Silver X Mining Corp. — Audit Report / Information 2023

Apr 14, 2023

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SILVER X MINING CORP.

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2022 AND TEN MONTHS ENDED DECEMBER 31, 2021

Expressed in US Dollars

SHIM & Associates LLP Chartered Professional Accountants Suite 900 – 777 Hornby Street Vancouver, B.C. V6Z 1S4 T: 604 559 3511 | F: 604 559 3501

S H I M

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Silver X Mining Corp.

Opinion

We have audited the accompanying consolidated financial statements of Silver X Mining Corp. (the “Company”), which comprise the consolidated statements of financial position as at December 31, 2022 and 2021, and the consolidated statements of loss and comprehensive loss, changes in shareholders’ equity (deficiency) and cash flows for the year ended December 31, 2022 and the ten months ended December 31, 2021 and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2022 and 2021, and its consolidated financial performance and cash flows for the year ended December 31, 2022 and the ten months ended December 31, 2021 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS).

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 2 of the consolidated financial statements, which indicates that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the year ended December 31, 2022. 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.

We have determined the matter described below to be the key audit matter to be communicated in our audit report.

Assessment of impairment indicators of development property and exploration and evaluation assets

As at December 31, 2022, the carrying value of development property amounted to $46.9 million and exploration and evaluation assets at $4.4 million. Development property and exploration and evaluation assets are tested for impairment at the end of each reporting period if, in management’s judgment, there is an indicator of impairment. Management applies significant judgment in assessing whether indicators of impairment exist that would necessitate impairment testing. Internal and external factors, such as (i) changes in the amount of the recoverable resources and reserves; (ii) changes in metal prices, capital and operating costs and interest rates; and (iii) the market capitalization of the Company compared to its net assets, are evaluated by management in determining whether there are any indicators of impairment.

We considered this a key audit matter due to (i) the significance of the development property balance and exploration and evaluation assets balance and (ii) the significant judgment by management, in assessing any indicator of impairment, which led to significant audit effort and subjectivity in performing audit procedures to test management’s assessment.

SHIM & Associates LLP Chartered Professional Accountants

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures include, among others:

• Evaluated the intent through discussion and communication with management, and corroborating with the Company’s recently expenditure activity.

• Evaluated the reasonableness of management’s assessment of indicators of impairment, which included the following:

• Assessed the completeness of external or internal factors that could be considered as indicators of impairment of the Company’s development property and exploration and evaluation assets, by considering evidence obtained in other areas of the audit.

• Assessed the reasonableness of factors such as changes in metal prices, capital and operating costs and interest rates by comparing them to external market data and by considering current and past performance of the Company and whether they were consistent with evidence obtained in other areas of the audit, as applicable.

• Reviewed all related documents available, including Technical Report, for possible indicators of impairment.

• Recalculated the Company’s market capitalization and compared it to the Company’s net assets as at December 31, 2022.

Other Information

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

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

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

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 Those Charged with Governance for the Consolidated Financial Statements

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

In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

SHIM & Associates LLP Chartered Professional Accountants

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

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

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

The engagement partner on the audit resulting in this independent auditor’s report is Dong H. Shim.

“SHIM & Associates LLP”

CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, Canada April 13, 2023

SILVER X MINING CORP. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Expressed in US Dollars)

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December 31, December 31,
Notes 2022 2021
Restated (Note 2)
ASSETS
Current assets
Cash $ 1,023,979 $ 4,505,888
Trade and other receivables 6 3,893,279 2,725,046
Prepaid expenses and deposits 224,460 471,765
Inventory 7 1,277,203 331,986
6,418,921 8,034,685
Non-current assets
Other receivables – non current 6 1,326,009 680,739
Right-of-use- assets 10 599,723 890,012
Property and equipment 9 6,582,202 5,434,699
Development property 11 46,931,126 45,937,777
Exploration and evaluation assets 7 4,416,483 5,886,348
59,855,543 58,829,575
TOTAL ASSETS $ 66,274,464 $ 66,864,260
LIABILITIES and SHAREHOLDERS'
EQUITY (DEFICIENCY)
Current liabilities
Accounts payable and accrued liabilities 12 14,972,451 11,641,973
Lease obligation 10 245,920 227,433
Convertible debenture 14 - 4,128,864
Debenture 13 1,813,545 1,631,838
17,031,916 17,630,108
Non-current liabilities
Lease obligation 10 324,378 551,469
Deferred income tax liability 21 8,609,292 7,933,292
Asset retirement obligation 15 1,941,567 1,684,801
Total liabilities 27,907,153 27,799,670
Shareholders' equity
Share capital 16 68,671,043 59,091,280
Deficit (40,694,768) (31,446,815)
Reserves 10,391,036 11,420,125
Total shareholders' equity 38,367,311 39,064,590
TOTAL LIABILITIES and
$ 66,274,464 $ 66,864,260
SHAREHOLDERS' EQUITY
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Nature of operations and going concern (notes 1 & 2) Subsequent events (note 23) APPROVED ON BEHALF OF THE BOARD OF DIRECTORS ON APRIL 13, 2023:

__”Michael Hoffman” Director _”Darryl Cardey”____ Director

See accompanying notes to the consolidated financial statements

4

SILVER X MINING CORP. CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Expressed in US Dollars)

			For the year		For the ten
			ended		months ended
			December 31,		December 31,
	Notes		2022		2021
					Restated(Note 2)
OPERATING REVENUE		$	13,872,800	$	4,114,011
COST OF SALES
Mining and processing			(13,235,176)		(9,445,828)
Amortization			(1,117,558)		(133,817)
			(14,352,734)		(9,579,645)
OPERATING LOSS			(479,934)		(5,465,634)
EXPLORATION EXPENDITURES	8		(225,396)		(429,466)
GENERAL AND ADMINISTRATIVE EXPENSES
Consulting fees	17		(1,070,672)		(932,674)
Directors fees	17		(48,594)		(23,170)
Investor relations			(901,135)		(953,211)
Office and administration			(500,841)		(97,619)
Professional fees			(504,011)		(539,289)
Salaries and benefits	17		(204,903)		(84,453)
Share-based payments	16,17		(522,783)		(3,720,601)
Transfer agent and regulatoryfees			(78,543)		(38,093)
			(3,831,482)		(6,389,110)
Loss before other items			(4,536,812)		(12,284,210)
OTHER ITEMS
Finance income			4,041		45,649
Finance cost			(942,070)		(1,507,402)
Impairment of exploration and evaluation assets	8		(1,090,003)		-
Loss on conversion of convertible debenture	13,15		(2,062,122)		-
Gain on settlement of debt	13,15		196,142		-
Foreign exchange loss			(141,129)		(1,470,079)
Net loss before tax			(8,571,953)		(15,216,042)
Deferred income tax (expense) recovery	21		(676,000)		1,979,000
Net loss		$	(9,247,953)	$	(13,237,042)
Gain (loss) on translation of foreign operations			(916,875)		3,340,013
Comprehensive loss		$	(10,164,828)	$	(9,897,029)
Loss per share, basic and diluted		$	(0.07)	$	(0.15)
Weighted average number of common shares
outstanding			136,006,560		89,787,154

See accompanying notes to the consolidated financial statements

5

SILVER X MINING CORP. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY) (Expressed in US Dollars)

				Other Equity Reserves	Other Equity Reserves	Other Equity Reserves
		Number of		Share-	Share	Equity portion
		Common	Share	based	purchase	of convertible	Accumulated
	Notes	shares	capital	payments	warrants	debenture	OCI	Deficit	Total
Balance, February 28, 2021 Net loss for the period (Restated Note 2) (Loss) gain on translation of foreign operations Warrants exercised Options exercised RSU vesting Acquisition of MMTP MMTP Finder shares Convertible debenture Private placement, net Shares for debt Share-based payments Balance, December 31, 2021(Restated Note 2)	16 16 16 5 5 14 16 16 16	42,969,029 - - 4,117,100 250,000 875,000 42,969,046 1,250,000 - 23,649,286 5,890,418 - 121,969,879	20,861,688 $ - - 1,174,478 125,828 503,937 24,131,030 689,913 - 10,069,923 1,534,483 - 59,091,280 $	2,198,167 $ - - - (71,835) (503,937) - - - - - 3,720,601 5,342,996 $	1,271,673 $ (21,835) - - - 59,285 - 406,678 - - 1,715,801 $	- $ - - - - - - - 153,065 - - - 153,065 $	868,250 $ - 3,340,013 - - - - - - - - 4,208,263 $	(18,209,773) $ $ (13,237,042) - - - - - - - - - (31,446,815) $ $	6,990,005 (13,237,042) 3,340,013 1,152,643 53,993 - 24,131,030 749,198 153,065 10,476,601 1,534,483 3,720,601 39,064,590
Net loss for the period		-	-	-	-	-	-	(9,247,953)	(9,247,953)
(Loss) gain on translation of foreign operations		-	-	-	-	-	(916,875)	-	(916,875)
Private placement, net	16	13,554,441	2,135,082	-	28,658	-	-	-	2,163,740
RSU vesting	16	575,000	317,654	(317,654)	-	-	-	-	-
Options exercised	16	700,000	337,952	(192,936)	-	-	-	-	145,016
Shares for debt	16	1,801,256	290,235	-	-	-	-	-	290,235
Settlement of accrued interest on convertible debenture, net	14,16	1,240,122	253,703	-	-	-	-	-	253,703
Conversion of convertible debenture	14,16	17,157,829	6,245,137	-	-	(153,065)	-	-	6,092,072
Share-basedpayments Balance, December 31, 2022	16	- 156,998,527	- 68,671,043 $	522,783 5,355,189 $	- 1,744,459 $	- - $	- 3,291,388 $	- (40,694,768) $ $	522,783 38,367,311

