Zacatecas Silver Corp. — Audit Report / Information 2026

Apr 28, 2026

ZACATECAS SILVER

ZACATECAS SILVER CORP.

CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

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DAVIDSON

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of
Zacatecas Silver Corp.

Opinion

We have audited the accompanying consolidated financial statements of Zacatecas Silver Corp. (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2025 and 2024 and the consolidated statements of loss and comprehensive loss, cash flows, and changes in shareholders' equity for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2025 and 2024, and its financial performance and its cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards").

Basis for Opinion

We conducted our audit 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 in our audit is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the consolidated financial statements, which indicates that the Company incurred losses since inception and does not currently have the financial resources to sustain operations in the long-term. As stated in Note 1, these material uncertainties 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 consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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

DAVIDSON & COMPANY LLP

1200 - 609 Granville Street
PO BOX 10372, Pacific Centre
Vancouver, BC V7Y 1G6

604 687 0947
davidson-co.com

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Assessment of Impairment Indicators of Mineral Properties

As described in Note 6 to the consolidated financial statements, the carrying amount of the Company's Mineral Properties was $47,314,318 as of December 31, 2025. As more fully described in Notes 2 and 3 to the consolidated financial statements, management assesses Mineral Properties for indicators of impairment at each reporting period.

The principal considerations for our determination that the assessment of impairment indicators of the Mineral Properties is a key audit matter are that there was judgment made by management when assessing whether there were indicators of impairment for the Mineral Properties, specifically relating to the assets' carrying amount which is impacted by the Company's intent and ability to continue to explore and evaluate these assets. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their assessment of indicators of impairment that could give rise to the requirement to prepare an estimate of the recoverable amount of the Mineral Properties.

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

• Evaluating management's assessment of impairment indicators.
• Evaluating the intent for the Mineral Properties through discussion and communication with management.
• Reviewing the Company's recent expenditure activity.
• Obtaining, on a test basis through correspondence with legal counsel, confirmation of title to ensure mineral rights underlying the Mineral Properties are in good standing.

Other Information

Management is responsible for the other information. The other information obtained at the date of this auditor's report includes 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.

We obtained Management's Discussion and Analysis prior to the date of this auditor's report. 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 Accounting Standards, 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.

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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 skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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 consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business 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.

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

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The engagement partner on the audit resulting in this independent auditor's report is Peter Maloff.

Chartered Professional Accountants

April 27, 2026

Vancouver, Canada

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ZACATECAS SILVER CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian Dollars)
AS AT DECEMBER 31,

	2025	2024
ASSETS
Current
Cash	$ 2,426,045	$ 6,719
Prepaid expenses and advances	97,307	15,517
Receivables (Note 4)	34,125	17,469
	2,557,477	39,705
Equipment (Note 5)	-	29,268
Mineral property (Note 6)	47,314,318	47,150,898
	$ 49,871,795	$ 47,219,871
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities (Note 7)	$ 820,847	$ 1,311,411
Contingent consideration (Note 6)	10,702,328	9,580,264
	11,523,175	10,891,675
Shareholders' equity
Share capital (Note 8)	52,756,288	47,916,336
Contributed surplus (Note 8)	4,434,222	3,263,941
Accumulated other comprehensive income	523,514	347,025
Deficit	(19,365,404)	(15,199,106)
	38,348,620	36,328,196
	$ 49,871,795	$ 47,219,871

Nature and continuance of operations (Note 1)
Subsequent events (Note 13)

Approved and authorized by the Board on April 27, 2026

“Eric Vanderleeuw” Director “Charles Hethey” Director
Eric Vanderleeuw Charles Hethey

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

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ZACATECAS SILVER CORP.

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED DECEMBER 31,

(Expressed in Canadian Dollars)

	2025	2024
EXPENSES
Consulting fees	$ 257,500	$ 132,365
Depreciation (Note 5)	27,960	34,983
Directors’ fees (Note 7)	-	72,000
Exploration expenses (Notes 6 and 7)	839,402	982,406
Foreign exchange (gain)	25,911	(29,635)
Management fees (Note 7)	211,837	350,182
Marketing and shareholder communications	207,722	280,593
Office expense	124,841	148,120
Professional fees (Note 7)	326,374	311,870
Project investigations	-	40,376
Share-based compensation (Notes 7 and 8)	974,603	-
Transfer agent and filing fees	27,304	36,963
Travel	21,621	90,334
	(3,045,075)	(2,450,557)
Interest income	841	432
Settlement of accounts payable and accrued liabilities (Note 7)	-	121,910
Change in fair value of contingent consideration (Note 6)	(1,122,064)	(1,230,835)
	(1,121,223)	(1,108,493)
Loss for the year	(4,166,298)	(3,559,050)
Other comprehensive loss
Exchange difference on translation of foreign operations	176,489	(231,386)
Loss and comprehensive loss for the year	$(3,989,809)	$(3,790,436)
Basic and diluted loss per common share	$ (0.03)	$ (0.03)
Weighted average number of common shares outstanding – basic and diluted	159,205,249	112,720,527

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

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ZACATECAS SILVER CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
(Expressed in Canadian Dollars)

	2025	2024
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year:	$ (4,166,298)	$ (3,559,050)
Items not affecting cash
Depreciation	27,960	34,983
Recovery on settlement of accounts payable	-	(121,910)
Share-based compensation	974,603	-
Unrealized foreign exchange	1,333	-
Change in fair value of contingent consideration	1,122,064	1,230,835
Non-cash working capital item changes:
Prepaid expenses and advances	(82,301)	36,720
Receivables	(22,163)	(1,086)
Accounts payable and accrued liabilities	(475,563)	(32,937)
Net cash used in operating activities	(2,620,365)	(2,412,445)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of shares	5,250,000	2,500,000
Proceeds from warrant exercises	17,650	-
Share issuance costs	(232,020)	(87,827)
Net cash provided by financing activities	5,035,630	2,412,173
Change in cash for the year	2,415,265	(272)
Effect of changes in exchange rates on cash	4,061	(5,977)
Cash, beginning of year	6,719	12,968
Cash, end of year	$ 2,426,045	$ 6,719

Supplemental disclosure with respect to cash flows (Note 12).

