CleanTech Vanadium Mining Corp. — Audit Report / Information 2023

Aug 1, 2023

Financial Statements

For the Fifteen Months Ended March 31, 2023

(Expressed in Canadian Dollars)

Mao & Ying LLP

CHARTERED PROFESSIONAL ACCOUNTANTS

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Flying Nickel Mining Corp.

Opinion

We have audited the financial statements of Flying Nickel Mining Corp. (the "Company"), which comprise the statement of financial position as at March 31, 2023, and the statements of operations and comprehensive loss, changes in equity, and cash flows for the fifteen months ended March 31, 2023, 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 March 31, 2023, and its financial performance and its cash flows for the fifteen months ended March 31, 2023 in accordance with International Financial Reporting Standards (IFRSs).

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 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 these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 in the financial statements, which describes matters and conditions that indicate the existence of a material uncertainty that may cast significate doubt about 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 judgment, were of most significance in our audit of the financial statements of the current period. 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 Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in this report.

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

As described in Note 7 to the financial statements, the carrying amount of the Company's E&E Assets was $20,126,319 as at March 31, 2023. As more fully described in Note 3(a) to the financial statements, management assesses E&E Assets for indicators of impairment at each reporting period.

The principal considerations for our determination that the assessment of impairment of the E&E Assets is a key audit matter are that there was judgment made by management when assessing whether there were indicators of impairment for the E&E Assets, specifically relating to the assets' carrying amount which is impacted by the Company's intent and ability to continue to explore and evaluate these assets. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their assessment of indicators of impairment that could give rise to the requirement to prepare an estimate of the recoverable amount of the E&E Asset.

Our audit procedures included, among others:

• Evaluating management's assessment of impairment indicators;
• Evaluating the intent for the E&E Assets through discussion and communication with management;
• Reviewing the Company's recent expenditure activity; and
• Obtaining supporting of title to ensure mineral rights underlying the E&E Assets are in good standing.

Fair value of the share based compensation

As disclosed in Note 10(c) to the financial statements, the Company has granted 7,010,000 stock options to its directors, officers, employees and consultants during the fifteen months ended March 31, 2023. The Company calculated the fair value of the stock options at the grant date using the Black-Scholes Option Pricing Model. As described in Note 3(a) to the financial statements, the Black-Scholes Option Pricing Mode involves a number of key inputs in order to calculate the fair value of an option. Significant estimates and judgements are involved in determining the reasonableness of these key inputs used, in particularly for the expected volatility input. Because the Company's stock trading history is less than one year, the expected volatility is estimated based on the historical volatility of the comparable companies.

Our audit procedures included, among others:

• Reviewing the directors' resolutions for approving to grant the stock options and the related stock options agreements;
• Assessing the reasonableness of the assumptions used by management in the Black-Scholes Option Pricing Model;
• Reviewing the reasonableness of the amortization schedule of the share based compensation (over the vesting period);
• Reforming the fair value calculation using the Black-Scholes Option Pricing Model; and
• Preparing the sensitivity analysis for the expected volatility assumption used in the Black-Scholes Option Pricing Model.

Other Information

Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis. 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 identified above 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. 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 these 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 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 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 skepticism 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.
• 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.

The engagement partner on the audit resulting in this independent auditor's report is Linda Zhu.

Prior Year Adjustment

As part of our audit of the financial statements for the fifteen months ended March 31, 2023, we also audited the adjustment described in Note 17 to the financial statements that was applied to amend the financial statements for the period from incorporation on December 21, 2020 to December 31, 2021. In our opinion, ' We were not engaged to audit, review, or apply any procedures to the financial statements of the Company for the period from incorporation on December 21, 2020 to December 31, 2021, other than with respect to the adjustment and, accordingly, we do not express an opinion or any other form of assurance on the Company's financial statements for the period from incorporation on December 21, 2020 to December 31, 2021 taken as a whole.

Other Matter

The financial statements of the Company for the period from incorporation on December 21, 2020 to December 31, 2021 were audited by another auditor who expressed an unmodified opinion on these financial statements on April 29, 2022.

Vancouver, Canada

July 29, 2023 Chartered Professional Accountants

	March 31,	December 31,2021
	2023
	($)	($)
		Restated – note 17
Assets
Current assets
Cash	343,730	-
Restricted cash (note 8)	-	6,715,407
Term deposit	57,500	-
Goods and services tax receivables and other receivables	169,619	-
Prepaid expenses (note 11)	136,086	400,138
Deferred financing cost (note 17)	-	689,112
Due from related parties (note 11)	1,389,276	868,688
Total current assets	2,096,211	8,673,345
Non-current assets
Exploration and evaluation asset (note 7)	20,126,319	-
Total assets	22,222,530	8,673,345
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities (note 11)	294,437	362,072
Premium on flow-through shares (note 9)	-	132,225
Liability for subscription receipts (notes 8, 17)	-	7,065,824
Total liabilities	294,437	7,560,121
Shareholders' Equity
Share capital (note 10)	24,288,676	1,247,240
Reserves (note 10)	2,092,775	37,586
Warrants to be issued (note 10)	-	189,040
Deficit	(4,453,358)	(360,642)
Total equity	21,928,093	1,113,224
Total liabilities and equity	22,222,530	8,673,345

Nature of Operations and Going Concern (note 1) Subsequent Events (note 18)

Approved on behalf of the Board:

"John Lee" "Greg Hall"

John Lee, Director and Chairman Greg Hall, Director

	Fifteen Months	December 21,
	Ended	2020 to
	March 31,	December 31,
	2023	2021
	($)	($)
General and Administrative Expenses
Advertising and promotion	205,947	-
Consulting (note 11)	492,043	10,000
Directors' fee (note 11)	94,116	4,000
Insurance	47,026	-
Office and administration	87,480	134,460
Professional fees	624,342	54,570
Salaries and benefits (note 11)	654,076	122,817
Share based payments (notes 10, 11)	1,396,001	-
Stock exchange and shareholder services	258,977	42,041
Travel and accommodation	79,736	-
	(3,939,744)	(367,888)
Other Items
Other income	31,743	-
Recovery of flow through liability (note 9)	132,225	7,246
Impairment of intangible asset (note 6)	(313,977)
Foreign exchange loss	(2,963)	-
Net loss and comprehensive loss for the period	(4,092,716)	(360,642)
Basic and diluted loss per share	(0.07)	(67.86)
Basic and diluted weighted average number of shares
outstanding (note 10(e))	60,368,511	5,314

