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King Copper Discovery Corp. Audit Report / Information 2025
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Audit Report / Information
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KING COPPER
DISCOVERY
KING COPPER DISCOVERY CORP.
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
bakertilly
Baker Tilly WM LLP
900 – 400 Burrard Street
Vancouver, British Columbia
Canada V6C 3B7
T: +1 604.684.6212
F: +1 604.688.3497
[email protected]
www.bakertilly.ca
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of King Copper Discovery Corp.:
Opinion
We have audited the consolidated financial statements of King Copper Discovery Corp. and its subsidiaries (together the "Company"), which comprise the consolidated statements of financial position as at December 31, 2025 and 2024, and the consolidated statements of loss and comprehensive loss, consolidated statements of cash flows, and consolidated statements of changes in shareholders' equity (deficiency) for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2025 and 2024, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with IFRS Accounting Standards.
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 is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the consolidated financial statements, which describes the conditions indicating 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 for the year ended December 31, 2025. 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 of our auditor's report, we have determined the matter described below to be the key audit matters to be communicated in our report.
Baker Tilly WM LLP is a member of Baker Tilly Canada Cooperative, which is a member of the global network of Baker Tilly International Limited. All members of Baker Tilly Canada Cooperative and Baker Tilly International Limited are separate and independent legal entities.
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| Key audit matter | How our audit addressed the key audit matter |
|---|---|
| Assessment of the existence of impairment indicators for mineral properties | |
| Refer to note 5 | Our approach to addressing the matter involved the following procedures, among others: |
| As at December 31, 2025, the carrying amount of the Company's mineral properties was $270,427. | |
| At each reporting period, management assesses mineral properties to determine whether there are any indicators of impairment. If any such indicators exist, the asset's recoverable amount is estimated. An impairment loss is recognized if the carrying amount of an asset exceeds its estimated recoverable amount. |
Management assesses mineral properties for impairment based on, at minimum, the presence of any of the following indicators:
(i) the period for which the Company has the right to explore in the specific area has expired during the year or will expire in the near future, and is not expected to be renewed;
(ii) substantive expenditure on further exploration for, and evaluation of, mineral resources in the specific area is neither budgeted nor planned;
(iii) the Company has decided to discontinue exploration for and evaluation of mineral resources in the specific area; and/or
(iv) for areas of likely development, available data indicates that the carrying amount exceeds the recoverable amount.
No impairment indicators were identified by management as at December 31, 2025.
We considered this a key audit matter due to the significance of the mineral property interests and the judgments made by management in their assessment of impairment indicators related to the mineral property interests. These factors have resulted in a high degree of subjectivity in performing audit procedures, related to the judgment applied by management. | Evaluating the judgments made by management in determining the impairment indicators, which included the following:
• Obtained, for a sample of claims by reference to government registries, evidence to support (i) the right to explore the area and (ii) claim expiration dates.
• Read the board of directors' minutes and resolutions and observed evidence supporting the continued and planned exploration expenditures, which included evaluating results of the Company's work programs.
• Assessed whether available data indicates the potential for commercially viable mineral resources.
• Based on evidence obtained in other areas of the audit, considered whether other facts and circumstances suggest that the carrying amount may exceed the recoverable amount. |
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Other Information
Management is responsible for the other information. The other information comprises the information included in the Management's Discussion and Analysis filed with the relevant Canadian securities commissions.
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 and remain alert for indications that the other information appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. 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.
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- 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.
- Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Company as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes 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 period 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 Graeme L. Cocke.
Baker Tilly WM LLP
CHARTERED PROFESSIONAL ACCOUNTANTS
Vancouver, B.C.
April 23, 2026
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KING COPPER DISCOVERY CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian Dollars)
AS AT
| December 31, 2025 | December 31, 2024 | |
|---|---|---|
| ASSETS | ||
| Current | ||
| Cash | $ 15,695,101 | $ 28,949 |
| Receivables and prepaid expenses (Note 4) | 147,529 | 95,385 |
| 15,842,630 | 124,334 | |
| Mineral properties (Note 5) | 270,427 | 187,410 |
| $ 16,113,057 | $ 311,744 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current | ||
| Accounts payable and accrued liabilities (Note 6) | $ 593,917 | $ 1,575,906 |
| Shareholders' equity (deficiency) | ||
| Share capital (Note 7) | 51,583,563 | 30,313,158 |
| Share-based payment reserve (Note 7) | 8,570,300 | 5,488,543 |
| Deficit | (44,634,723) | (37,065,863) |
| 15,519,140 | (1,264,162) | |
| $ 16,113,057 | $ 311,744 |
Nature and continuance of operations and going concern (Note 1)
Subsequent events (Note 12)
Approved and authorized by the Board on April 22, 2026.
"Jonathan Richards" Director
Jonathan Richards
"Justin Blanchet" Director
Justin Blanchet
The accompanying notes are an integral part of these consolidated financial statements.
KING COPPER DISCOVERY CORP
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31
| 2025 | 2024 | |
|---|---|---|
| EXPENSES | ||
| Consulting fees | $ 84,470 | $ 21,827 |
| Directors and advisory fees (Note 6) | 408,951 | 200,862 |
| Exploration expenditures (Notes 5 and 6) | 1,889,298 | 1,335,665 |
| Foreign exchange | 13,655 | 48,441 |
| Investor relations | 30,000 | 7,615 |
| Management fees (Note 6) | 236,816 | 261,080 |
| Marketing and shareholder communications | 597,410 | 64,562 |
| Office expenses | 79,809 | 39,737 |
| Professional fees (Note 6) | 281,434 | 329,282 |
| Property investigation | - | 64,567 |
| Share-based payments (Notes 6 and 7) | 3,600,198 | 646,449 |
| Transfer agent, filing and listing fees | 57,973 | 49,317 |
| Travel | 452,634 | 72,812 |
| (7,732,648) | (3,142,216) | |
| Other items | ||
| Interest income | 126,810 | 2,917 |
| Gain on settlement of debt | 36,978 | - |
| Impairment of mineral properties (Note 5) | - | (2,110,182) |
| Loss and comprehensive loss for the year | $ (7,568,860) | $ (5,249,481) |
| Basic and diluted loss per common share | $ (0.04) | $ (0.06) |
| Weighted average number of common shares outstanding – basic and diluted | 209,253,143 | 93,000,466 |
The accompanying notes are an integral part of these consolidated financial statements.