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

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ZACATECAS SILVER CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Expressed in Canadian Dollars)

	Share Capital		Contributed Surplus	Accumulated Other Comprehensive Income	Deficit	Total
	Number	Amount
Balance, December 31, 2023	90,410,991	$ 45,557,822	$ 3,210,282	$ 578,411	$ (11,640,056)	$ 37,706,459
Private Placement	25,000,000	2,500,000	-	-	-	2,500,000
Share issue costs	315,000	(87,827)	-	-	-	(87,827)
Fair value of warrants issued as finders' fees	-	(53,659)	53,659	-	-	-
Loss and comprehensive loss for the year	-	-	-	(231,386)	(3,559,050)	(3,790,436)
Balance, December 31, 2024	115,725,991	47,916,336	3,263,941	347,025	(15,199,106)	36,328,196
Private placements	92,500,000	5,250,000	-	-	-	5,250,000
Warrants exercised	353,000	39,711	(22,061)	-	-	17,650
Share issuance costs	224,000	(232,020)	-	-	-	(232,020)
Fair value of warrants issued as finders' fees	-	(217,739)	217,739	-	-	-
Share-based compensation	-	-	974,603	-	-	974,603
Loss and comprehensive loss for the year	-	-	-	176,489	(4,166,298)	(3,989,809)
Balance, December 31, 2025	208,802,991	$ 52,756,288	$ 4,434,222	$ 523,514	$ (19,365,404)	$ 38,348,620

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

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ZACATECAS SILVER CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2025

(Expressed in Canadian Dollars)

1. NATURE AND CONTINUANCE OF OPERATIONS

Zacatecas Silver Corp. (the "Company") was incorporated in Canada under the Business Corporations Act (British Columbia) on July 22, 2020. The Company is principally engaged in the acquisition and exploration and development of mineral properties in Mexico. The Company's shares are publicly traded on the TSX Venture Exchange (the "TSXV") under the symbol ZAC. The head office and principal address of the Company is 595 Howe Street, #704, Vancouver, British Columbia, V6C 2T5. The Company is in the process of investing in potential acquisitions and exploring and evaluating its resource properties and has not yet determined whether the properties contain reserves that are economically recoverable.

These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards ("IFRS") with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation. The Company has incurred losses from inception and does not currently have the financial resources to sustain operations in the long term. While the Company has been successful in obtaining its required funding in the past, there is no assurance that such future financing will be available or be available on favourable terms. An inability to raise additional financing may impact the future assessment of the Company as a going concern. These material uncertainties may cast significant doubt about the ability of the Company to continue as a going concern.

The consolidated financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations. Continued operations of the Company are dependent on the Company's ability to receive financial support, and necessary financings, or generate profitable operations in the future.

2. BASIS OF PREPARATION

Statement of Compliance

These consolidated financial statements, including comparatives, have been prepared using accounting policies consistent with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IASB").

Basis of Consolidation

These consolidated financial statements include the accounts of the Company and its 100% owned subsidiaries, as listed below. All inter-company balances and transactions are eliminated on consolidation.

Company	Place of Incorporation	Principal Activity
Desarrollos Mineros Zacatecas Silver S.A de C.V.	Mexico	Exploration and Evaluation
Esperanza Silver de Mexico S.A de C.V	Mexico	Exploration and Evaluation
Servicios Mineros Te Tlama S.A de C.V	Mexico	Exploration and Evaluation
1260410 B.C Ltd.	Canada	Holding

These consolidated financial statements incorporate the financial statements of the Company and its wholly controlled subsidiaries. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The consolidated financial statements include the accounts of the Company and its direct wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated.

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ZACATECAS SILVER CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2025

(Expressed in Canadian Dollars)

2. BASIS OF PREPARATION (cont'd...)

Basis of Measurement

These consolidated financial statements are presented in Canadian dollars, which is also the Company's and 1260410 B.C Ltd.'s functional currency. Desarrollos Mineros Zacatecas Silver S.A de C.V. has a functional currency of the Mexican Peso and Esperanza Silver de Mexico S.A de C.V ("Esperanza") and Servicios Mineros Te Tlama S.A de C.V have a functional currency of the US dollar.

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

Significant Accounting Judgments and Estimates

The preparation of these consolidated financial statements requires management to make judgments and estimates and form assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. On an ongoing basis, management evaluates its judgments and estimates in relation to assets, liabilities and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments and estimates. Actual outcomes may differ from these estimates.

The key areas of judgment applied in the preparation of the consolidated financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities are as follows:

Functional currency

The functional currency of the Company and its subsidiaries is the currency of their respective primary economic environment. Judgment is necessary in evaluating each entity's functional currency.

Going concern

The assessment of the Company's ability to continue as a going concern and to raise additional funding to cover its ongoing operating expenditures and to meet its liabilities for the ensuing year, involves significant judgment based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances (Note 1).

Impairment of exploration and evaluation assets

The carrying value and recoverability of exploration and evaluation assets requires management to make certain estimates, judgments and assumptions about each project. Management considers the economics of the project, including the latest resource prices and the long-term forecasts, and the overall economic viability of the project. Management has assessed these indicators and does not believe an impairment provision is required.

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ZACATECAS SILVER CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2025

(Expressed in Canadian Dollars)

2. BASIS OF PREPARATION (cont'd...)

Significant Accounting Judgments and Estimates (cont'd...)

The significant areas of assumptions and estimation uncertainty at the reporting date that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:

Contingent consideration

The contingent consideration payable pursuant to the Esperanza acquisition requires management to make significant assumptions and estimates at each reporting period with respect to the likelihood and magnitude of an outflow of resources (Note 6).

Metal stream valuation

The liability representing the Company’s obligation to deliver silver metal under the Silver Stream is subject to significant estimate with respect to the likelihood of delivery under the arrangement as well as discount rates and future silver prices (Note 6).