		Share		Warrants to be
	Number of	Capital	Reserves1	Issued	Deficit	Total
	Shares	($)	($)	($)	($)	($)
Balance, December 21, 2020	-	-	-	-	-	-
Shares issued on incorporation	1	1	-	-	-	1
Flow through shares, net (note 8)	1,992,437	1,284,825	-	-	-	1,284,825
Broker warrants (note 8)	-	(37,586)	37,586	-	-	-
Broker warrants issuable (note 8)	-	-	-	189,040	-	189,040
Net loss and comprehensive loss	-	-	-	-	(360,642)	(360,642)
Balance, December 31, 2021	1,992,438	1,247,240	37,586	189,040	(360,642)	1,113,224
Share cancelled on completion of the Arrangement	(1)	(1)	-	-	-	(1)
Shares issued under the Arrangement (notes 4, 10)	50,000,000	16,423,987	-	-	-	16,423,987
Conversion of subscription receipts,
net of share issue costs (notes 4, 10)	10,094,033	5,808,073	403,761	-	-	6,211,834
Broker warrants (note 10)	-	-	189,040	(189,040)	-	-
Private placement, net of share issue costs (note 10)	5,370,000	859,200	-	-	-	859,200
Finder's fees (note 10)	332,150	(49,823)	49,823	-	-	-
Share-based payments (note 10)	-	-	1,412,565	-	-	1,412,565
Net loss and comprehensive loss	-	-	-	-	(4,092,716)	(4,092,716)
Balance, March 31, 2023	67,788,620	24,288,676	2,092,775	-	(4,453,358)	21,928,093

1 Stock options and warrants

	Fifteen Months	December 21,2020 toDecember 31,
	Ended
	March 31,
	2023	2021
	($)	($)
Operating Activities
Net loss for the period	(4,092,716)	(360,642)
Items not involving cash
Recovery of flow-through liability	(132,225)	(7,246)
Share-based payments	1,396,001	-
Impairment of intangible asset (note 6)	313,977	-
Changes in non-cash working capital
Other receivables	(169,619)	-
Prepaid expenses	264,052	(400,138)
Due from related parties	(520,588)	(868,687)
Accounts payable and accrued liabilities	(200,590)	362,072
Cash used in operating activities	(3,141,708)	(1,274,641)
Investing Activities
Exploration and evaluation asset	(3,552,814)	-
Term deposit	(57,500)	-
Acquisition of intangible asset (note 6)	(313,977)	-
Cash used in investing activities	(3,924,291)	-
Financing Activities
Proceeds from share issuance	859,200	-
Share issue costs	(164,878)	-
Net proceeds from subscription receipts (flow through)	-	1,424,296
Net proceeds from subscription receipts (non-flow through)	-	6,565,752
Cash from financing activities	694,322	7,990,048
(Decrease) Increase in cash	(6,371,677)	6,715,407
Cash, beginning of period	-	-
Cash released from (held in) escrow	6,715,407	(6,715,407)
Cash, end of period	343,730	-

1. Nature Of Operations and Going Concern

Flying Nickel Mining Corp. (the "Company" or "Flying Nickel") is a premier nickel sulphide mining and exploration company and is advancing its 100% owned Minago nickel project in the Thompson nickel belt in Manitoba, Canada.

The Company was incorporated on December 21, 2020, under the laws of the province of British Columbia, Canada and maintains its registered and records office at Suite 1610 – 409 Granville Street, Vancouver, British Columbia, Canada, V6C 1T2.

On March 4, 2022, the Company's common shares were publicly listed on the TSX Venture Exchange under the symbol "FLYN". On April 8, 2022 the Company's common shares have started trading on the US OTCPK under the symbol "FLYNF". On May 31, 2022 the Company's common shares have started listing on the OTCQB.

These financial statements (the "Financial Statements") have been prepared under the assumption that the Company is a going concern, which contemplates the realization of assets and the payment of liabilities in the ordinary course of business. As at March 31, 2023, the Company had a deficit of $4,453,358. The operations of the Company have been primarily funded by the issuance of capital stock.

The continued operations of the Company are dependent on its ability to develop a sufficient financing plan, receive continued financial support from related parties, complete sufficient public equity financings or generate profitable operations in the future. These material uncertainties may cast significant doubt on the entity's ability to continue as a going concern. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue its business.

2. Basis Of Presentation

(a) Statement of Compliance

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), and Interpretations of the International Financial Reporting Interpretations Committee ("IFRIC").

On December 30, 2022, the Company changed its financial year end from December 31 to March 31.

These financial statements were approved by the Board of Directors and authorized for issue on July 29, 2023.

(b) Basis of Measurement

These financial statements have been prepared on the historical cost basis. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information. Certain amounts in the prior period have been reclassified to conform with the presentation in the current period.

3. Significant Accounting Policies

(a) Use of judgments and estimates

In preparing these financial statements, management makes judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. The Company's management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised. Actual results may differ from these estimates.

Share-based compensation

The Company uses the Black-Scholes Option Pricing Model to fair value options in order to calculate share based compensation expense. The Black-Scholes Option Pricing Model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company's shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of sharebased compensation expense.

Impairment assessment of exploration and evaluation assets

The application of the Company's accounting policy for exploration and evaluation expenditure requires judgment in determining whether it is likely that future economic benefits will flow to the Company, which may be based on assumptions about future events or circumstances.

All capitalized exploration and evaluation assets are monitored for indications of impairment at each reporting period. The Company considered the following facts and circumstances in determination if it should test exploration and evaluation assets for impairment:

• (i) the period for which the Company has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed;
• (ii) substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned;
• (iii) exploration for and evaluation of mineral resources in the specific area have 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
• (iv) 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 assets is unlikely to be recovered in full from successful development or by sale.

