Silver Bear Resources Plc — Annual Report 2024

Mar 31, 2025

ANNUAL REPORT AND ACCOUNTS Registered Number: 10669766 (England and Wales) For the year ended 31 December 2024 (Expressed in Canadian dollars)

Mangazeisky Silver Project – Open Pit

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Silver Bear Resources Plc

Opinion

We have audited the consolidated financial statements of Silver Bear Resources Plc (the Company) (Registration Number 10669766, Pavilions Computershare Governance Services, Bridgewater Road, Bristol, United Kingdom, BS138FD) and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at 31 December 2024 and the consolidated statement of comprehensive profit or loss, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements for the year ended 31 December 2024, comprising material accounting policy information and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2024, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Independence Rules for Auditors and Audit Organisations and the Code of Professional Ethics for Auditors adopted in the Russian Federation, which comply with the International Code of Ethics for Professional Accountants (including International Independence Standards) developed by the International Ethics Standards Board for Accountants (IESBA), and we have fulfilled our other responsibilities in accordance with these requirements of professional ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.

Material Uncertainty Related to Going Concern

We draw attention to "Going Concern" section of Note 2 "Basis of preparation" in the consolidated financial statements, which sets out the Company's management considerations regarding the future potential impacts that the Russian geopolitical situation and the resulting sanctions imposed by and against Russia or the Russian imposed capital controls could have on the Group's operations, and regarding the absence of a contractual agreement for the Group to continue to defer interest and capital repayments on its loans from its Shareholders. As a result thereof, there is an uncertainty relating to the Group's ability to maintain working capital liquidity to service the Group's financing arrangements which may result in the need for additional funding. As stated in "Going Concern" section of Note 2, these events or conditions, along with other matters as set forth in Note 2, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

Carrying value of Mineral Properties and Plant and Equipment (Note 9, 10)

The Group's project mining assets, including capitalised Mineral Property and Property, Plant and Equipment represent the Group's most significant assets.

At the year-end, the management of the Company performed an impairment test to determine the recoverable amount of mining properties. The recoverable amount was determined with reference to a discounted cash flow which is based on estimates of future cash flows.

Given the uncertainty estimates regarding silver and other commodity prices, foreign exchange rates, reserves and resources, production levels, operating and development costs and capital expenditure as well as economic variables such as discount rates, and the material value of the mining assets we consider the carrying value of the Mineral Properties and Plant and Equipment to be a key audit matter.

Our procedures regarding this key audit matter included the following:

• we obtained from the Company's management discounted cash flow models and performed data integrity and arithmetical checks on the models using our proprietary tool.
• we determined that the basis of preparation of the models was in line with the applicable accounting standards, our expectations and valuation methodology.
• we compared the actual performance during 2024 to budgets for the period in order to assess the quality of management's forecasting.
• we critically challenged the NPV model, focussing on the appropriateness of estimates with reference to empirical data and external evidence with specific emphasis on the following assumptions: silver prices, foreign exchange rates, reserves and resources and production levels, operating and development costs, capital expenditure and discount rates.
• we benchmarked forecast silver and other raw stock prices against publicly available third- party information.
• we reconciled the resources used in the life of mine model to the updated mineral resources statement included in the third-party competent person's report and performed procedures to assess their independence, objectivity and competence.
• we reviewed management's sensitivity analysis and performed our own sensitivity analysis on key inputs to assess the impact of changes in assumptions.
• we involved our internal valuation experts to support our assessment of the discount rate applied and discussed the judgments regarding the calculation with the Audit Committee of the Company.
• we read the key licence agreements and confirmed that the Group holds valid licences. We assessed the commitments and obligations associated with the licences to confirm compliance with the licences.

Other Matter

Our audit of the Group consolidated financial statements is not a statutory audit required by the state authorities of England and Wales.

Other Information

The Director of the Company (management) is responsible for the other information. The other information comprises the information included in Management Discussion and Analysis (MDA), but does not include the consolidated financial statements and our auditor's report thereon.

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

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Responsibilities of Management and the Audit Committee for the Consolidated Financial Statements

The Director of the Company is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group'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 Group or to cease operations, or has no realistic alternative but to do so.

The Company's Audit Committee is responsible for overseeing the Group's financial reporting process.

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

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

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group'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 Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion.

Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Plan and perform the Group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the consolidated financial statements of the Group. We are responsible for the direction,

supervision and review of the audit work performed for purposes of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the Company's Audit Committee 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 the Company's Audit Committee 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 the Company's Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The Auditor in Charge of the audit resulting in this independent auditor's report (Engagement Partner on the audit), principal registration number of the entry in the State Register of Auditors and Audit Organisations 22006023333, acting on behalf of the audit organisation under Power of Attorney No. 64-01/2024-Ю dated 5 July 2024

(signed) Lidia Anatolyevna Vayspek

Audit organization: Unicon Joint Stock Company Suite 50, Office I, 3rd Floor, Section 11, Block 1, Bldg. 125, Warshavskoye Shosse, Moscow, 117587, Russia Principal Registration Number of the Entry in the State Register of Auditors and Audit Organisations: 12006020340

31 March 2025

		31 December	31 December
	Note	2024	2023
ASSETS
Non-current assets
Property, plant and equipment	10	72,042,743	56,040,535
Mineral property	9	1,565,670	1,253,257
Intangible assets	8
Prepaid non-current assets	6	590,438	1,674,697
Other non-current assets	$\overline{7}$	3,885,523	3,152,198
Total non-current assets		78,084,374	62,120,687
Current assets
Inventories	5	32,918,962	25,295,607
Receivables	4	402,602	540,941
Prepaid expenses	6	7,721,271	5,255,581
Cash and cash equivalents	3	3,958,546	3,607,440
Total current assets		45,001,381	34,699,569
TOTAL ASSETS		123,085,755	96,820,256
EQUITY AND LIABILITIES
Non-current liabilities
Long-term loans	13	905,760	38,294,573
Provision for decommissioning and restoration liability	14	3,720,060	3,466,642
Lease obligation	12	1,475,394	551,399
Total non-current liabilities		6,101,214	42,312,614
Current liabilities
Advances received		4,976	5,564
Short-term loans	13	325, 114, 025	225,211,102
Account payable and accrued liabilities	11	3,808,790	2,053,273
Lease obligation	12	1,665,632	819,491
Total current liabilities		330,593,423	228,089,430
Total liabilities		336,694,637	270,402,044
Equity
Share capital	15	99,569,970	99,569,970
Share premium	15	23,158,166	23, 158, 166
Shareholders contribution		5,381,283	5,381,283
Contributed surplus	15	14,578,157	14,579,774
Cumulative translation adjustment		71,075,176	43,810,922
Accumulated deficit		(427, 371, 634)	(360, 081, 903)
Total equity (deficiency)		(213, 608, 882)	(173, 581, 788)
TOTAL EQUITY AND LIABILITIES		123,085,755	96,820,256

Consolidated Statement of Comprehensive Profit or Loss

For the year ended 31 December 2024 (Canadian dollars)

	Note
		2024	2023
Revenue:
Metal sales	2	10,063,758	17,173,167
Cost of Sales:
Production cost	18	(8,643,364)	(8,544,902)
Depreciation and amortization		(4,133,599)	(5,594,829)
(Charge)/reversal impairment of inventory		(1,224,357)	1,609,269
Gross (loss)/profit		(3,937,562)	4,642,705
Sales expenses		(1,362,265)	-
General and administrative expenses	18	(3,148,573)	(3,535,141)
Impairment of PPE and mineral property	9,10	-	(316,169)
Other income	17	129,185	179,558
Other expenses	17	(1,721,987)	(1,710,305)
Operating loss		(10,041,202)	(739,352)
Finance income	19	450,364	271,703
Finance expenses	19	(25,755,867)	(17,638,302)
Foreign exchange loss, net		(31,920,920)	(49,134,596)
Loss before tax		(67,267,625)	(67,240,547)
Tax charge	25	(23,723)	(1,005,357)
Loss for the year		(67,291,348)	(68,245,904)
Other comprehensive profit/(loss)
Items, that may be reclassified subsequently to profit or
loss:
Exchange differences on translating foreign operations		27,264,254	34,576,461
Total comprehensive loss for the year		(40,027,094)	(33,669,443)
Basic and diluted loss per ordinary share, cents per
ordinary share	15	(0.10)	(0.10)

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

Consolidated Statement of Changes in Equity

For the year ended 31 December 2024 (Canadian dollars)

					Cumulative
	Share capital	Share premium	Shareholders contribution	Contributed surplus	translation adjustment	Accumulated Deficit	Total equity
Balance 31 December 2022	99,569,970	23,158,166	5,381,283	14,599,817	9,234,461	(291,856,042)	(139,912,345)
Net loss for the period	-	-	-	-	-	(68,245,904)	(68,245,904)
Other comprehensive profit:
Cumulative translation adjustment	-	-	-	-	34,576,461	-	34,576,461
Comprehensive loss for the period	-	-	-	-	34,576,461	(68,245,904)	(33,669,443)
Cancelled and expired options, Note 15	-	-	-	(20,043)	-	20,043	-
Balance 31 December 2023	99,569,970	23,158,166	5,381,283	14,579,774	43,810,922	(360,081,903)	(173,581,788)
Net loss for the period	-	-	-	-	-	(67,291,348)	(67,291,348)
Other comprehensive loss:
Cumulative translation adjustment	-	-	-	-	27,264,254	-	27,264,254
Comprehensive loss for the period	-	-	-	-	27,264,254	(67,291,348)	(40,027,094)
Cancelled and expired options, Note 15	-	-	-	(1,617)	-	1,617	-
Balance 31 December 2024	99,569,970	23,158,166	5,381,283	14,578,157	71,075,176	(427,371,634)	(213,608,882)

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

Consolidated Statement of Cash Flows

For the year ended 31 December 2024 (Canadian dollars)

	2024	2023
Cash provided by (used in)
Operating activities
Total loss for the year	(67,291,348)	(68,245,904)
Adjustments for items not affecting cash:
Depreciation	4,029,728	5,456,377
Amortization	139,616	249,568
Share-based payments (Note 18)	-	-
Accretion expenses (Note 19)	410,738	360,640
Unrealized FX movement	31,920,920	49,134,596
Impairment of PPE and mineral property	-	316,169
Impairment of inventory	1,224,357	(1,609,269)
Interest income (Note 19)	(450,364)	(271,703)
Interest expense (Note 19)	25,345,129	17,277,661
Net change in non-cash working capital (Note 20)	(14,753,846)	(10,554,272)
Net cash used in operating activities	(19,425,070)	(7,886,137)
Purchases of property, plant and equipment (Note 10)	(22,874,526)	(8,294,586)
Exploration and evaluation capital expenditure (Note 10)	(588,529)	(361,537)
Interest income	450,364	271,703
Net cash used in investing activities	(23,012,691)	(8,384,420)
Repayment of principal on lease obligations	(2,141,633)	(2,233,720)
Repayment of interest on lease obligations	(986,287)	(240,129)
Short-term and long-term loans drawn (Note 13)	50,214,237	21,364,925
Short-term and long-term loans principal repayment (Note 13) Short-term and long-term loans Interest repayment (Note 13)	(187,591) (3,652,574)	(117,217) (219,625)
Net cash generated from financing activities	43,246,152	18,554,234
Effect of exchange rate changes on cash and cash equivalents
and translation differences	(457,284)	(1,230,157)
Increase in cash and cash equivalents during the year	351,107	1,053,520
Cash and cash equivalents - beginning of the year	3,607,440	2,553,921
Cash and cash equivalents - end of the year (Note 3)	3,958,546	3,607,440
Cash and cash equivalents consist of:
Cash	3,958,546	3,607,440

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

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the year ended 31 December 2024

1. NATURE OF OPERATIONS

Silver Bear Resources Plc was incorporated in United Kingdom on 14 March 2017 under the Companies Act 2006, registered office address the Pavilions Computershare Governance Services, Bridgewater Road, Bristol, United Kingdom, BS138FD.

