GR SILVER MINING LTD. — Audit Report / Information 2023

Apr 22, 2024

GR SILVER MINING LTD.

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023 AND 2022

(Expressed in Canadian Dollars)

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INDEPENDENT AUDITOR’S REPORT

To the Shareholders of GR Silver Mining Ltd.

Opinion

We have audited the accompanying consolidated financial statements of GR Silver Mining Ltd. (the “Company”), which comprise the consolidated statements of financial position as at December 31, 2023 and 2022, and the consolidated statements of loss and comprehensive loss, changes in shareholders’ equity (deficiency), and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

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

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the consolidated financial statements, which indicates that the Company has a working capital deficiency of $23,706,229 and an accumulated deficit of $82,711,596, and expects to incur further losses in the exploration and advancement of its mineral projects. As stated in Note 1, these events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

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

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 our auditor’s report.

Assessment of Impairment Indicators of Exploration and Evaluation Assets (“E&E Assets”)

As described in Note 5 to the consolidated financial statements, the carrying amount of the Company’s E&E Assets was $7,424,819 as of December 31, 2023. As more fully described in Note 2 to the consolidated financial statements, management assesses E&E Assets for indicators of impairment at each statement of financial position date.

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The principal considerations for our determination that the assessment of impairment indicators of the E&E Assets is a key audit matter is 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 Assets.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures included, among others:

• Obtaining an understanding of the key controls associated with evaluating the E&E Assets for indicators of impairment.

• Evaluating the reasonableness of management’s assessment of indicators of impairment for the E&E Assets.

• Evaluating the intent for the E&E Assets through discussion and communication with management.

• Obtaining confirmation of title to ensure mineral rights underlying the E&E Assets are in good standing.

Estimate of Reclamation Provisions related to Exploration and Evaluation Assets

As described in Note 9 to the consolidated financial statements, the carrying amount of the Company’s reclamation provision was $2,847,403 as of December 31, 2023. As more fully described in Note 2 to the consolidated financial statements, management assesses its provision for restoration, rehabilitation and environmental obligations on an annual basis or when new material information becomes available.

The principal considerations for our determination that the estimate of reclamation provisions is a key audit matter are that estimating the costs of such reclamation activities includes significant judgement such as when the reclamation will take place, the time period required to undertake the reclamation, the extent and costing of reclamation activities, regulatory and legislative changes, inflation and discount rates utilized. 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 estimate of the net present value of reclamation provisions.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures included, among others:

• Evaluating the qualifications, competence and objectivity of management’s experts related to the cost estimation process of the reclamation provisions.

• Assessing the reasonableness of changes in cost estimates against prior year calculations and timing of expected reclamation activities.

• Evaluating the mathematical accuracy of the reclamation provision model.

• • Evaluating the inflation rate and discount rate utilized in the reclamation provision model.

Other Information

Management is responsible for the other information. The other information obtained at the date of this auditor's report includes Management’s Discussion and Analysis.

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

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

We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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

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

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Michael MacLaren.

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Vancouver, Canada April 19, 2024

Chartered Professional Accountants

GR SILVER MINING LTD.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT DECEMBER 31

(Expressed in Canadian Dollars)

		2023		2022
ASSETS Current Cash Receivables (Note 3) Prepaids Equipment(Note 4) Exploration and evaluation assets(Note 5) Reclamation provision indemnification asset(Note 9 and Note 16) Value added tax receivable(Note 3)		$ 100,573 20,404 201,355 322,332 992,769 7,424,819 1,190,055 793,474 $10,723,449		$ 902,238 11,722 324,634 1,238,594 1,482,432 19,724,680 986,407 1,851,391 $25,283,504
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIENCY) Current liabilities Accounts payable and accrued liabilities (Note 8) Mexico mining concession fees (Note 7) Non-current liabilities Reclamation provision (Note 9) Total liabilities Shareholders’ equity (deficiency) Share capital (Note 10) Share compensation reserve (Note 10) Deficit		$ 1,928,103 22,100,458 24,028,561 2,847,403 26,875,964 58,207,921 8,351,160 (82,711,596) (16,152,515) $10,723,449		$ 951,380 17,392,058 18,343,438 2,347,359 20,690,797 54,011,616 7,694,698 (57,113,607) 4,592,707 $25,283,504

Nature of operations and going concern (Note 1) Subsequent events (Note 16)

Approved and authorized by the Board on April 19, 2024:

“Eric Zaunscherb” Director “Larry Taddei” Director

The accompanying notes are an integral part of these consolidated financial statements.

GR SILVER MINING LTD.

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS FOR THE YEAR ENDED DECEMBER 31

(Expressed in Canadian Dollars)

	2023	2022
EXPENSES Consulting Concession fees (Note 7) Depreciation (Note 4) Exploration expenditures (Note 6 and 8) Investor relations Office Professional fees (Note 8) Salaries (Note 8) Share-based compensation (Note 8 and 10) Transfer agent Travel Accretion expense on restoration obligation (Note 9) Foreign exchange loss Provision on value added tax (Note 3) Impairment on exploration and evaluation assets (Note 5) Interest income Retirement of concession fees (Note 7) Sale of assets Gain (loss) on settlement of accounts payable (Note 10) Other Loss and comprehensive loss for the year	$ 121,319 7,291,259 489,663 4,082,583 289,087 471,543 502,834 1,396,864 234,208 94,306 59,833 (15,033,499) (6,930) (2,036,604) (981,160) (12,589,327) 44,829 4,732,000 26,941 (6,619) 252,380 $ (25,597,989)	$ 108,610 6,844,123 573,239 7,109,227 608,431 650,993 575,206 2,050,881 453,446 179,631 154,739 (19,308,526) (6,727) (1,458,542) (693,251) - 62,382 2,612,428 - 4,792 (6,733)
		$ (18,794,177)
Loss per common share -Basic and diluted	$ (0.10)	$ (0.10)
Weighted average number of common shares outstanding -Basic and diluted	265,863,817	195,654,720

The accompanying notes are an integral part of these consolidated financial statements.

