Copperhead Resources Inc. — Interim / Quarterly Report 2024

Nov 18, 2024

COPPERHEAD RESOURCES INC.

CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited)

For the three and nine months ended September 30, 2024 and 2023

(Expressed in Canadian Dollars, unless otherwise noted)

Table of Contents

	Page
Notice of Non-Review of Condensed Interim Financial Statements	1
Financial Statements
Unaudited Condensed Interim Statements of Financial Position	2
Unaudited Condensed Interim Statements of Loss and Comprehensive Loss	3
Unaudited Condensed Interim Statements of Changes in Shareholders’ Equity	4
Unaudited Condensed Interim Statements of Cash Flows	5
Notes to the Unaudited Condensed Interim Financial Statements	6-12

NOTICE OF NON-REVIEW OF CONDENSED INTERIM FINANCIAL STATEMENTS

In accordance with National Instrument 51-102 Part 4, subsection 4.3(3)(a), Copperhead Resources Inc. (the “Company”) hereby informs all readers that the accompanying unaudited condensed interim financial statements of the Company have not been reviewed by its auditor and have prepared by and are the responsibility of management and Board of Directors for all financial statement information and reporting.

The attached unaudited condensed interim financial statements for the three and nine months ended September 30, 2024 and 2023 have not been reviewed by the Company’s auditor and should be read in conjunction with the Company’s management discussion and analysis (MD&A) on Form 51-102F1 for the three and nine months ended September 30, 2024 and 2023, as filed on SEDAR+.

Vancouver, BC

November 18, 2024

1

Copperhead Resources Inc. Statements of Financial Position As at

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Nature of operations and going concern (Note 1)

Approved and authorized for issue by the Board on November 18, 2024:

“Damian Lopez”

Signed: Director

“Matthew Larsen”

Signed: Director

The accompanying notes are an integral part of these financial statements

2

Copperhead Resources Inc.

Unaudited Condensed Interim Statements of Loss and Comprehensive Loss For the three and nine months ended September 30, 2024 and 2023

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The accompanying notes are an integral part of these financial statements

3

Copperhead Resources Inc.

Unaudited Condensed Interim Statements of Shareholders' Equity For the nine months ended September 30, 2024 and 2023

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The accompanying notes are an integral part of these financial statements

4

Unaudited Condensed Interim Statements of Cash Flows For the nine months ended September 30, 2024 and 2023

Copperhead Resources Inc.

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The accompanying notes are an integral part of these financial statements

5

Copperhead Resources Inc. Notes to the Unaudited Condensed Interim Financial Statements For the three and nine months ended September 30, 2024 and 2023

1. Nature of operations and going concern

Copperhead Resources Inc. (the “Company” or “Copperhead”) was incorporated on February 17, 2022 under the Business Corporations Act (British Columbia). The address of the Company’s registered office is 607 - 1750 Davie Street, Vancouver, BC V6G 1W3. The Company’s common shares are publicly traded on the Canadian Securities Exchange (the “CSE”) under the stock symbol “CUH.”

The Company is an exploration stage junior mining company engaged in the business of identification, acquisition and exploration of mineral interests. The recovery of the amounts comprising mineral properties is dependent upon the confirmation of economically recoverable reserves, the ability of the Company to obtain necessary financing to successfully complete their exploration and development, and upon future profitable production.

These financial statements have been prepared by management on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. At September 30, 2024, the Company had not yet achieved profitable operations, had accumulated losses of $608,204 since its inception, and expects to incur further losses in the development of its business, all of which casts significant doubt about the Company’s ability to continue as a going concern. A number of alternatives including, but not limited to selling an interest in one or more of its properties or completing a financing, are being evaluated with the objective of funding ongoing activities and obtaining working capital. The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future and repay its liabilities arising from normal business operations as they become due.

2. Basis of preparation

(a) Statement of compliance

These unaudited condensed interim financial statements for the three and nine months ended September 30, 2024 and 2023 have been prepared in accordance with International Financial Reporting Standard (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in accordance with International Accounting Standards (“IAS”) IAS 34 – Interim Financial Reporting. These condensed interim financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

These unaudited condensed interim financial statements do not include all of the information and disclosures required to be included in annual financial statements prepared in accordance with IFRS.

These unaudited condensed interim financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2023, which includes information necessary or useful to understanding the Company’s business and financial statement presentation. In particular, the Company’s significant accounting policies, use of judgements and estimates were presented in those audited financial statements and have been consistently applied in the preparation of these condensed interim financial statements.

(b) Basis of presentation

These unaudited condensed interim financial statements have been prepared on an historical cost basis, except for financial instruments classified as financial instruments at fair value through profit or loss, which are stated at fair value. In addition, these unaudited condensed

6

Copperhead Resources Inc. Notes to the Unaudited Condensed Interim Financial Statements For the three and nine months ended September 30, 2024 and 2023

interim financial statements have been prepared using the accrual basis of accounting except for cash flow information.

(c) Functional and presentation currency

These unaudited condensed interim financial statements are presented in Canadian dollars, which is the Company’s functional currency.