Silver Bear Resources Plc became the parent company of Silver Bear Resources Inc. on 30 June 2017 following a plan of arrangement transaction involving a one-for-one share exchange of all then outstanding common shares of Silver Bear Resources Inc. for ordinary shares of Silver Bear Resources Plc.

Silver Bear Resources Plc became the direct parent company of AO Prognoz on 16 November 2020. AO Prognoz was acquired from Silver Bear Resources B.V. following a plan of reorganization of the Group structure.

Silver Bear Resources Inc. was incorporated under the Business Corporations Act of the Province of Ontario, Canada, on 8 April 2004 and continued under Articles of Continuance dated 30 August 2004 under the Business Corporations Act (Yukon) and 1 February 2005 under the Business Corporations Act (Ontario).

The primary business of the Group is the acquisition, exploration, evaluation and development of precious metal properties. The head office of the Group is registered in London, United Kingdom. The strategy of the Group is to focus on the exploration and development of precious metal deposits. The principal asset of the Group is its right to explore and develop the Mangazeisky project ("Mangazeisky"), located approximately 400 kilometers north of Yakutsk in the Republic of Sakha (Yaktutia), in the Russian Federation. On June 22, 2018, the Group announced that it had achieved first silver production in April 2018 as a result of its commissioning activities.

Under the license No. YAKU 12692 BP registered on September 28, 2004, the Group carries out a geological study of the Endybal area - prospecting and evaluation of silver and gold deposits. According to Supplement No. 1, registered on 12 September 2016, the expiry date of the above license is 31 December 2023. The license area is located on the territory of the Kobyai region of the Republic of Sakha (Yakutia). Renewal of this license is a routine process, and the Group has a priority on this license

In 2013, the Group obtained a subsoil license No. YAKU 03626 BE, registered on August 28, 2013, for the exploration and production of silver, copper, lead, zinc at the Vertikalny deposit. The license area is located on the territory of the Kobyai region of the Republic of Sakha (Yakutia). The license expires on September 1, 2033. In 2015 the Group commenced the development of Mangazeisky that includes the construction of a silver mine with associated processing facilities and infrastructure. It has been determined that development costs incurred from 1 July 2015 have future economic benefits and are economically recoverable. In making this judgement, management assessed various sources of information including the geological and metallurgical information, scoping and feasibility studies, proximity of operating facilities, operating management expertise and existing permits.

2. BASIS OF PREPARATION

These audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB). The Group has consistently applied the accounting policies used in the preparation of its IFRS financial statements throughout all periods presented, as if these policies had always been in effect.

These audited consolidated financial statements comprise the financial statements of Silver Bear Resources Plc and its 100% owned subsidiaries: Silver Bear Resources Inc. (a Canadian corporation) and AO Prognoz (a Russian Federation corporation). All significant inter-company accounts and transactions have been eliminated on consolidation.

These audited consolidated financial statements were reviewed, approved and authorized for issue by the Board of Directors on 31 March 2025.

The financial information for the year ended 31 December 2024 and the year ended 31 December 2023 does not constitute the company's statutory accounts for those years. The auditors' reports on the accounts for 31 December 2024 is unqualified but draw attention to matters by way of emphasis in relation to going concern and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The auditors' reports on the accounts for 31 December 2023 is unqualified but draw attention to matters by way of emphasis in relation to going concern and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

Following Silver Bear Resources Plc becoming the parent company of the Group (as detailed in note 1) and becoming direct parent of AO Prognoz, these transactions were not treated as a business combination under IFRS 3 "Business combinations" but was considered as a capital reorganisation, as these entities are under common control.

2. BASIS OF PREPARATION (Continued)

Basis of consolidation

Following Silver Bear Resources Plc becoming the parent company of the Group (as detailed in note 1) and becoming direct parent of AO Prognoz, these transactions were not treated as a business combination under IFRS 3 "Business combinations" but was considered as a capital reorganisation, as these entities are under common control.

The consolidated financial statements of Silver Bear Resources Plc are presented using the values from the consolidated financial statements of Silver Bear Resources Inc. The equity structure (that is, the issued share capital) reflects that of Silver Bear Resources Plc, with other amounts in equity being those from the consolidated financial statements of the previous group holding entity, Silver Bear Resources Inc. The resulting difference that will arise was recognised as a component of equity.

Going Concern

These audited consolidated financial statements have been prepared on a going concern basis which contemplates that the Group and Company will be able to realize its assets and settle its liabilities in the normal course as they come due for a period of at least 12 months form the date of approval of the financial statements.

The Directors have prepared a cash flow forecast for the 18 months period from the date of approval of these financial statements. Cash forecasts for the Group and Company are regularly produced based on management's best estimate of:

• The Group's production and expenditure forecasts;
• Future silver prices; and
• Foreign exchange rate.

The ability of the Group and Company to operate as a going concern is dependent upon future production volumes and silver prices as they impact cash flows required to both fund working capital and meet the Group's and Company's liabilities as and when they fall due. These are in turn also impacted by the geopolitical situation between Russia and Ukraine, and the uncertain future potential impacts of Sanctions.

The Group's and Company's cash flow forecast was run with average silver price of \$US 30.0/oz for 2025 and 30.0/oz for 2026 based on independent forecasts for silver sold in Russia.

The Directors have analysed the Group's and Company's expected liquidity position over the forecast period and believe that it is reasonable to apply the going concern principle for the preparation of the Group's and Company's financial statements. When assessing the going concern status, the Directors have taken into consideration the following factors:

• As of 31 December 2024, the Group had \$3,958,546 (31 December 2023: \$3,607,440) cash and cash equivalents, and net current liabilities of \$285,592,042 (31 December 2023: net current liabilities of \$193,389,862). These current liabilities include the Group debt under facilities agreements of \$236,288,082 (31 December 2023: \$220,306,573) with its major shareholders and related party, Inflection (loan was transferred to SKA Asset Management in September 2023) and Aterra, for which interest accrues monthly, this debt became overdue in January 2023.
• In the period ended 31 December of 2024 the Group generated total operating cash outflow of \$19,425,070 (2023: cash outflow of \$7,886,137). Since period ended there has been no deterioration in production or sales as a result of the geopolitical situation between Russia and Ukraine or imposed sanctions.
• In the Group's cashflow forecast, the Directors have assumed that the Group is able to defer interest repayments on its loans and obtain loan extensions from its shareholders for loans that became overdue in 2023. This forecast shows that cash remains positive for the 18-month period from the date of approval of these financial statements. In the event that the Group is unable to defer interest payments or obtain a loan extension from its shareholders the Group would have insufficient cash to satisfy these liabilities.
• While there is currently no contracted written agreement to defer interest repayments to the Group's shareholders, the Group's Directors note that in the past they have been successful in both securing financing from its Shareholders and deferring interest repayments to them. For this reason and based on the Group's long-term relationships with their shareholders, the Directors have a reasonable expectation that they will be able to continue deferring interest payments.

2. BASIS OF PREPARATION (Continued)

Going concern (Continued)

.

• The Group has agreed with major shareholder to extend the shareholder's loans with its major shareholders, Inflection and Aterra, that currently matures in 2023, to 2028, however agreement cannot be executed due to nine package of EU sanctions against Russian Federation that prohibits new investing and new financing into Russian mining sector. Management are undertaking the following initiatives, namely: a) Seeking a Russian bank or financial institution capable of refinancing the current shareholder debt facility and providing the additional financing required to complete construction of the new flotation facility and allow for the underground mining at Vertikalny and/or b) Seeking a prospective joint-partner or financer or buyer for the Vertikalny Mine and the Mangazeisky Project assets. Management believes that its lenders will work with it (subject to compliance with all applicable sanctions) while it seeks a solution.
• During 2022 year due to the geopolitical situation between Russia and Ukraine multiple sanctions were declared against Russia by Western countries. There are no sanctions against the Group, however sanctions that were implemented against Russia meant some brands ceased their operations in Russia. The Directors have prepared a plan to respond to this risk such as diversifying revenue channels and considering the use of aftermarket spare parts for mining equipment that can no longer be sourced directly from suppliers. While the effect from the sanctions to date has had minimal impacts on the Group's operations, there is no certainty over the future impacts of sanctions imposed against Russia.
• Also, during 2022-year Russia implemented sanctions against Western countries. Since the Russian sanctions have been implemented, capital controls have been put in place that put restrictions on payments outside of Russia. Given the parent Company is reliant on cash from its Russian subsidiaries, this temporarily prevented the Parent Company fulfilling its obligation to creditors. Subsequently the Parent Company has received cash from its subsidiary through management service contracts which has enabled it to resume fulfilling its obligations to creditors. While the sanctions are in effect, the Group will be unable to pay dividends from Russia to UK and further to shareholders. There is no certainty over the future impact of sanctions imposed by Russia or Russian imposed capital controls.

In the light of the future potential impacts the Russian geopolitical situation and the resulting sanctions imposed by and against Russia or the Russian imposed capital controls could have on the Group's and Company's operations, and in the absence of a contractual agreement for the Group and Company to continue to defer interest and capital repayments on its loans from its shareholders, together with the other factors described above, the Group's and Company's Directors have identified a material uncertainty relating to the Group's and Company's ability to maintain working capital liquidity to service the Group's and Company's financing arrangements which may result in the need for additional funding.

These material uncertainties may cast significant doubt upon the Group's and Company's ability to continue as a going concern. Notwithstanding these material uncertainties, the Directors have a reasonable expectation that the Group and Company have adequate resources to continue in existence for a period of at least 12 months form the date of approval of the financial statements and have concluded it is appropriate to adopt the going concern basis of accounting in the preparation of the financial statements. The financial statements do not include the adjustments that would result if the Group and Company were unable to continue as a going concern.

