McFarlane Lake Mining Limited — Interim / Quarterly Report 2024

Jan 15, 2024

Condensed Consolidated Interim Financial Statements of

MCFARLANE LAKE MINING LIMITED

For the three months ended November 30, 2023 and 2022

(Expressed in Canadian Dollars) ( Unaudited )

Notice of No Auditors’ Review of Condensed Consolidated Interim Financial Statements

The accompanying unaudited condensed consolidated interim financial statements of McFarlane Lake Mining Limited 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 condensed consolidated interim financial statements in accordance with standards established by Chartered Professional Accountants of Canada for a review of interim financial statements by an entity’s auditor.

MCFARLANE LAKE MINING LIMITED

Condensed Consolidated Interim Statements of Financial Position As at November 30, 2023 and August 31, 2023 (Expressed in Canadian Dollars) ( Unaudited )

		November 30,	August 31,
	Note	2023	2023
		$	$
ASSETS
Current assets
Cash		3,154,597	249,411
Restricted investment		32,500	25,000
Prepaid expenses		195,312	37,908
Other receivable		310,561	82,291
Total assets		3,692,970	394,610
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities	10, 12	809,599	1,059,267
Notes payable	6	195,000	195,000
Flow-through sharepremium liability	7	995,601	60,470
Total liabilities		2,000,200	1,314,737
Shareholders' equity (deficit)
Share capital	8(a)	12,699,507	10,225,366
Warrants	8(d)	2,903,776	1,887,777
Contributed surplus	8(b)(c)	2,037,849	2,037,849
Deficit		(15,948,362)	(15,071,119)
Total shareholders' equity (deficit)		1,692,770	(920,127)
Total liabilities and shareholders' equity (deficit)		3,692,970	394,610
Nature of operations	1
Going concern	2
Commitments and contingencies	5, 13
Subsequent events	14

See accompanying notes to condensed consolidated interim financial statements.

On behalf of the Board:

(Signed) Mark Trevisiol Director (Signed) Charles Lilly Director

1

MCFARLANE LAKE MINING LIMITED

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited)

		For the three months ended November 30,	For the three months ended November 30,
	Note	2023	2022
		$	$
Operating expenses
Professional fees	10	520,660	107,765
Advertising and promotion		73,164	24,000
Consulting fees	10	126,000	126,000
Director fees	10	2,250	-
Office and general		41,081	19,917
Interest and bank charges	6	6,467	6,130
Exploration and evaluation expenditures	5, 10	107,079	900,631
Investor relations and business development		61,500	81,100
Regulatory and transfer agent fees		3,961	5,079
Share-based compensation	8(b)(c),10	-	279,000
Total operating expenses		942,162	1,549,622
Loss before non-operating items		(942,162)	(1,549,622)
Other income
Flow-through sharepremium recovery	7	64,919	297,214
Total other items		64,919	297,214
Net loss and comprehensive loss for theperiod		(877,243)	(1,252,408)
Basic and diluted net loss and comprehensive loss per
common share	9	(0.005)	(0.013)
Weighted average number of common shares
outstanding - Basic and diluted		176,246,974	98,321,714

See accompanying notes to condensed consolidated interim financial statements.

2

MCFARLANE LAKE MINING LIMITED

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity (Deficiency) For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited)

							Total
					Contributed	Accumulated	Shareholders'
	Note	Common	Share Capital	Warrants	surplus	Deficit	Equity (Deficit)
		#	$	$	$	$	$
Balance, August 31, 2022		87,647,813	8,481,873	1,234,175	932,849	(10,387,323)	261,574
Shares and warrants issued in private placements		12,924,000	904,680	387,720	-	-	1,292,400
Share issuance costs		-	(68,489)	(29,352)	-	-	(97,841)
Shares and warrants issued for services (finder's fee)		27,000	1,890	810	-	-	2,700
Share based compensation		-	-	-	279,000	-	279,000
Net loss		-	-	-	-	(1,252,408)	(1,252,408)
Balance, November 30, 2022		100,598,813	9,319,954	1,593,353	1,211,849	(11,639,731)	485,425
Balance, August 31, 2023		113,183,845	10,225,366	1,887,777	2,037,849	(15,071,119)	(920,127)
Shares and warrants issued in private placements	8(a)(ii)	52,100,000	1,563,000	1,042,000	-	-	2,605,000
Flow through shares issued in private placements	8(a)(ii)	33,335,006	2,000,100	-	-	-	2,000,100
Premium on flow-through shares	8(a)(ii)	-	(1,000,050)	-	-	-	(1,000,050)
Share issuance costs	8(a)(ii)	-	(88,909)	(26,001)	-	-	(114,910)
Net loss		-	-	-	-	(877,243)	(877,243)
Balance, November 30, 2023		198,618,851	12,699,507	2,903,776	2,037,849	(15,948,362)	1,692,770

See accompanying notes to condensed consolidated interim financial statements.

