Pegasus Resources — Audit Report / Information 2023

Jan 29, 2026

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September 29, 2023

To: British Columbia Securities Commission

Alberta Securities Commission Ontario Securities Commission

Re: Audited Financial Statements for European Energy Mining Corp. (the "Company") for the Year Ended May 31, 2023 (the "Annual Statements")

The Company's Annual Statements were filed on SEDAR+ on September 28, 2023. It has come to our attention that, due to a printing issue, page 5 (Statement of Changes in Equity) of the Annual Statements was omitted in the version filed. Accordingly, we are re-filing the Annual Statements with the omitted page included.

"Julia Stone"

Julia Stone Chief Financial Officer

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European Energy Metals Corp.

(Formerly Hilo Mining Ltd.)

FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2023 AND 2022

(Expressed in Canadian dollars)

AMENDED

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INDEPENDENT AUDITORS' REPORT

To the Shareholders and Directors of European Energy Metals Corp.

Opinion

We have audited the financial statements of European Energy Metals Corp. (formerly Hilo Mining Ltd.) (the "Company") which comprise the statements of financial position as at May 31, 2023 and 2022, and the statements of loss and comprehensive loss, changes in shareholders' equity and cash flows for the years then ended, and the related notes comprising a summary of significant accounting policies and other explanatory information (together, the "Financial Statements").

In our opinion, the accompanying Financial Statements present fairly, in all material respects, the financial position of the Company as at May 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the 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.

Emphasis of matter - Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the accompanying Financial Statements, which describes matters and conditions that indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Statements for the year ended May 31, 2023. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our report.

Other Information

Management is responsible for the other information, which comprises the information included in the Company's Management Discussion & Analysis to be filed with the relevant Canadian securities commissions.

Our opinion on the 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 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 Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

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. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the Financial Statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.

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In preparing the 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.

Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' 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 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 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 auditors' report to the related disclosures in the 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 auditors' 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 Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are, therefore, the key audit matters. We describe these matters in our auditors' 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 auditors' report is Waseem Javed.

CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, British Columbia

September 27, 2023

-

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European Energy Metals Corp. (formerly Hilo Mining Ltd.) Statements of Financial Position As at May 31, 2023 and 2022 (Expressed in Canadian dollars)

	2023	2022
	\$	\$
ASSETS
CURRENT
Cash	892,711	576,344
Amounts receivable	20,980	3,129
Prepayments (Note 7)	134,684	-
	1,048,375	579,473
Exploration and evaluation assets (Note 8)	461,231	236,231
TOTAL ASSETS	1,509,606	815,704
LIABILITIES
CURRENT
Accounts payable and accrued liabilities (Note 10)	158,903 158,903	78,669 78,669
SHAREHOLDERS' EQUITY
Share capital (Note 9)	1,725,011	855,658
Reserves	651,323	313,528
Deficit	(1,025,631)	(432,151)
	1,350,703	737,035
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	1,509,606	815,704

NATURE AND CONTINUANCE OF OPERATIONS (Note 1) SUBSEQUENT EVENTS (Note 12)

Approved and authorized for issue on behalf of the Board on September 27, 2023

"Larry Taddei"	Director
"Jeremy Poirier"	Director

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

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European Energy Metals Corp. (formerly Hilo Mining Ltd.) Statements of Loss and Comprehensive Loss For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

	2023	2022
	\$	\$
EXPENSES
Consulting fees (Note 10)	51,708	69,650
Filing and transfer agent fees	39,617	39,828
Management fees (Note 10)	167,909	78,750
Marketing and advertising	98,563	880
Office	19,243	8,732
Professional fees (Note 10)	81,114	158,244
Share-based payments (Note 9 and 10)	90,477	74,105
Travel	44,849	1,962
NET LOSS AND COMPREHENSIVE LOSS	593,480	432,151
Basic and diluted loss per share	(0.05)	(0.11)
Weighted average number of common
shares outstanding, basic and diluted	10,894,705	3,904,962

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European Energy Metals Corp. (formerly Hilo Mining Ltd.) Statements of Changes in Shareholders' Equity For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