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies

Foreign currency translation

Items included in the financial statements of each entity are measured using the currency of the primary economic environment in which it operates ("functional currency"). The consolidated financial statements are presented in Canadian dollars which is the functional currency of Silver Bear Resources Inc., and Silver Bear Resources B.V. Silver Bear Resources Plc has changed its functional currency as of 1 January 2018 from Canadian dollars to Russian roubles when it was deemed that the majority of underlying transactions now took place in roubles. Silver Bear Resources Plc functional currency is different to presentation currency, because the group is listed on TSX and presentation of financial statements in Canadian dollars is considered to be beneficial for potential and current shareholders in Canada. The financial statements of AO Prognoz have the Russian rouble as their functional currency. The results of both Silver Bear Resources Plc and AO Prognoz are translated into the Canadian dollar presentation currency for consolidation purposes as follows: assets and liabilities – at the closing rate at the date of the statements of financial position, and income and expenses at the average rate for each quarter (as this is considered a reasonable approximation to actual rates). All resulting changes are recognized in other comprehensive income as cumulative translation adjustments.

Foreign currency transactions are translated into the functional currency of the entity in which they occur using the exchange rates prevailing at the dates of transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in currencies other than functional currency at period-end exchange rates are recognized in profit or loss.

Mineral properties

Mineral properties include the costs of acquiring exploration and mining licenses, as well as the cost of assets associated with the obligation for environmental rehabilitation and costs of developing the mining properties. Licenses are valued at cost at the date of acquisition less impairment. Mining properties under development are accounted for at cost and are not amortised until production has commenced. Cost includes expenditure that is directly attributable to the development of mining properties and preparing them for production.

Developing costs and licenses depreciated through unit of production basis calculated based on the ratio of silver ore mined during a period to the total volume of silver ore to be mined based on the estimated commercial resources.

Asset associated with the obligation for environmental rehabilitation depreciated on straight line basis during life of mine.

Intangible assets

Intangible assets are carried at cost, less accumulated amortization. All intangible assets are amortized on a straight-line basis over one to eleven years.

Property, plant and equipment

Property, plant and equipment are carried at cost, less accumulated depreciation and impairment losses.

Mining properties are depleted on 'unit of production basis' calculated based on the ratio of silver ore mined during a period to the total volume of silver ore to be mined based on the estimated commercial resources. Commercial resources are mineral resources that are considered probable of economic extraction and include measured, indicated and inferred resources. While inferred resources have a lower degree of geological certainty, they are included in the depletion calculation due to the nature of the ore body which enables their presence being able to be inferred without a high concentration of drilling

Leased equipment are amortized over the remaining life of the lease. Significant components of property, plant and equipment are recorded and depreciated separately. Residual values, the method of depreciation and the useful lives of assets are revised annually and adjusted prospectively, if appropriate, if there is an indicator of a significant change since the last reporting date. Depreciation of underlying property, plant and equipment which directly contributed the developing the mining properties are capitalized as additions in mineral properties.

Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management.

In order to determine whether the project is ready to operate as intended by management, judgement was applied taking into account commercial production indicators such as pre-production output has reached a nominated percentage, the internal project management team has transferred the mine to the operational team, the majority of the assets necessary for the mining project are substantially complete and ready for use and the project's ability to sustain commercial levels of production. These indicators provided guidance to recognize that the mine development phase was ceased and the production phase commenced from 1 July 2019.

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the year ended 31 December 2024

BASIS OF PREPARATION (Continued)

Exploration and development assets

Mineral exploration and evaluation costs, including geophysical, topographical, geological and similar types of costs, are capitalized into exploration assets if management concludes that future economic benefits are likely to be realized based on current internal assessment of exploration results and identified mineral resources.

In accordance with IFRS 6 Exploration for and evaluation of mineral resources, the potential indicators of impairment include: management's plans to discontinue the exploration activities, lack of further substantial exploration expenditure planned, expiry of exploration licenses in the period or in the nearest future, or existence of other data indicating the expenditure capitalized is not recoverable. At the end of each reporting period, management assesses whether such indicators exist for the exploration and evaluation assets capitalized.

Exploration and evaluation expenditures are transferred to development assets when commercially-viable resources are identified, respective mining plan and model are prepared and approved. At the time of reclassification exploration and evaluation assets are assessed for impairment based on the economic models prepared.

The costs to remove any overburden and other waste materials to initially expose the ore body, referred to as stripping costs, are capitalized as a part of development assets when these costs are incurred.

Impairment of non-financial assets

The Group reviews and evaluates the recoverable amount of its mineral properties, property, plant and equipment and other noncurrent assets annually and when events or changes in circumstances indicate that the carrying amounts of related assets or groups of assets might not be recoverable.

For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). The recoverable amount is the higher of an asset's fair value less costs of disposal and its value in use (being the present value of the expected future cash flows of the relevant asset). Any resulting write-down of the excess of carrying value over the recoverable amount is charged to the consolidated statement of operations.

Provision for decommissioning and restoration liability

Mining and exploration activities normally give rise to obligations for environmental rehabilitation. Rehabilitation work may include facility decommissioning and dismantling; removal or treatment of waste materials; site and land rehabilitation, including compliance with and monitoring of environmental regulations; security and other site-related costs required to perform the rehabilitation work; and operation of equipment designed to reduce or eliminate environmental effects. The extent of work required and the associated costs are dependent on the requirements of relevant authorities and our environmental policies. Routine operating costs that may impact the ultimate closure and rehabilitation activities, such as waste material handling conducted as an integral part of a mining or exploration process, are not included in the provision. The timing of the actual rehabilitation expenditure is dependent upon a number of factors such as the life and nature of the asset, the license conditions and the operating environment. Expenditures may occur before and after the site closure and can continue for an extended period of time depending on rehabilitation requirements.

Rehabilitation provisions are measured at the expected value of future cash flows associated with the settlement of the obligation and discounted to their present value using a pre-tax discount rate which reflects current assessments of the time value of money.

The expected future cash flows include the effect of inflation. The unwinding of the discount in subsequent periods is presented as interest expense. The asset associated with retirement obligations represents the part of the cost of acquiring the future economic benefits of the operation and is capitalized to mineral properties as part of the carrying amount of the long-lived asset and amortized over the expected economic life of the operation to which it relates. The Group re-measures the liability at each reporting date. Changes in estimates are recorded using current discount rate assumptions. Adjustments are also accounted for as a change in the corresponding value of the related assets.

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Financial instruments

Financial assets:

Financial assets within the scope of IFRS 9 are initially recognised at fair value and are classified financial assets at amortised cost. The Group determines the classification of its financial assets at initial recognition.

The Group's financial assets include cash and cash equivalents, accounts receivable. Regular purchases and sales of financial assets are recognized on the trade-date, being the date on which the Group commits to purchase or sell assets.

The Group recognises a loss allowance for expected credit losses ('ECL') on financial assets that are measured at amortised cost which comprise mainly trade receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The Group always recognises lifetime ECL on trade receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate

Financial assets are derecognized when the rights to receive cash flows from investments and the Group has transferred substantially all risks and rewards of ownership.

Financial liabilities:

Financial liabilities within the scope of IFRS 9 are initially recognised at fair value and are classified as financial liabilities at fair value through profit or loss, financial liabilities, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

The Group's current financial liabilities include accounts payable, accrued liabilities, and short-term loans. Initially they are recognized at fair value, and subsequently measured at amortized cost using the effective interest method. Amortized cost approximates fair value due to the short-term maturity of these liabilities.

Financial instruments are initially recorded at fair value. The fair values of cash and cash equivalents, miscellaneous receivables, short-term loans, lease liabilities and accounts payable and accrued liabilities approximate their recorded amounts because of their short-term nature. The fair value of long-term loans and non-current lease liabilities is shown at their carrying values as any differences are not material.

In determining if a modification of a financial liability is substantial, which includes a comparison of the cash flows before and after the modification, discounted at the original effective interest rate (EIR), referred to as the '10% test'. If the difference between these discounted cash flows is more than 10%, the financial liability is derecognized and a new financial liability recognized at fair value.

If, a modified financial liability does not result in derecognition, the original EIRs retained and the Group recalculates carrying amount based on reviewed cash flow of financial liability and recognized modification gain or loss.

Gain on modification of shareholder loans is recognised either as finance income in the Consolidated Statement of Comprehensive Profit / (Loss) or as an increase in shareholder contribution in Equity. Management makes assessment of each modification and if change in terms, for example, reduction of interest rate, represents terms which are more favourable at the time than market and indicative of the lender acting in capacity of shareholder, then it is recognised through shareholder contribution, otherwise, it is recognised as finance income.

Cash and cash equivalents

Cash represents cash on hand and demand deposits. Cash equivalents represent short-term, highly liquid investments that are readily convertible to known amounts of cash and subject to insignificant risk of change in value.

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the year ended 31 December 2024

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Revenue recognition

Timing of recognition is governed by IFRS 15. Entity recognizes revenues when a performance obligation is satisfied, which is when "control" of the goods has transferred to the customer. Control of goods is transferred at the point of time, when silver is passed to the buyer at the refinery site.

Revenues from major customer are shown in the table below:

	31 December 2024	In %	31 December 2023	In %
Total silver sales revenue	10,063,758		17,173,167
Total silver sales revenue by countries:
Russian Federation	10,063,758	100%	17,173,167	100%
Total silver sales revenue	10,063,758		17,173,167
Total silver sales revenue by counteragents:
Trismegis	10,063,758	100%	11,898,731	69%
Solfer	-	-	5,183,778	30%
Other	-	-	90,658	1%
Total silver sales revenue	10,063,758		17,173,167

Current and deferred income Taxes

Current income tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable or receivable in respect of previous years.

The Group uses the asset and liability method of accounting for income taxes, under which deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying value of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates or laws is recognized as part of the provision for income tax in the year the changes are considered substantively enacted. Deferred tax benefits attributable to these differences, if any, are recognized to the extent that the realization of such benefits is more likely than not.

The Group did not recognised deferred taxes raised during pre-production stage.

Earnings per share

Basic earnings per share is computed by dividing the profit/(loss) for the period by the weighted average number of common shares outstanding.

Diluted earnings per share is computed by dividing the profit/(loss) for the period by the diluted weighted average number of common shares outstanding.

Share-based payments

The fair value of any stock options granted to directors, officers, consultants and employees is recognized as an expense over the vesting period with a corresponding increase recorded to contributed surplus. The fair value of share-based compensation is determined using the Black-Scholes option pricing model and management's assumptions as disclosed in Note 15. An estimate for forfeitures is made when determining the number of equity instruments expected to vest. Upon exercise of the stock options, consideration paid by the option holder is recorded as an increase to share capital.

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the year ended 31 December 2024

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in profit or loss in the period in which they are incurred, using the average exchange rate prevailing for that period. Translation differences associated with borrowings costs are expensed.

Prepaid expenses

Prepaid expenses represent payments made or obligations incurred in advance of the receipt of goods or rendering of services. Prepaid expenses are typically included in other current assets on the consolidated statement of financial position.

