Archer Exploration : Annual Report

ARCHER EXPLORATION CORP.

Financial Statements

For the Fifteen Months Ended December 31, 2023

(Expressed in Canadian dollars)

Tel: [phone]	BDO Canada LLP
Fax: [phone]	Unit 1100 Royal Centre
www.bdo.ca	1055 West Georgia Street, P.O. Box 11101
	Vancouver, British Columbia
	V6E 3P3

Independent Auditor's Report

To the Shareholders of Archer Exploration Corp.

Opinion

We have audited the financial statements of Archer Exploration Corp. (the "Company"), which comprise the statement of financial position as at December 31, 2023, and the statements of loss and comprehensive loss, cash flows, and changes in shareholders' equity for the 15-month period then ended, and the related notes to the financial statements, including material accounting policy information.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2023 and its financial performance and its cash flows for the period 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, 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 in the financial statements, which indicate that the Company is in the exploration and evaluation stage and has not generated revenue, has incurred a net loss for the period of $3,337,535 and has an accumulated deficit of $7,560,524. As stated in Note 1, these events and conditions, along with other matters as set forth in Note 1, indicate that material uncertainties exist that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect to this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the 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. 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 report.

BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms

Assessment of Impairment Indicators on Exploration and Evaluation Assets

Description of the key audit matter

At each reporting date, management assesses the Company's exploration and evaluation assets for indicators of impairment in accordance with IFRS 6 Exploration for and Evaluation of Mineral Resources ("IFRS 6"). This assessment involves judgment, including whether the rights to tenure for the areas of interest are current, and the Company's ability and intention to continue to evaluate and develop the area of interest. We have therefore considered this a Key Audit Matter due to the judgment involved in the assessment of indicators of impairment.

Please refer to Note 3(a) to the financial statements for the Company's accounting policy on exploration and evaluation assets, and Note 4(c) and Note 9 which details the critical judgments used in assessing impairment indicators and other details relating to the exploration and evaluation assets.

How the key audit matter was addressed in the audit

Our approach in addressing this matter included the following procedures, among others:

• Obtained and examined management's assessment of impairment indicators under IFRS 6;
• Obtained an understanding of the current exploration program and any associated risks through discussions with management, technical personnel and through review of technical reports;
• Assessed that the Company's rights to tenure for the areas of interest are current, which included obtaining supporting documentation for the mining licenses;
• Considered the Company's ability and intention to continue to evaluate the areas of interest, which included performing an assessment of the Company's cash flow forecast models, discussions with management as to the intentions and the strategy of the Company, and comparison of these to other audited information; and
• Assessed the adequacy of the disclosures in the financial statements, including disclosures related to significant judgments and estimates.

Accounting for Acquisition Transaction

Description of the key audit matter

The Company completed a nickel asset acquisition during the period. Through the application of IFRS 3 Business Combinations ("IFRS 3") and IFRS 10 Consolidated Financial statements ("IFRS 10"), management determined that the acquisition should be accounted for as an asset acquisition. Management is required to exert significant judgment and estimation to determine whether the transaction meets the criteria for a business combination, who is the acquirer for accounting purposes, and calculating the fair value of the consideration paid and the assets acquired and liabilities assumed. We have therefore considered this a Key Audit Matter due to the judgment and estimation involved in determining the accounting and fair value assessments.

Refer to Note 1(c), Note 4(a) and Note 5 to the financial statements for the critical accounting estimates and judgements applied and other details relating to the asset acquisition transaction.

How the key audit matter was addressed in the audit

Our approach in addressing this matter included the following procedures, among others:

• Obtained and examined management's accounting assessment of the transaction in accordance with IFRS 3 and IFRS 10, corroborating the facts therein to supporting evidence including relevant transaction agreements and documents to understand terms, facts and circumstances related to the acquisition transaction;
• Assessed management's purchase price allocation, including the fair value of consideration paid, as well as the fair values determined for any assets acquired and liabilities assumed; and
• Assessed the adequacy of disclosures in the financial statements, including disclosures related to significant judgments and estimates.

Other Matter

The financial statements of the Company for the year ended September 30, 2022 were audited by another auditor who expressed an unmodified opinion on those financial statements on January 25, 2023.

Other Information

Management is responsible for the other information. The other information comprises the information included in Management's Discussion and Analysis (the "MD&A"). 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 identified above 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 the MD&A 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 Financial statements

Management is responsible for the preparation and fair presentation of these 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 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.

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 the 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 judgment 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 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 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.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the 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 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 Rob Scupham.

Chartered Professional Accountants

Vancouver, British Columbia

April 24, 2024

Archer Exploration Corp. Statements of Financial Position (Expressed in Canadian dollars)

		December 31,	September 30,
	Note	2023	2022
		$	$
ASSETS
Current
Cash		2,876,128	213,231
Receivables	6	234,729	95,943
Prepaid expenses	7	129,349	6,650
		3,240,206	315,824
Other assets	8	57,500	-
Exploration and evaluation assets	9	37,205,127	-
Property and equipment	10	88,135	-
Total assets		40,590,968	315,824
LIABILITIES
Current
Trade and other payables	11	739,549	238,315
Decommissioning and restoration provision	13	526,310	-
		1,265,859	238,315
Decommissioning and restoration provision	13	2,100,729	-
Total liabilities		3,366,588	238,315
SHAREHOLDERS' EQUITY
Share capital	14	38,189,779	3,186,256
Warrants reserve	14	3,389,060	699,457
Contributed surplus	14	3,206,065	414,785
Deficit		(7,560,524)	(4,222,989)
Total shareholders' equity		37,224,380	77,509
Total liabilities and shareholders' equity		40,590,968	315,824

Nature of operations and going concern (Note 1)

Subsequent events (Note 20)

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

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Archer Exploration Corp.

