SOLIS MINERALS LIMITED — Audit Report / Information 2021

Dec 21, 2021

Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth, WA, 6000 Australia

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

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	Audited as at Translated as at Subsequent Pro-forma Pro-forma
	31-May-21 31-May-21 events adjustments after issue
	Notes C$ $ $ $ $
CURRENT ASSETS
Cash and cash equivalents	1 2,548,807 2,731,811 (269,286) 4,679,526 7,142,051
Receivables	66,267 71,025 - - 71,025
Prepaid expenses	27,985 29,994 - - 29,994
TOTAL CURRENT ASSETS	2,643,059 2,832,830 (269,286) 4,679,526 7,243,070
NON-CURRENT ASSETS
Receivables	117,455 125,888 - - 125,888
Deposits	28,843 30,914 - - 30,914
Equipment	10,828 11,605 - - 11,605
Exploration and evaluation assets	2 3,360,003 3,601,251 258,600 - 3,859,851
TOTAL NON-CURRENT ASSETS	3,517,129 3,769,658 258,600 - 4,028,258
TOTAL ASSETS	6,160,188 6,602,488 (10,686) 4,679,526 11,271,328
CURRENT LIABILITIES
Accounts payable	380,190 407,488 - - 407,488
Accrued liabilities	104,986 112,524 - - 112,524
Short-term borrowing	3 51,016 54,679 (54,679) - -
TOTAL CURRENT LIABILITIES	536,192 574,691 (54,679) - 520,012
TOTAL LIABILITIES	536,192 574,691 (54,679) - 520,012
NET ASSETS	5,623,996 6,027,797 43,993 4,679,526 10,751,316
EQUITY
Share capital	4 26,161,373 28,039,760 37,513 4,551,408 32,628,681
Reserves	5 2,611,568 2,799,079 219,725 359,333 3,378,137
Deficit	6 (23,148,945) (24,811,042) (213,245) (231,215) (25,255,502)
TOTAL EQUITY	5,623,996 6,027,797 43,993 4,679,526 10,751,316
NTA 6,891,465 Minimum NTA 4,000,000 Status PASS Headroom 2,891,465 Working capital 6,723,058 Minimum working capital 1,500,000 Status PASS Headroom 5,223,058

BDO Corporate Finance (WA) Pty Ltd ABN 27 124 031 045 AFS Licence No 316158 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Corporate Finance (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.

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Notes:

1. Cash and cash equivalents

Subsequent events:

• a) Cash and cash equivalents have been adjusted for the payment of USD$200,000 ($258,600) upon the signing of an option agreement to earn-into the Mostazal Copper Project (‘ Mostazal Option Agreement ’ or the ‘ Agreement ’). The payment was made to the vendors of the Mostazal Copper Project on 23 June 2021 as part of the expenditure and payment requirements of the Agreement.

• b) Cash and cash equivalents have been adjusted for the receipt of MXN$99,998 ($6,480) upon the sale of its Mexican subsidiaries, Minera Westminster S.A. de C.V. and Servicios Westminster S.A. de C.V., to 1323760 B.C. Limited on 6 October 2021.

• c) Cash and cash equivalents have been adjusted for the repayment of two outstanding loan agreements with Ore Capital Partners Ltd (‘ OCP ’). The loans had a combined balance of CAD$51,016 ($54,679) which was repaid on 29 October 2021.

• d) Cash and cash equivalents have been adjusted for the exercise of 175,000 existing warrants at an exercise price of CAD$0.20, for total proceeds of CAD$35,000 ($37,513).

Pro-forma adjustments

• e) Cash and cash equivalents have been adjusted for the proceeds from CHESS Depository Interests (‘ CDI ’) to be issued under the Prospectus. Under the offer, the Company will raise $5,500,000 (before costs) through the issue of 27.5 million CDIs at $0.20 per CDI.

• f) Cash and cash equivalents have been adjusted for the costs associated with the initial public offering of Solis CDIs on the Australian Securities Exchange. The Company is expected to incur cash costs of $820,474. The costs directly attributable to the capital raising have been offset against share capital and those not directly attributable to the capital raising have been expensed.

• Exploration and evaluation assets

• a) Exploration and evaluation assets have been adjusted for the payment of USD$200,000 ($258,600) upon the signing of the Mostazal Option Agreement on 23 June 2021.

• Short-term borrowings

• a) Short-term borrowings have been adjusted for the repayment of the Company’s outstanding loan agreements with OCP of CAD$51,016 ($54,679) on 29 October 2021.

• Share capital

Subsequent events:

• a) Share capital has been adjusted for the issue of shares upon exercise of 175,000 outstanding warrants at an exercise price of CAD$0.20, for total proceeds of CAD$35,000 ($37,513).

Pro-forma adjustments:

• b) Share capital has been adjusted for the proceeds from the CDIs to be issued under the Prospectus. The Company expects to raise $5,500,000 under the offer.

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• c) Share capital has been adjusted for cash costs of the offer to be capitalised, which total $589,259.

• d) Share capital has been adjusted for the issue of the Lead Manager Options which is deemed to be a cost of the offer. 3,666,667 Lead Manager Options are to be issued to Euroz Hartleys Limited. The Lead Manager Options are exercisable at $0.28, being a 40% premium to the issue price, within a period of three years from the date of issue. The Lead Manager Options have been valued using the Black-Scholes option pricing model at a fair value of $359,333.

5. Reserves

Subsequent events:

• a) Reserves have been adjusted for the cancellation of 75,000 unvested options (‘ Unvested Options ’) held by Rayleigh Capital Limited. The Unvested Options were valued using the Black Scholes option pricing model at a grant date fair value of CAD$8,925 ($9,600).

• b) Reserves have been adjusted for the issue of 1,025,000 incentive stock options (‘ Incentive Stock Options ’) issued to directors, officers and consultants of the Company on 18 June 2021. The Incentive Stock Options have been valued at CAD$195,775 ($210,125) using the Black Scholes option pricing model.

Pro-forma adjustments:

• c) Reserves have been adjusted for the issue of the Lead Manager Options, which have been valued at $359,333.

6. Deficit

Subsequent events:

• a) Deficit has been adjusted to reflect the cancellation of the Unvested Options, which have been valued at CAD$8,925 ($9,600).

• b) Deficit has been adjusted to reflect the issue of the Incentive Stock Options, which have been valued at CAD$195,775 ($210,125) using the Black Scholes option pricing model.

• c) Deficit has been adjusted to reflect the sale of the Company’s Mexican exploration assets on 6 October 2021. Prior to the sale, the Company did not recognise its Mexican exploration assets on its balance sheet, and as such, we have adjusted the Company’s deficit account for a gain on the sale of the Mexican exploration assets of MXN$99,998 ($6,480).

Pro-forma adjustments:

• d) Deficit has been adjusted to reflect the costs of the offer that are not deemed to be directly attributable to the capital raising, being $231,215.

1 CAD:AUD as at 31 May 2021 was 1.0718, as sourced from Bloomberg.

2 USD:AUD as at 31 May 2021 was 1.2930, as sourced from Bloomberg.

3 MXN:AUD as at 31 May 2021 was 0.0648, as sourced from Bloomberg.

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