3. MATERIAL ACCOUNTING POLICY INFORMATION

Financial instruments

Financial assets

The Company classified its financial assets in the following categories: at fair value through profit and loss (“FVTPL”), at fair value through other comprehensive income (“FVTOCI”), or at amortized cost. The determination of the classification of financial assets is made at initial recognition. Equity instruments that are held for trading (including all equity derivative instruments) are classified as FVTPL; for other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI.

The Company’s accounting policy for each of the categories is as follows:

Financial assets at FVTPL: Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statement of (loss) income. Realized and unrealized gains and losses arising from changes in the fair value of financial assets held at FVTPL are included in the statements of loss and comprehensive loss.

Financial assets at FVTOCI: Financial assets carried at FVTOCI are recorded at fair value and transaction costs are expensed in the statement (loss) income. Realized and unrealized gains and losses arising from changes in fair value of the financial assets held at FVTOCI are included in other comprehensive (loss) income.

Financial assets at 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 (loss) income in they arise.

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.

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ZACATECAS SILVER CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2025

(Expressed in Canadian Dollars)

3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd...)

Financial instruments (cont'd...)

Financial assets (cont'd...)

Impairment of financial assets at amortized cost: The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost.

The following table shows the classification of the Company’s financial assets:

Financial asset	IFRS 9 Classification
Cash	Amortized cost
Receivables	Amortized cost

Financial liabilities

The Company classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was incurred. The Company's accounting policy for each category is as follows:

Fair value through profit or loss – This category comprises derivatives or liabilities acquired or incurred principally for the purpose of selling or repurchasing in the near term and includes contingent consideration. They are carried in the statement of financial position at fair value with changes in fair value recognized in the statements of loss and comprehensive loss.

Other financial liabilities - This category includes accounts payable and accrued liabilities, deferred acquisition costs, and subscription receipts, which are recognized at amortized cost using the effective interest method.

Transaction costs in respect of financial instruments at fair value through profit or loss are recognized in the statements of loss and comprehensive loss immediately, while transaction costs associated with all other financial instruments are included in the initial measurement of the financial instrument.

The following table shows the classification of the Company’s financial liabilities:

Financial liability	IFRS 9 Classification
Accounts payable and accrued liabilities	Amortized cost
Contingent consideration	FVTPL

Exploration and evaluation - mineral property

The Company is in the process of exploring its mineral property interests and has not yet determined whether these properties contain ore reserves that are economically recoverable.

All costs related to the acquisition of mineral properties, including option payments, are capitalized on an individual prospect basis. Amounts received for the sale of mineral properties and for option payments are treated as reductions of the cost of the property, with payments in excess of capitalized costs recognized in profit or loss. The recoverability of the amounts capitalized for the undeveloped mineral properties is dependent upon the determination of economically recoverable ore reserves, confirmation of the Company's interest in the underlying mineral claims, the ability to obtain the necessary financing to complete their development, and future profitable production or proceeds from the disposition thereof. Subsequent recovery of the resulting carrying value depends on successful development or sale of the mineral property. If a mineral property does not prove viable, all unrecoverable costs associated with the project net of any impairment provisions are written off.

Exploration and evaluation expenditures are recognized in profit or loss. Costs incurred before the Company has obtained legal rights to explore on areas of interest are recognized in profit or loss. Expenditures incurred by the Company in connection with the exploration and evaluation of mineral resources after the technical feasibility and commercial viability of extracting a mineral resource are demonstrable are capitalized.

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ZACATECAS SILVER CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in Canadian Dollars)

3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd...)

Exploration and evaluation - mineral property (cont'd...)

Title to mineral properties involves inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently unreliable conveyance history characteristics of many mineral properties. The Company has investigated title to all of its mineral properties and proposed acquisition of mineral property interests and to the best of its knowledge the properties are in good standing.

From time to time, the Company may acquire or dispose of properties pursuant to the terms of option agreements. Due to the fact that options are exercisable entirely at the discretion of the optionee, the amounts payable or receivable are not recorded. Option payments are recorded as mineral property costs or recoveries when the payments are made or received.

Impairment

At the end of each reporting period, the Company’s assets are reviewed to determine whether there is any indication that those assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit or loss for the year. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that 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. A reversal of an impairment loss is recognized immediately in profit or loss.

Decommissioning provision

The Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of mineral properties, oil and gas interests, and equipment, when those obligations result from the acquisition, construction, development or normal operation of the assets. The net present value of future rehabilitation cost estimates arising from the decommissioning of plant and other site preparation work is capitalized to the related assets along with a corresponding increase in the rehabilitation provision in the period incurred. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value. The rehabilitation asset is depreciated on the same basis as the related asset.

The Company’s estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to the related assets with a corresponding entry to the rehabilitation provision. The Company’s estimates are reviewed annually for changes in regulatory requirements, discount rates, effects of inflation and changes in estimates.

Changes in the net present value, excluding changes in the Company’s estimates of reclamation costs, are charged to profit and loss for the period.

Equipment

Equipment includes computer and office equipment, field equipment and vehicles, which is carried at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures directly attributable to bringing the asset to its operating location and condition necessary for it to be capable of operating in the intended manner.

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ZACATECAS SILVER CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in Canadian Dollars)

3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd...)

Equipment (cont'd...)

Repairs and maintenance costs are charged to expense as incurred, except when these repairs significantly extend the life or result in an operating improvement. In these instances, the portion of these repairs relating to the betterment is capitalized as part of equipment.

Depreciation is based on the cost of the assets less estimated residual value and the expected useful life. Depreciation commences when an asset is available for use and is recorded until an asset is disposed of or otherwise removed from services. Depreciation is recorded using the straight-line method over three years for equipment. Estimates of remaining useful lives and residual values are reviewed annually. Changes in estimates are accounted for prospectively.

