Announcement PDF Consolidated Financial Statements October 31, 2023 and 2022 (Expressed in Canadian Dollars) Independent Auditor's Report To the Shareholders of Commerce Resources Corp. Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of Commerce Resources Corp. (the “Company”), which comprise the consolidated statements of financial position as at October 31, 2023 and 2022, and the consolidated statements of operations and comprehensive loss, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at October 31, 2023 and 2022 and its financial performance and its 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 the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our 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. Material Uncertainty Related to Going Concern We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company has not yet achieved profitable operations, has accumulated losses since its inception and expects to incur further losses. As stated in Note 1, these events and conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter. 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. We have determined that there is the following key audit matter to communicate in our auditor’s report: Key audit matter: How our audit addressed the key audit matter: Assessment of impairment indicators of Exploration and evaluation assets. Our approach to addressing the matter included the following procedures, among others: Refer to note 3 – Significant accounting judgments, estimates and assumptions, note 4 – Significant accounting policies Exploration and evaluation costs, and note 7 – Exploration and evaluation assets Management assesses at each reporting period whether there is an indication that the carrying value of exploration and evaluation assets may not be recoverable. Management applies significant judgment in assessing whether indicators of impairment exist that necessitate impairment testing. Internal and external factors, such as (i) a significant decline Evaluated the reasonableness of management’s assessment of impairment indicators, which included the following:  Assessed the Company’s market capitalization in comparison to the Company’s net assets, which may be an indication of impairment.  Assessed the completeness of the factors that could be considered indicators of impairment, including consideration of evidence obtained in other areas of the audit. in the market value of the Company’s share price; (ii) changes in the Company’s assessment of whether commercially viable quantities of mineral resources exist within the properties; and (iii) changes in metal prices, capital and operating costs, are evaluated by management in determining whether there are any indicators of impairment. We considered this a key audit matter due to (i) the significance of the exploration and evaluation asset balance and (ii) the significant audit effort and subjectivity in applying audit procedures to assess the factors evaluated by management in its assessment of impairment indicators, which required significant management judgment.  Confirmed that the Company’s right to explore the properties had not expired.  Obtained management’s written representations regarding the Company’s future plans for the exploration and evaluation assets.  Assessed the reasonability of the Company’s financial statement disclosure regarding their exploration and evaluation assets. Other Information Management is responsible for the other information. The other information comprises the information included in "Management's Discussion and Analysis", but does not include the consolidated financial statements and our auditor's report thereon. 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, 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, 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:  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 Company'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 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.  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.  Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units withing the Group as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes 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 William Nichols. Chartered Professional Accountants Vancouver, BC, Canada February 13, 2024 5 Commerce Resources Corp. Consolidated Statements of Financial Position As at October 31, As expressed in Canadian dollars Commitments - Note 10 Subsequent events - Note 17 Approved and authorized by the Board of Directors on February 13, 2024: “Christopher Grove” “Ian Graham” _______________________ ________________________ Director Director The accompanying notes are an integral part of these consolidated financial statements. 