CleanTech Vanadium Mining Corp. — Interim / Quarterly Report 2022

Feb 24, 2023

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Condensed Interim Financial Statements (Unaudited)

For the Twelve Months Ended December 31, 2022

(Expressed in Canadian Dollars)

NOTICE OF NO REVIEW BY AUDITOR

In accordance with National Instrument 51-102 Continuous Disclosure Obligations of The Canadian Securities Administrators we hereby give notice that our condensed interim financial statements for the twelve months ended December 31, 2022, which follow this notice, have not been reviewed by an auditor.

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Flying Nickel Mining Corp. Condensed Interim Statements of Financial Position (Expressed in Canadian Dollars) (Unaudited)

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	December 31,	December 31,
	2022	2021
	($)	($)
Assets
Current assets
Cash	584,998	-
Restricted cash (note 6)	-	6,715,407
Receivables - Goods and Services Tax	192,240	-
Prepaid expenses	288,477	400,138
Due from relatedparty (note 9)	1,383,674	868,688
	2,449,389	7,984,233
Non-current assets
Exploration and evaluation asset(note5)	38,138,834	-
	40,588,223	7,984,233
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	434,662	362,072
Accrued liabilities	65,878	-
Premium on flow-through shares (note 7)	-	132,225
Liabilityfor subscription receipts(note 6)	-	6,376,712
	500,540	6,871,009
Shareholders’ Equity
Share capital (note 8)	40,898,944	1,247,240
Reserves (note 8)	2,970,385	37,586
Warrants to be issued (note 8)	-	189,040
Deficit	(3,781,646)	(360,642)
	40,087,683	1,113,224
	40,588,223	7,984,233

Nature of Operations and Going Concern (note 1) Subsequent Events (note 14)

Approved on behalf of the Board:

“ John Lee ” “ Mark Scott ” John Lee, Director and Chairman Mark Scott, Director

The accompanying notes form an integral part of these condensed interim financial statements.

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Condensed Interim Statements of Operations and Comprehensive Loss (Expressed in Canadian Dollars) (Unaudited)

Flying Nickel Mining Corp.

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	Three Months	Three Months	Twelve Months	December 21,
	Ended	Ended	Ended	2020 to
	December 31,	December 31,	December 31,	December 31,
	2022	2021	2022	2021
	($)	($)	($)	($)
General and Administrative Expenses
Advertising and promotion	-	-	515,225	-
Consulting (note 9)	31,368	10,000	331,301	10,000
Directors’ fee (note 9)	37,800	4,000	103,600	4,000
Insurance	10,625	-	36,417	-
Office and administration	5,312	134,460	55,614	134,460
Professional fees	63,552	54,570	515,742	54,570
Salaries and benefits (note 9)	271,881	122,817	593,419	122,817
Share based payments (note 8 and 9)	451,831	-	1,183,630	-
Stock exchange and shareholder services	24,855	42,041	196,015	42,041
Travel and accommodation	9,973	-	51,260	-
	(907,197)	(367,888)	(3,582,223)	(367,888)
Other Items
Other income	19,555	-	31,743	-
Recovery of flow through liability (note 7)	-	7,246	132,224	7,246
Foreign exchange loss	(2,748)	-	(2,748)	-
Net loss and comprehensive loss for theperiod	(890,390)	(360,642)	(3,421,004)	(360,642)
Basic and diluted loss per share	(0.01)	(67.86)	(0.06)	(67.86)
Basic and diluted weighted average number of shares
outstanding (note 8e)	62,086,470	5,314	59,946,134	5,314

The accompanying notes form an integral part of these condensed interim financial statements.

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Flying Nickel Mining Corp. Condensed Interim Statements of Changes in Equity (Expressed in Canadian Dollars) (Unaudited)

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		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	1,992,437	1,284,825	-	-	-	1,284,825
Agent warrants	-	(37,586)	37,586	-	-	-
Warrants issuable	-	-	-	189,040	-	189,040
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 (note 8)	50,000,000	35,000,000	-	-	-	35,000,000
Conversion of subscription receipts,
net of share issue costs (note 8)	10,094,033	6,400,874	-	-	-	6,400,874
Broker warrants (note 8)	-	37,586	(37,586)	-	-	-
Warrants issued	-	(1,786,755)	1,786,755	(189,040)	-	(189,040)
Share-based payments (note 8)	-	-	1,183,630	-	-	1,183,630
Comprehensive loss	-	-	-	-	(3,421,004)	(3,421,004)
Balance, December 31, 2022	62,086,470	40,898,944	2,970,385	**- **	(3,781,646)	40,087,683

1Share options and warrants

The accompanying notes form an integral part of these condensed interim financial statements.