Inventories

Costs incurred in bringing each product to its present location and conditions are accounted for as follows:

Raw materials: purchase price plus transportation cost plus any applicable customs duties and taxes.

Ore stockpiles comprises direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs.

The cost of silver for sale and silver in circuit comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs.

Inventories are accounted for using weighted average basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Inventories related to construction supplies accounted as other non-current assets.

Inventory measured at lower of cost and net realisable value.

Leases

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

Leases of low value assets; and leases with a duration of 12 months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease.

On initial recognition, the carrying value of the lease liability also includes amounts expected to be payable under any residual value guarantee, the exercise price of any purchase option granted in favour of the group if it is reasonably certain to assess that option, any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

Lease liabilities accounted under a separate line in financial statement.

Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

Lease payments made at or before commencement of the lease, initial direct costs incurred and the amount of any provision recognised where the group is contractually required to dismantle, remove or restore the leased asset.

Right of the use assets related to mining equipment under leased contracts are disclosed in property plant and equipment.

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease.

Amounts payable for leases covered by the short-term exemption are charged to the income statement on a straight-line basis over the term of the relevant lease.

2. BASIS OF PREPARATION (Continued)

Accounting estimates and management judgments

The preparation of consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The significant areas of estimation and uncertainties considered by management in preparing the consolidated financial statements include:

Critical judgements in applying accounting policies:

• Determination of functional currency

Based on the primary indicators in IAS 21 – The Effects of Change in Foreign Exchange Rates – the Russian rouble has been determined as the functional currency of AO Prognoz, an operating subsidiary of the Group, because the Russian rouble is the currency that mainly influences labour, material and other costs of providing goods or services, and is the currency in which these costs are denominated and settled.

Effects of changes in foreign exchange rates on the consolidation of the financial statements are recorded in other comprehensive income and carried in the form of a cumulative translation adjustment in the accumulated other comprehensive income section of the Statement of financial position of the Group.

The functional currency of Silver Bear Resources Plc changed from Canadian dollars to Russian rouble in 2018 as it is now deemed that the majority of underlying transactions for this entity are undertaken in roubles and therefore it is appropriate for this to be its functional currency.

The functional currency of Silver Bear Resources Inc. has been determined to be the Canadian Dollar reflecting the current principal equity and financing structure.

Key sources of estimation uncertainty:

• Mineral resource estimate

Mineral resource estimates are estimates of the amount of silver that can be economically and legally extracted from the Group's mining properties. Such resource estimates and their changes may impact the Group's reported financial position and results in the following ways:

(a) The carrying value of exploration and evaluation assets, mining properties and property, plant and equipment may be affected due to changes in estimated future cash flows.

(b) Depreciation and amortisation charges in the statement comprehensive income may change where such charges are determined using the unit of production method.

(c) Provisions for rehabilitation and environmental provisions may change where resource estimate changes affect expectations about when such activities will occur and the associated cost of these activities.

The Group estimates mineral resources based on information compiled by appropriately qualified Competent Persons relating to the geological and technical data on the size, depth, shape and grade of the ore body and suitable production techniques and recovery rates. Such an analysis requires complex geological judgements to interpret the data. The estimation of recoverable resources is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements and production costs, along with geological assumptions and judgements made in estimating the size and grade of the ore body.

The Group reviews its mineral resource estimates on regular basis and as at 1 April 2020 the Group obtained a mineral resource (not reserve) estimate from a third party, Wardell Armstrong. Wardell Armstrong has issued their report on 10 November 2021 the delay in issuing report due to COVID-19 travel restrictions. This report has superseded the Companies previous estimate of recoverable reserves and resources that was prepared in 2017.

The difference between a resource statement (as obtained in 2020) and reserves and resources statement (as obtained previously in 2017) is the level of confidence of the presence of economically viable minerals.

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the year ended 31 December 2024

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

• Impairment of mineral properties and property, plant and equipment

The carrying value of mineral properties and property, plant and equipment as of 31 December 2024 is \$1,565,670 and \$72,042,743 respectively, as disclosed in Note 9 and Note 10. While assessing whether any indications of impairment exist for mineral properties, consideration is given to both external and internal sources of information. Information that management considers includes, changes in the market, and changes in the economic and legal environment in which the Group operates that are not within its control that could affect the recoverable amount of mineral properties. Internal sources of information include the manner in which mineral properties are being used or are expected to be used and indications of expected economic performance of the assets. Estimates include but are not limited to estimates of the discounted future after-tax cash flows expected to be derived from the Group's mineral properties, costs to sell the properties and the appropriate discount rate. Reductions in metal price forecasts, reductions in the amount of recoverable mineral reserves and mineral resources, and/or adverse current economics can result in a write-down of the carrying amounts of the Group's mineral properties.

On 22 June 2020, the Group announced that it has received a draft report from Wardell Armstrong (Moscow) that provides a review of the Company's current mineral resources, as well as draft revised mine and processing plans, for its Vertikalny and Mangazeisky North deposits. The Group had previously disclosed that it had engaged Wardell Armstrong (Moscow) to conduct this review of the mineral resources as well as reassessing mine and processing plans for these deposits. Wardell Armstrong (Moscow) have issued their final report on 10 November 2021.Following additional exploration activities, this included a material change in the mineral resource estimates of both Vertikalny and Mangazeisky North deposits.

In accordance with IAS 36, the impairment test was undertaken on 31 December 2024.

Key Assumption used in the impairment test:

• The economic life of the Vertikalny and Mangazeisky North deposits is currently expected to be around 2030 as per management's expectation as of 31 December 2024.
• For the following six years average Silver price is US\$31.76/ounce as per management's expectation as of 31 December 2024.
• For the following six years average RUB/USD foreign exchange rate 103.2 as per management's expectation as of 31 December 2024.
• For the following six years average aannual inflation of costs expressed in USD is 2.6% as per management's expectation as of 31 December 2024.
• For the following six years annual inflation of costs expressed in RUB is 4.31% as per management's expectation as of 31 December 2024.
• Post tax nominal discount rate of 18.75%. This was based on a Capital Asset Pricing Model analysis.

Based on the key assumptions set out above:

The recoverable amount of Vertikalny and Mangazeisky North deposits \$132,137,234.

Carrying value of the mining assets is shown I table below:

PPE and mineral property	73,608,413
Less right of the use assets	(4,955,063)
Less exploration assets	(1,423,879)
Less asset retirement obligation	(3,720,060)
Adjustment for net working capital	37,229,069
Total carrying value for impairment test	100,738,480

The recoverable amount above carrying value of mining assets for \$31,398,753.

Based on annual impairment test as of 31 December 2024 no additional impairment indicators have been identified (31 December 2023: no additional impairment indicators have been identified).

Notes to Consolidated Financial Statements

For the year ended 31 December 2024

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Sensitivity analysis:

		In millions of CAD
	Increased by 20%	42
Impact if metal prices	Decreased by 20%	(42)
	Increased by 20%	15
Impact if RUB/USD exchange rate	Decreased by 20%	(15)
	Increased by 20%	(13)
Impact if post-tax discount rate:	Decreased by 20%	13

• Depreciation rates

Once a mine development phase ceases and the production phase commences mining assets are depreciated using a unitof production method based on estimated economically recoverable resources, which results in a depreciation charge proportional to the depletion of reserves.

The Group proven and probable mineral reserves at the beginning of commercial production was 717 thousand tonnes, depletion for the period 1 July 2019 - 31 March 2020 was 95 thousand tonnes.

Starting from 1 April 2020 management of the group has changed its depreciation base for the unit of production method from mineral reserves to mineral resources. In making this change, the UoP calculation has been adjusted to include the estimated future costs to access and process resources expected to be converted to reserves. The most material impact of this is in respect of costs required to enable the processing facility to process sulphide ores that will be mined in the future, in addition to the oxide ores currently being processed. Management believes that this change in accounting estimate represent the most accurate and fair view for the depreciation charge calculation.

On 1 April 2020, the change in accounting estimate occurred, resources were 810 thousand tonnes and depletion for the period 1 April 2020 - 31 December 2020 was 79 thousand tonnes.

On 1 January 2021 the change in accounting estimate occurred, management reassess estimation of existing resources based on available data and resources used for "life of mine model" were 1,504,232 tonnes. This estimation includes "inferred" resources, that was not included into Wardell Armstrong mineral resource report. Depletion for the period 1 January 2020- 31 December 2024 was 299,046 tonnes.

• Rehabilitation provisions and asset retirement obligations

The carrying value of the asset retirement obligation as of 31 December 2024 is \$3,720,060 as disclosed in Note 14. Exploration and development activities carried out by the Group give rise to obligations for environmental rehabilitation. Significant uncertainty exists as to the amount and timing of associated cash flows and regulatory requirements. A Russian Central Bank borrowing rate for a 7-year zero coupon year bond is used in discounting future cash flows as a pre-tax discount rate.

The expected life of the mine is used as the discounting period. If the estimated discount rate used in the calculation had been higher for 20% than the management estimate, the carrying amount of the provision would have been lower for \$7,594 and the interest expense higher for \$7,413.

• Ore stocks

Stock is valued at the lower of cost or net realisable value. Costs that are incurred in or benefit the production process are accumulated as ore stockpiles, silver in process and silver bullion. Although the quantities of recoverable metal are reconciled by comparing the grades of ore to the quantities of silver actually recovered (metallurgical balancing), the nature of the process inherently limits the ability to precisely monitor recoverability levels. Net realisable value tests are performed at least annually and represent the estimated future sales price of the product based on contained silver and metals prices, less estimated costs to complete production and bring the product to sale. These net realisable tests take into account management's estimate of the maximum values to be realised from ore stockpiles, in some instances through blending of different ore stockpile grades, prior to these being added to future processing plant feeds. Judgement is required in assessing whether stockpiles of different grades should be tested individually, or tested as inputs to the silver production process.

Notes to Consolidated Financial Statements

For the year ended 31 December 2024

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Accounting developments not yet adopted

There are a number of standards and interpretations which have been issued by the International Accounting Standards Board that are effective for periods beginning subsequent to 31 December 2024 (the date on which the company's next annual financial statements will be prepared up to) that the Group has decided not to adopt early:

• «Limitations on Convertibility of Currencies» (an amendment to IAS 21 'The Effects of Changes in Foreign Exchange Rates'), effective 1 January 2025;
• «Classification and Measurement of Financial Instruments» (amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures), effective 1 January 2026;
• «Presentation and Disclosure of Financial Statements» (IFRS 18), effective 1 January 2027;
• «Non-public subsidiaries: Disclosures» (IFRS 19), effective 1 January 2027;
• Annual Improvements to IFRS Accounting Standards − Volume 11 (effective 1 January 2026):

The Group does not believe these standards and interpretations will have a material impact on the financial statements once adopted

3. CAPITAL MANAGEMENT AND FINANCIAL RISK FACTORS

The Group manages its capital structure and makes adjustments to it, based on the funds available to the Group, in order to support the current production operations, acquisition, exploration and development of precious metal properties.