GR SILVER MINING LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31

(Expressed in Canadian Dollars)

	2023 2022
CASH FLOWS FROM OPERATING ACTIVITIES Loss for the year Items not affecting cash: Depreciation Accretion expense on restoration obligation (Gain) loss on settlement of accounts payable Retirement of concession fees Loss on equipment disposal Share-based compensation Impairment on value added tax Impairment on exploration and evaluation assets Changes in non-cash working capital items: Decrease (Increase) in receivables Decrease (Increase) in value added tax Decrease (Increase) in prepaids Increase in concession fees payable Decrease (Increase) in accounts payable and accrued liabilities Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Equipment disposal Equipment additions Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of shares Share issue costs Net cash provided by financing activities Change in cash during the year Cash, beginning of year Cash, end of year	$ (25,597,989) $ (18,794,177) 489,663 573,239 6,930 6,727 (6,619) 4,792 (4,732,000) (2,612,428) - 7,209 234,208 453,446 981,160 693,251 12,589,327 - (8,682) 13,797 76,757 (315,474) 123,279 (61,226) 9,440,399 7,159,698 1,090,854 (680,732)
	(5,312,713) (13,561,462)
	- 26,898 - (282,583)
	- (255,685)
	4,729,875 12,874,871 (218,827) (1,233,282)
	4,511,048 11,641,589
	(801,665) (2,175,558) 902,238 3,077,796
	$ 100,573 $ 902,238

Supplemental disclosure with respect to cash flows (Note 11)

The accompanying notes are an integral part of these consolidated financial statements.

GR SILVER MINING LTD. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY) (Expressed in Canadian Dollars)

		**Share Capital **	**Share Capital **		Reserves	Deficit	**Total **
		**Number **	Amount
Balance, December 31, 2021 Cash transactions Private placement, special warrants Exercise of warrants Share issue costs Non-cash transactions Reclassification of reserves on exercise of warrants Finder’s fees – warrants issued Debt settlement Residual value of warrants Share-based compensation Net loss for the year Balance, December 31, 2022 Cash transactions Private placement Exercise of warrants Share issue costs Non-cash transactions Reclassification of reserves on exercise of warrants Finder’s fees – warrants issued Debt settlement Residual value of warrants Share-based compensation Net loss for the year Balance, December 31, 2023		167,442,155 63,499,755 400,987 - - - 136,909 - - - 231,479,806 69,397,500 300,000 - - - 1,343,891 - - - 302,521,197	$ 45,492,226 12,793,374 81,497 (1,233,282) 39,970 (331,851) 28,751 (2,859,069) - - 54,011,616 4,684,875 45,000 (218,827) 6,000 (34,279) 107,511 (393,975) - - $ 58,207,921		$ 4,090,302 - - - (39,970) 331,851 - 2,859,069 453,446 - 7,694,698 - - - (6,000) 34,279 - 393,975 234,208 - $ 8,351,160	$ (38,319,430) - - - - - - - - (18,794,177) (57,113,607) - - - - - - - (25,597,989) $ (82,711,596)	$ 11,263,098 12,793,374 81,497 (1,233,282) - - 28,751 - 453,446 (18,794,177) 4,592,707 4,684,875 45,000 (218,827) - - 107,511 - 234,208 (25,597,989) $ (16,152,515)

The accompanying notes are an integral part of these consolidated financial statements.

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

GR Silver Mining Ltd. (the “Company” or “GR Silver”) was incorporated on November 8, 2012, under the laws of British Columbia. The Company’s registered and records office is 600 – 890 West Pender Street, Vancouver, B.C. V6C 1J9. To date, the Company has not generated any operating revenue. The Company trades on the TSX Venture Exchange (TSX-V) under the trading symbol GRSL.

As at December 31, 2023, the Company has a working capital deficiency of $23,706,229 and an accumulated deficit of $82,711,596. The Company expects to incur further losses in the exploration and advancement of its mineral projects. The Company's ability to continue the exploration of its mineral projects and to realize its assets at their carrying values is dependent upon obtaining additional financing and generating revenues sufficient to cover its operating costs. These material uncertainties may cast significant doubt on the Company’s ability to continue as a going concern.

The Company is in the business of acquiring and exploring exploration and evaluation assets and has not yet determined whether any of its properties contain reserves that are economically recoverable. The recoverability of the amounts shown for exploration and evaluation assets are dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of those reserves and upon future profitable production.

These consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and thus be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in these consolidated financial statements.

2. MATERIAL ACCOUNTING POLICIES

Statement of compliance

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

These consolidated financial statements were authorized for issue by the Board of Directors on April 19, 2024.

Basis of presentation

These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments measured at fair value, as explained in the accounting policies set out in Note 2. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

Reclassification of prior amounts

The Company has reclassified certain comparative information on the consolidated statements of loss and comprehensive loss to conform with the current period presentations.

Basis of consolidation

These consolidated financial statements of the Company include the balances of its subsidiaries from the date that control is obtained, Goldplay de Mexico SA de CV, Minera San Marcial SA de CV, Minera Matatan SA de CV (“Matatan”), and Marlin Gold Mining Ltd. (“Marlin”) which are wholly owned subsidiaries incorporated in Mexico. Mineral La Rastra SA de CV which is owned 100% by Matatan and Oro Gold de S.A. de C.V. (“Oro Gold”) and Marlin

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

2. MATERIAL ACCOUNTING POLICIES (cont’d…)

Gold Trading Inc. are 100% owned by Marlin.

The Company consolidates its subsidiaries on the basis that it controls the subsidiaries through its ability to govern its financial and operating policies.

All intercompany transactions and balances are eliminated on consolidation.

Foreign currency transactions

The Company’s reporting currency and the functional currency of all its operations is the Canadian dollar as this is the principal currency of the economic environment in which it operates.

Applicable to all entities in the group, transactions in foreign currencies are translated at the exchange rate in effect at the date of the transaction. Foreign denominated monetary assets and liabilities are translated to their Canadian dollar equivalents using foreign exchange rates prevailing at the statement of financial position date. Exchange gains or losses arising on foreign currency translation are reflected in profit or loss for the year.

Exploration and evaluation assets

Exploration and evaluation assets include all costs related to the acquisition of exploration and evaluation assets. All costs related to exploration and evaluation incurred during the exploration and evaluation phase are expensed as incurred and recognized in profit or loss. Costs incurred before the Company has obtained the legal rights to explore an area are recognized in profit or loss.

Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mining property and development assets within equipment.

Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

Financial instruments

The Company recognizes financial assets and financial liabilities when it becomes a party to a contract.

The Company classifies its financial assets in the following categories: at fair value through profit or loss (“FVTPL”), at fair value through other comprehensive income (“FVTOCI”) or at amortized cost. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Financial assets at FVTPL

Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed to profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial asset held at FVTPL are included in profit or loss in the period in which they arise.