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Flying Nickel Mining Corp. Condensed Interim Statements of Cash Flows (Expressed in Canadian Dollars) (Unaudited)

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	Three Months	Three Months	Twelve Months	December 21,
	Ended	Ended	Ended	2020 to
	December 31,	December 31,	December 31,	December 31,
	2022	2021	2022	2021
	($)	($)	($)	($)
Operating Activities
Net loss for the period	(890,390)	(360,642)	(3,421,004)	(360,642)
Items not involving cash
Recovery of flow-through liability	-	(7,246)	(132,224)	(7,246)
Share-based payments	451,831	-	1,183,630	-
Changes in non-cash working capital
Receivables	(45,145)	-	(192,240)	-
Prepaid expenses	20,096	(400,138)	111,661	(400,138)
Due from related party	(307,451)	(868,687)	(514,986)	(868,687)
Accountspayable and accrued liabilities	(4,733)	362,072	(158,726)	362,072
Cash used in operatingactivities	(775,792)	(1,274,641)	(3,123,889)	(1,274,641)
Investing Activities
Exploration and evaluation asset	(785,395)	-	(2,841,640)	-
Cash used in investingactivities	(785,395)	-	(2,841,640)	-
Financing Activities
Share issue costs	-	-	(164,880)	-
Cash from the Arrangement	-	-	6,715,407	-
Net proceeds from subscription receipts (flow through)	-	1,424,296	-	1,424,296
Netproceeds from subscription receipts(non-flow through)	-	6,565,752	-	6,565,752
Cash from financingactivities	-	7,990,048	6,550,527	7,990,048
Increase (decrease) in cash	(1,561,187)	6,715,407	584,998	6,715,407
Cash, beginning of period	2,146,185	-	-	-
Cash held in escrow	-	(6,715,407)	-	(6,715,407)
Cash, end ofperiod	584,998	-	584,998	-

The accompanying notes form an integral part of these condensed interim financial statements.

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Flying Nickel Mining Corp. Notes to the Condensed Interim Financial Statements For The Twelve Months Ended December 31, 2022 (Expressed in Canadian Dollars) (Unaudited)

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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 to the OTCQB.

These condensed interim financial statements (the “Interim 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 December 31, 2022, the Company had a deficit of $3,781,646. 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 condensed interim 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. 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 “ 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 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 preConsolidation 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 Arrangement:

• i. certain royalties held by Silver Elephant were transferred to Oracle in exchange for the issuance of 1,785,430 Oracle shares;

• ii. the Minago Project was spun out, into Flying Nickel in exchange for the issuance of 50,000,000 Flying Nickel shares, and the assumption of certain liabilities related to the underlying assets;

• iii. and the Gibellini Project was spun out, into Nevada Vanadium in exchange for the issuance of 50,000,000 Nevada Vanadium shares, and the assumption of certain liabilities related to the underlying assets; and

• iv. Oracle purchased 22,953,991 of the outstanding shares of both Nevada Vanadium and Flying Nickel in exchange for the issuance of 78,214,570 Oracle shares to Silver Elephant.

The fair value of the net assets contributed pursuant to the Arrangement consisted of the following:

	($)
Assets
Exploration and evaluation asset	35,034,508
Liability
Trade and otherpayables	(34,508)
Fair value of net assets contributed	35,000,000

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Flying Nickel Mining Corp. Notes to the Condensed Interim Financial Statements For The Twelve Months Ended December 31, 2022 (Expressed in Canadian Dollars) (Unaudited)

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3. Proposed Transaction

On October 6, 2022 Flying Nickel and Nevada Vanadium Mining Corp. (formerly 1324825 B.C. Ltd.) ("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, representing the equivalent of $0.155 per Nevada Vanadium Share, based on the closing price of Flying Nickel Shares on the TSX Venture Exchange (the "TSXV") on August 19, 2022. 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.

4. Significant Accounting Policies

• (a) Statement of compliance and basis of preparation

These Interim Financial Statements have been prepared in accordance with IAS 34, Interim Financial Reporting. They do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Company’s annual financial statements as at and for the year ended December 31, 2021 (“Annual Financial Statements”). However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company’s financial position and performance since the last annual financial statements as at and for the year ended December 31, 2021. These condensed interim consolidated financial statements have been prepared using the same accounting policies and methods of computation as the most recent annual consolidated financial statements for the year ending December 31, 2021. Certain amounts in the prior period have been reclassified to conform with the presentation in the current period.

