Discovery Silver : Earnings Document

Published: 2025-04-15 20:34:05 ET DSV.TO

CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2024 and 2023

(expressed in Canadian dollars)

Independent auditor's report

To the Shareholders of Discovery Silver Corp.

Our opinion

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Discovery Silver Corp. and its subsidiaries (together, the Company) as at December 31, 2024 and 2023, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).

What we have audited

The Company's consolidated financial statements comprise:

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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

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 for the year ended December 31, 2024. These matters were

PricewaterhouseCoopers LLP

PwC Tower, 18 York Street, Suite 2500, Toronto, Ontario, Canada M5J 0B2

T.: +1 416 863 1133, F.: +1 416 365 8215, Fax to mail: [email protected]

"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

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.

Key audit matter

Assessment of indicators of impairment of Cordero mineral property

Refer to note 3 - Material accounting policies and note 5 - Critical judgments and estimates in applying accounting policies to the consolidated financial statements.

The carrying value of the Cordero mineral property, which is comprised of exploration and evaluation assets, was $84.9 million as at December 31, 2024. The carrying values of mineral properties are reviewed each reporting period or upon the occurrence of events or changes in circumstances indicating that the carrying values of assets may not be recoverable. If any such indicator exists, then an impairment test is performed by management. Indicators of impairment may include (i) the period during which the entity has the right to explore in the specific area has expired during the year or will expire in the near future; (ii) substantive expenditure on further exploration for and evaluation of mineral reserves and resources in the specific area is neither budgeted nor planned; (iii) sufficient data exists to support that extracting the reserves and resources will not be technically feasible or commercially viable based on technical studies or desktop studies; and (iv) facts and circumstances suggest that the carrying amount exceeds the recoverable amount. No impairment indicators were identified by management for the Cordero mineral property as at December 31, 2024.

We considered this a key audit matter due to the significance of the mineral property and the judgments made by management in its assessment of indicators of impairment, which led to subjectivity in performing procedures to test management's assessment.

How our audit addressed the key audit matter

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

Other information

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

Our opinion on the consolidated 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 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.

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 consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, 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 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 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:

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 Marelize Barber.

/s/PricewaterhouseCoopers LLP

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Ontario

March 26, 2025

Discovery Silver Corp.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian dollars, except where otherwise noted)

December 31,

As at

Notes

2024

2023

ASSETS

Current

Cash and cash equivalents

29,310,579

58,944,459

Sales tax and other receivables

3,201,221

2,418,901

Prepaids and deposits

279,481

292,055

Investments

213,147

204,180

33,004,428

61,859,596

Non-current

Property and Equipment

2,775,518

1,511,446

Value-added taxes receivable

2,153,568

2,299,668

Mineral properties

84,949,272

80,395,288

TOTAL ASSETS

122,882,786

146,065,998

LIABILITIES

Current

Accounts payable and accrued liabilities

8,359,638

12,056,645

Current portion of lease liabilities

247,674

111,580

8,607,312

12,168,225

Non-current

Other long-term liabilities

1,069,448

4,177,833

Lease liabilities

1,217,813

298,834

TOTAL LIABILITIES

10,894,573

16,644,892

SHAREHOLDERS' EQUITY

Share capital

13(b)

220,211,128

216,194,163

Contributed surplus

44,801,220

42,660,494

Warrants

13(e)

17,525,093

Accumulated other comprehensive loss

(1,297,473)

1,397,720

Accumulated deficit

(169,251,755)

(148,356,364)

TOTAL EQUITY

111,988,213

129,421,106

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

122,882,786

146,065,998

Approved on Behalf of the Board on March 26, 2025:

"Jeff Parr"

"Murray John"

Jeff Parr - Director

Murray John - Director

Discovery Silver Corp.