KING COPPER DISCOVERY CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31
| 2025 | 2024 | |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Loss for the year | $ (7,568,860) | $ (5,249,481) |
| Items not involving cash: | ||
| Share-based payments | 3,600,198 | 646,449 |
| Gain on settlement of debt | (36,978) | - |
| Impairment of mineral properties | - | 2,110,182 |
| Non-cash working capital item changes: | ||
| Receivables and prepaid expenses | (52,144) | (30,181) |
| Accounts payable and accrued liabilities | (945,011) | 1,047,890 |
| Net cash used in operating activities | (5,002,795) | (1,475,141) |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Acquisition of mineral properties | (83,017) | (467,341) |
| Net cash used in investing activities | (83,017) | (467,341) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds from issuance of shares | 20,000,000 | 2,100,000 |
| Share issuance costs | (1,122,729) | (150,741) |
| Proceeds from warrant exercises | 1,874,693 | - |
| Net cash provided by financing activities | 20,751,964 | 1,949,259 |
| Change in cash for the year | 15,666,152 | 6,777 |
| Cash, beginning of year | 28,949 | 22,172 |
| Cash, end of year | $ 15,695,101 | $ 28,949 |
Supplemental disclosures with respect to cash flows (Note 10)
The accompanying notes are an integral part of these consolidated financial statements.
KING COPPER DISCOVERY CORP
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)
(Expressed in Canadian Dollars)
| Number | Amount | Share-based payment reserve | Deficit | Total | |
|---|---|---|---|---|---|
| Balance, December 31, 2023 | 78,010,629 | $ 28,071,457 | $ 5,134,536 | $(31,816,382) | $ 1,389,611 |
| Shares issued during private placement | 21,000,000 | 2,100,000 | - | - | 2,100,000 |
| Shares issued on exercise of RSUs | 2,150,000 | 354,750 | (354,750) | - | - |
| Share issuance costs | - | (213,049) | 62,308 | - | (150,741) |
| Share-based payments | - | - | 646,449 | - | 646,449 |
| Loss and comprehensive loss for the year | - | - | - | (5,249,481) | (5,249,481) |
| Balance, December 31, 2024 | 101,160,629 | 30,313,158 | 5,488,543 | (37,065,863) | (1,264,162) |
| Shares issued during private placement | 165,217,390 | 20,000,000 | - | - | 20,000,000 |
| Share issuance costs | 1,746,500 | (1,122,729) | - | - | (1,122,729) |
| Shares issued on exercise of RSUs | 2,925,000 | 481,313 | (481,313) | - | - |
| Shares issued on exercise of warrants | 11,885,000 | 1,782,750 | - | - | 1,782,750 |
| Shares issued on exercise of broker’s warrants | 612,954 | 91,943 | - | - | 91,943 |
| Share-based payment reallocation on exercise of broker warrants | - | 37,128 | (37,128) | - | - |
| Share-based payments | - | - | 3,600,198 | - | 3,600,198 |
| Loss and comprehensive loss for the year | - | - | - | (7,568,860) | (7,568,860) |
| Balance, December 31, 2025 | 283,547,473 | $ 51,583,563 | $ 8,570,300 | $(44,634,723) | $ 15,519,140 |
The accompanying notes are an integral part of these consolidated financial statements.
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
- NATURE AND CONTINUANCE OF OPERATIONS
King Copper Discovery Corp. (the "Company") was incorporated in Canada under the British Columbia Corporations Act on March 21, 2017. The Company is principally engaged in the acquisition and exploration of resource properties. The Company's shares are publicly traded on the TSX Venture Exchange (the "TSXV") under the symbol KCP. The address of the registered head office, records office, and principal place of business of the Company is 1212-1030 West Georgia Street, Vancouver, British Columbia, V6E 2Y3. The Company is in the process of investing in potential new acquisitions and exploring and evaluating its resource properties and has not yet determined whether the properties contain ore reserves that are economically recoverable.
These consolidated financial statements have been prepared in accordance with IFRS Accounting 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 rather than through a process of forced liquidation. The Company has incurred losses from inception and does not currently have the financial resources to sustain operations in the long-term. While the Company has been successful in obtaining required funding in the past, there is no assurance that such future financing will be available or be available on favourable terms. An inability to raise additional financing may impact the future assessment of the Company as a going concern. These conditions create a material uncertainty that may cast significant doubt about the ability of the Company to continue as a going concern.
These consolidated financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations. Continued operations of the Company are dependent on the Company's ability to receive financial support, necessary financings, or generate profitable operations in the future.
- BASIS OF PREPARATION
Statement of compliance
These consolidated financial statements, including comparatives have been prepared using accounting policies in accordance with IFRS as issued by the International Accounting Standards Board ("IASB").
The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit or loss, which are measured at their fair value.
Basis of consolidation
These consolidated financial statements include the accounts of the Company and its subsidiaries, Aurora Mining S.A. (Argentina – 100% interest) and Aurora Copper Peru S.A.C. (Peru – 100% interest). The subsidiaries' principal activity is mineral exploration.
Subsidiaries are all entities over which the Company has exposure to variable returns from its involvement and has the ability to use power over the investee to affect its returns. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company until the date on which control ceases.
