closing of the Transaction (the "Closing Date"):

Issuance of 8,000,000 common shares of the Company on the Closing Date at a deemed issue price of $0.05 per common share for a total deemed value of $400,000;
Payment of $100,000 in cash and $250,000 in common shares of the Company on or before the 1-year anniversary of the Closing Date;
Payment of $250,000 in cash and $350,000 in common shares of the Company on or before the 2-year anniversary of the Closing Date;
Payment of $400,000 in cash and $700,000 in common shares of the Company on or before the 3-year anniversary of the Closing Date; and
Incurring qualified expenditures on the Property totaling $2,450,000 with the following breakdown:
$200,000 on or before the 1-year anniversary of the Closing Date;
an additional $750,000 on or before the 2-year anniversary of the Closing Date; and
an additional $1,500,000 on or before the 3-year anniversary of the Closing Date.

The Transaction shall close on the Closing Date, subject to satisfaction of the following conditions:

Completion of a capital raise by Caprock for a minimum amount of $400,000;
Satisfactory due diligence by Caprock, including but not limited to legal, corporate, financial and technical due diligence;
The Closing Date for the Transaction must be on or before the four-month anniversary of the Option Agreement; and
Standard regulatory and stock exchange approvals.

Ackley lithium property

On December 3, 2024, the Company filed a formal notice of termination with the vendor of the Ackley property, terminating the Ackley option agreement.

AI assistant

Caprock Mining Corp. — Audit Report / Information 2024

48119_rns_2024-12-24_7020c5e1-fa9d-465d-b2e9-8a9798536e26.pdf

CAPROCK

INDEPENDENT AUDITOR'S REPORT

Report on the Audit of the Financial Statements

Opinion

Basis for Opinion

Material Uncertainty Relating to Going Concern

Key Audit Matters

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

Description of the matter

Why the matter is a key audit matter

How the matter was addressed in the audit

Information Other than the Financial Statements and Auditor's Report Thereon

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Auditor's Responsibilities for the Audit of the Financial Statements

Approved on behalf of the Board of Directors:

Caprock Mining Corp.

Caprock Mining Corp.

Caprock Mining Corp.

1. Nature of Operations and Going Concern

2. Basis of Presentation

(a) Statement of Compliance

2. Basis of Presentation (continued)

(b) Basis of Measurement

(c) Functional Currency

(d) Significant Accounting Judgments, Estimates and Assumptions

Going concern

Fair value of financial assets and financial liabilities

Warrants and options

Restricted Share Units

Shares issued for non-cash consideration

2. Basis of Presentation (continued)

(d) Significant Accounting Judgments, Estimates and Assumptions (continued)

Impairment assessment of non-current assets

Restoration, rehabilitation and environmental obligations

Income taxes

Expected credit losses on financial assets

3. Material Accounting Policies

(a) Cash

(b) Financial Instruments

3. Material Accounting Policies (continued)

(b) Financial Instruments (continued)

Classification

Fair value through profit or loss

Financial assets at fair value through other comprehensive income

Amortized cost

Measurement

3. Material Accounting Policies (continued)

(b) Financial Instruments (continued)

Expected credit loss impairment model

Derecognition

Determination of fair value

(c) Exploration and Evaluation Assets

3. Material Accounting Policies (continued)

(c) Exploration and Evaluation Assets (continued)

3. Material Accounting Policies (continued)

(c) Exploration and Evaluation Assets (continued)

Restoration, rehabilitation and environmental obligations

Impairment of non-financial assets

(d) Provisions

(e) Income Tax

3. Material Accounting Policies (continued)

(e) Income Tax (continued)

Estimates

(f) Share Capital

(g) Restricted Share Units

(h) Share-Based Payments Transactions

3. Material Accounting Policies (continued)

(i) Loss Per Share

(j) Related Party Transactions

(k) Foreign Currency Transactions

4. Receivables

5. Prepaid expenses

6. Exploration and Evaluation Assets

Big Ridge Property

6. Exploration and Evaluation Assets (continued)

Ackley Property

8. Share Capital

Caprock Mining Corp. Audit Report / Information 2024