Financial assets at FVTOCI

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

2. MATERIAL ACCOUNTING POLICIES (cont’d…)

Investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.

Financial assets at amortized cost

Financial assets at amortized cost are initially recognized at fair value and subsequently carried at amortized cost less impairment. They are classified as current assets or non-current assets based on their maturity date.

Financial assets are derecognized when they mature or are sold, and substantially all the risks and rewards of ownership have been transferred. Gains and losses on derecognition of financial assets classified as FVTPL or amortized cost are recognized in profit or loss. Gains or losses on financial assets classified as FVTOCI remain within accumulated other comprehensive income. Cash, receivables and value added taxes are classified as amortized cost.

Impairment of financial assets 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 loss allowance for the financial asset is measured 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 financial asset has not increased significantly since initial recognition, the loss allowance is measured for the financial asset at an amount equal to twelve month expected credit losses. For trade receivables the Company applies the simplified approach to providing for expected credit losses, which allows the use of a lifetime expected loss provision. Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be objectively related to an event occurring after the impairment was recognized.

The effective interest method is a method of calculating the amortized cost of an instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all transaction costs and other premiums or discounts) through the expected life of the debt instrument to the net carrying amount on initial recognition.

Financial liabilities

All financial liabilities are initially recorded at fair value and designated upon inception as FVTPL or amortized cost. At December 31, 2023, the Company has not classified any financial liabilities as FVTPL.

Financial liabilities classified as amortized cost liabilities are initially recognized at fair value less directly attributable transaction costs. After initial recognition, these financial liabilities are subsequently measured at amortized cost using the effective interest rate method. The effective interest rate method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. The Company’s accounts payable and accrued liabilities and concession fees payable are classified as amortized cost.

Financial liabilities classified as FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Derivatives, including separated embedded derivatives are also classified as held for trading and recognized at fair value with changes in fair value recognized in profit or loss unless they are designated as effective hedging instruments. Fair value changes on financial liabilities and Mexico mining concession fees classified as FVTPL are recognized in profit or loss.

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

2. MATERIAL ACCOUNTING POLICIES (cont’d…)

Significant accounting estimates and judgments

The preparation of these consolidated financial statements requires management to make judgments and estimates and form assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the statement of financial position and the reported amount of revenues and expenses during the reporting year. Actual results could differ from these estimates. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in future periods affected.

Significant accounts that require estimates as the basis for determining the stated amounts include evaluating the potential impairment of exploration and evaluation assets, share-based payments, collectability of value added tax (“VAT”), valuation of the reclamation provision, indemnification assets and determination of mining concession fees payable.

Economic recoverability and probability of future economic benefits of exploration and evaluation assets

Management has determined that exploration, evaluation, and related costs incurred which were capitalized may have future economic benefits and may be economically recoverable. Management uses several criteria in its assessment of economic recoverability and probability of future economic benefits, including geologic and other technical information, a history of conversion of mineral deposits with similar characteristics to its own properties to proven and probable mineral reserves, the quality and capacity of existing infrastructure facilities, evaluation of permitting and environmental issues and local support for the project.

Valuation of share-based compensation

The Company uses the Black-Scholes Option Pricing Model for valuation of share-based compensation. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate, and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves.

Collectability of value added tax and indemnification assets

The Company pays VAT on expenditures that it incurs in Mexico. Such VAT payments are considered to be refundable, however the timing and successful recovery includes estimation uncertainty. Management has estimated and accrued the likely refundable amount. Indemnification assets relate to estimated contractual obligations payable by a vendor (Note 9 and Note 16). In determining the likelihood of collection the Company has considered the liquidity and working capital of the vendor.

Provision for environmental rehabilitation

The Company assesses its provision for restoration, rehabilitation and environmental obligations on an annual basis or when new material information becomes available. Mining and exploration activities are subject to various laws and regulations governing the protection of the environment. In general, these laws and regulations are continually changing and the Company has made, and intends to make in the future, expenditures to comply with such laws and regulations. Accounting for decommissioning and restoration provisions requires management to make estimates of the future costs the Company will incur to complete the reclamation and remediation work required to comply with existing laws and regulations at each mining operation. Actual costs incurred may differ from those amounts estimated. In addition, future changes to environmental laws and regulations could increase the extent of reclamation and remediation work required to be performed by the Company. Increases in future costs could materially impact the amounts charged to operations for reclamation and remediation. The provision represents management’s best estimate of the present value of the future decommissioning and restoration provision. The actual future expenditures may differ from the amounts currently provided.

Significant judgements include the following:

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

2. MATERIAL ACCOUNTING POLICIES (cont’d…)

Functional currency

The functional currency for each of the Company’s subsidiaries is the currency of the primary economic environment in which the entity operates. Determination of functional currency may involve certain judgments to determine the primary economic environment and the Company reconsiders the functional currency of its entities if there is a change in events and conditions which determined the primary economic environment.

Going Concern

The Company must assess its ability to continue as a going concern. Factors that affect this determination include current cash and investments, budgeted expenditures for future periods and the conditions of the market for exploration companies.

Impairment

At the end of each reporting period the carrying amounts of the Company’s assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in profit or loss for the year. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.

Where an impairment subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate and its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

Share capital

Common shares are classified as equity. Transaction costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects.

The Company engages in equity financing transactions to obtain the funds necessary to continue operations and explore and evaluate exploration and evaluation assets. These equity financing transactions may involve issuance of common shares or units. Each unit comprises a certain number of common shares and a certain number of warrants. Depending on the terms and conditions of each equity financing transaction, the warrants are exercisable into additional common shares at a price prior to expiry as stipulated by the transaction. Warrants that are part of units are assigned a value based on the residual value, if any, and included in reserves.

Warrants that are issued as payment for agency or finders’ fees or other transactions costs are accounted for as sharebased payments.

Share-based payments

The fair value of options or compensatory warrants granted is recognized as a share-based payments expense with a corresponding increase in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee. Consideration paid on the exercise of stock options is credited to share capital and the fair value of the options is reclassified from reserve to share capital.

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

2. MATERIAL ACCOUNTING POLICIES (cont’d…)

The fair value of options granted is measured at grant date and each tranche is recognized over the period during which the options vest. The fair value is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. At each reporting date, the amount recognized as an expense is adjusted to reflect the number of stock options that are expected to vest.

