Lithos Group — Interim / Quarterly Report 2023

Dec 29, 2022

ALCHEMIST MINING INC.

Condensed Consolidated Interim Financial Statements

Six Months Ended October 31, 2022 and 2021

(Expressed in Canadian Dollars)

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Notice to the Reader

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited interim financial statements of the Company for the six months ended October 31, 2022 have been prepared by and are the responsibility of the Company’s management.

The Company’s independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity’s auditor.

December 28, 2022

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ALCHEMIST MINING INC. Condensed Consolidated Interim Statements of Financial Position (Unaudited - Expressed in Canadian Dollars)

Notes October 31, 2022 (unaudited)	April 30, 2022 (Audited)
Assets Current Cash $ 140,493 Receivables 6,890	$ 352,085 60,737
147,383	412,822
Total assets $ 147,383	$ 412,822
Liabilities Current Accounts payable and accrued liabilities 7 $ 139,422 Convertible debt 9 - Shareholder loans 7 -	$ 118,968 94,063 222
139,422	213,253
Total liabilities 139,422	213,253
Shareholders’ equity Share capital 6 6,349,977 Reserves 6 27,600 Deficit (6,369,616)	6,155,365 27,600 (5,983,396)
Total shareholders’ equity 7.961	199,569
Total liabilities and shareholders’ equity $ 147.383	$ 412,822

Nature of operations (note 1) Going concern (note 2)

Approved on behalf of the Board by:

“ Eric Boehnke ” “ James Carter ” Director Director

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

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ALCHEMIST MINING INC.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss Six Months Ended October 31, 2022 and 2021 (Unaudited - Expressed in Canadian Dollars)

		Three Months	Three Months	Ended		Nine Months	Ended
	October 31,		October 31,		October 31, October 31,
		2022		2021		2022	2021
Expenses
Accounting, legal and audit (note 10)	$	35,076	$	21,428	$	66,605$	28,505
Consulting fees (note 10)		32,600		73,500		38,881	177,000
Depreciation		-		42		-	84
Exploration costs		49,694		-		149,632	-
Filing fees and shareholder information		9,586		6,814		10,850	10,923
Interest expense (note11)		-		2,205		-	3,140
Office and general		18,841		1,316		18,949	1,671
Travel Expenses		-		10,716		-	13,112
		(145,797)		(116,021)		(284,917)	(234,435)
Foreign exchange loss		-		-		(976)	-
Loss on settlement of convertible debt		-		-		(100,549)	(234,435)
Write-off of shareholder loan		-		-		222	-
Write-off of shareholder loan
the Period	$	**145,797 **	$	(116,021)	$	386,220 $	(234,435)
Basic and Diluted Loss Per Share	$	(0.01)	$	(0.03)	$	(0.02) $	(0.06)
Weighted Average Number of Common
Shares Outstanding – Basic and Diluted		19,109,655		3,830,536		18,835,757	3,830,536

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

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ALCHEMIST MINING INC.

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity (Deficiency) (Unaudited - Expressed in Canadian Dollars)

Number of Shares Share Capital Reserves Share subscriptions Deficit	Total
Balance, April 30, 2021 3,830,536 $ 4,536,579 $ 27,600 $ - $ (4,948,190) Share subscriptions received - - - 105,000 - Loss for the period - - - (234,435)	$ (384,011) 105,000 (234,423)
Balance, October 31, 2021 3,830,536 $ 4,536,579 $ 27,600 $ 105,000 $ (5,182,625)	$ (513,446)
Balance, April 30, 2022 18,460,949 $ 6,155,365 $ 27,600 $ - $ (5,983,396) Shares issued for debt 648,706 194,612 - - - Lossforthe period - - - - (386,220)	$ 199,569 194,612 (386,220)
Balance, October 31, 2022 19,109,655 $ 6,349,977 $ 27,600 $ - $ (6,369,616)	$ 7,961

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

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Amended and Restated

ALCHEMIST MINING INC.