Where a potential impairment is indicated, assessments are performed for each area of interest. To the extent that deferred exploration expenditures are not expected to be recovered, an impairment is charged to profit or loss. Exploration areas where reserves have been discovered, but require major capital expenditure before production can begin, are continually evaluated to ensure that commercial quantities of reserves exist or to ensure that additional exploration work is underway as planned.

An impairment charge relating to an exploration and evaluation asset may be subsequently reversed when new exploration results or actual or potential proceeds on sale or farm-out of the property result in a revised estimate of the recoverable amount but only to the extent that this does not exceed the original carrying value of the property that would have resulted if no impairment had been recognized. General exploration costs in areas of interest in which the Company has not secured rights are expensed as incurred.

(a) Use of judgments and estimates - continued

The recoverability of amounts shown for exploration and evaluation assets is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain financing to complete development of the properties, and on future production or proceeds of disposition.

Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

As at March 31, 2023, the Company has assessed that there are no impairment indicators with respect to its exploration and evaluation assets.

(b) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, deposits in banks and highly liquid investments with an original maturity of three months or less at the time of purchase and excludes restricted cash which in presented separately in these financial statements.

As at March 31, 2023 and December 31, 2021, the Company does not have any cash equivalents.

(c) Exploration and evaluation asset(s)

Mineral property assets consist of exploration and evaluation costs. Costs directly related to the exploration and evaluation of resource properties are capitalized to mineral properties once the legal rights to explore the resource properties are acquired or obtained. These costs include acquisition of rights to explore, license and application fees, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling, and activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource.

If it is determined that capitalized acquisition, exploration and evaluation costs are not recoverable, or the property is abandoned or management has determined an impairment in value, the property is written down to its recoverable amount. Mineral properties are reviewed at least annually for indicators of impairment and are tested for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable amount.

From time to time, the Company acquires or disposes of properties pursuant to the terms of option agreements. Options are exercisable entirely at the discretion of the optionee and, accordingly, are recorded as mineral property costs or recoveries when the payments are made or received. After costs are recovered, the balances of the payments received are recorded as a gain on option or disposition of mineral property.

The Company conducts its mineral exploration activities in compliance with applicable environmental protection legislation. The Company is not aware of any material existing environmental issues related to any of its current or former properties that may result in material liability to the Company. Environmental legislation is becoming increasingly stringent and costs and expenses of regulatory compliance are increasing. The impact of new and future environmental legislation on the Company's operations may cause additional expenses and restrictions. If the restrictions adversely affect the scope of exploration and development on the mineral properties, the potential for production on the property may be diminished or negated.

The Company recognizes government grants in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate. Administration and overhead costs that are not directly attributable to a specific exploration area are charged to the statement of income.

(d) Unit offerings

The proceeds from the issuance of units consisting of common shares and warrants are allocated first to common shares based on the market trading price of the common shares at the time the units are priced, and any excess is allocated to warrants.

(e) Share-based payments

The Company has a share purchase option plan and accounts for share-based payments using a fair value-based method with respect to all share-based payments to directors, officers, employees, and service providers. Share-based payments to 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 if such fair value is not reliably measurable, at the fair value of the equity instruments issued. The fair value is recognized as an expense or capitalized to mineral properties or property and equipment with a corresponding increase in option reserve. This includes a forfeiture estimate, which is revised for actual forfeitures in subsequent periods.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the statement of income (loss) over the remaining vesting period.

Upon the exercise of the share purchase option, the consideration received, and the related amount transferred from option reserve are recorded as share capital.

(f) Flow-through shares

Canadian Income Tax legislation permits an enterprise to issue securities referred to as flow-through shares, whereby the investor can claim the tax deductions arising from the renunciation of the related resource expenditures. The Company accounts for flow-through shares whereby the premium paid for the flow-through shares in excess of the market value of the shares without flow-through features at the time of issuance is credited to other liabilities and included in profit or loss at the same time the qualifying expenditures are made.

(g) Loss/earnings per share

Basic loss/earnings per share is calculated using the weighted average number of common shares outstanding during the period. The Company uses the treasury stock method to compute the dilutive effect of options and warrants. Under this method the dilutive effect on earnings per share is calculated presuming the exercise of outstanding options and warrants. It assumes that the proceeds of such exercise would be used to repurchase common shares at the average market price during the period. However, the calculation of diluted loss/gain per share excludes the effects of various conversions and exercise of options and warrants that would be anti-dilutive.

(h) Income tax

Income tax expense comprises current and deferred tax. Current tax is the expected tax payable or receivable on the taxable income or loss for the year using tax rates enacted or substantively enacted at the reporting date.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the tax laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(i) Financial instruments

The Company follows IFRS 9 – Financial Instrument ("IFRS 9") to account for its financial instruments. IFRS 9 uses a single approach to determine whether a financial asset is classified and measured at amortized cost or at fair value. The classification and measurement of financial assets is based on the Company's business models for managing its financial assets and whether the contractual cash flows represent solely payments for principal and interest.

Under IFRS 9, financial assets are classified into one of three categories (i) amortized cost; (ii) fair value changes through other comprehensive income ("FVTOCI"); and (iii) fair value through profit or loss ("FVTPL"). Financial liabilities are into one of two categories: (i) amortized cost; and (ii) FVTPL.

Initial recognition

The classification is determined at initial recognition and depends on the nature and purpose of the financial asset. On initial recognition, all financial assets and financial liabilities are recorded at fair value adjusted for directly attributable transaction costs except for financial assets and liabilities classified as FVTPL, in which case transaction costs are expensed as incurred.

Subsequent measurement of financial assets

Financial assets classified as amortized cost are measured using the effective interest method. Amortized cost is calculated by taking into account any discount or premiums on acquisition and fees that are an integral part of the effective interest method. Amortization from the effective interest method is included in finance income. Financial assets classified as FVTPL are measured at fair value with changes in fair values recognized in profit or loss. Equity investments designated as FVTOCI are measured at fair value with changes in fair values recognized in other comprehensive income ("OCI"). Dividends from that investment are recorded in profit or loss when the Company's right to receive payment of the dividend is established unless they represent a recovery of part of the cost of the investment.