Share capital

Equity financing transactions may involve the issuance of units. Units comprise common shares and share purchase warrants. The Company accounts for unit offering proceeds between common shares and share purchase warrants using the residual value method, with the common shares being valued first and the balance, if any, is allocated to the attached warrants.

Income and Loss per share

The Company presents basic loss per share for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the year. Diluted loss per share is calculated by adjusting the weighted average number of common shares outstanding for dilutive instruments. The number of shares included with respect to options, warrants, and similar instruments is computed using the treasury stock method. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti-dilutive.

Share-based payments

Share-based payments are arrangements in which the Company receives goods or services in consideration for its own equity instruments granted to non-employees. These are accounted for as equity settled share-based payment transactions and measured at the fair value of goods and services received. If the fair value of the goods or services received cannot be estimated reliably, the share-based payment transaction is measured at the fair value of the equity instruments granted at the date the Company receives the goods or services.

Income taxes

Income tax expense comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity. Current tax expense is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at year end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is recorded using the liability method, providing for temporary differences, between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences are not provided for relating to goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable loss, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the date of the statement of financial position.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a deferred tax asset will be recovered, it does not recognize the asset.

---

ZACATECAS SILVER CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in Canadian Dollars)

3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd...)

Foreign Currencies

The presentation currency of the Company is the Canadian dollar. The functional currency is the currency of the primary economic environment in which the entity operates.

Entities whose functional currencies differ from the presentation currency are translated into Canadian dollars as follows: assets and liabilities – at the closing rate as at the reporting date, and income and expenses – at the average rate of the period. All resulting changes are recognized in other comprehensive loss as cumulative translation differences.

Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. All gains and losses on translation of these foreign currency transactions are charged to profit or loss.

When the Company disposes of its entire interest in a foreign operation, or loses control, joint control, or significant influence over a foreign operation, the foreign currency gains or losses accumulated in other comprehensive loss related to the foreign operation are recognized in profit or loss. If an entity disposes of part of an interest in a foreign operation which remains a subsidiary, a proportionate amount of foreign currency gains or losses accumulated in other comprehensive loss related to the subsidiary are reallocated between controlling and non-controlling interests.

Business combinations and asset acquisitions

The Company accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Company. In determining whether a particular set of activities and assets is a business, the Company assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.

The consideration transferred in an acquisition is generally measured at fair value, as are the identifiable net assets acquired. Where an acquisition is determined to be an asset acquisition, the net value is attributed to a single identifiable asset or group of similar identifiable assets.

Any contingent consideration is measured at fair value at the date of acquisition. Contingent consideration is remeasured at fair value at each reporting date. The Company has elected to record subsequent changes in the fair value of the contingent consideration on an asset acquisition to profit or loss.

Transaction costs incurred in an asset acquisition are capitalized to the cost of the asset acquired.

Metal stream contract

The Company entered into a streaming arrangement (“Silver Stream”) with a third party as partial consideration for the acquisition of the Esperanza Gold Project (Note 6). Under the Silver Stream, the Company will deliver a portion of any future silver production from the Esperanza Gold Project and will in turn receive a cash payment as metal is delivered to the customer. See Note 6 for details on the Silver Stream.

The Company has recognized the liability as the obligation to deliver good in the future which will be recognized at fair value until such time that the terms of delivery, defined by the parameters of economic feasibility and future operations of the Esperanza Gold Project, are established under IFRS 15 Revenue from contracts with customers (“IFRS 15”).

---

ZACATECAS SILVER CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in Canadian Dollars)

1. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd...)

New standards and standards not yet adopted

IFRS 18 Presentation and disclosure in financial statements

In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements ("IFRS 18") which introduces:

• new requirements on presentation within the statement of profit or loss;
• disclosure standards regarding management defined performance measures; and
• principles for aggregation and disaggregation of financial information in the financial statements and the notes.

IFRS 18 will be effective for annual reporting periods beginning on or after January 1, 2027 but companies can apply it earlier. IFRS 18 replaces IAS 1. It carries forward many requirements from IAS 1 unchanged. The Company is assessing the impact of the adoption of this standard.

1. RECEIVABLES

	December 31, 2025	December 31, 2024
Goods and service tax (“GST”) receivable	$ 19,996	$ 7,035
Other	14,129	10,434
Total	$ 34,125	$ 17,469

1. EQUIPMENT

	Computer and office equipment	Field equipment	Vehicles	Total
Cost
Balance, December 31, 2023	$ 133,284	$ 47,084	$ 21,074	$ 201,442
Foreign exchange	(2,020)	(5,354)	1,853	(5,521)
Balance, December 31, 2024	131,264	41,730	22,927	195,921
Foreign exchange	1,573	4,172	(1,088)	4,657
Balance, December 31, 2025	$ 132,837	$ 45,902	$ 21,839	$ 200,578
Accumulated Depreciation
Balance, December 31, 2023	$ 94,601	$ 29,040	$ 11,943	$ 135,584
Depreciation	19,792	9,739	5,452	34,983
Foreign exchange	(1,167)	(4,072)	1,325	(3,914)
Balance, December 31, 2024	113,226	34,707	18,720	166,653
Depreciation	18,355	7,378	2,227	27,960
Foreign exchange	1,256	3,817	892	5,965
Balance, December 31, 2025	$ 132,837	$ 45,902	$ 21,839	$ 200,578
Carrying amount at December 31, 2024	$ 18,038	$ 7,023	$ 4,207	$ 29,268
Carrying amount at December 31, 2025	$ -	$ -	$ -	$ -

---

ZACATECAS SILVER CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2025

(Expressed in Canadian Dollars)

6. MINERAL PROPERTY

Zacatecas Project, Mexico

On August 18, 2020, the Company entered into a purchase agreement with Santacruz Silver Mining Ltd. (“Santacruz”), Impulsora Minera Santacruz, S.A. de D.V. (“IMSC”), being a wholly owned subsidiary of Santacruz, and Desarrollos Mineros Zacatecas Silver, S.A. de C.V. (“DMZS”), a wholly owned subsidiary of the Company. Under the terms of the purchase agreement, DMZS acquired a 100% interest in certain claims known as the Zacatecas Project, in Zacatecas, Mexico, subject to certain underlying royalties. The Company acquired a 100% interest in the property by issuing 5,000,000 common shares (issued), agreeing to pay outstanding property taxes on the project of MxP3,977,515 ($278,080 - paid), and agreeing to make total payments of US$1,500,000 over a period of two years from listing on the TSXV, which was subsequently amended and paid on listing.