	Common Shares
	Number of Shares	Amount	Reserves	Deficit	Total
		\$	\$	\$	\$
Balance, May 31, 2021	1	1	-	-	1
Shares issued pursuant to the Arrangement	1,500,000	-	236,231	-	236,231
Shares issued for cash, net	5,772,363	865,854	-	-	865,854
Share issuance costs	-	(10,197)	3,192	-	(7,005)
Share-based payments	-	-	74,105	-	74,105
Net loss	-	-	-	(432,151)	(432,151)
Balance, May 31, 2022	7,272,364	855,658	313,528	(432,151)	737,035
Shares issued for cash, net	12,800,000	1,152,000	-	-	1,152,000
Shares issuance costs	918,799	(346,882)	254,053	-	(92,829)
Shares issued pursuant to the Earn-In
Agreement (Note 8)	100,000	50,000	-	-	50,000
Exercise of stock options, net	50,000	14,235	(6,735)	-	7,500
Restricted share compensation	-	-	90,477	-	90,477
Net loss	-	-	-	(593,480)	(593,480)
Balance, May 31, 2023	21,141,163	1,725,011	651,323	(1,025,631)	1,350,703

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

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European Energy Metals Corp. (formerly Hilo Mining Ltd.) Statements of Cash Flows For the years ended May 31, 2023 and 2022 (Unaudited – Expressed in Canadian dollars)

	2023	2022
Cash provided by (used in):	\$	\$
OPERATING ACTIVITIES
Net loss	(593,480)	(432,151)
Non-cash items
Share-based payments	90,477	74,105
Net changes in non-cash working capital items:
Prepayments	(134,684)	-
Amounts receivable	(17,851)	(3,129)
Accounts payable and accrued liabilities	80,234	78,669
Net cash used in operating activities	(575,304)	(282,506)
INVESTING ACTIVITY
Expenditure on exploration and evaluation assets	(175,000)	-
Net cash used in investing activity	(175,000)	-
FINANCING ACTIVITY
Shares issued for cash, net	1,066,671	858,849
Net cash provided by financing activity	1,066,671	858,849
Change in cash	316,367	576,343
Cash, beginning	576,344	1
Cash, ending	892,711	576,344

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

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Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

1. NATURE AND CONTINUANCE OF OPERATIONS

European Energy Metals Corp. (formerly Hilo Mining Ltd.) (the "Company") was incorporated on February 2, 2021 under the laws of British Columbia. The Company commenced trading on the TSX Venture Exchange on April 29, 2022 under the trading symbol "HILO.V". The address of the Company's corporate office and its principal place of business is 503 - 905 Pender Street, Vancouver, British Columbia, Canada, V6C 1L6. The Company was incorporated as a subsidiary of Golden Independence Mining Corp. ("Golden"). On April 25, 2023, the Company changed its name to European Energy Metals Corp. and updated its trading symbol to "FIN".

The Company's principal business activities include the acquisition and exploration of mineral property assets. On April 22, 2021, the Company entered into an arrangement agreement (the "Arrangement") with its parent entity, Golden, whereby the Company issued 1,500,000 common shares to Golden in exchange for Golden's mining claim representing the Champ exploration property (the "Champ Property"). Under the Arrangement, Golden distributed 1,000,000 of the common shares to its shareholders and Golden retained 500,000 common shares of the Company. The Company completed the Arrangement on November 12, 2021.

The Company's financial statements have been prepared on the basis of accounting principles applicable to a going concern, which presumes that the Company will realize its assets and discharge its liabilities in the normal course of business for at least the next twelve months. Management recognizes that the Company will need to obtain additional financial resources in order to meet its planned business objectives. The Company has not generated cash flows from operations and has an accumulated deficit of \$1,025,631 as at May 31, 2023. The Company's ability to continue as a going concern and to realize the carrying value of its assets and discharge its liabilities when due is dependent upon obtaining additional financing and generating revenues sufficient to cover its operating costs. There are no assurances that the Company will be able to obtain additional financial resources and/or achieve positive cash flows or profitability. These factors indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.

These financial statements do not give effect to any 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 liabilities in other than the normal course of business and at amounts different from those reflected in these financial statements.

The Company's business may be affected by changes in political and market conditions, such as interest rates, availability of credit, inflation rates, changes in laws, and national and international circumstances. Recent geopolitical events, including, the outbreaks of the relations between NATO and Russian Federation regarding the situation in Ukraine, and potential economic global challenges such as the risk of the higher inflation and energy crises, may create further uncertainty and risk with respect to the prospects of the Company's business.