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MCFARLANE LAKE MINING LIMITED

Condensed Consolidated Interim Statements of Cash Flows For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited)

		For the three months ended November	For the three months ended November
	Note	2023	2022
		$	$
Operating activities
Net loss		(877,243)	(1,252,408)
Items not affecting cash:
Share-based compensation	8(b), 8(c)	-	279,000
Flow-through share premium recovery	7	(64,919)	(297,214)
Change in non-cash working capital items:
Prepaid expenses		(157,404)	(29,730)
Other receivable		(228,270)	(79,153)
Accountspayable and accrued liabilities		(249,668)	622,103
Net cash used in operating activities		(1,577,504)	(757,402)
Investing activities
Purchase GIC		(7,500)	-
Net cash used in investing activities		(7,500)	-
Financing activities
Proceeds of private placement - units	8(a)	2,605,000	1,292,400
Proceeds of private placement - flow-through shares	8(a)	2,000,100
Payment of share issuance costs related toprivateplacement	8(a)	(114,910)	(95,141)
Net cashprovided by financing activities		4,490,190	1,197,259
Change in cash		2,905,186	439,857
Balance,beginningof theperiod		249,411	1,595,037
Balance, end of theperiod		3,154,597	2,034,894
Supplemental cash flow information
Non-cash share issue costs		-	2,700

See accompanying notes to condensed consolidated interim financial statements.

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

1. Nature of Operations

McFarlane Lake Mining Limited (the "Company"), formerly 1287401 B.C. Ltd (“1287401”), was incorporated under the Business Corporations Act (British Columbia) on February 03, 2021, and was continued into the Province of Ontario on January 26, 2022. The Company is engaged in the acquisition and exploration of mineral resource properties in Canada.

On January 14, 2022, 1287401 completed a reverse takeover transaction (the “RTO” or “Transaction”) with McFarlane Lake Mining Incorporated (“McFarlane”), a privately held mineral exploration company incorporated under the laws of Province of Ontario on August 21, 2020, by way of “three-cornered” amalgamation. The issuer resulting from the Transaction (the “Resulting Issuer”) carries on the business of McFarlane under the name “McFarlane Lake Mining Limited”.

The Transaction constituted a reverse acquisition in accordance with International Reporting Standards (“IFRS”) as the shareholders of McFarlane took control of 1287401. As McFarlane was deemed to be the acquirer for accounting purposes, the resulting consolidated statements of financial position were presented as a continuance of McFarlane’s operations at their historical carrying values, and the comparative figures presented are those of McFarlane. The results of operations, the cash flows, and the assets and liabilities of 1287401 have been included in these consolidated financial statements since January 14, 2022.

The Company’s shares are listed on the Cboe Canada Exchange (formerly the NEO Exchange) under the symbol “MLM”. The Company’s shares are also listed on the US OTC Exchange under the symbol “MLMLF”. The Company’s corporate office is at 15 Kincora Court, Sudbury, Ontario P3E 2B9, Canada.

2. Going Concern

These condensed consolidated interim financial statements have been prepared using accounting policies applicable to a going concern, which contemplate the realization of assets and settlement of liabilities in the normal course of business as they become due. The business of mining and exploring for minerals involves a high degree of risk and there can be no assurance that the planned exploration programs will ultimately result in profitable mining operations.

Although the Company has taken steps to verify title to the properties on which it will conduct exploration and in which it has an interest in accordance with industry standards to the current stage of exploration of such properties, these procedures do not guarantee the Company’s title. Property title may be subject to government licensing, requirements, or regulations, unregistered prior agreements, unregistered claims, first nations’ claims and non-compliance with regulatory requirements. The Company’s assets may also be subject to increases in taxes and royalties, renegotiation of contacts and political uncertainties.

These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) applicable to a going concern. Accordingly, they do not give effect to the adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its obligations and commitments in other than the normal course of business. The Company has incurred losses for the three months ended November 30, 2023, and as of November 30, 2023, has a deficit.

The business of mining and exploration for minerals involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations. The Company’s continued existence is dependent upon the preservation of its interests in the underlying properties, the achievement of profitable operations, or the ability of the Company to raise additional financing as necessary, or alternatively upon the Company’s ability to dispose of its interests on an advantageous basis.

