Lupaka Gold : 2024 Unaudited Q1 Lupaka Financial Statements / Q1 Lupaka MD&A

Lupaka Gold Corp.

Condensed Interim Consolidated Financial Statements For the three months ended March 31, 2024 and 2023 (Presented in Canadian Dollars) - Unaudited

NOTICE TO READER

Pursuant to National Instrument 51-102, Part 4, subsection 4.3(3)(a) issued by the Canadian Securities administrators, if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed interim consolidated financial statements of Lupaka Gold Corp. ("the Company" or "Lupaka") for the interim period ended March 31, 2024, have been prepared in accordance with the International Accounting Standard 34 - Interim Financial Reporting as issued by the International Accounting Standards Board and are the responsibility of the Company's management.

The Company's independent auditors have not performed a review of these interim financial statements.

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial

statements.

Lupaka Gold Corp.

Condensed Interim Consolidated Statements of Financial Position

As at March 31, 2024 (Unaudited) and 2023

(expressed in Canadian Dollars, Except Share Data)

	March 31,	December 31,
	2024	2023
	$	$
Assets
Current assets
Cash	2,382	34,965
GST receivable	2,080	1,205
Non-current asset	4,462	36,170
Mineral properties (Note 4)	14,919	14,563
Total assets	19,381	50,733
Liabilities
Current liabilities
Accounts payable and accrued liabilities (Note 5)	655,144	668,550
Due to related parties (Note 6)	19,950	18,900
Total liabilities	675,094	687,450
Shareholders' Equity
Common shares (Note 8 (a))	60,042,789	60,042,789
Warrants (Note 8 (b))	290,676	366,795
Contributed surplus	8,560,089	8,479,114
Deficit	(68,708,418)	(68,684,173)
Accumulated other comprehensive loss	(840,849)	(841,242)
Total equity	(655,713)	(636,717)
Total liabilities and equity	19,381	50,733

Nature of operations and going concern (Note 1)

Approved and authorized for issue by the Board of Directors on May 20, 2024

signed "Gordon Ellis"		signed "Mario Stifano"
Director		Director

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

Lupaka Gold Corp.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss For the three months ended March 31, 2024 and 2023 (Unaudited)

(expressed in Canadian Dollars, Except Share Data)

	2024	2023
	$	$
Operating expenses
Exploration
Project administration	-	1,051
General and administration
Management fees	8,530	12,988
Professional and regulatory fees	7,244	7,783
Arbitration expenses	293	9,218
Shareholder and investor relations	829	1,122
Office and general	2,742	2,505
General and administration	19,638	33,616
Operating loss	(19,638)	(34,667)
Recovery on impaired mineral property	607	-
Foreign exchange gain (loss)	(5,214)	583
Net loss for the period	(24,245)	(34,084)
Other comprehensive (loss) income	393	(16)
Loss and comprehensive loss for the period	(24,245)	(34,100)
Weighted average number of shares outstanding
Basic and diluted	20,527,784		18,027,784
Loss per share, basic and diluted	($0.00)		($0.00)

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

Lupaka Gold Corp.

Condensed Interim Consolidated Statements of Cash Flows

For the three months ended March 31, 2024 and 2023 (Unaudited)

(presented in Canadian Dollars)

	2024	2023
	$	$
Cash flows from (used in) operating activities
Net loss for the period	(24,245)	(34,084)
Adjustment for items not affecting cash:
Share-based compensation expense (Note 8)	4,856	9,533
Changes in non-cash working capital	(19,389)	(24,551)
GST receivable	(875)	(1,462)
Accounts payables and accrued liabilities	(13,369)	(33,396)
Due to related parties (Note 6)	1,050	1,050
Net cash used in operating activities	(32,583)	(58,359)
Net decrease in cash	(32,583)	(58,359)
Cash- beginning of period	34,965	70,595
Cash - end of period	2,382	12,236

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

Lupaka Gold Corp.

Condensed Interim Consolidated Statements of Changes in Equity

For the three months ended March 31, 2024 and 2023 (Unaudited)

(presented in Canadian Dollars, Except Share Data)

	2024				2023
	Number	$		Number	$
Common shares (Note 8 (a))
Balance - beginning of period	20,527,784	60,042,789	18,027,784	60,015,245
Balance - end of period	20,527,784	60,042,789	18,027,784	60,015,245
Share purchase warrants (Note 8 (b))
Balance - beginning of period		366,795			248,835
Share purchase warrants expired		(76,119)			-
Balance - end of period		290,676			248,835
Contributed surplus
Balance - beginning of period		8,479,114			8,453,050
Share-based compensation		4,856			9,533
Share purchase warrants expired		76,119			-
Balance - end of period		8,560,089			8,462,583
Deficit
Balance - beginning of period		(68,684,173)			(68,517,452)
Net loss for the period		(24,245)			(34,084)
Balance - end of period		(68,708,418)			(68,551,536)
Accumulated other comprehensive income
Balance - beginning of period		(841,242)			(840,910)
Currency translation adjustment on foreign
operations		393			(16)
Balance - end of period		(840,849)			(840,926)
Total shareholders' equity		(655,713)			(665,799)

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

Lupaka Gold Corp.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2024 and 2023 (Unaudited)

(presented in Canadian Dollars)

1 Nature of operations and going concern

Lupaka Gold Corp. ("Lupaka" or "the Company") was incorporated in Canada on November 3, 2000 under the legislation of the Province of British Columbia, and is in the business of acquisition, exploration and development of mineral resource properties. Lupaka was dormant prior to January 1, 2010.

