Kingsmen Resources Ltd. — Audit Report / Information 2025

Apr 16, 2026

KINGSMEN RESOURCES LTD.

CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 2025 AND 2024

(Expressed in Canadian Dollars)

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D&H

D&H Group LLP
Chartered Professional Accountants
300 – 855 Homer Street
Vancouver, BC V6B 2W2

dhgroup.ca t. 604.731.5881 f. 604.731.9923

Independent Auditor's Report

To the Shareholders of Kingsmen Resources Ltd.

Opinion

We have audited the consolidated financial statements of Kingsmen Resources Ltd. (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2025 and December 31, 2024, and the consolidated statements of comprehensive loss, consolidated statements of changes in shareholders' equity and consolidated statements of cash flows 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 financial position of the Company as at December 31, 2025 and December 31, 2024, and its financial performance and its 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.

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.

Assessment of Impairment Indicators of Exploration and Evaluation Assets

Description

Management assesses whether there are indicators of impairment to exploration and evaluation assets when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed the recoverable amount. Management applies judgement in assessing whether impairment indicators are present. No impairment indicators were identified by management as of December 31, 2025.

This matter was significant to our audit because the carrying value of the Company's exploration and evaluation assets at December 31, 2025, was $ 1,965,756, which represents a significant portion of the Company's total assets and management applies significant judgement in assessing whether impairment indicators are present. See Note 3 and Note 4 to the consolidated financial statements.

A BC Limited Liability Partnership of Corporations
Member of BHD™ an Association of Independent Accounting Firms Located Across Canada and Internationally

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D&H

D&H Group LLP
Chartered Professional Accountants
300 – 855 Homer Street
Vancouver, BC V6B 2W2

dhgroup.ca t. 604.731.5881 f. 604.731.9923

How the Key Audit Matter Was Addressed in the Audit

Our approach to addressing the matter included the following procedures, among others:

Evaluated management's assessment as to whether there were any indicators of impairment to exploration and evaluation assets, which included the following:

• Obtained all option agreements, confirmed the details of the option agreements with counterparties and confirmed exploration claim listings included in option agreements with the related mining authorities.
• Considered the Company's assessment of whether the commercial viability of extracting mineral resources had been demonstrated and whether it was appropriate to continue to classify the costs as capitalized exploration and evaluation assets.
• Assessed whether there were other changes in circumstances indicating that the exploration and evaluation expenditures may not be recoverable, based on the evidence obtained in other areas of the audit.

Other Information

Management is responsible for the other information. The other information comprises the information included in Management's Discussion and Analysis.

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

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

We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, 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.

A BC Limited Liability Partnership of Corporations
Member of BHD™ an Association of Independent Accounting Firms Located Across Canada and Internationally

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D&H

D&H Group LLP
Chartered Professional Accountants
300 – 855 Homer Street
Vancouver, BC V6B 2W2

dhgroup.ca t. 604.731.5881 f. 604.731.9923

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

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

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

A BC Limited Liability Partnership of Corporations Member of BHD™ an Association of Independent Accounting Firms Located Across Canada and Internationally

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D&H

D&H Group LLP
Chartered Professional Accountants
300 – 855 Homer Street
Vancouver, BC V6B 2W2
dhgroup.ca
t. 604.731.5881
f. 604.731.9923

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 Gordon Cummings.

"D&H Group LLP"
Vancouver, B.C.
April 16, 2026

Chartered Professional Accountants

A BC Limited Liability Partnership of Corporations
Member of BHD™ an Association of Independent Accounting Firms Located Across Canada and Internationally

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KINGSMEN RESOURCES LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian Dollars)

	Note	December 31, 2025 $	December 31, 2024 $
ASSETS
Current assets
Cash		4,311,562	1,253,296
GST receivable		21,089	11,323
Prepaid expenses and other		39,675	69,926
Total current assets		4,372,326	1,334,545
Non-current assets
Exploration and evaluation assets	4	1,965,756	450,286
TOTAL ASSETS		6,338,082	1,784,831
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities		223,930	80,114
TOTAL LIABILITIES		223,930	80,114
SHAREHOLDERS’ EQUITY
Share capital	5	7,647,887	2,553,286
Share-based payment reserve		2,575,509	2,463,838
Deficit		(4,109,244)	(3,312,407)
TOTAL SHAREHOLDERS’ EQUITY		6,114,152	1,704,717
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		6,338,082	1,784,831

Nature of Operations - see Note 1
Events after the Reporting Period - See Note 11

These consolidated financial statements were approved for issue by the Board of Directors on April 16, 2026 and are signed on its behalf by:

/s/ Scott Emerson
Scott Emerson
Director

/s/ Nick DeMare
Nick DeMare
Director

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

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KINGSMEN RESOURCES LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Expressed in Canadian Dollars)