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

2. Going Concern (continued)

The Company has raised capital for working capital and the planned exploration and development of its mineral properties. The Company’s continuation as a going concern is dependent upon successful results from its planned exploration and evaluation activities, its ability to attain profitable operations to generate funds and its ability to raise equity capital or borrowings sufficient to meet its current and future obligations for the next 12 months. Although the Company has been successful in raising funds to date there is no assurance that it will be able to do so in the future. On November 1 and 27, 2023, the Company closed two non-brokered private placement offerings (the “Offerings”) for aggregate gross proceeds of $4,605,100 to meet part of its financial obligations for the next 12 months (see also note 8).

These matters represent material uncertainties that cast significant doubt about the Company’s ability to continue as a going concern.

3. Basis of Preparation

(a) Statement of compliance

These unaudited condensed consolidated interim financial statements have been prepared in accordance with IFRS issued by the International Accounting Standard 34, (“IAS 34”), Interim Financial Reporting . These interim financial statements do not conform in all respects to the requirements of International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) for annual financial statements. Accordingly, these interim financial statements should be read in conjunction with the Company’s August 31, 2023 financial statements.

These unaudited condensed consolidated interim financial statements were authorized for issue by the Board of Directors of the Company on January 10, 2024.

(b) Basis of measurement

These condensed consolidated interim financial statements have been prepared on a historical cost basis, except for certain financial assets which are carried at fair value. In addition, these condensed consolidated interim financials have been prepared using the accrual basis of accounting, except for cash flow information.

(c) Principles of consolidation

These unaudited consolidated interim financial statements incorporate the financial statements of the Company and the entity it controls.

Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities, are exposed to, or have rights to, variable returns from the Company’s involvement with the entity and have the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company until the date on which control ceases. Profit or loss of subsidiaries acquired during the year are recognized from the date of acquisition or effective date of disposal as applicable. All intercompany transactions and balances have been eliminated.

As of November 30, 2023, the Company has one wholly owned subsidiary: McFarlane Lake Mining Incorporated.

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

3. Basis of Preparation (continued)

(d) Functional and presentation currency:

These condensed consolidated interim financial statements are presented in Canadian dollars ("CAD"), which is also the functional currency of the Company and its subsidiary.

4. Summary of Significant Accounting Policies

Significant accounting judgments, estimates and assumptions

The preparation of these condensed consolidated interim 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 condensed consolidated interim financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These condensed consolidated interim financial statements include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the condensed consolidated interim 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.

Information about critical judgements in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in these condensed consolidated interim financial statements are discussed below:

a) Title to mineral property interests

Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company titles. Such properties may be subject to prior agreement or transfers and titles may be affected by undetected defects.

b) Valuation of share-based payments

The Company values share-based payments granted using market-based generally accepted valuation techniques at the date of grant. Assumptions made for the valuation include volatility of the share price, risk free interest rate and the life of the stock options granted. Such assumptions are highly subjective and changes in these assumptions materially affect the calculated fair value. Assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 9. The expected volatility assumptions for option grants are based on comparable companies.

c) Valuation of deferred income tax assets

Each year, the Company evaluates the likelihood of whether some portion of deferred tax assets, if any, will be realized. This evaluation is based on historic and future expected levels of taxable income, the timing of reversals of taxable temporary timing differences that give rise to deferred tax liabilities, tax planning initiative, and deferred tax rates.

d) Going concern

The assessment of the Company’s ability to continue as a going concern involves judgment

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

4. Summary of Significant Accounting Policies (continued)

regarding future funding available for its exploration projects and working capital requirements.

e) Existence of decommissioning and restoration costs and timing of expenditure

Decommissioning, restoration, and similar liabilities are estimated based on the Company's interpretation of current regulatory requirements and 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 with regulatory authorities.

f) Income, value added, withholding and other taxes

The Company is subject to income, value added, withholding and other taxes. Judgment is used in determining provisions for taxes as there are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The determination of the Company's income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations, which may not coincide with the interpretation of the tax authorities. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. All tax related filings are subject to government audit and potential reassessment subsequent to the consolidated interim financial statement reporting period. In case the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax related accruals and deferred income tax provisions in the period in which such determination is made.

g) Provisions and contingencies

Provisions and contingencies arising in the course of operations, including provisions for income or other tax matters are subject to estimation uncertainty. Management uses all information available in assessing the recognition, measurement and disclosure of matters that may give rise to provisions or contingencies. The actual outcome of various provisional and contingent matters may vary and may cause significant adjustments to the Company’s assets when the amounts are determined or additional information is required.

h) Flow-through shares

The Company may, from time to time, issue flow-through common shares to finance a portion of its exploration program. Pursuant to the terms of the flow-through share agreements, these shares transfer the tax deductibility of qualifying resource expenditures to investors. On the date of issuance of the flow-through shares, the premium relating to the proceeds received in excess of the fair value of the Company’s common shares is allocated to premium on flow-through shares liability. The reduction to the premium liability in the period of renunciation is recognized through operations.