Share-based payments to non-employees, who are not providing similar services to employees, are measured at the grant date by using the fair value of the goods or services received or the fair value of the equity instruments issued if it is determined the fair value of the goods or services received cannot be reliably measured and are recorded at the date the goods or services are received.

Related party transactions

Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. A transaction is a related party transaction when there is a transfer of resources or obligations between related parties.

Provisions

Rehabilitation provisions

The Company recognizes liabilities for statutory, contractual, constructive, or legal obligations, including those associated with the reclamation of exploration and evaluation assets and equipment, when those obligations result from the acquisition, construction, development or normal operation of the assets. Initially, a liability for rehabilitation obligation is recognized at its fair value in the year in which it is incurred if a reasonable estimate of cost can be made. The Company records the present value of estimated future cash flows associated with rehabilitation as a liability when the liability is incurred and increases the carrying value of the related assets for that amount. Subsequently, these rehabilitation costs are amortized over the life of the related assets. At the end of each period, the liability is increased to reflect the passage of time and changes in the estimated future cash flows underlying any initial estimates.

The Company recognizes its environmental liability on a site-by-site basis when it can be reliably estimated. Environmental expenditures related to existing conditions resulting from past or current operations and from which no current or future benefit is discernible are charged to profit or loss.

Income taxes

Current tax is the expected tax payable or receivable on the local taxable income or loss for the year, using local tax rates enacted or substantively enacted at the financial position reporting date and includes any adjustments to tax payable or receivable in respect of previous years.

Deferred income taxes are 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 laws that have been enacted or substantively enacted by the financial position reporting date. Deferred tax is not recognized for temporary differences which arise on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting, nor taxable profit or loss.

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.

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

2. MATERIAL ACCOUNTING POLICIES (cont’d…)

Earnings (loss) per share

The Company presents basic and diluted earnings (loss) per share data for its common shares, calculated by dividing the earnings (loss) attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti-dilutive.

Equipment

Recognition and measurement

On initial recognition equipment is valued at cost, being the purchase price and directly attributable costs of acquisition or construction required to bring the asset to the location and condition necessary to be capable of operating in the manner intended by the Company, including appropriate borrowing costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognized within provisions.

Equipment is subsequently measured at cost less accumulated depreciation, less any accumulated impairment losses, except for land, which is not depreciated.

Depreciation

Depreciation is recognized in profit or loss at the following annual rates:

• Office equipment – 10% to 30% declining balance basis.

• Exploration equipment – 10% to 20% declining balance basis

• Mobile equipment – 20% to 25% declining balance basis

• Building – 10% declining balance and useful life

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

New accounting policies and amendments

The Company adopted: Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) – the amendments require that an entity disclose its material accounting policies, instead of its significant accounting policies. Further amendments explain how an entity can identify a material accounting policy.

The Company adopted amendments made to IAS 12. IAS 12 was amended so that it no longer applies to transactions that give rise to equal and offsetting temporary differences. As a result, companies will need to recognize a deferred tax asset and a deferred tax liability for temporary differences arising on initial recognition of a lease and a decommissioning provision. The adoption of this amendment did not have a material impact on the audited consolidated financial statements.

Amendments not yet adopted

Amendment to IAS 1: Presentation of Financial Statements

Amendments to IAS 1 clarify the requirements for classifying liabilities as current or non-current. The amendments provide a more general approach to the classification of liabilities based on the contractual arrangements in place at the reporting date. The Company does not expect this amendment to have a material effect on the classification of liabilities.

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

3. RECEIVABLES

The Company’s current receivables primarily consist of refundable sales tax from government taxation authorities in Canada.

The Company maintains its value added tax receivable from the taxation authorities in Mexico as a long-term receivable due to a historically lengthy collection cycle. During the year ended December 31, 2023, the Company provisioned value added tax by $981,160 (December 31, 2022 - $693,251) based on increasing provisions for aged value added tax receivable.

	December 31,	December 31,	December 31,
		2023	2022
GST receivable	$	7,242 $	10,768
Other receivables		13,162	954
Current receivable	$	20,404 $	11,722
VAT receivable		793,474	1,851,391
Total receivable	$	813,878 $	1,863,113

4. EQUIPMENT

Office Equipment Mobile Equipment Exploration Equipment	Buildings Total
Cost: Balance at December 31, 2021 $ 75,605 $ 63,257 $ 1,287,827 Additions - 77,361 118,230 Disposal - - (46,141)	$ 886,918 $ 2,313,607 86,992 282,583 - (46,141)
Balance at December 31, 2022 $ 75,605 $ 140,618 $ 1,359,916 Disposal - - (150,209)	$ 973,910 $ 2,550,049 - (150,209)
Balance at December 31, 2023 $ 75,605 $ 140,618 $ 1,209,707	$ 973,910 $ 2,399,840
Accumulated Depreciation: Balance at December 31, 2021 $ 23,393 $ 21,143 $ 216,328 Depreciation 30,884 110,757 142,988 Disposal - - (12,034)	$ 245,548 $ 506,412 288,610 573,239 - (12,034)
Balance at December 31, 2022 $ 54,277 $ 131,900 $ 347,282 Depreciation - 8,718 324,136 Disposal - - (150,209)	$ 534,158 $ 1,067,617 156,809 489,663 - (150,209)
Balance at December 31, 2023 $ 54,277 $ 140,618 $ 521,209	$ 690,967 $ 1,407,071
Net Book Value December 31, 2022 $ 21,328 $ 8,718 $ 1,012,634 December 31, 2023 $ 21,328 $ - $ 688,498	$ 439,752 $ 1,482,432 $ 282,943 $ 992,769

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

5. EXPLORATION AND EVALUATION ASSETS

The Company’s capitalized acquisition expenditures on its exploration and evaluation assets are as follows:

	San Marcial, Mexico Plomosas, Mexico	La Trinidad, Mexico	Total
Balance, December 31, 2021 Reclamation provision, net of indemnification Balance, December 31, 2022 Reclamation provision Impairment	$ 4,045,500 $ 3,094,180 - 182,001 $ 4,045,500 $ 3,276,181 - 103,138 - -	$ 12,638,084 (235,085) $ 12,402,999 186,328 (12,589,327)	$ 19,777,764 (53,084) $ 19,724,680 289,466 (12,589,327)
Balance, December 31, 2023	$ 4,045,500 $ 3,379,319	$ -	$ 7,424,819

San Marcial Property, Mexico

The Company owns a 100% interest in the San Marcial Property located in the Rosario Mining District, Sinaloa, Mexico. The San Marcial Property is subject to a net smelter royalty (“NSR”) of 0.75%. The Company has a buy-back right on the NSR that can be exercised at any time by paying $1,250,000. The Company also assumed a pre-existing 3% NSR on the San Marcial Property which is subject to a buy back right on the NSR of US$600,000 per 1% that can be exercised by the Company at any time and from time to time, in whole or in part.