(d) Significant judgments, estimates and assumptions

The preparation of financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported revenues and expenses during the year. Although management uses historical experience and its best knowledge of the amount, events or actions to form the basis for judgments and estimates, actual results may differ from these estimates. The most significant accounts that require estimates as the basis for determining the stated amounts include recognition of deferred income tax amounts and provision for restoration, rehabilitation and environmental costs.

Critical judgments exercised in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as follows:

Economic recoverability and probability of future economic benefits of mineral properties Management has determined that mineral property costs incurred which were capitalized have future economic benefits and are economically recoverable. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefits including geological and metallurgic information, history of conversion of mineral deposits to proven and probable reserves, scoping and feasibility studies, accessible facilities, existing permits and life of mine plans.

Determination of functional currency

The Company determines the functional currency through an analysis of several indicators such as expenses and cash flow, financing activities, retention of operating cash flows, and frequency of transactions with the reporting entity.

Income taxes

In assessing the probability of realizing income tax assets, management makes estimates related to expectations of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified.

Site decommissioning obligations

The Company recognizes a provision for future abandonment activities in the financial statements equal to the net present value of the estimated future expenditures required to settle the estimated future obligation at the statement of financial position date. The measurement of the decommissioning obligation involves the use of estimates and assumptions including the discount rate, the expected timing of future expenditures and the amount of future abandonment costs. The estimates were made by management and external consultants considering current costs, technology and enacted legislation. As a result, there could be significant adjustments to the provisions established which would affect future financial results.

7

Copperhead Resources Inc. Notes to the Unaudited Condensed Interim Financial Statements For the three and nine months ended September 30, 2024 and 2023

3. Significant accounting policies

The same accounting policies and methods of computation were followed in the preparation of these unaudited condensed interim financial statements as were followed in the preparation of the most recent audited financial statements.

4. Mineral property interests

On April 6, 2022 (the “Commencement Date”), the Company entered into an agreement (the “Option Agreement”) with Romios Gold Resources Inc (“Romios”). The Company has the option to acquire 75% of Romios’ interest in a group of properties located in NW British Columbia, collectively referred to as the Red Line Project (or “Project”). The Company can exercise the option to acquire 75% of the project by:

• i) Incurring exploration expenditures of o $75,000 within 12 months of the Commencement Date (Met);

• $100,000 within 24 months of the Commencement Date (Met);

• $150,000 within 36 months of the Commencement Date;

• ii) Issuing:

• a. 1,000,000 common shares to Romios within 5 days of the Commencement Date (Issued on April 6, 2022);

• b. 500,000 common shares to Romios within 36 months of the Commencement Date;

• iii) Making a cash payment of $75,000 on or before the third anniversary of the Commencement Date; and

• iv) Enter into a joint venture with Romios to collectively operate the project, whereby the Company’s initial interest in the joint venture shall be 75% and Romios’s initial interest shall be 25%.

During the three and nine months ended September 30, 2024 and 2023, acquisition costs of $nil were incurred on mineral property interests.

5. Related party transactions

Related parties include management and directors, close family members and enterprises which are controlled by these individuals as well as certain persons performing similar functions.

As at September 30, 2024, $63,280 (December 31, 2023: $27,685) included in accounts payable and accrued liabilities is due to an entity in which a director of the Company is also a director and shareholder. These amounts are unsecured, non-interest bearing and due on demand.

During the three and nine months ended September 30, 2024, the Company incurred $10,500 and $31,500 respectively (three and nine months ended September 30, 2023: $10,500 and $31,500 respectively) in professional fees from an entity in which a director of the Company is also a director and shareholder.

All related party transactions are in the normal course of operations and have been measured at the agreed to amount, which is the amount of consideration established and agreed to by the related parties.

8

Copperhead Resources Inc. Notes to the Unaudited Condensed Interim Financial Statements For the three and nine months ended September 30, 2024 and 2023

6. Share capital

The Company was authorized to issue an unlimited number of common shares.

Issued
	Number of	Amount
	Common Shares	$
Balance, January 1, 2023	10,788,700	626,384
Share issuance (i)	303,000	30,300
Special warrant conversion(ii)	732,000	48,754
Balance December 31, 2023 and September 30, 2024	11,823,700	705,438

(i) On January 10, 2023, the Company completed a private placement of 303,000 common shares at $0.10 per share for gross proceeds of $30,300.

(ii) On May 15, 2023, 732,000 Special Warrants were converted to 732,000 common shares (Note 8).

7. Stock options

The stock option plan of the Company provides that the Board of Directors of the Company may from time to time, in its discretion and in accordance with the Exchange requirements, grant to directors, officers, consultants and employees of the Company, non-assignable and non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 10% of the total issued and outstanding common shares of the Company, exercisable for a period of up to five (5) years from the date of the grant.