The fair value of the deferred payments of $1,559,046 was determined on the date of the acquisition using a discounted cash flow model with a discount rate of 20%. Subsequently the Company amended the Zacatecas Project purchase agreement between Santacruz, IMSC and DMZS, such that DMZS paid the US$1,500,000 on the listing date and the 5,000,000 common shares were subject to resale restrictions for periods of 2 to 14 months from the TSXV listing date.

Esperanza Project, Mexico

On April 12, 2022, the Company completed its acquisition of the Esperanza Gold Project, located in Morelos State, Mexico, pursuant to the terms of a Share Purchase Agreement dated February 28, 2022 (the “Share Purchase Agreement”) with Minas De Oro Nacional, S.A. De C.V. (“Minas De Oro”), a subsidiary of Alamos Gold Inc. (“Alamos”).

Under the terms of the Share Purchase Agreement, the Company acquired all the issued and outstanding shares of Esperanza Silver de Mexico S.A de C.V (“Esperanza Mexico”), which holds title to the Esperanza Gold Project. In consideration, the Company:

i. paid Minas de Oro US$5,000,000 in cash;
ii. issued 12,140,000 common shares of the Company; and
iii. Granted a Silver Stream (“Silver Stream Obligation”) under which Alamos is entitled to receive 20% of the silver produced from the Esperanza Gold Project at a cash price of 20% of the prevailing spot silver price, subject to a maximum of 500,000 ounces of silver delivered to Alamos.

The Share Purchase Agreement further provides that the Company will make certain additional payments contingent upon the completion of key milestones on the Esperanza Gold Project (“Milestone Payments”):

iv. Pay US$5,000,000 within 60 days after approval of an environmental impact assessment report by the applicable governmental authorities;
v. Pay US$14,000,000 within 60 days of the earlier of (i) completion of a feasibility study on the Esperanza Gold Project or (ii) the Company announcing its decision to commence construction of a mine on the Esperanza Gold Project; and
vi. Pay US$20,000,000 within 180 days after commencement of commercial production on the Esperanza Gold Project.

The Company may, at its sole election, satisfy up to 50% of the contingent payments by issuing common shares at a price equal to the 10-day volume-weighted average price prior to the issuance of such shares provided that such share issuance does not cause Alamos to exceed 19.99% ownership of the issued and outstanding shares of the Company (on a partially diluted basis).

The Company has also agreed to incur US$7,500,000 in expenditures to advance the Esperanza Gold Project over the three years following the acquisition. If the Company fails to meet the expenditure commitment, an amount equal to the shortfall will be added to the next contingent payment. The Company did not meet the obligation by US$1,621,401 and has included the amount within the contingent consideration calculation.

---

ZACATECAS SILVER CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in Canadian Dollars)

1. MINERAL PROPERTY (cont'd...)

Esperanza Project, Mexico (cont'd...)

The transaction did not meet the definition of a business combination and therefore was accounted for as an asset purchase of mineral property interests. The fair value of the consideration paid for the acquisition of Esperanza has been allocated to the assets acquired and liabilities assumed, based on management's best estimate and taking into account all available information at the time of acquisition.

The following table summarizes the fair value of the total consideration paid and the aggregate fair value of the identified assets acquired and liabilities assumed:

Purchase price
Cash (US$5,000,000)	$ 6,305,000
12,140,000 common shares	13,354,000
Fair value of Milestone Payments	19,745,605
Fair value of Silver Stream	3,061,463
Transaction costs and finder’s fee (1)	1,063,277
Fair value of consideration	$ 43,529,345

(1) The Company paid a finder’s fee of US$500,000 to a third party.

The fair value of the contingent Milestone Payments of $19,745,605 was estimated on the date of acquisition based on management assumptions on the probability and timing of such payments using a probability-weighted discounted cash flow model. The Company used a discount rate of 9.75%. The Milestone Payments and Silver Stream are revalued at each reporting period based on the prevailing facts and circumstances of the Esperanza Gold Project. The fair value is determined using discounted cash flows based on significant inputs and assumptions such as a discount rate, an estimate of timelines to advance the project and a success probability factor. The fair value at each reporting period is also impacted by prevailing foreign exchange rates.

As at December 31, 2025, the Company used a discount rate of 13.75% (2024 - 13.75%). The changes in the fair value of the Milestone Payments and Silver Stream (“Contingent Consideration”) for the year ended December 31, 2025 and for the year ended December 31, 2024 are as follows:

Contingent Consideration	Milestone Payments	Silver Stream	Total
Balance, December 31, 2023	$ 6,924,498	$ 1,424,931	$ 8,349,429
Change in fair value	1,007,586	223,249	1,230,835
Balance, December 31, 2024	7,932,084	1,648,180	9,580,264
Change in fair value	909,091	212,973	1,122,064
Balance, December 31, 2025	$ 8,841,175	$ 1,861,153	$ 10,702,328

The Milestone Payments are considered to be in level 3 of the fair value hierarchy (Note 11).

Significant inputs and assumptions into the model are summarized in the following table:

Inputs and Assumption	December 31, 2025	December 31, 2024
Debt discount rate	13.75%	13.75%
Average silver price	US$37.74	US$27.61

---

ZACATECAS SILVER CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in Canadian Dollars)

1. MINERAL PROPERTY (cont'd...)

Esperanza Project, Mexico (cont'd...)

Sensitivity Analysis:

The fair value of the Silver Stream Obligation was estimated using Level 3 inputs and is most sensitive to changes in future metal prices, discount rates, foreign exchange rates, and estimated mineral resources.