As at March 31, 2023 and December 31, 2021, the Company does not have any financial assets classified at FVTOCI.

(i) Financial instruments - continued

Impairment of financial assets carried at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the credit risk of the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in the statement of comprehensive loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized

Subsequent measurement of financial liabilities

Financial liabilities classified as amortized cost are measured using the effective interest method. Amortized cost is calculated by taking into account any discount or premiums on acquisition and fees that are an integral part of the effective interest method. Amortization using the effective interest method is included in finance costs. Financial liabilities classified as FVTPL are measured at fair value with gains and losses recognized in profit or loss.

As at March 31, 2023 and December 31, 2021, the Company does not have any financial liabilities classified at FVTPL.

Derecognition of financial assets and financial liabilities

A financial asset is derecognized when the rights to receive cash flows from the asset have expired; or the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third-party under a 'pass- through' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. Gains and losses on derecognition of financial assets and liabilities classified as amortized cost are recognized in profit or loss when the instrument is derecognized or impaired, as well as through the amortization process. Gains and losses on derecognition of equity investments designated as FVTOCI (including any related foreign exchange component) are recognized in OCI. Amounts presented in OCI are not subsequently transferred to profit or loss, although the cumulative gain or loss may be transferred within equity.

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability. In this case, a new liability is recognized, and the difference in the respective carrying amounts is recognized in the statement of income.

Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices, without deduction for transaction costs. For financial instruments that are not traded in active markets, the fair value is determined using appropriate valuation techniques, such as using a recent arm's length market transaction between knowledgeable and willing parties, discounted cash flow analysis, reference to the current fair value of another instrument that is substantially the same, or other valuation models.

(j) Changes in Accounting Standards

Certain accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company's financial statements.

4. Arrangement and Transfer of Assets

On January 14, 2022, Silver Elephant Mining Corp. ("Silver Elephant") completed a strategic reorganization of its business through a statutory plan of arrangement (the **"**Silver Elephant Arrangement") under the Business Corporations Act (British Columbia) pursuant to which certain assets of Silver Elephant were spun-out to the Company.

Pursuant to the Silver Elephant Arrangement, the common shares of Silver Elephant were consolidated on a 10:1 basis and each holder of common shares received in exchange for every 10 pre-Consolidation common shares held: (i) one post Consolidation common share of Silver Elephant; (ii) one common share of Flying Nickel Mining Corp.; (iii) one common share of Nevada Vanadium Mining Corp. ("Nevada Vanadium"), and (iv) two common shares of Oracle Commodity Holding Corp (formerly Battery Metals Royalties Corp.) ("Oracle" or "Battery Metals").

As a result of the Silver Elephant Arrangement, the Minago Project along with the assumption of certain liabilities related to the underlying assets was spun out by Silver Elephant into Flying Nickel in exchange for the issuance of 50,000,000 of Flying Nickel shares. The Silver Elephant Arrangement does not meet the definition of a business combination under IFRS 3. The assets acquired and liabilities assumed through the Silver Elephant Arrangement were considered as a group reorganization and were accounted based on Silver Elephant's carrying amounts immediately prior to the spin out with a corresponding adjustment in the amount of $16,423,987 to share capital.

	($)
Assets
Exploration and evaluation asset	16,458,495
Liabilities
Trade and other payables	(34,508)
Net assets	16,423,987

5. Proposed Transaction

On October 6, 2022 Flying Nickel and Nevada Vanadium signed an arrangement agreement pursuant to which Flying Nickel proposes to acquire all of the issued and outstanding common shares of Nevada Vanadium (the "Nevada Vanadium Shares") by way of a court-approved plan of arrangement (the "Transaction").

Under the terms of the agreement, Nevada Vanadium shareholders will receive one (1) (the "Exchange Ratio") Flying Nickel common share (a "Flying Nickel Share") for each Nevada Vanadium Share held immediately prior to the effective time of the Transaction. All convertible securities of Nevada Vanadium outstanding immediately prior to the effective time of the Transaction will be exchanged for securities of Flying Nickel bearing substantially the same terms as the securities replaced based on the Exchange Ratio. As at the date of these financial statements, the Transaction is still in progress.

6. Intangible Asset

During the fifteen months ended March 31, 2023, the Company acquired the domain nickel.com (the "Domain") for $313,977 and initially recognized as an intangible asset. The Domain was fully impaired as at March 31, 2023, and the Company recognized an impairment charge of $313,977 during the fifteen months ended, March 31, 2023.

7. Exploration and Evaluation Asset

Minago Project	($)
Balance, December 21, 2020 and December 31, 2021	-
Assets transferred under the Arrangement (note 4)	16,458,495
Licenses, taxes, fees and permits	373,740
Feasibility	1,183,974
Exploration	972,989
Drilling	610,825
Personnel, camp and general	509,732
Shares based payments	16,564
Balance, March 31, 2023	20,126,319

The Minago Project is located in northern Manitoba, Canada within the southern part of the Thompson Nickel Belt.

On January 14, 2022, pursuant to the Silver Elephant Arrangement (note 4), the Company issued 50,000,000 common shares in consideration for Minago nickel project mineral property assets and the assumption of certain liabilities related to the underlying assets.

Minago Net Smelter Royalty

On January 14, 2022, under the terms of the Silver Elephant Arrangement and pursuant to the royalty agreement between the Company and Silver Elephant dated August 25, 2021 ("Minago Royalty Agreement"), the Company has granted and agreed to pay, among other things, in each fiscal quarter where the average price per pound of nickel as reported on the Nominated Metals Exchange or Substitute Metals Exchange (in each case as defined in the Minago Royalty Agreement) in the event such pricing is not reported on the Nominated Metals Exchange, exceeds US$15 per pound, a royalty equal to two per cent (2%) of returns in respect of all mineral products produced from certain mineral claims and leases in the Minago Project after the commencement of commercial production. Each royalty payment will be provisional and subject to adjustment in accordance with the Minago Royalty Agreement. Oracle is the current holder of this royalty.