	Note	Year Ended December 31,
		2025 $	2024 $
Expenses
Accounting and administration	6(b)	45,400	36,324
Audit		22,000	18,500
Corporate development		94,167	54,798
Director and officer compensation	6(a)	222,000	182,250
General exploration		8,359	4,530
Investment conferences		80,058	9,622
Legal		15,002	1,789
Office		27,116	17,034
Professional fees		164,242	121,703
Regulatory		37,479	31,186
Share-based compensation	5(d)	-	304,200
Shareholder costs		13,338	11,089
Transfer agent		13,356	8,098
Travel		72,016	28,107
		814,533	829,230
Loss before other items		(814,533)	(829,230)
Other items
Interest income		46,654	38,286
Foreign exchange		(28,958)	831
		17,696	39,117
Net loss and comprehensive loss for the year		(796,837)	(790,113)
Basic and diluted loss per common share		$(0.03)	$(0.04)
Basic and diluted weighted average number of common shares outstanding		24,973,493	19,868,111

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

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KINGSMEN RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Expressed in Canadian Dollars)

Year Ended December 31, 2025

	Share Capital		Share-Based Payment Reserve $	Deficit $	Total Shareholders' Equity $
	Number of Shares	Amount $
Balance at December 31, 2024	23,349,919	2,553,286	2,463,838	(3,312,407)	1,704,717
Common shares issued for:
- private placements	4,511,389	5,185,450	-	-	5,185,450
- share options exercised	25,000	9,000	-	-	9,000
- warrants exercised	694,000	277,600	-	-	277,600
Share issue costs	-	(379,069)	113,291	-	(265,778)
Transfer on exercise of share options	-	1,620	(1,620)	-	-
Net loss for the year	-	-	-	(796,837)	(796,837)
Balance at December 31, 2025	28,580,308	7,647,887	2,575,509	(4,109,244)	6,114,152

Year Ended December 31, 2024

	Share Capital		Share-Based Payment Reserve $	Deficit $	Total Shareholders' Equity $
	Number of Shares	Amount $
Balance at December 31, 2023	19,349,919	1,568,522	2,159,638	(2,522,294)	1,205,866
Common shares issued for:
- private placement	4,000,000	1,000,000	-	-	1,000,000
Share issue costs	-	(15,236)	-	-	(15,236)
Share-based compensation	-	-	304,200	-	304,200
Net loss for the year	-	-	-	(790,113)	(790,113)
Balance at December 31, 2024	23,349,919	2,553,286	2,463,838	(3,312,407)	1,704,717

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

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KINGSMEN RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian Dollars)

	Year Ended December 31,
	2025
$	2024
$
Operating activities
Net loss for the year	(796,837)	(790,113)
Adjustment for:
Share-based compensation	-	304,200
Changes in non-cash working capital items:
GST receivable	(9,766)	(926)
Prepaid expenses and other	30,251	(48,522)
Accounts payable and accrued liabilities	24,110	14,798
Net cash used in operating activities	(752,242)	(520,563)
Investing activity
Exploration and evaluation asset expenditures	(1,395,764)	(119,762)
Net cash used in investing activity	(1,395,764)	(119,762)
Financing activities
Issuance of common shares	5,472,050	1,000,000
Share issue costs	(265,778)	(15,236)
Net cash provided by financing activities	5,206,272	984,764
Net change in cash	3,058,266	344,439
Cash at beginning of year	1,253,296	908,857
Cash at end of year	4,311,562	1,253,296

Supplemental cash flow information - Note 8

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

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

1. Nature of Operations

The Company was incorporated on January 11, 2000 under the provisions of the Company Act (British Columbia). The Company’s common shares are listed and trade on the TSX Venture Exchange (“TSXV”) under the symbol “KNG” and on the OTCQB under the symbol “KNGRF”. The Company’s principal office is located at #1305 - 1090 West Georgia Street, Vancouver, British Columbia V6E 3V7.

The Company is a junior mineral exploration company engaged in the acquisition and exploration of mineral properties in Mexico. As at December 31, 2025 the Company has not earned any production revenue, nor has it determined whether these properties contain economically recoverable ore reserves. The underlying value of the mineral resource interests is entirely dependent on the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete exploration and development and upon future profitable production. Mineral resource interests represent costs incurred to date, less amounts amortized and/or written off, and do not necessarily represent present or future values. As a mineral Company in the exploration stage the ability of the Company to complete the exploration and development of its mineral property interests will be affected primarily by its ability to raise adequate amounts of capital through equity financings, debt financings, joint venturing of projects and other means.

2. Basis of Preparation

Statement of Compliance

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

Basis of Measurement

The Company’s consolidated financial statements have been prepared on the historical cost basis except for the revaluation of certain financial assets and financial liabilities to fair value. These consolidated financial statements are presented in Canadian Dollars unless otherwise stated.

Details of the Group

In addition to the Company, the consolidated financial statements include all subsidiaries. Subsidiaries are all corporations over which the Company is able, directly or indirectly, to control financial and operating policies, which is the authority usually connected with holding majority voting rights. Subsidiaries are fully consolidated from the date on which control is acquired by the Company. Inter-company transactions and balances are eliminated upon consolidation. They are deconsolidated from the date that control by the Company ceases.

