Nicola Mining : Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2024 and 2023

NICOLA MINING INC.

Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024 and 2023

(unaudited, prepared by management)

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

CONDENSED INTERIM CONSOLIDATED FINANCIAL REPORTING

The accompanying unaudited condensed interim consolidated financial statements of Nicola Mining Inc. ("the Company") have been prepared by management in accordance with International Reporting Standards ("IFRS"). Management acknowledges responsibility for the preparation and presentation of the unaudited condensed interim consolidated financial statements, including responsibility for significant accounting estimates and the choice of accounting principles and methods that are appropriate to the Company's circumstances.

NOTICE OF NO AUDITOR REVIEW OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The Company's independent auditor has not performed a review of these condensed interim consolidated financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for review of interim financial statements by an entity's auditor.

NICOLA MINING INC.

Condensed Interim Consolidated Statements of Financial Position (Expressed in Canadian dollars) - unaudited

	Note		March 31, 2024	December 31, 2023
Assets
Current assets
Cash		$	3,115,085	$	4,756,118
Amounts receivable	3		277,664		566,709
Marketable securities	6		964,286		-
Prepaid expenses and other assets			284,421		123,040

		4,641,456	5,445,867
Non-current assets
Property, plant, and equipment		18,916,645	18,986,949
Right-of-use-assets		8,653	13,360
Mineral interests	5	4	4
Restricted cash	7	1,275,875	1,275,875

Total assets	$	24,842,633	$	25,722,055
Liabilities
Current liabilities
Accounts payable and accrued
liabilities	$	607,087	$	682,205
Current portion of lease liabilities		10,765		16,353

				617,852		698,558
Non-current liabilities
Asset retirement obligation			14,620,897		14,506,089
Secured convertible debenture	8		4,347,308		4,236,848
Total liabilities			19,586,057		19,441,495
Equity
Shareholders' equity
Share capital	10		85,894,218		85,894,218
Warrants	10		1,694,494		1,694,494
Equity component of convertible
debentures			2,671,669		2,671,669
Contributed surplus			8,741,459		8,737,314
Accumulated deficit			(93,745,264)		(92,717,135)
Total shareholders' equity			5,256,576		6,280,560
Total liabilities and shareholders'
equity		$	24,842,633	$	25,722,055
	Peter Espig (signed)	Director	Frank Hogel (signed)		Director

Nature of operations and going concern (Note 1)

Subsequent Events (Note 14)

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

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NICOLA MINING INC.

Condensed Interim Consolidated Statements of Operations and Comprehensive Loss (Expressed in Canadian dollars) - unaudited

Three months ended March 31,

	Note		2024		2023
Operating expenses
Exploration costs	5	$	(177,655)	$	(36,762)
Mill costs	4		(483,636)		(930,768)
Accretion of asset retirement obligation			(114,808)		(56,588)
Salaries and benefits	12		(49,420)		(50,282)
Share-based compensation expense	11		(4,145)		-
Professional fees			(2,665)		(34,981)
Consulting fees	12		(140,125)		(160,500)
Office and general			(21,512)		(25,181)
Travel and investor relations			(153,666)		(113,674)
Regulatory and transfer agent fees			(10,553)		(14,834)
Rent			(11,832)		(8,015)
Depreciation			(3,682)		(519)
Operating loss			(1,173,699)		(1,432,104)
Flow-through premium			-		1,625
Gravel, ash, soil, and other income			316,207		2,192,624
Finance costs	9		(134,923)		(193,843)
Fair value revaluation - marketable securities	6		(35,714)		-
Foreign exchange gain (loss)			-		5,005
Net income or (loss) before income taxes			(1,028,129)		573,307
Deferred income tax recovery			-		5,366
Net loss for the period		$	(1,028,129)	$	578,673
Earnings (loss) per share - basic, diluted		$	(0.01)	$	0.00
Weighted average number of common shares outstanding -
Basic, diluted			161,182,098		155,922,218

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

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NICOLA MINING INC.

Condensed Interim Consolidated Statements of Cash Flows (Expressed in Canadian dollars) - unaudited

Three months ended March 31,

		2024		2023
Operating Activities
Net income (loss) for the period	$	(1,028,129)	$	578,673
Adjustments for:
Accretion of asset retirement obligation		114,808		56,588
Share-based compensation		4,145		-
Deferred income tax recovery		-		(5,366)
Depreciation		75,010		70,149
Non-cash interest and finance expense		143,134		196,129
Foreign exchange		-		(5,063)
Flow-through premium		-		(1,625)
Recovery - write-off of accounts payables		-		-
Fair value revaluation - marketable securities		35,714		-
Changes in non-cash working capital items
Amounts receivable		289,044		(1,374,212)
Prepaid expenses and other assets		(161,381)		(39,019)
Accounts payable and accrued liabilities		(75,118)		194,849
Cash Provided by Operating Activities		(602,773)		(328,897)
Investing Activities
Purchase of marketable securities		(1,000,000)		-
Restricted cash movement		-		5,000
Cash Used in Investing Activities		(1,000,000)		5,000
Financing Activities
Issuance of common shares, net of cash paid share issuance costs		-		1,990,000
Interest payment on secured convertible debenture		(32,200)		(30,000)
Repayment of lease liabilities		(6,060)		(6,060)
Repayment of equipment loan		-		(12,591)
Repayment of working capital and revolving prepayment loan		-		(6,981)
Cash (Used In) Provided by Financing Activities		(38,260)		1,934,368
Net change in cash for the period		(1,641,033)		1,610,471
Cash beginning of year		4,756,118		895,774
Cash at the end of the period	$	3,115,085	$	2,506,245
Non-cash transactions:
Shares issued to settle convertible debentures and interest		-		28,754
Recognition of equity component of convertible debentures		-		119,873

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

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NICOLA MINING INC.

Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (Expressed in Canadian dollars) - unaudited

						Equity
						Component
						of						Total
	Number of		Share			Convertible		Contributed		Accumulated		Equity
	Common Shares		Capital		Warrants	Debentures		Surplus		Deficit
Balance, January 1, 2024	161,182,098	$	85,894,218	$	1,694,494	$ 2,671,669	$	8,737,314	$	(92,717,135)	$	6,280,560
Share based compensation	-		-		-	-		4,145		-		4,145
Net income for the period ended	-		-		-	-		-		(1,028,129)		(1,028,129)
Balance, March 31, 2024	161,182,098	$	85,894,218	$	1,694,494	$ 2,671,669	$	8,741,459	$	(93,745,264)	$	5,256,576
Balance, January 1, 2023	149,036,074	$	82,922,658	$	1,694,494	$ 2,552,797	$	8,223,493	$	(93,318,432)	$	2,075,010
Share issuance financing	8,000,000		1,990,000		-	-		-		-		1,990,000
Issuance of convertible debenture	-		-		-	14,507		-		-		14,507
Convertible debenture conversion	161,584		28,754		-	(2,462)		-		-		26,292
Net loss for the period ended	-		-		-	-		-		578,673		578,673
Balance, March 31, 2023	157,197,658	$	84,941,412	$	1,694,494	$ 2,564,842	$	8,223,493	$	(92,739,759)	$	4,684,482

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

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NICOLA MINING INC.

Notes to Condensed Interim Consolidated Financial Statements (Expressed in Canadian dollars) - unaudited

For the three months ended March 31, 2024 and 2023

1. NATURE OF OPERATIONS AND GOING CONCERN

Nicola Mining Inc. (the "Company" or "Nicola") is a junior exploration company that is engaged in the business of identification, acquisition, and exploration of mineral property interests together with custom milling operations at its mill located in Merritt, B.C. (the "Merritt Mill"). The Company's head office is located at 3329 Aberdeen Road, Lower Nicola, B.C. Nicola is a publicly listed company incorporated under the Business Corporations Act (British Columbia). The Company's common shares are listed on the TSX Venture Exchange (the "TSX-V") under the symbol "NIM.V" and on OTCQB operated by the OTC Markets Group Inc. under the ticker "HUSIF".

As at March 31, 2024, the Company had an accumulated deficit of $93,745,264 (December 31, 2023 - $92,717,135) and working capital of $4,023,604 (2023 - working capital of $4,747,309). To continue operations, the Company will be required to raise funds through the issuance of equity or debt, be successful recommencing operations at the Treasure Mountain project ("Treasure Mountain Property") and/or Merritt Mill ("Merritt Mill"), together with ongoing exploration programs at its New Craigmont property ("New Craigmont Property"). These factors represent a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. Realization values may be substantially different from carrying values as shown and the Company's consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.

These unaudited condensed interim consolidated financial statements have been prepared using the going concern concept, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.

Stock consolidation

During the year ended December 31, 2023, the Company consolidated its common shares on a 2-to-1 ratio ("Stock Consolidation"). For all periods presented herein, the number of common shares, stock options, and warrants have been retroactively restated.

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NICOLA MINING INC.

Notes to Condensed Interim Consolidated Financial Statements (Expressed in Canadian dollars) - unaudited

For the three months ended March 31, 2024 and 2023

2. BASIS OF PRESENTATION

1. Statement of Compliance with International Financial Reporting Standards
   These unaudited condensed interim consolidated financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting as issued by the International Accounting
   Standards Board ("IASB"). Accordingly, certain disclosures included in annual financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the
   IASB have been condensed or omitted and these unaudited condensed consolidated interim financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2023. The financial statements have been prepared on an accrual basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The financial statements are presented in Canadian dollars.
   The Company's interim results are not necessarily indicative of its results for a full year.
   These unaudited condensed consolidated interim financial statements were approved by the Board of Directors on May 30, 2024.
2. Basis of Consolidation
   These unaudited condensed interim consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Huldra Properties Inc. All inter-company balances, and transactions are eliminated on consolidation.
3. Basis of Measurement
   These unaudited condensed interim consolidated financial statements are presented in Canadian dollars, which is also the Company's and its subsidiary's functional currency and 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.
4. Use of Estimates and Judgements
   The preparation of the unaudited condensed interim consolidated financial statements in conformity with IFRS requires management to make judgements and estimates which affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. The judgements that have the most significant effect on the amounts recognized in the Company's consolidated financial statements are as follows:
5. 1. Impairment of non-current assets

Non-current assets are tested for impairment when indicators of impairment are present. Calculating the estimated fair values of cash generating units for non-current asset impairment tests requires management to make estimates and assumptions with respect to metal selling prices, future capital expenditures, reductions in the amount of recoverable reserves, resources, and exploration potential, production cost estimates, discount rates and exchange rates. Reduction in metal price forecasts, increases in estimated future costs of production, increases in estimated future non-expansionary capital expenditures, reductions in the amount of recoverable reserves, resources, and exploration potential, and/or adverse current economics can result in a write-down of the carrying amounts of the Company's non-current assets.