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

These condensed interim financial statements were approved by the Board of Directors and authorized for issue on February 23, 2023.

• (b) Use of judgments and estimates

In preparing these interim 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. Actual results may differ from these estimates. The significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Annual Financial Statements.

• (c) New accounting policies adopted by the Company in the current period

Net assets acquired under the plan of arrangement

Assets and liabilities acquired under the plan of arrangement have been assessed individually to determine their fair value under current market conditions. Fair value is measured with reference to the fair value of the equity issued as consideration. The Company believes that the valuation assumptions reflect a reasonable estimate of the fair value of each account or asset.

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Flying Nickel Mining Corp. Notes to the Condensed Interim Financial Statements For The Twelve Months Ended December 31, 2022 (Expressed in Canadian Dollars) (Unaudited)

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4. Significant Accounting Policies – continued

Leases

At inception of a contract, we assess whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. We assess whether the contract involves the use of an identified asset, whether we have the right to obtain substantially all of the economic benefits from use of the asset during the term of the arrangement and if we have the right to direct the use of the asset. At inception or on assessment of a contract that contains a lease component, we allocate the consideration in the contract to each lease component on the basis of their relative stand-alone prices. As a lessee, we recognize a right-of-use asset, which is included in property, plant and equipment, and a lease liability at the commencement date of a lease. The right-of-use asset is initially measured at cost, which is comprised of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any decommissioning and restoration costs, less any lease incentives received. The right-of-use asset is subsequently depreciated from the commencement date to the earlier of the end of the lease term, or the end of the useful life of the asset. In addition, the right-of-use asset may be reduced due to impairment losses, if any, and adjusted for certain remeasurements of the lease liability

A lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by the interest rate implicit in the lease, or if that rate cannot be readily determined, our incremental borrowing rate. Lease payments included in the measurement of the lease liability are comprised of:

• fixed payments, including in-substance fixed payments, less any lease incentives receivable;

• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• amounts expected to be payable under a residual value guarantee;

• exercise prices of purchase options if we are reasonably certain to exercise that option; and

• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, or if there is a change in our estimate or assessment of the expected amount payable under a residual value guarantee, purchase, and extension or termination option. Variable lease payments not included in the initial measurement of the lease liability are charged directly to profit (loss). We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The lease payments associated with these leases are charged directly to profit (loss) on a straight-line basis over the lease term.

The Company does not currently have any leases that satisfy the conditions under IFRS 16 – leases to record a right-of-use asset and corresponding lease liability.

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.

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Flying Nickel Mining Corp. Notes to the Condensed Interim Financial Statements For The Twelve Months Ended December 31, 2022 (Expressed in Canadian Dollars) (Unaudited)

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4. Significant Accounting Policies – continued

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 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.

5. Mineral Property

Minago Project	($)
Balance, December 21, 2020 and December 31, 2021	-
Assets transferred under the Arrangement	35,031,008
Licenses, taxes, fees and permits	213,133
Feasibility	1,156,318
Exploration	782,769
Drilling	610,825
Personnel,campandgeneral	344,781
Balance, December 31, 2022	38,138,834

On January 14, 2022, pursuant to the Arrangement, 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. The fair value of Minago project of $35,031,008 was determined based on the Company’s private placement, pursuant to which 10,094,033 common shares were issued at a price of $0.70 per share.

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

Minago Net Smelter Royalty

On January 14, 2022, under the terms of the 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 $20.33 (US$15.00) 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 Manitoba, Canada which comprise Flying Nickel’s Minago nickel property after the commencement of commercial production. Each royalty payment will be provisional and subject to adjustment in accordance with the Minago Royalty Agreement.

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Flying Nickel Mining Corp. Notes to the Condensed Interim Financial Statements For The Twelve Months Ended December 31, 2022 (Expressed in Canadian Dollars) (Unaudited)

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5. Mineral Property – continued

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 $17,924 (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 $$17,924 (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.

6. Subscription Receipts

On November 29, 2021, pursuant to the Arrangement (note 2), the Company issued:

• (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; and

• (ii) 1,992,437 flow-through eligible 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.

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 at a price of $0.77 per share (note 8).