Use of estimates

The estimates and associated assumptions are based on historical experience and various factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Management believes the estimates are reasonable; however,

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

4. Summary of Significant Accounting Policies (continued)

actual results could differ from those estimates and could impact future results of operations and cash flows. Significant estimates include the valuation of options using the Black-Scholes pricing model.

Significant accounting policies - other

These condensed consolidated interim financial statements follow the same accounting policies and methods of application as the Company’s most recent annual financial statements. Accordingly, they should be read in conjunction with the Company’s most recent annual financial statements.

New standards adopted in the period

During the three months ended November 30, 2023, the Company adopted the following amendment. This change did not have any material impact on the Company’s financial statements.

IAS 1 – Presentation of Financial Statements (“IAS 1”) was amended in January 2020 to provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. The amendments clarify that the classification of liabilities as current or noncurrent is based solely on a company’s right to defer settlement at the reporting date. The right needs to be unconditional and must have substance. The amendments also clarify that the transfer of a company’s own equity instruments is regarded as settlement of a liability, unless it results from the exercise of a conversion option meeting the definition of an equity instrument. In February 2021, the IASB issued ‘Disclosure of Accounting Policies’ with amendments that are intended to help preparers in deciding which accounting policies to disclose in their financial statements.

IAS 8 – In February 2021, the IASB issued ‘Definition of Accounting Estimates’ to help entities distinguish between accounting policies and accounting estimates.

IAS 12 – In May 2021, the IASB issued ‘Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction’ that clarifies how entities account for deferred tax on transactions such as leases and decommissioning obligations.

New standards not yet adopted and interpretations issued but not yet effective

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing on or after December 1, 2023. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following have not yet been adopted and are being evaluated to determine their impact on the Company.

IFRS 10 – Consolidated Financial Statements (“IFRS 10”) and IAS 28 – Investments in Associates and Joint Ventures (“IAS 28”) were amended in September 2014 to address a conflict between the requirements of IAS 28 and IFRS 10 and clarify that in a transaction involving an associate or joint venture, the extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business. The effective date of these amendments is yet to be determined, however early adoption is permitted. The Company will adopt these amendments as of their effective date, and is currently assessing the impacts on adoption.

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

5. Exploration and Evaluation Properties

West Hawk Lake, High Lake and McMillan Properties

On December 30, 2021, the Company executed a purchase agreement with Canadian Star Minerals Ltd. (the “Optioner”) to acquire 100% interest in certain mining claims. The purchase price paid by the Company upon exercise of the option was satisfied as follows:

• $2,750,000 of cash consideration;

• 5,625,000 of common shares issued by the Company with a deemed value of $2,250,000 which represents $2,750,000 less the cumulative amount paid by the Company in option payments of $550,000; and

• transferred to the Optioner 7,000,000 issued and outstanding shares in the capital of the Company held by certain officers and directors of the Company upon closing of the transaction. The shares were valued at $1,700,000 based on the quoted market price of $0.085 per share. The contributed amount was recorded as exploration and evaluation expenditures in the consolidated statement of loss.

The property is subject to a 2% net smelter return royalty (“NSR”) for the McMillian mine claims and a 2% NSR with the right to purchase 1% for a purchase price of $1,250,000 for the High Lake claims. The Company is also required to pay $10,000 every June 15 until such time as commercial production has commenced on the mining claims or the optionee offers to return the mining claims.

Mongowin Property

On February 1, 2022, the Company executed a purchase agreement with Transition Metals Corpl, (“Mongowin Optionor”) to acquire 100% interest in certain mining claims and patented claims located in Northeastern Ontario in Mongowin Township. The definitive agreement to purchase the Property was subject to the following terms and conditions:

• a) $15,000 cash payment for a 5-month period exclusivity to transact;

• b) $45,000 to affect a 3-month extension of the period of exclusivity;

• c) $585,000, of which $85,000 was paid in cash and $500,000 was settled by the issuance of

• common shares of the Company;

• d) The Company granted the Mongowin Optionor a 1.5% Net Smelter Return Royalty;

• e) A portion of the property is subject to an additional existing NSR of which 0.5% may be

• purchased for $600,000;

• f) Beginning on the fifth anniversary of the Purchase Agreement, the Company will pay the Mongowin Optionor advanced royalty payments of $25,000 per year (in cash or common shares) to a maximum total of $250,000 (in cash or shares). Any exploration expenditures incurred on the Mongowin Property will offset this payment on a dollar for dollar basis. If the Company does not pay the advanced royalty payments or spend the required exploration expenditure, the Mongowin Optionor may choose to purchase the property for $1;

• g) The Mongowin Optionor is entitled to a one-time milestone payment of $2,500,000 upon the commercial exploitation of mineral products on the Mongowin Property. As this payment is contingent on future commercial production, which cannot be determined, no provision as been recorded in these consolidated financial statements.