2. SIGNIFICANT ACCOUNTING POLICIES

a) Statement of compliance

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board.

The financial statements were authorized for issue in accordance with a resolution from the Board of Directors on September 27, 2023.

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Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

b) Basis of presentation

These financial statements have been prepared on the historical cost basis, with the exception of financial instruments, which are measured at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

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

c) Financial Instruments

Financial Assets

On initial recognition financial assets are classified as measured either at:

• i. Amortized cost;
• ii. Fair value through other comprehensive income ("FVOCI"); or
• iii. Fair value through profit and loss ("FVTPL").

Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Financial assets are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

Subsequent measurement of financial assets depends on their classification:

i. Amortized cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost is recognized in profit or loss when the asset is derecognized or impaired. Interest income from these financial assets is included as finance income using the effective interest rate method.

The Company does not have any assets classified at amortized cost.

ii. FVOCI

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets' cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains and losses, interest revenue, and foreign exchange gains and losses which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other gains (losses). Interest income from these financial assets is included as finance income using the effective interest rate method.

The Company does not have any assets classified at FVOCI.

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Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

c) Financial Instruments (continued)

iii. FVTPL

Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVTPL. A gain or loss on an investment that is subsequently measured at FVTPL is recognized in profit or loss and presented net as revenue in the Statement of Loss and Comprehensive Loss in the period in which it arises.

The Company's cash is classified at FVTPL.

Financial Liabilities and Equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the group entities are recorded at the proceeds received, net of direct issue costs.

Financial liabilities are classified as measured at either (i) FVTPL; or (ii) amortized cost.

A financial liability is classified as at FVTPL if it is classified as held-for-trading or is designated as such on initial recognition. Directly attributable transaction costs are recognized in profit or loss as incurred. The amount of change in the fair value that is attributable to changes in the credit risk of the liability is presented in OCI and the remaining amount of the change in the fair value is presented in profit or loss.

The Company does not classify any financial liabilities at FVTPL.

Other non-derivative financial liabilities are initially measured at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest method.

The Company classifies its accounts payable at amortized cost.

A financial liability is derecognized when the contractual obligation under the liability is discharged, cancelled or expires or its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

d) Exploration and evaluation assets

Once the legal right to explore a property has been acquired, costs directly related to exploration and evaluation expenditures are recognized and capitalized, in addition to the acquisition costs. These direct expenditures include such costs as mineral concession taxes, option payments, wages and salaries, surveying, geological consulting and laboratory, field supplies, travel and administration. Costs not directly attributable to exploration and evaluation activities, including general administrative overhead costs, are expensed in the period in which they are incurred. Exploration and evaluation assets are not amortized during the exploration and evaluation stage. Once the technical feasibility and commercial viability of extracting the mineral resource has been determined, the property is considered to be a mine under development and is classified as 'mines under construction'.

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Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

e) Impairment of non-financial assets

Non-financial assets, including exploration and evaluation assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount, which is the higher of value in use and fair value less costs to sell, the asset is written down to its recoverable amount. An impairment loss is charged to statements of comprehensive loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only 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 in prior years. A reversal of an impairment loss is recognized immediately in income or loss.

The recoverable amount is the higher of the fair value less costs of disposal and the value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows ("cash generating units" or "CGU's"). These are typically the individual properties or projects.

f) Reclamation provisions

The Company recognizes a provision for statutory, contractual, constructive or legal obligations associated with decommissioning of mining operations and reclamation and rehabilitation costs arising when environmental disturbance is caused by the exploration or development of mineral properties, plant and equipment. Provisions for site closure and reclamation are recognized in the period in which the obligation is incurred or acquired, and are measured based on expected future cash flows to settle the obligation, discounted to their present value. The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and risks specific to the liability.

When an obligation is initially recognized, the corresponding cost is capitalized to the carrying amount of the related asset in mine property, plant and equipment. These costs are depreciated on a basis consistent with the depreciation, depletion, and amortization of the underlying assets. The obligation is accreted over time for the change in its present value, with this accretion charge recognized as a finance expense in profit or loss. Additional environment disturbances or changes in reclamation costs will be recognized as additions to the corresponding assets and reclamation provision in the year in which they occur.