As of December 31, 2025 the subsidiaries of the Company are as follows:

Company	Location of Incorporation	Ownership Interest
Kingsmen Holdings Ltd.	Canada	100%
Leona Silver Exploraciones S.A. de C.V.	Mexico	100%

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

3. Material Accounting Policy Information

Critical Judgments and Sources of Estimation Uncertainty

The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical Judgments

The following are critical judgments that management has made in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the financial statements:

(i) The determination of categories of financial assets and financial liabilities has been identified as an accounting policy which involves judgments or assessments made by management.

(ii) Management is required to assess the functional currency of each entity of the Company. In concluding that the Canadian dollar is the functional currency of the parent and its subsidiary companies, management considered the currency that mainly influences the cost of providing goods and services in each jurisdiction in which the Company operates. As no single currency was clearly dominant the Company also considered secondary indicators including the currency in which funds from financing activities are denominated and the currency in which funds are retained.

(iii) Management is required to assess impairment in respect of intangible exploration and evaluation assets. The triggering events are defined in IFRS 6. In making the assessment, management is required to make judgments on the status of each project and the future plans towards finding commercial reserves. The nature of exploration and evaluation activity is such that only a proportion of projects are ultimately successful and some assets are likely to become impaired in future periods. During fiscal 2025 and 2024 management determined that no impairment indicators were present and no impairment charge was required.

(iv) Although the Company takes steps to verify title to exploration and evaluation assets 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 title may be affected by undetected defects.

(v) The assessment of the probability of future taxable income in which deferred tax assets can be utilized is based on the Company's estimate of future profits or losses adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the jurisdictions in which the Company operates are also carefully taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilized without a time limit, that deferred tax asset is usually recognized in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances. Details of these can be found in Note 7.

Estimation Uncertainty

The following are key assumptions concerning the future and other key sources of estimation uncertainty that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year:

(i) The assessment of any impairment of evaluation and exploration assets is dependent upon estimates of the recoverable amount that take into account factors such as reserves and economic and market conditions.

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

3. Material Accounting Policy Information (continued)

(ii) The cost estimates are updated periodically during the life of a mine to reflect known developments, (e.g. revisions to cost estimates and to the estimated lives of operations), and are subject to review at regular intervals. Decommissioning, restoration and similar liabilities are estimated based on the Company’s interpretation of current regulatory requirements, constructive obligations and are measured at fair value. Fair value is determined based on the net present value of estimated future cash expenditures for the settlement of decommissioning, restoration or similar liabilities that may occur upon decommissioning of the mine. Such estimates are subject to change based on changes in laws and regulations and negotiations with regulatory authorities. As at December 31, 2025 and 2024 there were no decommissioning liabilities.

(iii) Determining the fair value of share options requires estimates related to the choice of a pricing model, the estimation of stock price volatility, the expected forfeiture rate and the expected term of the underlying instruments. Any changes in the estimates or inputs utilized to determine fair value could have a significant impact on the Company’s future operating results or on other components of shareholders’ equity (deficit).

Cash and Cash Equivalents

Cash includes cash on hand and demand deposits. Cash equivalents include short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. The Company is not exposed to significant credit or interest rate risk although cash is held in excess of federally insured limits with a major financial institution. As at December 31, 2025 and 2024 the Company did not have any cash equivalents.

Accounts Payable and Accrued Liabilities

Payables are obligations to pay for materials or services that have been acquired in the ordinary course of business from suppliers. Payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Payables are classified as other financial liabilities initially at fair value and subsequently measured at amortized cost using the effective interest method.

Exploration and Evaluation Assets

The Company is in the exploration stage with respect to its investment in exploration and evaluation assets and, accordingly, follows the practice of capitalizing all costs relating to the acquisition of, exploration for and development of mineral properties and crediting all proceeds received against the cost of the related properties. Such costs include, but are not exclusive to, geological, geophysical studies, exploratory drilling and sampling. The aggregate costs related to abandoned mineral properties are charged to operations at the time of any abandonment, or when it has been determined that there is evidence of a permanent impairment. An impairment charge relating to a mineral property is subsequently reversed when new exploration results or actual or potential proceeds on sale or farm-out of the property result in a revised estimate of the recoverable amount, but only to the extent that this does not exceed the original carrying value of the property that would have resulted if no impairment had been recognized.

The recoverability of amounts shown for exploration and evaluation assets is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain financing to complete development of the properties, and on future production or proceeds of disposition.

The Company recognizes in income costs recovered on mineral properties when amounts received or receivable are in excess of the carrying amount.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mining property and development assets. At such time as commercial production commences, these costs will be charged to operations on a unit-of-production method based on proven and probable reserves.

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

3. Material Accounting Policy Information (continued)

All capitalized exploration and evaluation expenditures are monitored for indications of impairment. Where a potential impairment is indicated, assessments are performed for each area of interest. To the extent that exploration expenditures are not expected to be recovered, they are charged to the results of operations.

Impairment of Assets

At each financial position reporting date, the carrying amounts of the Company’s long-lived assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

An asset’s recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a 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 or cash generating unit 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 period.

