Exhibit 99.2
Solaris Resources Inc.
Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
Page 1 of 24
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors
Solaris Resources Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Solaris Resources Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of net loss and comprehensive loss, cash flows and changes in equity for each of the years then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and its financial performance and its cash flows for each of the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company does not generate operating cash flow from a producing mine, has incurred operating losses to date and requires additional financing to continue operations. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ KPMG LLP
Chartered Professional Accountants
We have served as the Company’s auditor since 2018.
Vancouver, Canada
March 20, 2025
Page 2 of 24
Solaris Resources Inc.
Consolidated Statements of Financial Position
As at December 31, 2024 and 2023
(Unaudited – In thousands of United States dollars)
| Note | 2024 | 2023 | ||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | $ | ||||||||
| Prepaids and other | 5 | |||||||||
| Restricted cash | 9 | |||||||||
| Exploration and evaluation assets | 6 | |||||||||
| Property, plant and equipment | 7 | |||||||||
| Total assets | $ | $ | ||||||||
| Liabilities and Equity | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||||
| Lease liability | 8 | |||||||||
| Long-term liabilities | ||||||||||
| Lease liability | 8 | |||||||||
| Reclamation provision | 9 | |||||||||
| Loans and borrowings | 10 | |||||||||
| Other long-term liability | ||||||||||
| Total liabilities | ||||||||||
| Shareholders’ equity | ||||||||||
| Common shares | 12 | |||||||||
| Reserves | 12 | |||||||||
| Deficit | ( | ) | ( | ) | ||||||
| Equity attributable to shareholders of the Company | ( | ) | ||||||||
| Non-controlling interests | 16 | |||||||||
| Total shareholders’ equity | ( | ) | ||||||||
| Total liabilities and equity | $ | $ | ||||||||
Nature of operations and
going concern (Note 1)
Commitments and contingencies (Notes 8, 10, 19(c), 21, 22)
Subsequent event (Note 21, 24)
| Approved on behalf of the Board: | ||
| “Donald Taylor” | “Rodrigo Borja” | |
| Donald Taylor – Director | Rodrigo Borja – Director | |
The accompanying notes form an integral part of these consolidated financial statements.
Page 3 of 24
Solaris Resources Inc.
Consolidated Statements of Net Loss and Comprehensive Loss
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, except share and per share amounts)
| Note | 2024 | 2023 | ||||||||
| Exploration expenses | 13 | $ | $ | |||||||
| General and administrative expenses | 14 | |||||||||
| Loss from operations | ||||||||||
| Change in fair value of derivatives | 11 | |||||||||
| Finance cost | ||||||||||
| Impairment of exploration and evaluation assets | 6 | |||||||||
| Interest income, other income and loan revaluation, net | ( | ) | ( | ) | ||||||
| Net loss | $ | $ | ||||||||
| Other comprehensive loss (income) | ||||||||||
| Items that may be reclassified to profit or loss: | ||||||||||
| Foreign currency translation | ( | ) | ( | ) | ||||||
| Total comprehensive loss | $ | $ | ||||||||
| Net loss attributable to: | ||||||||||
| Shareholders of the Company | $ | $ | ||||||||
| Non-controlling interest | 16 | |||||||||
| $ | $ | |||||||||
| Total comprehensive loss attributable to: | ||||||||||
| Shareholders of the Company | $ | $ | ||||||||
| Non-controlling interest | 16 | |||||||||
| $ | $ | |||||||||
| Net loss per share attributable to shareholders of the Company | ||||||||||
| Basic and diluted | $ | $ | ||||||||
| Weighted average number of shares outstanding | ||||||||||
| Basic and diluted | ||||||||||
The accompanying notes form an integral part of these consolidated financial statements.