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

5. Exploration and Evaluation Properties (continued)

Michaud/Munro Properties

The Company executed a purchase agreement on March 10, 2022 with 1929941 Ontario Limited , (the “Michaud/Munro Optionor”) in respect of the acquisition by the Company of a 100% interest in 17 mining leases located in Northeastern Ontario in the townships of Michaud and Munro in the Larder Lake Mining District near the town of Matheson, Ontario. The definitive agreement to purchase the Michaud/Munro Properties is subject to the following terms and conditions:

• a) The Company paid a non-refundable cash payment of $35,000 to the Michaud/Munro Optionor for a period of exclusivity prior to the signing of the purchase agreement;

• b) The Company provided the Michaud/Munro Optionor with a $30,000 cash payment upon the transfer of the mining leases;

• c) The Company issued $550,000 worth of shares upon the transfer of the mining leases ;

• d) 1.5% Net Smelter Return Royalty of which 1% can be purchased for $1.5 million.

The CEO of the Company has an equity interest in the Michaud/Munro Optionor company.

6. Notes payable

During fiscal 2021, McFarlane was advanced funds totalling $195,000 from companies controlled by certain directors of the Company. These promissory notes payable are unsecured, bear interest at 12% per annum and are due on demand. During the three month period ended November 30, 2023, the Company incurred interest expense of $5,834 (November 30, 2022 - $5,834). Included in accounts payable and accrued liabilities as of November 30, 2023 is accrued interest owed on these notes payable in the amount of $63,125 (August 31, 2023 - $57,291).

7. Flow-through Share Premium Liability

The flow-through share premium liability balance as at November 30, 2023 is $996,601 (August 31, 2023 - $60,470).

(a) Private Placement Offering - April 2023

In April 2023, the Company issued 3,100,000 flow-through shares, (“FT Shares”) for gross proceeds equal to $372,000, thus committing to spend this amount by December 31, 2024 on “Canadian exploration expenses” which qualify as “flow-through mining expenditures”, as these terms are defined in the Income Tax Act (Canada) (“Resource Expenditures”). Upon the issuance of the FT Shares, the Company recorded an aggregate flow-through share premium of $142,242. During the three months ended November 30, 2023, the Company incurred $158,145 of Resource Expenditures towards this commitment and recorded flow-through share premium income of $60,470 respectively in the condensed consolidated interim statement of loss and comprehensive loss.

(b) Private Placement Offering – November 2023

In November 2023, the Company issued 33,335,006 FT Shares for gross proceeds equal to $2,000,100, thus committing to spend this amount by December 31, 2025 on “Canadian exploration expenses” which qualify as “flow-through mining expenditures”, as these terms are defined in the Income Tax Act (Canada) (“Resource Expenditures”). Upon the issuance of the FT Shares, the Company recorded an aggregate flow-through share premium of $1,000,050. During the three months ended November 30, 2023, the Company incurred $8,899 of Resource Expenditures towards this commitment and recorded flow-through share premium income of $4,449 in the condensed consolidated interim statement of loss and comprehensive loss.

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

8. Share capital

(a) Share capital

Authorized:

The Company is authorized to issue an unlimited number of common shares with no par value.

		Note	# Shares*		Amount
Balance, August 31, 2022			87,647,813	$	8,481,873
Shares and warrants issued in private placements			12,924,000		904,680
Shares and warrants issued in private placements			2,200,032		231,004
Shares and warrants issued in private placements			7,285,000		509,950
Flow through shares issued in private placements			3,100,000		372,000
Premium on flow-through shares			-		(142,242)
Shares issued for	services (finder's fee)		27,000		1,890
Share issuance costs			-		(133,789)
Balance, August 31, 2023			113,183,845	$	10,225,366
Shares and warrants issued in private placements		8(a)(i)	43,500,000		1,305,000
Shares and warrants issued in private placements		8(a)(i)	8,600,000		258,000
Flow through shares issued in private placements		8(a)(i)	24,943,681		1,496,620
Flow through shares issued in private placements		8(a)(i)	8,391,325		503,480
Premium on flow-through shares		8(a)(i)	-		(1,000,050)
Share issuance costs		8(a)(i)	-		(88,909)
Balance, November	30, 2023		198,618,851	$	12,699,507

* All figures reflect the Exchange Ratio

Issued:

• i. On November 1, 2023, the Company closed the first tranche (the “First Tranche”) of a nonbrokered private placement offering (the “Offering”) for aggregate gross proceeds of $3,671,620. In connection with the First Tranche, the Company issued 43,500,000 units at a price of $0.05 per unit and 24,943,681 flow-through shares at a price of $0.06 per FT share.

