Amaroq Minerals : Audited Consolidated Financial Statements For The Years Ended December 31, 2023 And 2022

Amaroq Minerals Ltd.

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

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BDO Canada s.r.l./S.E.N.C.R.L./LLP 1000, rue De La Gauchetière O. Bureau 200 Montréal QC H3B 4W5 Canada

To the Shareholders of Amaroq Minerals Ltd.

Opinion

We have audited the consolidated financial statements of Amaroq Minerals Ltd. and its subsidiaries (the "Group"), which comprise the consolidated statements of financial position as at December 31, 2023 and 2022, and the consolidated statements of comprehensive loss, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.

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 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRSs).

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.

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 current period. 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.

Determination of commencement of development stage

Description of the key audit matter

As described in Note 3.7.1, management determined that the technical feasibility and commercial viability ("TFCV") of the Nalunaq Project was established with an effective date of September 1, 2023. Once TFCV has been determined, the property is considered to be a mine under development and any development costs incurred are classified as a capital asset.

BDO Canada s.r.l./S.E.N.C.R.L., une société canadienne à responsabilité limitée/société en nom collectif à responsabilité limitée, est membre de BDO International Limited, société de droit anglais, et fait partie du réseau international de sociétés membres indépendantes BDO.

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.

This was a key audit matter due to the judgment that was required by management in assessing the TFCV of the Nalunaq Project.

Refer to Note 4.4 - Critical accounting judgments and assumptions and Note 9 - Capital assets to the consolidated financial statements.

How the key audit matter was addressed in the audit

Our approach included but was not limited to the following procedures:

•  Considered the judgment made by management in determining that TFCV was reached based on available guidance, which included the following:

  • o Evaluated the reasonableness of management's judgments in assessing whether the technical feasibility and commercial viability of extracting the mineral resource have been established by considering (i) the Board of Directors' minutes; (ii) technical reports; (iii) permits issued by the government; and (iv) whether management's judgments were consistent with evidence obtained in other areas of the audit.

•  Reviewed supporting evidence of the financing obtained for management to pursue its development activities.

Valuation of restricted share units (RSUs)

Description of the key audit matter

On December 30, 2022, conditional awards were granted to certain participants under the Company's RSU plan, subject to a service condition and a market performance condition tied to the generation of shareholder value over a four-year performance period.

This was a key audit matter due to the assumptions that must be included in the initial fair value measurement of the RSUs, including but not limited to the estimated share price on the measurement dates and volatility.

Refer to Note 4.6 - Critical accounting judgments and assumptions and Note 13.2 Restricted share unit to the consolidated financial statements.

How the key audit matter was addressed in the audit

Our approach included but was not limited to the following procedures:

•  Evaluated the reasonableness of management's assumptions included in the fair value model of the RSUs;

•  Performed a sensitivity analysis on key inputs; and

•  Involved valuation specialists to assess appropriateness of the model used by management and to re-perform the fair value calculation.

Other Information

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

•  The information, other than the consolidated financial statements and our auditor's report thereon, included in the Annual Report; and

•  The information included in the Management's Discussion and Analysis.

Our opinion on the consolidated financial statements does not cover the other information and we do not and will 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 Management's Discussion and Analysis 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.

The Annual Report is expected to be made available to us after the date of the auditor's report. If, based on the work we will perform on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact to those charged with governance.

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 IFRSs, 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 Anne-Marie Henson.