Lupaka's head office, and records and registered offices are located at 1569 Dempsey Road, North Vancouver, BC V7K 1S8. Lupaka's common shares trade in Canada on the TSX Venture Exchange ("TSX.V") and in Germany on the Frankfurt Exchange under the symbol LQP.

Collectively, Lupaka and its subsidiaries are referred to hereafter as "the Company".

The Company is presently awaiting a decision on an Arbitration Claim against the Republic of Peru as a result of its loss of ownership of the Invicta Gold Project ("Invicta") to PLI Huaura Holdings LP ("PLI"; see Note 6), and continues to hold two potential gold properties in the state of Oregon, USA. As well, management continues to seek out other exploration projects for potential development and investment.

Going Concern

These condensed interim consolidated financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"), that are applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they become due.

If the going concern assumption was not appropriate for these financial statements, then adjustments would be necessary to the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used, and such adjustments would be material.

As at March 31, 2024, the Company had a working capital deficit (current assets less current liabilities) of $670,632 (December 31, 2023 - $651,280) and accumulated deficit of $68,708,418 (December 31, 2023 - $68,684,173). For the three-month period ended March 31, 2024, the Company had a net loss of $24,245 (three-month period ended March 31, 2023 - net loss of $34,084) and used cash in operating activities of $32,583 (three-month period ended March 31, 2023 - $58,359).

The Company's ability to continue as a going concern is dependent upon its ability to generate positive cash flow from operating activities or to raise funds primarily through the issuance of shares or obtaining alternative financing, which it has been successful in doing so in the past. There can be no assurance that sufficient financing can be obtained in the future. As a result, there are material uncertainties that cast significant doubt about the Company's ability to continue as a going concern and realize its assets and discharge its liabilities in the normal course of business.

As the outcome of these matters cannot be predicted at this time, if the Company is unable to generate positive cash flow from operating activities or obtain additional financing, management may be required to further curtail certain expenses.

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Lupaka Gold Corp.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2024 and 2023 (Unaudited)

(presented in Canadian Dollars)

2 Statement of compliance and basis of preparation

These condensed interim consolidated financial statements ("interim financial statements") have been prepared in accordance with International Accounting Standard ("IAS") 34, "Interim Financial Reporting", and International Financial Reporting Standards ("IFRS"). These interim financial statements should be read in conjunction with the Company's consolidated financial statements as at and for the year ended December 31, 2023, as some disclosures from the annual consolidated financial statements have been condensed or omitted.

These interim financial statements have been prepared on a historical cost basis except for those financial instruments which have been classified at fair value through profit or loss. In addition, except for cash flow information, these interim financial statements have been prepared using the accrual method of accounting. All dollar amounts presented are in Canadian dollars unless otherwise specified.

The results of any subsidiaries acquired or disposed of during the period are included in the consolidated statements of income (loss) and comprehensive income (loss) from the effective date of acquisition up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the results of subsidiaries to bring their accounting policies into line with those used by the Company. Inter-company transactions, balances, loss, comprehensive loss and expenses are eliminated on consolidation, where appropriate.

The consolidated financial statements include the accounts of Lupaka and its wholly-owned subsidiaries, which are as follows:

• Lupaka USA Limited ("LPKUSA"), a USA company
• Andean American Gold Corp. ("AAG"), a Canadian company
• Lupaka Gold Peru S.A.C. ("LGP"), a Peruvian company
• Andean Exploraciones S.A.C. ("AES"), a Peruvian company (inactive)
• Greenhydro S.A.C. ("Greenhydro"), a Peruvian company (inactive)

3 Mineral properties

In December 2021, LPK USA acquired three potential gold properties in the state of Oregon, USA referred to as the Idol City, Pine Creek and Red Mountain projects. All of these properties are located in the south-east corner of the state in a similar geological environment to the prolific Battle Mountain - Eureka trend in Northern Nevada.

On December 13, 2023, the Company was advised by the Bureau of Land Management (Oregon State Office) that the Red Mountain mining claims are located on land that has been withdrawn from mineral development by an Act of Congress for the Steens Mountain Wilderness Area and the Steens Mountain Cooperative Management and Protection Area. As a result, $7,430 in previously-capitalized costs for the Red Mountain property have been written off, leaving the Idol City and Pine Creek properties as the Company's only remaining mineral properties.