Page 4 of 24
Solaris Resources Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars)
| Note | 2024 | 2023 | ||||||||
| Cash provided by (used in): | ||||||||||
| Operations | ||||||||||
| Net loss for the year | $ | ( | ) | $ | ( | ) | ||||
| Adjustments for: | ||||||||||
| Change in fair value of derivatives | 11 | |||||||||
| Finance cost | ||||||||||
| Finance income | ( | ) | ( | ) | ||||||
| Foreign exchange and other | ||||||||||
| Share-based compensation | 12 | |||||||||
| Amortization | 7 | |||||||||
| Impairment of exploration and evaluation assets | 6 | |||||||||
| Reclamation provision | ||||||||||
| Other | ||||||||||
| Net changes in non-cash working capital items: | ||||||||||
| Prepaids and other | ( | ) | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||||
| Reclamation provision settlement | ( | ) | ( | ) | ||||||
| Other long-term liability | ||||||||||
| ( | ) | ( | ) | |||||||
| Financing | ||||||||||
| Proceeds from private placements of common shares | 10,12 | |||||||||
| Proceeds from Public Offering | 12 | |||||||||
| Proceeds from issuance of loans and borrowings | 10 | |||||||||
| Share issuance and loan finance costs paid | ( | ) | ( | ) | ||||||
| Proceeds from the exercise of Equinox Warrants, warrants | ||||||||||
| Proceeds from the exercise of Equinox Warrants, warrants and stock options | ||||||||||
| Payment of lease liability | ( | ) | ( | ) | ||||||
| Contribution from non-controlling interest | ||||||||||
| Finance income received and other, net | ||||||||||
| Investing | ||||||||||
| Restricted cash contribution | 9 | ( | ) | |||||||
| Capital expenditures | ( | ) | ( | ) | ||||||
| Mineral Property Investment | ( | ) | ||||||||
| ( | ) | ( | ) | |||||||
| Effect of exchange rate change on cash and cash equivalents | ( | ) | ||||||||
| Increase (decrease) in cash and cash equivalents | ( | ) | ||||||||
| Cash and cash equivalents, beginning of year | ||||||||||
| Cash and cash equivalents, end of year | $ | $ | ||||||||
Supplemental cash flow information (Note 23)
The accompanying notes form an integral part of these consolidated financial statements.
Page 5 of 24
Solaris Resources Inc.
Consolidated Statements of Changes in Equity
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, except number of shares)
| Share Capital | Reserves | |||||||||||||||||||||||||||||||||
| Note | Number of Shares | Amount | Options, RSUs and warrants | Foreign currency translation | Total | Deficit | Non- controlling interest | Total equity | ||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Private placement equity financing, net of share issue costs | 10 | |||||||||||||||||||||||||||||||||
| Shares issued on exercise of stock options | 12 | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Shares issued on exercise of Solaris warrants and Equinox Warrants | 12 | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Share-based compensation | 12 | – | ||||||||||||||||||||||||||||||||
| Contribution from non-controlling interest | – | |||||||||||||||||||||||||||||||||
| Net loss and comprehensive loss | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Private placements equity financings, net of share issue costs | 10,12 | |||||||||||||||||||||||||||||||||
| Public offering, net of share issue costs | ||||||||||||||||||||||||||||||||||
| Shares issued on exercise of stock options | 12 | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Shares issued on exercise of Solaris warrants and Equinox Warrants | 12 | |||||||||||||||||||||||||||||||||
| Share-based compensation | 12 | – | ||||||||||||||||||||||||||||||||
| Contribution from non-controlling interest | – | |||||||||||||||||||||||||||||||||
| Net loss and comprehensive loss | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||
The accompanying notes form an integral part of these consolidated financial statements.
Page 6 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
| 1. | Nature of operations and going concern |
Solaris Resources Inc. (the “Company” or “Solaris”) was incorporated under the Business Corporations Act of British Columbia on June 18, 2018 as a wholly owned subsidiary of Equinox Gold Corp. (“Equinox”). Equinox subsequently completed a spin-out of Solaris pursuant to a plan of arrangement (the “Arrangement”). Solaris’ common shares trade on the Toronto Stock Exchange under the symbol “SLS” and the NYSE American under the symbol “SLSR”.