The accounts of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Inter-company transactions, balances and unrealized gains or losses on transactions are eliminated upon consolidation.
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
2. BASIS OF PREPARATION (cont'd...)
Basis of measurement
These consolidated financial statements are presented in Canadian dollars, which is also the Company's and its subsidiaries' functional currency and have been prepared on a historical cost basis, except for certain financial instruments, which are carried at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
Significant Accounting Judgments and Estimates
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 at the date of the financial statements and reported amounts of expenses during the reporting period. On an ongoing basis, management evaluates its judgments and estimates in relation to assets, liabilities and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments and estimates. Actual outcomes may differ from these estimates.
The most significant estimate is as follows:
Share-based payments
The Company measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date on which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them.
The most significant judgments are as follows:
Impairment of exploration and evaluation assets
The carrying amount and recoverability of mineral properties requires management to make certain estimates, judgments and assumptions about each project. Management considers the economics of the project, including the latest resource prices and the long-term forecasts, and the overall economic viability of the project.
During the year ended December 31, 2024, the Company abandoned the El Tapau, Cerro Negro and Miranda Project and recognized an impairment of $2,110,182. Management has assessed these indicators and does not believe any additional impairment is required for the year ended December 31, 2025.
Determination of functional currency
The functional currencies of the Company and its subsidiaries are outlined in the basis of measurement section above. The determination of functional currency involves certain judgments to determine the primary economic environment in which each entity operates. The Company reconsiders its functional currency and its subsidiaries if there are changes in events and conditions impacting the factors used in the determination of the primary economic environment.
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
3. MATERIAL ACCOUNTING POLICY INFORMATION
Financial instruments
Financial assets
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 determination of the classification of financial assets is made at initial recognition. Equity instruments that are held for trading (including all equity derivative instruments) are classified as FVTPL; for other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as FVTOCI.
The Company’s accounting policy for each of the categories is as follows:
Financial assets at FVTPL: Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of financial assets held at FVTPL are included in profit or loss.
Financial assets at FVTOCI: Financial assets and equity investments carried at FVTOCI are recorded at fair value plus transaction costs. Subsequently they are measured at fair value, with realized and unrealized gains and losses arising from changes in fair value of the financial assets held at FVTOCI are included in other comprehensive (loss) income.
Financial assets at amortized cost: A financial asset is measured at amortized cost if the objective of the business model is to hold the financial asset for the collection of contractual cash flows, and the asset’s contractual cash flows are comprised solely of payments of principal and interest. They are classified as current assets or non-current assets based on their maturity date, and are initially recognized at fair value plus transaction costs, and are subsequently carried at amortized cost using the effective interest method, less any impairment. The effective interest rate is the rate that discounts estimated future cash flows over the expected life of the financial instrument, or where appropriate, a shorter period.
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. The impairment methodology applied depends on whether there has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition based on all information available, and reasonable and supportive forward-looking information.
The following table shows the classification of the Company’s financial assets:
| Financial asset | Classification |
|---|---|
| Cash | Amortized cost |
| Other receivables and advances | Amortized cost |
Financial liabilities
The Company classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was incurred. The Company’s accounting policy for each category is as follows:
Financial liabilities at FVTPL – This category comprises derivatives or liabilities acquired or incurred principally for the purpose of selling or repurchasing in the near term. They are initially measured at fair value with transaction costs expensed in profit or loss. Subsequently, these financial liabilities are carried in the consolidated statement of financial position at fair value with changes in fair value recognized in profit or loss.
Financial liabilities at amortized cost – This category includes financial liabilities not at fair value through profit or loss. These financial liabilities are initially recognized at fair value less transaction costs, and subsequently are measured at amortized cost using the effective interest method.
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd...)
Financial instruments (cont'd...)
The following table shows the classification of the Company’s financial liabilities:
| Financial liability | Classification |
|---|---|
| Accounts payable and accrued liabilities | Amortized cost |
Share capital
Equity financing transactions may involve the issuance of units. Units comprise common shares and share purchase warrants. The Company accounts for unit offering proceeds between common shares and share purchase warrants using the residual value method, with the common shares being valued first and the balance, if any, is allocated to the attached warrants.
Costs directly identifiable with the raising of share capital financing are charged against share capital. Share issuance costs incurred in advance of share subscriptions are recorded as deferred assets. Share issuance costs related to incomplete share subscriptions are charged to profit or loss.
Warrants issued to agents or brokers on a non-cash basis in connection with corporate financings are recorded at fair value using the Black-Scholes option pricing model and charged against share capital as issue costs with an offsetting increase to share-based payments reserve. Upon exercise, shares are issued from treasury and the amount reflected in share-based payment reserves is credited to share capital, adjusted for any consideration paid.
When warrants expire unexercised or are cancelled, the amounts recorded in share-based payment reserve with respect to those warrants are not reclassified within equity.
Mineral properties
The Company is in the process of exploring its mineral property interests and has not yet determined whether these properties contain ore reserves that are economically recoverable.
All costs related to the acquisition of mineral properties, including option payments, are capitalized on an individual prospect basis. The recoverability of the amounts capitalized for the undeveloped mineral properties is dependent upon the determination of economically recoverable ore reserves, confirmation of the Company's interest in the underlying mineral claims, the ability to obtain the necessary financing to complete their development, and future profitable production or proceeds from the disposition thereof. Subsequent recovery of the resulting carrying amount depends on successful development or sale of the mineral property.
Mineral properties are assessed annually for indicators of impairment. A property is deemed to have an indicator of impairment if the period for which the Company has the right to explore the property has expired or is not expected to be renewed, substantive expenditure on further exploration and evaluation of mineral resources is neither budgeted nor planned, exploration and evaluation activities have not led to the discovery of commercially viable quantities of mineral resources and the Company has decided to discontinue such activities for the specific property, or if sufficient data exists to indicate that development of a specific property would be unlikely to recover the carrying amount of the associated capitalized exploration and evaluation expenditures.
