Steppe Gold : Audited Annual Financial Results of 2024

Published: 2025-03-31 19:21:04 ET STGO.TO

Consolidated Financial Statements

For the years ended December 31, 2024, and 2023

(Expressed in US Dollars)

INDEPENDENT AUDITOR'S REPORT

March 31, 2025 Edmonton, Alberta

To the Shareholders of Steppe Gold Ltd.

Opinion

We have audited the consolidated financial statements of Steppe Gold Ltd. and its subsidiaries (the Company), which comprise the consolidated statements of financial position as at December 31, 2024 and 2023, and the consolidated statements of income and comprehensive income, changes in shareholders' equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of material accounting policy information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2024 and 2023, and the consolidated financial performance and consolidated cash flows for the years 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 Consolidated Financial Statements section of our report. We are independent of the Company in accordance with 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. For the matter below, our description of how our audit addressed the matter is provided in that context.

Valuation of inventories and cost of sales

We refer to financial statement summary of material accounting policy information on inventories and related disclosure in Note 7.

At December 31, 2024, the value of inventory amounted to $62,761,000. Inventories were considered as a key audit matter due to the size of the balance and because inventory valuation involves management judgment. According to the financial statements' accounting principles inventories are measured at the lower of production cost and net realizable value based on estimated metal content, with net realizable value approximated as the prevailing and long-term metal prices less estimated future production costs to convert inventories into saleable form and estimated costs to sell. The Company has specific procedures for identifying risk of obsolescence and measuring inventories at the lower of cost or net realizable value.

To address the risk for material misstatement on inventories, our audit procedures included, amongst other procedures:

l Assessing the compliance of Company's accounting policies over inventory with applicable accounting standards.

l Assessing the inventory valuation processes and practices.

l Evaluating the analyses and calculations made by management with respect the remaining estimated costs to produce finished goods and evaluate the possibility of impairment.

We assessed the adequacy of the Company's disclosures related to inventories and cost of sales.

Valuation of investment in bonds

We refer to financial statement summary of material accounting policy information on investment in bonds and related disclosure in Notes 8 and 26.

At December 31, 2024, the value of the investment in bonds amounted to $97,050,000. Investment in bonds was considered as a key audit matter due to the size of the balance, the counter-party to the bonds and because the related valuation involves management judgment. The Company has specific procedures for assessing the valuation and collectability of the investment in bonds.

To address the risk for material misstatement on the investment in bonds, our audit procedures included, amongst other procedures:

l Reviewing outstanding bond agreements to verify terms and conditions relating to the bond issuances.

l Evaluation of management's expected credit loss analysis of the investment in bonds.

l Obtain external confirmation of the bond balance, terms and conditions at December 31. 2024.

l Assessing the ability and willingness to repay the investment in bonds by the bond holders.

We assessed the adequacy of the Company's disclosures related to the investment in bonds.

Reverse takeover transaction

We refer to financial statement summary of material accounting policy information on the reverse takeover and related disclosure in Note 3.

On August 1, 2024 the Company completed a share exchange transaction with Boroo Pte Ltd. to purchase all of Boroo Gold LLC's shares in exchange for the number of the Company's shares equal to approximately 55.9% of the fully diluted Company shares immediately prior to the closing date of the transaction. This transaction was considered as a key audit matter due to the nature of the transaction and the accounting impact of the transaction which involves significant management estimate and judgment.

To address the risk for material misstatement over the reverse takeover transaction, our audit procedures included, amongst other procedures:

l Reviewing the share purchase agreements to verify terms and conditions relating to the transaction.

l Examination of management's treatment of the transaction in accordance with IFRS 3 - Business Combinations.

l Assessment of the purchase price allocation reported for the transaction, which included assessment of the independently prepared valuation report, the input variables and assumptions utilized.

l Evaluation of the management's experts' competence, capabilities and objectivity in developing the valuation report.

We assessed the adequacy of the Company's disclosures related to the reverse takeover transaction.

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, which includes Management's Discussion and Analysis.

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 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.

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, 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:

l 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.

l 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.

l Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

l 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 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 Company to cease to continue as a going concern.

l 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.

l Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company 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 be reasonably expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Justin Rousseau.

Kingston Ross Pasnak LLP Chartered Professional Accountants

STEPPE GOLD LTD.

Consolidated Statements of Financial Position

(All dollar amounts expressed in thousands of United States Dollars, other than the per share amounts or unless otherwise noted)

December 31, 2024 December 31, 2023

Notes

(Restated) ASSETS Current assets

Cash

47,132

14,903

Receivables and other assets

1,830

1,922

Receivables - ATC sales

4,037

Prepayments

2,986

2,959

Inventories

62,761

20,852

Investments in bond

8,26

97,050

Total current assets

215,796

40,636

Long-term assets

Receivables - ATC sales

1,899

Exploration and evaluation assets

1,599

Property, plant and equipment

3,9

131,639

49,922

Long term investments

10,26

317

295

Deferred tax asset

894

Investments in bond

8,26

156,442

Total long-term assets

136,348

206,659

Total assets

352,144

247,295

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Amounts payable and other liabilities