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

		Fifteen months ended	Twelve months ended
		December 31,	September 30,
	Note	2023	2022
Operating expenses		$	$
	534,715
Consulting fees		370,111
Depreciation	10	3,950	-
Exploration and evaluation costs		-	177,886
Filing fees		116,208	26,738
General and administrative		246,365	150,788
Management fees	15	888,095	184,988
Marketing		503,766	30,817
Professional fees		499,794	900,451
Rent		50,839	44,000
Share-based payments	14	1,889,700	393,130
		4,733,432	2,278,909
Other income (expenses)		2,253,573
Amortization of flow through liability	12	-
Change in decommissioning and restoration		(910,066)	-
provision	13	(2,987)
(Loss) gain on foreign exchange		6,755
Impairment of option agreement rights		-	(147,490)
Impairment of prepaid expenses		-	(1,060,142)
Interest expense		(122,523)	-
Interest income		228,900	-
Loss before income taxes		(3,286,535)	(3,479,786)
Income taxes		(51,000)
Deferred income tax expense	18	-
Net loss and comprehensive loss		(3,337,535)	(3,479,786)
Basic and diluted loss per common share		(0.04)	(0.35)
Weighted average number of common shares
outstanding - Basic and diluted		85,711,265	9,893,340

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

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Archer Exploration Corp. Statements of Cash Flows (Expressed in Canadian dollars)

	Fifteen months ended Twelve months ended
	December 31,	September 30,
	2023	2022
Operating activities:	$	$
(3,337,535)
Net loss for the period	(3,479,786)
Items not affecting cash:	3,950
Depreciation	-
Share-based payments	1,889,700	393,130
Amortization of flow through liability	(2,253,573)	-
Change in decommissioning and restoration costs	910,066	-
Unrealized foreign exchange loss	1,106	-
Impairment of option agreement rights	-	147,490
Impairment of prepaid expenses	-	1,060,142
Deferred income tax expense	51,000	-
Changes in non-cash working capital:	473,444
Receivables	(90,346)
Prepaid expenses	(122,699)	(305,458)
Trade and other payables	13,293	13,704
Other assets	(57,500)	-
Cash used in operating activities	(2,428,748)	(2,261,124)
Investing activities:	(8,200,608)
Exploration and evaluation costs	(109,990)
Cash acquired in the Wallbridge assets acquisition	2,652,997	-
Purchase of equipment	(19,564)	-
Decommissioning and restoration costs	(644,178)	-
Cash used in investing activities	(6,211,353)	(109,990)
Financing activities:	2,000
Proceeds from exercise of stock options	500
Proceeds from exercise of warrants	-	780,000
Proceeds from issuance of non-flow-through units	3,848,192	1,072,499
Proceeds from issuance of flow-through units	4,372,339	-
Proceeds from issuance of charity flow-through units	3,999,999	-
Share issuance costs	(919,532)	-
Cash provided by financing activities	11,302,998	1,852,999
Change in cash	2,662,897	(518,115)
Cash, beginning of period	213,231	731,346
Cash, end of period	2,876,128	213,231
Supplemental cash flow information:	(228,900)
Cash interest received	-
Accounts receivable acquired in the Wallbridge assets acquisition	612,230	-
Exploration and evaluation costs included in trade and other	486,836
payables		-

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

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Archer Exploration Corp.

Statements of Changes in Shareholders' Equity (Expressed in Canadian dollars; except number of shares)

							Total
		Share	Warrants	Contributed	Shares to be		shareholders'
	Common shares	capital	reserve	surplus	issued	Deficit	equity
Balance, September 30, 2021	#	$	$	$	$	$	$
6,509,422	1,174,961	429,952	21,956	427,500	(743,203)	1,311,166
Issuance of units in private placement	2,000,000	1,230,494	269,505	-	(427,500)	-	1,072,499
Shares issued on exercise of stock options	1,667	801	-	(301)	-	-	500
Shares issued on exercise of warrants	2,600,000	780,000	-	-	-	-	780,000
Share-based payments	-	-	-	393,130	-	-	393,130
Net loss and comprehensive loss for the
period	-	-	-	-	-	(3,479,786)	(3,479,786)
Balance, September 30, 2022	11,111,089	3,186,256	699,457	414,785	-	(4,222,989)	77,509
Shares issued upon exercise of stock options	6,666	3,000	-	(1,000)	-	-	2,000
Shares issued for other compensatory	25,000	12,500	-	(12,500)	-	-	-
awards settled
Issuance of common shares in the	66,211,929	28,564,545	-	-	-	-	28,564,545
Wallbridge assets acquisition
Shares issued as finders' fees in the	1,655,298	714,114	-	-	-	-	714,114
Transaction
Issuance of non-flow-through units in	15,147,855	2,461,469	1,386,723	-	-	-	3,848,192
private placement
Issuance of flow-through units in private	16,741,534	2,914,633	1,457,706	-	-	-	4,372,339
placement
Issuance of charity flow-through units in	2,898,550	3,337,422	662,577	-	-	-	3,999,999
private placement
Flow-through premium liability	-	(2,253,573)	-	-	-	-	(2,253,573)
Share issuance costs net of tax	-	(750,587)	(117,945)	-	-	-	(868,532)
Share-based payments	-	-	-	1,889,700	-	-	1,889,700
Share-based payments - exploration-related	-	-	-	215,622	-	-	215,622
Reclassification from reserves to	-	-	(699,458)	699,458	-	-	-
contributed surplus upon the expiration
of warrants				-
Net loss and comprehensive loss for the	-	-	-		(3,337,535)	(3,337,535)
period					-
Balance, December 31, 2023	113,797,921	38,189,779	3,389,060	3,206,065	-	(7,560,524)	37,224,380

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

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