2023 2022 Assets Current Cash $ 3,954,990 $ 513,793 Marketable securities 5,616 8,985 Short-term investment (Note 5) 23,000 23,000 Taxes and other receivables - 567,291 Due from related parties (Note 11) 35,516 - Prepaid expenses 432,338 708,204 Total current assets 4,451,460 1,821,273 Non-current Equipment (Note 6) 268,741 297,777 Exploration and evaluation assets (Note 7 and Schedule I) 72,375,839 70,844,756 Reclamation bonds 80,000 80,000 Right-of-use asset (Note 15) 111,696 144,387 Total Assets $ 77,287,736 $ 73,188,193 Liabilities Current Accounts payable and accrued liabilities $ 368,631 $ 1,288,155 Due to related parties (Note 11) 56,392 131,721 Taxes payable 24,205 - Lease liabilities (Note 15) 27,214 27,214 Liability for flow-through shares (Note 14) - 27,872 Total current liabilities 476,442 1,474,962 Non-current Lease liabilities (Note 15) 94,591 121,805 Total Liabilities 571,033 1,596,767 Shareholders’ Equity Share capital (Note 8) 103,574,799 97,315,234 Reserves (Note 9) 11,022,110 10,370,707 Share subscriptions received - 89,468 Deficit (37,880,206) (36,183,983) Total Shareholders’ Equity 76,716,703 71,591,426 Total Liabilities and Shareholders’ Equity $ 77,287,736 $ 73,188,193 6 Commerce Resources Corp. Consolidated Statements of Operations and Comprehensive Loss For the years ended October 31, As expressed in Canadian dollars The accompanying notes are an integral part of these consolidated financial statements. 2023 2022 Expenses Administration fees and rent (Note 10 & 11) $ 151,750 $ 150,000 Advertising and website 108,205 210,765 Consulting fees (Note 11) 439,101 335,651 Filing and transfer agent fees 59,156 78,196 Insurance 13,156 12,604 Investor relations 1,509 18,103 Lease interest (Note 15) 15,986 10,762 Office, telephone and miscellaneous 23,352 21,514 Professional fees 107,058 86,250 ROU asset depreciation (Note 15) 32,691 19,070 Share-based payments (Note 9) 346,899 296,899 Travel 36,310 50,438 Loss before other items (1,335,173) (1,290,252) Other items: Interest income 6,418 18,690 Loss on sale of marketable securities - (1,343) Flow-through premium recovery (Note 14) 27,872 580,260 Foreign exchange losses (2,066) (6,685) Part XII.6 tax (20,615) (4,837) Write-off of other receivables (Note 7) (369,290) - Unrealized loss on marketable securities (3,369) (19,393) Net loss and comprehensive loss for the year $ (1,696,223) $ (723,560) Basic and diluted loss per share $ (0.02) $ (0.01) Weighted average number of common shares outstanding – basic and diluted 98,933,814 90,447,197 7 Commerce Resources Corp. Consolidated Statements of Changes in Equity For the years ended October 31, As expressed in Canadian dollars The accompanying notes are an integral part of these consolidated financial statements. Note Number of Shares Share Capital Share subscriptions received Reserves Deficit Total Balance, October 31, 2021 83,013,201 $ 95,606,080 $ - $ 10,073,808 $ (35,460,423) $ 70,219,465 Flow-through shares issued for cash 8 8,641,429 1,857,908 - - - 1,857,908 Share issuance costs - (148,754) - - - (148,754) Share-based compensation 9 - - - 296,899 - 296,899 Share subscriptions received - - 89,468 - - 89,468 Net loss for the year - - - - (723,560) (723,560) Balance, October 31, 2022 91,654,630 $ 97,315,234 $ 89,468 $ 10,370,707 $ (36,183,983) $ 71,591,426 Shares issued for cash 8 76,366,925 6,764,728 (89,468) - - 6,675,260 Share issuance costs - (505,163) - 304,505 - (200,658) Share-based compensation 9 - - - 346,898 - 346,898 Net loss for the year - - - - (1,696,223) (1,696,223) Balance, October 31, 2023 168,021,555 $ 103,574,799 $ - $ 11,022,110 $ (37,880,206) $ 76,716,703 8 Commerce Resources Corp. Consolidated Statements of Cash Flows For the years ended October 31, As expressed in Canadian dollars 2023 2022 CASH FLOWS USED IN OPERATING ACTIVITIES: Net loss for the year $ (1,696,223) $ (723,560) Add (deduct) items not affecting cash: ROU asset depreciation 32,691 19,070 Lease interest 15,986 10,762 Loss on sale of investments - 1,343 Deferred income taxes (27,872) (580,260) Unrealized loss on marketable securities 3,369 19,393 Share-based payments 346,898 296,899 Write-off of other receivables 369,290 - (955,861) (956,353) Changes in non-cash working capital items related to operations: Taxes and other receivables 222,206 (260,146) Prepaid expenses 275,866 375,096 Due to related parties (14,228) 19,101 Accounts payable and accrued liabilities (37,673) 48,165 Net cash used in operating activities (509,690) (774,137) CASH FLOWS FROM FINANCING ACTIVITIES: Share subscriptions received (89,468) 89,468 Payments of lease liabilities (43,200) (25,200) Issue of share capital, net of share issuance costs 6,564,070 2,270,847 Net cash flows from financing activities 6,431,402 2,335,115 CASH FLOWS USED IN INVESTING ACTIVITIES: Sale of marketable securities - 157 Exploration and evaluation costs, net of tax credits received (2,480,515) (4,308,645) Net cash used in investing activities (2,480,515) (4,308,488) Increase (decrease) in cash 3,441,197 (2,747,510) Cash, beginning of year 513,793 3,261,303 Cash, end of year $ 3,954,990 $ 513,793 Supplemental disclosure with respect to cash flows – Note 13 The accompanying notes are an integral part of these consolidated financial statements. Commerce Resources Corp. Notes to the Consolidated Financial Statements For the year ended October 31, 2023 Expressed in Canadian Dollars 9 1. NATURE OF OPERATIONS AND CONTINUANCE OF OPERATIONS Commerce Resources Corp. (“Commerce” or the “Company”) was incorporated on May 19, 1999, under the