During the three months ended March 31, 2024, the Company received a $607 refund relating to the Red Mountain property from the Bureau of Land Management and recorded it as a recovery on impaired mineral property.

As at March 31, 2024, consulting, legal and staking expenditures totaling $14,919 have been capitalized to mineral properties (December 31, 2023 - $14,563).

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Lupaka Gold Corp.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2024 and 2023 (Unaudited)

(presented in Canadian Dollars)

1. Accounts payable and accrued liabilities
   As at March 31, 2024, $293,425 was payable to a former CEO of the Company pursuant to a March 2018 settlement agreement which was renegotiated in February 2019. In addition, approximately $218,000 remains due to KLR Group, LLC for finder's fees incurred in obtaining the PLI Financing Agreement (Note 7) pursuant to a June 2017 settlement agreement.
2. Related party transactions

Details of transactions between the Company and other related parties are disclosed below:

1. Related party expenditures
   During the three-month period ended March 31, 2024, the Company incurred $1,000 (three- month period ended March 31, 2023 - $1,000) in management fees with DFJ Consulting Services Ltd., a company owned by the CFO of the Company.
2. Key management compensation
   Key management includes directors and executive officers of the Company. The compensation paid or payable to key management for employee services for the three-month periods ended March 31, 2024 and 2023 is shown below:

	2024	2023
	$	$
Management fees	1,000	1,000
Share-based compensation	3,034	5,995
Total	4,034	6,995

1. Due to current and former related parties

Amounts due to or from related parties are unsecured and non-interest bearing and measured at the amount of consideration established and agreed to by the related parties.

As at March 31, 2024:

• $3,150 was payable to the Company's CFO for outstanding management fees, which is included in Due to Related Parties;
• $16,800 was payable for consulting and advisory services to Havilah Holdings Inc. ("Havilah"), which is included in Due to Related Parties. Havilah is a co-owner of K-Rok Minerals Inc., a >10% shareholder of the Company, which is owned 47.5% by ABE, 47.5% by Havilah and 5% by another individual. ABE is wholly-owned by Gordann Consultants Ltd., a company in which the Company's Chairman, CEO and a director owns a 51% interest and his wife owns a 49% interest; and
• $293,425 was payable to a former CEO of the Company pursuant to a March 2018 settlement agreement between the parties, which is included in Accounts Payable.

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Lupaka Gold Corp.

Notes to the Condensed Interim Consolidated Financial Statements

Three months ended March 31, 2024 and 2023 (Unaudited)

(presented in Canadian Dollars)

6 Arbitration Claim Made Under The Canada-Peru Trade Agreement

On October 21, 2019, the Company delivered to the Peruvian Minister of Economy and Finance a Request for Arbitration in accordance with the 2009 Free Trade Agreement between Canada and Peru (the "CPFTA Arbitration"). In this respect, the Company has engaged Lalive SA (London) and Boles Schiller Flexner LLP (New York City) to represent its interests in the CPFTA Arbitration, which primarily centers on a claim for US$47.7 Million plus arbitration expenses and interest at a rate of LIBOR+2% compounded annually from August 27, 2019 until payment is received by Lupaka.

On August 4, 2020, the Company reported that it had entered into an Arbitration Funding Agreement with Bench Walk Advisors ("BWA") to support the Company's arbitration claim against the Republic of Peru under the CPFTA. The BWA Agreement allows for up to USD$4.1 million to support the arbitration and related costs. Amounts advanced by BWA are repayable only upon completion of a successful claim and recovery. The actual amount received by BWA will vary in accordance with the actual settlement received by the Company from the Republic of Peru. As such, the financing is non-dilutive to current Lupaka shareholders. Precise terms of the Arbitration Funding Agreement (other than those set out herein) are confidential.

From March 27 to April 3, 2023, the arbitration hearing stage of the Company's Arbitration Claim against the Republic of Peru convened in Washington, D.C. Subsequent to the completion of the arbitration hearings, the Tribunal granted the Parties an opportunity to answer specific questions that the Tribunal had. These questions and information requests were received and answered by the Parties in late June 2023.

During the week of October 16, 2023 and in response to the ICSID's request, the Company and the Republic of Peru each submitted their reimbursement for payment of arbitration expenses to the ICSID Tribunal, which the Tribunal will factor into their Arbitration Claim decision. Management believes these to be the last documents to be submitted for the Arbitration Claim process.

In November 2023, ICSID requested a further advance of USD250,000 from each of the Parties, which for the Company was funded by BWA pursuant to the Company's BWA Arbitration Funding Agreement.

In March 2024, ICSID advised the Parties on behalf of the President of the Tribunal that the Tribunal has held deliberations on the case and drafting of the ruling is well underway. However, work remains, given the very extensive arguments presented by both Parties. The Tribunal is working with a view to completing its drafting by this summer, with the goal to release the ruling in the course of the second half of the year, bearing in mind also the time necessary to finalize the ruling in the two procedural languages. The Tribunal further advised that it will provide a more concrete report of the anticipated timing of the ruling as soon as practicable.

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