Gross proceeds of $7,065,824 from the issuance of 10,094,033 NFT Subscription Receipts of the Company remained subject to escrow as at December 31, 2021. The Company incurred broker commissions and out-of-pocket costs of $664,950. Warrants issuable of $189,040 were recorded as equity (note 8) and added to deferred transaction costs to be netted against the subscription receipts.

On January 14, 2022 the NFT Subscription Receipts were 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 Arrangement.

7. Premium On Flow-Through Shares

During the period ended December 31, 2021, the Company issued 1,992,437 flow-through shares for gross proceeds of $1,534,176 (notes 6 and 8) and recognized a deferred 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
Settlement of expenditures made recorded as other income	(7,246)
Balance, December 31, 2021	132,225
Settlement of expenditures made recorded as other income	(132,225)
Balance, December 31, 2022	-

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Flying Nickel Mining Corp. Notes to the Condensed Interim Financial Statements For The Twelve Months Ended December 31, 2022 (Expressed in Canadian Dollars) (Unaudited)

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8. 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 December 31, 2022, the Company had 62,086,470 (December 31, 2021 – 1,992,438) common shares issued and outstanding.

(b) Issued Share Capital

During the period from January 1, 2022 to December 31, 2022

On January 14, 2022, pursuant to the Arrangement, the Company issued 50,000,000 common shares with a fair value of $0.70 per share (note 2).

On January 14, 2022 and February 28, 2022, a total of 5,844,033 and 4,250,000 NFT Subscription Receipts (note 6) were converted into 5,844,033 and 4,250,000 units (the “Units”) of the Company at a price of $0.70 per Unit, with each Unit consisting of one common share and one-half of one common share purchase warrant exercisable at a price of $1.00 until November 29, 2023, for gross proceeds of $7,065,824. The Company incurred broker commissions and out-of-pocket costs of $664,950 which has been recorded as share issuance costs. An aggregate of 597,069 broker warrants with a fair value of $189,040 were issued, with each broker warrant entitling the holder to acquire one common share of the Company at an exercise price of $0.70 per common share until November 29, 2023.

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

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 6) were converted into 1,992,437 flow-through common shares of the Company at a price of $0.77 per share, for gross proceeds of $1,534,176. 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 with a fair value of $37,586 were issued, with each broker warrant entitling the holder to acquire one common share of the Company at an exercise price of $0.70 per common share until November 29, 2023.

• (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 grant with a maximum term of 10 years.

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

		Weighted average
	Number of	exercise price
	Options	($)
Balance, December 21, 2020 and December 31, 2021	-	-
Granted	5,690,000	0.69
Cancelled	(1,730,000)	0.66
Balance, December 31, 2022	3,960,000	0.70

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Flying Nickel Mining Corp. Notes to the Condensed Interim Financial Statements For The Twelve Months Ended December 31, 2022 (Expressed in Canadian Dollars) (Unaudited)

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8. Share Capital – continued

The following table summarizes the stock options outstanding as at December 31, 2022.

	Options Outstanding Number of Options Outstanding Weighted Average Remaining Contractual Life (Years)	Options Outstanding Number of Options Outstanding Weighted Average Remaining Contractual Life (Years)
		Number of Options Exercisable Weighted Average Remaining Contractual Life (Years)
0.70 0.74	3,810,000 4.18 150,000 4.21	1,587,500 4.18 62,500 4.21
0.70 - 0.74	3,960,000 4.18	1,650,000 4.18

Share-based payment expenses resulting from stock options are amortized over the corresponding vesting periods. Share based 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 three months and twelve months ended December 31, 2022, the Company recorded share-based payments expense of $451,831 (2021 - $nil) and $1,183,630 (2021 - $nil) respectively.

The fair value of each share option is estimated on the date of grant using the Black-Scholes Option Pricing Model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatility of the Company’s shares, and other factors. The expected term of share options granted represents the period of time that share options granted are expected to be outstanding. The risk-free rate of periods within the contractual life of the share option is based on the Canadian government bond rate. Assumptions used for share options granted during fiscal 2022 is as follows:

						Fair	Total
			Risk			Value	Fair Value
	Number	Expected	Free	Expected	Expected	Per	($)
	of Share	Price	Interest	Life	Dividend	Option
Grant Date	Options	Volatility	Rate	(Years)	Yield	($)
March 4, 2022	5,240,000	137%	1.45%	5.00	-	0.34	1,762,389
March 17, 2022	150,000	138%	1.45%	5.00	-	0.57	85,249
April 22,2022	300,000	138%	2.75%	5.00	-	0.47	142,194
	5,690,000						1,989,832

