Kermode Resources Ltd. — Interim / Quarterly Report 2023

Sep 1, 2023

KERMODE RESOURCES LTD.

FINANCIAL STATEMENTS

FOR THE NINE AND THREE MONTHS

ENDED JULY 31, 2023 and 2022

(Unaudited)

(Expressed in Canadian Dollars)

The accompanying unaudited interim financial statements have been prepared by Management of Kermode Resources Ltd. and have not been reviewed by the Company’s auditors.

Page 1 of 25

KERMODE RESOURCES LTD Statements of Financial Position

(Expressed in Canadian Dollars)

As at Note	July 31 2023 October 31 2022
Assets Current assets Cash Miscellaneous receivables Prepaid expenses	26,175 30,041 12,480 3,573 20,147 25,486
Total current assets Exploration and evaluation assets 5	58,802 59,100 988,978 218,040
Total assets	1,047,780 277,140
Liabilities Current liabilities Accounts payable and accrued liabilities 6 Advancespayables 4	263,599 246,982 29,808 29,808
Total current liabilities	293,407 276,790
Shareholders' deficiency Share capital (Note 7) 7 Contributed surplus (Note 8) 8 Deficit	11,039,437 10,100,588 271,656 138,776 (10,556,720) (10,239,014)
Total shareholders' deficiency	754,373 350
Total liabilities and shareholders' deficiency	1,047,780 277,140

Nature of business and going concern (Note 1) Subsequent events (Note 11)

Approved and authorized by the Board on September 1, 2023.

“Maxime Lepine”	“Tek Manhas” Director
Director

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

Page 2 of 25

KERMODE RESOURCES LTD Statements of Loss and Comprehensive Loss For the three and nine months ended July 31

(Expressed in Canadian Dollars)

	Note	**Nine Month Ended July 31 **	**Three Month Ended July 31 **
		2023 2022	2023 2022
Operating expenses Consultants Management fees Office and sundry Professional fees Property investigation Share-based compensation Transfer agent and filing fees Write downof mineralproperty	6 8	$ - $ 4,000 50,500 10,000 3,115 1,094 20,086 38,575 63,280 74,203 132,879 - 47,846 21,089 - 78,196	$ - $ 3,000 38,500 6,000 - 224 7,250 12,934 135 44,839 114,418 - 17,503 1,586 - -
Loss and comprehensive loss for the period		317,706 227,157	177,806 68,583
Loss and comprehensive loss for theperiod		(317,706) (227,157)	(177,806) (68,583)
Basic and diluted lossper share		(0.00) (0.00)	(0.00) (0.00)
Weighted average number of common shares outstanding,basic and diluted		150,271,990 105,495,231	173,512,227 111,706,257

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

Page 3 of 25

KERMODE RESOURCES LTD. Statements of Changes in Shareholders’ Equity (Deficiency) (Expressed in Canadian Dollars)

For the nine months ended July 31, 2023 and 2022

Note	Number of Shares	Share Capital Contributed Surplus	Accumulated Deficit	Total
Balance, on October 31, 2021 Private Placement Shares issued for debt Share issued for Property Share issue costs-cash Loss for theperiod	90,497,373 9,652,600 8,980,197 10,500,000 - -	$ 9,434,521 $ 102,255 241,315 - 137,238 - 165,000 - (6,054) - -	$ (9,728,506) - - - - (227,157)	$ (191,730) 241,315 137,238 165,000 (6,054) (227,157)
Balance, July 31, 2022 Shares issued for debt Share based compensation Stock options cancelled Broker warrants Loss and comprehensive loss	119,630,170 - - - - -	9,972,020 102,255 132,168 - - 72,634 - (39,712) (3,599) 3,599 - -	(9,955,663) - - 39,712 - (323,063)	118,612 132,168 72,634 - - (323,063)
Balance, October 31, 2022	119,630,170	10,100,589 138,776	(10,239,014)	351
Private Placement 7	7,573,000	75,730 -	-	75,730
Share issue costs-cash 7	-	(800) -	-	(800)
Shares issued for debt 7	7,485,569	74,856 -	-	74,856
Share issued for Property 7	64,986,404	789,062 -	-	789,062
Share based compensation 8	-	- 132,880	-	132,880
Lossforthe period	-	- -	(317,706)	(317,706)
Balance, July 31, 2023	199,675,143	11,039,437 271,656	(10,556,720)	754,373

The accompanying notes are an integral part of these financial statements

KERMODE RESOURCES LTD. Statements of Cash Flows

(Expressed in Canadian Dollars)

For the nine months ended July 31, 2023 and 2022

For the nine months ended July 31, 2023 and 2022
Note	2023 2022
Operating Activities Loss and comprehensive loss for the year Items not affecting cash: Shares issued for debt Shares issued for mineral property Share based compensation 8 Change in non-cash working capital items Receivables Prepaid expenses Accountspayable and accrued liabilities	(317,706) $ (227,157) 115,858 137,238 - 165,000 142,879 - (8,907) 1,933 5,339 39,113 16,617(200,982)
Net cash used in operatingactivities	(45,920) (84,855)
Financing activities Issuance of common shares, net of issue costs 7 Share issue costs	74,930 235,261 - -
Net cashprovided byfinancingactivities	74,930 235,261
Investing activities Receipt(Payment) on advances receivable, net Exploration and evaluation assets	- (32,876) (108,805)
Net cash used in investingactivities	(32,876) (108,805)
Change in cash for the period Cash, beginning of the year	(3,866) 41,601 30,041 93,664
Cash, end of the period	26,175 135,265
Supplemental schedule of non-cash transactions: Shares issued for mineral property 7 Shares issued for debt 7	789,062 165,000 74,856 137,238

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

5

KERMODE RESOURCES LTD. Notes to the Financial Statements (Expressed in Canadian Dollars) As at July 31, 2023 and 2022

1. NATURE OF BUSINESS AND GOING CONCERN

Kermode Resources Ltd. (“Kermode” or the "Company") was incorporated under the laws of the Province of Alberta and was subsequently continued into British Columbia.