Company Act of British Columbia and is in the business of acquiring, exploring, developing and evaluating mineral resource properties, and either joint venturing or developing these properties further or disposing of them when the evaluation is completed. The Company is in the exploration stage and has interests in properties located in British Columbia (“BC”) and Quebec, Canada. Commerce is a public company listed on Tier 1 of the TSX Venture Exchange in Canada (“CCE”), the Frankfurt Stock Exchange in Germany (“D7H”), and the OTCQX (“CMFZF”). The head office, principal address and registered and records office of the Company are located at 1450 – 789 West Pender, Vancouver, BC, Canada, V6C 1H2. On July 12, 2023, the Company incorporated Capacitor Metals Corp., a British Columbia company which is a wholly- owned subsidiary of the Company. These consolidated financial statements were authorized for issue by the Audit Committee and Board of Directors on February 13, 2024. The Company has no source of operating cash flows, has not yet achieved profitable operations, has working capital of $3,975,018 at October 31, 2023 (2022 - $346,311), has accumulated losses since its inception, expects to incur further losses in the development of its business, and has no assurance that sufficient funding will be available to conduct further exploration of its mineral properties. These material uncertainties cast significant doubt about the Company’s ability to continue as a going concern and, accordingly, the appropriateness of the use of generally accepted accounting principles applicable to a going concern. In recognition of these circumstances, management is pursuing various financial alternatives to fund the Company’s exploration and development programs. There is no assurance that these initiatives will be successful. In the future, the Company may raise additional financing through the issuance of share capital or shareholder loans; however, there can be no assurance that it will be successful in its efforts to do so and that the terms will be favourable to the Company. These consolidated financial statements do not include any adjustments to the carrying values of assets and liabilities, the reported expenses and consolidated statement of financial position classifications that might be necessary should the Company be unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Management is actively seeking to raise the necessary capital to meet its funding requirements and has undertaken available cost-cutting measures. There can be no assurance that management’s plan will be successful. If the going concern assumption were to be found not appropriate for these consolidated financial statements, then adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the consolidated statement of financial position classifications used. Such adjustments could be material. The business of mining and exploration involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations. The Company has no source of revenue, and has significant cash requirements to meet its administrative overhead and maintain its mineral interests. 2. BASIS OF PRESENTATION Statement of Compliance These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). Commerce Resources Corp. Notes to the Consolidated Financial Statements For the year ended October 31, 2023 Expressed in Canadian Dollars 10 2. BASIS OF PRESENTATION - continued Basis of Measurement and Consolidation The consolidated financial statements have been prepared on the historical cost basis, except for cash equivalents which are reflected at fair value as set out in the accounting policies below. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information. The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiary Capacitor Metals Corp. Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect those returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are de-consolidated from the date control ceases. The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiaries after eliminating inter-entity balances and transactions. 3. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS Estimates and assumptions In particular, information about significant areas of estimation uncertainty considered by management in preparing the consolidated financial statements includes:  The recoverability of the carrying value of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest;  The inputs used in assessing the recoverability of deferred income tax assets to the extent that the deductible temporary differences will reverse in the foreseeable future and that the Company will have future taxable income;  Management’s assumption that there are currently no decommissioning liabilities is based on the facts and circumstances that have existed during the periods;  The fair value of share-based compensation is determined using the Black-Scholes option pricing model. Estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. Option-pricing models require the use of highly subjective estimates and assumptions including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates and, therefore, existing models