Western Atlas Resources : Financial Statements – Year Ended 2023

Western Atlas

Resources Inc.

Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

(Expressed in Canadian dollars)

Crowe MacKay LLP

1100 - 1177 West Hastings Street

Vancouver, BC V6E 4T5

Main [phone]

Fax [phone]

www.crowemackay.ca

Independent Auditor's Report

To the Shareholders of Western Atlas Resources Inc.

Opinion

We have audited the consolidated financial statements of Western Atlas Resources Inc. (the "Group"), which comprise the consolidated statements of financial position as at December 31, 2023 and December 31, 2022 and the consolidated statements of loss and comprehensive loss, changes in shareholders' equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of material accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2023 and December 31, 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.

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 Group 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 1 to the consolidated financial statements which describes the material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the year ended December 31, 2023. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be a key audit matter to be communicated in our report. 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.

Recoverability of Exploration and Evaluation Assets

As disclosed in Note 4 to the consolidated financial statements, the carrying value of Exploration and Evaluation Assets represents a significant asset of the Group. Refer to Note 2 and Note 3 to the consolidated financial statements for a description of the accounting policy and significant judgments applied to Exploration and Evaluation Assets.

At each reporting period end, management applies judgment in assessing whether there are any indicators of impairment relating to mining claims and deferred exploration costs. If there are indicators of impairment, the recoverable amount of the related asset is estimated in order to determine the extent of any impairment. Indicators of impairment may include (i) the period during which the entity has the right to explore in the specific area has expired during the year or will expire in the near future and is not expected to be renewed; (ii) substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned; (iii) exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; and (iv) sufficient data exists to indicate that the carrying amount of the mining claims and deferred exploration costs is unlikely to be recovered in full from successful development or by sale. No impairment indicators were identified by management as at December 31, 2023.

Why the matter was determined to be a key audit matter

We considered this a key audit matter due to (i) the significance of the mining claims and deferred exploration costs balance and (ii) the judgments made by management in its assessment of indicators of impairment related to mining claims and deferred exploration costs, which have resulted in a high degree of subjectivity in performing audit procedures related to these judgments applied by management.

How the matter was addressed in our audit

We have evaluated management's assessment of impairment indicators per IFRS 6 Exploration for and Evaluation of Mineral Resources, including but not limited to:

• Reviewing the Group's rights to explore in the relevant exploration areas and assessing whether the rights to tenure remained current at the financial position date;
• Obtaining, by reference to government registries, evidence to support (i) the right to explore the area and (ii) claim expiration dates;
• Considering the status of the relevant exploration areas by holding discussions with management, and reviewing the Group's exploration budget and directors' minutes;
• Enquiring with management and reviewing its future plans and other documentation as evidence that further exploration and evaluation activities in the area of interest will be continued in the future;
• Assessing the adequacy of the related disclosures in Note 2, Note 3 and Note 4 to the consolidated financial statements.

Other Information

Management is responsible for the other information. The other information comprises:

• 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 identified above 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 the other information prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. 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 as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance are responsible for overseeing the Group's financial reporting process.

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

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with 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 Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions

and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group 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 period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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

Chartered Professional Accountants

Vancouver, Canada

April 26, 2024

WESTERN ATLAS RESOURCES INC.

Consolidated Statements of Financial Position

(expressed in Canadian dollars)

	December 31, 2023	December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	45,656	$	261,646
Prepaid expenses		10,120		24,837
Accounts receivable		1,521		24,402
		57,297		310,885
Non-current assets
Exploration and evaluation assets (Note 4)		4,939,304		4,917,612
Total assets	$	4,996,601	$	5,228,497
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities (Note 7)	$	140,317	$	39,335
Accrued compensation (Note 7)		264,559		-
		404,876		39,335
Shareholders' equity
Share capital (Note 6)		9,764,716		9,758,716
Equity reserves		872,041		800,314
Deficit		(6,045,032)		(5,369,868)
		4,591,725		5,189,162
Total liabilities and shareholders' equity	$	4,996,601	$	5,228,497

Nature of operations and going concern (Note 1)

Subsequent events (Note 13)

These consolidated financial statements were approved for issue by the Board of Directors on April 19, 2024.

They are signed on the Company's behalf by:
"Fabio Capponi"	"Susan Rubin"
Director	Chief Financial Officer

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

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WESTERN ATLAS RESOURCES INC.

Consolidated Statements of Loss and Comprehensive Loss

(expressed in Canadian dollars)

		Year ended		Year ended
		December 31, 2023		December 31, 2022
Operating expenses
General and administrative expenses	$	97,047	$	92,874
Salaries and benefits (Note 7)		126,896		128,026
Geological consulting		76,361		137,149
Accounting, audit and advisory services (Note 7)		203,618		191,420
Legal fees		20,000		20,141
Property investigation costs		59,954		215,551
Investor relations		13,027		78,276
Share based payments (Note 6)		77,727		287,564
Foreign exchange loss		534		1,523
Net Loss and comprehensive loss for the year	$	675,164	$	1,152,524

Weighted average common shares outstanding	117,596,960	117,430,658
Loss per common share - basic and diluted	$0.01	$0.01

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

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WESTERN ATLAS RESOURCES INC.