15,163

32,504

Streaming arrangement

4,443

Triple Flag Gold Prepay Loan

6,914

Short term loans

15,26

19,590

82,603

Current portion of lease liability

310

Current tax liability

17,973

11,358

Convertible debentures - derivative

380

Asset retirement obligation

132

Total current liabilities

64,773

126,597

Long-term liabilities

Asset retirement obligation

16,970

12,002

Lease liability

307

Convertible debentures - loan liability

2,477

Long term loans

16,26 17 25

114,552

2,815

BORO Bond

43,000

Deferred tax liability

2,699

Total long-term liabilities

177,306

17,515

Total liabilities

242,079

144,113

Shareholders' equity

Share capital

3,18

55,422

3,000

Accumulated other comprehensive loss

(1,571)

Retained Earnings

56,242

100,181

Total equity attributable to the owners of the Company

110,093

103,181

Non-controlling interest

(28)

Total shareholders' equity

110,065

103,181

Total liabilities and shareholders' equity

352,144

247,295

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

Approved on behalf of the Board:

(Signed) "Bataa Tumur-Ochir"____________, Director (Signed) "Batjargal Zamba"____________,Director

STEPPE GOLD LTD.

Consolidated Statements of Income and Comprehensive Income

(All dollar amounts expressed in thousands of United States Dollars, other than the per share amounts or unless otherwise noted)

Notes

Revenue Cost of sales Gross profit

19 20

December 31, 2024

178,133 (81,857) 96,276

December 31, 2023 (Restated)

132,055 (61,231) 70,824

Exploration and evaluation expenditures Corporate administration

Operating profit

(242)

(9,222) 86,812

(211)

(2,545) 68,068

Finance (expenses)/income Foreign exchange gain/(loss)

Net profit before tax Income tax

Profit for the period

Other comprehensive income for the period Items that may be reclassified subsequently to profit or loss:

Cumulative translation adjustment

Net profit and comprehensive income for the period

Net profit attributable to shareholders of the Company Net loss attributable to non-controlling interest

Basic net earnings per share Diluted net earnings per share

Weighted average number of common shares outstanding - basic

Weighted average number of common shares outstanding - diluted

(7,204)

526 80,134

(18,811) 61,323

(1,571)

59,752 61,351

(28)

24 24

61,323

56,338

0.324

0.392

0.321

0.392

189,225,996

143,796,574

191,064,232

143,796,574

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

4,706

(519) 72,255

(15,917) 56,338

- 56,338 56,338

STEPPE GOLD LTD.

Consolidated Statements of Cash Flows

(All dollar amounts expressed in thousands of United States Dollars, other than the per share amounts or unless otherwise noted)

December 31,

2024

2023

(Restated)

80,133

72,255

(192)

410

149

(5)

(2,153)

4,518

1,232

(804)

17,501

18,232

(1,251)

938

(1,254)

(505)

(0)

11,481

(5)

183

(3,782)

528

(3,455)

(3,152)

102,092

88,979

3,136

(4,364)

18,784

131

(28,287)

(2,762)

2,527

98,252

81,984

(16,423)

(9,952)

Net cash (used)/generated from operating activities

81,829

72,032

Investing activities

(11,616)

(10,299)

(2,549)

2,103

(2,800)

280

(290)

(11,986)

(13,109)

25,924

42,905

(14)

(30,315)

(34,146)

(12,329)

(11,866)

Notes

Operating activities

Net profit for the period before tax

Adjustments for non-cash items:

Change in the fair value of CD derivative

Fair value of Triple Flag Gold Prepay loan

Fair value of TDB and Aranjin's shares

Reversal of Bond Impairment loss

Accretion and financing costs

Loss on inventory write off

Other income

Depreciation

UR FX exchange

Change in the fair value of stream liability

Change in the fair value of ATC consideration

Movements in ARO

Interest expense

Loss/(Gain) on disposal of property, plant and equipment

Deferred tax benefit

Bad debt

Penalty

Movements in provision for supplies

Bond interest income

Operating cash flows before changes in

non-cash working capital items

Changes in working capital items:

(Increase)/decrease in inventories

Receivables and other assets

Amounts payable and other liabilities

Asset Retirement Obligation

Cash (used) / generated from operations

Income tax paid

Acquisition of plant and equipment 9

Deposits on property, plant and equipment 9

Steppe Gold cash at acquisition 3 Acquisition of investment

Proceeds from disposal of property, plant and equipment

Investment in securities 10 Net cash used in investing activities

Financing activities

10 8 12

Proceeds from loan - Boroo Gold 15,16

Proceed from BORO Bond $43M 17

Cost of share issuance 18

Repayment of loan - Boroo Gold 15,16

Interest paid on loan 15,16

Interest paid on convertible debentures

(194)

Repayment of stream financing

(3,043)

Lease obligation payments

(48)

Asset revaluation reserve

Dividend declared

(60,500)

Net cash used in financing activities

(37,614)

(46,012)

Net increase/(decrease) in cash

32,229

12,911

Cash at the beginning of the period

14,903

1,992

Cash at the end of the period

47,132

14,903

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

Disclaimer

Steppe Gold Ltd. published this content on March 31, 2025, and is solely responsible for the information contained herein. Distributed via , unedited and unaltered, on March 31, 2025 at 23:20 UTC.