Plomosas Property, Mexico

The Company owns a 100% interest in the Plomosas Property located in the Rosario Mining District, Sinaloa, Mexico. The Plomosas Property is subject to a 2% NSR with half of the NSR (i.e., 1% NSR) being subject to a buy-back for US$1,000,000. The Company also assumed a pre-existing NSR ranging between 1.75% and 3.5% based on the price of zinc.

La Trinidad Property, Mexico

The Company owns a 100% interest in the La Trinidad Property located in the Rosario Mining District, Sinaloa, Mexico. The La Trinidad Property is subject to a 1% NSR with the NSR being subject to a buy-back for US$2,000,000 at any time. The Company also assumed pre-existing NSR’S between 0.5% and 2.5% on certain claims within the concession package.

The Company had an agreement with the vendor of the La Trinidad Property under which the vendor has agreed to remediate and indemnify the Company against reclamation obligations that existed at the time of acquisition in 2021. Subsequent to the year end, the Company closed a waiver and release agreement with the vendor, under which the parties were mutually released from outstanding undertakings, covenants, indemnities and obligations set out in, arising from, or related to the Company’s acquisition of Marlin notably the indemnification for reclamation (Note 16).

The Company separately entered into an agreement to sell certain non-core concessions (Note 7) that has not yet completed as of December 31, 2023.

During the year ended December 31, 2023, the Company determined that the carrying value of its interest in the La Trinidad property was impaired because no additional expenditures are planned for the property at this time. The Company accordingly wrote down acquisition and exploration expenditures on the property of $12,589,327 as impairment of exploration and evaluation assets.

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

5. EXPLORATION AND EVALUATION ASSETS (cont’d…)

El Habal Property, Mexico

The Company has a 100% interest in the El Habal Property. The property is subject to an NSR between 1.0% and 1.5%.

The Company has issued an option to purchase a 1% NSR on the El Habal Property which can be exercised by payment to the Company of US$1,000,000 per 0.5% NSR, for a total option exercise price of US$2,000,000 for a 1% NSR. The Company also issued a 1% royalty on concessions adjacent to the property.

6. EXPLORATION EXPENDITURES

Exploration expenditures for the year ended December 31, 2023:

Community relations Drilling Environmental/reclamation Field Geochemistry Geological Technical reports Survey Topography	$ - - - 48 - - - - - $ 48	$ 99,459 294,044 - 323,779 154,653 519,850 5,793 40,369 5,068 $ 1,443,015	$ 2,350 217,418 68,816 834,976 314,085 615,794 152,128 - 9,797 $ 2,215,364	$ 309,229 - - 34,077 - 80,850 - - - $ 424,156	$ 411,038 511,462 68,816 1,192,880 468,738 1,216,494 157,921 40,369 14,865 $ 4,082,583

Exploration expenditures for the year ended December 31, 2022, are comprised of the following:

				San				La
		El Habal		Marcial		Plomosas		Trinidad		Total
Community relations	$	-	$	101,028	$	40,948	$	202,585	$	344,561
Consulting		-		8,433		12,317		-		20,750
Drilling		-		808,975		1,086,816		-		1,895,791
Environmental		-		16,134		82,069		-		98,203
Field		10,680		443,004		1,661,702		91,797		2,207,183
Geological		4,426		665,682		781,393		19,600		1,471,101
Geochemistry		-		316,430		525,636		20,571		862,637
Metallurgical		-		-		-		117,157		117,157
Report preparation		-		1,240		14,888		-		16,128
Topography		-		24,607		51,109		-		75,716
Total	$	15,106	$	2,385,533	$	4,256,878	$	451,710	$	7,109,227

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

7. CONCESSION FEES

December 31, 2023	Mexico	Mexico	Mexico	Mexico	Total
Concession fees expense Retirement(1) Net expense Fees payable, December31,2023	$ 211,062 - $ 221,062 $ 304,578	$ 44,722 - $ 44,722 $ 45,911	$ 316,196 - $ 316,196 $ 312,681	$ 6,719,279 (4,732,000) $ 1,987,279 $21,437,288	$ 7,291,259 (4,732,000) $ 2,559,259 $ 22,100,458
December 31, 2022	El Habal, Mexico	San Marcial, Mexico	Plomosas, Mexico	La Trinidad, Mexico	Total
Concession fees expense Retirement(1) Net expense Fees payable, December31,2022	$ 131,548 - $ 131,548 $ 78,254	$ 31,798 - $ 31,798 $ -	$ 216,566 - $ 216,566 $ -	$ 6,464,211 (2,612,428) $ 3,851,783 $17,313,804	$ 6,844,123 (2,612,428) $ 4,231,695 $ 17,392,058

(1) During the years ended December 31, 2023 and 2022, a portion of the concession fees became statute barred and are no longer payable resulting in the Company recognizing a concession fee retirement.

During fiscal 2021 the Company entered into an agreement to sell the El Salto and El Salto Sur non-core concessions within the La Trinidad Property in an arm’s length transaction. The Company will receive no consideration except the purchaser will be responsible for $13,216,184 (December 31, 2022 - $10,052,581) of the concession fees owed. Approval of the transaction is pending and is subject to approval from government agencies in Mexico.

8. RELATED PARTY TRANSACTIONS

Key management personnel include those people who have authority and responsibility for planning, directing and controlling the activities of the Company. The Company has determined that key management personnel consist of executive and non-executive members of the Company’s Board of Directors and corporate officers. Key management personnel compensation for the year ended December 31 was:

		2023	2022
Short-term benefits paid or
accrued:
Salaries	$	702,271 $	1,135,519
Director fees		2,000	49,917
Consulting fees		60,500	-
Share-based compensation		178,958	309,442
Professional fees		83,275	203,232
Total remuneration	$	1,027,005 $	1,698,110

Included in accounts payable and accrued liabilities as at December 31, 2023 was $189,635 (December 31, 2022 – $73,530) owed to a director and companies controlled by a director or officer.