The Company is primarily engaged in the business of acquiring, exploring, and transacting in mineral exploration properties located in Canada and the USA. There has been no determination whether properties held contain economically recoverable mineral resources.

The Company’s shares are listed on the TSX Venture Exchange (“TSX-V”). The Company’s registered and records office is 1 – 505 Fisgard Street, Victoria, British Columbia, Canada.

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred ongoing losses. A number of alternatives including, but not limited to completing a financing, are being evaluated with the objective of funding ongoing activities and obtaining additional 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. These material uncertainties may cast significant doubt about the Company’s ability to continue as a going concern.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2. SIGNIFICANT ACCOUNTING POLICIES Statement of Compliance

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

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

Basis of presentation

These condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain information and footnote

6

KERMODE RESOURCES LTD. Notes to the Financial Statements

(Expressed in Canadian Dollars)

As at July 31, 2023 and 2022

disclosure normally included in annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB, have been omitted or condensed.

The condensed interim financial statements of the Company have been prepared on a historical cost basis. In addition, these condensed interim financial statements have been prepared using the accrual basis of accounting. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The condensed interim consolidated financial statements have been prepared on a going concern basis and are presented in Canadian dollars, which is the Company’s functional currency.

The condensed interim financial statements should be read in conjunction with the most recently filed annual financial statements of Kermode, which includes information necessary or useful to understanding the Company’s financial statement presentation. In particular, the Company’s significant accounting policies were presented in Note 2 to the consolidated financial statements for the year ended October 31, 2022 and have been consistently applied in the preparation of these condensed interim consolidated financial statements except as described herein.

The operating results for the nine months ended July 31, 2023, are not necessarily indicative of results that may be expected for the full year ended October 31, 2023, due to variation in property expenses and other factors.

3. ADVANCES PAYABLE

During the year ended October 31, 2021, the Company advanced funds to/from a management company, owned by a spouse of a former director. The management company incurred administration expenditures and settled certain exploration expenditures on behalf of the Company. The balance payable as at July 31, 2023 of $29,808 (October 31, 2022 - $29,808) is due to a company with common former directors and is non-interest bearing, unsecured with no specified terms of repayment.

4. LOSS (GAIN) ON SETTLEMENT OF DEBT

During the year ended October 31, 2022, the Company issued 8,980,197 common shares valued at $269,406 in settlement of $137,239 in debts resulting in a loss on settlement of $132,167. During the year ended October 31, 2021, the Company settled debt of $65,399 for $nil proceeds resulting in the gain on settlement of debt of $65,399.

During the nine months ended July 31, 2023, the Company issued 6,485,569 common shares valued at $64,856 in settlement of $64,856 in debts resulting in $nil loss.

7

KERMODE RESOURCES LTD. Notes to the Financial Statements

(Expressed in Canadian Dollars)

As at July 31, 2023 and 2022

5. EXPLORATION AND EVALUATION ASSETS

Caycuse Eastgate	Grey Copper / Jonathan's Pond	Little Bay Copper Loup Creek Lucky Strike Star of the West Vidette Lake 911 Knockout	Trio	Khrysos& Silver Bell Slesse Creek Eastgate BC Total
Balance, October 31, 2020 - -	-	- - - - - -	-	- - - -
Acquisition Costs - 6,030	-	- - - - 9,000 -	-	- - - 15,030
Prospecting - 20,000	-	- - - - 59,195 -	-	- - - 79,195
Staking - -	-	- - - - - -	-	- - - -
Fees & licenses - -	-	- - - - - -	-	- - - -
Write down - -	-	- - - - - -	-	- - - -
Balance, October 31, 2021 - 26,030	-	- - - - 68,195 -	-	- - - 94,225
Acquisition Costs - -	-	42,000 - 135,000 - 10,000 -	-	- - - 187,000
Prospecting - -	-	- - 19,517 12,117 10,000 -	-	- - - 41,634
Staking - -	-	- - 3,576 5,830 - -	-	- - - 9,406
Fees & licenses - 2,801	-	- - - - - -	-	- - - 2,801
Write down - (28,831)	-	- - - - (88,195) -	-	- - - (117,026)
Balance, October 31, 2022 - -	-	42,000 - 158,093 17,947 - -	-	- - - 218,040
Acquisition Costs 225,000 -	105,000	- - 90,000 - - -	-	150,000 40,000 - 610,000
Prospecting 13,601 -	-	- 21,872 23,083 64,981 - 7,118	1,628	21,258 6,986 - 160,526
Staking - -	-	- - - - - 112	-	- - - 112
Fees & licenses - -	-	- - - - -	-	- - - -
Write down - -	-	- - - - -	-	- - - -
Balance, January 31, 2023 238,601 -	105,000	42,000 21,872 271,176 82,928 - 7,230	1,628	171,258 46,986 - 988,678

KERMODE RESOURCES LTD. Notes to the Financial Statements (Expressed in Canadian Dollars) As at July 31, 2023 and 2022

5. EXPLORATION AND EVALUATION ASSETS – continued

 Title to mineral properties

Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral properties. The Company has investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its properties are in good standing.

The Company has not yet determined if the exploration and evaluation assets contain economic ore recoveries.