Consolidated Statements of Changes in Shareholders' Equity

(expressed in Canadian dollars)

									Total
	Total number		Total share						Shareholders'
	of shares issued		capital		Reserves		Deficit		Equity
Balance December 31, 2021	116,153,398	$	9,660,716	$	610,750	$	(4,217,344)	$	6,054,122
Net loss	-		-		-		(1,152,524)		(1,152,524)
Granting of RSU's	-		-		98,000		-		98,000
Exercise of RSU's	1,400,000		98,000		(98,000)		-		-
Share-based payments	-		-		189,564		-		189,564
Balance December 31, 2022	117,553,398	$	9,758,716	$	800,314	$	(5,369,868)	$	5,189,162
Net loss	-		-		-		(675,164)		(675,164)
Granting of RSU's	-		-		72,000		-		72,000
Exercise of RSU's	300,000		6,000		(6,000)		-		-
Share-based payments	-		-		5,727		-		5,727
Balance Decembre 31, 2023	117,853,398	$	9,764,716	$	872,041	$	(6,045,032)	$	4,591,725

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

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WESTERN ATLAS RESOURCES INC.

Consolidated Statements of Cash Flows

(expressed in Canadian dollars)

		Year ended		Year ended
	December 31, 2023	December 31, 2022
Cash flows provided by (used in):
Operating activities
Net loss for the year	$	(675,164)	$	(1,152,524)
Adjustment for non-cash items:
Share-based payments		77,727		287,564
Changes in non-cash working capital items:
Prepaid expenses		14,717		7,757
Accounts receivable		22,881		(17,713)
Accounts payable and accrued liabilities		96,544		7,729
Accrued compensation		264,559		-
Net cash used by operating activities		(198,736)		(867,187)
Investing activities
Exploration and evaluation assets		(17,254)		(36,674)
Net cash used by investing activities		(17,254)		(36,674)
Net cash decrease for the year		(215,990)		(903,861)
Cash and cash equivalents at beginning of year		261,646		1,165,507
Cash and cash equivalents at end of year	$	45,656	$	261,646

Supplemental cash flow information (Note 5)

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

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WESTERN ATLAS RESOURCES INC.

Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (expressed in Canadian dollars)

1. Nature of operations and going concern

Western Atlas Resources Inc. (the "Company") is a company domiciled in Canada. The address of the Company's registered office is Suite 1700, Park Place, 666 Burrard Street, Vancouver, BC, Canada V6C 2X8. The Company has one wholly owned subsidiary, Western Atlas Holding Corp., formerly Western Atlas (Nunavut) Holding Corp., which in turn has two wholly owned subsidiaries, 5530 Nunavut Inc., which is domiciled in Canada, and Andes Ecosucursal S.A.S., which is domiciled in Ecuador.

The consolidated financial statements of the Company for both periods presented comprises the Company and its subsidiaries (together referred to as the "Company" and individually as "Company entities"). The Company and its subsidiaries are primarily involved in the discovery, acquisition, and development of mineral deposits in premier mining jurisdictions.

These consolidated financial statements have been prepared on a basis which assumes that the Company will be able to continue its operation as a going concern for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. During the year ended December 31, 2023, the Company incurred a net loss of $675,164 (2022 - $1,152,524). At December 31, 2023, the Company had not achieved profitable operations, had an accumulated deficit of $6,045,032 (2022 - $5,369,868) and expects to incur further losses as it develops its business and explores its mineral property interests. The Company will be required to raise additional financing to maintain its operations; all of the factors indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.

The Company is in the process of exploring its exploration and evaluation assets and has not yet determined whether they contain resources that are economically recoverable. The recoverability of amounts shown for exploration and evaluation assets is dependent upon, among other things, the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary mining and environmental permits, and upon future profitable production or proceeds from disposition of the mineral property.

The ability of the Company to carry out its planned business objectives and continue as a going concern is dependent on its ability to raise adequate financing from lenders, shareholders, and other investors, and/or generate operating profitability and positive cash flow from its mineral property interests. There can be no assurances that the Company will be able to obtain the additional financial resources necessary and/or achieve profitability or positive cash flows from its future operations. If the Company is unable to obtain adequate additional financing, the Company would be required to curtail its planned operations and exploration and development activities which may impact the Company's ability to maintain its mineral property interest.

The Company's business may be affected by changes in political and market conditions, such as interest rates, availability of credit, inflation rates, changes in laws, and national and international circumstances. Recent geopolitical events and potential economic global challenges such as the risk of higher inflation and energy crises, may also create further uncertainty and risk with respect to the Company's business.

The consolidated financial statements do not include any adjustments relating to the recorded amounts and classification of assets and liabilities should the Company be unable to continue as a going concern. Such adjustments could be material.

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