If there is an indication of impairment, the Company determines the recoverable amount of the specific property as the greater of the asset’s value in use or fair value less costs of disposal, and comparing this to the carrying amount as at the reporting date. If the carrying amount exceeds the recoverable amount, those exploration and evaluation expenditure costs, in excess of estimated recoveries, are written off to profit or loss as an impairment loss.
Capitalized mineral property costs are classified as intangible assets.
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd...)
Mineral properties (cont'd...)
Exploration and evaluation expenditures are recognized in profit or loss. Costs incurred before the Company has obtained legal rights to explore on areas of interest are recognized in profit or loss. Expenditures incurred by the Company in connection with the exploration and evaluation of mineral resources after the technical feasibility and commercial viability of extracting a mineral resource are demonstrable are capitalized.
From time to time, the Company may acquire or dispose of mineral properties pursuant to the terms of option agreements. Due to the fact that options are exercisable entirely at the discretion of the optionee, the amounts payable or receivable are not recorded. Option payments are recorded as mineral property costs or recoveries when the payments are made or received.
Impairment
At the end of each reporting period, the Company’s assets are reviewed to determine whether there is any indication that those assets may be impaired. If such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs of disposal 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 pre-tax 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 the 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 loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of 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-based payments
The Company may grant Restricted Share Units (“RSU”) and stock options in accordance with the Company’s Long Term Inventive Plan (“LTIP”) to acquire common shares of the Company to directors, officers, employees, and consultants. An individual is classified as an employee when the individual is an employee for legal or tax purposes or provides services similar to those performed by an employee.
The fair value of stock options is measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration paid for the shares on the exercise of stock options is credited to share capital. If and when the stock options are exercised, the applicable amounts of reserves are transferred to share capital.
The fair value of the estimated number of RSUs that will eventually vest, determined at the date of grant, is recognized as share-based compensation expense over the vesting period, with a corresponding amount recorded as equity. The fair value of the RSUs is estimated using the market value of the underlying shares as well as assumptions related to the market and non-market conditions at the date of grant.
In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of goods or service received.
When share-based awards expire unexercised or are cancelled, the amounts recorded in share-based payment reserve with respect to those share-based payments are not reclassified within equity.
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd...)
Earnings (loss) per share
The Company presents basic earnings (loss) per share for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the year. Diluted earnings per share is calculated by adjusting the weighted average number of common shares outstanding for dilutive instruments. The number of shares included with respect to options, warrants, and similar instruments is computed using the treasury stock method. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding, as the effect would be anti-dilutive.
Income taxes
Income tax expense comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity. Current tax expense is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at year end, adjusted for amendments to tax payable with regards to previous years.
Deferred tax is recorded using the liability method, providing for temporary differences, between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences are not provided for relating to goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable loss, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the date of the consolidated statement of financial position.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a deferred tax asset will be recovered, it does not recognize the asset.
Foreign Currencies
The functional currency is the currency of the primary economic environment in which the entity operates. Entities whose functional currencies differ from the presentation currency are translated into Canadian dollars as follows: assets and liabilities – at the closing rate as at the reporting date, and income and expenses – at the average rate of the period. All resulting changes are recognized in other comprehensive loss as cumulative translation differences.
Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. All gains and losses on translation of these foreign currency transactions are charged to profit or loss.
When the Company disposes of its entire interest in a foreign operation, or loses control, joint control, or significant influence over a foreign operation, the foreign currency gains or losses accumulated in other comprehensive loss related to the foreign operation are recognized in profit or loss. If an entity disposes of part of an interest in a foreign operation which remains a subsidiary, a proportionate amount of foreign currency gains or losses accumulated in other comprehensive loss related to the subsidiary are reallocated between controlling and non-controlling interests.
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd...)
Recently adopted accounting standards
The Company did not adopt any amendments to IFRS that were mandatorily effective for accounting periods beginning on or after January 1, 2025, which had a material impact on disclosures or amounts reported in these consolidated financial statements.
New standards and standards not yet adopted
The Company has not yet adopted certain new standards, amendments and interpretations to existing standards as outlined below, which have been published but are only effective for accounting periods beginning on or after January 1, 2026 or later periods.
Amendments to IFRS 9, Financial Instruments, and IFRS 7, Financial Instruments: Disclosures. In May 2024, the IASB issued Amendments to the Classification and Measurement of Financial Instruments. The amendments clarify that a financial liability is derecognized on the settlement date and introduce an accounting policy choice to derecognize a financial liability settled using an electronic payment system before the settlement date. Other clarifications include guidance on the classification of financial assets with ESG-linked features, non-recourse loans and contractually linked instruments.
The amendments are effective for annual periods beginning on or after January 1, 2026. Early adoption is permitted, with an option to early adopt only the amendments to the classification of financial assets (for contingent features). The Company is currently in the process of assessing the impact of the amendments on the consolidated financial statements and notes to the consolidated financial statements.
IFRS 18, Presentation and Disclosure in Financial – In April 2024, the IASB issued IFRS 18, Presentation and Disclosure in the Financial Statements. IFRS 18 will replace IAS 1 Presentation of Financial Statements but carries forward many of the requirements from IAS 1. The standard introduces new defined subtotals to be presented in the Company's consolidated statement of comprehensive loss, disclosure of any management-defined performance measures related to the consolidated statement of comprehensive loss and requirements for grouping of information. IFRS 18 is effective for annual periods beginning on or after January 1, 2027, with earlier adoption permitted, and will apply retrospectively. The Company is currently in the process of assessing the impact of IFRS 18 (and applicable amendments to other standards) on the consolidated financial statements.