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, so that the increased carrying amount 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.

Decommissioning Provision

An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration, development or ongoing production of a mineral interest by or on behalf of the Company. Costs for restoration of site damage which is created on an ongoing basis during exploration and evaluation are provided for at their net present values and charged against profits in the period such exploration and evaluation occurs. Discount rates using a pre-tax risk-free rate that reflects the time value of money are used to calculate the net present value. The related liability is adjusted for each period for the unwinding of the discount rate, the changes to the current market-based discount rate and the amount or timing of the underlying cash flows needed to settle the obligation. As at December 31, 2025 and 2024 the Company does not have any decommissioning obligations.

Financial Instruments

Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognized when the obligation specified in the contract is discharged, cancelled or expires. All recognized financial assets are measured subsequently at amortized cost or fair value through profit or loss (“FVTPL”) or fair value through other comprehensive income (“FVTOCI”).

The Company classifies its financial instruments into the following categories:

(i) Financial assets at FVTP: A financial asset or liability is classified in this category if acquired principally for the purpose of selling or repurchasing in the short-term. Derivatives are also included in this category unless they are designated as hedges. Financial instruments in this category are recognized initially and subsequently at fair value. Transaction costs are expensed in the consolidated statement of operations. Gains and losses arising from changes in fair value are presented in the consolidated statement of operations within “other gains and losses” in the period in which they arise.

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

3. Material Accounting Policy Information (continued)

(ii) Financial assets at FVTOCI: The Company has made an irrevocable election to designate its investments in marketable equity securities as classified at fair value through other comprehensive income. Investment transactions are recognized on the trade date with transaction costs included in the underlying balance. Fair values are determined by reference to quoted market prices at the balance sheet date. When investments in marketable equity securities are disposed of or impaired, the cumulative gains and losses recognized in other comprehensive income are not recycled to profit and loss and remain within equity.

(iii) Financial assets and liabilities at amortized cost: Financial assets and liabilities at amortized cost include cash and trade payables and are included in current classification due to their short-term nature. Trade receivables and payables are non-interest bearing if paid when due and are recognized at their face amount, less, when material, a discount, except when fair value is materially different. These are subsequently measured at amortized cost.

Share Capital

Common shares issued by the Company are classified as equity. Costs directly attributable to the issue of common shares, share purchase warrants and share options are recognized as a deduction from equity, net of any related income tax effects.

Equity Financing

The Company engages in equity financing transactions to obtain the funds necessary to continue operations and explore and evaluate mineral properties. These equity financing transactions may involve issuance of common shares or units. Units typically comprise a certain number of common shares and share purchase warrants. Depending on the terms and conditions of each equity financing transaction, the warrants are exercisable into additional common shares at a price prior to expiry as stipulated by the terms of the transaction. The Company has adopted the residual value method with respect to the allocation of proceeds received on sale of units to the underlying common shares and share purchase warrants issued as private placement units. The fair value of the common shares issued in private placements is determined by the closing quoted bid price on the price reservation or announcement date. The balance, if any, is allocated to the attached share purchase warrants.

Share-Based Payment Transactions

The share option plan allows Company employees and consultants to acquire shares of the Company. The fair value of share options granted is recognized as a share-based compensation expense with a corresponding increase in the equity settled share-based payments reserve in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee.

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

Equity-settled share-based payment transactions with non-employees are measured at the fair value of the goods or services received. However, if the fair value cannot be estimated reliably, the share-based payment transaction is measured at the fair value of the equity instruments granted at the date the Company receives the goods or the services.

Current and Deferred Income Taxes

Income tax expense comprises current and deferred tax. Income tax is recognized in the statement of comprehensive income (loss), except to the extent that it relates to items recognized in other comprehensive income (loss) or directly in equity. In this case the income tax is also recognized in other comprehensive income (loss) or directly in equity, respectively.

Page 14

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

1. Material Accounting Policy Information (continued)

Current Income Tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantially enacted at the statement of financial position date in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred Income Tax

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Loss Per Share

Basic loss per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. The computation of diluted loss per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on loss per share. The dilutive effect of convertible securities is reflected in diluted earnings per share by application of the “if converted” method. The dilutive effect of outstanding options and warrants and their equivalents is reflected in diluted earnings per share by application of the treasury stock method.

Foreign Currency Translation

Functional and Presentation Currency

The financial statements of the Company’s subsidiary are prepared in the local currency of its home jurisdiction. Consolidation of the subsidiary includes re-measurement from the local currency to the subsidiary’s functional currency. The subsidiary’s functional currency, being the currency of the primary economic environment in which the subsidiary operates, is the Canadian dollar. The consolidated financial statements are presented in Canadian dollars.

Exchange rates published by the Bank of Canada were used to translate the subsidiary financial statements into the consolidated financial statements. Income and expenses for each statement of comprehensive loss presented are translated using the rates prevailing on the transaction dates. All resulting foreign exchange differences are recognized in comprehensive income (loss).

Page 15

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

3. Material Accounting Policy Information (continued)

Foreign Currency Transactions

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in comprehensive income (loss).