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

8. RELATED PARTY TRANSACTIONS (cont’d…)

During the year ended December 31, 2023, the Company issued 788,879 (December 31, 2022 – Nil) common shares valued at $59,166 (December 31, 2022 - $Nil) as debt settlement with officers and a director of the Company.

9. RECLAMATION PROVISIONS

As at December 31, 2023 the Company’s reclamation provisions are related to the Company’s La Trinidad and Plomosas properties (Note 5). On March 31, 2021, the Company acquired the La Trinidad property and assumed a reclamation provision of $2,431,930 relating to the property reclamation and dismantling and removal of buildings, salvaged topsoil replacement and recontouring and grading. Mako Mining Corp. (“Mako”) is responsible for certain costs estimated at $1,190,055 (2022 – $986,407) which has been recorded as an indemnification asset (Note 16).

The provision was calculated using an inflation rate of 3.7% and a discount rate of 9.2% with the assumption that the reclamation will be settled between 2025 and 2027. Significant activities include land rehabilitation, demolition and removal and restoration costs. The amounts and timing of the reclamation will vary depending on several factors including exploration success and alternative mining plans.

Balance as at beginning of year Change in estimate and discount rates Foreign exchange Accretion expense Balanceasatend ofyear	$ 2,347,359 204,806 288,308 6,930 $ 2,847,403	$ 2,653,918 (630,459) 317,173 6,727 $ 2,347,359

10. SHARE CAPITAL AND RESERVES

Authorized – Unlimited common shares without par value.

During the year ended December 31, 2023, the Company:

• a) Completed a non-brokered private placement of 30,300,000 units at a price of $0.10 per unit for gross proceeds of $3,030,000. Each unit consisted of one common share in the capital of the Company and one-half of one common share purchase warrant and each whole warrant is exercisable into one common share of the Company at an exercise price of $0.15 per warrant until February 14, 2025. The Company valued the warrants at $303,000 using the residual value approach. The Company paid cash finders fees of $116,940 and issued 1,169,400 agents’ warrants valued at $32,463 using the following Black-Scholes assumptions: risk free interest rate of 3.87%, expected life of 2 years, volatility of 74.56% and dividend rate of 0%. Each agent warrant is exercisable into one common share at an exercise price of $0.15 per share until February 14, 2025. Additional share issue costs of $47,151 were incurred in connection with this financing and was recorded as an offset to share capital, as share issue costs.

• b) Issued 300,000 common shares on the exercise of warrants at a price of $0.15 per warrant for proceeds of $45,000.

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

10. SHARE CAPITAL AND RESERVES (cont’d…)

• c) Completed a non-brokered private placement of 6,597,500 units at a price of $0.05 per unit for gross proceeds of $329,875. Each unit consisted of one common share in the capital of the Company and one-half of one common share purchase warrant and each whole warrant is exercisable into one common share of the Company at an exercise price of $0.08 per warrant until August 9, 2025. The Company valued the warrants at $65,975 using the residual value approach. The Company paid cash finders fees of $8,100 and issued 162,000 agents’ warrants valued at $1,816 using the following Black-Scholes assumptions: risk free interest rate of 4.59%, expected life of 2 years, volatility of 62.39% and dividend rate of 0%. Each agent warrant is exercisable into one common share at an exercise price of $0.08 per share until August 9, 2025. Additional share issue costs of $14,569 were incurred in connection with this financing and was recorded as an offset to share capital, as share issue costs.

• d) Completed a non-brokered private placement of 2,500,000 units at a price of $0.05 per unit for gross proceeds of $125,000. Each unit consisted of one common share in the capital of the Company and one-half of one common share purchase warrant and each whole warrant is exercisable into one common share of the Company at an exercise price of $0.08 per warrant until October 13, 2025. The Company valued the warrants at $25,000 using the residual value approach.

• e) Completed a non-brokered private placement of 30,000,000 units at a price of $0.04 per unit for gross proceeds of $1,200,000. Each unit consisted of one common share in the capital of the Company and one common share purchase warrant and each whole warrant is exercisable into one common share of the Company at an exercise price of $0.07 per warrant until November 10, 2026. Additional share issue costs of $27,766 were incurred in connection with this financing and was recorded as an offset to share capital, as share issue costs.

• f) Issued 1,343,891 common shares valued at $107,511 as debt settlement resulting in a gain on settlement of $6,619. Share issue costs of $4,299 were incurred and was recorded as an offset to share capital, as share issue costs.

During the year ended December 31, 2022, the Company:

• a) Issued 400,987 common shares on the exercise of warrants for proceeds of $81,497. Share issue costs of $684 were incurred and was recorded as an offset to share capital, as share issue costs.

• b) Issued 136,909 common shares valued at $28,751 as debt settlement resulting in a gain on settlement of $4,792. Share issue costs of $556 were incurred and was recorded as an offset to share capital, as share issue costs.

• c) Completed conversion of 27,236,755 special warrants (the “Special Warrants”) to 27,236,755 units (the “Units”). The Special Warrants were previously issued upon completion of a private placement at a price of $0.27 per Special Warrant for gross proceeds of $7,353,924. Upon receipt of a final short form prospectus, each Special Warrant was automatically exercised, at no additional cost to the holder thereof, for one Unit. Each Unit was comprised of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable to acquire one share at an exercise price of $0.37 per share to March 29, 2025. The Company valued the warrants at $2,315,124 using the residual value approach. On completion of the private placement, the Company paid cash finders fees of $422,931 and issued 1,566,410 special agent warrants valued at $190,844 using the following Black-Scholes assumptions: risk free interest rate of 2.34%, expected life of 3 years, volatility of 75.93% and dividend rate of 0%. Upon receipt of a final short form prospectus, each special agent warrant was automatically exercised, at no additional cost to the holder thereof, for one broker warrant. Each broker warrant is exercisable for one common share until March 29, 2025, at an exercise price of $0.27 per share. Additional share issue costs of $266,298 were incurred in connection with this financing, and was recorded as an offset to share capital, as share issue costs.