The Company is engaged in the acquisition,
exploration and development of mineral property interests. The Company’s assets consist primarily of the Warintza property (“Warintza”)
in Ecuador, the
These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards applicable to a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due for the foreseeable future. The Company does not generate operating cash flow from a producing mine and has incurred operating losses to date. The Company has relied on cash received from share issuances and advances from the senior secured debt facility (the “Senior Loan”) to fund its business activities, including planned corporate expenditures, exploration expenses, as well as the development activities for the Warintza project. The Company’s ability to continue as a going concern is dependent upon the successful execution of its business plan, meeting certain Warintza project milestones, raising additional capital and/or evaluating strategic alternatives for its mineral property interests. The Company expects to continue to raise the necessary funds primarily through the issuance of common shares and/or advances from the Senior Loan (see below) in support of its business objectives. While the Company has been successful in securing financing to date, there can be no assurances that future equity financing, debt facilities or strategic alternatives will be available on acceptable terms to the Company or at all.
As at December 31, 2024, the Company
had cash and cash equivalents of $
| 2. | Basis of preparation |
| a) | Statement of compliance |
These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
These consolidated financial statements were approved and authorized for issuance by the Board of Directors on March 20, 2025.
| b) | Basis of presentation |
These consolidated financial statements have been prepared on a historical cost basis except for certain financial assets and financial liabilities recognized at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information. These consolidated financial statements are presented in United States dollars (“US dollars”).
Page 7 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
| c) | Basis of consolidation |
These consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control is transferred to the Company until the date that control ceases. All intercompany transactions and balances have been eliminated on consolidation.
These consolidated financial statements include the accounts of the Company and its subsidiaries as described below:
| Company | Location | Ownership interest | ||||
| Lowell Copper Holdings Inc. | ||||||
| 1330783 B.C. Ltd. | ||||||
| Lowell Copper Holdings (US) Inc. | ||||||
| Solaris Exploration Inc. | ||||||
| Lowell Copper (US) Inc. | ||||||
| Lowell Mineral Exploration Ecuador S.A. | ||||||
| Solaris Resources Ecuador S.A.S. | ||||||
| Minera Ricardo Resources Inc. S.A. | ||||||
| Solaris Copper SpA | ||||||
| Lowell Copper S.A.C. | ||||||
| Minera Gabriella S.A. de C.V. | ||||||
| Ascenso Inversiones S.A. | ||||||
| Catalyst Copper Corp. | ||||||
| Solaris Resources AG | ||||||
| Minera Hill 29, S.A. de C.V. | ||||||
| Minera Torre de Oro, S.A.P.I. de C.V. | ||||||
| d) | Functional and presentation currency |
The functional currency of the Company and each of its subsidiaries is determined by the currency of the primary economic environment in which the entity operates. The functional currency of the Company is the Canadian dollar. The functional currency of the Company’s subsidiaries and the Company’s reporting currency is the US dollar.
For the purpose of preparing the consolidated financial statements, the assets and liabilities are first expressed in the entity’s respective functional currency and translated into the US dollar presentation currency using exchange rates prevailing at the reporting date, while the income and expense items are translated at the average exchange rates for the period. Translation differences are recognized in other comprehensive income (loss) and recorded in the “foreign currency translation reserves” included in equity.
| 3. | Material accounting policies |
| a) | Exploration and evaluation |
Exploration and evaluation expenditures relate to costs incurred in the search for mineral resources, the determination of technical feasibility and the assessment of commercial viability of an identified resource. Exploration and evaluation activities include permitting, community engagement, exploratory drilling and sampling, surveying transportation and infrastructure requirements, and gathering of exploration data through geophysical studies.
The Company capitalizes significant direct costs of acquiring resource property interests. Option payments are considered acquisition costs if the Company has the intention of exercising the underlying option.
Page 8 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
Subsequent to the acquisition of a mineral interest, exploration and evaluation costs incurred, including those related to asset retirement obligations, are expensed as incurred up to the date the technical feasibility and commercial viability of extracting a mineral resource are demonstrable for a project and on receipt of project development approval from the Board of Directors. The approval from the Board of Directors will be dependent on the Company obtaining necessary permits and licenses to develop the mineral property. At this point, exploration and evaluation assets are assessed for impairment and then reclassified to property, plant and equipment. Capitalized acquisition costs are assessed for impairment at least annually or when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount, with any impairment loss recognized as an expense.
Value-added taxes are included in exploration and evaluation costs when the recoverability of these amounts is uncertain.