1) Caycuse Copper, British Columbia

On December 12, 2022 the Company entered into an option agreement to acquire a 100% interest in the Caycuse Copper project in BC with initial payments of 15,000,000 shares to the vendor group. The project has no work commitments and no cash payments. To exercise the option, the Company must register the following:

• i) a 1% net smelter return royalty with a total buy-down of $1,000,000 where 1% can be bought down for $1,000,000 entirely or in part and;

• ii) a 10% sales participation right of the gross proceeds of any future transaction where the Company sells the property in the next ten years.

2) Eastgate Property, Nevada USA

The Company holds a 15% interest in the Eastgate Gold Property, which is comprised of mineral claims located northeast of the Rawhide Mine, and east of Fallon in Churchill, County, Nevada.

On April 3, 2012, the Company entered into a mineral property option and joint venture agreement with Blue Ridge Gold LLC. On January 3, 2017, the Company elected not to acquire any additional interest in the property and provided notice to Blue Ridge Gold LLC that the Company required a joint venture be formed between the parties.

Due to challenges and continued delays in coordinating exploration, the Company wrote off the costs of

$28,831 in the year ended October 31, 2022.

3) Grey Copper / Jonathan’s Creek, Newfoundland

On December 13, 2022 the Company entered into an option agreement to acquire a 100% interest in the Loup Creek project in BC. The project has no work commitments and no cash payments. To exercise the option, the Company must register the following:

• i) a 2% net smelter return royalty where 1% can be bought down for $1,000,000 entirely or in part

9

KERMODE RESOURCES LTD. Notes to the Financial Statements (Expressed in Canadian Dollars) As at July 31, 2023 and 2022

5. EXPLORATION AND EVALUATION ASSETS – continued

4) Little Bay Copper, Newfoundland

On April 11, 2022, the Company entered into an option agreement with Grassroots Prospecting and Prospect Generation Inc. to acquire a 100% interest in the Little Bay Copper project in Newfoundland.

Pursuant to the option agreement, the Company issued 1,500,000 common shares valued at $30,000 and paid cash of $12,000 during the year ended October 31, 2022. To exercise the option, the Company must pay an additional $250,000 within 48 months of closing, and issue common shares and incur exploration expenditures as follows:

Date	Number of common	Exploration
	shares to be issued	expenditures
12 months following closing	3,000,000	$ 100,000
24 months following closing	6,000,000	250,000
36 months following closing	7,500,000	400,000
48 months following closing	15,000,000	3,500,000
	31,500,000	$4,250,000

On exercise of the option, there will be a 2% net smelter returns royalty with a buy-back of 1% for $2,000,000.

5) Loup Creek, British Columbia

On December 12, 2022 the Company entered into an option agreement to acquire a 100% interest in the Loup Creek project in BC. The project has no work commitments and no cash payments. To exercise the option, the Company must register the following:

• i) a 2% net smelter return royalty with a total buy-down of $2,000,000 and;

• ii) a 20% sales participation right of the gross proceeds of any future transaction where the Company sells the property in the next ten years.

6) Lucky Strike, British Columbia

On July 20, 2022, the Company entered into an option agreement to acquire a 100% interest in the Lucky Strike Copper project in British Columbia.

Pursuant to the option agreement, the Company issued 9,000,000 common shares valued at $135,000. To exercise the option, the Company must issue an additional 9,000,000 common shares within 12 months following closing and 9,000,000 common shares within 24 months following closing.

10

KERMODE RESOURCES LTD. Notes to the Financial Statements (Expressed in Canadian Dollars) As at July 31, 2023 and 2022

5. EXPLORATION AND EVALUATION ASSETS – continued

On exercise of the option, there will be a 2% net smelter return royalty payable to the vendor group, where each one percent can be bought down for $1,000,000.

7) Star of the West, British Columbia

On October 28, 2022, the Company entered into an option agreement to acquire a 100% interest in the Star of the West project in British Columbia. To exercise the option, the Company must register the following:

• i) a 2.5% net smelter return royalty with a total buy-down of $5,000,000 where each 0.5% can be purchased from the vendors for $1,000,000 and;

• ii) a 30% sales participation n right of the gross proceeds of any future transaction where the Company sells the property in the next ten years.

The option agreement does not require any payment of cash common shares or work commitments by the Company.

8) Vidette Lake Gold Project property, British Columbia

On May 23, 2020, the Company entered into an option agreement with Strata GeoData Services Ltd. to acquire a 100% interest in the Vidette Lake gold project in British Columbia.

During the year ending October 31, 2021, the Company paid $5,000 in cash; issued 100,000 common shares valued at $4,000, and incurred $59,195 of exploration expenditures.

During the year ended October 31, 2022, the Company paid $10,000 in cash.

To exercise the option, the Company was required to pay an additional $20,000 in cash, issue an additional 400,000 common shares of the Company, and expend an additional of $165,000 in exploration over the next 2 years.

During the year ended October 31, 2022, the Company decided not to proceed with the option agreement, consequently the costs of $88,195 were written off to operations.

9) 911 Knockout Project, British Columbia

On June 22, 2023, Kermode Resources Ltd. has optioned the 911 Knockout project on Vancouver Island as an exempt transaction within TSX Venture Exchange policy.

The Knockout project is composed of the following separate projects with total size of all three projects of approximately 935 hectares. The projects are as follows:

• a) The Maidan project covers 341 hectares with claim No. 1101659, 1101723 and 1101724. b) The Robertson River copper project covers 340 hectares with claim No. 1101059.

11

KERMODE RESOURCES LTD. Notes to the Financial Statements (Expressed in Canadian Dollars)

As at July 31, 2023 and 2022

5. EXPLORATION AND EVALUATION ASSETS – continued

• c) The Comego project covers 254.69 hectares with claim No. 1102760.