See accompanying notes to the consolidated financial statements

3

SILVER X MINING CORP. CONSOLIDATED STATEMENTS OF CASH FLOW (Expressed in US Dollars)

				For the ten months
		For the year ended		ended December 31,
		December 31, 2022		2021
				Restated(Note 2)
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net loss for the period	$	(9,247,953)	$	(13,237,042)
Items not affecting cash:
Accretion and interest		553,812		310,866
Amortization		1,117,558		203,757
Deferred income tax expense (recovery)		676,000		(1,979,000)
Gain on settlement of debt		(196,142)		-
Impairment of exploration and evaluation assets		1,090,003		-
Loss on conversion of convertible debenture		2,062,122		-
MMTP finder shares		-		749,198
Share-basedpayments		522,783		3,720,601
		(3,421,817)		(10,231,620)
Changes in non-cash working capital items:
Other receivables and prepaid		(1,728,163)		(574,589)
Accounts payable and accrued liabilities		3,608,843		1,157,056
Inventory		(945,217)		129,023
Net cash outflow from operating activities		(2,486,354)		(9,520,130)
FINANCING ACTIVITIES
Proceeds from exercise of warrants		-		1,152,643
Proceeds from exercise of options		145,016		53,993
Proceeds from private placement		2,316,674		11,350,239
Share issue costs		(165,974)		(873,638)
Lease payments		(202,832)		(209,957)
Netproceeds from debenture		241,188		-
Net cash inflow from financing activities		2,334,072		11,473,280
INVESTING ACTIVITIES
MMTP Cash		-		136,378
Development property		(1,224,311)		-
Purchase ofpropertyand equipment		(1,451,958)		(1,963,417)
Net cash outflow from investing activities		(2,676,269)		(1,827,039)
FX impact on cash		(653,358)		3,183,770
Net change in cash		(3,481,909)		3,309,881
Cash, beginningofperiod		4,505,888		1,196,007
Cash, end ofperiod	$	1,023,979	$	4,505,888

Supplemental cash flow information (note 22)

See accompanying notes to the consolidated financial statements

7

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

1. CORPORATE INFORMATION

Silver X Mining Corp. (the “Company”) was incorporated under the Business Corporations Act of British Columbia on June 4, 2009. The Company is listed on the Toronto Stock Exchange Venture (The “TSXV”) under the symbol AGX, the U.S. Over The Counter Market (The "OTCQB") under the symbol AGXPF and the Frankfurt Stock Exchange under the symbol WPZ.

The Company’s principal business activities are directed towards the exploration and development of mineral properties in the Americas.

The address of the Company’s corporate office and principal place of business is Suite 1430 – 800 West Pender Street, Vancouver, BC, V6C 2V6.

2. BASIS OF PREPARATION

Statement of Compliance with International Financial Reporting Standards (“IFRS”)

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

Basis of Measurement

These consolidated financial statements have been prepared on the historical cost basis, except for certain assets and liabilities measured at fair value.

The consolidated financial statements are presented in US dollars.

The preparation of consolidated financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment of complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4.

Change in Presentation Currency

Effective March 1, 2020, the Company changed its presentation currency from Canadian Dollars (“CAD”) to U.S. Dollars (“USD”) to better reflect the Company’s business activities. In making this change in presentation currency to USD, the Company followed the guidance in IAS 21 The Effects of Changes in Foreign Exchange Rates and have applied the change retrospectively, as if the USD had always been the Company’s presentation currency, as follows:

• Assets and liabilities have been translated into the USD at the rate of exchange prevailing at the respective reporting dates;

• The consolidated statements of loss and comprehensive loss were translated at the average exchange rates for the respective reporting periods, or at the exchange rates prevailing at the applicable transaction date;

• Equity transactions have been translated at the exchange rate prevailing at the date of the transactions; and;

• Exchange differences arising on translation were recorded in accumulated other comprehensive loss in shareholders’ equity.

8

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

2. BASIS OF PREPARATION (continued…)

Change in Presentation Currency (continued…)

The exchange rates used were as follows:

USD/CAD exchange rate	Dec. 31, 2021
Closing at the reporting date	1.2678
Average rate for the period	1.2503

Change in Fiscal Year-end

The Company has changed its fiscal year-end from February 28 to December 31, resulting in a 10 month transition year from March 1, 2021 to December 31, 2021. The reason for the change was to be consistent with its operating subsidiary’s year end.

Going Concern and Continuance of Operations

These consolidated financial statements have been presented on the basis that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Realization values may be substantially different from the carrying values shown and these consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At December 31, 2022, the Company had an accumulated deficit of $40,694,768 since inception, and the Company’s working capital deficit was $10,612,995. The Company is expected to incur further losses in the development of its business.

The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary capital either through external financing sources or organically through its production to meet its obligations and repay its liabilities arising from normal business operations when they come due, which in part, depends on prevailing market conditions, commodity prices and operational success. While the Company has been successful in securing financings in the past, there is no assurance that it will be able to do so in the future.

COVID-19

The recent outbreak of the novel coronavirus COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the Canadian and global economies, disruptions of financial markets, and created uncertainty regarding potential impacts to the Corporation. The extent to which the COVID-19 pandemic impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to the duration, spread, severity, and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on the Company’s suppliers and vendors and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume. The management team is closely following the progression of COVID-19 and its potential impact on the Company. Even after the COVID-19 pandemic has subsided, the Company may experience adverse impacts to its business as a result of any economic recession or depression that has occurred or may occur in the future. Therefore, the Company cannot reasonably estimate the impact at this time to our business, liquidity, capital resources and financial results.

9

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

2. BASIS OF PREPARATION (continued…)

Basis of Consolidation

The consolidated financial statements include the accounts and results of operations of the Company and its wholly owned subsidiaries listed in the following table below.

A subsidiary is an entity in which the Company has control, directly or indirectly, where control is defined as the power to govern the financial and operating policies of an enterprise to obtain benefits from its activities. All material intercompany transactions and balances have been eliminated on consolidation.

Name of Parent	Place of **Incorporation **	Functional Currency	Dec 31, 2022 Ownership	Dec 31, 2021 Ownership
Silver X Mining Corp.	Canada	CAD	N/A - Parent	N/A - Parent
Name of Subsidiary
Mines & Metals Trading (Peru) PLC	Isle of Man	USD	100%	100%
Recuperada SAC	Peru	SOL	100%	100%
San Antonio Mining Peru SAC	Peru	SOL	100%	100%
Mining Sense Gold Peru SAC	Peru	SOL	100%	100%
Minera Tangana SAC	Peru	SOL	100%	100%
Corongo Exploraciones SAC	Peru	SOL	100%	100%
Western Pacific Resources (U.S.) Corp.	USA	USD	100%	100%
Quilla Canada Mining Corp.	Canada	CAD	100%	100%
Talla Canada Mining Corp.	Canada	CAD	100%	100%
Greengold Canada Mining Corp.	Canada	CAD	100%	100%
Quilla Mining SAC	Peru	SOL	100%	100%
Corporacion Minera Talla SAC	Peru	SOL	100%	100%
Green Gold Resources	Ecuador	USD	100%	100%

The functional currency of each entity is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in United States dollar, which is the Company’s reporting currency. The functional currency of the Company and its subsidiaries are noted in the table above.

10

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

2. BASIS OF PREPARATION (continued…)

Amendments to Accounting Standards Adopted During the Period

Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)

In May 2020, the IASB issued amendments to IAS 16 Property, Plant and Equipment that clarify the accounting for the net proceeds from selling any items produced while bringing an item of property, plant and mine development to the location and condition necessary for it to be capable of operating in the manner intended by management. The amendments prohibit entities from deducting amounts received from selling items produced from the cost of property, plant and mine development while the Company is preparing the asset for its intended use. Instead, sales proceeds and the cost of producing these items will be recognized in the consolidated statements of income. The amendments are effective for annual reporting periods beginning on or after January 1, 2022. The amendments apply retrospectively, but only to assets brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented in the financial statements in which the Company first applies the amendments. The Company adopted the standard on the effective date and applying it retrospectively to the fiscal year beginning January 1, 2021 resulted in an increase to revenue from mining operations from the sale of pre-commercial mineral production of $4.1 million, an increase in production costs (including amortization) of $9.6 million during the year ended December 31, 2021, along with a corresponding change in the development property of $5.5 million as at December 31, 2021. The adoption also resulted in a decrease in deferred income tax liability and an increase in deferred tax recovery in the amount of $1,613,000.

3. SIGNIFICANT ACCOUNTING POLICIES

Business combination

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method in accordance with IFRS 3, Business Combinations. The cost of an acquisition is measured as the sum of the consideration transferred, measured at the acquisition date fair value and the amount of any non-controlling interest in the acquiree. Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the Company’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-bytransaction basis. The excess of: (i) total consideration transferred by the Company, measured at fair value, including contingent consideration, and (ii) the non-controlling interests in the acquiree, over the acquisition date fair value of net assets acquired, is recorded as goodwill. Acquisition costs incurred are expensed. Goodwill arising on an acquisition is recognized as an asset and initially measured at cost. Goodwill is not amortized; rather it is tested annually for impairment or at any time during the year that an indicator of impairment is identified.

