Eskay Mining : For the year ended February 29, 2024 FS

ESKAY MINING CORP.

FINANCIAL STATEMENTS

YEARS ENDED FEBRUARY 29, 2024

AND FEBRUARY 28, 2023

(EXPRESSED IN CANADIAN DOLLARS)

Independent Auditor's Report

To the Shareholders of Eskay Mining Corporation

Opinion

We have audited the financial statements of Eskay Mining Corporation (the "Company"), which comprise the statements of financial position as at February 29, 2024, February 28, 2023 and March 1, 2022, and the statements of loss and comprehensive loss, statements of cash flows and statements of changes in shareholders' equity for the years ended February 29, 2024 and February 28, 2023, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at February 29, 2024 and 2023, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS").

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 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 financial statements in Canada. 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.

Emphasis of matter

We draw attention to Note 2 in the financial statements which describes that the financial statements as at February 28, 2023 and March 1, 2022 and for the year ended February 28, 2023 have been restated. Our opinion is not modified in respect of this matter.

Material uncertainty related to going concern

We draw attention to Note 1 in the financial statements, which indicates that the Company incurred a net loss during the year ended February 29, 2024. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that material uncertainties exist that cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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Key audit matters

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

Except for the matter described in the Material uncertainty related to going concern section, we have determined that there were no additional key audit matters to communicate in our report.

Other information

Management is responsible for the other information. The other information comprises Management's Discussion and Analysis.

Our opinion on the 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 financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the 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 financial statements

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

In preparing the 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 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 financial statements

Our objectives are to obtain reasonable assurance about whether the 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

• Identify and assess the risks of material misstatement of the 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 risks 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 financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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.

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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 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 of the audit resulting in this independent auditor's report is Nicole Louli.

McGovern Hurley LLP

Chartered Professional Accountants

Licensed Public Accountants

Toronto, Ontario

June 26, 2024

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Eskay Mining Corp.

Statements of Financial Position

(Expressed in Canadian Dollars)

As at	As at	As at
February 29,	February 28,	March 1,
2024	2023	2022
	(note 2)	(note 2)

ASSETS
Current assets	$	2,839,947
Cash and cash equivalents	$	3,024,574	$	876,222
Amounts receivable (note 9)		977,571		1,526,514		842,063
Prepaid expenses and other deposits (note 3)		25,530		329,907		464,840
Total current assets		3,843,048		4,880,995		2,183,125
Non-current assets		99,503
Deposits (note 4)			94,303		94,303
Investment in associate (note 13)		1,896,156		5,690,302		6,091,409
Equipment (note 5)		213,649		175,015		112,135
Total assets	$	6,052,356	$	10,840,615	$	8,480,972
SHAREHOLDERS' EQUITY AND LIABILITIES
Current liabilities	$	302,167
Amounts payable and other liabilities (note 11)	$	487,872	$	615,454
Seabridge loan (notes 12)		-		2,783,325		2,470,802
Total current liabilities		302,167		3,271,197		3,086,256
Non-current liabilities		76,917
Provision for reclamation (note 10)			71,414		66,310
Total liabilities		379,084		3,342,611		3,152,566
Shareholders' equity		113,693,197
Share capital (note 14)			113,693,197		95,982,395
Reserves (notes 15 & 16)		14,728,845		14,161,913		12,083,662
Accumulated deficit		(122,748,770)		(120,357,106)		(102,737,651)
Total shareholders' equity		5,673,272		7,498,004		5,328,406
Total shareholders' equity and liabilities	$	6,052,356	$	10,840,615	$	8,480,972
Nature of operations and going concern (note 1)
Commitments and contingencies (note 20)
Subsequent events (note 23)

Approved on behalf of the Board of Directors:

"Hugh M. (Mac) Balkam", Director

"J. Gordon McMehen", Director

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

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Eskay Mining Corp.

Statements of Loss and Comprehensive Loss (Expressed in Canadian dollars)

		Year ended		Year ended
		February 29,	February 28,
		2024		2023
Operating expenses				(note 2)
$	3,628,907
Exploration and evaluation expenditures (note 4)	$	12,641,682
General and administrative (note 18)		2,158,026		4,991,847
Total operating expenses		(5,786,933)		(17,633,529)
Other items		38,860
Interest income			67,154
Gain on Seabridge loan termination (note 12)		2,783,325		-
Amortization (note 5)		(38,879)		(31,671)
Accretion (note 12)		-		(312,523)
Sale of mineral claims		4,000,000		-
Impairment of investment in associate (note 13)		(3,331,019)		-
Loss from investment in associate (note 13)		(461,142)		(401,107)
Gain on dilution of investment in associate (note 13)		(1,985)		-
Income tax recovery		-		44,082
Net loss and comprehensive loss for the year	$	(2,797,773)	$	(18,267,594)
Net loss per share - Basic and Diluted (note 17)	$	(0.02)	$	(0.10)
Weighted average number of common shares outstanding - Basic
and diluted (note 17)		183,617,123		177,469,488

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

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Eskay Mining Corp.