4. RECEIVABLES AND PREPAID EXPENSES
| December 31, 2025 | December 31, 2024 | |
|---|---|---|
| Goods and services tax (“GST”) receivable | $ 93,055 | $ 73,552 |
| Other receivables and advances | 18,401 | 15,620 |
| Prepayments | 36,073 | 6,213 |
| Total | $ 147,529 | $ 95,385 |
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
5. MINERAL PROPERTIES
Title to mineral property interests
Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and titles may be affected by undetected defects.
Colquemayo Project, Peru
On June 28, 2024, the Company entered into a definitive option agreement, with third parties (the “Optionors”), to acquire a 100% interest in certain claims located in Peru, comprising the Colquemayo Project. The Company can acquire a 100% interest in the property by making total cash payments of US$1,585,000 and by incurring exploration expenditures of US$6,200,000 as follows:
| Cash Payment (USD $) | Minimum Exploration Expenditures (USD $) | |
|---|---|---|
| Upon signing LOI (paid $34,500) | 25,000 | - |
| Anniversary of TSXV Approval of transaction (paid and incurred) | 60,000 | 200,000 |
| First anniversary of grant of exploration permit* | 200,000 | 1,000,000 |
| Second anniversary of grant of exploration permit* | 250,000 | 1,000,000 |
| Third anniversary of grant of exploration permit* | 250,000 | 2,000,000 |
| Fourth anniversary of grant of exploration permit* | 800,000 | 2,000,000 |
| 1,585,000 | 6,200,000 |
*The Company may satisfy up to 50% of the Cash Payments by issuing the Optionors common shares in the capital of the Company.
The Optionors retain a 2% NSR royalty, of which the Company may purchase 50%, (1%), of the NSR for a payment of USD$2,500,000.
San Francisco Project, Argentina
The San Francisco Project at December 31, 2025 was made up of five separate agreements, as described below:
Don David - San Francisco Project, Argentina
On August 24, 2022, the Company entered into an option agreement with third parties to acquire a 100% interest in certain claims known as the Don David Project, Argentina. The Company can acquire a 100% interest in the property by making payments and incurring exploration expenditures and drilling as follows:
| Cash Payment (USD $) | |
|---|---|
| August 24, 2022 (paid) | 15,000 |
| At signing of First Addendum (paid) | 15,000 |
| At 5th month of the Environmental Permit (paid) | 35,000 |
| July 31, 2026[1] | 100,000 |
| July 31, 2027[1] | 150,000 |
| July 31, 2028[1] | 250,000 |
| July 31, 2029[1] | 1,000,000 |
| 1,565,000 |
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
5. MINERAL PROPERTIES (cont'd...)
| Minimum Exploration Expenditures (USD $) | Minimum Drilling (Meters) | |
|---|---|---|
| July 31, 2026[1] | - | 2,000 |
| July 31, 2027[1] | 300,000 | - |
| July 31, 2028[1] | 600,000 | - |
| July 31, 2029[1] | 750,000 | - |
| 1,650,000 | 2,000 |
- On August 15, 2023, August 22, 2024, February 18, 2025, and on January 23, 2026, the Company agreed to amend and extend the due date of the cash payments, minimum exploration expenditures and minimum drilling meterage. The dates shown above are updated to reflect the amendments.
The third parties retain a 2% NSR royalty, of which the Company may purchase 50%, (1%), of the NSR for a payment of USD$1,000,000.
Santa Barbara - San Francisco Project, Argentina
On July 1, 2021, the Company entered into an option agreement with government organization Instituto Provincial de Exploraciones y Explotaciones Mineras de la Provincia de San Juan, Argentina ("IPEEM") to acquire the right to explore and exploit certain claims known as the Santa Barbara Project, Argentina. The Company can maintain the right to explore by incurring exploration expenditures as follows:
| Cash Payment (USD $) | Minimum Exploration Expenditures (USD $) | |
|---|---|---|
| Upon signing (paid) | 20,000 | - |
| July 1, 2022 (completed) | - | 505,000 |
| July 1, 2023 (completed) | - | 1,124,000 |
| July 1, 2024 (completed) | - | 1,124,000 |
| July 1, 2025 (incurred)* | - | 900,000 |
| July 1, 2026* | - | 750,000 |
| July 1, 2027* | - | 750,000 |
| July 1, 2028* | - | 1,223,000 |
| 20,000 | 6,376,000 |
*On September 19, 2025, the minimum expenditures were amended and extended as per the terms shown above.
During the five-year exploration stage, the Company is also required to make monthly payments of US$5,519 (US$0.50 per hectare) and loan IPEEM a four-wheel-drive vehicle, which will become the property of IPEEM if the agreement terminates. During the second stage (exploitation stage) the Company is required to make monthly payments of US$16,557 (US$1.50 per hectare) until production starts and then a 1% to 2% royalty, with a value to be set at the time the exploitation stage commences.
El Tapau - San Francisco Project, Argentina
On September 24, 2018, the Company entered into an option agreement with third parties to acquire a 100% interest in certain claims known as the El Tapau Project, Argentina. The Company could acquire a 100% interest in the property by making total cash payments of US$1,610,000 and by incurring exploration expenditures of US$1,050,000 over a period of 6 years.
During the year ended December 31, 2024, the Company elected to terminate the option agreement and consequently recognized an impairment on the mineral property of $937,308.
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
5. MINERAL PROPERTIES (cont'd...)
Cerro Negro - San Francisco Project, Argentina
On September 25, 2018, the Company entered into an option agreement with third parties to acquire a 100% interest in certain claims known as the Cerro Negro Project, Argentina. The Company could acquire a 100% interest in the property by making total cash payments of US$1,710,000 and by incurring exploration expenditures of US$2,050,000 over a period of 6 years.