Additional environment disturbances or changes in rehabilitation costs will be recognized as additions to the corresponding assets and rehabilitation liability in the year in which they occur. The Company has no material restoration, reclamation, rehabilitation or environmental obligation as the disturbance to date is minimal.

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Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

g) Share-based payments

Share-based payments to employees are measured at fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to contributed surplus. The fair value of stock options is determined using the Black-Scholes Option Pricing Model. The number of shares and stock options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

h) Cash and cash equivalents

Cash and cash equivalents include cash on hand readily convertible into a known amount of cash and can be redeemed at any time without penalties, and amounts held in trust.

i) Share capital

The Company's common shares, and any future offerings of share warrants and options are classified as equity instruments. Incremental costs directly related to the issue of new shares or options are shown in equity as a deduction from the proceeds. For equity offerings of units consisting of a common share and warrant, when both instruments are classified as equity. Warrants that are part of units are accounted for using the residual method, following an allocation of the unit price to the fair value of the common shares that were concurrently issued. Warrants that are issued as payment for an agency fee or other transactions costs are accounted for as share-based payments.

j) Income taxes

Income taxes comprises both current and deferred tax. Income tax is recognized in the statement of loss except to the extent that it relates to items recognized in other comprehensive income or directly in equity, in which case the income tax is also recognized in other comprehensive income or directly in equity. Current income taxes are the expected taxes payable on the taxable income for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to taxes payable in respect of previous years.

The Company accounts for potential future net tax assets which are attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and which are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be settled. When the future realization of income tax assets does not meet the test of being more likely than not to occur, no net asset is recognized.

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Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

k) Loss per share

Basic loss per share is calculated by dividing the net loss for the period available to common shareholders by the weighted average number of shares outstanding during the period. Diluted earnings per share reflect the potential dilution of securities that could share in earnings of an entity, to the extent their inclusion is not anti-dilutive. Basic and diluted loss per share are the same for the periods presented. The Company uses the treasury stock method of calculating fully diluted earnings per share amounts, whereby any proceeds from the exercise of stock options or other dilutive instruments are assumed to be used to purchase common shares at the average market price during the year.

l) Foreign currency

Transactions and balances in currencies other than the Canadian dollar, the currency of the primary economic environment in which the Company operates ("the functional currency"), are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at exchange prevailing on the statement of financial position date are recognized in the statement of comprehensive loss.

3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS

Significant accounting estimates and judgments

The preparation of these 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 financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These financial statements include estimates that, 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.

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the financial position reporting date that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

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Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS (continued)

Critical accounting estimates

• The inputs used in valuing share-based payments.
• o The Company uses the fair-value method of accounting for share-based payments (related to incentive stock options and compensation warrants granted, modified or settled). Under this method compensation costs attributable to stock option awards granted are measured at fair value at the issue or grant date and are expensed over the vesting period. In determining the fair value for share-based payments, the Company uses option pricing models and makes estimates of the expected volatility of the stock, the expected life and risk-free rate. The expected volatility is based on historical volatility of the Company's stock over a period commensurate with the expected life of the option. Changes to these estimates could result in the fair value of share-based payments expense being less than or greater than the amount recorded.

Significant accounting judgments

• The evaluation of the Company's ability to continue as a going concern.
• o The Company's management has made an assessment of the Company's ability to continue as a going concern. Factors considered by management are disclosed in Note 1.
• Exploration and evaluation assets
• o The Company is required to review the carrying value of its exploration and evaluation properties at each reporting date for potential impairment. Impairment is indicated if the carrying value of the Company's exploration and evaluation assets is not recoverable. If impairment is indicated, the amount by which the carrying value of exploration and evaluation assets exceeds their estimated fair value is charged to the statements of comprehensive loss.
• o Evaluating for recoverability during the exploration and evaluation phase requires judgment in determining whether future economic benefits from future exploitation, sale or otherwise are likely. Evaluations may be more complex where activities have not reached a stage which permits a reasonable assessment of the existence of reserves or resources. Management must make certain estimates and assumptions about future events or circumstances including, but not limited to, the interpretation of geological, geophysical and seismic data, the Company's financial ability to continue exploration and evaluation activities, contractual issues with joint venture partners, the impact of government legislation and political stability in the region, and the impact of current and expected future metal prices on potential reserves.