Inventories

Finished goods ore are valued at the lower of average production cost and net realizable value. Finished goods must be refined offsite to return saleable metals. Net realizable value is the amount estimated to be obtained from sale of the inventory in the normal course of business, less any anticipated costs to be incurred prior to its sale. The production cost of inventories is determined on a weighted average basis and includes cost of raw materials, direct labour, mine-site overhead and depreciation and depletion of mine properties and plant and equipment.

Consumable supplies and spare parts expected to be used in production are valued at the lower of weighted average cost or net realizable value, which includes the cost of purchase as well as transportation and charges to bring them to their existing location and condition.

11

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued…)

A write-down of inventory is recognized as an expense in profit or loss in the period the write-down occurs. Reversal of any write-down of inventory, arising from an increase in net realizable value, is recognized in profit or loss as a reduction in the amount of inventories recognized as an expense in the period in which the reversal occurs.

Property and equipment

This item is presented at acquisition cost, less accumulated depreciation and any accumulated impairment loss, if any. The initial cost of an asset classified in this category includes the purchase price, including import duties and non-refundable purchase taxes and any costs directly attributable to the asset for working conditions and use.

Residual values, useful life and depreciation method of the assets are reviewed and adjusted, if necessary, at the date of each statement of financial position.

When the carrying amount of an asset is greater than its estimated recoverable value, the corresponding loss is recorded. The cost and accumulated depreciation of assets retired or sold are removed from the respective accounts and the resulting gain or loss will affect the results of the year in which it occurs.

Depreciation is calculated using the straight line method based on the estimated useful lives as follows:

	YEARS
Buildings and facilities	20
Machinery and equipment	7-10
Vehicles	5
Furniture and fixtures	10
Computer equipment	4

Depreciation of the plant is calculated based on the unit-of-production method.

Mineral Properties

i) Mines under construction and development costs:

When technical feasibility and economic viability of projects have been determined and the decision to proceed with development has been approved, the expenditures related to construction are capitalized as mines under construction and classified as a component of mine properties, plant and equipment. Costs associated with the commissioning of new assets, in the pre-commercial period before they are operating in the way intended by management, are capitalized. Commercial production is deemed to have occurred when management determines certain production parameters are met. The Company has not completed a technical feasibility study demonstrating economic viability on their Recuperada Project.

ii) Mine properties:

Once a mineral property has been brought into commercial production as intended by management, costs of any additional work on that property are expensed as incurred, except for large development programs, which will be deferred and depleted over the remaining useful life of the related assets. Mine properties include deferred underground development costs and decommissioning, and restoration costs related to the reclamation of mine properties. Mine properties are derecognized upon disposal, or impaired when no future economic benefits are expected to arise from continued use of the asset. Any gain or loss on disposal of the asset, determined as the difference between the proceeds received and the carrying amount of the asset is recognized in profit or loss.

12

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued…)

Costs of producing mine properties are depreciated and depleted on the unit-of-production basis using estimated proven and probable reserves. Note that at this time the Company has no proven and probable reserves. Depreciation or depletion is recorded against the mine property only upon the commencement of commercial production.

Exploration expenditures are expensed as incurred at mine properties, unless the nature of the expenditures are to convert mineral resources into mineral reserves or in the absence of a mineral resource estimate, are to define areas to be included in the mine plan. Any amounts deferred in this regard are depreciated based on the unit-of-production method.

Mine properties are recorded at cost, net of accumulated depreciation and depletion and accumulated impairment losses and are not intended to represent future values.

Recovery of capitalized costs is dependent on successful development of economic mining operations or the disposition of the related mineral property.

Decommissioning and Restoration

The Company is subject to various governmental laws and regulations relating to the protection of the environment. The environmental regulations are continually changing and are generally becoming more restrictive.

Decommissioning and restoration obligations encompass legal, statutory, contractual or constructive obligations associated with the retirement of a long-lived tangible asset (for example, mine or site reclamation costs) that results from the acquisition, construction, development and/or normal operation of a long-lived asset. The retirement of a long-lived asset is reflected by an other-than-temporary removal from service, including sale of the asset, abandonment or disposal in some other manner.

The present value of a liability for decommissioning and restoration is recorded in the period in which the obligation first arises. The Company records the estimated present value of future cash flows associated with site closure and reclamation as a long-term liability and increases the carrying value of the related assets for that amount. Over time, the liability is increased to reflect an interest element in the estimated future cash flows (accretion expense) considered in the initial measurement of fair value. The capitalized cost is depleted or depreciated on either the unit-of-production basis or the straight-line basis, as appropriate. The Company's estimates of its provision for decommissioning and restoration obligations could change as a result of changes in regulations, changes to the current market-based discount rate, the extent of environmental remediation required, and the means of reclamation or cost estimates. Changes in estimates are accounted for in the period in which these estimates are revised.

Impairment of Non-Financial Assets

For the purposes of assessing impairment, the recoverable amount of an asset, which is the higher of its fair value less costs to sell and its value in use, is estimated. If it is not possible to estimate the recoverable amount of an individual asset, the asset is included in the cash-generating unit to which it belongs and the recoverable amount of the cash generating unit is estimated. As a result, some assets are tested individually for impairment, and some are tested at the cash-generating unit level. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets.

13

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued…)

Intangible assets with an indefinite useful life and intangible asset not yet available for use are also tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the asset is impaired such as decreases in metal prices, an increase in operating costs, a decrease in mineable reserves or a change in foreign exchange rates. The Company also considers net book value of the asset, the ongoing costs required to maintain and operate the asset, and the use, value and condition of the asset.

An impairment loss is recognized for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. To determine the value-in-use, management estimates expected future cash flows from each asset or cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. Future cash flows used in the determination of value in use are estimated based on expected future production, recoverability of reserves, commodity prices, operating costs, reclamation costs and capital costs. Management estimates of future cash flows are subject to risks and uncertainties. It is reasonably possible that changes in estimates could occur which may affect the recoverable amounts of assets, including the Company’s investments in mineral properties.

Fair value is determined with reference to discounted estimated future cash flow analysis or on recent transactions involving dispositions of similar properties.

An impairment loss for a cash-generating unit is first allocated to reduce the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is allocated on a pro rata basis to the other assets in the cash-generating unit. All assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist or may have decreased. An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, however only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash generating unit) in prior years.

Loss per Share

Basic loss per share is calculated by dividing the loss available to common shareholders by the weighted average number of common shares outstanding during the year. The weighted average number of common shares outstanding used for the calculation of the diluted per common share amount assumes that the proceeds to be received on the exercise of dilutive share options are used to repurchase common shares at the average market price during the period. In a loss year, potentially dilutive equity instruments are excluded from the loss per share calculation, as the effect would be anti-dilutive.

Shares held in escrow, other than where their release is subject to the passage of time, are not included in the calculation of the weighted average number of common shares outstanding.

14

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued…)

Share Capital

Equity instruments are contracts that give a residual interest in the net assets of the Company. Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company’s common shares, share warrants and options are classified as equity instruments.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds.

Warrants issued by the Company typically accompany an issuance of shares in the Company (a “unit”) and entitle the warrant holder to exercise the warrants for a stated price for a stated number of common shares in the Company. The Company uses the residual approach when allocating the fair value of the share purchase warrants issued in conjunction with the offering of units through a private placement. The Company determines the fair value of the common share and the residual value is allocated to the share purchase warrant for unit offerings that contain a common share and a share purchase warrant.

Share-based Payments

Where equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Performance vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether these vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.

Where terms and conditions of options are modified before they vest, any incremental increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.

Where equity instruments are granted to employees or others providing similar services, they are recorded at the fair value of the equity instrument granted at the grant date. The grant date fair value is recognized in profit or loss over the vesting period, described as the period during which all the vesting conditions are to be satisfied.

Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received or at the fair value of the equity instruments issued (if it is determined the fair value of goods or services cannot be reliably measured), and are recorded at the date the goods or services are received.

All equity-settled share-based payments are reflected in other equity reserve until exercised. Upon exercise, shares are issued, and the amount reflected in other equity reserve is credited to share capital, adjusted for any consideration paid.

Where a grant of options is cancelled during the vesting period, excluding forfeitures when vesting conditions are not satisfied, the Company immediately accounts for the cancellation as an acceleration of vesting and recognizes the amount that otherwise would have been recognized for services received over the remainder of the vesting period. Any payment made to the employee on the cancellation is accounted for as the repurchase of an equity interest, except to the extent the payment exceeds the fair value of the equity instrument granted, measured at the repurchase date. Any such excess is recognized as an expense.

15

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued…)

Financial Instruments

Classification

Financial assets are classified at initial recognition as either: measured at amortized cost, fair value through profit or loss (“FVTPL”), or fair value through other comprehensive income ("FVTOCI"). The classification depends on the Company’s business model for managing the financial assets and the contractual cash flow characteristics. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income (“OCI”).

Fair value through profit or loss (“FVTPL”) - Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed to profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial asset held at FVTPL are included in profit or loss in the period in which they arise.

Fair value through other comprehensive income (“FVTOCI”) - Investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently, they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.

Financial assets at amortized cost - A financial asset is measured at amortized cost if the objective of the business model is to hold the financial asset for the collection of contractual cash flows, and the asset's contractual cash flows are comprised solely of payments of principal and interest. They are classified as current assets or non-current assets based on their maturity date and are initially recognized at fair value and subsequently carried at amortized cost less any impairment.

Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL or the Company has opted to measure at FVTPL.

The Company has classified its financial instruments as follows:

Financial instrument	Classification
Cash	FVTPL
Receivables	Amortized cost
Deposits	Amortized cost
Accountspayable and accrued liabilities	Amortized cost

Measurement

Financial assets and liabilities at FVTPL are initially recognized at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets or liabilities held at FVTPL are included in profit or loss in the period in which they arise. Where the Company has opted to designate a financial liability at FVTPL, any changes associated with the Company's credit risk will be recognized in OCI.

Financial assets and liabilities at amortized cost are initially recognized at fair value, and subsequently carried at amortized cost less any impairment.

16

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued…)

Impairment

The Company assesses on a forward-looking basis the expected credit loss ("ECL") associated with financial assets measured at amortized cost, contract assets and debt instruments carried at FVTOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognized in profit or loss and reflected in an allowance account against receivables. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Foreign Currency Translation

The functional currency is the currency of the primary economic environment in which an entity operates and may differ from the currency in which the entity conducts transactions.

Transactions in currencies other than the functional currency are translated to the functional currency at exchange rates prevailing on the dates of the transactions. Monetary assets and liabilities that are denominated in currencies other than the functional currency are translated to the functional currency using the exchange rate prevailing on the date of the consolidated statement of financial position, while nonmonetary assets and liabilities are translated at historical rates.

Exchange gains and losses arising from the translation of foreign currency-denominated transactions or balances are recorded as a component of net income (loss) in the period in which they occur.

The results of operations and financial position of a subsidiary where the functional currency is different from the presentation currency are translated as follows: assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; expenses are translated at the average exchange rate for the year, all resulting exchange differences are recognized in other comprehensive income or loss. On disposition or partial disposition of a foreign operation, the cumulative amount of any respective exchange difference is recognized in profit or loss.

Income Taxes

Income tax expense comprises current and deferred tax. Current and deferred taxes are recognized in profit or loss, except to the extent that it relates to a business combination or items recognized directly in equity or in other comprehensive income/loss.

Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current year and any adjustment to income taxes payable in respect of previous years. Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted by the year-end date.

Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base, except for those taxable temporary differences arising on the initial recognition of goodwill or on the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.

Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary differences is restricted to those instances where it is probable that future taxable profit will be available against which the deferred tax asset can be utilized. At the end of each reporting year, the Company reassesses unrecognized deferred tax assets. The Company recognizes a previously unrecognized deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

17

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued…)

Compound financial instruments

Compound financial instruments issued by the Company comprise of a convertible debenture that can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value. The liability component of a compound financial instrument is recognized initially at the fair value of the similar liability that does not have an equity conversion option. The equity component is recognized initially as the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition except on conversion or expiry.

Financial liabilities are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

Future accounting standards

Amendments to IAS 1 Presentation of Financial Statements

The amendment clarifies the requirements relating to determining if a liability should be presented as current or non-current in the statement of financial position. Under the new requirement, the assessment of whether a liability is presented as current or non-current is based on the contractual arrangements in place as at the reporting date and does not impact the amount or timing of recognition. The amendment applies retrospectively for annual reporting periods beginning on or after January 1, 2023. The Company does not believe that these amendments will have a material impact on the consolidated financial statements.

The Company continues to review changes to IFRS standards. There are no other pending IFRSs or IFRIC interpretation that are expected to be relevant to the Company’s consolidated financial statements.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

The Company’s management makes judgments in its process of applying the Company’s accounting policies in the preparation of its consolidated financial statements. In addition, the preparation of the financial data requires that the Company’s management make assumptions and estimates of the effects of uncertain future events on the carrying amounts of the Company’s assets and liabilities at the end of the reporting period and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates as the estimation process is inherently uncertain. Estimates are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to estimates and the resulting effects on the carrying amounts of the Company’s assets and liabilities are accounted for prospectively.

18

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENT (continued…)

Significant judgments in applying accounting policies

The critical judgments that the Company’s management has made in the process of applying the Company’s accounting policies, apart from those involving estimations, that have the most significant effect on the amounts recognized in the Company’s consolidated financial statements are as follows:

(i) Impairment of assets

The carrying value of property, plant and equipment, exploration and evaluation properties and the Company’s mineral property is reviewed each reporting period to determine whether there is any indication of impairment. If the carrying amount of an asset exceeds its recoverable amount, the asset is impaired and an impairment loss is recognized in profit or loss. The assessment of fair values, including those of the cashgenerating units, require the use of estimates and assumptions for recoverable production, long-term commodity prices, discount rates, foreign exchange rates, future capital requirements and operating performance. Changes in any of the assumptions or estimates used in determining the fair value of assets could impact the impairment analysis.

(ii) Economic recoverability and probability of future economic benefits of exploration and development costs

Management has determined that acquisition costs incurred which have been capitalized are economically recoverable. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefit including geologic and metallurgic information, history of conversion of mineral deposits to proven and probable reserves, scoping and feasibility studies, accessible facilities, existing permits and life of mine plans.

(iii) Functional currency

The functional currency for each of the Company’s subsidiaries, joint ventures and investments in associates, is the currency of the primary economic environment in which the entity operates. The Company has determined the functional currency of each entity is either the Peruvian SOL, Canadian Dollar, or US Dollar (see note 2 for more details). Determination of functional currency may involve certain judgments to determine the primary economic environment and the Company reconsiders the functional currency of its entities if there is a change in events and conditions which determined the primary economic environment.

(iv) Commencement of commercial production

Costs associated with the commissioning of new assets, in the pre-commercial period before they are operating in the way intended by management, are capitalized, net of any pre-production revenues. Commercial production is deemed to have occurred when management determines that, amongst other items, the completion of operational commissioning of major mine components has been reached, operating results, which includes the grade and volume of material mined, are being achieved consistently for a period of time, and there are indicators that these operating results will continue, all of which involve management judgments.

19

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENT (continued…)

Key sources of estimation Uncertainty

The areas which require management to make significant estimates and assumptions in determining carrying values include, but are not limited to:

(i) Mineral resource estimation

The carrying value and recoverability of mineral properties requires management to make certain estimates, judgments and assumptions about each project. Management considers the economics of the project, including the latest resources prices and the long-term forecasts, and the overall economic viability of the project. The determination of mineral resources also requires the use of estimates. The Company estimates its mineral resources based on information compiled by Qualified Persons as defined in accordance with Canadian Securities Administrators National Instrument 43-101, Standards for Disclosure of Mineral Projects. There are numerous uncertainties inherent in estimating mineral resources and assumptions that are valid at the time of estimation may change significantly when new information becomes available. Changes in the forecasted prices of commodities, exchange rates, production costs or recovery rates may change the economic status of resources and may result in changes to resource estimates.

(ii) Depreciation and depletion

Plants and other facilities used directly in mining activities are depreciated using the units-of-production (“UOP”) method over a period not to exceed the estimated life of the ore body based on recoverable metal to be mined from estimated resources. Mobile and other equipment are depreciated, net of residual value, on a straight-line basis, over the useful life of the equipment to the extent that the useful life does not exceed the related estimated life of the mine based on estimated recoverable resources.

The calculation of the UOP rate, and therefore the annual depreciation and depletion expense, could be materially affected by changes in the underlying estimates. Changes in estimates can be the result of actual future production differing from current forecasts of future production, expansion of mineral reserves through exploration activities, differences between estimated and actual costs of mining and differences in metal prices and smelting and refining costs used in the estimation of mineral reserves.

Significant judgment is involved in the determination of useful life and residual values for the computation of depreciation and depletion and no assurance can be given that actual useful lives and residual values will not differ significantly from current assumptions.

(iii) Inventories

Expenditures incurred, and depreciation and depletion of assets used in mining and processing activities are deferred and accumulated as the cost of ore in stockpiles, concentrate stockpiles, in-process and finished metal inventories. These deferred amounts are carried at the lower of average cost or net realizable value (“NRV”). Write-downs of ore in stockpiles, ore in-process and finished metal inventories resulting from NRV impairments are reported as a component of current period costs. The primary factors that influence the need to record write-downs include prevailing and long-term metal prices and prevailing costs for production inputs such as labour, fuel and energy, materials and supplies, as well as realized ore grades and actual production levels.

20

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENT (continued…)

(iv) Decommissioning and restoration provision

The Company assesses its provision for reclamation and remediation on an annual basis or when new material information becomes available. Mining and exploration activities are subject to various laws and regulations governing the protection of the environment. In general, these laws and regulations are continually changing and the Company has made, and intends to make in the future, expenditures to comply with such laws and regulations. Accounting for reclamation and remediation obligations requires management to make estimates of the future costs the Company will incur to complete the reclamation and remediation work required to comply with existing laws and regulations at each mining operation and exploration and development property. Actual costs incurred may differ from those amounts estimated. Also, future changes to environmental laws and regulations could increase the extent of reclamation and remediation work required to be performed by the Company. Increases in future costs could materially impact the amounts charged to operations for reclamation and remediation. The provision represents management’s best estimate of the present value of the future reclamation and remediation obligation. The actual future expenditures may differ from the amounts currently provided.

(v) Share-based payments

‐ Share-based payments are determined using the Black Scholes option pricing model based on estimated fair values of all share ‐ based awards at the date of grant and is expensed to profit or loss over each award’s ‐ vesting period. The Black Scholes option pricing model utilizes subjective assumptions such as expected price volatility and expected life of the option. Changes in these input assumptions can significantly affect the fair value estimate.