For the fair value of the Silver Stream Obligation, reasonably possible changes at the reporting date to one of the significant inputs, holding other inputs constant, would have the following effects:

Key Inputs	Inter-relationships between significant inputs and fair value measurement	Estimated Fair Value Increase (decrease)
Key observable inputs
- Metal prices	- Future silver prices were 10% higher	186,115
	- Future silver prices were 10% lower	(186,115)
- Discount rates	- Discount rates were 1% higher	(218,365)
	- Discount rates were 1% lower	218,365
- Foreign exchange rates	- Exchange rate was 10% higher	186,115
	- Exchange rate was 10% lower	(186,115)
Key unobservable inputs
- Estimated mineral resources	- Estimated mineral resources were 10% higher	186,115
	- Estimated mineral resources were 10% lower	(186,115)
- Milestone probability weighting	- Increase in probability weighting by 10%	186,115
	- Decrease in probability weighting by 10%	(186,115)

Total Acquisition costs

	Esperanza Gold Project	Zacatecas Project	Total
Balance, December 31, 2023	$44,488,850	$2,871,688	$47,360,538
Foreign currency translation	-	(209,640)	(209,640)
Balance, December 31, 2024	44,488,850	2,662,048	47,150,898
Foreign currency translation	-	163,420	163,420
Balance, December 31, 2025	$44,488,850	$2,825,468	$47,314,318

---

ZACATECAS SILVER CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in Canadian Dollars)

1. MINERAL PROPERTY (cont'd...)

Exploration Expenditures

During the year ended December 31, 2025 and December 31, 2024, the Company incurred exploration costs on the Esperanza Gold and Zacatecas silver projects as follows:

For the year ended December 31, 2025	Esperanza Gold Project	Zacatecas Project	Total
Administrative, permitting and land access	$ 14,890	$ -	$ 14,890
Corporate social responsibility and community relations	25,367	229,825	255,192
General exploration	7,365	-	7,365
Mining duties	150,320	361,173	511,493
Reporting	2,761	10,011	12,772
Taxes paid (IVA)	4,486	33,204	37,690
	$ 205,189	$ 634,213	$ 839,402
For the year ended December 31, 2024	Esperanza Gold Project	Zacatecas Project	Total
---	---	---	---
Administrative, permitting and land access	$ 14,293	$ -	$ 14,293
Corporate social responsibility and community relations	45,714	-	45,714
Drilling and assay	-	20,802	20,802
General exploration	176,044	235,578	411,622
Mining duties	222,694	252,974	475,668
Reporting and technical studies	-	10,427	10,427
Taxes paid (IVA)	(5,153)	9,033	3,880
	$ 453,592	$ 528,814	$ 982,406

1. RELATED PARTY TRANSACTIONS

Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consists of members of the Board and corporate officers, including the Company's Chief Executive Officer and Chief Financial Officer.

During the year ended December 31, 2025 and 2024, the Company entered into the following transactions with current and former related parties, not disclosed elsewhere in these consolidated financial statements:

	2025	2024
Professional fees	$ 205,677	$ 160,690
Exploration costs	91,195	259,780
Director fees	-	72,000
Management fees	264,337	350,182
Share-based compensation	705,881	-
	$ 1,267,090	$ 842,652

As at December 31, 2025, $70,474 (2024 - $371,729) was included in accounts payable and accrued liabilities owing to officers and directors of the Company in relation to fees and reimbursement of expenses. During the year ended December 31, 2025, $nil (2024 - $52,500) previously accrued expenses to a director of the Company was written off to loss and comprehensive loss.

---

ZACATECAS SILVER CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in Canadian Dollars)

1. SHAREHOLDERS' EQUITY

Authorized

An unlimited number of common shares without par value.

Issued share capital

During the year ended December 31, 2025

On February 11, 2025, the Company closed a non-brokered private placement for total gross proceeds of $1,500,000. Pursuant to the private placement, the Company issued 30,000,000 common shares at a price of $0.05 per share. The Company paid finders' fees of $46,550 to a third party, issued 224,000 finders' common shares valued at $20,160 and issued 1,155,000 finders' warrants entitling the holder to purchase one additional common share at a price of $0.05 for a period of two years. The finders' warrants were valued at $72,183 using the Black-Scholes valuation model and following assumptions: expected volatility of 109.81%, risk free interest rate of 2.71%, life of 2 years, dividend yield of 0% and forfeiture rate of 0%. In connection with the offering, the Company incurred additional closing costs of $27,085.

On September 22, 2025, the Company closed the first tranche of a non-brokered private placement by issuing 38,449,335 units a price of $0.06 per unit for gross proceeds of $2,306,960. Each unit was comprised of one common share and one common share purchase warrant entitling the holder to purchase an additional common share at a price of $0.10 for a period of two years. The Company paid finders' fees of $113,297 and issued 1,432,050 finders' warrants with an exercise price of $0.10 and a life of two years, and 512,236 finders' warrants with an exercise price of $0.06 and life of two years. The warrants were valued at $143,883 using the Black-Scholes model and the following weighted average assumptions: volatility of 124.91%, risk free interest rate of 2.45%, life of two years, dividend yield of 0% and forfeiture rate of 0%.

On September 29, 2025, the Company closed the second and final tranche of a non-brokered private placement by issuing 24,050,665 units a price of $0.06 per unit for gross proceeds of $1,443,040. Each unit was comprised of one common share and one common share purchase warrant entitling the holder to purchase an additional common share at a price of $0.10 for a period of two years. The Company paid finders' fees of $1,120 and issued 18,669 finders' warrants with an exercise price of $0.10 and a life of two years. The warrants were valued at $1,673 using the Black-Scholes model and the following assumptions: volatility of 127.93%, risk free interest rate of 2.47%, life of two years, dividend yield of 0% and forfeiture rate of 0%. In connection with the closing of the two tranches, the Company incurred additional closing costs of $43,968.