Glencore Net Smelter Royalty

The Minago property claims are subject to a net smelter return ("NSR") royalty interest (the "Glencore Royalty") retained by Glencore Canada Corporation ("Glencore"). The Glencore Royalty in respect of nickel, shall for any calendar quarter be: (i) 2% NSR royalty when the London Metals Exchange 3-month nickel price is equal to or greater than US$13,227.74 per tonne in that quarter; and (ii) a 1% NSR when the London Metals Exchange 3-month nickel price is less than US$13,227.74 per tonne in that quarter. The Glencore Royalty in respect of other minerals, metals and concentrates, shall be a 2% NSR. In the event that the Glencore Royalty consists of a 2% NSR royalty, Flying Nickel may purchase a portion of the royalty interest which represents in the aggregate no more than 1% of the royalty interest for $1,000,000. The Glencore Royalty interest shall never be less than a 1% NSR.

8. Subscription Receipts

On November 29, 2021, pursuant to the Silver Elephant Arrangement (note 4), the Company issued (also see note 10):

• (i) 10,094,033 subscription receipts of the Company (each, a "NFT Subscription Receipt") at a price of $0.70 per NFT Subscription Receipt for gross proceeds of $7,065,824 from the sale of NFT Subscription Receipts. Each NFT Subscription Receipt is automatically converted into one unit upon satisfaction of the NFT escrow release conditions with no additional consideration required. Each Unit consists of one common share of the Company and one-half of one common share purchase warrant, each whole warrant entitles its holder to acquire one common share of the Company at an exercise price of $1.00 per share until November 29, 2023 (note 10(d)). The Company incurred broker commissions and out-of-pocket costs of $664,950 and issued 597,069 broker warrants with a fair value of $189,040 (see note 10(d)) in connection with the NFT Subscription Receipt. Each broker warrant entitles its holder to acquire one common share of the Company at an exercise price of $0.70 per common share until November 29, 2023; and
• (ii) 1,992,437 flow-through subscription receipts of the Company (each, a "FT Subscription Receipt) at a price of $0.77 per FT Subscription Receipt for gross proceeds of $1,534,176. The Company incurred broker commissions and out-of-pocket costs of $109,880 and issued 119,546 broker warrants with a fair value of $37,586 (see note 10(d)) in connection with FT Subscription Receipts. Each broker warrant entitles its holder to acquire one common share of the Company at an exercise price of $0.70 per common share until November 29, 2023.

On December 30, 2021, gross proceeds of $1,534,176 were released from escrow to Flying Nickel upon converting an aggregate of 1,992,437 FT Subscription Receipts into 1,992,437 flow-through common shares of Flying Nickel.

Gross proceeds of $7,065,824 from the issuance of 10,094,033 NFT Subscription Receipts of the Company remain subject to escrow as of December 31, 2021 to be released to the Company upon satisfaction of certain additional escrow release conditions, including receipt of final approval of the Supreme Court of British Columbia, in connection with the Silver Elephant Arrangement.

The gross proceeds of the issuance of NFT Subscription Receipts net of the deferred transaction costs paid in the amount of $6,715,407 remained subject to escrow as at December 31, 2021.

On January 14, 2022 the restricted cash of $6,715,407 was released to the Company upon satisfaction of all escrow release conditions, including receipt of final approval of the Supreme Court of British Columbia, in connection with the Silver Elephant Arrangement.

9. Premium On Flow-Through Shares

During the period from incorporation on December 21, 2020 to December 31, 2021, the Company issued 1,992,437 flow-through shares for gross proceeds of $1,534,176 (notes 8 and 10) and recognized a premium of flow-through shares of $139,471.

A continuity of the premium on flow-through shares is as follows:

	($)
Balance, December 21, 2020	-
Liability incurred on flow-through shares issued	139,471
Renouncement of qualifying expenditures incurred	(7,246)
Balance, December 31, 2021	132,225
Renouncement of qualifying expenditures incurred	(132,225)
Balance, March 31, 2023	-

10. Share Capital

(a) Authorized Share Capital

The authorized share capital of the Company consists of an unlimited number of common shares without par value. As at March 31, 2023, the Company had 67,788,620 (December 31, 2021 – 1,992,438) common shares issued and outstanding.

(b) Issued Share Capital (also see note 18)

During the fifteen months ended March 31, 2023

On January 14, 2022, pursuant to the Silver Elephant Arrangement, the Company issued 50,000,000 common shares in exchange of the assets acquired and liabilities related to the Minago Project which resulted in increase of share capital of $16,423,987 (note 4).

On January 14, 2022 and February 28, 2022, a total of 5,844,033 and 4,250,000 NFT Subscription Receipts (note 8) were converted into 5,844,033 and 4,250,000 units (the "Units") (note 8). Each Unit consists of one common share of the Company and one-half of one common share purchase warrant, each whole warrant entitles its holder to acquire one common share of the Company at an exercise price of $1.00 per share until November 29, 2023 (see note 10(d)).

The Company's stock did not trade until March 4, 2022. The Company estimated the market price of the common shares at the time of issuance is $0.66 per share, estimated by observing the financing completed by the comparable companies. The gross proceeds of the NFT Subscription Receipts was first allocated to common shares in the amount of $6,662,062 with the remaining of $403,761 was allocated to the warrants by applying the residual approach.

In connection with the NFT Subscription Receipts, the Company incurred share issuance costs of broker commissions and outof-pocket costs of $664,950, of which $164,880 was paid during the fifteen months ended March 31, 2023. The Company also issued 597,069 broker warrants. Each broker warrant entitles its holder to acquire one common share of the Company at an exercise price of $0.70 per common share until November 29, 2023 (see note 10(d)).

On January 14, 2022, pursuant to the Silver Elephant Arrangement, the Company cancelled one founder share with a value of $1.

On February 15, 2023, the Company completed a private placement by issuing an aggregate of 5,370,000 units at a price of $0.16 per unit for aggregate gross proceeds of $859,200. Each unit consists of one common share of the Company and one common share purchase warrant with each warrant entitling the holder to purchase one additional share of the Company at a price of $0.20 per share for 36 months from closing. The gross proceeds of the private placement was allocated to common shares and $nil was allocated to the warrants by applying the residual approach. Finder's unit contains the same terms of the unit issued in the private placement (note 10(d)).