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Montréal, Québec

March 26, 2024

_________________________________________________ 1 CPA auditor, public accountancy permit No. A129869

Consolidated Statements of Financial Position

As at December 31, 2023 and 2022

As at	As at
December 31,	December 31,
Notes	2023	2022
$	$
ASSETS
Current assets
Cash	21,014,633	50,137,569
Due from a related party	21.1	3,521,938	-
Sales tax receivable	69,756	95,890
Prepaid expenses and others	5	18,681,568	450,290
Inventory	680,358	-
Total current assets	43,968,253	50,683,749
Non-current assets
Deposit	27,944	27,944
Escrow account for environmental monitoring	6	598,939	427,120
Investment in equity-accounted joint arrangement	7	23,492,811	-
Mineral properties	8	48,821	85,579
Right of use asset	11.1	574,856	655,063
Capital assets	9	38,241,559	13,216,606
Total non-current assets	62,984,930	14,412,312
TOTAL ASSETS	106,953,183	65,096,061
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities	6,273,979	1,138,961
Convertible notes	10	35,743,127	-
Lease liabilities - current portion	11	80,206	71,797
Total current liabilities	42,097,312	1,210,758
Non-current liabilities
Lease liabilities	11	577,234	657,440
Total non-current liabilities	577,234	657,440
Total liabilities	42,674,546	1,868,198
Equity
Capital stock	12	132,117,971	131,708,387
Contributed surplus	13	6,725,568	5,250,865
Accumulated other comprehensive loss	(36,772)	(36,772)
Deficit	(74,528,130)	(73,694,617)
Total equity	64,278,637	63,227,863
TOTAL LIABILITIES AND EQUITY	106,953,183	65,096,061
Subsequent events	23

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

Approved on Behalf of the Board of Directors

(s) Eldur Ólafsson	(s) Line Frederiksen
Eldur Ólafsson	Line Frederiksen
Director	Director

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Consolidated Statements of Comprehensive Loss

For the years ended December 31, 2023 and 2022

Notes	2023	2022
$	$
Expenses
Exploration and evaluation expenses	16	6,616,652	12,700,526
Site development costs	2,515,743	-
General and administrative	17	13,631,912	10,150,020
Loss on disposal of capital assets	37,791	100,536
Foreign exchange loss (gain)	(306,705)	(849,773)
Operating loss	22,495,393	22,101,309
Other expenses (income)
Interest income	(1,069,559)	(239,869)
Project management income	21.1	(1,714,559)	-
Gain on loss of control of subsidiary	7	(31,340,880)	-
Share of net losses of joint arrangement	7	7,892,387	-
Unrealised loss on derivative liability	10	4,536,411	-
Finance costs	18	34,320	37,523
Net loss and comprehensive loss	(833,513)	(21,898,963)
Weighted average number of common shares
outstanding - basic and diluted	272,623,548	191,575,781
Basic and diluted loss per common share	20	(0.003)	(0.11)

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

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Amaroq Minerals Ltd.

Consolidated Statements of Changes in Equity

For the years ended December 31, 2023 and 2022

(In Canadian Dollars)

Number of
common
shares	Capital	Contributed
Notes	outstanding	stock	surplus
$	$
Balance, January 1, 2022	177,098,737	88,500,205	3,300,723
Net loss and comprehensive loss	-	-	-
Share issuance under a fundraising	85,714,285	46,313,551	-
Share issuance costs	-	(3,331,569)	-	-
Options exercised	260,000	226,200	(96,200)	-
Stock-based compensation	13.1	-	-	2,046,342	-
Balance, December 31, 2022	263,073,022	131,708,387	5,250,865	(36,772)
Balance, January 1, 2023	263,073,022	131,708,387	5,250,865	(36,772)
Net loss and comprehensive loss	-	-	-	-
-	-	-	-
Share issuance under a fundraising	-	-	-	-
Share issuance costs	-	-	-	-
Options exercised, net	597,029	409,584	(433,600)	-
Stock-based compensation	13.1	-	-	1,908,303	-
Balance, December 31, 2023	263,670,051	132,117,971	6,725,568

Accumulated
other
comprehensive	Total
loss	Deficit	equity
$	$	$
(36,772)	(51,795,654)	39,968,502
-	(21,898,963)	(21,898,963)
-	46,313,551
-	(3,331,569)
-	130,000
-	2,046,342
(73,694,617)	63,227,863
(73,694,617)	63,227,863
(833,513)	(833,513)
-	-
-	-
-	-
-	(24,016)
-	1,908,303
64,278,637

-

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

(36,772) (74,528,130)

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