The Group considers excess cash balances, all the components of shareholders' equity and loans as capital. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Group's management to sustain the future development of the business.

The property in which the Group currently has an interest is in production stage.

In order to fund the ongoing development activities, the Group will spend existing working capital and plans to raise additional amounts as needed through equity and/or debt. The Group will continue to assess new properties and seek to acquire an interest in additional properties where sufficient geologic or economic potential are noted and if financial resources exist to do so. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Group, is reasonable.

There were no changes in the Group's approach to capital management during the period ended 31 December 2024 compared to the year ended 31 December 2023. The Group is not subject to externally imposed capital requirements.

FINANCIAL RISK FACTORS

The Group is exposed to credit and liquidity risks and market risk. The risk management policies employed by the Group to manage these risks are discussed below:

Market risk

The Group takes on exposure to market risks. Market risks arise from open positions in (a) silver prices (b) foreign currencies, (c) interest bearing assets and liabilities and (d) equity products, all of which are exposed to general and specific market movements. Management sets limits on the value of risk that may be accepted, which is monitored on a daily basis. However, the use of this approach does not prevent losses outside of these limits in the event of more significant market movements.

Sensitivities to market risks included below are based on a change in a factor while holding all other factors constant. In practice this is unlikely to occur and changes in some of the factors may be correlated – for example, changes in interest rate and changes in foreign currency rates.

Credit risk

The Group has no significant concentration of credit risk arising from operations. Cash equivalents consist of interest earning bank accounts held in banks in the Russia and Canada which in the presentational currency total \$3,933,101 (31 December 2023: \$\$3,581,951) and \$25,445 (31 December 2023: \$25,489), respectively. The Group's Canadian chartered banks have a credit rating of at least A2 (Moody's). At 31 December 2024 the Group's Russian banks have a credit rating of at least ruBBB- (Expert RA).

The Group maximum exposure to credit risk by class of individual financial instrument is shown in the table below:

	31 December 2024	31 December 2023
Receivables from customers	173,073	531,569
Cash and cash equivalents	3,958,546	3,607,440
	4,131,619	4,139,009

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the year ended 31 December 2024

3. CAPITAL MANAGEMENT AND FINANCIAL RISK FACTORS (Continued)

Liquidity risk

The Group's approach to managing liquidity risk is to ensure it will have sufficient liquidity to meet liabilities when due by continual review of budgets and forecasts and discussions with shareholders and other providers of finance as appropriate. The Group's current assets and current liabilities are show in the table below:

	31 December	31 December
	2024	2023
Total current assets	45,001,381	34,699,569
Total current liabilities	330,593,423	228,089,430

As of 31 December 2024, the Group had total current assets of \$45,001,381 (31 December 2023 – \$34,699,569) to settle total current liabilities of \$330,593,423 (31 December 2023 – \$228,089,430), as well as its commitments outlined in Note 21. These current liabilities include shareholder and related party loans and accrued interest under facilities agreements totalling \$236,288,082 (31 December 2023 - \$220,306,574).

The Group has agreed with major shareholders to extend the shareholder's loans, that became overdue in 2023, to 2028, however agreement cannot be executed due to nine package of EU sanctions against Russian Federation that prohibits new investing and new financing into Russian mining sector.

Management is undertaking the following initiatives, namely: a) Seeking a Russian bank or financial institution capable of refinancing the current shareholder debt facility and providing the additional financing required to complete construction of the new flotation facility and allow for the underground mining at Vertikalny and/or b) Seeking a prospective joint-partner or financer or buyer for the Vertikalny Mine and the Mangazeisky Project assets. Management believes that its lenders will work with it (subject to compliance with all applicable sanctions) while it seeks a solution.

As of 31 December 2024, the Group had cash balances of \$3,958,546 (31 December 2023 – \$3,607,440)

The Group had total lease obligations of \$3,141,026 on 31 December 2024 (31 December 2023 – \$1,370,890) under a combination of three and five-year leases for equipment in relation to the development of Mangazeisky, as outlined in Note 12.

The contractual maturities of the Group's financial liabilities (which are all carried at amortised cost) are shown in the table below:

31 December 2024	Carrying amount	Contractual cash flows	6 months or less	6 to 12 months	12 to 36 months
Current liabilities
Accounts payable & accrued liabilities	3,808,790	3,808,790	3,808,790	-	-
Short-term loans principal	259,341,724	259,341,724	182,020,843	77,320,881	-
Short-term loans interest	65,772,301	79,764,284	72,912,540	6,851,744	-
Lease liabilities	1,665,632	2,507,840	1,388,132	1,119,708	-
Non-current liabilities
Long-term loans principal	905,760	905,760	-	-	905,760
Long-term loans interest	-	337,162	-	-	337,162
Lease liabilities	1,475,394	1,875,834	-	-	1,875,834
	332,969,601	348,541,394	260,130,305	85,292,333	3,118,756

31 December 2023	Carrying amount	Contractual cash flows	6 months or less	6 to 12 months	12 to 36 months
Current liabilities
Accounts payable & accrued liabilities	2,053,273	2,053,273	2,053,273	-	-
Short-term loans principal	179,197,764	179,095,843	179,095,843	-	-
Short-term loans interest	46,013,338	52,246,221	49,068,792	3,177,429	-
Lease liabilities	819,491	1,130,154	797,855	332,299	-
Non-current liabilities
Long-term loans principal	38,294,573	38,294,574	-	-	38,294,574
Long-term loans interest	-	5,945,649	-	-	5,945,649
Lease liabilities	551,399	611,490	-	-	611,490
	266,929,838	279,377,204	231,015,763	3,509,728	44,851,713

3. CAPITAL MANAGEMENT AND FINANCIAL RISK FACTORS (Continued)

Interest rate risk

The Group has cash balances and interest-bearing debt on short term loans at commercial fixed rates. The Group's current policy is to invest excess cash in interest-earning bank accounts with Canadian and Russian financial institutions. The Group periodically monitors the investments it makes and is satisfied with the credit ratings of its banks.

Foreign currency risk

The Group has funded certain exploration, project construction and administrative expenses on a transaction by transaction basis using U.S. dollar and Russian ruble. USD funding has been provided directly to AO Prognoz in Russia and converted to Russian ruble. This exposes the Group to changes in foreign exchange rates for U.S. dollar and Russian ruble.

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group's exposure to the risk of changes in foreign exchange rates relates primarily to the Group's borrowings (when borrowing is denominated in a different currency from functional currencies of the Group companies).

	31 December 2024				31 December 2023
	GBP	USD	CAD	CNY	GBP	USD	CAD	CNY
Current assets:
Cash and cash equivalents	-	4,501	21,210	76,896	-	4,346	21,143	-
Receivables	-	-	-	-	-	-	-	-
Total current assets	-	4,501	21,210	76,896	-	4,346	21,143	-
Current liabilities:
Accounts payable and accrued liabilities	3,867	451,319	58,858	780,542	7,943	344,399	80,213	-
Lease liabilities	-	-		-	-	-		-
Total current liabilities	3,867	451,319	58,858	780,542	7,943	344,399	80,213	-
Non-current liabilities:
Long-term loans	-	287,874,465	-	-	-	225,804,975	-	-
Lease liabilities	-	-		-	-	-		-
Total non-current liabilities	-	287,874,465	-	-	-	225,804,975	-	-

The following table presents sensitivities of profit and loss to reasonably possible changes in exchange rates applied at the end of the reporting period relative to the functional currency of the respective Group entities, with all other variables held constant:

	31 December 2024	31 December 2023
	Impact on profit or loss	Impact on profit or loss
US Dollar strengthening by 20% (2023: strengthening by 20%)	(53,252,808)	(47,482,588)
US Dollar weakening by 20% (2023: weakening by 20%)	53,252,808	47,482,588
GBP strengthening by 20% (2023: strengthening by 20%)	(825)	(2,123,533)
GBP weakening by 20% (2023: weakening by 20%)	825	2,123,533
CAD strengthening by 20% (2023: strengthening by 20%)	(4,911)	(5,555)
CAD weakening by 20% (2023: weakening by 20%)	4,911	5,555
CNY strengthening by 20% (2023: strengthening by 20%)	(30,943)	-
CNY weakening by 20% (2023: weakening by 20%)	30,943	-

4. RECEIVABLES

	31 December 2024	31 December 2023
Russian Value Added Tax	36,328	-
Deferred Russian Value Added Tax	193,201	9,372
Receivables from customers	173,073	531,569
	402,602	540,941

Deferred Russian Value Added Tax relates to the VAT paid on acquisition of materials and services and the costs incurred on the construction of both building and technological equipment. This VAT can be claimed once the assets the VAT relates to are ready for use. The VAT recognized here is on assets that are expected to be available for use in the first quarter of 2025 therefore the asset has been recognized as current.

Receivables from customer mainly consist of receivables from silver sales and fuel sales. Sales of fuel was accounted on net basis in other income, which comprise of the selling price less cost of fuel.

5. INVENTORIES

Material and supplies inventories are stated at the lower of weighted average costs and net realizable value. Inventories consist of the following:

	31 December	31 December
	2024	2023
Fuel and lubricants	396,049	1,847,813
Parts and supplies	7,657,468	7,266,196
Reagents	5,148,440	777,958
Silver for sale	11,010	12,185
Ore stockpile	6,534,301	9,155,890
Silver in circuit	13,171,694	6,235,565
	32,918,962	25,295,607

Net realisable value test performed that represent the estimated future sales price of the product based on contained silver and metals prices, less estimated costs to complete production and bring the product to sale.

The total cost of inventory recognized in cost of sales is \$12,776,963 (2023: \$14,139,731).

Notes to Consolidated Financial Statements

For the year ended 31 December 2024

6. PREPAID EXPENSES AND NON-CURRENT ASSETS

Prepaid expenses consist of the following:	31 December 2024	31 December 2023
Prepayments to suppliers	6,639,344	5,159,252
Taxes	1,081,927	96,329
	7,721,271	5,255,581
Prepaid non-current assets consist of the following:	31 December 2024	31 December 2023
Prepayments for property, plant and equipment	590,438	1,674,697

Non-current prepayments consist of prepayments that will be converted to non-current assets – property, plant and equipment. The equipment will be delivered and transferred to construction in progress within next twelve months.

7. OTHER NON-CURRENT ASSETS

	30 December	31 December
	2024	2023
Construction supplies	3,564,351	2,793,082
Non-current inventories	321,172	359,116
	3,885,523	3,152,198

8. INTANGIBLE ASSETS

	31 December	31 December
Software	2024	2023
Balance at the beginning of the year	-	82,515
Amortization	-	(72,481)
Translation adjustment	-	(10,034)
Balance at the end of the period	-	-

9. MINERAL PROPERTY

Mineral property includes the cost of acquiring exploration and mining licenses, as well as the value of assets associated with asset retirement obligations and capitalized project development costs.