Statements of Cash Flows

(Expressed in Canadian Dollars)

		Year ended		Year ended
		February 29,	February 28,
		2024		2023
Operating activities				(note 2)
$	(2,797,773)
Net loss for the year	$ (18,267,594)
Adjustments for:		973,041
Share-based payments (note 15)			3,425,349
Gain on seabridge loan termination (note 12)		(2,783,325)		-
Amortization (note 5)		38,879		31,671
Accretion (notes 10 and 12)		5,503		317,627
Loss from investment in associate (note 13)		461,142		401,107
Loss on dilution of investment in associate (note 13)		1,985		-
Impairment of investment in associate (note 13)		3,331,019		-
Changes in non-cash working capital items:		548,943
Amounts receivable			(684,451)
Prepaid expenses and other deposits		138,072		134,933
Amounts payable and other liabilities		(24,600)		(127,583)
Net cash used in operating activities		(107,114)	(14,768,941)
Investing activity		(77,513)
Purchase of equipment			(94,550)
Net cash used in investing activities		(77,513)		(94,550)
Financing activities		-
Proceeds from private placements (note 14)			7,000,002
Share issue costs		-		(114,124)
Proceeds from exercise of stock options		-		765,100
Proceeds from exercise of warrants		-		9,360,865
Net cash provided by financing activities		-		17,011,843
Net change in cash and cash equivalents		(184,627)		2,148,352
Cash and cash equivalents, beginning of year		3,024,574		876,222
Cash and cash equivalents, end of year	$	2,839,947	$	3,024,574
Cash and cash equivalents	$	2,725,973
Cash	$	2,925,071
GIC	$	113,974	$	99,503

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

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Eskay Mining Corp.

Statements of Changes in Shareholders' Equity

(Expressed in Canadian Dollars)

Equity attributable to shareholders
			Share			Accumulated
			capital		Reserves	deficit		Total
	Balance, February 28, 2022	$	95,982,395	$	12,083,662	$ (102,576,546)	$	5,489,511
	Restatement (note 2)		-		-	(161,105)		(161,105)
	Balance, February 28, 2022	$	95,982,395	$	12,083,662	$ (102,737,651)	$	5,328,406
	Units issued through private placements (note 14(b)(i))		7,000,002		-	-		7,000,002
	Share issue costs - cash		(114,124)		-	-		(114,124)
	Exercise of stock options (note 14(b)(ii))		1,464,059		(698,959)	-		765,100
	Expiry of stock options		-		(648,139)	648,139		-
	Exercise of warrants (note 14(b)(iii))		9,360,865		-	-		9,360,865
	Share-based payments (note 15)		-		3,425,349	-		3,425,349
	Net loss for the year		-		-	(18,267,594)		(18,267,594)
	Balance, February 28, 2023, restated (note 2)	$113,693,197	$	14,161,913	$(120,357,106)	$	7,498,004
	Expiry of stock options		-		(31,081)	31,081		-
	Expiry of warrants		-		(375,028)	375,028		-
	Share-based payments (note 15)		-		973,041	-		973,041
	Net loss for the year		-		-	(2,797,773)		(2,797,773)
	Balance, February 29, 2024	$113,693,197	$	14,728,845	$ (122,748,770)	$	5,673,272

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

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Eskay Mining Corp.

Notes to Financial Statements

Years Ended February 29, 2024 and 2023 (Expressed in Canadian Dollars)

1. Nature of operations and going concern

Eskay Mining Corp. (the "Company" or "Eskay") is a Canadian company incorporated in British Columbia and listed for trading on the TSX Venture Exchange ("TSXV"), the Frankfurt Stock Exchange and the OTCQB Venture Market in the United States. The Company is primarily engaged in the acquisition and exploration of mineral properties. The primary office is located at The Canadian Venture Building, 82 Richmond Street East, Toronto, Ontario, M5C 1P1.

These financial statements were approved by the board of directors on June 26, 2024.

These financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. The Company has incurred losses in prior periods, and had a net loss of $2,797,773 during the year ended February 29, 2024 (year ended February 28, 2023 - net loss of $18,267,594), has an accumulated deficit of $122,748,770 (February 28, 2023 - $120,357,106). These conditions indicate that material uncertainties exist that cast significant doubt on the Company's ability to continue as a going concern.

The Company's ability to continue to meet its obligations and carry out its planned exploration activities is uncertain and dependent upon the continued financial support of its shareholders and securing additional financing. While the Company has been successful in securing financing in the past, there is no assurance that it will be able to do so in the future. If the going concern assumption was not used, then the adjustments required to report the Company's assets and liabilities on a liquidation basis could be material to these financial statements.

Although the Company has taken steps to verify title to the properties on which it is conducting exploration and in which it has an interest, in accordance with industry standards for the current stage of operations of such properties, these procedures do not guarantee the Company's title. Property title may be subject to social and government licensing requirements or regulations, unregistered prior agreements, unregistered claims, aboriginal claims, and non- compliance with regulatory and environmental requirements. The Company's mineral exploration property interests may also be subject to increases in taxes and royalties, renegotiation of contracts, and political uncertainty.

2. Significant accounting policies

1. Statement of compliance

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and interpretations issued by the IFRS Interpretations Committee ("IFRIC") of the IASB. The policies set out below have been consistently applied to all periods presented. These financial statements have been prepared on a historical cost basis, except for those instruments carried at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting except for cash flow information.

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