Accounting Pronouncements Not Yet Adopted

IFRS 18, Presentation and Disclosure in Financial Statements, which will replace IAS 1, Presentation of Financial Statements aims to improve how companies communicate in their financial statements, with a focus on information about financial performance in the statement of profit or loss, in particular additional defined subtotals, disclosures about management-defined performance measures and new principles for aggregation and disaggregation of information. IFRS 18 is accompanied by limited amendments to the requirements in IAS 7 Statement of Cash Flows. IFRS 18 is effective from January 1, 2027. Companies are permitted to apply IFRS 18 before that date.

The Company is assessing the impact of adoption of IFRS 18 and working to identify all impacts the changes will have on the Company’s consolidated financial statements.

4. Exploration and Evaluation Assets

	Los Coloradas Project $	Almoloya Project $	Total $
Balance at December 31, 2023	328,274	-	328,274
Exploration costs	49,882	-	49,882
Acquisition costs	72,130	-	72,130
	122,012	-	122,012
Balance at December 31, 2024	450,286	-	450,286
Exploration costs	1,217,844	-	1,217,844
Acquisition costs	193,819	103,807	297,626
	1,411,663	103,807	1,515,470
Balance at December 31, 2025	1,861,949	103,807	1,965,756

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

4. Exploration and Evaluation Assets (continued)

(a) Las Coloradas Project, Mexico

During fiscal 2022 the Company, entered into agreements to assemble a group of claims (the “Las Coloradas Project”) located in the Parral Mining District, State of Chihuahua, Mexico. As at December 31, 2025 the Las Coloradas Project comprise the following agreements:

(i) Promise contract (the “Ramos Agreement”) executed November 25, 2022, as amended February 9, 2024, to which the Company has the right to acquire an assignment of rights to 12 mineral claims in consideration of making US $1,143,500 in option payments as follows:

	Amount US $
On signing	14,500
February 9, 2026	14,000
February 9, 2027	21,000
February 9, 2028	42,000
February 9, 2029	84,000
February 9, 2030	168,000
February 9, 2031	300,000
February 9, 2032	500,000
	1,143,500

As at December 31, 2025 the Company has made payments totalling $19,438 (US $14,211) (2024 - $15,464 (US $11,368)) for past mineral taxes in arrears which have been applied towards the option payment amounts.

(ii) Mining exploration contract (the “MSA Agreement”) executed November 25, 2022, as amended November 27, 2023 and December 12, 2024, to which the Company has the right to acquire an assignment of rights to one mineral claim in consideration of making US $1,000,000 in option payments as follows:

	Amount US $
On signing	20,000 (paid)
November 25, 2023	5,000 (paid)
November 25, 2024	15,000 (paid)
November 25, 2025	45,000 (paid in January 2026)
November 25, 2026	35,000
November 25, 2027	80,000
November 25, 2028	200,000
November 25, 2029	600,000
	1,000,000

(iii) Mining exploration contract (the “Loya Agreement”) executed November 8, 2022, as amended November 27, 2023, to which the Company had the right to acquire an assignment of rights to one mineral claim in consideration of making payments totalling US $150,000 by November 8, 2025. During fiscal 2024 the Company paid an initial US $80,000 and, in fiscal 2025 paid the remaining US $70,000 to acquire the claim. The official transfer will be completed in fiscal 2026.

Page 17

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

4. Exploration and Evaluation Assets (continued)

(iv) Promise agreement (the “Salazar Agreement”) executed November 3, 2022, to which the Company paid $10,424 (US $7,500) to the vendor and expensed to general exploration. Upon completion and delivery to the Company of the final assignment of the right to the one mineral claim, the vendor and the Company have agreed to enter into an assignment agreement to the Company with payment of US $42,500. The mineral claim will be subject to a 1% net smelter return royalty (“NSR”).

(v) On January 22, 2025 the Company executed a promise agreement to which the Company has the right to acquire an assignment of right to one mineral claim (the “EL AS Claim”) in Mexico in consideration of making US $250,000 in option payments as follows:

	Amount US $
On signing	37,000 (paid)
July 22, 2025	15,000 (paid)
January 22, 2026	20,000 (paid in January 2026)
January 22, 2027	50,000
January 22, 2028	55,000
January 22, 2029	73,000
	250,000

The Company has entered into land access agreements over the Las Coloradas Project, which currently expires in May 2029.

(b) Almoloya Project, Mexico

Pursuant to an option agreement dated October 23, 2025 among the Company, Minera Sierra Amoloya S.A. de C.V. and Grupo Industrial Gamo, S. de R.L. MI. the Company was granted the option to acquire a 100% interest in the Almoloya gold-silver project located in the Parral Mining District in Chihuahua, Mexico. The terms of the option agreement require the Company to make staged cash payments totalling US $8,625,000 over an eight year period as follows:

	Amount US $
On signing	75,000
October 23, 2026	250,000
October 23, 2027	400,000
October 23, 2028	600,000
October 23, 2029	800,000
October 23, 2030	1,000,000
October 23, 2031	1,100,000
October 23, 2032	1,400,000
October 23, 2033	3,000,000
	8,625,000

The Company has agreed to conduct a minimum of US $200,000 per annum on exploration activities on the Almoloya Project during the duration of the option period.