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Flying Nickel Mining Corp. Notes to the Condensed Interim Financial Statements For The Twelve Months Ended December 31, 2022 (Expressed in Canadian Dollars) (Unaudited)

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8. Share Capital – continued

(d) Warrants

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

		Weighted average
	Number of	exercise price
	warrants	($)
Balance, December 21, 2020	-	-
Issued	119,546	0.70
Balance, December 31, 2021	119,546	0.70
Issued – broker warrants	597,069	0.70
Issued – financingwarrants	5,047,017	1.00
Balance, December 31, 2022	5,763,632	0.96

The fair value of each warrant is estimated on the date of grant using the Black-Scholes Option Pricing Model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatility of the Company’s shares. The expected term of warrants issued represents the period of time which those warrants are expected to be outstanding.

The risk-free rate of periods within the contractual life of the warrants is based on the Canadian government bond rate. Assumptions used for warrants issued during 2022 and 2021 are as follows:

	Number	Expected	Risk Free	Expected	Expected	Fair Value	Total Fair
	of	Price	Interest	Life	Dividend	per Warrant	Value
Issue Date	Warrants	Volatility	Rate	(Years)	Yield	($)	($)
November 29, 2021	119,546	83%	0.96%	2.0	-	0.32	37,850
January 14, 2022	597,069	83%	0.96%	2.0	-	0.32	189,040
January 14, 2022	2,922,017	83%	0.96%	2.0	-	0.24	693,160
February28,2022	2,125,000	138%	1.64%	2.0	-	0.41	866,969

As of December 31, 2022, the following warrants were outstanding:

	Remaining Life	Number of	Exercise Price
Expiry Date	(Years)	Warrants	($)
November 29, 2023	0.91	716,615	0.70
November 29,2023	0.91	5,047,017	1.00

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Flying Nickel Mining Corp. Notes to the Condensed Interim Financial Statements For The Twelve Months Ended December 31, 2022 (Expressed in Canadian Dollars) (Unaudited)

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8. Share Capital – continued

• (e) Loss per Share

Three Months Ended December 31, 2022 ($) Three Months Ended December 31, 2021 ($) Twelve Months Ended December 31, 2022 ($) December 21, 2020 to December 31, 2021 ($)	Three Months Ended December 31, 2022 ($) Three Months Ended December 31, 2021 ($) Twelve Months Ended December 31, 2022 ($) December 21, 2020 to December 31, 2021 ($)
Basic loss per share (0.01) (67.86) (0.06) (67.86) Diluted loss per share (0.01) (67.86) (0.06) (67.86) Net loss for theperiod (890,390) (360,642) (3,421,004) (360,642)
Three Months Ended December 31, 2022 ($) Three Months Ended December 31, 2021 ($) Twelve Months ended December 31, 2022 ($) December 21, 2020 to December 31, 2021 ($)
Shares outstanding, beginning of period 62,086,470 - 1,992,438 - Founder share cancelled - - (1) - Effect of shares issued under the Arrangement - - 48,219,178 - Effect of conversion of subscription receipts - - 9,734,519 - Effect of issuance of flow through shares - 5,314 - 5,314
Basic weighted average number of shares outstanding 62,086,470 5,314 59,946,134 5,314 Effect of dilutive share options - - - - Effect of dilutive warrants - - - -
Diluted weighted average number of shares outstanding 62,086,470 5,314 59,946,134 5,314

As at December 31, 2022, there were 3,960,000 (December 31, 2021 – nil) share options and 5,763,632 (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.

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Flying Nickel Mining Corp. Notes to the Condensed Interim Financial Statements For The Twelve Months Ended December 31, 2022 (Expressed in Canadian Dollars) (Unaudited)

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9. Related Party Transactions and Balances

The Company has entered into a Mutual Management and Technical Services Agreement (the “MMTSA”) with Silver Elephant, pursuant to which the companies will provide each other with general, technical and administrative services, as reasonably requested.

During the twelve months ended December 31, 2022, 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 executive and non-executive directors.