During the period from incorporation on December 21, 2020 to December 31, 2021

On December 21, 2020, the Company issued one founder share with a fair value of $1 upon incorporation of the Company to Silver Elephant.

On December 30, 2021, a total of 1,992,437 FT Subscription Receipts (note 8) were converted into 1,992,437 flow-through common shares of the Company. The gross proceeds of the flow-through common shares were allocated to share capital and the premium on flow-through shares based on the estimated value of the common shares on the issuance date. As a result, an amount of $139,471 was allocated to the premium on flow-through shares (note 9). The Company incurred broker commissions and out-of-pocket costs of $109,880 which has been recorded as share issuance costs. An aggregate of 119,546 broker warrants were issued (see note 10(d)). Each broker warrant entitles its holder to acquire one common share of the Company at an exercise price of $0.70 per common share until November 29, 2023.

10. Share Capital – continued

(c) Share Based Compensation Plan

The Company has a 10% rolling equity-based compensation plan in place, as approved by the Company's shareholders on December 22, 2021 (the "2021 Plan"). Under the 2021 Plan, the Company may grant stock options, bonus shares or stock appreciation rights. All stock options and other share-based awards granted by the Company, or to be granted by the Company, since the implementation of the 2021 Plan will be issued under, and governed by, the terms and conditions of the 2021 Plan. The stock option vesting terms are determined by the Board of Directors on the date of the grant with a maximum term of 10 years.

During the fifteen months ended March 31, 2023, the Company granted stock options to certain directors, officers and employees to acquire a total of 7,010,000 common shares in the capital of the Company at an exercise price ranging from $0.14 to $0.74 per share. These options vest at 12.5% per quarter for the first two years following the grant date and have a five-year term from the date of grant.

The continuity of the Company's share options is as follows:

	Number of Options	Weighted averageexercise price ($)
Balance, December 21, 2020 (incorporation) and December 31, 2021	-	-
Granted	7,010,000	0.58
Forfeited	(1,650,000)	0.66
Balance, March 31, 2023	5,360,000	0.55

The following table summarizes the stock options outstanding as at March 31, 2023.

	Options Outstanding		Options Exercisable
		Weighted Average		Weighted Average
Exercise	Number of	Remaining	Number of	Remaining
Price	Options	Contractual Life	Options	Contractual Life
($)	Outstanding	(Years)	Exercisable
0.135	1,400,000	4.76	-	-
*0.70	3,810,000	3.93	1,905,000	3.93
*0.74	150,000	3.97	75,000	3.97
	5,360,000	4.15	1,980,000	3.93

* On May 1, 2023, the Company amended the exercise price of 3,810,000 stock options from $0.70 to $0.20 and 150,000 stock options from $0.74 to $0.20 (note 18).

Share-based payment expenses resulting from stock options are amortized over the corresponding vesting periods. Sharebased payments are either capitalized as exploration costs where related to mineral properties or expensed as general and administrative expenses where related to general operations of the Company.

During the fifteen months ended March 31, 2023, the Company recorded share-based payments expense of $1,412,565 of which $16,564 was capitalized as exploration cost and the reminder of $1,396,001 was expensed as general and administrative expenses (December 21, 2020 to December 31, 2021 - $nil, $nil and $nil).

10. Share Capital – continued

The fair value of each stock option is estimated on the date of grant using the Black-Scholes Option Pricing Model with the assumptions presented in the table below. Expected volatilities are based on historical volatility of the comparable companies as the Company doesn't have enough trading history. The expected term of share options granted represents the period of time that share options granted are expected to be outstanding. The risk-free interest rate is based on the Canadian government bond rate.

Grant Date	Number ofShare Options	ExpectedPriceVolatility	Risk FreeInterestRate	ExpectedLife(Years)	ExpectedDividendYield	Fair ValuePer Option($)	TotalFair Value($)
March 4, 2022	5,160,000	137%	1.45%	5.00	-	0.34	1,735,482
March 18, 2022	150,000	138%	1.45%	5.00	-	0.57	85,249
May 3, 2022	300,000	138%	2.75%	5.00	-	0.47	142,194
January 3, 2023	1,400,000	141%	3.23%	5.00	-	0.13	175,617
	7,010,000						2,138,542

(d) Warrants

The continuity of the Company's warrants is as follows:

		WeightedAverage Exercise
	Number of	Price
	Warrants	($)
Balance, December 21, 2020 (incorporation)	-	-
Issued	119,546	0.70
Balance, December 31, 2021	119,546	0.70
Issued – broker warrants	929,219	0.52
Issued – financing warrants	10,417,016	0.59
Balance, March 31, 2023	11,465,781	0.58

The fair value of each broker warrant is estimated on the date of grant using the Black-Scholes Option Pricing Model with the assumptions presented in the table below. Expected volatilities are on historical volatility of the comparable companies as the Company doesn't have enough trading history. The expected term of warrants issued represents the period of time which those warrants are expected to be outstanding. The risk-free interest rate is based on the Canadian government bond rate.

					Fair Value
Issue Date	Number ofWarrants	ExpectedPriceVolatility	Risk FreeInterestRate	ExpectedLife(Years)	ExpectedDividendYield	perWarrant($)	Total FairValue($)
November 29, 2021	119,546	83%	0.96%	2.00	-	0.31	37,856
January 14, 2022	597,069	83%	0.96%	1.87	-	0.32	189,040
February 15, 2023	332,150	99%	4.24%	3.00	-	0.15	49,823

10. Share Capital – continued

As of March 31, 2023, the following warrants were outstanding:

	Remaining Life	Number of	Exercise Price
Expiry Date	(Years)	Warrants	($)
November 29, 2023	0.67	716,615	0.70
November 29, 2023	0.67	5,047,016	*1.00
February 15, 2026	2.88	5,702,150	0.20
	1.77	11,465,781	0.58

* On April 21, 2023, the Company amended the exercise price of 5,047,017 warrants from $1.00 to $0.20 per share with an accelerated expiry date when certain conditions are met (note 18).