As at December 31, 2025 the Company has recorded $102,795 (US $75,000) in accounts payable and accrued liabilities for the initial option payment due on signing. The amount was subsequently paid in January 2026.

Commercial production from the Almoloya Project will be subject to a 2.5% NSR, of which the Company may repurchase 1% of the NSR for US $3,000,000.

Page 18

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

4. Exploration and Evaluation Assets (continued)

(c) La Trini, Mexico

The La Trini Property consists of mineral claims located in the Jalisco silver belt approximately 100 kilometres northwest of Guadalajara, Jalisco State, Mexico. In fiscal 2020 the Company sold an initial 49% interest in the La Trini Property to GoGold Resources Inc. (“GoGold”). On February 1, 2022 the Company completed the disposition of its remaining 51% interest in the La Trini Property to GoGold. The Company retains a 1% NSR on the La Trini Property, which may then be purchased by GoGold for US $1,000,000.

5. Share Capital

(a) Authorized Share Capital

The Company’s authorized share capital consists of an unlimited number of common shares without par value. All issued common shares are fully paid.

(b) Equity Financings

Fiscal 2025

(i) On May 21, 2025 the Company completed a non-brokered private placement of 1,436,389 units, at $0.72 per unit, for total proceeds of $1,034,200. Each unit comprised one common share and one-half of a share purchase warrant. Each whole warrant entitles the holder to purchase an additional common share at a price of $1.05 per share on or before May 21, 2027. Directors and officers of the Company purchased a total of 25,214 units of the private placement.

The Company incurred $32,008 for finder’s fees and other costs associated with this private placement.

(ii) On November 19, 2025 the Company completed a non-brokered private placement and issued a total of 3,075,000 units, at a price of $1.35 per unit, for gross proceeds of $4,151,250. Each unit comprised one common share and one-half of one common share purchase warrant of the Company. Each whole warrant entitles the holder to purchase an additional common share of the Company at an exercise price of $1.90 per share on or before November 19, 2027.

The Company paid finders’ fees of $191,179 cash and issued finder’s warrants to acquire 141,614 common shares (the “Finder’s Warrants”). Each Finder’s Warrant entitles the holder to purchase an additional common share at a price of $1.90 per share on or before November 19, 2027. The value assigned to the Finder’s Warrants was $113,291. The weighted average fair value of the Finder’s Warrants issued was $0.80 per warrant. The fair value of the Broker Warrants has been estimated using the Black-Scholes option pricing model. The assumptions used were: a risk-free interest rate of 2.48%; expected volatility of 92%; an expected life of 2 years; a dividend yield of 0%; and an expected forfeiture rate of 0%.

The Company incurred $42,591 for legal and filing costs associated with the private placement.

Fiscal 2024

In November 2024 the Company completed a non-brokered private placement of 4,000,000 units at $0.25 per unit, for total proceeds of $1,000,000. Each unit comprised one common share and one common share purchase warrant. Each warrant entitles the holder to purchase an additional common share at a price of $0.40 per share for a period of two years from closing. A director of the Company and a close family member of a director purchased a total of 78,000 units for $19,500.

The Company incurred $15,236 for filing costs associated with this private placement.

Page 19

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

5. Share Capital (continued)

(c) Warrants

A summary of the number of common shares reserved pursuant to the Company’s outstanding warrants at December 31, 2025 and 2024 and the changes for the years ended on those dates, is as follows:

	2025		2024
	Number	Weighted Average Exercise Price $	Number	Weighted Average Exercise Price $
Balance, beginning of year	4,000,000	0.40	-	-
Issued	2,467,309	1.63	4,000,000	0.40
Exercised	(694,000)	0.40	-	-
Balance, end of year	5,773,309	0.93	4,000,000	0.40

The following table summarizes information about the number of common shares reserved pursuant to the Company’s warrants outstanding and exercisable at December 31, 2025:

Number	Exercise Price $	Expiry Date
202,000	0.40	November 13, 2026
3,048,000	0.40	November 15, 2026
56,000	0.40	November 19, 2026
788,195	1.05	May 21, 2027
1,679,114	1.90	November 19, 2027
5,773,309

See also Note 11.

(d) Equity Incentive Plan

On September 10, 2025 the Company established a new 10% rolling omnibus equity incentive plan (the “Equity Incentive Plan”). The Equity Incentive Plan allows for the issuance of incentive stock options, deferred share units, performance share units, restricted share units, stock appreciation rights and stock purchase rights (collectively the “Awards”). The maximum number of shares reserved for issuance on exercise of all the Awards granted under the Equity Incentive Plan shall not exceed 10% of the issued and outstanding common shares as at the date of grant of any Award.

The Company did not grant any share options during fiscal 2025.