On November 27, 2023, the Company closed the second (and final) tranche (the “Second Tranche”) of a non-brokered private placement offering for aggregate gross proceeds of $933,480. In connection with the Second Tranche, the Company issued 8,600,000 units at a price of $0.05 per unit and 8,391,325 flow-through shares at a price of $0.06 per FT share.

The total gross proceeds to the Company from the First and Second Tranches of the Offering were $4,605,100.

Each unit consists of one common share of the Company and one of one common share purchase warrant. Each warrant is exercisable by the holder to acquire one common share of the Company at a price of $0.07 per common share until May 1, 2025 (Tranche 1) and May 27, 2025 (Tranche 2).

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

8. Share Capital (continued)

The allocation of the Units between share capital and warrants was done based on the relative fair value of each of the components. The fair value of the warrants was determined using the Black-Scholes Model using the following assumptions:

Share price	$0.03	Risk free interest rate	4.40% - 4.53%
Expected life	1.5 years	Volatility	156.22% - 159.59%
Dividend yield	0.00%

The relative fair value of the shares was determined to be $1,563,000 and the relative fair value of the warrant was determined to be $1,042,000.

In connection with the offering, the Company paid $114,910 in legal and accounting expenses.

The gross proceeds from FT Share portion of the offering were allocated to common shares and FT Share premium using the residual method, with proceeds being allocated to the common shares first based on the market value of the shares at the time of the issuance. The fair value of the shares was determined to be $1,000,050 and $1,000,050 was allocated as the value of the Flow-through share premium.

Certain directors and officers of the Company subscribed to a total of 3,700,000 units for gross proceeds of approximately $257,0000 in the Offering.

(b) Stock options

The Company has a stock option plan (the “Plan”) for its directors, officers, consultants, and key employees under which the Company may grant options to acquire a maximum number of 15% of the total issued and outstanding common shares of the company. These options are non-transferable and are valid for a maximum of 5 years from the issue date. Vesting terms and conditions are determined by the Board of Directors at the time of the grant. The exercise price of the options is fixed by the Board of Directors at the time of the grant at a minimum of the market price of the common shares, subject to regulatory requirements.

Expected volatility has been determined using the share price of comparable companies for the period equivalent to the life of the options prior to grant date.

						Number of		Weighted
						options	average exercise price
Options outstanding at August	31,	2022				7,000,000	$	0.16
Granted						2,325,000		0.12
Granted						325,000		0.16
Granted						325,000		0.12
Options outstandingat August	31,	2023	& November	30,	2023	9,975,000	$	0.15

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

8. Share Capital (continued)

On October 14, 2022, the Company granted of a total of 2,325,000 stock options to directors, executive officers, management and consultants, exercisable at $0.12 per share and expiring on October 14, 2027. All of these options were issued to related parties. The options have a five-year term and vested immediately. The stock options fair value of $279,000 was determined using a Black-Scholes model based on the following assumptions: expected life of 5 years, expected volatility of 195.23%, expected dividend yield of 0% and a risk-free interest rate of 3.64%.

On January 13, 2023, the Company granted of a total of 325,000 stock options to a new director, exercisable at $0.16 per share and expiring on January 13, 2028. All of these options were issued to a related party. The options have a five-year term and vested immediately. The stock options fair value of $52,000 was determined using a Black-Scholes model based on the following assumptions: expected life of 5 years, expected volatility of 193.77%, expected dividend yield of 0% and a risk-free interest rate of 3.00%.

On May 8, 2023, the Company granted of a total of 325,000 stock options to a director, exercisable at $0.12 per share and expiring on May 8, 2028. All of these options were issued to a related party. The options have a five-year term and vested immediately. The stock options fair value of $39,000 was determined using a Black-Scholes model based on the following assumptions: expected life of 5 years, expected volatility of 216.80%, expected dividend yield of 0% and a risk-free interest rate of 3.08%.