For asset acquisitions, contingent share consideration is an estimate of the fair value of the contingent amounts expected to be payable in the future. The fair value is based on number of contingent shares, the share price of the Company on the date of acquisition and management’s expectations of probability.

(vi) Contingencies

Due to the size, complexity and nature of the Company’s operations, various legal and tax matters are outstanding from time to time. In the event that management’s estimate of the future resolution of these matters’ changes, the Company will recognize the effects of the changes in its consolidated financial statements on the date such changes occur.

(vii) Deferred taxes

In assessing the probability of realizing income tax assets recognized, management makes estimates related to expectations of future taxable income, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. Forecasted cash flows from operations are based on life of mine projections internally developed and reviewed by management. The likelihood that tax positions taken will be sustained upon examination by applicable tax authorities is assessed based on individual facts and circumstances of the relevant tax position evaluated in light of all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. At the end of each reporting period, the Company reassesses unrecognized income tax assets.

21

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

5. BUSINESS COMBINATION

On June 23, 2021, the Company acquired the Nueva Recuperada silver-lead-zinc project through the business combination of Mines & Metals Trading (Peru) PLC (“MMTP”).

The acquisition was accounted for as a business combination, in which the assets acquired and the liabilities assumed are recorded at their estimated fair values.

The Company issued 42,969,046 common shares to acquire all outstanding shares of MMTP. The total fair value of the consideration was $24,131,030.

The Company issued 1,250,000 common shares valued at $689,914 and 316,848 share purchase warrants valued at $59,285 (note 16) as finder’s fee and non-cash transaction costs, which have been included in finance cost for the ten months ended December 31, 2021.

The purchase price allocation is as follows:		Total
Consideration – 42,969,046 common shares(note 16)	$	24,131,030
Fair value of assets and liabilities acquired
Cash		136,378
Trade and other receivables		3,126,141
Prepaid expenses and deposits		10,090
Inventory		461,009
Property, plant and equipment		3,464,302
Development property (note 11)		47,107,531
Accounts payables and accruals		(10,220,129)
Convertible debenture and other debentures (notes 13 & 14)		(6,807,876)
Asset retirement obligations (note 15)		(3,234,124)
Deferred tax liabilities		(9,912,292)
Fair value of net assets acquired	$	24,131,030

6. TRADE AND OTHER RECEVIABLES

		December 31,		December 31,
		2022		2021
Supplier advances		1,717,574		1,324,053
Reclamation bond		1,326,009		680,739
Tax receivables – Peru (IGV)		2,148,879		1,324,911
Tax receivables – Canada(GST)		26,826		76,082
	$	5,219,288	$	3,405,785
Non-current		(1,326,009)		(680,739)
Current		3,893,279		2,725,046

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SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

7. INVENTORY

	December 31,	December 31,
Finished goods inventory	2022 153,801	2021 -
Concentrate inventory	262,747	146,207
Stockpile inventory	490,644	16,189
Material and supplies	370,011	169,590
Current	1,277,203	331,986

8. EXPLORATION AND EVALUATION ASSETS

The Company has capitalized the following acquisition costs of its mineral property interests during the year ended December 31, 2022:

		Ecuador		Peru
		Property		Properties
		(a)		(b)		Total
Balance February 28, 2021	$	1,163,816	$	4,728,240	$	5,892,056
Foreign exchange impact		(1,128)		(4,580)		(5,708)
Balance December 31, 2021	$	1,162,688	$	4,723,660	$	5,886,348
Impairment of exploration and evaluation assets		(1,090,003)		-		(1,090,003)
Foreign exchange impact		(72,685)		(307,177)		(379,862)
Balance December 31, 2022	$	-	$	4,416,483	$	4,416,483

a) Julian Property, Ecuador

On January 27, 2020, the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Green Oil S.A. (“Green Oil”) with respect to the acquisition by the Company from Green Oil of certain mineral claims located in Ecuador known as the Julian Property. The Julian Property is located in the Province of Azuay in the canton of Oña.

On June 11, 2020, the Company acquired the Julian Property through the issuance of 6,000,000 common shares valued at $1,042,436, to Green Oil and its nominees. The Company also paid direct transaction costs of $72,173.

During the year ended December 31, 2022, the Company did not undertake any works on the property. Further evaluation of the available mineral resources data has not led to the commercially viable quantities of mineral resources. As at December 31, 2022, the Company had concluded that the property is impaired resulting in an impairment loss of $1,090,003.

23

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

8. EXPLORATION AND EVALUATION ASSETS (continued…)

b) Coriorcco & Las Antas Property, Peru

On October 8, 2020, the Company purchased the option rights to acquire a 100% interest in the Coriorcco property and up to an 85% legal and beneficial interest in the Las Antas property located in Peru. As consideration for the acquisition of the option rights, the Company paid cash of $1,500,000, issued 7,050,000 common shares and paid a finder’s fee with 629,836 common shares, with an aggregate value of $2,958,641.

Under the Coriorcco Option Agreement, the Company will have the right to acquire a 100% interest in Coriorcco by making a payment of $3,000,000 plus general sales tax and granting a production royalty to the underlying concession holder (the “Coriorcco Royalty” of 1% NSR) upon fulfilling the precedent conditions, some of which remain to be met, which include commencement of mining and production payments.

The Coriorcco Royalty can be repurchased for $1,000,000 (the “Buy-Back Right”) prior to the fifth anniversary of the Coriorcco Option Agreement. Every year following the fifth anniversary of the Coriorcco Option Agreement, the cost of the Buy-Back Right increases by 10%.

Additionally, as part of the agreement, the Company will pay $190,000 (upon completion of registering the amended agreement with the Peruvian Public Registry, which had not occurred as at December 31, 2022 and will be required to pay up to $850,000 (in cash or shares at the Company’s option) based on the size of the mineral resource (in the measured and indicated category) that is established on the Coriorcco property in a technical report prepared in accordance with National Instrument 43-101 on the following conditions:

$350,000 if a measured and indicated resource of 500,000 to 999,999 ounces of gold is established; $450,000 if a measured and indicated resource of 1,000,000 to 1,499,999 ounces of gold is established; or $850,000 if a measured and indicated resource in excess of 1,500,000 ounces of gold is established

The Company was required to commence small scale mining by April 2022 with the option to extend a further twelve months to April 2023 by incurring $200,000 in exploration expenditures and is currently reviewing its exploration plan aiming to extend the commencement of the small scale mining in 2023.

The precedent condition to exercise the option in Las Antas property regarding the completion of the $2,000,000 exploration expenditure has not been met as at December 31, 2022.

c) Lily 19 Claims, Peru

Silver X acquired the Lily 19 claims through an earn in agreement with Barrick Gold Corp. in Q4 2021. Under the terms of the of the agreement, to acquire a 100% interest in the project Silver X must:

• Complete at least 3,000 m of diamond drilling in the concession

• Map and sample the surface

• Maintain the claims in good standing

• Make a one-time payment of $25,000 (paid)

The above must be achieved wthin four (4) years of the date of signing, or two (2) years from receiving a drilling permit for the property. Furthermore, Barrick will retain a 2% NSR, of which 1% can be bought back for $2,000,000.

24

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

8. EXPLORATION AND EVALUATION ASSETS (continued…)

EXPLORATION EXPENDITURES

==> picture [366 x 187] intentionally omitted <==

----- Start of picture text -----

Ecuador Peru Total
-
Geological consulting 62,020 62,020
-
Concession payments 148,709 148,709
Other - 14,667 14,667
Year ended
$ - $ 225,396 $ 225,396
December 31, 2022
Ecuador Peru Total
-
Geological consulting 228,549 228,549
Concessions payments 24,629 79,253 103,882
Other - 97,035 97,035
Ten months ended
$ 24,629 $ 404,837 $ 429,466
December 31, 2021
----- End of picture text -----

9. PROPERTY AND EQUIPMENT

	As at December		Foreign	As at December
COST	31, 2021	Purchases	exchange impact	31, 2022
Building and facilities	121,341	65,771	447	187,559
Machinery and equipment	816,957	544,838	3,704	1,365,499
Vehicles, furniture and other equipment Plant	208,611 4,428,192	298,632 542,717	2,023 108,724	509,266 5,079,633
	$ 5,575,101	$ 1,451,958	$ 114,898	$ 7,141,957

		As at December				Foreign		As at December
ACCUMULATED DEPRECIATION		31, 2021		Depreciation		exchange impact		31, 2022
Building and facilities		3,128		6,153		131		9,412
Machinery and equipment		111,359		159,266		1,079		271,704
Vehicles, furniture and other equipment		25,915		50,594		343		76,852
Plant		-		200,434		1,353		201,787
	$	140,402	$	416,447	$	2,906	$	559,755

		As at December		As at December
NET CARRYING VALUE		31, 2021		31, 2022
Building and facilities		118,213		178,147
Machinery and equipment		705,598		1,093,795
Vehicles, furniture and other equipment		182,696		432,414
Plant		4,428,192		4,877,846
	$	5,434,699	$	6,582,202

25

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

10. LEASES

The Company’s leases relate to equipment leases and office lease in Peru. Right of use assets of $959,952 was recognized during the year ended December 31, 2021. Depreciation of right-to-use assets is calculated using the straight-line method over the remaining lease term. Right of use assets associated with the Company’s lease obligation as at December 31, 2022:

a) Right-of-Use Asset

==> picture [405 x 223] intentionally omitted <==

----- Start of picture text -----

December 31, December 31,
2022 2021
-
Opening balance 890,012
-
Recognized on adoption of IFRS 16 959,952
Less: depreciation (290,289) (69,940)
$ 599,723 $ 890,012
Lease Obligations
December 31, December 31,
2022 2021
-
Opening balance 778,902
-
Recognized on adoption of IFRS 16 808,952
Less: interest 102,880 28,907
Less: lease payments (311,484) (58,957)
$ 570,298 $ 778,902
----- End of picture text -----

b) Lease Obligations

Discounted lease obligation associated with the Company’s leases as at December 31, 2022 and 2021:

December 31,	December 31,
2022 Current 245,920	2021 227,433
Longterm 324,378	551,469
Total discounted lease obligation $ 570,298	$ 778,902

Undiscounted lease obligation associated with the Company’s leases as at December 31, 2022 and 2021:

		December 31,		December 31,
		2022		2021
Within a year		318,484		311,484
Later than ayear		363,185		681,670
Total undiscounted lease obligation	$	681,669	$	993,154

When measuring the lease liability, the Company discounted the lease obligation using a discount rate of 15%.