During fiscal 2024 the Company granted share options to purchase 1,690,000 common shares and recorded compensation expense of $304,200. The fair value of share options granted were estimated using the Black-Scholes option pricing model using the following assumptions: risk-free interest rate of 3.04%; estimated volatility of 93%; expected life of 2 years; expected dividend yield of 0%; and estimated forfeiture rate of 0%.

The estimated volatility was based on the historical share prices of the Company. The weighted average grant date fair value of all share options granted during fiscal 2024 was $0.18 per share option.

Option-pricing models require the use of estimates and assumptions including the expected volatility. Changes in the underlying assumptions can materially affect the fair value estimates and, therefore, existing models do not necessarily provide a reliable measure of the fair value of the Company’s share options.

Page 20

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

5. Share Capital (continued)

A summary of the Company’s share options at December 31, 2025 and 2024 and the changes for the years ended on those dates, is as follows:

	2025		2024
	Number of Options Outstanding	Weighted Average Exercise Price $	Number of Options Outstanding	Weighted Average Exercise Price $
Balance, beginning of year	1,690,000	0.36		-
Exercised	(25,000)	0.36	1,690,000	0.36
Balance, end of year	1,665,000	0.36	1,690,000	0.36

As at December 31, 2025 there were share options outstanding and exercisable to purchase 1,665,000 common shares of the Company at a price of $0.36 per share expiring November 11, 2026.

See also Note 11.

6. Related Party Disclosures

Transactions made with related parties are made in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. 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 consists of members of the Company’s Board of Directors and executive officers.

(a) During fiscal 2025 the Company incurred total compensation of $353,650 (2024 - $202,217) to key management personnel of which $222,000 (2024 - $182,250) was expensed to director and officer compensation and $131,650 (2024 - $19,967) was capitalized to exploration and evaluation assets. As at December 31, 2025 $30,150 (2024 - $9,066) remained unpaid and has been included in accounts payable and accrued liabilities.

During fiscal 2024 the Company also recorded $234,000 share-based compensation for share options granted to the key management personnel.

(b) During fiscal 2025 the Company incurred a total of $45,400 (2024 - $36,324) to Chase Management Ltd. (“Chase”), a private corporation owned by the CFO of the Company, for accounting and administration services provided by Chase personnel, excluding the CFO. As at December 31, 2025 $2,000 (2024 - $950) remained unpaid and has been included in accounts payable and accrued liabilities.

(c) See also Note 5(b).

Page 21

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

7. Income Taxes

Deferred income tax assets and liabilities of the Company as at December 31, 2025 and 2024 are as follows:

| | 2025
$ | 2024
$ |
| --- | --- | --- |
| Deferred income tax assets | | |
| Non-capital losses | 2,007,300 | 1,737,900 |
| Capital losses | 1,233,600 | 1,233,600 |
| Share issue costs | 60,400 | 4,100 |
| Mineral resource interests | 554,900 | 653,600 |
| | 3,856,200 | 3,629,200 |
| Valuation allowance | (3,856,200) | (3,629,200) |
| Net deferred income tax asset | - | - |

The recovery of income taxes shown in the consolidated statements comprehensive income (loss) and deficit differs from the amounts obtained by applying substantively enacted statutory rates to the income (loss) before provision for income taxes due to the following:

	2025	2024
Combined federal and provincial income tax rate	27.0%	27.0%
	2025
$	2024
$
Expected income tax expense (recovery)	(215,100)	(213,300)
Foreign income tax rate differences	100	200
Other	(15,400)	(1,000)
Unrecognized benefit of income tax losses	230,400	214,100
Actual income tax expense (recovery)	-	-

As at December 31, 2025, the Company has non-capital losses of approximately $7,367,800 (2024 - $6,389,200), capital losses of approximately $9,137,700 (2024 - $9,137,700) and accumulated pools of approximately $2,746,700 (2024 - $2,538,100) for Canadian income tax purposes to offset against future income. The non-capital losses expire commencing 2026 to 2045. The capital losses can be carried forward indefinitely.

The Company also has non-capital losses of approximately $64,400 (2024 - $45,800) and accumulated pools of approximately $1,514,600 (2024 - $351,700) for Mexican income tax purposes.

Income tax benefits which may arise as a result of these losses have not been recognized in the financial statements as their realization is unlikely.

Page 22

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

8. Supplemental Cash Flow Information

During fiscal 2025 and 2024 non-cash activities were conducted by the Company as follows:

| | 2025
$ | 2024
$ |
| --- | --- | --- |
| Operating activity | | |
| Accounts payable and accrued liabilities | 119,706 | 2,250 |
| Investing activity | | |
| Exploration and evaluation assets | (119,706) | (2,250) |
| Financing activities | | |
| Issuance of common shares | 1,620 | - |
| Share-based payments reserve | (1,620) | - |
| | - | - |

9. Segmented Information

As at December 31, 2025 and 2024 the Company has no reportable segment revenues or operating results. The Company's total assets are segmented geographically as follows:

	As at December 31, 2025
	Canada
$	Mexico
$	Total
$
Current assets	4,222,308	150,018	4,372,326
Exploration and evaluation assets	-	1,965,756	1,965,756
	4,222,308	2,115,774	6,338,082
	As at December 31, 2024
	Canada
$	Mexico
$	Total
$
Current assets	1,265,616	68,929	1,334,545
Exploration and evaluation assets	-	450,286	450,286
	1,265,616	519,215	1,784,831

10. Financial Instruments and Risk Management

Categories of Financial Assets and Financial Liabilities

Financial instruments are classified into one of the following categories: fair value through profit or loss ("FVTPL"); amortized cost; and fair value through other comprehensive (loss) income. The carrying values of the Company's financial instruments are classified into the following categories:

| Financial Instrument | Category | December 31, 2025
$ | December 31, 2024
$ |
| --- | --- | --- | --- |
| Cash | FVTPL | 4,311,562 | 1,253,296 |
| Accounts payable and accrued liabilities | Amortized cost | (223,930) | (80,114) |

The Company's financial instruments recorded at fair value require disclosure about how the fair value was determined based on significant levels of inputs described in the following hierarchy:

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

10. Financial Instruments and Risk Management (continued)

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions occur in sufficient frequency and value to provide pricing information on an ongoing basis.

Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1. Prices in Level 2 are either directly or indirectly observable as of the reporting date. Level 2 valuations are based on inputs including quoted forward prices for commodities, time value and volatility factors, which can be substantially observed or corroborated in the market place.

Level 3 - Valuations in this level are those with inputs for the asset or liability that are not based on observable market data.

The recorded amount for accounts payable and accrued liabilities approximate its fair value due to the short-term nature. The Company’s fair value of cash under the fair value hierarchy are measured using Level 1 inputs.

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

Credit Risk

Credit risk is the risk of loss associated with a counter-party’s inability to fulfill its payment obligations. The Company’s credit risk is primarily attributable to cash. Management believes that the credit risk concentration with respect to financial instruments included in cash is remote.

Liquidity Risk

Liquidity risk is the risk that the Company will not have the resources to meet its obligations as they fall due. The Company manages this risk by closely monitoring cash forecasts and managing resources to ensure that it will have sufficient liquidity to meet its obligations. All of the Company’s financial liabilities are classified as current and are anticipated to mature within the next fiscal period. The following table is based on the contractual maturity dates of financial assets and the earliest date on which the Company can be required to settle financial liabilities.

	Contractual Maturity Analysis at December 31, 2025
	Less than 3 Months $	3 - 12 Months $	1 - 5 Years $	Over 5 Years $	Total $
Cash	4,311,562	-	-	-	4,311,562
Accounts payable and accrued liabilities	(223,930)	-	-	-	(223,930)
	Contractual Maturity Analysis at December 31, 2024
	Less than 3 Months $	3 - 12 Months $	1 - 5 Years $	Over 5 Years $	Total $
Cash	1,253,296	-	-	-	1,253,296
Accounts payable and accrued liabilities	(80,114)	-	-	-	(80,114)

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.

Interest Rate Risk

The Company is exposed to interest rate risk to the extent that the cash bears floating rates of interest. The interest rate risk on cash and on the Company’s obligations are not considered significant.

Page 24

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KINGSMEN RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)

10. Financial Instruments and Risk Management (continued)

Foreign Currency Risk

The Company’s functional currency is the Canadian dollar. The Company maintains foreign currency bank accounts to support the cash needs of its foreign operations. The Company also maintains a bank account in US Dollars with its Canadian bank. Management believes the foreign exchange risk related to currency conversions is minimal and therefore does not hedge its foreign exchange risk. At December 31, 2025, 1 Canadian Dollar was equal to 13.12 Mexican Peso and 0.73 US Dollar.

Balances are as follows:

	Mexican Pesos	US $	CDN $ Equivalent
Cash	1,965,735	531,419	877,799
Accounts payable and accrued liabilities	(82,795)	(98,337)	(141,018)
	1,882,940	433,082	736,781

Based on the net exposures as of December 31, 2025 and assuming that all other variables remain constant, a 10% fluctuation on the Canadian Dollar against the Mexican Peso and the US Dollar would result in the Company’s comprehensive loss being approximately $74,000 higher (or lower).

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 exploration and evaluation assets. 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 development of the business. The Company defines capital that it manages as share 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.

11. Events after the Reporting Period

Subsequent to December 31, 2025 the Company:

(i) issued 165,000 common shares for cash proceeds of $173,250 on the exercise of warrants;

(ii) granted share options to purchase 108,300 common shares at an exercise price of $1.90 per share expiring January 5, 2028; and

(iii) completed a private placement of 5,777,778 units of the Company, at a price of $2.25 per unit, for total gross proceeds of $13,000,000. Each unit comprised one common share and one-half of a share purchase warrant. Each whole warrant entitles the holder to purchase an additional common share at a price of $3.00 per share on or before February 11, 2029.

The Company paid the broker a cash fee of $910,000 and issued 404,444 share purchase warrants (“Broker Warrants”). Each Broker Warrant entitles the holder to purchase one common share at a price of $3.00 per share on or before February 11, 2029.

Page 25