At November 30, 2023, the following options were outstanding and available to be exercised:

		Number of Stock			Remaining Life
Grant Date	Expiration	Options	Exercise	Price	(inyears)
May 31, 2021	May 31, 2026	5,500,000	$	0.10	2.50
January 25, 2022	January 25, 2027	1,500,000		0.40	3.16
October 14, 2022	October 14, 2027	2,325,000		0.12	3.87
January 13, 2023	January 13, 2028	325,000		0.16	4.12
May8,2023	May8,2028	325,000		0.12	4.44
		9,975,000	$	0.15	3.04

(c) Restricted share units

The Company adopted a restricted share unit plan (the “RSU Plan”) on December 7, 2021, under which the Company may grant restricted share units ("RSUs") to directors, officers and key employees of the Company.

	Number of	Grant date fair
	RSUs	value
RSUs outstanding at August 31, 2022	-	- $
Granted	7,000,000	0.105
RSUs outstandingat August 31,2023 & November 30,2023	7,000,000	0.105 $

On March 27, 2023, the Company granted of an aggregate of 7,000,000 RSUs to two directors of the Company which vest immediately. Each vested RSU entitles the holder to receive one Common Share.

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

8. Share Capital (continued)

The fair value of the RSUs were determined to be $735,000 based on the market value of the shares on the date of the grant.

As at November 30, 2023, the following RSUs were outstanding and exercisable:

		Grant date fair	Grant date fair
Grant Date	Number of RSUs		value
March 27, 2023	7,000,000	$	0.105

(d) Warrants

As at November 30, 2023, the following warrants were outstanding and exercisable:

		Number of
		warrants			Remaining Life
Grant Date	Expiry Date	Outstanding	Exercise	Price	(inyears)
December 9, 2021	December 9, 2024	4,206,156	$	0.60	1.03
December 9, 2021	December 9, 2024	1,097,075		0.40	1.03
September 16, 2022	September 16, 2025	6,475,500		0.20	1.80
February 17, 2023	February 17, 2026	1,100,016		0.25	2.22
April 13, 2023	April 13, 2026	3,642,500		0.20	2.37
November 1, 2023	May 1, 2025	43,500,000		0.07	1.42
November 27,2023	May27,2025	8,600,000		0.07	1.49
		68,621,247	$	0.13	1.50

9. Loss per Share

For the three months ended November 30, 2023, basic and diluted loss per share has been calculated based on the loss attributable to common shareholders of $877,243 (2022 – $1,252,408) and the weighted average number of common shares outstanding of 176,246,974 (2022 – 98,321,714).

10. Related Party Transactions and Balances

The following expenses were incurred with directors and key management personnel of the Company. Key management personnel are persons responsible for planning, directing, and controlling the activities of the Company including any directors and officers of the Company.

The remuneration of directors and key management of the Company for the three months ended November 30, 2023 and 2022 was as follows:

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

10. Related Party Transactions and Balances (continued)

	2023	2022
	$	$
Consulting fees	126,000	141,000
Director fees	2,250	-
Share basedpayments	-	279,000

Included in accounts payable and accrued liabilities as at November 30, 2023 is $44,769 owing to officers and management of the Company (August 31, 2023 - $55,425). The amounts are unsecured, non-interest bearing and due on demand.

Also included in accounts payable and accrued liabilities as at November 30, 2023 is accrued interest owing on the notes payable due to directors of the Company in the amount of $63,125 (August 31, 2023 - $57,291).

Also included in accounts payable and accrued liabilities as at November 30, 2023 is director fees owing to directors of the Company in the amount of $23,250, (August 31, 2023 - $21,000).

During the 3-month period ended November 30, 2023, the Company incurred professional fees to a law firm and its associated companies for legal, accounting and capital advisory services totalling $212,722 (November 30, 2022 - $154,855). One of the directors of the Company is a partner in this law firm. Included in accounts payable and accrued liabilities as at November 30, 2023 is $324,691 owing to this law firm and its associated companies (August 31, 2023 - $454,431). The amounts are unsecured, non-interest bearing and due on demand.

The CEO of the Company has an equity interest in the Michaud/Munro Optionor company 1929941 Ontario Limited (“1929941”). On March 10, 2022, the Company completed a transaction with 1929941 for the acquisition of the Michaud/Munro exploration properties as noted in Note 5.

See also Notes 5, 6, and 8.

11. Capital Management

The Company defines capital as consisting of common share capital, options reserve and deficit.

The Company’s objective in managing capital is to maintain adequate levels of funding to safeguard the Company’s ability to continue as a going concern in order to pursue the exploration and development of its mineral property interests and to maintain a flexible capital structure which will optimize the costs of capital at an acceptable risk.