	Three Months	Three Months	Twelve	December 21,
	Ended	Ended	Months Ended	2020 to
	December 31,	December 31,	December 31,	December 31,
	2022	2021	2022	2021
	($)	($)	($)	($)
Fees to Silver Elephant under the MMTSA	57,159	99,862	412,299	99,862
Consulting fees for investor relation services paid to John Lee, Chairman and Interim CEO of the Company	30,000	10,000	120,000	10,000
Directors’ fees	37,800	4,000	103,600	4,000
Salaries and benefits paid to key management of the Company	34,632	109,438	432,754	109,438
Share-based payments to certain directors and officers of the Company	141,260	-	581,593	-
	300,851	223,300	1,650,246	223,300

As at December 31, 2022 the Company had balances due to related parties as follows:

	December 31,	December 31,
	2022	2021
	($)	($)
Receivable from Silver Elephant	1,022,211	1,268,826
Receivable from Nevada Vanadium, a company under common control	203,876	-
Receivable from Oracle, a company with certain directors and officers in common	157,587	-
Payable to John Lee	-	(10,000)
Directors’ feespayable	(48,800)	(4,000)
	1,334,874	1,254,826

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Flying Nickel Mining Corp. Notes to the Condensed Interim Financial Statements For The Twelve Months Ended December 31, 2022 (Expressed in Canadian Dollars) (Unaudited)

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10. 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 managements approach to capital management during the period ended December 31, 2022. Neither the Company nor its subsidiaries are subject to externally imposed capital requirements.

11. Fair Value Measurements and Financial Instruments

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. Cash is classified as Level 1. At December 31, 2022, 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, receivables, and accounts payable 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 period ended December 31, 2022

			Fair value at	Fair value at
			December 31,	December 31,
			2022	2021
Financial Instrument	Measurement Method	Associated Risks	($)	($)
Cash	FVTPL1(Level 1)	Credit and currency	584,998	-
Due from related parties	FVTPL1(Level 1)	Credit and currency	1,383,674	868,688
Receivables	Amortized cost	Credit and concentration	192,240	-
Accountspayable	Amortized cost	Currency	(434,662)	(362,072)
			1,726,250	506,616

1 Fair value through profit or loss

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Flying Nickel Mining Corp. Notes to the Condensed Interim Financial Statements For The Twelve Months Ended December 31, 2022 (Expressed in Canadian Dollars) (Unaudited)

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12. 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 December 31, 2022 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.

(a) 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 December 31, 2022, the Company’s maximum exposure to credit risk is the carrying value of its financial assets.

(b) Liquidity risk

Liquidity risk is the risk that an entity will be unable to meet its financial obligations as they fall due. The Company manages liquidity risk by preparing cash flow forecasts of upcoming cash requirements. As at December 31, 2022 the Company had a cash balance of $584,998 (December 31, 2021: restricted cash of $6,715,407) and had accounts payable and accrued liabilities of $500,540 (December 31, 2021: $362,072), which have contractual maturities of 90 days or less. Liquidity risk is assessed as high.

(c) Market Risk

The significant market risks to which the Company is exposed are interest rate risk, currency risk and equity price risk.

(d) 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. Because of the short-term nature of these financial instruments, fluctuations in market rates do not have a significant impact on estimated fair values as at December 31, 2022.

(e) 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 is therefore exposed to foreign currency risk arising from transactions denominated in a foreign currency and the translation of financial instruments denominated in US dollars into its reporting currency, the Canadian dollar.

(f) Equity Price Risk

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

Sensitivity Analysis

A 1% change in interest rates does not have a material effect on the Company’s profit or loss and equity.

The Company has certain accounts payables denominated in US Dollars. The Company estimates that a +/-10% change in the value of the Canadian dollar relative to US Dollar would have a corresponding effect of approximately $2,000 to profit or loss.

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Flying Nickel Mining Corp. Notes to the Condensed Interim Financial Statements For The Twelve Months Ended December 31, 2022 (Expressed in Canadian Dollars) (Unaudited)

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13. Segmented Information

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

14. Subsequent Events

On January 3, 2023, the Company granted incentive stock options (the “Options”) to certain directors, officers and employees to acquire a total of 1,400,000 common shares in the capital of the Company at an exercise price of $0.135. All Options were granted pursuant to the Company’s 10% rolling stock option plan (the “Plan”) and are subject to the terms of the Plan, the applicable grant agreements and the requirements of the TSX-V. The Options are exercisable for a five-year term expiring January 3, 2028. The Options will vest at 12.5% per quarter for the first two years following the grant date.

On February 15, 2022, the Company closed a non-brokered private placement and issued an aggregate of 5,370,000 units for aggregate gross proceeds of $859,200. Each unit 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.

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