Mineral property consists of the following:			31 December 2024	31 December 2023
Mangazeisky	Licenses and Development Costs	Asset Retirement Obligation	Total	Total
Balance at the beginning of the year	328,725	924,532	1,253,257	2,170,235
Development costs capitalised	395,299	-	395,299
Depreciation	(19,054)	(186,070)	(205,124)	(270,156)
Change in estimate	-	271,180	271,180	(216,550)
Translation adjustment	(55,862)	(93,080)	(148,942)	(430,272)
Balance at the end of the period	649,108	916,562	1,565,670	1,253,257

Mineral property is made up of the following classes of assets; licenses \$649,108 (2023: \$328,725) and asset retirement obligation \$916,562 (2023: \$924,532).

The Group acquired the exploration license in respect of the Mangazeisky property when it acquired all the shares of AO Prognoz on 21 October 2004. In September 2023, the Mangazeisky exploration license was extended by the Federal Subsoil Use Agency in the Russian Federation ("Rosnedra") through to 31 December 2026.

In September 2013, the Group acquired the mining license in respect of the Mangazeisky property which is valid for a period of 20 years from the grant date.

The licenses and development cost are depreciated on unit of production basis in proportion of depletion of total tonnes mined.

Notes to Consolidated Financial Statements

For the year ended 31 December 2024

10. PROPERTY, PLANT AND EQUIPMENT

Reconciliation of the carrying amount at the beginning and end of the periods ended 31 December 2024 and 31 December 2023:

	Right of the use assets	Mining Assets	Assets under construction	Total
Carrying amount at 31 December 2022	3,039,849	53,709,526	7,383,749	64,133,124
Additions	1,649,817	381,747	7,230,921	9,262,485
Transfers	-	1,162,176	(1,162,176)	-
Disposal at cost	-	(15,102)	(56,235)	(71,337)
Depreciation	(3,514,728)	(2,149,287)	-	(5,664,015)
Depreciation eliminated on disposal	-	11,573	-	11,573
Impairment of mining assets	-	(316,169)	-	(316,169)
Translation adjustment	741,383	(10,414,763)	(1,641,746)	(11,315,126)
Carrying amount at 31 December 2023	1,916,321	42,369,701	11,754,513	56,040,535
Additions	5,395,623	566,813	20,536,063	26,498,499
Transfers	-	3,789,092	(3,789,092)	-
Disposal at cost	-	(242,654)	(68,723)	(311,377)
Depreciation	(1,802,801)	(1,162,774)	-	(2,965,575)
Depreciation eliminated on disposal	-	242,654	-	242,654
Translation adjustment	(554,080)	(4,143,843)	(2,764,070)	(7,461,993)
Carrying amount at 31 December 2024	4,955,063	41,418,989	25,668,691	72,042,743

The property, plant and equipment as of the period ended 31 December 2024 included \$25,988,257 (31 December 2023: \$11,754,513) of assets that are not yet ready for use. During the period ended 31 December 2024, \$3,789,092 (31 December 2023: \$1,162,176) of these assets became available for use, they were transferred into property, plant and equipment and depreciation was charged on them. Leased assets are pledged as security for the related lease obligations.

The Group acquires property, plant and equipment on prepayment terms. Cash paid to suppliers of property, plant and equipment and capitalized expenses paid by cash during the period was \$23,463,055 (2023: \$8,656,123).

All the property plant and equipment of the Group is pledged to shareholders under borrowings agreements.

Assets under construction includes a flotation building for the amount of \$5,614,351 (31 December 2023: \$4,995,547) and development costs for North Mangazeisky open pit \$9,868,418 (31 December 2023: \$2,893,717).

Mining assets include exploration and evaluation assets \$1,743,445 (31 December 2023: \$1,360,959).

Mining assets (exept exploration and evaluation assets) depreciated on unit of production basis in proportion of depletion of resources.

At 31 December 2023 by result of assessing exploration and evaluation assets, capitalized costs totaling \$316,169 were impaired due to the unconfirmed commercial viability of further exploration and development of the areas to which these capitlized costs belong.

10. PROPERTY, PLANT AND EQUIPMENT (Continued)

Right of the use assets depreciated on straight line basis in accordance with lease agreements and consist from the following classes of underlying assets:

	Processing plant	Mining vehicles	Infrastructure and other	Total
Carrying amount at 31 December 2022	120,092	2,416,664	503,093	3,039,849
Additions	-	210,835	1,438,982	1,649,817
Depreciation	(147,858)	(2,671,798)	(695,072)	(3,514,728)
Translation adjustment	27,766	465,679	247,938	741,381
Carrying amount at 31 December 2023	-	421,380	1,494,941	1,916,321
Additions	822,589	2,037,943	2,535,091	5,395,623
Depreciation	(251,979)	(489,317)	(1,061,505)	(1,802,801)
Translation adjustment	(55,919)	(196,726)	(301,435)	(554,080)
Carrying amount at 31 December 2024	514,691	1,773,280	2,667,092	4,955,063

During the period ended 31 December 2024, fully depreciated right-of-use assets with an initial value of \$5,228,738 were transferred to mining assets. (2023: \$4,126,131)

11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of the following:

	31 December	31 December
	2024	2023
Trade and other payables	2,220,222	1,318,830
Accrued liabilities	927,771	624,861
Social contribution taxes	351,227	8,857
VAT	53,922	63,709
Consolidated Tax Account	6,004	37,016
Provision for mining tax	249,644	-
	3,808,790	2,053,273

12. LEASE OBLIGATION

In October 2024 and December 2024, the Group entered into lease-back agreements with Universalnaya Lizingovaya Companiya AO and Delta Leasing OOO. These lease-back agreements were classified as financial liabilities in accordance with IFRS 9 (Note 13).

On September 2022, the Group entered into lease-back agreements with Interleasing OOO and on the terms of the Interleasing OOO, these lease-back agreements were classified as financial liability in accordance with IFRS 9 (Note 13).

For period ended 31 December 2023 Interest expenses on lease liabilities were \$982,466 (2024: \$240,129), total cash outflow for leases was \$3,127,920 (2023: \$2,473,849).

Future minimum lease payments under leases, together with the present value of the minimum lease payments, are as follows:

	31 December 2024	31 December 2023
Within one year	2,507,840	1,130,154
Within two to five years	1,875,834	611,490
Over 5 years	-	-
	4,383,674	1,741,644
Future finance charges on finance leases	(1,242,648)	(370,754)
Present value of the net lease payments	3,141,026	1,370,890
Current portion	1,665,632	819,491
Long-term portion	1,475,394	551,399
Total obligations under leases	3,141,026	1,370,890

13. LONG-TERM AND SHORT-TERM LOANS

	31 December 2024			31 December 2023
Lender	Principal	Interest	Total	Principal	Interest	Total
Long-term loans:
Lease back	905,760	-	905,760	152,557	-	152,557
SKA Assets Management		-	-	33,007,514	-	33,007,514
ZPIF UGA			-	5,134,502		5,134,502
Total long-term loans	905,760	-	905,760	38,294,573	-	38,294,573
Short-term loans:			-
Unifirm Ltd	36,478,023	11,015,350	47,493,373	35,977,353	8,303,773	44,281,126
Inflection Management Corp./ SKA Assets Management	145,006,710	43,787,999	188,794,709	143,016,454	33,008,993	176,025,447
Lease back	973,779	-	973,779	203,957	-	203,957
SKA Assets Management	29,520,005	8,625,315	38,145,320	-	4,693,187	4,693,187
ZPIF UGA	47,363,207	2,343,637	49,706,844		7,385	7,385
Total short-term loans	259,341,724	65,772,301	325,114,025	179,197,764	46,013,338	225,211,102
Total loans	260,247,484	65,772,301	326,019,785	217,492,337	46,013,338	263,505,675

Movements in short and long-term loans:

Lender	Unifirm Ltd	Inflection Management Corp.	SKA Assets Management	Lease back	SKA Assets Management	ZPIF UGA	Total
Loan currency	USD	USD	USD	RUB	RUB	RUB
31 December 2022	41,335,328	164,315,375	-	708,041	24,550,992	-	230,909,736
Principal Received	-	-	-	-	15,838,383	5,526,542	21,364,925
Principal and interest repayment	-	-	-	(336,842)	-	-	(336,842)
Interest accrued	2,622,799	4,734,609	5,691,490	117,217	3,820,989	7,949	16,995,053
Assignment of a loan	-	(181,283,794)	181,283,794	-	-	-	-
Foreign exchange loss	10,319,199	38,402,588	2,618,088	-	-	-	51,339,875
Translation adjustment	(9,996,200)	(26,168,778)	(13,567,924)	(131,902)	(6,509,664)	(392,604)	(56,767,072)
31 December 2023	44,281,126	-	176,025,448	356,514	37,700,700	5,141,887	263,505,675

Lender	Unifirm Ltd	SKA Assets Management	Lease back	SKA Assets Management	ZPIF UGA	Total
Loan currency	USD	USD	RUB	RUB	RUB
31 December 2023	44,281,126	176,025,448	356,514	37,700,700	5,141,887	263,505,675
Principal Received	-	-	2,089,584	-	48,124,653	50,214,237
Principal and interest repayment	-	-	(521,138)	-	(3,319,027)	(3,840,165)
Interest accrued	2,667,749	10,604,783	187,591	4,968,604	5,932,304	24,361,031
Foreign exchange loss	6,003,627	23,865,498	-	-	-	29,869,125
Translation adjustment	(5,459,130)	(21,701,020)	(233,012)	(4,523,984)	(6,172,974)	(38,090,120)
31 December 2024	47,493,373	188,794,709	1,879,539	38,145,320	49,706,843	326,019,784

Facilities agreements in USD:

Gain on modification of shareholder loans is recognised either as finance income in the Consolidated Statement of Comprehensive Profit / (Loss) or as an increase in shareholder contribution in Equity. Management makes assessment of each modification and if change in terms, for example, reduction of interest rate, represents terms which are more favourable at the time than market and indicative of the lender acting in capacity of shareholder, then it is recognised through shareholder contribution, otherwise, it is recognised as finance income.

On 1 January 2019, the Group's major shareholders Aterra and Inflection agreed to further reduce the interest rate applicable to all funds drawn under the Facilities Agreement, as amended, from 10% to 9% per annum. The accrued interest accrued quarterly, and is payable on 1 January, 1 April, 1 July and 1 October in each calendar year starting from 31 December 2019 and on the maturity date, being 20 March 2023. The modification of the loan interest from 10% to 9% in 2019 was considered to be non-substantive and resulted recognition of shareholders contribution reserve of \$3,574,206.

13. LONG-TERM AND SHORT-TERM LOANS (Continued)

On 24 December 2019, the Group entered into an amendment and restatement deed relating to the Facilities Agreement. Under this agreement, the lenders have agreed to provide an additional US\$4 million of working capital of which US\$2 million was drawn down in December 2019.