Although the Company has taken steps to verify title to exploration and evaluation properties in which it has an interest, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers, non-compliance with regulatory requirements or title may be affected by undetected defects.
| b) | Property, plant and equipment |
Property, plant and equipment is carried at cost less accumulated amortization and accumulated impairment losses. The cost of an item of property, plant and equipment consists of purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use, initial estimates of the costs of dismantling and removing an item and restoring the site on which it is located, and, where applicable, borrowing costs.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Property, plant and equipment, including
major components, are depreciated using the straight-line method over their estimated useful lives, typically ranging from
Right-of-use assets are depreciated using the straight-line method from the date the asset is available for use by the Company to the earlier of the end of the useful life of the right-to-use asset or the end of the lease term. The estimated useful life of the right-to-use assets are determined on the same basis as that of property, plant and equipment.
The Company conducts an annual assessment of the residual balances, useful lives and amortization methods being used for property, plant and equipment and any changes arising from the assessment are applied by the Company prospectively.
| c) | Leases |
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for a consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
| ● | The contract involves the use of an identified asset that is physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then no right of use asset is identified. |
| ● | The Company has the right to obtain substantially all the economic benefits from use of the asset throughout the period of use; and |
| ● | The Company has the right to direct the use of the asset. The Company has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. |
Payments related to short-term leases
and leases of low-value assets are recognized as an expense in profit or loss. Short-term leases are leases with a lease term of
The Company recognizes a right-to-use asset and a corresponding lease liability on the date the leased asset is available for use by the Company.
Page 9 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
The right of use asset and corresponding lease liability are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. The cost of the right of use asset also includes any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or restore the underlying asset or the site on which it is located, less any lease incentives received.
| d) | Reclamation provision |
A reclamation provision is recognized at the time the legal or constructive obligation first arises which is generally the time when the environmental disturbance occurs. Provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and the risks specific to the liability. Upon initial recognition, reclamation costs related to exploration and evaluation activities are included as exploration expenses in net loss. Following the initial recognition of the provision, the carrying amount of the provision is increased for unwinding of the discount and for changes to the discount rate and the amount or timing of cash flows needed to settle the obligation. The unwinding of the discount is recognized as finance expense in net loss while the effect of the changes to the discount rate and the amount or timing of cash flows are recognized in exploration expenses.
| e) | Financial instruments |
Financial instruments are recognized initially at fair value. Subsequent to initial recognition, financial instruments are classified and measured as described below.
Transaction costs associated with financial instruments carried at fair value through profit or loss are expensed as incurred, while transaction costs associated with all other financial instruments are included in the initial carrying amount of the asset or the liability.
| (i) | Financial asset at amortized cost |
Financial assets are recorded at amortized cost if both of the following criteria are met: 1) the objective of the Company’s business model for these financial assets is to collect their contractual cash flows; and 2) the asset’s contractual cash flows represent solely payments of principal and interest.
The Company’s cash and cash equivalents, amounts receivable and due from a related party are recorded at amortized cost as they meet the required criteria.
| (ii) | Financial liabilities |
Accounts payable and accrued liabilities and loans and borrowings are accounted for at amortized cost using the effective interest rate method.
| (iii) | Derivatives |
Derivatives are initially recognized at their fair value on the date the derivative contract is entered into and transaction costs are expensed. The Company’s derivatives are subsequently re-measured at their fair value at each statement of financial position date with changes in fair value recognized in net income or loss. Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to their host contracts. The obligation to issue shares on exercise of Equinox Warrants met the definition of a derivative.
| f) | Share capital |
Common shares are classified as equity. Incremental costs directly attributable to the issuance of common shares are recognized as a deduction from equity, net of any tax effects. If the completion of a share equity transaction is considered likely, professional, consulting, regulatory and other costs directly attributable to financing transactions are recorded as deferred share issue costs until the financing transactions are completed; otherwise, they are expensed as incurred. Deferred share issue costs related to financing transactions that are not completed are charged to expenses. Proceeds related to the issuance of units are allocated between the common shares and warrants on a relative fair value basis where warrants are classified as equity instruments. For warrants classified as derivative liabilities, the fair value of the warrants is determined with the residual amount allocated to common shares.