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Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

4. ACCOUNTING STANDARDS ISSUED BUT NOT YET IMPLEMENTED

A number of amendments to standards and interpretations applicable to the Company are not yet effective for the year ended May 31, 2023 and have not been applied in preparing these financial statements nor does the Company expect these amendments to have a significant effect on its financial statements.

5. MANAGEMENT OF CAPITAL

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to pursue the sourcing and exploration of resource properties. The Company does not have any externally imposed capital requirements to which it is subject.

The Company considers the aggregate of its share capital, reserves and deficit as capital. 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 or dispose of assets or adjust the amount of cash.

6. FINANCIAL INSTRUMENTS AND FINANCIAL RISK

Fair value

As at May 31, 2023, the Company's financial instruments consist of cash and accounts payable.

IFRS 13 Fair Value Measurement establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. IFRS 13 prioritizes the inputs into three levels that may be used to measure fair value:

• Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities.
• Level 2 Inputs that are observable, either directly or indirectly, but do not qualify as Level 1 inputs (i.e., quoted prices for similar assets or liabilities).
• Level 3 Prices or valuation techniques that are not based on observable market data and require inputs that are both significant to the fair value measurement and unobservable.

The fair value of cash is based on Level 1 inputs. There are no Level 2 or Level 3 financial instruments.

The Company's financial instruments include cash and accounts payable. Cash is measured at fair value and account payable is measured at amortized cost.

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Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

6. FINANCIAL INSTRUMENTS AND FINANCIAL RISK (continued)

Credit risk

Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. The financial instrument that potentially subjects the Company to concentrations of credit risk consists principally of cash. To minimize the credit risk, the Company places its cash with high quality financial institutions.

Liquidity risk

The Company manages liquidity risk through the management of its capital structure, as outlined in Note 5. The Company monitors its ability to meet its short-term exploration and administrative expenditure requirements by raising additional funds through share issuances when required.

Foreign exchange risk

Foreign exchange risk is the risk that the fair value or future cash flows will fluctuate due to changes in foreign exchange rates. The Company does not hold financial instruments in a foreign currency. The Company is not exposed to significant foreign exchange risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company is not exposed to significant interest rate risk.

7. PREPAYMENTS

Prepayments consist of:

	2023	2022
	\$	\$
Administration and insurance	9,929	-
Marketing & advertising	74,755	-
Property and geological advances	50,000	-
	134,684	-

{17}------------------------------------------------

Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

8. EXPLORATION AND EVALUATION ASSETS

Expenditures related to the acquisition and exploration of mineral properties consisted of:

	Champ	Finland
	Property	Property	Total
	\$	\$	\$
Acquisition Costs:
Balance, May 31, 2022	236,231	-	236,231
Acquisition pursuant to Earn-In Agreement	-	150,000	150,000
Balance, May 31, 2023	236,231	150,000	386,231
Exploration Costs:
Balance, May 31, 2021 and 2022	-	-	-
Surveying	75,000	-	75,000
Balance, May 31, 2023	75,000	-	75,000
Total, May 31, 2022	236,231	-	236,231
Total, May 31, 2023	311,231	150,000	461,231

Champ Property

Pursuant to an option agreement (the "Agreement") dated August 24, 2017, Golden was granted an option to acquire a 100% undivided interest in the Champ Property located in the Greenwood Mining District of British Columbia. In accordance with the Agreement, Golden acquired a 100% undivided interest in the Champ Property with the optionor retaining a 2% net smelter return royalty on the Champ Property. Golden has the right to purchase the first 1% of the royalty for \$1,000,000 and the remaining 1% for \$1,000,000 at any time during the five-year period starting from the date of commencement of commercial production.

Prior to the closing of the Arrangement (Note 1) with the Company's parent, Golden, the Company and Golden entered into an Asset Purchase Agreement pursuant to which the Company acquired Golden's interest in the Champ Project in exchange for the issuance of 1,500,000 common shares of the Company. The fair value of the Champ Property was determined to be \$236,231 at the date of the transaction.