26

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

11. DEVELOPMENT PROPERTY

Opening balance, February 28, 2021	$	-
MMTP business combination – development property acquired		47,107,531
ARO reversal		(1,169,754)
As at December 31, 2021 (Restated Note 2)	$	45,937,777
ARO adjustments		174,362
Property additions		1,224,311
Depreciation and amortization		(410,822)
Foreign exchange		5,498
As at December 31, 2022		46,931,126

During the period ended December 31, 2022, the Company incurred $1,224,310 in further developing Nueva Recuperada Project.

12. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	December 31,		December 31,
Trade payable	2022 9,534,099		2021 7,958,234
Accrued liabilities	5,438,352		3,683,739
$	14,972,451	$	11,641,973

13. DEBENTURES

		December 31,		December 31,
		2022		2021
Trafigura Peru S.A.C. (i)		1,363,451		1,152,470
Blanco SAFI S.A.C (ii)		226,425		370,941
Herr - Glass (iii)		205,168		107,075
Other		18,501		1,352
	$	1,813,545	$	1,631,838

i) On March 8 2022, the company signed an amendment with the lender extending the loan to January 2024 and increasing it by $641,300 to $1,400,000. Under the new agreement the monthly payments will start in June 2022 and will be comprised by 19 installments of $58,300 each and 1 installment of $292,300 due on January 2024. The loan bears an interest of 6.0% + Libor (3M) per annum. The remaining balance relates to a short-term line of credit with the lender. The line of credit bears an interest of 5.5% + Libor per annum.

ii) The loan bears an interest of 1.5% monthly. The loan was due as at December 31, 2022. The Company is under negotiations with the lender to extend the maturity date.

iii) The loan bears an interest of 5% per annum with a private lender, and was due as at December 31, 2022. The Company is under negotiations with the lender to extend the maturity date.

27

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

14. CONVERTIBLE DEBENTURE

On June 23, 2021, the Company acquired a convertible debenture from the business combination with MMTP (note 5). The debenture is with Baker Steel. The convertible debenture bears a 10% interest rate and is convertible in whole or in part at any time up to and including the maturity date of June 30, 2022 into common shares of the Company at $0.4677 per share.

On January 27, 2022, the Company issued 780,250 common shares at a price of C$0.31 for the settlement of $200,000 of accrued interest (up to December 31, 2021) on the convertible debenture resulting in a gain on settlement in the amount of $14,412 (Note 16).

On April 18, 2022, the Company entered into agreement with the debenture holders that it wished to repay the convertible debenture early through issuance of 8,641,183 common shares. In connection with the early conversion of the debenture, the Company agreed to pay a prepayment fee of $88,767 which was settled by issuance of 372,496 common shares and issued additional 8,144,150 common shares at a price of C$0.33 resulting in a gain on settlement in the amount of $23,031 and a loss on conversion of $2,062,122 respectively (Note 16).

Opening balance, March 1, 2020, February 28, 2021	$	-
MMTP business combination – convertible debenture acquired		5,000,000
Reclassification – equity portion		(153,065)
Conversion		(1,000,000)
Accretion and interests		281,929
As at December 31, 2021 Accretion and interests	$	4,128,864 144,939
Conversion		(4,273,803)
As at December 31, 2022		-

15. ASSET RETIREMENT OBLIGATION

Opening balance, March 1, 2020, February 28, 2021	$	-
MMTP business combination – asset retirement
obligation acquired		3,234,124
Revaluation		(1,169,755)
Foreign exchange and other		(379,568)
As at December 31, 2021	$	1,684,801
Accretion		82,404
Foreign exchange and other		174,362
As at December 31, 2022		1,941,567

The Company included a provision for the future cost of remediation of the development property. The carrying balance represents the present value of the remediation cost which are expected to be incurred from 2030 to 2039. The provision has been determined based on a third-party plan commissioned by the Company and approved by the Peruvian Directorate General of Mining Environmental Affairs of the Ministry of Energy and Mines.

The undiscounted provision for environmental rehabilitation is estimated at $2.6M as at December 31, 2022 (December 31, 2021: $2.6M), over a period of 9-14 years, and discounted using a risk-free rate of 4% (December 31, 2021: 3%) per annum. The Company has a reclamation bond in place for $2.8M.

28

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

16. SHARE CAPITAL AND RESERVES

The Company is authorized to issue an unlimited number of common shares without par value.

Current period ended December 31, 2022

• a) On January 27, 2022, the Company issued 780,250 common shares at a price of C$0.31 for the settlement of $200,000 of accrued interest (up to December 31, 2021) on the $4,000,000 Baker Steel convertible debenture resulting in a gain on settlement in the amount of $14,412 (Note 14). In connection with the settlement of the accrued interest, the Company paid share issue costs of $13,041 in cash.

• b) On June 8, 2022, the Company issued 459,872 common shares at a price of C$0.23 for the settlement of $109,589 of accrued interest (from January 1, 2022 to the settlement date) on the $4,000,000 Baker Steel convertible debenture resulting in a gain on settlement in the amount of $28,433.

The Company issued 8,641,183 common shares valued at $4,117,279 to Baker Steel convertible debenture holders upon conversion. In connection with the early conversion of the debenture, the Company issued additional 8,144,150 common shares at a price of C$0.33 resulting in a loss on conversion in the amount of $2,062,122. In addition, the Company agreed to pay a prepayment fee of $88,767 which was settled by issuing 372,496 common shares at a price of C$0.23 resulting in a gain on settlement in the amount of $23,031(Note 14).

• c) On August 22, 2022, the Company issued 1,801,256 common shares at a price of C$0.21 for the debt settlement agreement with Maverix Metals Inc. in the amount of $494,706 less 15% withholding tax payable to Peruvian government resulting in a gain on settlement in the amount of $130,265.

• d) On October 14, 2022, the Company closed the first tranche of its private placement with the placement of 8,648,254 units of the Company at a price of C$0.22 per unit for a gross proceed of $1,459,841.

On October 28, 2022, the Company closed the second and final tranche of the private placement with the placement of an additional 4,906,187 units of the Company at a price of C$0.22 per unit for additional gross proceeds of $828,174.

For both tranches, each unit consisted of one common share of the Company and one-half of one common share purchase warrant (each whole such warrant, a "Warrant"). Each warrant entitles the holder to purchase one common share in the capital of the Company at a price of C$0.33 for a period expiring two years following the applicable closing dates of the private placement.

In connection with the private placement, the Company paid finders fees of $124,275 and issued 372,700 brokers warrants as with the same terms of the unit. The brokers warrants were valued at $28,658 using the Black-Scholes valuation model with the following weighted average assumptions: expected life of 2 years, expected stock price volatility of 85.07%, dividend yield of 0%, risk free interest rate of 3% and the fair value of common shares at the date of grant of C$0.25.

• e) On November 2, 2022, 250,000 RSU’s were cancelled and 575,000 common shares were issued in relation to the vesting of RSUs.

• f) On November 8, 2022, 250,000 common shares were issued in relation to the exercise of options with an exercise price of C$0.27 for total proceeds of $51,791.

• g) On November 16, 2022, 50,000 common shares were issued in relation to the exercise of options with an exercise price of C$0.27 for total proceeds of $10,358.

• h) On November 28, 2022, 300,000 common shares were issued in relation to the exercise of options with an exercise price of C$0.27 for total proceeds of $62,150.

29

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

16. SHARE CAPITAL AND RESERVES (continued…)

• i) On December 20, 2022, 100,000 common shares were issued in relation to the exercise of options with an exercise price of C$0.27 for total proceeds of $20,717.

Ten months period ended December 31, 2021

• a) On June 23, 2021, the Company completed the acquisition of all the issued ordinary shares of MMTP in exchange for 42,969,046 common shares of the Company valued at $24,131,030 (the "Transaction") (note 5). The Company also issued a finder's fee of 1,250,000 common shares valued at $689,914 and issued 316,848 share purchase warrants valued at $59,285 to an arm's-length third party.

• b) Concurrent with the Transaction, pursuant to a private placement financing completed on April 16, 2021, 23,649,286 subscription receipts were converted into 23,649,286 common shares of the Company and the related escrowed proceeds were released to the Company. Gross proceeds received was $11,350,239 with share issuance cost of $1,280,316 (non-cash portion was $406,678), resulting in net proceeds of $10,476,601.