On 26 May 2020, the Group's major shareholders Aterra and Inflection agreed to further reduce the interest rate applicable to all funds drawn under the Facilities Agreement, as amended, from 9% to 7% per annum. The accrued interest accrued quarterly, and is payable on 1 January, 1 April, 1 July and 1 October in each calendar year starting from 1 April 2020 and on the maturity date, being 20 March 2023. Accrued interest at 1 April 2020 was capitalized to the loan principal. The modification of the loan interest from 9% to 7% in 2020 was considered to be non-substantive. As this reduction of interest rate was reflective of market conditions having been benchmarked against Russian bank lending rates offered to the Group it has been recognized through finance income in amount of \$7,817,537.

On 31 December 2020, the Group further amended its existing Facilities Agreement major shareholders Aterra and Inflection, extending the maturity dates of certain components of Tranches F, G, H and I, issued by Inflection from 31 July 2021 and 20 September 2022, as applicable, to 1 January 2023. The modification of the loan in 31 December 2020 was considered to be nonsubstantive and has been recognized through finance income in amount of \$233,058.

Due to the adoption in late 2022, of the 9th Sanctions Package by the European Union against Russia ("EU 9th Sanctions Package"), which include a prohibition against new investment and new financing of companies in the Russian mining sector the Company's lenders Inflection and Aterra, both companies incorporated in the European Union, have determined that they are each unable to enter into the Facilities Agreement Amendments.

The lenders have determined that the EU 9th Sanctions Package prohibits the Facilities Agreements amendments specifically: (i) the extension of the maturity dates for Tranches F, G, H and I that became due 1 January 2023 to 31 December 2027 and (ii) other Tranches that will become due 20 March 2023 to 31 December 2028. The Facilities Agreements amendments were approved by the shareholders of the Company at the Company's Annual General and Special Meeting of shareholders on 05 October 2022.

On September 25, 2023, the corporation received notice that the loan claims specified in the Facilities Agreements, previously held by Inflection Management Corp., have been transferred to SKA Assets Management, a company under the common control with Inflection Management Corp. All other terms and conditions of the loan remained unchanged.

The Secured Loan Funding is secured and the parent and subsidiaries of the Group will act as guarantor of each other's obligations under the Facilities Agreement and all related security documents.

SKA Assets Management loan in RUB:

On 4 February 2021, the Group entered into a loan agreement with SKA ASSETS MANAGEMENT LIMITED, a company under common control with Inflection, in the amount of RUB 750,000,000 (equivalent to approximately C\$12,000,000) with an interest rate of 8.27% per annum, accruing interest on a monthly basis. The Principal will be due and payable on 31 December 2021.

On 19 January 2022, the Group entered into an amendment of agreement with SKA ASSETS MANAGEMENT LIMITED, a company under common control with Inflection extending the maturity date to 31 December 2022, with an interest rate of 10.27% per annum effectively from 1 January 2022.

On 6 October 2022, the Group entered into an amendment of agreement with SKA ASSETS MANAGEMENT LIMITED, a company under common control with Inflection extending the maturity date to 31 December 2025, with an interest rate of 12.50% per annum and increase principal of loan in the amount of RUB 2,250,000,000 (equivalent to approximately C\$43,000,000) effectively from 1 October 2022. The modification of the loan was considered to be substantive and resulted derecognition of old loan in the amount of \$11,871,925 and recognition of new loan at fair value of \$11,871,925.

Lease back in RUB:

In October 2024 and December 2024, the Group entered into lease-back agreements with Universalnaya Lizingovaya Companiya AO and Delta Leasing OOO. These lease-back agreements were classified as financial liabilities in accordance with IFRS 9

On September 2022, the Group entered into lease-back agreements with Interleasing OOO and on the terms of the Interleasing OOO, these lease-back agreements were classified as financial liability in accordance with IFRS 9.

14. PROVISION FOR DECOMMISSIONING AND RESTORATION LIABILITY

The Group's mining, exploration and development activities are subject to various governmental laws and regulations relating to the protection of the environment. These environmental regulations are continually changing and are generally becoming more restrictive. The Group has made, and intends to make in the future, expenditures to comply with such laws and regulations. The Group has recorded a liability and corresponding asset for the estimated future cost of reclamation and closure, including site rehabilitation and long-term treatment and monitoring costs, discounted to net present value. Such estimates are, however, subject to change based on negotiations with regulatory authorities, or changes in laws and regulations.

The Group's provision for decommissioning and restoration liability consists of management's best estimate of reclamation and closure costs for the Mangazeisky project.

Significant reclamation and closure activities include land rehabilitation, demolition of buildings and site facilities and other costs defined by the license requirements.

Asset retirement obligation consists of the following:

	31 December 2024	31 December 2023
Balance at the beginning of the year	3,466,642	4,233,777
Accretion expense	410,738	360,640
Impact of rates adjustment	271,180	(216,556)
Translation adjustment	(428,500)	(911,219)
Balance at the end of the year	3,720,060	3,466,642

At 31 December 2023, the expected life of the Mangazeisky project has been assessed to be 7 years. The projected cost for reclamation and closure of the Mangazeisky project in 2028 has been estimated to be \$7.4m. A Russian Government 7-year zero coupon year bond of 11.42% (2023: 11.76%) has been used in discounting of future cash flows

15. SHAREHOLDERS' EQUITY

Common shares

Authorized: Unlimited number of common shares with a par value of GBP 0.001.

All issued shares are fully paid. Reconciliation of the number and value of common shares at the beginning and end of the period ended 31 December 2024 and 31 December 2023:

		31 December		31 December
Common shares		2024		2023
	Number of		Number of
	common shares	\$	common shares	\$
Balance - Beginning of the year	678,329,611	99,569,970	678,329,611	99,569,970
Issued under share subscription plan	-	-	-	-
Balance - End of the year	678,329,611	99,569,970	678,329,611	99,569,970

Share premium

	31 December	31 December
	2024	2023
Balance - Beginning of the year	23,158,166	23,158,166
Shares issued under share subscription plan	-	-
Balance - End of the year	23,158,166	23,158,166

Share premium comprises the amount subscribed for share capital in excess of nominal value.

Share Subscription Plan

On 27 June 2019, the board of directors resolved, and the Group obtained approval from the TSX and the shareholders an amendment to the Share Bonus Plan. The number of the Bonus Shares issued to insiders of the Group, within any one-year period, and issuable to insiders of the Group, at any time, under the Share Bonus Plan, or when combined with all of the Group's other security based compensation arrangements, shall not exceed 10% of the Group's total issued and outstanding Shares, respectively.

On 2 February 2022, the Group issued 451,764 common shares under the non-executive director subscription plan for the nominal fee of £0.001.

On 16 February 2022, the Group issued 131,765 common shares under the non-executive director subscription plan for the nominal fee of £0.001.

Stock options

The Group has a stock option plan which is intended to provide an incentive to officers, employees, directors and consultants of the Group. Stock options are granted from time to time and the option price is determined by the Compensation Committee of the Board of Directors at its sole discretion but shall not be less than the closing price of the Group's common stock on the "TSX" on the last trading date preceding the date of the grant. The term of each option is granted for a period not exceeding five years from the date of the grant. Except as expressly provided for in the option holder's employment, consulting or termination contract, the option holder may exercise the option to the extent exercisable on the date of such termination at any time within twelve months after the date of termination.

The maximum aggregate number of Shares reserved by the Group for issuance and which may be purchased upon the exercise of all options granted under its option plan together will all shares reserved for issuance under the share bonus plan must not exceed 10% of the outstanding Shares (on a non-diluted basis) issued and outstanding at the time of the granting of the options.

On 18 May 2016, 2,900,000 options were granted to directors, officers and consultants of the Group. The exercise price of the options is \$0.19 per option. Granted stock options vest immediately on the day of grant and expire on 18 May 2021.

On 21 December 2017, 18,000,000 options were grated to directors of the Group. 6,000,000 of these options have an exercise price of \$0.17 per option, 6,000,000 have an exercise price of \$0.25 per share and the remaining 6,000,000 have an exercise price of \$0.30 per share.

On 4 April 2018, 2,600,000 options were granted to directors, officers and consultants of the Group. 866,667 of these options have an exercise price of \$0.22 per option, 866,667 have an exercise price of \$0.30 per share and the remaining 866,666 have an exercise price of \$0.35 per share.

15. SHAREHOLDERS' EQUITY (Continued)

Stock options (Continued)

On 14 November 2018, 3,000,000 options were granted to directors, officers and consultants of the Group. 1,000,000 of these options have an exercise price of \$0.18 per option and will fully invest on 14 November 2019, 1,000,000 have an exercise price of \$0.25 per share and will be fully vested on 14 November 2020, and the remaining 1,000,000 have an exercise price of \$0.30 per share and will be fully vested on 14 November 2021.

On 24 May 2019, 500,000 options were granted to officer of the Group 166,667 of these options have an exercise price of \$0.11 per option and will fully vested on 24 May 2020, 166,667 have an exercise price of \$0.25 per share and will be fully vested on 24 May 2021, and the remaining 166,666 have an exercise price of \$0.30 per share and will be fully vested on 24 May 2022.

During the period ended 31 December 2021, options generated a share-based payments expense of \$ nil (2023: \$ nil). The fair value of options is estimated on the date of grant using the Black-Scholes option pricing model. Where relevant, the expected life used in the model has been adjusted based on management's best estimate for the effects of non-transferability and exercise restrictions (including the probability of meeting market conditions attached to the option). Expected volatility is based on the historical share price volatility over the past 4 years. The expected life of the option was calculated based on the history of option exercises.

Reconciliation of the number of options at the beginning and end of the periods ended 31 December 2024 and 31 December 2023:

		31 December		31 December
		2024		2023
		Weighted average		Weighted average
	Number	exercise price, \$	Number	exercise price, \$
Balance - Beginning of the year	333,333	0.27	4,433,333	0.27
Granted	-	-	-	-
Exercised	-	-	-	-
Expired / Cancelled / Forfeited	(333,333)	0.27	(4,100,000)	0.27
Balance - End of the year	-	-	333,333	0.27

Contributed surplus consists of the following:	31 December 2024	31 December 2023
Balance - Beginning of the year	14,579,774	14,599,817
Share-based payments	-	-
Exercised options	-	-
Expired / Cancelled / Forfeited options	(1,617)	(20,043)
Balance - End of the year	14,578,157	14,579,774

Earnings per share

The calculation of the basic and diluted loss per share attributable to the owners of the Group is based on the following data

	31 December 2024	31 December 2023
Net loss	(67,291,348)	(68,245,904)
Weighted average number of shares used in basic EPS	678,329,611	678,329,611
Basic loss per share	(0.10)	(0.10)
Exercisable stock options	-	333,333
Weighted average number of shares used in diluted EPS	678,329,611	678,662,944
Diluted loss per share	(0.10)	(0.10)

16. RELATED PARTY DISCLOSURES

(a) Financing transactions

The Group has entered into a series of financing transactions with major shareholders. As set out in Note 13.