CONSOLIDATED STATEMENTS OF LOSS AND TOTAL COMPREHENSIVE LOSS

(Expressed in Canadian dollars, except per share and share information)

Years Ended

December 31,

Notes

2024

2023

Expenses (income)

General office and other expenses

12,977,449

8,653,089

Interest income

(2,201,088)

(3,095,468)

Interest expense

120,325

19,030

Professional fees

1,479,821

1,547,300

Exploration and project evaluation expenses

507,383

3,743,940

Share-based compensation

13(b)

4,446,038

5,673,104

Loss on fair value remeasurement of investments

(8,544)

316,425

Write-off for IVA receivable

1,293,744

Foreign exchange loss (gain)

3,574,007

(2,398,649)

Net loss

20,895,391

15,752,515

Other comprehensive loss (income)

2,695,193

(1,349,195)

Total comprehensive loss

23,590,584

14,403,320

Weighted average shares outstanding

Basic and diluted

13(b)

398,385,856

382,703,062

Net loss per share

Basic and diluted

(0.05)

(0.04)

Discovery Silver Corp.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Canadian dollars, except where otherwise noted)

Years Ended

December 31,

Notes

2024

2023

Operating Activities

Net loss

(20,895,391)

(15,752,515)

Items not affecting cash:

Depreciation

379,061

363,744

Accretion

270,066

Share-based compensation

13(c)

4,446,038

5,673,104

Write-off for IVA receivable

1,293,744

Loss on fair value remeasurement

(8,544)

316,424

Unrealized foreign exchange loss

4,400,065

801,659

Changes in non-cash operating working capital:

Sales tax and other receivables

(550,635)

4,621,152

Prepaids and deposits

12,574

(32,776)

Accounts payable and accrued liabilities

(8,806,027)

1,189,910

Net cash used in operating activities

(20,752,793)

(1,525,554)

Investing Activities

Acquisition of property and equipment

(440,669)

Disposals of property and equipment

7,021

90,481

Acquisition of mineral property

(9,831,226)

(33,407,547)

Net cash used in investing activities

(9,824,205)

(33,757,735)

Financing Activities

Issuance of shares, net of costs

13(b)

48,741,556

Issuance of shares on exercise of options

13(c)

1,711,653

251,696

Principal payment on lease liability

(682,528)

(139,385)

Net cash provided by financing activities

1,029,125

48,853,867

Effect of exchange rates on cash and cash equivalents

(86,007)

(847,057)

Decrease (increase) in cash and cash equivalents

(29,633,880)

12,723,521

Cash and cash equivalents, beginning of year

58,944,459

46,220,938

Cash and cash equivalents, end of year

29,310,579

58,944,459

Supplemental Cash Flow Information:

Income tax expense paid

Interest paid

822

Discovery Silver Corp.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in Canadian dollars, except where otherwise noted)

Accumulated

Number of

Other

Common

Contributed

Comprehensive

Accumulated

Notes

Share Capital

Warrants

Surplus

Loss

Deficit

Total Equity

At January 1, 2024

395,862,249

216,194,163

17,525,093

42,660,494

1,397,720

(148,356,364)

129,421,106

Share-based

compensation

13c

4,446,038

Shares issued on

exercise of options

13c

3,468,450

2,625,456

(913,803)

1,711,653

Shares issued on

exercise of RSU's

13f

1,130,545

1,391,509

(1,391,509)

Net loss and total

comprehensive loss

for the year

(2,695,193)

(20,895,391)

(23,590,584)

At December 31, 2024

400,461,244

220,211,128

17,525,093

44,801,220

(1,297,473)

(169,251,755)

111,988,213

Accumulated

Number of

Other

Common

Contributed

Comprehensive

Accumulated

Notes

Share Capital

Warrants

Surplus

Loss

Deficit

Total Equity

At January 1, 2023

351,941,580

166,732,378

17,525,093

37,455,923

48,525

(132,603,849)

89,158,070

Share-based

compensation

13c

5,673,104

Shares issued under

marketed public

offering

13b

43,125,000

51,750,000

Share issue costs

13c

(3,008,444)

Shares issued on exercise

of options

13c

528,650

374,642

(122,946)

251,696

Shares issued on exercise

of RSU's

13f

267,019

345,587

(345,587)

Net loss and total

comprehensive loss for

the year

1,349,195

(15,752,515)

(14,403,320)

At December 31, 2023

395,862,249

216,194,163

17,525,093

42,660,494

1,397,720

(148,356,364)

129,421,106

Disclaimer

Discovery Silver Corp. published this content on April 16, 2025, and is solely responsible for the information contained herein. Distributed via , unedited and unaltered, on April 16, 2025 at 00:33 UTC.