	Number of		Weighted Average	Expiry Date
	Options		Exercise Price
Balance, January 1, 2023	-	$	-
Granted	975,000		0.10	December 1, 2028
Balance, December 31, 2023 and	975,000	$	0.10
September 30, 2024

On December 1, 2023, the Company granted options to its directors and officers entitling the purchase of 975,000 common shares at a price of $0.10 per common share. The options are for a five-year term, expiring on December 1, 2028, and vest on the date of grant. Options granted were allocated an estimated fair value using the Black-Scholes option pricing model to estimate the fair value using the weighted average assumptions of an expected forfeiture rate of 0%, a risk-free interest rate of 3.5%, an expected dividend yield of 0%, an expected stock price volatility of 110%, and an expected option life of five years. This resulted in a calculated fair value per stock option of $0.07985. During the three and nine months ended September 30, 2024, the Company recognized $nil and $nil respectively (three and nine months ended September 30, 2023: $nil and $nil respectively) of share-based compensation that were recorded as contributed surplus. The weighted average remaining contractual life of the options outstanding at September 30, 2024 is 4.17 years (September 30, 2023: nil).

8. Special warrants

On March 7, 2023, the Company issued 532,000 special warrants at $0.10 per special warrant for total proceeds of $53,200 and issued 200,000 special warrants as commission to the agent (the “Special Warrants”) valued at $20,000. The Company incurred an additional $4,446 in issuance costs related to these Special Warrants. These Special Warrants were converted to common shares on a one-to-one basis on May 15, 2023, in conjunction with the Company’s filing of a final prospectus.

9

Copperhead Resources Inc. Notes to the Unaudited Condensed Interim Financial Statements For the three and nine months ended September 30, 2024 and 2023

9. Exploration expenditures

The Company’s exploration expenditures are as follows:

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10. Financial instruments and risk management

Fair value hierarchy

As at September 30, 2024, the Company’s only financial instruments are comprised of cash, other receivables and accounts payables. The fair value of these financial instruments approximates their carrying value due to their short-term maturity. Fair values of financial instruments are classified in a fair value hierarchy based on the inputs used to determine fair values. The levels of the fair value hierarchy are as follows:

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

As at September 30, 2024, the fair value of cash held by the Company was based on level 1 inputs of the fair value hierarchy.

The fair value of the Company’s financial instruments has been classified within the fair value hierarchy as at September 30, 2024 as follows:

	Level 1	Level 2	Level 3	Total
Financial Assets
Cash	$ 216,483	-	-	$ 216,483
	$ 216,483	-	-	$ 216,483

10

Copperhead Resources Inc.

Notes to the Unaudited Condensed Interim Financial Statements For the three and nine months ended September 30, 2024 and 2023

As at September 30, 2024, there were no financial assets or liabilities measured and recognized in the statements of financial position at fair value that would be categorized as Level 2 or 3 in the fair value hierarchy above.

Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

(a) Credit risk

The Company’s cash is largely held in large Canadian financial institutions. The Company does not have any asset-backed commercial paper. The Company maintains cash deposits with Schedule A financial institution, which from time to time may exceed federally insured limits. The Company has not experienced any significant credit losses and believes it is not exposed to any significant credit risk.

(b) Liquidity risk

The Company is exposed to liquidity risk or the risk of not meeting its financial obligations as they come due. The Company constantly monitors and manages its cash flows to assess the liquidity necessary to fund operations (see note 1). As at September 30, 2024, the Company had a cash balance of $216,483 to settle current and future liabilities and as such, is not exposed to significant liquidity risk.

(c) Interest rate risk

Interest rate risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Financial assets and liabilities with variable interest rates expose the Company to cash flow interest rate risk. The Company does not hold any financial liabilities with variable interest rates. The Company does maintain bank accounts which earn interest at variable rates but it does not believe it is currently subject to any significant interest rate risk.

(d) Foreign currency risk

The Company's functional currency is the Canadian dollar and major purchases are transacted in Canadian dollars. Management believes the foreign exchange risk derived from currency conversions is negligible. The foreign exchange risk is therefore manageable and not significant. The Company does not currently use any derivative instruments to reduce its exposure to fluctuations in foreign exchange rates.

(e) Price risk

The ability of the Company to explore its mineral properties and the future profitability of the Company are directly related to the market price of precious metals. The Company monitors precious metals prices to determine the appropriate course of action to be taken by the Company.

(f) Capital management

The Company defines its capital as shareholders’ equity. The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition and exploration and development of mineral properties. The Board of Directors do not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business. The properties in which the Company currently has an interest are in the exploration

11

Notes to the Unaudited Condensed Interim Financial Statements For the three and nine months ended September 30, 2024 and 2023

Copperhead Resources Inc.

stage. As such, the Company has historically relied on the equity markets to fund its activities. In addition, the Company is dependent upon external financings to fund activities. In order to carry out planned exploration and pay for administrative costs, the Company will need to raise additional funds. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

There were no changes in the Company’s approach to capital management during the period ended September 30, 2024.

11. Segmented information

The Company operates in one reportable operating segment, being the acquisition and exploration of mineral properties in Canada. As the operations comprise a single reporting segment, amounts disclosed also represent segment amounts.

12