There are no cash payments, no share payments and no work commitments. To earn 100-per-cent ownership of the project, Kermode must make the following payments:

• a) a 2-per-cent royalty with a $2-million buydown to eliminate the royalty; the buydown shall apply once for all the projects in the 911 Knockout project collection;

• b) 20-per-cent sale participation right for 10 years;

• c) area of interest clause whereby the terms of this deal shall apply to any contiguous property that shall be acquired by either party within a five-kilometre radius at the discretion of Kermode;

• d) sole discretion clause where Kermode can exercise the purchase option for any or all of the claims included in the 911 Knockout project at any time at the sole discretion of Kermode.

10) Trio, British Columbia

On July 24, 2023, Kermode Resources Ltd. has optioned the Silverbell Trio project on Vancouver Island as an exempt transaction within TSX Venture Exchange policy.

The Silverbell Trio project is composed of the following separate projects:

• a) The Silverbell project covers 85 hectares with claim No. 1106245.

• b) The Dauntless project covers 85 hectares with claim No. 1098813.

• c) The Coronation project covers 21 hectares with claim No. 1064070.

The total size of all three projects is approximately 191 hectares.

There are no cash payments, no share payments and no work commitments. To earn 100-per-cent ownership of the project, Kermode must make the following payments:

• a) A 2-per-cent royalty with a $2-million buydown to eliminate the royalty; the buydown shall apply once for all the projects in the Silverbell Trio project collection;

• b) A 20-per-cent sale participation right for 10 years;

• c) An area of interest clause whereby the terms of this deal shall apply to any contiguous property that shall be acquired by either party within a five-kilometre radius at the discretion of Kermode;

• d) A sole discretion clause where Kermode can exercise the purchase option for any or all of the claims included in the Silverbell Trio project at any time at the sole discretion of Kermode.

11) Khrysos & Silver Bell Project, British Columbia

On, May 26, 2023, Kermode Resources Ltd. has optioned the Khrysos and Silver Bell projects from Aurum Vena Mineral Resources Corp. in British Columbia.

12

KERMODE RESOURCES LTD. Notes to the Financial Statements (Expressed in Canadian Dollars)

As at July 31, 2023 and 2022

5. EXPLORATION AND EVALUATION ASSETS – continued

The Khrysos project comprises British Columbia mineral title Nos. 1088992, 1095266, 1095267 and 1095268, which total approximately 750 hectares. The Silver Bell project comprises British Columbia mineral title Nos. 1092822, 1089287, 1092823 and 1068145, which total approximately 500 hectares

Timing	Cash	Securities	Exploration or Other WorkCommitments
Signing	$-0-	15,000000,	$-0-
Year 1	$-0-	-	$-0-
Year 2	$-0-	-	$-0-
Year 3	$-0-	-	$-0-
Year 4	$-0-	-	$-0-
Year 5	$-0-	15,000,000	$-0-

In addition, the deal shall have the following features:

• No royalty;

• 10-per-cent sales participation right for any transaction in the next 10 years;

• An area of interest, including any contiguous claims within a two-kilometre distance;

• No spending obligations or work commitments.

All shares issued pursuant to the option agreement will be subject to resale restrictions under applicable securities legislation and the rules of the TSX Venture Exchange and the following schedule: Of the 15 million shares to be paid on signing, a total of five million shares shall be free trading after four months, a total of five million shares shall be free trading after eight months, and a total of five million shares shall be free trading after 12 months such that one-third of each total share payment shall be free trading after each four-month increment. The price of shares issued shall be one cent.

12) Slesse Project, British Columbia

On June 22, 2023 Kermode Resources Ltd. (TSXV: KLM) (“KLM” or “Company”) options the the SLESSE CREEK project (the “Project”) as per the terms announced May 10, 2023. The Project land position covers 1,567 hectares. The claim numbers are 1103855, 1104184, 1102836, 1102889, 1103856, 1104185, 1102758, 1101588, 1101879, 1102837, 1101878.

13

KERMODE RESOURCES LTD. Notes to the Financial Statements

(Expressed in Canadian Dollars)

As at July 31, 2023 and 2022

5. EXPLORATION AND EVALUATION ASSETS – continued

Terms of the purchase option:

	Cash	Securities	Exploration Commitments
Exchange Approval	$-0-	4,000,000	$-0-
Year 1	$-0-	4,000,000	$-0-
Year 2	$-0-	9,000,000	$-0-

There are no cash payments and no work commitments. There is a 1% royalty with a $1M buy-down to eliminate the royalty and a 10% “Sale Participation Right” for ten years. There shall be an “area of interest” clause whereby the terms of this deal shall apply to any contiguous property that shall be acquired by either party or any property acquired within a 5km radius. All shares issued pursuant to the Option Agreement will be subject to resale restrictions under applicable securities legislation and the rules of the TSX Venture Exchange. The price of shares issued shall be $0.01.

13) Santa Anna Project, British Columbia

On August 18, 2023, Kermode revises the proposed terms for a non-binding letter of intent (“LOI”) to acquire the SANTA ANNA (“Project”) in British Columbia from a group of four private individuals who are arm’s length to Kermode. The Project includes one exploration claim with license number 1097236 covering 517 hectares in Map Number 092K.

The LOI provides for a due diligence period extending to September 31st, 2023. During this period, KLM can elect to enter into a definitive agreement which will formalize the Transaction. Either party can conduct any activities during the LOI.

WORK COMMITMENTS: None.

OTHER TERMS & CONDITIONS: - a Net Smelter Return royalty of two percent 2% where each half point 0.5% can be purchased from the vendors for $1M at any time at buyer’s discretion for a total buy-down of five million $4M. - a Sales Participation Right (SPR) of ten percent 10% of gross proceeds of any future transaction where KLM sells the property in the next ten years.