1. Completion of commissioning

The determination of the date on which a mine or plant enters the production stage is a significant judgement since capitalization of certain costs ceases and depletion and amortization of capitalized costs commence upon entering production. As a mine or plant is constructed and

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NICOLA MINING INC.

Notes to Condensed Interim Consolidated Financial Statements (Expressed in Canadian dollars) - unaudited

For the three months ended March 31, 2024 and 2023

commissioned, costs incurred are capitalized and proceeds from mineral sales are offset against the capitalized costs. This continues until the mine or plant can operate in the manner intended by management, which requires significant judgement in its determination.

1. Key Sources of Estimation Uncertainty
   The significant assumptions about the future and other major sources of estimation uncertainty as at the end of the reporting period that have a significant risk of resulting in a material adjustment to the carrying amounts of the Company's assets and liabilities are as follows:

Convertible debentures

The Company's convertible debentures represent management's best estimates and judgement in accounting for separate components of financial liability and an equity instrument. The identification of such components embedded within a convertible debenture requires significant judgement given that it is based on the interpretation of the substance of the contractual arrangement. Where the conversion option has a fixed conversion rate, the financial liability, which represents the obligation to pay coupon interest on the convertible debentures in the future, is initially measured at its fair value and subsequently measured at amortized cost. The residual is accounted for as an equity instrument at issuance.

Rehabilitation provisions

The Company's rehabilitation provision represents management's best estimate of the present value of the future cash outflows required to settle the liability. Management assesses these provisions on an annual basis or when new information becomes available. This assessment includes the estimation of the future rehabilitation costs, the timing of these expenditures, inflation, and the impact of changes in discount rates, interest rates and foreign exchange rates. The actual future expenditures may differ from the amounts currently provided if the estimates made are significantly different than actual results or if there are significant changes in environmental and/or regulatory requirements in the future.

1. Adoption of New and Revised IFRS and IFRS Not Yet Effective
   The accounting policies adopted in the preparation of these consolidated financial statements have been prepared on the basis of all IFRS and interpretations effective as at March 31, 2024.
   A number of new standards, and amendments to standards and interpretations, are not yet effective for the interim period ended March 31, 2024, and have not been early adopted in preparing these consolidated financial statements.
   Other accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company's consolidated financial statements.

3. AMOUNTS RECEIVABLE

		March 31, 2024	December 31, 2023
Gravel, ash, soil, and other
receivables	$	621,628	$	914,584
GST - (net)		(343,964)		(347,875)
	$	277,664	$	566,709

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NICOLA MINING INC.

Notes to Condensed Interim Consolidated Financial Statements (Expressed in Canadian dollars) - unaudited

For the three months ended March 31, 2024 and 2023

4. MILL COST

Mill costs (including care and maintenance costs) incurred is as follows:

		Three months ended
		March 31,
Note	2024	2023
		$	$
MILL COSTS
Costs incurred during the year
Amortization and depreciation	66,622	64,923
Power and fuel	11,367	29,410
Mill supplies and rentals	17,741	59,068
Mill repairs	137,661	209,543
Mill insurance	52,010	48,771
Property taxes	-	22,000
Reclamation of mill site	46,526	186,566
Salaries and wages	139,577	297,857
Water sampling and reports	12,132	12,630
Total costs incurred during the year		483,636	930,768

5. MINERAL INTERESTS

The Company holds a 100% interest in 30 mineral claims and 1 mineral lease at the Treasure Mountain Property, located near Hope, B.C. The properties are subject to a 2% net smelter royalty.

The Company holds a 100% interest in New Craigmont Property comprising 22 mineral claims and 10 mineral leases located in Lower Nicola, BC. The properties are subject to a 2% net smelter royalty.

The Company recorded an impairment write-down in relation to its Treasure Mountain Property in 2014. The property remains in good standing, and further carrying charges and evaluation costs are being charged to the consolidated statement of operations and comprehensive income (loss) as an operating expense.

Dominion Creek Property

On May 31, 2021, the Company entered into a Mineral Property Purchase Agreement and acquired a 50% interest in 8 mineral claims known as the Dominion Creek Property from High Range Exploration Ltd ("High Range"). The Dominion Creek Property is located near Prince George, BC. The Company acquired the 50% by paying $225,000, $75,000 of which was used to commence work on a 10,000- tonne bulk sample permit application. During the year ended December 31, 2022, the Company impaired the Dominion Creek Property by $224,999 to $1 due to the delays in development.

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