Condensed Consolidated Interim Statements of Cash Flows Six Months Ended October 31, 2022 and 2021 (Unaudited - Expressed in Canadian Dollars)

2022	2021
Operating Activities Loss for the period $ (386,220) Items not involving cash Depreciation - Loss on settlement of convertible debt 100,549 Write-off of shareholder loan (222) Changes in non-cash working capital items: Accounts receivable 53,847 Prepaid expenses - Accounts payable and accrued liabilities 20,454	$ (234,435) 84 - - (27,308) 77 (31,821)
Cash Used in Operating Activities (211,592)	(293,403)
Financing Activities Proceed from loan - Repayment of shareholder loans - Share subscriptions received -	187,500 (10,958) 105,000
Cash Provided by Financing Activities -	281,542
Change in Cash in the Period (211,592) Cash, Beginning of Period 352,085	(11,861) 15,502
Cash, End of Period $ 140,493	$ 3,641

Supplemental cash flow information (note 12)

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

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ALCHEMIST MINING INC. Notes to the Condensed Consolidated Interim Financial Statements Six Months Ended October 31, 2022 and 2021 (Expressed in Canadian Dollars, unless otherwise stated)

1. NATURE OF OPERATIONS

Alchemist Mining Inc. (the “Company”) was incorporated as NY85 Capital Inc. under the Business Corporations Act on October 22, 2010 in the province of British Columbia. On October 1, 2012, the shareholders of the Company approved the name change from NY85 Capital Inc. to Alchemist Mining Inc. at the Annual General and Special Meeting of the Company. On August 20, 2014, the Company de-listed from the TSX Venture Exchange and commenced trading on the Canadian Securities Exchange ("CSE"). The common shares of the Company are listed for trading on the CSE under the symbol AMS.X. The Company has been operating in a single business segment focusing on mineral exploration in Canada.

All issued and outstanding shares and warrants in these condensed consolidated interim financial statements have been updated to reflect the Company’s consolidation on the basis of 20 preconsolidated common shares to 1 post-consolidated common share (Note 6).

2. GOING CONCERN

These condensed consolidated interim financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.

For the six months ended October 31, 2022, the Company incurred a net loss of $386,220, (2021 – $234,435), and as at October 31, 2022, has an accumulated deficit of $6,369,616 (April 30, 2022 – $5,983,396). At October 31, 2022, the Company has a working capital of $7,961 (April 30, 2022 –$199,569). The Company has limited resources, no sources of operating cash flows and no assurances that sufficient funding will be available to continue operations for an extended period of time. These circumstances indicate that a material uncertainty exists which may cast significant doubt on the Company’s ability to continue as a going concern.

The application of the going concern concept is dependent upon the Company’s ability to satisfy its liabilities as they become due and to obtain the necessary financing to complete the development of its technologies and the attainment of profitable operations. Management is actively engaged in seeking to raise the necessary capital to meet its funding requirements. There can be no assurance that management’s plan will be successful. If the going concern assumption were not appropriate for these condensed consolidated financial statements, then adjustments may be necessary in the carrying values of assets and liabilities, the reported expenses and the consolidated statement of financial position classifications used. Such adjustments could be material.

On March 11, 2020, the outbreak of the novel strain of coronavirus, specifically identified as “COVID-19”, was declared by the World Health Organization as a global pandemic. This has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and physical distancing, have caused material disruption to business globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company in future periods.

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ALCHEMIST MINING INC. Notes to the Condensed Consolidated Interim Financial Statements Six Months Ended October 31, 2022 and 2021 (Expressed in Canadian Dollars, unless otherwise stated)

3. BASIS OF PRESENTATION

Approval of the consolidated financial statements

These condensed consolidated interim financial statements for the six months ended October 31, 2022 were reviewed by the Audit Committee and approved and authorized for issue on December 28, 2022 by the Board of Directors of the Company.

Statement of compliance

These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting, International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations of the International Financial Reporting Interpretations Committee ("IFRIC").

Basis of preparation

These condensed consolidated financial interim statements are presented in Canadian dollars, which is also the Company’s and its subsidiary’s functional currency. These condensed consolidated interim financial statements have been prepared on a historical cost basis, except for certain financial assets and financial liabilities measured at fair value.

The Company uses the same accounting policies and methods of computation as in the audited annual financial statements for the year ended April 30, 2022.

Basis of consolidation

These condensed consolidated interim financial statements include the financial statements of the Company and its wholly owned, 100% controlled subsidiary, 1282112 BC Ltd., incorporated and located in British Columbia (“1282112”). Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All significant intercompany transactions and balances have been eliminated on consolidation.