(b) Purchases from related parties

During the period ended 31 December 2024 the Group has acquired construction materials from TechnoNicol in amount of \$nil (For the same period in 2023: \$\$4,905).

(c) Compensation of key management

Key management are the Group's directors. Compensation awarded to key management comprised:

	31 December	31 December
	2024	2023
Salaries, fees and short-term employee benefits	335,016	554,143
	335,016	554,143

(d) Interest in other entities

Name of subsidiary	Registered address/ Principal place of	Description of	Proportion of nominal value of issued shares held by:
undertaking	business	shares held	Group %	Company %
Silver Bear Resources Inc.	Suite 2500, 120 Adelaide Street West, Toronto, Ontario, Canada, M5H 1T1	Ordinary CAD 120,863,139 shares	100	100
AO Prognoz	36/1 Ordzhonikidze Street, Yakutsk, Republic of Sakha (Yakutia), 677000, Russian Federation	Ordinary RUB 10,000 shares	100	100

All subsidiary undertakings have been included in the consolidation. The voting rights in the subsidiary undertakings are in proportion to the amount of shares held.

The prinicipal activites of the Group's subsidaries are as follows:

• Silver Bear Resources Inc. holding company; and
• AO Prognoz acquisition, exploration, evaluation and development of precious metal properties.

17. OTHER INCOME AND EXPENSES

OTHER INCOME

	2024	2023
Meals distribution	517	66,664
Rent	33,864	65,123
Other income	94,804	47,771
	129,185	179,558

OTHER EXPENSES

	2024	2023
Loss from fuel sales	-	(60,360)
Property tax	(564,186)	(709,406)
Winter road maintenance	(943,559)	(448,148)
Other expenses	(214,242)	(492,391)
	(1,721,987)	(1,710,305)

18. PRODUCTION COST, GENERAL AND ADMINISTRATIVE EXPENSES

Production cost:

	2024	2023
Employee compensation	(6,894,158)	(5,824,441)
Process reagents	(27,424)	(1,275,907)
Repair and maintenance	(1,746,401)	(1,893,408)
Fuel	(4,117,426)	(1,903,681)
Mining tax	(907,926)	(835,768)
Blasting	-	(608,206)
Energy	-	(1,865,974)
Refinery	-	(154,621)
Other	(3,510,116)	(2,330,455)
Change in finished goods and work in progress	8,560,087	8,147,559
	(8,643,364)	(8,544,902)

General and administrative expenses:

	2024	2023
Employee compensation	(2,006,592)	(2,053,004)
Professional fees	(182,936)	(280,480)
Auditors' remuneration - Audit fees	(118,065)	(111,640)
Office expenses	(49,673)	(58,765)
Travel expenses	(13,787)	(22,425)
Legal fees	(73,037)	(200,170)
Investor relations expenses	(61,890)	(67,714)
Depreciation	(7,110)	(15,360)
Amortization	(28,637)	(95,755)
Rent	(232,328)	(253,932)
IT and communications	(181,815)	(269,858)
Other expenses	(192,703)	(106,038)
	(3,148,573)	(3,535,141)

The average number of employees during the period was 306 (2023: 262).

The following table provides the breakdown of Group's employee compensation charged to the income statement:

Employee compensation:

	2024	2023
Salaries, fees and short-term employee benefits	(8,900,750)	(7,877,445)
	(8,900,750)	(7,877,445)

19. FINANCE INCOME AND EXPENSE

Finance Expense

	2024	2023
Interest accrued from loans	(24,361,031)	(16,995,053)
Interest accrued from prepayments	(1,632)	(78,326)
Interest accrued from lease obligations	(982,466)	(204,283)
Accretion expenses	(410,738)	(360,640)
	(25,755,867)	(17,638,302)

Finance Income

	2024	2023
Interest from deposits	450,364	271,703
	450,364	271,703

20. NET CHANGE IN NON-CASH WORKING CAPITAL

Net change in non-cash working capital consists of the following:

	2024	2023
Receivables	(44,297)	4,350,708
Advances received	-	(116,263)
Inventories	(13,878,011)	(6,270,985)
Prepaid expenses	(3,399,302)	(4,320,788)
Accounts payable and accrued liabilities	2,567,764	(4,196,944)
	(14,753,846)	(10,554,272)

Net changes in non-cash working capital for cash flow statement calculated for each company of the Group in their functional currencies. Then translated to the reporting currency using the average rates and consolidated.

21. CAPITAL COMMITMENTS AND CONTINGENCIES

The Group is party to certain management contracts and severance obligations. These contracts contain clauses requiring that additional payments of up to \$70,000 be made upon the occurrence of certain events such as a change of control. As the likelihood of these events taking place is not determinable, the contingent payments have not been reflected in these consolidated financial statements.

The Group may be involved in legal proceedings from time to time, arising in the ordinary course of its business. The amount of ultimate liability with respect to these actions will not, in the opinion of management, materially affect the Group's financial position, results of operations or cash flows. There were no material outstanding legal proceedings as of 31 December 2024.

22. SEGMENTED INFORMATION

The Group has one operating segment based on geographical location being the property in the Russian Federation (Mangazeisky). The Corporate balances are provided below to allow reconciliation back to the primary statements.

As at 31 December 2024

Country/Property	Cash	Inventories	Prepaid	Receivables	Mineral Properties	Property plant and equipment	Depreciation	Interest expense	Loss before tax
Russia - Mangazeisky	3,849,860	32,918,962	8,114,678	402,602	1,565,670	72,042,743	(4,029,729)	(25,755,867)	(67,113,355)
Corporate	108,686	-	197,031	-	-	-	-	-	(154,270)
	3,958,546	32,918,962	8,311,709	402,602	1,565,670	72,042,743	(4,029,729)	(25,755,867)	(67,267,625)

As at 31 December 2023

Country/Property	Cash	Inventories	Prepaid	Receivables	Mineral Properties	Property plant and equipment	Depreciation	Interest expense	Loss before tax
Russia - Mangazeisky	3,484,506	25,295,607	6,829,649	540,941	1,253,257	56,040,535	(5,456,377)	(17,638,302)	(67,315,709)
Corporate	122,934	-	100,629	-	-	-	-	-	75,162
	3,607,440	25,295,607	6,930,278	540,941	1,253,257	56,040,535	(5,456,377)	(17,638,302)	(67,240,547)

23. FINANCIAL INSTRUMENTS

Financial instruments measured at fair value on the consolidated statements of financial position are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

• Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities;
• Level 2 Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
• Level 3 Inputs that are not based on observable market data.

The Group's current financial instruments consist of cash, accounts receivable, short-term loans, lease liabilities and accounts payable and accrued liabilities. These financial assets and liabilities are measured at amortised cost. The fair value of these financial instruments approximates their carrying values due to the short-term nature of these instruments. The Group's non-current financial instruments consist of long-term loans and lease liabilities. The fair value of these instruments approximates their carrying values as any differences are not material. Financial assets and financial liabilities as at 31 December 2024 and 31 December 2023 were as follows:

31 December 2024	Cash and receivables	Loans and other liabilities	Total
Cash and cash equivalents	3,958,546	-	3,958,546
Receivables from customers	173,073	-	173,073
Short-term loans	-	(325,114,025)	(325,114,025)
Long-term loans	-	(905,761)	(905,761)
Advances received	-	(4,976)	(4,976)
Trade and other payables and accrued liabilities	-	(3,147,994)	(3,147,994)
Lease liabilities	-	(3,141,026)	(3,141,026)
	4,131,619	(332,313,782)	(328,182,163)

31 December 2023	Cash and receivables	Loans and other liabilities	Total
Cash and cash equivalents	3,607,440	-	3,607,440
Receivables from customers	531,569	-	531,569
Short-term loans	-	(225,211,102)	(225,211,102)
Long-term loans	-	(38,294,573)	(38,294,573)
Advances received	-	(5,565)	(5,565)
Trade and other payables and accrued liabilities	-	(1,943,691)	(1,943,691)
Lease liabilities	-	(1,370,890)	(1,370,890)
	4,139,009	(266,825,821)	(262,686,812)

The carrying value of cash equivalents, amounts receivable, short-term loans, long-term loans, accounts payable and accrued liabilities and lease liabilities reflected in the consolidated statement of financial position approximate fair value.

Notes to Consolidated Financial Statements

For the year ended 31 December 2024

24. NET DEBT RECONCILIATION

	Long and short-term loans	Long and short-term lease obligation	Subtotal	Cash and cash equivalents	Total
Net Debt as 31 December 2021	(230,909,736)	(2,506,155)	(233,415,891)	2,553,921	(230,861,970)
Cash flow	(21,028,083)	2,473,849	(18,554,234)	2,246,835	(16,307,399)
Non-cash changes:
New leases	-	(1,574,138)	(1,574,138)	-	(1,574,138)
Accrual of interest	(16,995,053)	(204,282)	(17,199,335)	-	(17,199,335)
FX differences	(51,339,875)	481	(51,339,394)	(7,801)	(51,347,195)
Translation differences	56,767,072	439,355	57,206,427	(1,185,515)	56,020,912
Net Debt as 31 December 2022	(263,505,675)	(1,370,890)	(264,876,565)	3,607,440	(261,269,125)
Cash flow	(46,374,072)	3,127,920	(43,246,152)	808,390	(42,437,762)
Non-cash changes:			-		-
New leases	-	(2,611,370)	(2,611,370)	-	(2,611,370)
Accrual of interest	(24,361,031)	(982,466)	(25,343,497)	-	(25,343,497)
FX differences	(29,869,125)	(1,447,825)	(31,316,950)	1,202	(31,315,748)
Translation differences	38,090,118	143,605	38,233,723	(458,486)	37,775,237
Net Debt as 31 December 2023	(326,019,785)	(3,141,026)	(329,160,811)	3,958,546	(325,202,265)

25. INCOME TAXES

	2024	2023
Current tax expense	(23,723)	(1,005,357)
Total tax expense	(23,723)	(1,005,357)

Reconciliation between tax expense and the product of accounting loss multiplied by the Corporation's domestic tax rate is as follows:

	2024	2023
Loss before taxation	(67,267,625)	(67,240,547)
Statutory tax rate	20.00%	20.00%
Tax benefit of statutory rate	13,453,525	13,448,109
Expenses not deductible for income tax purposes	-	(971,758)
Tax agent income tax charge for period	-	(978,386)
Deferred taxes not recognized for the period	(13,477,248)	(12,503,322)
Total tax expense	(23,723)	(1,005,357)

The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off the current tax assets and current tax liabilities or deferred tax assets and liabilities and they relate to taxes levied by the same tax authority.

From January 1, 2025, the Russian Federation has set a profit tax rate of 25%, the recalculation of deferred taxes and Income tax liability was made in the reporting as of December 31, 2024.

26. CONTROLLING AND ULTIMATE CONTROLLING PARTY

As at 31 December 2024 and 2023 the controlling and ultimate controlling party is Kolesnikov Sergei Anatolievich.

27. SUBSEQENT EVENTS

There are no significant events after the reporting date.