Page 10 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
| g) | Impairment |
Non-financial assets
The carrying amounts of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs to sell is the amount obtainable from the sale of an asset or cash generating unit in an arm’s length transaction between knowledgeable, willing parties, less costs of disposal. When a binding sale agreement is not available, fair value less costs to sell is estimated using a discounted cash flow approach with inputs and assumptions consistent with those at market. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely independent of cash inflows of other assets or groups of assets (the “cash generating unit” or “CGU”). This generally results in the Company evaluating its non-financial assets on a property-by-property basis.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognized in net income or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount. An impairment charge is reversed through net income or loss only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of any applicable amortization, if no impairment loss had been recognized.
Financial assets
The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the loss allowance for the financial asset is measured at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If, at the reporting date, the credit risk on the financial asset has not increased significantly since initial recognition, the loss allowance is measured for the financial asset at an amount equal to twelve month expected credit losses. For amounts receivable and due from a related party, the Company applies the simplified approach to providing for expected credit losses, which allows the use of a lifetime expected loss provision. Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be objectively related to an event occurring after the impairment was recognized.
| h) | Share-based payments |
Stock options
The Company grants stock options to acquire common shares to directors, officers, employees and consultants. The Board of Directors determines the specific grant terms within the limits set by the Company’s stock option plan.
The fair value of the estimated number of stock options that will eventually vest, determined as of the date of the grant, is recognized as share-based compensation expense over the vesting period of the stock options, with a corresponding increase in shareholders’ equity (in other reserves). The total amount recognized as an expense is adjusted to reflect the number of options expected to vest at each reporting date.
Restricted share units
The Company grants to employees, officers, directors and consultants, restricted share units (“RSUs”) in such numbers and for such terms as may be determined by the Board of Directors. RSUs granted under the RSU plan are exercisable into common shares for no additional consideration after the vesting conditions, as specified by the Board of Directors, are met. The Company intends to settle each RSU with one common share of the Company and therefore RSUs are accounted for as equity-settled instruments.
Page 11 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
RSUs are measured at fair value on the date of grant and the corresponding share-based compensation is recognized over the vesting period in exploration or general and administration expenses, as applicable.
In addition to service conditions, RSUs may have non-market-based performance vesting conditions (“pRSUs”). Share-based compensation for these pRSUs is measured on the grant date but is recognized only when it is more likely than not that the performance vesting conditions will be met.
| i) | Income tax |
Income tax on income or loss comprises current and deferred tax. Income tax is recognized in net income or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.
Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable or receivable related to previous years.
Deferred tax is recognized for differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred taxes are not recorded for temporary differences related to the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, temporary differences arising on the initial recognition of goodwill and temporary differences relating to the investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Deferred taxes are measured at the tax rates that are expected to be applied to temporary differences when they reverse based on laws that have been enacted or substantively enacted at period end.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized.
| j) | Earnings per share |
Basic earnings (loss) per share (“EPS”) is calculated by dividing the income or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted EPS is determined by adjusting the income or loss attributable to common shareholders and the weighted average number of shares outstanding for the effects of all dilutive potential common shares, which comprise the Company’s obligation to issue shares on exercise of Equinox Warrants, the Company’s own warrants, stock options, RSUs and pRSUs. The dilutive effect of these instruments assumes that the proceeds to be received on exercise are applied to repurchase common shares. Dilutive instruments are only included in the dilutive calculations to the extent exercise prices are below the average market price of the common shares. None of the shares issuable on the exercise of options, RSUs, pRSUs, warrants issued by the Company and Equinox Warrants were included in the computation of diluted EPS for periods presented because they are anti-dilutive.
| k) | Adoption of new accounting standards |
Effective January 1, 2024, the Company has adopted ‘Classification of Liabilities as Current or Non-current (Amendments to IAS 1) and Noncurrent Liabilities with Covenants (Amendments to IAS 1)’. In January 2020, the IASB published narrow scope amendments to IAS 1 Presentation of Financial Statements. The narrow scope amendment clarifies that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the expectations of the entity or events after the reporting date. In October 2022, the IASB published an additional narrow scope amendment to IAS 1 Presentation of Financial Statements and reconfirmed that only covenants with which a company must comply on or before the reporting date affect the classification of a liability as current or non-current. Covenants with which the Company must comply after the reporting date do not affect a liability’s classification at that date. The Company has considered the amendments and concluded that there is no material impact on the consolidated financial statements from the adoption of this amendment.
| l) | Accounting standards not yet adopted |
Certain new standards, interpretations, and amendments to existing standards have been issued by the IASB or the International Financial Reporting Interpretations Committee but not yet adopted by the Company. However, these updates either are not applicable to the Company or are not material to the consolidated financial statements.