TERMS OF THE PURCHASE OPTION:

	**Cash **	Securities	Spending requirement
Signing	$-0-	2,000,000	$-0-
Year 1	$-0-	-0-	$-0-
Year 2	$-0-	-0-	$-0-
Year 3	$-0-	-0-	$-0-
Year 4	$-0-	-0-	$-0-
Year 5	$-0-	2,000,000	$-0-

14

KERMODE RESOURCES LTD. Notes to the Financial Statements

(Expressed in Canadian Dollars)

As at July 31, 2023 and 2022

5. EXPLORATION AND EVALUATION ASSETS – continued

14) Eastgate BC Project, British Columbia

On June 22, 2023, Kermode optioned the EASTGATE BC project as an exempt transaction within TSX Venture Exchange policy.

The total area of the project is approximately 42 hectares of mineral claims in BC. The EASTGATE BC project is comprised of one claim number #1104223.

To earn 100% ownership of the project, Kermode must assign the vendors a Net Smelter Return royalty and a Sales Participation Right as described below. The Net Smelter Return royalty is set at 5% five percent with a buy-down of $5M five million dollars to reduce the royalty to zero. The Sales Participation Right is set at 25% twenty five percent for a period of 10 ten years, where the right is calculated as a percentage of the gross proceeds from any transaction whereby Kermode sells any interest in the project.

There is no exploration spending commitments, share payments, or cash payments.

As to July 31, 2023, there is no spending incurred for the project.

6. RELATED PARTY TRANSACTIONS AND BALANCES

The Company had the following transactions in the normal course of operations with related parties:

		July 31, 2023		July 31, 2022
Director fees	$	-	$	-
Management fee(i)		50,500		10,000

The Company paid or accrued $50,500 (2022 - $10,000) in management fees, including $8,000 for previous CFO by cash, and $27,500 to current CFO by share for services, $10,000 to CEO by share of services, and $5,000 to Corporate Secretary.

Key management personnel of the Company are Directors, Chief Executive Officer, Chief Financial Officer, and Corporate Secretary.

Accounts payable and accrued liabilities includes $141,788 (2022 - $103,627) due to current and former officers and directors and a company controlled by a current officer. These amounts are unsecured, non- interest bearing and have no fixed terms of repayment.

15

KERMODE RESOURCES LTD. Notes to the Financial Statements

(Expressed in Canadian Dollars)

As at July 31, 2023 and 2022

7. SHARE CAPITAL

Authorized share capital

As at July 31, 2023, the authorized share capital of the Company is an unlimited number of common shares without par value. All issued shares, consisting only of common shares, are fully paid.

Issued share capital

As at July 31, 2023, the Company had 199,675,143 common shares issued and outstanding. As at July 31, 2022, the Company had 119,630,170 common shares issued and outstanding.

Share issuances

For the nine months ended July 31, 2023, the Company completed the following transactions:

• (i) On December 9, 2022, the Company issued 15,000,000 common shares valued at $225,000 pursuant to the option to acquire the Caycuse property (Note 4).

• (ii) On December 9, 2022, the Company issued 7,000,000 common shares valued at $105,000 pursuant to the option to acquire the Grey Copper / Jonathan’s Pond properties (Note 4).

• (iii) On February, 2023, the Company issued 379,645 shares to 911 Exploration Corp. to pay for expenses incurred in January 2023 totaling $5,694.68; and the Company also issued 1,333,333 shares to Planet X Exploration Services Ltd to pay for expenses incurred in January 2023 totaling $20,000.00.

• (iv) On March 1, 2023, the Company issued 777,058 shares to 911 Exploration Corp. to pay for expenses incurred in February 2023 totaling $11,655.88.

• (v) On March 03, 2023, the Company issued 1,154,216 shares to Planet X Exploration Services Ltd to pay for expenses incurred in February totaling $17,313.25.

• (vi) On April 4, 2023, the Company issued 862,470 shares to 911 Exploration Corp. to pay for expenses incurred in March 2023 totaling $12,937.05.

• (vii) On April 11, 2023, the Company issued 1,333,333 shares to Planet X Exploration Services Ltd to pay for expenses incurred in February totaling $20,000.00.

• (viii) On May 2, 2023, the Company issued 1,998,510 shares to 911 Exploration Corp. to pay for expenses incurred in April 2023 totaling $19,985.

• (ix) On May 08, 2023, the Company issued 2, 573,000 for the financing with gross proceeds of $25,730 under the non-brokered private placement previously announced on March 10, 2023. Kermode issued 2,573,000 units of the Company at a private of $0.01 per Unit. Each Unit consists of one common share of the Company and one common share warrant.

16

KERMODE RESOURCES LTD. Notes to the Financial Statements

(Expressed in Canadian Dollars)

As at July 31, 2023 and 2022

7. SHARE CAPITAL—Continue d

• (x) On May 26, 2023, Kermode issued 15,000,000 for the acquisition of the option on the KHRYSOS project and SILVER BELL project from Aurum VENA MINERAL RESOURCES CORP. in British Columbia.

• (xi) On June 2, 2023, the Company issued 2,716,306 shares to 911 Exploration Corp. to pay for expenses incurred in April 2023 totaling $27,163.

• (xii) On June 13, 2023, the Company issued 5,000,000 for the financing with gross proceeds of $50,000 under a non-brokered private placement.

• (i) On June 22, 2023, Kermode issued 4,000,000 for the acquisition of the option on the Slesse Creek project.

• (ii) On June 2, 2023, the Company issued 2,716,306 shares to 911 Exploration Corp. to pay for expenses incurred in April 2023 totaling $27,163.

• (iii) On June 28, 2023, Kermode issued 6,485,569 shares for the debts with value of $64,856 including $17,500 for NewCrest Consulting Corp, $29,229 for Peter Bell, and $18,127 for Richard Kowalski.