During the year ended December 31, 2024

On February 13, 2024, the Company closed a non-brokered private placement for total gross proceeds of $2,500,000. Pursuant to the private placement, the Company issued 25,000,000 units at a price of $0.10 per unit. Each unit consists of one common share and one-half of one common share purchase warrant. Each whole warrant entitles the holder to purchase a common share at an exercise price of $0.15 for a period of two years from the date of issuance.

The Company paid $55,138, issued 315,000 common shares and issued 865,375 broker warrants as finders' fees and paid other share issuance costs of $32,689. Each broker warrant is exercisable into one common share at a price of $0.15 for a period of two years. The broker warrants were valued at $53,659 using the Black-Scholes pricing methodology. The Company used the following assumptions when valuing the broker warrants: expected volatility of 93.45%, risk free interest rate of 4.35%, life of two years, dividend yield of 0% and forfeiture rate of 0%.

---

ZACATECAS SILVER CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in Canadian Dollars)

1. SHAREHOLDERS' EQUITY (cont'd...)

Stock options and warrants

The Company has a stock option plan under which it is authorized to grant options to executive officers and directors, employees and consultants, enabling them to acquire up to 10% of the issued and outstanding common shares of the Company. Under the plan, the exercise price of each option equals the Market Price (as that term is defined by the TSXV) of the Company's shares, less the Discounted Market Price (as that term is defined by the TSXV), as calculated on the date of grant. The options can be granted for a maximum term of 10 years, with vesting determined by the board of directors.

Stock option and warrant transactions are summarized as follows:

	Warrants		Stock Options
	Number	Weighted Average Exercise Price	Number	Weighted Average Exercise Price
Outstanding, December 31, 2023	17,560,369	$ 1.05	5,817,500	$ 0.59
Expired	(9,613,161)	1.46	-	-
Granted	13,365,375	0.15	-	-
Outstanding, December 31, 2024	21,312,583	0.30	5,817,500	0.59
Expired / Cancelled	-	-	(2,842,500)	0.56
Exercised	(353,000)	0.05	-	-
Granted	65,617,955	0.10	9,000,000	0.10
Outstanding and exercisable, December 31, 2025	86,577,538	$ 0.15	11,975,000	$ 0.23

The balance of stock options and warrants outstanding as at December 31, 2025, was as follows:

Expiry Date	Number	Exercise Price - $	Remaining Life (Years)
Stock Options
March 2, 2026¹	2,375,000	0.50	0.17
March 15, 2027	400,000	1.20	1.20
July 18, 2027	200,000	0.70	1.55
January 20, 2030	3,000,000	0.10	4.06
May 9, 2030	1,000,000	0.05	4.61
October 9, 2025	5,000,000	0.11	4.78
Warrants
May 10, 2026	7,809,502	0.55	0.36
May 10, 2026	137,706	0.55	0.36
February 13, 2026²	13,365,375	0.15	0.12
February 11, 2027³	802,000	0.05	1.12
September 22, 2027	38,449,335	0.10	1.73
September 22, 2027	1,432,050	0.10	1.73
September 22, 2027	512,236	0.06	1.73
September 29, 2027	24,050,665	0.10	1.75
September 29, 2027	18,669	0.10	1.75

1. Subsequent to December 31, 2025, all of these options expired unexercised.
2. Subsequent to December 31, 2025, 1,701,250 of these warrants were exercised for proceeds of $255,188. The remaining 11,664,125 expired unexercised.
3. Subsequent to December 31, 2025, 676,390 of these warrants were exercised for proceeds of $33,820.

---

ZACATECAS SILVER CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in Canadian Dollars)

1. SHAREHOLDERS' EQUITY (cont'd...)

Stock options and warrants (cont'd...)

During the year ended December 31, 2025, the Company granted a total of 9,000,000 (2024 – nil) stock options with a weighted average fair value of $0.07 (2024 - $nil). Total share-based payments recognized in the statement of loss and comprehensive loss for the year ended December 31, 2025 related to stock options granted and vested were $625,383 (2024 - $nil).

The fair value of options at the date of grant was estimated using the Black-Scholes Option Pricing Model using the following weighted average assumptions:

	December 31, 2025	December 31, 2024
Weighted average share price on date of grant	0.09	N/A
Risk-free interest rate	2.84%	N/A
Expected life of option	5 years	N/A
Expected annualized volatility	106.02%	N/A
Expected dividend rate	N/A	N/A

Restricted Share Units

The Company has a fixed equity incentive plan whereby it may grant restricted share units ("RSUs") or deferred share units ("DSUs") to employees, officers, directors and consultants of the Company. The maximum number of shares issuable pursuant to RSUs and DSUs issued under the plan shall not exceed 9,041,099.

During the year ended December 31, 2025, the Company granted 6,000,000 RSUs (2024 – nil) to certain directors, officers, and consultants of the Company. The RSUs vest as follows:

• 5,000,000 on January 20, 2026
• 1,000,000 on May 9, 2026

During the year ended December 31, 2025, the Company recognized $349,220 (2024 - $nil) for RSUs granted and vested.

RSU transactions are as follows:

	Number of RSUs
Balance, December 31, 2023 and 2024	-
Granted	6,000,000
Balance, December 31, 2025	6,000,000

As at December 31, 2025, no RSUs have vested. Subsequent to the year ended December 31, 2025, 5,000,000 RSUs fully vested and 1,000,000 common shares were issued upon the exercise of 1,000,000 RSUs.