Page 12 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
| 4. | Use of judgements and estimates |
In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of the Company’s accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Judgements and estimates that have the most significant effect on the amounts recognized in the Company’s consolidated financial statements are as follows:
| a) | Determination of functional currencies |
The functional currency for the Company and its subsidiaries is the currency of the primary economic environment in which the entity operates. The Company has determined the functional currency of Solaris is the Canadian dollar, and the functional currency of each subsidiary entity is the US dollar. Assessment of functional currency involves certain judgements to determine the primary economic environment and the Company reconsiders the functional currency of its entities if there is a change in events and conditions which determined the primary economic environment.
| b) | Reclamation provision |
The ultimate costs for reclamation and rehabilitation are uncertain, and cost estimates can vary in response to many factors, including estimates of the nature, extent and timing of rehabilitation activities, technological changes, regulatory changes, changes in inflation rates, the risk-free interest rate used for discounting future cash flows, foreign exchange rates, and estimates of the underlying currencies in which the provisions will ultimately be settled. The Company estimates its costs based on studies using current restoration standards and techniques, and the provision at the reporting date represents management’s best estimate of the present value of the future rehabilitation costs required. Significant assumptions related to the reclamation provision are disclosed in Note 9.
| c) | Valuation of exploration and evaluation assets |
The application of the Company’s accounting policy for exploration and evaluation assets requires estimates in determining whether it is likely that future economic benefits will flow to the Company, which may be based on assumptions about future events or circumstances. Capitalized acquisition costs are assessed for impairment at least annually or when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. Judgement is required in determining whether indicators of impairment exist, including factors such as the period for which the Company has the right to explore, expected renewals of exploration rights, whether expenditures on further exploration and evaluation of resource properties are planned, results of exploration and evaluation activities on the exploration and evaluation assets and future commodity prices.
| d) | Share-based compensation |
The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock options granted to directors, officers,
employees and consultants of the Company. The use of the Black-Scholes option pricing model requires management to make various estimates
and assumptions that impact the value assigned to the stock options including the expected volatility of the stock price, the risk-free
interest rate, dividend yield, the expected life of the stock options and the number of options expected to vest. The expected term of
the options granted is determined based on historical data of the average hold period before exercise, cancellation or expiry. Expected
volatility is estimated with reference to the historical volatility of the share price of a peer group of companies as applicable given
the short period for which the Company’s shares have been publicly listed. Any changes in these assumptions could change the amount
of share-based compensation recognized. Significant assumptions related to share-based payments are disclosed in Note 12.
| e) | Going concern evaluation |
As discussed in Note 1, these consolidated financial statements have been prepared under the assumptions applicable to a going concern. If the going concern assumption were not appropriate for these consolidated financial statements, then adjustments would be necessary to the carrying value of assets and liabilities, the reported expenses, and the statement of financial position classifications used and such adjustments could be material. The Company reviews the going concern assessment at the end of each reporting period. The Company’s assessment of its ability to continue as a going concern requires significant judgement about whether there are material uncertainties that may cast significant doubt about the Company’s ability to continue as a going concern. The Company must determine whether sufficient financing will be obtained in the near term.