Finland Property

Pursuant to an earn-in agreement (the "Earn-In Agreement") dated April 6, 2023 with Capella Minerals Limited ("Capella"), the Company has the option to earn up to an 80% interest in a portfolio of reservations held by Capella in central Finland (the "Finland Property"). The property is subject to a 1% net smelter return royalty.

{18}------------------------------------------------

Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

8. EXPLORATION AND EVALUATION ASSETS (continued)

Finland Property (continued)

Terms of the Earn-In Agreement:

The Company has the option to earn a 51% interest in the Property (the "Initial Option") by

• (i) making a cash payment of \$100,000 (paid) and issuing 100,000 common shares (issued and valued at \$50,000) to Capella upon receiving TSX Venture Exchange approval of the Earn-In Agreement (approval received);
• (ii) completing \$500,000 in expenditures on the Property and issuing 150,000 common shares to Capella on before the first anniversary of the Earn-In Agreement; and
• (iii) completing an additional \$500,000 in expenditures on the Property, paying \$100,000 in cash and issuing 250,000 common shares to Capella on or before the second anniversary of the Earn-In Agreement. Upon exercise of the Initial Option, the Company will become the operator of the Property.

Following exercise of the Initial Option, the Company will have a further option to earn an additional 29% interest in the Finland Property (the "Final Option") by:

• (i) completing an additional \$500,000 in expenditures on the Finland Property, paying \$150,000 in cash and issuing 750,000 common shares to Capella on or before the third anniversary of the Earn-In Agreement; and
• (ii) completing and additional \$1,000,000 in expenditures on the Property, paying \$150,000 in cash and issuing 750,000 common shares to Capella on or before the fourth anniversary of the Earn-In Agreement.

If, on the date of the exercise of the Final Option, the Property hosts a mineral resource equal to or greater than 10 million metric tons with a minimum average grade of 1.0% Lithium Oxide (Li2O), the Company will make a bonus cash payment of \$500,000 and issue 1,000,000 common shares to Capella. The Company and Capella have the option to form a joint venture upon exercise of the Initial Option or to defer the joint venture formation until the exercise of the Final Option.

9. SHARE CAPITAL

a) Authorized

The Company's authorized capital consists of an unlimited number of common shares without par value.

On April 22, 2022, the Company entered into an escrow agreement with various security holders and an escrow agent. As of May 31, 2023, 1,391,172 (2022 - 2,086,756) shares were held in escrow.

b) Issued and outstanding

Share capital activities during the year ended May 31, 2023 and 2022 are as follows:

• On May 30, 2023, 50,000 stock options were exercised to 50,000 common shares for gross proceeds of \$7,500 at an exercise price of \$0.15 per share.
• On April 10, 2023, the Company executed the Earn-In Agreement and issued 100,000 common shares valued at \$50,000 (Note 8).

{19}------------------------------------------------

Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

9. SHARE CAPITAL (continued)

b) Issued and outstanding (continued)

• On February 24, 2023, the Company closed a non-brokered private placement and issued 12,800,000 units at a unit price of \$0.09 per unit, for gross proceeds of \$1,152,000. Each unit consists of one common share and one-half of a common share purchase warrant. Each whole warrant ("Share Purchase Warrant") is exercisable for one additional common share at an exercise price of \$0.15 for a period of 18 months. The Company incurred cash finder's fees of \$64,316 and issued 918,799 finder's units (the "Compensation Warrants") with a fair value of \$254,053. Each Compensation Warrant consists of one common share and one whole share purchase warrant at an exercise price of \$0.15 for a period of 18 months.
• On November 12, 2021, the Company completed the Arrangement (Note 1) and issued 1,500,000 common shares and recognized \$236,231 in share capital reserves.
• During November and December 2021, the Company issued 5,772,363 common shares for gross proceeds of \$865,854. The Company incurred cash finder's fees of \$7,005. The Company issued 47,299 broker warrants ("Broker Warrants") with an exercise price of \$0.30 and maturity two years after the grant date with a fair value of \$3,192.

c) Restricted Share Units ("RSU")

The Company adopted a RSU plan during the year ended May 31, 2023 after the shareholders approved a new rolling 10% restricted share unit plan (the "RSU Plan"). The maximum number of Common Shares which may be issuable upon vesting of outstanding RSUs granted under the RSU Plan and any other "rolling up to 10%" plans adopted by the Company (including the Company's stock option plan), from time to time, shall be equal to a maximum of 10% of the total number of issued and outstanding Common Shares calculated on the date an RSU is granted or issued. The RSU Plan is an "evergreen" plan meaning any vesting of an RSU will, subject to the overall limit described above, make new grants available under the RSU Plan resulting in a reloading of the number of RSUs available for grant.