(e) Diluted Loss per Share

As at March 31, 2023, there were 5,360,000 (December 31, 2021 – nil) share options and 11,465,781 (December 31, 2021 – 119,546) warrants that were potentially dilutive but not included in the diluted loss per share calculation as the effect would be anti-dilutive.

11. Related Party Transactions and Balances

Related party transactions have been measured at the exchange amount of consideration agreed between the related parties. Related party transactions not disclosed elsewhere in these financial statements are listed below.

The Company has entered into a Mutual Management and Technical Services Agreement (the "MMTSA") with Silver Elephant and other related entities commencing December 1, 2021 and subsequently amended April 1, 2023, pursuant to which the companies will provide each other with general, technical and administrative services, as reasonably requested. During the period from incorporation on December 21,2020 to December 31, 2021, the Company prepaid $500,000 pursuant to the MMTSA and incurred $99,862 in related fees.

The Company has entered a consulting agreement with the Company's executive chairman effective on December 1, 2021, pursuant to which the Company agreed to pay a minimum service fee of $10,000 per month. The Company also agreed to issue up to 450,000 common shares (the "Bonus Shares") of the Company to this individual upon achieving certain corporate milestones defined in the agreement. No Bonus shares were issued or issuable for the fifteen months ended March 31, 2023 and for the period from incorporation on December 21, 2020 to December 31, 2021 because none of the milestones have been achieved.

The Company had related party transactions with key management personnel in providing management and consulting services to the Company. Key management personnel are persons responsible for planning, directing and controlling the activities of an entity, and include the chief executive officer ("CEO"), chief financial officer ("CFO"), chief operating officer ("COO"), chief legal officer ("CLO"), executive and non-executive directors.

11. Related Party Transactions and Balances - continued

	FifteenMonthsEnded March31, 2023($)	December 21,2020 toDecember 31,2021($)
MMTSA fees charged by Silver Elephant, a company with certain directors andofficers in common	334,805	99,862
MMTSA recoveries from Silver Elephant	(277,215)	-
MMTSA fees charged by Nevada Vanadium, a company under common control	102,474	-
MMTSA recoveries from Nevada Vanadium	(232,336)	-
MMTSA recoveries from Oracle, a company under common control	(127,147)	-
Management fees paid to John Lee, Chairman and Interim CEO of the Company	162,000	10,000
Salaries and benefits paid to key management of the Company	386,158	109,438
Directors' fees	94,116	4,000
Share-based payments to certain key management of the Company	629,187	-
	1,072,042	223,300

During the fifteen months ended March 31, 2023, the Company paid $116,375 (2021 - $nil) to key management personnel for termination fees. The Company did not incur any post-employment benefit or other long term benefits to key management personnel for the fifteen months ended March 31, 2023 and forthe period from incorporation on December 21, 2020 to December 31, 2021.

The Company had balances due from (to) related parties as follows:

	March 31,2023($)	December 31,2021($)
Receivable from Silver Elephant	980,056	868,688
Receivable from Nevada Vanadium, a company under common control	239,689	-
Receivable from Oracle, a company with certain directors and officers in common	169,531	-
Prepaid expenses to Silver Elephant	-	400,138
Management fees payable to John Lee	-	(10,000)
Director's fees payable	(1,800)	(4,000)
	1,387,476	1,254,826

12. Segmented Information

The Company has one reportable business segment, being mineral exploration and development. All of the Company's assets are located in Canada.

13. Income Taxes

The Company's operations are, in part, subject to foreign tax laws where interpretations, regulations and legislation are complex and continually changing. As a result, there are usually some tax matters in question that may, upon resolution in the future, result in adjustments to the amount of deferred income tax assets and liabilities, and those adjustments may be material to the Company's financial position and results of operations. A reconciliation of income taxes at statutory rates with the reported taxes is as follows:

	Fifteen	December 21,
	Months Ended	2020 to
	March 31,	December 31,
	2023	2021
	($)	($)
Loss for the period	(4,092,716)	(360,642)
Statutory tax rate	27%	27%
Expected income tax (recovery)	(1,105,000)	(97,000)
Permanent differences	341,000	-
Other temporary differences	397,000	22,000
Share issue cost	(180,000)	(165,000)
Others	151,0000	-
Change in unrecognized deductible temporary differences	396,000	240,000
Total income tax expense (recovery)	-	-

Deferred tax assets (liabilities) at March 31, 2023 and December 31, 2021 are as follows: March 31, 2023 ($) December 31, 2021 ($) Exploration and evaluation assets (717,000) (22,000) Non-capital loss available for future periods 717,000 22,000 Deferred tax assets (liabilities) - -

The significant components of the Company's temporary differences, unused tax credits and unused tax losses that have not been included on the statement of financial position are as follows:

	Fifteen MonthsEnded March 31,2023($)	Expiry DateRange	December 21,2020 toDecember 31,2021($)	Expiry DateRange
Temporary Differences
Share issuance costs	559,000	2043 to 2045	610,000	2042 to 2045
Other temporary differences	314,000	n/a	-	-
Non-capital loss available for future periods	1,412,000	2042 to 2045	403,000	2042
Unrecognized deductible temporary differences	2,285,000		1,013,000
Canada	4,067,000	2042 to 2043	403,000	2042
Total non-capital losses	4,067,000		403,000

14. Capital Management

Management considers its capital structure to consist of share capital, share purchase options and warrants. The Company manages its capital structure and makes adjustments to it, based on the funds available to, and required by the Company in order to support the acquisition, exploration and development of exploration and evaluation assets. The Board of Directors does not establish quantitative returns on capital criteria for management.

The properties, to which the Company currently has an interest in, are in the exploration stage; as such, the Company is dependent on external financing to fund its activities. In order to carry out the planned exploration and development and pay for administrative costs, the Company will spend its existing working capital and raise additional amounts as needed. There were no changes in management's approach to capital management during the fifteen months ended March 31, 2023. The Company is not subject to externally imposed capital requirements.