---

ZACATECAS SILVER CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in Canadian Dollars)

1. INCOME TAXES

A reconciliation of income taxes (recovery) at statutory rates with the reported taxes for the year ended December 31, 2025 and 2024:

	2025	2024
Income (loss) before income taxes	$ (4,166,298)	$ (3,559,050)
Expected income tax (recovery)	$ (1,159,000)	$ (930,000)
Change in statutory, foreign tax and other	(22,000)	(26,000)
Permanent differences	291,000	(296,000)
Share issue costs	(61,000)	(24,000)
Change in foreign exchange	(107,000)	87,000
Adjustment to prior years provision versus statutory tax returns and expiry of non-capital losses	689,000
Change in unrecognized deductible temporary differences	369,000	1,189,000
Income tax recovery	$ -	$ -

The significant components of the Company's unrecognized temporary differences and tax losses are as follows:

	2025	2024	Expiry Date Range
Exploration and evaluation assets	$ 13,882,000	$ 12,836,000	N/A
Equipment	210,000	184,000	N/A
Share issuance costs	661,000	937,000	2046 to 2049
Non-capital losses	13,358,000	12,920,000	2040 to 2045

1. SEGMENT INFORMATION

The Company operates in one reportable operating segment, being the acquisition, exploration, and evaluation of resource properties in Mexico, as described in Note 6.

1. FINANCIAL AND CAPITAL RISK MANAGEMENT

Financial assets and liabilities are classified in the fair value hierarchy according to the lowest level of input that is significant to the fair value measurement. Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect placement within the fair value hierarchy levels. The hierarchy is as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The carrying value of cash, receivables, and accounts payable and accrued liabilities approximate their fair value due to the short-term nature of the financial instruments. Cash, receivables, and accounts payable and accrued liabilities are classified at amortized cost. Contingent consideration is classified as a Level 3 financial liability within the fair value hierarchy due to the use of unobservable inputs, including estimates of the probability and timing of milestone achievement and the discount rate applied to expected future payments. The fair value of the contingent consideration is remeasured at each reporting date using a probability-weighted expected payment approach, with changes in fair value recognized in profit or loss.

---

ZACATECAS SILVER CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2025

(Expressed in Canadian Dollars)

11. FINANCIAL AND CAPITAL RISK MANAGEMENT (cont'd...)

Risk management

The Company is exposed to varying degrees to a variety of financial instrument related risks:

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 cash is held at a large Canadian financial institution in interest bearing accounts. The Company has no investment in asset backed commercial paper.

The Company’s receivables primarily consist of goods and services tax receivable from the government of Canada.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through its capital management as outlined below. Accounts payable and accrued liabilities are due within one year.

Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.

a) Interest rate risk

The Company’s exposure to interest rate risk arises from the interest rate impact on cash. The Company’s practice has been to invest cash at floating rates of interest, in order to maintain liquidity, while achieving a satisfactory return for shareholders. There is minimal risk that the Company would recognize any loss as a result of a decrease in the fair value of any guaranteed bank investment certificates included in cash as they are generally held with large financial institutions. As at December 31, 2025, the Company is not exposed to significant interest rate risk.

b) Foreign currency risk

The majority of purchases are transacted in the Canadian dollar. Management believes the foreign exchange risk derived from currency conversions is not significant and therefore does not hedge its foreign exchange risk.

c) Price risk

The Company is exposed to price risk with respect to commodity prices. The Company closely monitors commodity prices to determine the appropriate course of action to be taken by the Company.

Capital management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue acquisition, exploration and evaluation of mineral properties and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. In the management of capital, the Company includes its components of shareholders’ equity.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue debt, acquire or dispose of assets or adjust the amount of cash.

The Company currently is not subject to externally imposed capital requirements. There were no changes in the Company’s approach to capital management.

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ZACATECAS SILVER CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2025

(Expressed in Canadian Dollars)

12. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

During the year ended December 31, 2025, the Company:

a) Granted finders’ warrants valued at $217,739 which are recorded in share issuance costs and contributed surplus;

b) Issued 224,000 shares valued at $20,160 as finders’ shares.

During the year ended December 31, 2024, the Company:

a) Granted 865,375 broker warrants valued at $53,659, which are recorded in share issuance costs and contributed surplus

No cash was paid for interest or taxes during the years ended December 31, 2025 and 2024.

13. SUBSEQUENT EVENTS

Subsequent to the year ended December 31, 2025, the Company:

a) granted 2,550,000 incentive stock options and 3,000,000 restricted share units (“RSUs”) to officers, directors, key employees, and consultants. Each option is exercisable at $0.12 per share and expires five years from the date of grant. Each RSU entitles the holder to receive one common share, vests one year from the date of grant, and expires three years from the date of grant.

b) Entered into an agreement to acquire a multi-asset exploration portfolio from Heliostar Metals Ltd. (“Heliostar”) comprising a 100% interest in the Cumaro, Lola, Oso Negro and Ejutla exploration properties (the “Exploration Properties”) located in Sonora, and Oaxaca, Mexico.

Under the terms of the agreement, the Company has agreed to option into a 100% interest in the Exploration Properties from Heliostar. In order to exercise the option, the Company will be required to:

i) pay US $450,000 to Heliostar as follows: (i) US $150,000 on the date that is the earlier of entering into a definitive option agreement or April 30, 2026 (the “Effective Date” – amended from March 31, 2026, pursuant to a series of amending agreements); (ii) US $100,000 on the first anniversary of the Effective Date; (iii) US $100,000 on the second anniversary of the Effective Date; and (iv) US $100,000 on the third anniversary of the Effective Date;

ii) issue US $750,000 common shares of the Company (the “Consideration Shares”) to Heliostar as follows: (i) US $300,000 of Consideration Shares on the Effective Date; (ii) US $150,000 of Consideration Shares on the first anniversary of the Effective Date; (iii) US $150,000 of Consideration Shares on the second anniversary of the Effective Date; and (iv) US $150,000 of Consideration Shares on the third anniversary of the Effective Date.

Upon exercise of the option, the Company will grant a 2% net smelter return royalty on the Exploration Properties, of which 50% of the royalty may be purchased, at any time before commercial production, with a one-time payment of US $2,000,000. Three mining concessions are currently subject to the following underlying royalties: (i) the La Barra mining concession is subject to a 1% net smelter royalty, which may be purchased with a one-time payment of US $500,000, (ii) the Edaena mining concession is subject to a 1% net smelter return royalty, which may be purchased with a one-time payment of US $250,000, (iii) the Cumaro mining concession is subject to a 1% net smelter return royalty, of which 50% may be purchased with a one-time payment of US $1,000,000.