• (iv) On July 5, 2023, the Company issued 3,111,849 shares to 911 Exploration Corp. to pay for expenses incurred in April 2023 totaling $31,119.

• (v) On June 2, 2023, the Company issued 1,319, 684 shares to Aurum Vena Mineral Resources Corp to pay for expenses incurred in April 2023 totaling $13,197.

• (vi) On June 19, 2023, Kermode issued 1,000,000 shares for services with value of $10,000, including $5,000 for CEO and $5,000 for CFO.

• (vii) On June 19, 2023, Kermode issued 9,000,000 for the acquisition of the option on the Lucky Strike project.

In total for the nine months ended July 31, 2023, the Company issued 80,044,973 shares in total with the value of $939,650, including:

• (i) 6,485,569 shares for the debts with value of $64,856,

• (ii) 7,573,000 shares for the private placement with the value of $75,730,

• (iii) 64,986,404 shares with the value of $789,064 for the acquisition and exploration work of mineral properties,

• (iv) 1,000,000 shares with the value of $10,000 for the services of CEO and CFO.

Regarding the shares for services in the nine months ended July 31, 2023, 4,064,100 shares issued with the value of $60,961 was for the mineral property investigation and the sale tax, and 1,775,955 shares issued with the value of $26,639 was for the exploration and evaluation of the mineral properties, and capitalized in the Exploration and evaluation of assets.

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KERMODE RESOURCES LTD. Notes to the Financial Statements (Expressed in Canadian Dollars) As at July 31, 2023 and 2022

8. SHARE-BASED PAYMENTS

The Company adopted an equity incentive plan to govern the grant, administration and exercise of Security Based Compensation which may be granted to eligible Participants. The maximum number of Shares issuable under this Plan shall not exceed the aggregate of (i) for Options, 10% of the number of Issued Shares of the Corporation outstanding as of the date of each grant hereunder, inclusive of all Shares then reserved for issuance pursuant to previously granted stock options, and (ii) for all other Awards, 10% of the number of Issued Shares of the Corporation outstanding as of the date where the plan was adopted. The plan was adopted September 19th, 2022 and allows for 11,963,017 Awards other than stock options to be issued. Under the plan, the exercise price of each option shall be equal or greater than the closing market price of the Company’s stock on the day prior to the date of grant. These options are subject to approval from the TSX-V, can be granted for a maximum term of 10 years, and vest at the discretion of the Board of Directors.

Awards that may be granted under this Plan include Options; Performance Share Units; Stock Appreciation Rights and Stock Purchase Rights.

a) Options

The following table summarizes the continuity of the Company’s stock options:

			Weighted Average
	Number of Options		Exercise Price
Balance October 31, 2021	5,000,000	$	0.05
Exercised	-		-
Granted	-		-
Balance, January 31, 2022	5,000,000	$	0.05
Exercised	-		-
Cancelled	(2,000,000)		0.05
Granted	3,000,000		0.05
Balance October 31, 2022	6,000,000		0.05
Exercised	-		-
Cancelled	(3,000,000)		0.05
Granted	13,196,301		0.05
Balance, July 31, 2023	16,196,301		0.05

At July 31, 2023, the Company had outstanding stock options, enabling holders to acquire common shares as follows:

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KERMODE RESOURCES LTD. Notes to the Financial Statements

(Expressed in Canadian Dollars)

As at July 31, 2023 and 2022

8. SHARE-BASED PAYMENTS – continued

Number of	Number of		Exercise	Expiry	Expiry
options outstanding	options exercisable		price	date
1,000,000	1,000,000	$	0.05	September 24, 2026
1,000,000	1,000,000		0.05	February 15, 2027
1,000,000	1,000,000		0.05	April 5, 2027
1,000,000	1,000,000		0.05	August 26, 2027
1,196,301	1,196,301		0.05	November 1, 2027
6,000,000	6,000,000		0.05	June 6, 2028
6,000,000	6,000,000		0.05	June 23,2028

The weighted average contractual life of the options outstanding at July 31, 2023 is 4, 47 years (October 31, 2022 – 4.65 years).

The total number of options exercisable as at July 31, 2023 is 16,196,301 (October 31, 2022 – 6,000,000).

The fair value of the options granted during the nine months ended April 30, 2023 and 2022 was determined using the Black-Scholes option pricing model using the following inputs:

Grant date	Risk-free	Expected	Volatility	Dividend
	interest rate	Life	factor	yield
September 24, 2021	0.25%	5 years	250%	0%
February 15, 2022	0.25%	5 years	195%	0%
April 5, 2022	0.25%	5 years	198%	0%
August 26, 2022	0.25%	5 years	198%	0%
November 1, 2022	0.25%	5 years	198%	0%
June 6, 2023	3.50%	5 years	298%	0%
June 23,2023	3.50%	5years	298%	0%

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KERMODE RESOURCES LTD. Notes to the Financial Statements

(Expressed in Canadian Dollars)

As at July 31, 2023 and 2022

8. SHARE-BASED PAYMENTS – continued

b) Performance Share Units

The following table summarizes the continuity of the Company’s performance share units ( “PSU” s):

	Number of PSUs
Balance October 31, 2021	-
Exercised	-
Granted	-
Balance, April 30, 2022	-
Exercised	-
Granted	-
Balance, October 31, 2022	-
Exercised	-
Granted	12,000,000
Cancelled	(2,000,000)
Balance, July 31, 2023	10,000,000

9. WARRANTS

The following common share purchase warrants entitle the holders thereof the right to purchase one common share for each common share purchase warrant. Warrant transactions and the number of share purchase warrants outstanding as at January 31, 2023 are summarized as follows:

	Issue Date	Exercise Price	Expiry	Number Outstanding
				as at April 30, 2023
Private Placement	February 9, 2022	$0.05	February 09, 2024	9,652,600
Finder’s Warrants	February 9, 2022	$0.05	February 09, 2024	160,000
Private Placement	May 9, 2023	$0.05	May 9, 2026	2,573,000
Finder’s Warrants	May9,2023	$0.05	May9,2026	80,000

10. FINANCIAL AND CAPITAL RISK MANAGEMENT

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

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KERMODE RESOURCES LTD. Notes to the Financial Statements (Expressed in Canadian Dollars)

As at July 31, 2023 and 2022

10. FINANCIAL AND CAPITAL RISK MANAGEMENT – continued

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

The Company has made the following designations of its financial instruments:

	Cash	Amortized cost
	Receivables	Amortized cost
	Advances payable	Amortized cost
	Accounts payable and accrued liabilities	Amortized cost

The fair value of the Company’s advances payable and accounts payable and accrued liabilities approximate their carrying values due to the short-term nature of these instruments.

The Company is exposed to varying degrees to a variety of financial instrument related risks:

Credit risk

The Company’s credit risk is primarily attributable to cash. The Company has no significant concentration of credit risk arising from operations. Management believes that the credit risk concentration with respect to cash, and financial instruments included in amounts receivable is remote.

Liquidity risk

The Company’s approach to managing liquidity risk is addressed in Note 1. As at July 31, 2023, the Company had a cash balance of $26,175 available to settle current liabilities of $293,407. All of the Company’s financial liabilities are subject to normal trade terms.

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. These fluctuations may be significant.

a) Interest rate risk

The Company has cash balances held with financial institutions. The Company’s current policy is to invest excess cash in short-term treasury bills issued by the Government of Canada and its banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks.

b) Foreign currency risk

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KERMODE RESOURCES LTD. Notes to the Financial Statements (Expressed in Canadian Dollars) As at July 31, 2023 and 2022

The Company does not have any balances denominated in a foreign currency and believes it has no significant foreign currency risk.

c) Price risk

The Company is exposed to price risk with respect to commodity prices. Changes in commodity prices will impact the economics of development of the Company’s mineral properties. The Company closely monitors commodity prices to determine the appropriate course of action to be taken.

Capital management

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 of mineral properties. The Board of Directors does 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 Company defines capital that it manages as shareholders’ equity (deficiency).

The properties in which the Company currently has an interest are in the exploration stage; as such the Company has historically relied on the equity markets to fund its activities. Current financial markets are very difficult and there is no certainty with respect to the Company’s ability to raise capital. 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.

The Company currently is not subject to externally imposed capital requirements. There were no changes in the Company’s approach to capital management.

d) SEGMENTED INFORMATION

The Company operates in one segment, being the acquisition, exploration and evaluation of mineral properties in Canada and the United States (Note 5).

July 31, 2023	Canada	United States	Total	Total
Mineralproperties	$988,978	$-	$988,978
July 31, 2022
Mineralproperties	$177,000	$26,030	$203,030

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KERMODE RESOURCES LTD. Notes to the Financial Statements

(Expressed in Canadian Dollars)

As at July 31, 2023 and 2022

11. SUBSEQUENT EVENTS

• a) On August 1, 2023, Kermode updates the proposed deal terms for the BLACK PANTHER property purchase option. The BLACK PANTHER Project has been expanded to cover total size 2,163 hectares with claims 1098465, 1103723, 1104637, 1098514, 1098836, 1103854, 1106076. The total share issuance has increased to 48,000,000 shares with the following schedule: (A) 12,000,000 Shares on the Effective Date; (B) an additional 12,000,000 Shares on or before 12 months following the Effective Date; (C) an additional 12,000,000 Shares on or before 24 months following the Effective Date; (D) an additional 12,000,000 Shares on or before 36 months following the Effective Date; The “Net Smelter Return royalty” has increased to 3% with a $6M six million dollar buy-down and the “Sale Participation Right” shall be 30% of gross proceeds received by Kermode from any future sale of disposition of any interest in the property in the next ten years.

• b) On August 2, 2023, Kermode announces work completed in July under the shares for services agreements with the Chief Executive Officer and Chief Financial Officer. See Kermode’s news release June 1, 2023, for details. The closing share price of Kermode on August 1, 2023, was $0.005, which means the issuance price under the agreement shall be $0.01 per share. The total amount of services provided by the CEO Peter Bell in July 2023 was $5,000, which will be paid with 500,000 shares of Kermode. The total amount of services provided by the CFO Andrew Low (Zhizhen Liu) through NewCrest Consulting Corporation in July 2023 was $5,000, which will be paid with 500,000 shares of Kermode to NewCrest Consulting Corporation. All shares issued are subject to a four-month hold.

• c) On August 2, 2023, Kermode announces work completed in July under the shares for services agreements with Aurum Vena Mineral Resources Corp. Details of the agreements are provided in Kermode’s news release dated June 1, 2023. The closing share price of Kermode on August 1, 2023, was $0.005, which means the issuance price under the agreement shall be $0.01 per share. The total amount of services provided by Aurum Vena Mineral Resources Corp. in July 2023 was $8,061.42, which will be paid with 806,142 shares of Kermode. All shares issued are subject to a four-month hold.

• d) On August 2, 2023, Kermode announces work completed in July under the shares for services agreements with 911 EXPLORATION CORP. Details of the agreements are provided in Kermode’s news release dated January 4, 2023. The closing share price of Kermode on August 1, 2023, was $0.005, which means the issuance price under the agreement shall be $0.01 per share. The total amount of services provided by 911 EXPLORATION CORP. in July 2023 was $25,532.97, which will be paid with 2,553,297 shares of Kermode. All shares issued are subject to a four-month hold.