Significant accounting judgments, estimates and assumptions

The preparation of consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, contingent assets, and contingent liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes may differ from these estimates.

Significant accounting judgments

Going concern

The assessment of the Company’s ability to continue as a going concern and to raise sufficient funds to pay for its ongoing operating expenditures, meet its liabilities for the ensuing year, and to fund planned and contractual technology development programs, involves significant judgment based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances .

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ALCHEMIST MINING INC. Notes to the Condensed Consolidated Interim Financial Statements Six Months Ended October 31, 2022 and 2021 (Expressed in Canadian Dollars, unless otherwise stated)

3. BASIS OF PREPARATION (Continued)

Significant accounting estimates and assumptions

Deferred income tax

The Company recognizes a deferred tax asset to extent recovery is probable. Assessing the recoverability of deferred tax assets requires management to make significant estimates of future taxable profit against which deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilized. In addition, changes in tax laws could limit the ability of the Company to obtain tax deductions in future periods.

4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Financial instruments are agreements between two parties that result in promises to pay or receive cash or equity instruments. The carrying values of these instruments approximate their fair values due to their short term to maturity.

Fair value measurements of financial instruments are required to be classified using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The levels of the fair value hierarchy are defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Inputs for assets or liabilities that are not based on observable market data.

The Company’s financial instruments classified as Level 1 in the fair value hierarchy are cash and accounts payable and accrued liabilities. Their carrying values approximate the fair values due to short-term maturity of these instruments.

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

• Credit risk;

• Liquidity risk; and

• Market risk.

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 manages credit risk, in respect of cash, by placing cash at major Canadian financial institutions.

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ALCHEMIST MINING INC. Notes to the Condensed Consolidated Interim Financial Statements Six Months Ended October 31, 2022 and 2021 (Expressed in Canadian Dollars, unless otherwise stated)

4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquid funds to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The contractual financial liabilities of the Company as of October 31, 2022 equal $139,422 (April 30, 2022 - $213,253). All of the liabilities presented as accounts payable are due within 90 days of October 31, 2022. The Company is seeking additional sources of capital through financing opportunities.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on capital.

As at October 31, 2022 and 2021, the Company is not exposed to significant market risk.

5. EQUIPMENT

Computer Equipment Furniture and Fixtures	Total
Cost
Balance, April30, 2022and October 31, $ 5,453 $ 2,032	$ 7,485
Accumulated depreciation
Balance, April 30, 2021 $ 5,368 $ 1,811 Depreciation 85 221 Balance, April 30, 2022 and October 31, $ 5,453 $ 2,032	$ 7,179 306 $ 7,485
~~2022~~ Net Book Value
April 30, 2022 and October 31, 2022 $ - $ -	$ -

6. SHARE CAPITAL

Authorized

Unlimited number of common shares without par value.

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ALCHEMIST MINING INC. Notes to the Condensed Consolidated Interim Financial Statements Six Months Ended October 31, 2022 and 2021 (Expressed in Canadian Dollars, unless otherwise stated)

6. SHARE CAPITAL (Continued)

Issued

For the six months ended October 31, 2022:

On June 9, 2022, the Company settled a convertible debt of $94,062 by issuing 648,706 units. Each unit is comprised of one common share with a fair value of $0.30 per share and one common share purchase warrant. Each warrant will entitle the holder thereof to acquire one share at a price of $0.145 per warrant share and exercisable for 4 years (Note 9).

For the year ended April 30, 2022:

On November 19, 2021, the Company consolidated the Company’s issued share capital on the basis of twenty (20) common shares for one (1) new common share of the Company.

On January 13, 2022, the Company issued an aggregate of 11,983,333 units at a price of $0.075 per unit for aggregate gross proceeds of $898,750 in a non-brokered private placement. Each unit is comprised of one common share and one common share purchase warrant. Each warrant will entitle the holder thereof to acquire one share at a price of $0.20 per warrant share and exercisable for 4 years.

On February 18, 2022, the Company settled $299,650 of debt by issuing 2,497,080 common shares with a fair value of $624,270. The Company recognized a loss on the settlement of debt of $324,621 on the transaction.

On February 24, 2022, the Company issued an aggregate of 150,000 common shares at a price of $0.70 per share for gross proceeds of $105,000 in a non-brokered private placement.