During the year ended December 31, 2024, the Company elected to terminate the option agreement and consequently recognized an impairment on the mineral property of $1,074,049.
Miranda - San Francisco Project, Argentina
On July 1, 2020, the Company entered into an option agreement with third parties to acquire a 100% interest in certain claims known as the Miranda Project, Argentina. The Company could acquire a 100% interest in the property by making total cash payments of US$245,000 over a period of 3 years.
During the year ended December 31, 2024, the Company elected to terminate the option agreement and consequently recognized an impairment on the mineral property of $98,825.
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
5. MINERAL PROPERTIES (cont'd...)
Acquisition costs
During the years ended December 31, 2025 and December 31, 2024, the Company incurred acquisition costs as follows:
| San Francisco Project | Colquemayo | ||||||
|---|---|---|---|---|---|---|---|
| Acquisition Costs | El Tapau Project | Cerro Negro Project | Miranda Project | Don David Project | Santa Barbara Project | Colquemayo Project | Total |
| December 31, 2023 | $ 755,956 | $ 869,824 | $ 98,825 | $ 39,171 | $ 66,475 | $ - | $ 1,830,251 |
| Additions | 181,352 | 204,225 | - | 47,264 | - | 34,500 | 467,341 |
| Impairment | (937,308) | (1,074,049) | (98,825) | - | - | - | (2,110,182) |
| December 31, 2024 | - | - | - | 86,435 | 66,475 | 34,500 | 187,410 |
| Additions | - | - | - | - | - | 83,017 | 83,017 |
| December 31, 2025 | $ - | $ - | $ - | $ 86,435 | $ 66,475 | $ 117,517 | $ 270,427 |
Exploration expenditures
During the year ended December 31, 2025, the Company incurred exploration costs as follows:
| Exploration Expenditures | San Francisco Project | Colquemayo Project | Total |
|---|---|---|---|
| Assay | $ - | $ 37,713 | $ 37,713 |
| Community relations | - | 74,086 | 74,086 |
| Concession fees | - | 439,896 | 439,896 |
| Environmental | - | 132,964 | 132,964 |
| Field expenditures | 13,081 | 74,700 | 87,781 |
| Geological consulting | 59,635 | 292,962 | 352,597 |
| Project and office administration | 98,383 | 116,900 | 215,283 |
| Project management | 45,260 | 256,474 | 301,734 |
| Report preparation | - | 54,000 | 54,000 |
| Taxes | 12,384 | 68,767 | 81,151 |
| Travel | 5,105 | 106,988 | 112,093 |
| $ 233,848 | $ 1,655,450 | $ 1,889,298 |
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
5. MINERAL PROPERTIES (cont'd...)
Exploration expenditures (cont'd...)
During the year ended December 31, 2024, the Company incurred exploration costs as follows:
| Exploration Expenditures | San Francisco Project | Colquemayo Project | Total |
|---|---|---|---|
| Assay | $ 28,722 | $ 5,090 | $ 33,812 |
| Concession Fees | - | 272,189 | 272,189 |
| Drilling | 14,801 | - | 14,801 |
| Environmental and report preparation | 1,151 | - | 1,151 |
| Field expenditures | 63,270 | 20,490 | 83,760 |
| Geological consulting | 225,998 | 108,737 | 334,735 |
| Project administration & community relations | 102,120 | 115,539 | 217,659 |
| Project management | 149,609 | 149,609 | 299,218 |
| Taxes | 47,703 | 5,185 | 52,888 |
| Travel | 10,817 | 14,635 | 25,452 |
| $ 644,191 | $ 691,474 | $ 1,335,665 |
6. RELATED PARTY TRANSACTIONS
Related party transactions consist of amounts paid to and or due to key management personnel of the Company. Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of members of the Board and corporate officers, including the Company's Chief Executive Officer and Chief Financial Officer. During the year ended December 31, 2025 and 2024, the Company entered into the following transactions with key management personnel:
| 2025 | 2024 | |
|---|---|---|
| Management fees | $ 236,816 | $ 248,496 |
| Exploration costs – management fees | 301,734 | 299,218 |
| Director fees | 130,248 | 115,346 |
| Professional fees | 145,184 | 139,600 |
| Share-based payments | 1,060,319 | 417,378 |
| $ 1,874,301 | $ 1,220,038 |
As at December 31, 2025, $237,174 (2024 - $1,160,626) was included in accounts payable and accrued liabilities owing to officers and directors of the Company.
7. SHAREHOLDERS' EQUITY
Authorized
An unlimited number of common shares without par value.
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
7. SHAREHOLDERS' EQUITY (cont'd...)
Issued share capital
During the year ended December 31, 2025:
- On March 3, 2025, the Company completed a non-brokered private placement financing and issued a total of 100,000,000 common shares at a price of $0.05 for gross proceeds of $5,000,000. The Company issued 1,746,500 common shares with a fair value of $87,325 as finders' fees and paid other share issue costs of $160,682.
- On September 15, 2025, the Company completed a non-brokered private placement financing and issued a total of 65,217,390 common shares at a price of $0.23 for gross proceeds of $15,000,000. The Company paid finders' fees of $111,141 and paid other share issue costs of $850,906.
- Issued 11,885,000 common shares upon exercise of warrants for gross proceeds of $1,782,750.
- Issued 612,954 common shares upon exercise of broker warrants for gross proceeds of $91,943 and reallocated $37,128 to share capital from share-based payment reserves.
During the year ended December 31, 2024:
On March 22, 2024, the Company completed a non-brokered private placement financing and issued a total of 21,000,000 units at a price of $0.10 for gross proceeds of $2,100,000. Each unit consisted of one common share and one common share purchase warrant. Each warrant entitles the holder to purchase an additional common share at an exercise price of $0.15 for a period of two years. No value was assigned to the warrants included in the units using the residual value method.