The Company endeavours to manage its capital structure in a manner that provides sufficient funding for operational activities through funds primarily secured through equity capital obtained in private placements. There can be no assurances that the Company will be able to continue raising capital in this manner. Although the Company has been successful at raising funds in the past through the issuance of share capital, it is uncertain whether it will be able to continue this form of financing due to the current difficult conditions. The Company makes adjustments to its management of capital in the light of changes in economic conditions and the risk characteristics of its assets, seeking to limit shareholder dilution and optimize its costs of capital while maintaining an acceptable level of risk.

The Company is not subject to any externally imposed capital requirements.

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

12. Financial Risks and Concentration of Risk

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or an equity instrument of another entity.

The carrying value of the Company’s financial instruments approximates fair value due to the short-term or demand nature of these financial instruments.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its obligations. The Company mitigates its exposure by monitoring the counterparty’s ability to repay.

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if its access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or matters specific to the Company. The Company generates cash flow primarily from its financing activities. The Company prepares annual capital expenditure budgets, which are monitored and updated as required. In addition, the Company requires authorization from the Board of Directors for expenditures on projects to assist with the management of capital.

The following are the contractual maturities of financial liabilities as at November 30, 2023:

At November 30, 2023		Carrying amount		within 1 year		1-3 years		4+ years
Accounts payable and accrued liabilities	$	809,599	$	809,599	$	-	$	-
Notespayable		195,000		195,000		-		-
	$	1,004,599	$	1,004,599	$	-	$	-

The following are the contractual maturities of financial liabilities as at August 31, 2023:

At August 31, 2023		Carrying amount		within 1 year		1-3 years	1-3 years		4+ years
Accounts payable and accrued liabilities	$	1,059,267	$	1,059,267	$		-	$	-
Notespayable		195,000		195,000			-		-
	$	1,254,267	$	1,254,267	$		-	$	-

Interest rate risk

The Company does not currently have any outstanding variable interest-bearing loans and, therefore, the Company is not exposed to interest rate risk through fluctuation in the prime interest rate.

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

13. Commitments and Contingencies

Consulting Agreements

The Company entered into consulting agreements on January 4, 2022 with its key management personnel (the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer) at combined consulting fees of $27,000 per month. These contracts require payment of approximately $1 million upon the occurrence of a change of control of the Company, as defined by each officer’s respective consulting agreement. The Company is also committed to payments upon termination of approximately $420,000 pursuant to the terms of these contracts. As a triggering event has not taken place, these amounts have not been recorded in these consolidated financial statements.

Environmental Contingencies

The Company’s exploration activities are subject to various federal, state, provincial, and international laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations. See also Note 6 (exploration and evaluation properties).

Flow-through Financings

The Company has entered into flow-through private placements (“FT Placements”) to fund exploration activities. Canadian tax rules require the Company to spend flow-through funds on “Canadian exploration expenses” (as defined in the Income Tax Act (Canada)) by the end of the calendar year following the year in which they were raised. The Company indemnified the subscribers of flow-through shares from any tax consequences should the Company, notwithstanding its plans, fail to meet its commitments under the flow-through subscription agreements.

In November, 2023, the Company completed a FT Placement for $2,000,100, thus committing to spend this amount by December 31, 2024 on “Canadian exploration expenses” which qualify as “flow-through mining expenditures”, as these terms are defined in the Income Tax Act (Canada) (“Resource Expenditures”). Upon the issuance of the FT Shares, the Company recorded an aggregate flow-through share premium liability of $1,000,050. During the three months ended November 30, 2023, the Company incurred $8,899 of resource expenditures and recorded a flowthrough share premium recovery of $4,449 in the condensed consolidated interim statement of loss. The Company intends to incur the remaining $1,991,202 of resource expenditures by December 31, 2024 to complete its commitment.

The Company’s exploration and evaluation activities are subject to laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company believes its activities are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.

14. Subsequent Event

On December 28, 2023 the Company’s board of directors approved (i) the grant of 5,650,000 stock options (collectively, the “Options”) to certain directors, officers and consultants of the Company; and (ii) the grant of 3,600,000 restricted share units (collectively, the “RSUs”) to certain consultants of the Company, each in accordance with the rules of Cboe Canada and the applicable plan.

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MCFARLANE LAKE MINING LIMITED Notes to Condensed Consolidated Interim Financial Statements For the three months ended November 30, 2023 and 2022 (Expressed in Canadian Dollars) ( Unaudited )

14. Subsequent Event (continued)

The Options are exercisable into the equivalent amount of common shares of the Company at a price of $0.09 per share until December 27, 2028.

The RSUs granted to the consultants will vest in accordance with the terms and conditions set forth in the applicable award agreements and once vested, each vested RSU will entitle the holder thereof to receive a common share in the capital of the Company.

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