• c) On August 18, 2021, 593,536 common shares were issued for the settlement of approximately $197,830 of accrued interest (up to September 30, 2021) on the $4,000,000 Baker Steel debenture.

• d) On September 1, 2021, 200,000 common shares were issued in relation to the exercise of options with an exercise price of C$0.27 for total proceeds of $43,194.

• e) On November 2, 2021, 875,000 common shares were issued in relation to the vesting of RSUs.

• f) On November 8, 2021, the Company issued 5,296,882 common shares for the settlement of $1,000,000 debt, accrued interest and arrangement fees with a combined value of $1,336,653. The common shares were issued at a deemed price of C$0.315 per share to Baker Steel.

• g) On November 18, 2021, 50,000 common shares were issued in relation to the exercise of options with an exercise price of C$0.27 for total proceeds of $10,799.

• h) For the ten months period ended, the Company issued 4,117,100 common shares from warrants exercised. Total proceeds received were $1,152,644.

30

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

16. SHARE CAPITAL AND RESERVES (continued…)

Warrants

The continuity of warrants for the years presented are as follows:

==> picture [450 x 110] intentionally omitted <==

----- Start of picture text -----

Number of Weighted average
warrants exercise price
Outstanding warrants, February 28, 2021 4,117,100 C$0.35
Granted 1,783,756 C$0.61
Exercised (4,117,100) C$0.35
Outstanding warrants, December 31, 2021 1,783,756 C$0.61
Granted 7,149,919 C$0.33
Expired (316,848) C$0.67
Outstanding warrants, December 31, 2022 8,616,827 C$0.38
----- End of picture text -----

As at December 31, 2022, warrants enabling the holders to acquire common shares are as follows:

		Weighted average
		remaining life in	Weighted average
Expiry date	Number of warrants	years	exerciseprice
June 23, 2023	1,466,908	0.48	C$0.60
October 20, 2024	4,595,656	1.81	C$0.33
October 28, 2024	2,554,263	1.83	C$0.33
	8,616,827	1.59	C$0.38

31

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

16. SHARE CAPITAL AND RESERVES (continued…)

Options

Option Plan

The Company has a share purchase option plan (“the Plan”), which allows the Company to issue options to directors, officers, employees, and consultants of the Company. The maximum aggregate number of securities reserved for issuance is 10% of the number of common shares issued and outstanding. Options granted under the Plan may have a maximum term of ten years. Vesting restrictions may be imposed at the discretion of the directors.

Share Purchase Options

The continuity of share purchase options for the periods presented is as follows:

	Number of options Weighted average exerciseprice
Outstanding options, February 28, 2021 Granted Exercised Cancelled Outstanding options, December 31, 2021 Granted Exercised Cancelled Outstanding options, December 31, 2022	2,525,000 C$ 0.38 6,975,000 C$ 0.60 (250,000) C$ 0.27 (150,000) C$ 0.27 9,100,000 C$ 0.55 2,300,000 C$ 0.25 (700,000) C$ 0.27 (2,175,000) C$ 0.53 8,525,000 C$ 0.50

As at December 31, 2022, options enabling the holders to acquire common shares are as follows:

			Weighted average
	Number of	Number of	remaining life in	Weighted average
Expiry date	options	vested options	years	exerciseprice
June 24, 2025	150,000	150,000	2.48	C$ 0.27
November 2, 2025	250,000	250,000	2.84	C$ 0.70
June 21, 2026	4,400,000	4,400,000	3.47	C$ 0.60
August 23, 2026	1,425,000	1,425,000	3.65	C$ 0.60
August 9, 2027	1,950,000	975,000	4.61	C$ 0.25
November 4, 2027	350,000	175,000	4.85	C$ 0.23
	8,525,000	7,375,000	3.78	C$ 0.50

32

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

16. SHARE CAPITAL AND RESERVES (continued…)

Options (continued…)

For the years ended December 31, 2022 and 2021, the Company granted the following stock options to the Company’s management, directors and service providers. The fair value of the options was estimated on the date of grant using the Black-Scholes option pricing model, with the following assumptions:

==> picture [466 x 107] intentionally omitted <==

----- Start of picture text -----

Grant Date November 2, 2022 August 9, 2022 August 23, 2021 June 21, 2021
Number of options granted 350,000 1,950,000 2,475,000 4,500,000
Vesting provision 12-month vesting 12-month vesting 12-month vesting At Grant Date
Expected stock price volatility 187% 187% 230% 234%
Expected life of options 5.0 years 5.0 years 5.0 years 5.0 years
Risk free interest rate 5.11% 5.11% 0.82% 0.97%
Expected dividend yield 0% 0% 0% 0%
Exercise price C$0.23 C$0.25 C$0.60 C$0.60
Fair value of the options $ 88,933 $ 362,140 $ 710,150 $ 2,418,947
----- End of picture text -----

For the year ended December 31, 2022, the share-based compensation expense related to options was $466,971 (ten months ended December 31, 2021 - $3,168,341).

Restricted Share Units (“RSU”)

RSU Plan

The Company has a RSU plan (“the Plan”), which allows the Company to issue RSU to directors, officers, employees, and consultants of the Company. The maximum aggregate number of securities reserved for issuance is 10% of the number of common shares issued and outstanding. RSU granted under the Plan may have a maximum term of ten years. Vesting restrictions may be imposed at the discretion of the directors.

The continuity of RSUs for the periods presented is as follows:

==> picture [405 x 28] intentionally omitted <==

----- Start of picture text -----

Number of
RSUs
----- End of picture text -----

	Number of RSUs
Outstanding options, February 28, 2021	1,750,000
Vested	(875,000)
Outstanding RSUs, December 31, 2021	875,000
Granted	250,000
Cancelled	(300,000)
Vested	(575,000)
Outstanding RSUs, December 31, 2022	250,000

On August 9, 2022, the Company granted 250,000 RSU’s to the Company’s management, directors and service providers. The RSU’s have a 12-month vesting provision.

For the year ended December 31, 2022, share-based compensation expense related to RSUs was $55,812 (ten months ended December 31, 2021 – $552,260).

33

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

17. RELATED PARTY TRANSACTIONS

The Company’s related parties with transactions during the year ended December 31, 2022, consist of directors, officers and the following companies with common directors:

Relatedparty	Nature of transactions
J Dare Consulting Ltd. (Director)	Director fees
Mysterybelle Ltd (Director)	Director fees
Roma Capital Corp. (Director, Officer)	Consulting fees
JR Management Corp. (Director)	Consulting fees
A15 Capital Corp. (Director, Officer)	Consulting fees
Vista Gold S.A.C. (Director, Officer)	Exploration and evaluation expenses
Altitude Exploraciones (Director, Officer)	Exploration and evaluation expenses
Vihren Management LTD. (Officer)	Consulting fees
Ordago Ou (Director, Officer)	Consulting fees
Oscrow Capital Pty Ltd. (Director)	Director fees
Green Oil S.A.(Director)	Consultingfees

As at December 31, 2022, the Company had $212,000 outstanding in accounts payables and accrued liabilities (December 31, 2021 - $219,833) and $48,009 outstanding in supplier advances associated with related parties.

Key Management Compensation

Key management personnel are persons responsible for planning, directing, and controlling the activities of the Company, and include certain directors and officers. Key management compensation, including amounts discussed above, is comprised of:

	Year ended December 31, 2022		Ten months ended December 31, 2021
Salaries and benefits $	169,722	$	82,647
Consulting fees	816,772		353,512
Directors' fees	52,174		23,170
Exploration and evaluation expenses	-		94,552
Share basedpayment	327,653		2,688,427
$	1,366,321	$	3,242,308

34

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

18. SEGMENTED INFORMATION

The Company operates in a two reportable operating segment, being the exploration and development of mineral properties. For the twelve months ended December 31, 2022, the mineral property interests are located in Ecuador and Peru.

	Canada –	Ecuador and
Saturday, December 31, 2022	Corporate	other	Peru	Total
Cash and cash equivalents	997,469	-	26,510	1,023,979
Inventory	-	-	1,277,203	1,277,203
Receivables	26,826	-	3,866,453	3,893,279
Prepaid	224,420	-	40	224,460
	1,248,715	-	5,170,206	6,418,921
Exploration and evaluation assets	-	-	4,416,483	4,416,483
Development property	-	-	46,931,126	46,931,126
ROU Assets	-	-	599,723	599,723
Equipment	-	-	6,582,202	6,582,202
Receivable – non current	-	-	1,326,009	1,326,009
Total assets	1,248,715	-	65,025,749	66,274,464

	Canada –	Ecuador and
December 31, 2021(Restated)	Corporate	other	Peru	Total
Cash and cash equivalents	2,583,712	-	1,922,176	4,505,888
Inventory	-	-	331,986	331,986
Receivables	76,082	-	2,648,964	2,725,046
Prepaid	246,075	-	225,690	471,765
	2,905,869	-	5,128,816	8,034,685
Exploration and evaluation assets	-	1,162,688	4,723,660	5,886,348
Development property	-	-	45,937,777	45,937,777
ROU Assets	-	-	890,012	890,012
Equipment	-	-	5,434,699	5,434,699
Receivable – non current	-	-	680,739	680,739
Total assets	2,905,869	1,162,688	62,795,703	66,864,260
	Canada –	Ecuador and
	Corporate	other	Peru	Total
Net loss – year ended December 31, 2022	(7,348,280)	-	(1,899,673)	(9,247,953)
Net loss – ten months ended December
31, 2021(Restated)	(7,341,942)	(24,629)	(5,870,471)	(13,237,042)

35

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these consolidated financial statements.