Stock options

The Company has adopted a stock option plan pursuant to which the Board of Directors of the Company may, from time to time, in its discretion, and in accordance with the CSE requirements, grant to directors, officers, employees and consultants of the Company non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 10% of the issued and outstanding common shares at the time of grant and exercisable for a period of up to ten years from the date of grant. The number of common shares reserved for issuance to any individual director or officer will not exceed 5% of the issued and outstanding common shares and the number of common shares reserved for issuance to all consultants will not exceed 2% of the issued and outstanding common shares. Options may be exercised within 90 days following cessation of the optionee’s position with the Company, provided that if the cessation of office, directorship, employment or consulting arrangement was by reason of death, the option may be exercised within a maximum period of one year after such death, subject to the expiry date of such option.

During the six months ended October 31, 2022, and year ended April 30, 2022, the Company did not grant any stock options.

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ALCHEMIST MINING INC. Notes to the Condensed Consolidated Interim Financial Statements Six Months Ended October 31, 2022 and 2021 (Expressed in Canadian Dollars, unless otherwise stated)

6. SHARE CAPITAL (Continued)

Warrants

The continuity of warrant transactions is summarized as follows:

		October 31, 2022	October 31, 2022		April	30, 2022
			Weighted			Weighted
		Number of	Average		Number of	Average
		Warrants	Exercise	Price	Warrants	Exercise	Price
Outstanding,	beginning of period	11,983,333	$	0.20	92,000	$	1.50
Issued		648,706		0.145	11,983,333		0.20
Expired		-		-	(92,000)		(1.50)
Outstanding,	end of period	12,632,039	$	0.20	11,983,333	$	0.20

As at October 31, 2022, the following share purchase warrants were issued and outstanding:

Expiry Date	Exercise Price$	Warrants outstanding #
January 13, 2026	0.20	11,983,333
June 8,2026	0.145	648,706
		12,632,039

As at October 31, 2022, the weighted average remaining life of the warrants is 3.20 years (April 30, 2022: 3.71 years).

7. RELATED PARTY TRANSACTIONS

Key management personnel compensation

The remuneration of the Company’s directors and other members of key management, who have the authority and responsibility for planning, directing, and controlling the activities of the Company, consists of the following amounts.

The following table summarizes transactions with related parties during the six months ended October 31, 2022 and 2021:

Consulting fees $ Accounting fees	Six months ended
	October 31, 2022 October 31, 2021 - $ 73,500 10,000 1,500
$	10,000 $ 75,000

As at October 31, 2022, $Nil (April 30, 2022 - $13,025) of unpaid consulting and professional fees was included in accounts payable and accrued liabilities. The amounts are unsecured, non-interest bearing and due on demand.

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ALCHEMIST MINING INC. Notes to the Condensed Consolidated Interim Financial Statements Six Months Ended October 31, 2022 and 2021 (Expressed in Canadian Dollars, unless otherwise stated)

7. RELATED PARTY TRANSACTIONS (continued)

Shareholder loans

		October 31,
		2022		April 30, 2022
Opening balance	$	222	$	11,253
Cash received		-		17,085
Cash paid for principal		-		(28,534)
Loss on debt settlement		-		491
Forgiveness of debt		(222)		(73)
Closingbalance	$	-	$	222

During the year ended April 30, 2022, the Company received working capital advances from related parties. The advances are unsecured, non-interest bearing and have no repayment terms. As at October 31, 2022, no amounts are outstanding.

8. LOANS PAYABLE

On June 7, 2021, the Company entered into a loan agreement with a non-arms length party. The principal of the loan received was $100,000 and was non-interest bearing and unsecured with $50,000 repayable on January 31, 2022 and $50,000 repayable on March 4, 2022. During the year ended April 30, 2022, the Company repaid the full balance of $100,000 in principal.

9. CONVERTIBLE DEBT

On June 23, 2021, the Company entered into a loan agreement with a non-arms length party. The principal of the loan received was $87,500 and had a fixed annual interest rate of 10%. The loan is unsecured and was repayable within 30 days of the Company resuming trading. The loan is repayable in cash or through the issuance of 125,000 units. Each unit is to be comprised of one common share and one share purchase warrant. The warrants will have an exercise price of $1.50 and will be exercisable for a period of two years from the date of issuance. The loan meets the criteria of a convertible debenture. As the debt was past due and recorded at its present value, $nil was assigned to the equity component. As of April 30, 2022, the Company owed $87,500 in principal and $6,563 in interest expense.