On March 6, 2023, the Company granted 800,000 RSU's to certain directors, officers and consultants of the Company, which had a fair value of \$0.48 per RSU, all will vest in one year from the grant date. The Company expensed \$90,477 included in share-based compensation expense during the year ended May 31, 2023 (2022 - \$nil) related to the grant of 800,000 RSUs that vest over a year.

A continuity schedule of the Company's outstanding restricted share units is as follows:

	Number outstanding	Weighted Average Fair Value (\$)
Balance, May 31, 2021	-	-
Granted	-	-
Balance, May 31, 2022	-	-
Granted	800,000	0.48
Balance, May 31, 2023	800,000	0.48

{20}------------------------------------------------

Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

9. SHARE CAPITAL (continued)

d) Stock options

Stock option transactions and the number of stock options outstanding are summarized below:

	Number of Options	Weighted Average Exercise Price (\$)
Balance, May 31, 2021	-	-
Granted	550,000	0.15
Balance, May 31, 2022	550,000	0.15
Exercised	(50,000)	0.15
Balance, May 31, 2023	500,000	0.15

Additional information regarding stock options outstanding is as follows:

		Number of
	Exercise	Options Issued
Expiry Date	Price (\$)	and Exercisable
February 1, 2027	0.15	500,000
Balance, May 31, 2023		500,000

The weighted average remaining life of the stock options as of May 31, 2023 is 3.68 (2022 – 4.68) years.

During the years ended May 31, 2023 and 2022, the following stock option grants occurred:

On February 1, 2022, the Company granted 550,000 stock options with a maturity date of February 1, 2027 and an exercise price of \$0.15 to certain directors, officers and consultants of the Company. The stock options had a fair value of \$74,105 and vested immediately.

The stock options were valued using the following Black-Scholes option pricing model using the following assumptions:

	2022
Risk-free interest rate	1.65%
Dividend yield	0%
Expected volatility	144.56%
Expected life (years)	5
Forfeiture rate	0%

.

{21}------------------------------------------------

Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

9. SHARE CAPITAL (continued)

e) Share purchase warrants

Share Purchase Warrant transactions and the number of warrants outstanding are summarized below:

	Number of	Weighted Average
	Warrants	Exercise Price (\$)
Balance, May 31, 2022 and 2021	-	-
Granted	6,400,000	0.15
Balance, May 31, 2023	6,400,000	0.15

Expiry Date	Exercise Price (\$)	Issued and Exercisable
August 24, 2024	0.15	6,400,000
Balance, May 31, 2023		6,400,000

The weighted average remaining life of the Shar Purchase Warrants as of May 31, 2023 is 1.24 (2022 – nil) years.

f) Broker Warrants & Compensation Warrants

During the year ended May 31, 2022 the Company issued 47,299 Broker Warrants with an exercise price of \$0.30 per common share.

During the year ended May 31, 2023 the Company issued 918,799 Compensation Warrants with an exercise price of \$0.15 per common share.

The Broker Warrants & Compensation Warrants outstanding are as follows:

Expiry Date		Exercise Price (\$)	Issued and Exercisable
November 17, 2023	Broker Warrant	0.30	46,699
December 17, 2023	Broker Warrant	0.30	600
August 24, 2024	Compensation Warrants	0.15	918,799
			966,098

The weighted average remaining life of the Broker Warrants & Compensation Warrants as of May 31, 2023 is 1.2 (May 31, 2022 – 1.46) years.

{22}------------------------------------------------

Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

9. SHARE CAPITAL (continued)

f) Broker Warrants & Compensation Warrants (continued)

The Broker Warrants & Compensation Warrants were valued using the following Black-Scholes option pricing model using the following weighted average assumptions:

	2023	, 2022
Risk-free interest rate	4.16%	1.00%
Dividend yield	0%	0%
Expected volatility	181.24%	116.97%
Expected life (years)	1.52	2
Forfeiture rate	0%	0%

The expected volatility used for the brokers' warrants granted is based on the historical share prices of comparable companies.