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

10. SHARE CAPITAL AND RESERVES (cont’d…)

• d) Completed a brokered private placement of 36,263,000 units at a price of $0.15 per unit for gross proceeds of $5,439,450. Each unit consisted of one common share in the capital of the Company and one-half of one common share purchase warrant and each whole warrant is exercisable into one common share of the Company at an exercise price of $0.22 per share until August 30, 2025. The Company valued the warrants at $543,945 using the residual value approach. The Company paid cash finders fees of $271,458 and issued 1,809,720 agent warrants valued at $118,761. The Company also paid a corporate finance fee of $50,000, recorded as an offset to share capital, as share issue costs and issued 339,000 agent warrants valued at $22,246. Each agent warrant is exercisable into one common share at an exercise price of $0.15 per share until to August 30, 2025. Agent warrants were valued using the following Black-Scholes assumptions: risk free interest rate of 3.53%, expected life of 3 years, volatility of 75.39% and dividend rate of 0%. Additional share issue costs of $221,354 were incurred in connection with this financing, and was recorded as an offset to share capital, as share issue costs.

Omnibus Long-Term Incentive Plan

The Company has adopted an omnibus long-term incentive plan (“LTIP”), which provides that the Board of Directors of the Company may from time-to-time, at its discretion, and in accordance with the TSX-V requirements, grant to directors, officers, consultants, and employees of the Company stock options, deferred share units, preferred share units, restricted share units or other such share-based instruments deemed to be consistent with the purposes of the plan. The LTIP reserves a number of common shares for issuance pursuant to the grant of stock options that will not exceed a rolling 10% of the Company’s issued and outstanding common shares at the time the options are granted. All other share-based compensation awards are subject to a maximum of 19,521,680 common shares as a separate allotment. Vesting of share-based compensation awards is at the discretion of the Board of Directors, subject to minimum requirements of the TSX-V. Stock options are exercisable for a maximum of 10 years, and the exercise price of the stock options is set in accordance with the policies of the TSX-V.

As at December 31, 2023, the Company has not granted any share-based compensation awards under the LTIP other than stock options as noted below.

Stock option transactions are summarized as follows:

Stockoptioncontinuity	Number of options	Weighted Average ExercisePrice
December 31, 2021 Expired Granted December 31, 2022 Granted Expired December 31, 2023, balance outstanding December 31,2023, exercisable	10,083,534 (1,269,377) 920,000 9,734,157 2,850,000 (4,519,157) 8,065,000 7,831,667	$ 0.46 0.63 0.25 0.42 0.08 0.29 $ 0.37 $ 0.38

The weighted average remaining contractual life of outstanding and exercisable options at December 31, 2023, respectively, was 2.58 and 2.54 years (December 31, 2022 – 2.22 and 2.14 year).

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

10. SHARE CAPITAL AND RESERVES (cont’d…)

Stock options

As at December 31, 2023, the Company had stock options outstanding as follows:

Stock options

Number ExercisePrice ExpiryDate

370,000 0.21 August 8, 2024 895,000 0.185 November 27, 2024 300,000 0.20 April 16, 2025 795,000 0.335 May 13, 2025 830,000 0.78 September 14, 2025 1,450,000 0.74 January 21, 2026 200,000 0.75 February 24, 2026 385,000 0.71 May 13, 2026 40,000 0.29 October 5, 2026 35,000 0.20 January 26, 2027 415,000 0.25 April 6, 2027 300,000 0.12 January 18, 2028 550,000 0.09 May 10, 2028 1,500,000 0.06 November 23, 2028 8,065,000

During the year ended December 31, 2023, the Company recognized share-based payments expense of $234,208 (2022 - $453,446) in connection with the vesting of stock options granted in current and previous periods.

The following weighted average assumptions were used for the Black-Scholes option pricing model valuation of stock options granted during the year ended as follows:

	December 31,	December 31,
	2023	2022
Risk-free interest rate	3.41%	2.51%
Expected life of options	5 years	5 years
Annualized volatility	71.21%	96.65%
Dividendrate	0%	0%

Warrants

The following common shares purchase warrants entitle the holder thereof to purchase one common share for each warrant. Warrant transactions are summarized as follows:

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

10. SHARE CAPITAL AND RESERVES (cont’d…)

Warrant continuity December 31, 2021 Issued Expired Exercised December 31, 2022 Issued Expired Exercised December31,2023, outstanding and exercisable	Number of warrants	Weighted Average ExercisePrice
	12,535,875 34,465,007 (894,000) (400,987) 46,705,895 51,030,150 (11,240,888) (300,000) 86,195,157	$ 0.67 0.28 0.25 0.20 0.38 0.10 0.72 0.15 $ 0.17

The weighted average remaining contractual life of warrants outstanding at December 31, 2023 was 1.91 (December 31, 2022–1.96) years.

Warrants outstanding are as follows:

Warrants	Number ExercisePrice ExpiryDate
	16,019,400 $ 0.15 February 14, 2025 1,566,410 0.27 March 29, 2025 13,618,377 0.37 March 29, 2025 18,131,500 0.22 August 30, 2025 2,148,720 0.15 August 30, 2025 3,460,750 0.08 August 9, 2025 1,250,000 0.08 October 13, 2025 30,000,000 0.07 November 10, 2026 86,195,157

The weighted average Black-Scholes inputs for finders warrants granted are as follows:

	December 31, 2023	December 31, 2022
Expected life of warrants	2.00	3.00
Annualized volatility	73.08%	75.62%
Dividend rate	-	-
Discount rate	3.96%	3.03%

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

11. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

Significant non-cash transactions during the year ended December 31, 2023;

• reclassification of reserves to share capital of $6,000 for warrants exercised.

• issued 1,343,891 common shares in settlement of debt in the amount of $107,511.

• issued 1,331,400 agent warrants valued at $34,279.

Significant non-cash transactions during the year ended December 31, 2022;

• reclassification of reserves to share capital of $39,970 for warrants exercised.

• issued 136,909 common shares in settlement of debt in the amount of $28,751.

• issued 3,715,130 agent warrants with a fair value of $331,851 recorded as share issue costs.

12. SEGMENTED INFORMATION

The business of the Company is the acquisition and exploration of mineral properties which is considered one business segment.

Geographic information of non-current assets is as follows:

December31,2023	Canada	Mexico Total
Equipment Exploration and evaluation assets Reclamation provision indemnification asset Value added tax receivable Total	$ 2,265 - - - $ 2,265	$ 990,504 $ 992,769 7,424,819 7,424,819 1,190,055 1,190,055 793,474 793,474 10,398,852 $ 10,401,117

13. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

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

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

• Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

• Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

• Level 3 – Inputs that are not based on observable market data

The carrying value of cash, receivables, accounts payable and accrued liabilities, and Mexico mining concession fees approximate their fair value because of the short-term nature of these instruments.