The Company paid finders' fees of $118,386, paid other share issue costs of $32,355 and issued 1,028,650 broker warrants fair valued at $62,308. Each broker warrant entitles the holder to purchase a common share at an exercise price of $0.15 for a period of two years. The Company fair valued the broker warrants using the Black-Scholes option pricing model and used the following assumptions when fair valuing the broker warrants: expected volatility of 103.95%, risk free interest rate of 4.1%, life of 2 years, dividend yield of 0% and forfeiture rate of 0%.
Restricted Share Units
The Company has a LTIP. The RSUs granted under the LTIP entitles directors, officers, employees and consultants to common shares of the Company upon vesting, based on vesting terms determined by the Company's Board of Directors at the time of grant.
During the year ended December 31, 2025, the Company granted an aggregate of 6,990,000 RSUs (2024 - 300,000) which vest over a period of 2 years, with 50% vesting after 12 months and 25% vesting 18 and 24 months after grant.
During the year ended December 31, 2025, the Company recognized $889,573 (2024 - $633,883) in share-based compensation related to the RSUs. This amount was also recorded within share-based payment reserve on the consolidated statement of financial position.
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
7. SHAREHOLDERS' EQUITY (cont'd...)
Restricted Share Units (cont'd...)
| Number Outstanding | Fair Value | |
|---|---|---|
| Outstanding, December 31, 2023 | 5,400,000 | $ 891,000 |
| Granted | 300,000 | 47,250 |
| Vested and converted to common shares | (2,150,000) | (354,750) |
| Outstanding, December 31, 2024 | 3,550,000 | 583,500 |
| Granted | 6,990,000 | 3,425,100 |
| Cancelled | (137,500) | (22,688) |
| Vested and converted to common shares | (2,925,000) | (481,313) |
| Outstanding, December 31, 2025 | 7,477,500 | $ 3,504,599 |
Stock options and warrants
Stock option and warrant transactions are summarized as follows:
| Stock options | Warrants | |||
|---|---|---|---|---|
| Number | Weighted Average Exercise Price | Number | Weighted Average Exercise Price | |
| Balance, December 31, 2023 | 7,795,000 | $ 0.66 | 6,120,270 | $ 0.59 |
| Granted | - | - | 22,028,650 | 0.15 |
| Expired/cancelled | (2,425,000) | 0.14 | - | - |
| Balance, December 31, 2024 | 5,370,000 | 0.73 | 28,148,920 | 0.24 |
| Granted | 15,650,000 | 0.23 | - | - |
| Exercised* | - | - | (12,497,954) | 0.15 |
| Expired/cancelled | (2,720,000) | 1.03 | (6,120,270) | 0.59 |
| Outstanding, December 31, 2025 | 18,300,000 | $ 0.26 | 9,530,696 | $ 0.15 |
| Exercisable, December 31, 2025 | 18,275,000 | $ 0.26 | 9,530,696 | $ 0.15 |
*The weighted average share price at the date of exercise of warrants during the year ended December 31, 2025 was $0.59 (December 31, 2024 – $nil).
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
7. SHAREHOLDERS' EQUITY (cont'd...)
Stock options and warrants (cont'd...)
The following stock options and warrants were outstanding as at December 31, 2025:
| Number | Exercise price | Expiry date | Remaining Life (years) | |
|---|---|---|---|---|
| Stock Options | ||||
| 400,000 | $ 0.91 | July 7, 2026 | 0.52 | |
| 1,350,000 | 0.35 | August 11, 2027 | 1.61 | |
| 900,000 | 0.35 | October 11, 2028 | 2.78 | |
| 4,800,000 | 0.10 | February 12, 2030 | 4.12 | |
| 6,800,000 | 0.15 | March 11, 2030 | 4.19 | |
| 4,050,000 | 0.50 | September 19, 2030 | 4.72 | |
| Warrants | ||||
| 9,115,000 | 0.15 | March 22, 2026* | 0.22 | |
| Broker Warrants | ||||
| 415,696 | 0.15 | March 22, 2026* | 0.22 |
*Subsequent to the year ended December 31, 2025, 9,015,000 warrants and 415,696 brokers warrants were exercised, and 100,000 warrants expired unexercised (Note 12).
The Company has a stock option plan under which it is authorized to grant options to executive officers and directors, employees and consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the Company. Under the plan, the exercise price of each option equals the market price of the Company's stock, less applicable discount, as calculated on the date of grant. The options can be granted for a maximum term of 10 years with vesting determined by the board of directors.
During the year ended December 31, 2025, the Company granted 15,650,000 (2024 - nil) options with a weighted average fair value of $0.17 (2024 - $nil) per option to directors, officers, employees, and consultants of the Company. Total share-based payments recognized within profit or loss for year ended December 31, 2025, was $2,710,625 (2024 - $12,566) for incentive options granted and vested. This amount was also recorded within share-based payment reserve on the consolidated statement of financial position.