10. RELATED PARTY BALANCES AND TRANSACTIONS

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between 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 consist of executive and non-executive members of the Company's Board of Directors and corporate officers.

	2023	2022
	\$	\$
Management fees	167,909	78,750
Office – Rental expense	9,143	3,047
Professional fees	14,188	20,458
Share-based payments	79,167	74,105

The Company also incurred consulting fees of \$nil (2022 - \$60,000) to Golden, the Company's former parent, for work related to the Arrangement. During the year ended May 31, 2023, the Company paid an additional \$nil (2022 - \$11,125) to Golden for other expense reimbursements related to the Arrangement.

At May 31, 2023, \$121,414 (May 31, 2022 - \$63,985) related to management fees and professional fees remained in accounts payable and accrued liabilities.

The Company entered into a month to month office sublease agreement on February 1, 2022 with a director and officer of the Company with a rate of \$762 per month.

The amounts payable are non-interest-bearing, unsecured, due on demand and have no fixed terms of repayment.

{23}------------------------------------------------

Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

11. INCOME TAX

In assessing deferred income tax assets, management considers whether it is probable that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the years in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment and concluding the deferred tax assets were not realized.

The following table reconciles the amount income tax recoverable on application of the combined statutory Canadian federal and provincial income tax rates:

	2023	2022
Canadian statutory income tax rate	27%	27%
	\$	\$
Loss for the year before income taxes	(593,480)	(432,151)
Expected income tax recovery	(160,240)	(117,000)
Non-deductible expenditures and non-taxable revenues	24,874	21,000
Share issue costs	(25,064)	(2,000)
Change in deferred tax assets not recognized	160,429	98,000
Income taxes recoverable	-	-
The nature and effect of the Company's deferred tax assets is as follows:
	2023	2022
	\$	\$
Non-capital losses carried forward	237,000	97,000
Share issuance costs	21,000	1,000
Deferred tax assets	258,000	98,000
Deferred tax assets not recognized	(258,000)	(98,000)
Net deferred tax assets	-	-

The Company has non-capital losses carried forward of \$879,000 (2022 – 358,000), which may be applied to reduce future taxable income between 2042 and 2043.

{24}------------------------------------------------

Notes to the Financial Statements For the years ended May 31, 2023 and 2022 (Expressed in Canadian dollars)

12. SUBSEQUENT EVENTS

Private placement

On June 22, 2023, the Company completed a non-brokered private placement (the "Private Placement"). Pursuant to the Private Placement, the Company issued 6,215,554 units ("Units") at a price of \$0.36 to raise gross proceeds of approximately \$2,245,000. Each Unit consists of one common share of the Company and one half of a common share purchase warrant (each whole warrant, a "Warrant"). Each Warrant entitles the holder to acquire one additional common share at an exercise price of \$0.75 for a period of three years following closing.

In connection with the Private Placement, the Company paid aggregate finder's fees of \$104,504 and issued 324,869 finder's warrants. The finder's warrants have the same terms of the Warrants forming part of the Units.

BB Gold Inc.

On September 1, 2023, the Company completed an acquisition of seven mineral reservations (the "Reservations") located in northern and central Finland (the "BB Gold Transaction"). Pursuant to BB Gold Transaction, the Company acquired all of the shares of BB Gold Inc., a company existing under the laws of Newfoundland and Labrador and its wholly owned Finnish subsidiary Sisu Exploration Oy, the direct owner of the concessions, from a private individual (the "Vendor") in exchange for the issuance of 1,250,000 common shares (the "Consideration Shares") with contractual resale restrictions. The Vendor is granted a 1% net smelter royal on six of the seven concessions.

Options and RSU

On September 18, 2023 the Company granted 150,000 Stock options with an exercise price of \$0.40, which expire in five years.

On September 6, 2023 the Company granted 250,000 Stock options with an exercise price of \$0.41, which expire in five years.

On July 17, 2023, the Company granted 100,000 stock options to a consultant with an exercise price of \$0.59, which expire in five years.

The Company also granted 150,000 RSU and 90,000 unvested RSU were cancelled.