Financial risk factors

The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below:

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

13. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d…)

Credit risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The Company’s credit risk is primarily attributable to cash, receivables and value added tax. Management believes that the credit risk concentration with respect to financial instruments included in receivables is remote and has deposited cash in high credit quality financial institutions. Credit risk with respect to value added taxes due from a government agency in Canada is low and undeterminable in Mexico based on past refund practices of the Mexican tax authorities. Value added taxes are subject to review and potential adjustment by taxation authorities.

Liquidity risk

As of December 31, 2023, the Company had cash balance of $100,573 to settle current liabilities of $24,028,561 which includes significant expenditure requirements pursuant to Mexican concession fees (Note 7). The Company is exposed to significant liquidity risk and additional financing will be required and may not be attainable. Additional funds will be required for property expenditures, retention of essential personnel, general and administration and to maintain its listing on the TSX.V

Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.

Interest rate risk

The Company’s current policy is to invest excess cash in investment-grade demand investments issued by its banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks. Concession fees past due are subject to accruing interest at rates set by the Government of Mexico. Such interest rates are publicly issued and applied against overdue amounts as accrued to the concession fees liability.

Foreign currency risk

The Company is exposed to foreign currency risk on fluctuations related to assets and liabilities that are denominated in foreign currency. As at December 31, 2023, amounts exposed to foreign currency risk include cash of MXN$380,174, value added tax receivable of MXN$10,149,322, accounts payable of MXN$17,316,155 and concession fees payable of MXN$282,686,845. A 10% change in foreign exchange rates will affect profit or loss by approximately $2,263,104.

Price risk

The Company is exposed to price risk with respect to commodity and equity prices. Equity price risk is defined as the potential adverse impact on the Company’s profit or loss and its ability to finance, due to movements in individual equity prices or general movements in the level of the stock market. Commodity price risk is defined as the potential adverse impact on profit or loss and economic value due to commodity price movements and volatilities. The Company closely monitors commodity prices, individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company. Fluctuations in value may be significant.

Foreign jurisdiction risk

In conducting operations in Mexico, the Company is subject to considerations and risks not typically associated with companies operating in Canada. These include risks such as the political, economic, and legal environments. Among other things, the Company's results may be adversely affected by changes in the political and social conditions and by changes in governmental policies with respect to mining laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation. The Company is aware of recent legislative

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

13. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d…)

changes in Mexico applicable to the mining industry, the full impacts of which have not been completely determined as the industry awaits further clarifications from the government on the changes. The Company will continue to monitor this closely to best deal with the changes.

14. CAPITAL MANAGEMENT

The Company defines capital that it manages as shareholders’ equity, consisting of issued common shares, stock options and warrants.

The Company manages its capital structure and adjusts it, based on the funds available to the Company, to support the acquisition and exploration of exploration and evaluation assets.

The Company has historically relied on and currently relies on the equity markets to fund all its activities. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient 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. The Company is not subject to externally imposed capital restrictions. There were no changes to the Company’s approach to capital management during the year.

15. INCOME TAX

A reconciliation of income taxes at statutory rates with the reported taxes is as follows:

		2023		2022
Loss for the year	$	(25,597,989)	$	(18,794,177)
Expected income tax (recovery)	$	(6,911,000)	$	(5,074,000)
Change in statutory, foreign tax, foreign exchange rates and other		(2,575,000)		(1,662,000)
Permanent differences		327,000		(1,585,000)
Share issue cost		(59,000)		(333,000)
Adjustments to prior years provision versus statutory tax returns		(350,000)		(3,906,000)
Change in unrecognized deductible temporary differences		9,568,000		12,560,000
Total incometaxexpense (recovery)	$	-	$	-

The significant components of the Company’s deferred tax assets that have not been included on the consolidated statements of financial position as follows:

		2023		2022
Deferred Tax Assets (liabilities)
Non-capital losses available for future periods	$	37,166,000	$	32,986,000
Property and equipment		327,000		173,000
Share issue costs		403,000		541,000
Asset retirement obligation		793,000		705,000
Exploration and evaluation assets		15,317,000		10,033,000
		54,006,000		44,438,000
Unrecognized deferred tax assets		(54,006,000)	(44,438,000)
Netdeferredtax liability	$	-	$	-

GR SILVER MINING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 (Expressed in Canadian Dollars)

15. INCOME TAX (cont’d…)

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

	December 31,		December 31,
Temporary Differences	2023	Expirydates	2022	Expirydates
Exploration and evaluation assets	$ 51,154,000	No expiry date	$ 37,844,000	No expiry date
Property plant and equipment	1,091,000	No expiry date	575,000	No expiry date
Share issue cost	1,493,000	2044 to 2047	2,003,000	2043 to 2046
Asset retirement obligation	2,643,000	No expiry date	2,349,000	No expiry date
Non-capital losses available for future	128,626,000		114,440,000
years:
Canada	47,430,000	2033 - 2043	44,846,000	2033 - 2042
Mexico	81,196,000	2028-2033	69,594,000	2025-2032

Tax attributes are subject to review and potential adjustment by tax authorities.

16. SUBSEQUENT EVENTS

The Company completed a non-brokered private placement of 6,700,000 units at a price of $0.10 per unit for gross proceeds of $670,000. Each unit consisted of one common share in the capital of the Company and one-half of one common share purchase warrant and each whole warrant is exercisable into one common share of the Company at an exercise price of $0.15 per warrant until February 9, 2026. The Company paid cash finders fees of $35,820 and issued 358,200 agents warrants. Each agent warrant is exercisable into one common share at an exercise price of $0.15 per share until February 9, 2026.

The Company closed a waiver and release agreement with Mako, under which the parties were mutually released from outstanding undertakings, covenants, indemnities and obligations set out in, from or related to the Company’s acquisition of Marlin notably the indemnification for reclamation (Note 9). Mako retains a 1% NSR royalty on the concessions owned by Oro Gold, a wholly owned subsidiary of Marlin.

In consideration for the waiver and release, Mako has paid to the Company US$500,000 cash, and the issuance of 296,710 common shares of Mako.

The Company had 2,447,848 warrants exercised for proceeds of $343,377.