General Objectives, Policies and Processes

The Board of Directors has overall responsibility for the determination of the Company’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company’s management. The Board of Directors receives periodic reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness and flexibility.

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

Credit Risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable to its cash and other receivables. The Company limits exposure to credit risk by maintaining its cash with large financial institutions. The Company does not have cash invested in asset-based commercial paper.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they become due. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities. Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments. The Company is exposed to liquidity risk.

Commodity Price Risk

Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate due to changes in market prices. The value of financial instruments can be affected by changes in interest rates, foreign currency rates and other market prices. Management closely monitors commodity prices, individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company.

36

SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued…)

Foreign Currency Risk

The Company’s operations in Canada, Peru, Ecuador and the United States creates exposure to foreign currency fluctuation. Some of the Company’s operating expenditures are incurred in Peruvian SOL or Canadian Dollar, and the fluctuation of foreign currencies with the US dollar will have an impact upon the profitability of the Company and may also affect the value of the Company’s financial assets and liabilities. The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks.

The Company’s financial assets and liabilities in various currencies as at December 31, 2022 are set out in the following table:

Saturday, December 31, 2022	Canadian Dollar	US Dollar	Peruvian SOL	Total
Cash and cash equivalents	642,672	375,193	6,115	1,023,979
Receivables	26,826	-	3,866,453	3,893,279
	669,498	375,193	3,872,568	4,917,258
Accounts payables and accruals	(403,272)	-	(14,569,179)	(14,972,451)
Lease	-	-	(570,298)	(570,298)
Debenture	-	-	(1,813,545)	(1,813,545)
Net asset(liabilities)	266,225	375,193	(13,080,454)	(12,439,036)

The Company’s financial assets and liabilities in various currencies as at December 31, 2021 are set out in the following table:

December 31, 2021	Canadian Dollar	US Dollar	Peruvian SOL	Total
Cash and cash equivalents	3,873,221	384,529	248,138	4,505,888
Receivables	76,082	-	2,648,964	2,725,046
	3,949,303	384,529	2,897,102	7,230,934
Accounts payables and accruals	(388,633)	-	(11,253,340)	(11,641,973)
Lease	-	-	(778,902)	(778,902)
Convertible debenture	-	(4,128,864)	-	(4,128,864)
Debenture	-	-	(1,631,838)	(1,631,838)
Net asset(liabilities)	3,560,670	(3,744,335)	(10,766,978)	(10,950,643)

The Company’s reported results will be affected by fluctuations in the Canadian dollar to US Dollar and Peruvian SOL to US Dollar exchange rate. As at December 31, 2022, a 10% appreciation of the Canadian Dollar relative to the US Dollars would have increased net financial assets by approximately $21,000 (December 31, 2021 - $350,000). A 10% depreciation of the US Dollar relative to the Canadian Dollar would have had the equal but opposite effect. A 10% appreciation of the US Dollar relative to the Peruvian SOL would have decreased net financial assets by approximately $329,000 (December 31, 2021 - $1,000,000) and a 10% depreciation of the Peruvian SOL would have had an equal but opposite effect. The Company has not entered into any agreements or purchased any instruments to hedge possible currency risk.

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SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued…)

Interest Rate Risk

Interest rate risk consists of two components:

• i) To the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in the prevailing market interest rates, the Company is exposed to interest rate cash flow risk.

• ii) To the extent that changes in prevailing market rates differ from the interest rate in the Company’s monetary assets and liabilities, the Company is exposed to interest rate price risk.

As at December 31, 2022, an 1% change in market interest rates would result in no material change in value of the assets or liabilities of the Company.

Other Price Risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk, currency risk, or equity price risk. The Company is not exposed to any other price risk.

Determination of Fair Value

When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

The carrying amounts for cash, receivables, accounts payable and accrued liabilities and due to related parties’ approximate fair values due to their short-term nature. Due to the use of subjective judgments and uncertainties in the determination of fair values these values should not be interpreted as being realizable in an immediate settlement of the financial instruments.

Fair Value Hierarchy

Financial instruments that are measured subsequent to initial recognition at fair value are grouped in Levels 1 to 3 based on the degree to which the fair value is observable:

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.

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SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

20. CAPITAL MANAGEMENT

The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern in order to advance its mineral property and pursue growth opportunities. The Company defines its capital as shareholders’ equity. The Company manages its capital structure and makes adjustments to it to effectively support the acquisition and exploration of mineral properties.

The properties in which the Company currently has an interest in are in exploration, development and production stages; as such, the Company is dependent on external financing to fund its exploration and development activities.. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company monitors its cash, investments, common shares, and stock options as capital. There have been no changes to the Company’s approach to capital management during the twelve months ended December 31, 2022. The Company’s investment policy is to hold cash in interest-bearing bank accounts or highly liquid short-term interestbearing investments with maturities of one year or less and which can be liquidated at any time without penalties. The Company is not subject to externally imposed capital requirements and does not have exposure to asset-backed commercial paper or similar products.

The Company does not expect its current capital resources to be sufficient to cover its operating capital and corporate general and administrative expenditure through the next twelve months and as such, will need to obtain additional capital resources. Actual funding requirements may vary from those previously planned due to a number of factors, including the progress of the Company’s business activities and economic condition.

21. TAX PROVISION

A reconciliation of income taxes computed at Canadian statutory rates to the reported income taxes is provided as follows:

			Ten months
		Year ended	ended
		December 31,	December 31,
		2022	2021
Loss for the year	$	(8,571,954)$	(15,216,042)
Canadian statutory tax rate		27.00%	27.00%
Income tax recovery computed at statutory rates		(2,314,000)	(4,108,000)
Change in statutory, foreign tax, foreign exchange rates
and other		973,000	490,000
Permanent differences		1,041,000	1,337,000
Share issue costs		(23,000)	(233,000)
Unused tax losses and tax offsets		999,000	535,000
	$	676,000 $	(1,979,000)

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SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

21. TAX PROVISION (continued…)

The tax effects of temporary differences between amounts recorded in the Company’s accounts and the corresponding amounts as computed for income tax purposes gives rise to deferred tax assets and liabilities as follows:

		December 31,		December 31,
		2022		2021
Development property	$	(11,009,000)	$	(10,844,000)
Property and equipment		(75,000)		15,000
Non-capital loss and other		2,474,708		2,895,708
	$	(8,609,292)	$	(7,933,292)

The significant components of the Company’s temporary differences, unused tax credits and unused tax losses that have not been included on the consolidated statement of financial position are as follows:

		December 31,		December 31,
		2022		2021
Non-capital losses	$	18,689,000	$	14,289,000
Capital loss		1,298,000		1,384,000
Exploration and evaluation assets		259,000		264,000
Share issue costs		685,000		874,000
Property and equipment		2,000		63,000
Asset retirement obligation		1,942,000		1,685,000
Unrecognized future deductible amounts	$	22,875,000	$	18,559,000

The Company’s unrecognized unused non-capital losses have the following expiry dates:

Canada US Peru	Total
2029 $ 220,251 $ - $ - 2030 517,837 - - 2031 557,032 - - 2032 667,245 - - 2033 1,031,457 - - 2034 454,550 696,303 - 2035 427,897 1,101,065 - 2036 277,246 - 2037 296,534 94,383 - 2038 277,297 15,118 - 2039 228,469 47,926 - 2040 2,172,151 - 2041 2,735,900 6,811 - 2042 2,842,901 72 - No expiry - - 9,273,516	$ 220,251 517,837 557,032 667,245 1,031,457 1,150,853 1,528,962 277,246 390,917 292,415 276,395 2,172,151 2,742,711 2,842,873 9,273,516 $ 23,942,401
$ 12,706,767 $ 1,961,678 $ 9,273,516

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SILVER X MINING CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022 and ten months ended December 31, 2021 (Expressed in US Dollars)

22. SUPPLEMENTAL CASH FLOW INFORMATION

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Year ended Ten months ended
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	Deember 31, 2022 D	ecember 31, 2021
Right-of-use assets and lease liabilities recognized	-	959,952
Vesting of RSUs	317,654	503,937
Revaluation of asset retirement obligations	174,362	1,169,755
Equity portion of convertible debenture	-	153,065
Shares issued – conversion of convertible debentures	4,117,279	-
Shares issued – shares for debt and accrued interest	543,938	1,534,483

23. SUBSEQUENT EVENTS

On February 3, 2023, 22,500 common shares were issued in relation to the exercise of warrants with an exercise price of C$0.33 for total proceeds of $5,534.

On March 23, 2023, 75,000 common shares were issued in relation to the exercise of options with an exercise price of C$0.25 for total proceeds of $13,715.

On April 3, 2023, 21,500 common shares were issued in relation to the exercise of warrants with an exercise price of C$0.33 for total proceeds of $5,243.

On April 5, 2023, 280,000 common shares were issued in relation to the exercise of warrants with an exercise price of C$0.33 for total proceeds of $68,663.

On April 10, 2023, 187,500 common shares were issued in relation to the exercise of options with an exercise price of C$0.25 for total proceeds of $34,779.

On April 11, 2023, 120,000 common shares were issued in relation to the exercise of warrants with an exercise price of C$0.33 for total proceeds of $29,275.

41