• e) On August 11, 2023, Kermode announces the BLACK PANTHER property purchase option. The BLACK PANTHER Project comprises claims covering 2,163 hectares with claims 1098465, 1103723, 1104637, 1098514, 1098836, 1103854, 1106076. The total share issuance has increased to 48,000,000 shares with the following schedule: (A) 12,000,000 Shares on the Effective Date; (B) an additional 12,000,000 Shares on or before 12 months following the Effective Date; (C) an additional 12,000,000 Shares on or before 24 months following the

23

KERMODE RESOURCES LTD. Notes to the Financial Statements

(Expressed in Canadian Dollars)

As at July 31, 2023 and 2022

Effective Date; (D) an additional 12,000,000 Shares on or before 36 months following the Effective Date; The “Net Smelter Return royalty” has increased to 3% with a $6M six million dollar buy-down and the “Sale Participation Right” shall be 30% of gross proceeds received by Kermode from any future sale of disposition of any interest in the property in the next ten years.

• f) On August 16, 2023, Kermode Resources Ltd. (TSXV: KLM) ("Kermode") announces a new Shares for Services agreement, subject to Exchange approval. The Company intends to issue common shares in the capital of Kermode to Gold Range LLC ("Consultant") to pay for certain costs associated with minerals exploration activities ("Services") at the Tonya project in Nevada. The Consultant is arm’s length to Kermode and its affiliates. The Consultant shall be eligible to receive a maximum amount of compensation under this agreement of $100,000 per month or $1,200,000 for the full Term from August 16, 2023 to August 16, 2024. The actual amount of compensation in any month shall depend on the Services provided in that month as expressly agreed in advance with the Company. The deemed value of Shares issued under this agreement will be the closing price of the Shares on the TSX Venture Exchange on the first trading day after the month wherein the services were provided. The deemed value will not be less than the Discounted Market Price (subject to a minimum price of $0.01). Any shares issued at a deemed price less than $0.05 will be subject to the Exchange Hold Period. In any case, the deemed value shall not be determined and any such securities shall not be issued until after the services are provided to the Issuer. There shall be a limitation on the total number of shares payable to the Consultant at any time such that the Consultant may not bring their undiluted share position at or above 10% of the Company’s issued and outstanding shares until such time that a Personal Information Form or 2C1 Declaration will be filed with and cleared by the Exchange. The Company can pay the company in cash any amount above 10% of the Company’s issued and outstanding shares until after such is filled and cleared by the exchange.

• g) On August 16, 2023, Kermode announces a new option agreement for the Tonya property in Nevada, USA. The option provides Kermode with the right but not the obligation to undertake a lease of the property. The property comprises unpatented mining claims in Pershing County, Nevada owned by Gold Range LLC. Kermode will not issue any shares under the transaction at any time. The first phase of the deal is the option, where Kermode begins with a one-year term that can be renewed for additional one-year periods by mutual consent of the counterparties so long as Kermode is paying or causing to be paid all annual claim maintenance fees and holding costs. During this phase, Kermode may carry out certain “pre-drilling” mineral exploration activities including but not limited to mapping, rock, soil and geochemical sampling, geophysical surveys and other exploration activities. Kermode will not conduct drilling activities of any kind or nature whatsoever including auger, core, rotary, reverse circulation or other without first entering into the lease agreement contemplated in this Option Agreement. The second phase of the deal is a lease, where Kermode commits to these cash payments: -on signing the lease US$ 5,000 -On the first anniversary US$ 5,000 -On the second anniversary US$ 10,000 - On the third anniversary US$ 50,000 - On the fourth anniversary US$ 100,000 - On the fifth & sixth anniversaries US$ 150,000 - On the seventh & eighth anniversaries US$ 200,000 - On the eighth anniversary and thereafter US$ 250,000 The lease has a 10-year term

24

KERMODE RESOURCES LTD. Notes to the Financial Statements (Expressed in Canadian Dollars)

As at July 31, 2023 and 2022

and is renewable for 10-year increments so long as exploration or mining activity is ongoing. In addition, there is a total five percent (5%) NSR Production Royalty with certain conditions: two percent royalty (2%) has no buy-down provision; the buy-down for the three percent (3%) is five million,US$5,000,000, prior to the earlier of production or the Fifth Anniversary. There is also a thirty percent (30%) future sales interest.

• h) On August 18, 2023, Kermode revises the proposed terms for a non-binding letter of intent (“LOI”) to acquire the SANTA ANNA (“Project”) in British Columbia from a group of four private individuals who are arm’s length to Kermode. The Project includes one exploration claim with license number 1097236 covering 517 hectares in Map Number 092K.

The LOI provides for a due diligence period extending to September 31st, 2023. During this period, KLM can elect to enter into a definitive agreement which will formalize the Transaction. Either party can conduct any activities during the LOI.

WORK COMMITMENTS: None.

OTHER TERMS & CONDITIONS:

• 1) a Net Smelter Return royalty of two and half percent (2.5%) where each half point 0.5% can be purchased from the vendors for $1M at any time at buyer’s discretion for a total buy-down of five million $5M.

• 2) a Sales Participation Right (SPR) of ten percent 10% of gross proceeds of any future transaction where Kermode sells the property in the next ten years.

TERMS OF THE PURCHASE OPTION:

	Cash	Securities	Spending requirement
Signing	$-0-	25,000,000	$-0-
Year 1	$-0-	-0-	$-0-
Year 2	$-0-	-0-	$-0-
Year 3	$-0-	-0-	$-0-
Year 4	$-0-	-0-	$-0-
Year 5	$-0-	25,000,000	$-0-

25