do not necessarily provide reliable measurement of the fair value of the Company’s stock options; and  The incremental rate of borrowing used in the measurement of the lease liability was based on the interest rate of other junior mining companies’ borrowing. Judgments The critical judgments that the Company’s management has made in the process of applying the Company’s accounting policies from those involving estimations that have the most significant effect on the amounts recognized in the Company’s consolidated financial statements are as follows:  Economic recoverability and probability of future economic benefits of exploration, evaluation and development costs Management has determined that exploratory drilling, evaluation, development and related costs incurred which have been capitalized are economically recoverable. Management uses several criteria in its Commerce Resources Corp. Notes to the Consolidated Financial Statements For the year ended October 31, 2023 Expressed in Canadian Dollars 11 3. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS - continued Judgments – continued assessments of economic recoverability and probability of future economic benefit including geologic information, scoping and feasibility studies, accessible facilities, existing permits and life of mine plans.  Production stage of a mine The determination of the date on which a mine enters the production stage is a significant judgment since capitalization of certain costs ceases upon entering production.  Provisions for reclamation Management assesses its provision for reclamation 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, and the impact of changes in discount 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.  Going concern The assessment of the Company’s ability to continue as a going concern involves judgment regarding future funding available for its exploration projects and working capital requirements. 4. SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements. Foreign currency translation The Company’s presentation currency and functional currency is the Canadian dollar as this is the principal currency of the economic environment in which it operates. Transactions in foreign currencies are initially recorded in the Company’s functional currency at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the end of each reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions and are not subsequently restated. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when fair value is determined. All gains and losses on translation of these foreign currency transactions are included in profit or loss. Cash Cash consists of amounts held in banks and cashable highly liquid investments with limited interest and credit risk. Short-term investments Short-term investments are investments which are transitional or current in nature, with an original maturity greater than three months but less than one year. Commerce Resources Corp. Notes to the Consolidated Financial Statements For the year ended October 31, 2023 Expressed in Canadian Dollars 12 4. SIGNIFICANT ACCOUNTING POLICIES - continued Marketable securities Marketable securities consist of common shares of publicly traded companies listed on the TSX Venture Exchange. Marketable securities are classified as fair value through profit and loss and are recorded at their fair values using quoted market prices at the consolidated statement of financial position date. Subsequent revaluation resulting in unrealized gains or losses is recorded in the consolidated statements of operations and comprehensive loss. Exploration and evaluation costs Exploration and evaluation activities involve the search for minerals, the determination of technical feasibility, and the assessment of commercial viability of an identified resource. Exploration and evaluation costs incurred prior to obtaining licenses are expensed in the period in which they are incurred. Once the legal right to explore has been acquired, exploration and evaluation costs incurred are capitalized. All capitalized exploration and evaluation costs are recorded at acquisition cost and are monitored for indications of impairment. Where there are indications of a potential impairment, an assessment is performed for recoverability. Capitalized costs are charged to the statement of operations and comprehensive loss to the extent that they are not expected to be recovered. Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets are tested for impairment and transferred to “Mines under construction”. There is no amortization during the exploration and evaluation phase. Recoverability of the carrying amount of any exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. Reclamation bonds Reclamation bonds are required by the Ministry of Natural Resources and are mostly represented by Guaranteed Interest Certificates (“GIC”) held in the Company’s name at a bank. The Company is entitled to interest on the GICs which is earned at an interest rate ranging from prime minus 2.2% - 2.65%. The reclamation bonds cannot be withdrawn by the Company without the consent of the Ministry of Natural Resources. E