During the six months ended October 31, 2022, the debt was re-assigned to an arm’s length party and was settled through the issuance of 648,706 units. Each unit comprised of one common share and one common share purchase warrant. Each warrant will entitle the holder to acquire one share at a price of $0.145 per share and is exercisable for 4 years. On the date of issuance, the shares had a fair value of $194,612. Accordingly, the Company recorded a loss of $100,549 on settlement.

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ALCHEMIST MINING INC. Notes to the Condensed Consolidated Interim Financial Statements Six Months Ended October 31, 2022 and 2021 (Expressed in Canadian Dollars, unless otherwise stated)

10. CAPITAL MANAGEMENT

The Company considers its capital to be comprised of shareholders’ equity.

The Company manages the capital structure and makes adjustments to 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. Although the Company has been successful at raising funds in the past through the issuance of share capital, it is uncertain whether it will continue this method of financing due to the current difficult market conditions.

In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. Management reviews the capital structure on a regular basis to ensure that the above objectives are met. There have been no changes to the Company’s approach to capital management during the period ended October 31, 2022. The Company is not subject to external restrictions on its capital.

11. DEFINITIVE AGREEMENTS

All Nations

During the year ended April 30, 2022, the Company filed its initial listing statement with the CSE. The listing statement disclosed amendments made to the APA on March 1, 2021 whereby the parties agreed to a 6.2% holdback on the shares (the “Holdback Shares”) issued as consideration, payable under the event two of the leases (the “Holdback Leases”) to be acquired by the Company if they are not successfully transferred to the Company on closing. Once the Holdback Leases are transferred to the Company, the Holdback Shares will be issued to All Nations.

The acquisition was to be an arm’s length transaction and was expected to constitute a change of business of Alchemist under the CSE rules and policies. Completion of the acquisition was subject to receipt of necessary consents and approvals, including, without limitation: (i) approval of the CSE for the listing statement and the listing of the common shares of the resulting issuer; and (ii) approval of Alchemist’s shareholders.

In August 2021, the Company terminated the Asset Purchase Agreement with All Nations.

Alinea

On September 16, 2021, the Company entered into a share exchange agreement with Alinea Cannabis Inc. (“Alinea”). The Company was to purchase all of the issued and outstanding shares of Alinea (3,680,000 Alinea common shares) from Alinea shareholders in exchange for an aggregate of 2,453,333 Company common shares.

On October 29, 2021, the Company terminated the Share Exchange Agreement with Alinea.

During the transaction, the Company advanced Alinea $23,000 in order to pay for filing fees with Health Canada. The advancement was unsecured and had a 10% annual interest rate.

During the year ended April 30, 2022, the Company wrote off the advancement of $23,000 which has been recorded in profit and loss and the advancement balance is $nil (April 30, 2022: $nil).

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ALCHEMIST MINING INC. Notes to the Condensed Consolidated Interim Financial Statements Six Months Ended October 31, 2022 and 2021 (Expressed in Canadian Dollars, unless otherwise stated)

11. DEFINITIVE AGREEMENTS (Continued)

Iron Forge

On April 8, 2022, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Iron Forge Holdings (I) Inc. (“Iron Forge”), a private arm’s-length British Columbia mineral exploration company, and the shareholders of Iron Forge, whereby the Company agreed to purchase all of the issued and outstanding shares from the Iron Forge shareholders in exchange for an aggregate of 7,500,000 common shares of the Company and 3,750,000 warrants with an exercise price of $0.20 per common share exercisable for a period of two years after closing.

As of October 31, 2022, the transaction has not been completed.

12. SUPPLEMENTAL CASH FLOW INFORMATION

		October 31,		October 31,
		2022		2021
Taxes paid	$	-	$	-
Interest paid	$	-	$	3,140

Investing and financing activities that do not have a direct impact on cash flows are excluded from the statement of cash flows. During the six months ended October 31, 2022 and 2021, the Company recorded the following non-cash investing and financing transactions:

		October 31,		October 31,
Convertible debt settled on issuance of units		~~2022~~		~~202~~
(Note 9)	$	94,063	$	-

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