The following weighted average assumptions were used for the valuation of stock options:
| 2025 | 2024 | |
|---|---|---|
| Share price | $0.22 | - |
| Exercise price | $0.23 | - |
| Risk-free interest rate | 2.72% | - |
| Expected life of options | 5 years | - |
| Annualized volatility | 111.3% | - |
| Dividend rate | - | - |
| Forfeiture rate | - | - |
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
8. INCOME TAXES
A reconciliation of income taxes (recovery) at statutory rate of 27% (2024 – 27%) with the reported taxes for the years ended December 31, 2025 and 2024 are as follows:
| 2025 | 2024 | |
|---|---|---|
| Loss before income taxes | $ (7,568,860) | $ (5,249,481) |
| Expected income tax (recovery) | $ (2,044,000) | $ (1,417,000) |
| Change in statutory, foreign tax and other | (33,000) | (37,000) |
| Items not deductible for tax purposes | 1,160,000 | 373,000 |
| Share issuance costs | (303,000) | (58,000) |
| Adjustment to prior years provision versus statutory tax and expiry of non-capital losses | (24,000) | 3,000 |
| Change in unrecognized deductible temporary differences | 1,244,000 | 1,136,000 |
| Income tax recovery | $ - | $ - |
The significant components of the Company's unrecognized temporary differences and tax losses are as follows:
| Expiry Date | |||
|---|---|---|---|
| 2025 | Range | 2024 | |
| Exploration and evaluation assets | $ 17,554,000 | N/A | $ 16,310,000 |
| Share issuance costs | 1,174,000 | 2029 | 256,000 |
| Non-capital losses | 14,707,000 | 2045 | 12,382,000 |
| $ 33,434,000 | $ 28,948,000 |
Loss carry-forwards include Canadian tax losses of $13,782,000 which expire through to 2045, Argentinian tax losses of $562,000 which expire through to 2029 and Peruvian tax losses of $363,000, which have no expiry date.
9. FINANCIAL AND CAPITAL RISK MANAGEMENT
Financial assets and liabilities are classified in the fair value hierarchy according to the lowest level of input that is significant to the fair value measurement. Assessment of the significance of a particular input to the fair value measurement requires judgement and may affect placement within the fair value hierarchy levels. The hierarchy is as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The carrying amounts of cash, other receivables and advances and accounts payable and accrued liabilities approximates their fair values due to the short-term nature of these financial instruments.
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
9. FINANCIAL AND CAPITAL RISK MANAGEMENT (cont'd...)
Risk management
The Company is exposed to varying degrees to a variety of financial instrument related risks:
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company’s cash is held at a large Canadian financial institution in interest bearing accounts, as such management does not believe that the Company is exposed to material credit risk. The Company has no investment in asset backed commercial paper. The Company’s exposure to and management of credit risk has not changed materially from that of the year ended December 31, 2024.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company manages liquidity risk through its capital management as outlined below. Accounts payable and accrued liabilities are due within one year on normal trade terms. At December 31, 2025, the Company had cash of $15,695,101 available to settle accounts payable and accrued liabilities of $593,917. The Company’s exposure to and management of liquidity risk has not changed materially from that of the year ended December 31, 2024.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk is comprised of: interest rate risk, foreign currency risk and other price risk. The Company is not exposed to material interest rate or other price risk. The Company’s exposure to and management of market risk has not changed materially from that of the year ended December 31, 2024.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is subject to foreign currency risk on financial instruments denominated in currencies other than the Canadian Dollar. The Company is exposed to foreign currency risk on fluctuations related to cash, accounts receivable and accounts payable and accrued liabilities that are denominated in the United States dollar (“USD”), the Argentine Peso (“ARS”) or the Peruvian Sol (“PEN).
Fluctuations in the USD, ARS, and PEN will, consequently, have an impact upon the Company’s profitability and the value of the Company’s cash, and accounts payable and accrued liabilities. As at December 31, 2025, the impact of a 10% change in the rate of exchange on the USD, ARS and PEN compared to the Canadian dollar would result in a change of approximately $2,988 (December 31, 2024 - $69,490) on the Company’s loss for the period. The Company does not use derivative instruments to reduce its exposure to foreign currency risk nor has it entered into foreign exchange contracts to hedge against gains or losses from foreign exchange fluctuations.
Capital management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue acquisition, exploration and evaluation of mineral properties and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. In the management of capital, the Company includes its components of shareholders’ equity, which totaled $15,519,140 (2024 – shareholders’ deficiency $1,264,162) at December 31, 2025.
The Company manages the capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue debt, acquire or dispose of assets or adjust the amount of cash
KING COPPER DISCOVERY CORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
- FINANCIAL AND CAPITAL RISK MANAGEMENT (cont'd...)
Capital management (cont'd...)
The Company currently is not subject to externally imposed capital requirements. There were no changes in the Company’s approach to capital management for the year ended December 31, 2025.
- SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS
The Company’s significant non-cash transactions during the year ended December 31, 2025 were as follows:
- Issued 1,746,500 common shares with a fair value of $87,325 as finders’ fees (Note 7).
- Recognized $37,128 to share capital from share-based payment reserves from the exercise of 612,954 finders’ warrants (Note 7).
- Issued 2,925,000 common shares with a fair value of $481,313 on conversion of RSUs.
The Company’s significant non-cash transactions during the year ended December 31, 2024 were as follows:
- Issued 2,150,000 common shares with a fair value of $354,750 on exercise of RSUs.
- Issued 1,028,650 compensation warrants with a fair value of $62,308 (Note 7).
No cash was paid for interest or taxes for the years ended December 31, 2025 and 2024.
- SEGMENT INFORMATION
The Company operates in one reportable operating segment, being the acquisition, exploration, and evaluation of mineral properties in multiple geographical locations, refer to Note 5.
- SUBSEQUENT EVENTS
Subsequent to December 31, 2025, the Company:
- Completed a non-brokered private placement financing and issued a total of 25,000,000 units at a price of $0.60 per unit for gross proceeds of $15,000,000. Each unit consisted of one common share and one common share purchase warrant. Each warrant entitles the holder to purchase an additional common share at an exercise price of $0.98 for a period of two years. The Company paid $905,408 in share issuance costs related to the private placement.
- Issued 1,800,000 common shares upon the exercise of stock options for gross proceeds of $442,500.
- Issued 9,430,696 common shares upon the exercise of warrants and brokers warrants for gross proceeds of $1,414,604.
- Granted 300,000 options at an exercise price of $0.98 per common share and 250,000 options at an exercise price of $1.10 per common share to certain persons under the Plan.
- Granted 450,000 RSUs, of which 50% vest on February 27, 2027 and 25% will vest every six months after.