15. Financial Instruments

(a) Fair value

Fair value is the price that 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 Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value as follows:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (for example, interest rate and yield curves observable at commonly quoted intervals, forward pricing curves used to value currency and commodity contracts and volatility measurements used to value option contracts), or inputs that are derived principally from or corroborated by observable market data or other means; and
• Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.

The Company has determined the estimated fair values of its financial instruments based upon appropriate valuation methodologies. The fair value of cash, restricted cash and term deposit is measured at Level 1. At March 31, 2023, there were no financial assets measured and recognized in the statement of position that would be categorized as Level 2 or Level 3 in the fair value hierarchy above.

The fair value of the Company's financial instruments including cash, restricted cash, term deposit, other receivables, due from related parties, liability for subscription receipts, accounts payable and accrued liabilities approximates their carrying value due to the immediate or short-term maturity of these financial instruments. The Company does not offset financial assets with financial liabilities. There were no transfers between Level 1, 2 and 3 for the fifteen months ended March 31, 2023 for the period from incorporation on December 21, 2020 to December 31, 2021.

15. Financial Instruments - continued

(b) Categories of financial instruments

			March 31,	December 31,
Financial Instrument	Measurement Method	Associated Risks	2023($)	2021($)
Cash	FVTPL (Level 1)	Credit	343,730	-
Restricted cash	FVTPL (Level 1)	Credit	-	6,715,407
Term deposit	FVTPL (Level 1)	Credit	57,500	-
Due from related parties	Amortized cost	Credit	1,389,276	868,688
Other receivables (excluding GST/HST
receivables)	Amortized cost	Credit	1,067	-
Accounts payable and accrue liabilities	Amortized cost	-	(294,437)	(362,072)
Liability for subscription receipt	Amortized cost	-	-	(7,065,824)
			1,497,136	156,199

16. Financial Risks

The Company's financial instruments are exposed to certain financial risks. The risk exposures and the impact on the Company's financial instruments at March 31, 2023 are summarized below. The Board of Directors periodically reviews with management the principal risks affecting the Company and the systems that have been put in place to manage these risks.

(c) Liquidity risk

Liquidity risk is the risk that an entity will be unable to meet its financial obligations as they fall due. As at March 31, 2023 the Company had a cash balance including term deposit, of $401,230 (December 31, 2021- restricted cash of $6,715,407) and had accounts payable and accrued liabilities of $294,437 (December 31, 2021- $362,072), which have contractual maturities of 90 days or less. Liquidity risk is assessed as high and the Company manages liquidity risk by preparing cash flow forecasts of upcoming cash requirements.

(d) Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company reduces its credit risk on restricted cash by placing these instruments with institutions of high credit worthiness. As at March 31, 2023 and December 31, 2021, the Company's maximum exposure to credit risk is the carrying value of its financial assets.

(e) Market Risk

The market risks to which the Company may be exposed to are interest rate risk and currency risk.

(i) Interest Rate Risk

Interest rate risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not subject to material interest rate risk for the fifteen months ended March 31, 2023 and for the period from incorporation on December 21, 2020 to December 31, 2021.

(ii) Currency Risk

The Company is exposed to foreign currency risk to the extent that monetary liabilities held by the Company are not denominated in Canadian dollars. The Company's operations is primary in Canada and the Company is not subject to material currency risk.

17. Restatement and Reclassification of Prior Year Presentation

The Company has identified an error in relation to prior year financial statements presentation of NFT Subscription Receipts (Note 8) resulting an understatement of total assets of $689,112 and understatement of total liabilities for the same amount as below. There is no impact to the Company's statements of equity, operations and cash flows.

	December 31,2021Previouslypresented($)	Restatement($)	December 31,2021Restate($)
Deferred financing cost	-	689,112	689,112
Total assets	7,984,233	689,112	8,673,345
Liability for subscription receipts	6,376,712	689,112	7,065,824
Total liabilities	6,871,009	689,112	7,560,121

18. Subsequent Events

• (a) On April 17, 2023, the Company granted stock options to certain employees to acquire a total of 205,000 common shares in the capital of the Company at an exercise price of $0.16 per share. These options are exercisable for a five-year term expiring April 17, 2028. These options will vest at 12.5% per quarter for the first two years following the grant date.
• (b) On April 17, 2023, the Company closed a non-brokered private placement and issued 1,250,000 units for gross proceeds of $200,000. Each unit is priced at $0.16 and consists of one common share of the Company and one share purchase warrant with each warrant entitling the holder to purchase one additional share of the Company at a price of $0.20 per share for 36 months from closing.
• (c) On April 21, 2023, the Company repriced an aggregate of 5,047,016 outstanding common share purchase warrants of the Company issued pursuant to a warrant indenture dated November 29, 2021 between the Company and Computershare Trust Company of Canada, as warrant agent (the "Warrant Indenture") (the "Warrant Repricing").

In connection with the Warrant Repricing, the Company adjusted the exercise price of the warrants from $1.00 to $0.20 and amended the expiry date of the warrants to add an acceleration clause such that in the event the closing price of the Company's common shares on the TSXV exceeds $0.25 for any ten consecutive trading days following the Warrant Repricing, the expiry date of the warrants shall be accelerated from November 29, 2023 to a date that is 30 days following the seventh calendar day following the ten consecutive trading day period. All other terms of the warrants remain unchanged.

• (d) On April 24, 2023, the Company granted stock options to a certain officer to acquire a total of 100,000 common shares in the capital of the Company at an exercise price of $0.165 per share. These options are exercisable for a five-year term expiring April 24, 2028. These options will vest at 12.5% per quarter for the first two years following the grant date.
• (e) On May 1, the Company repriced the exercise price of 3,810,000 Options from $0.70 to $0.20 and 150,000 Options from $0.74 to $0.20.
• (f) On May 12, 2023 the Company closed a non-brokered private placement of 200,000 units for gross proceeds of $32,000. Each unit is priced at $0.16 and consists of one common share of the Company and one share purchase warrant with each warrant entitling the holder to purchase one additional share of the Company at a price of $0.20 per share for 3 years. No finder's fees were paid in connection with this private placement.