Page 13 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
| 5. | Prepaids and other |
| As at December 31, | Note | 2024 | 2023 | |||||||
| Prepaid expenses and deposits | $ | $ | ||||||||
| Supplies inventory | ||||||||||
| Taxes recoverable | ||||||||||
| Amounts receivable and other | ||||||||||
| Due from a related party | 21 | |||||||||
| $ | $ | |||||||||
| 6. | Exploration and evaluation assets |
| As at December 31, | Note | 2024 | 2023 | |||||||
| La Verde (Mexico) | a) | $ | $ | |||||||
| Warintza (Ecuador) | b) | |||||||||
| ENAMI Concessions (Ecuador) | c) | |||||||||
| Ricardo (Chile) | d) | |||||||||
| Impairment of exploration and evaluation assets | d) | ( | ) | |||||||
| $ | $ | |||||||||
| a) | La Verde |
La Verde is situated in the Sierra Madre
del Sur west of Mexico City in Michoacán State, Mexico and consists of the Unificación Santa Maria claim. The project is
held
| b) | Warintza |
The Company owns a
| c) | ENAMI Concessions |
Solaris has entered into an option
agreement to acquire up to a
The Company made an upfront payment
to ENAMI EP of $
Page 14 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
| d) | Ricardo |
The Company owned a
| e) | Tamarugo |
Tamarugo is a grass-roots copper porphyry
target strategically located in northern Chile approximately 85 kilometres northeast of Copiapo and approximately 65 kilometres southwest
of Codelco’s El Salvador Copper Mine. The Company owns a
| f) | Other projects |
Solaris has earn-in agreements on certain
other projects including the Capricho and Paco Orco projects in Peru. The Capricho project is a
| 7. | Property, plant and equipment |
| Site
infra-structure and equipment | Construction
in progress | Warehouse
& office equipment & furniture | Right-of-use
assets | Total | ||||||||||||||||
| Cost | ||||||||||||||||||||
| As at December 31, 2022 | $ | $ | $ | $ | $ | |||||||||||||||
| Additions | ||||||||||||||||||||
| Transfers | ( | ) | ||||||||||||||||||
| Disposals | ( | ) | ( | ) | ( | ) | ||||||||||||||
| As at December 31, 2023 | $ | $ | $ | $ | $ | |||||||||||||||
| Additions | ||||||||||||||||||||
| Transfers | ( | ) | ||||||||||||||||||
| Disposals | ( | ) | ( | ) | ( | ) | ||||||||||||||
| As at December 31, 2024 | $ | $ | $ | $ | $ | |||||||||||||||
| Accumulated amortization | ||||||||||||||||||||
| As at December 31, 2022 | $ | $ | $ | $ | $ | |||||||||||||||
| Amortization | ||||||||||||||||||||
| Disposals | ( | ) | ( | ) | ||||||||||||||||
| As at December 31, 2023 | $ | $ | $ | $ | $ | |||||||||||||||
| Amortization | ||||||||||||||||||||
| Disposals | ( | ) | ( | ) | ( | ) | ||||||||||||||
| As at December 31, 2024 | $ | $ | $ | $ | $ | |||||||||||||||
| Net book value | ||||||||||||||||||||
| As at December 31, 2023 | $ | $ | $ | $ | $ | |||||||||||||||
| As at December 31, 2024 | $ | $ | $ | $ | $ | |||||||||||||||
Page 15 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
| 8. | Lease liability |
| As at December 31, | 2024 | 2023 | ||||||
| Balance, start of year | $ | $ | ||||||
| Additions | ||||||||
| Modifications | ||||||||
| Interest on lease liability recognized in net loss | ||||||||
| Termination of leases | ( | ) | ||||||
| Lease payments for the year | ( | ) | ( | ) | ||||
| Balance, end of year | $ | $ | ||||||
| Less current portion | ||||||||
| Long-term lease liability | $ | $ | ||||||
During the year ended December 31, 2024, the Company recognized $
| 9. | Reclamation provision |
| As at December 31, | 2024 | 2023 | ||||||
| Balance, start of year | $ | $ | ||||||
| Additions | ||||||||
| Accretion | ||||||||
| Settlement | ( | ) | ( | ) | ||||
| Change in estimate | ( | ) | ||||||
| Balance, end of year | $ | $ | ||||||
The reclamation provision represents
the estimated costs for restoration and rehabilitation for environmental disturbances at Warintza, estimated to be incurred in the year
2027. The total undiscounted estimated cash flows required to settle these obligations as at December 31, 2024 are $
Restricted cash of $
| 10. | Warintza project financing |
On December 11, 2023, the Company
entered into a financing package with OMF Fund IV SPV D LLC and OMF Fund IV SPV E LLC (collectively “OMF”), entities managed
by Orion Mine Finance Management LP, to provide up to approximately $
| i. | Senior Loan – OMF Fund IV SPV D LLC |
A first advance of $
The following table sets out the details of the Company’s loans and borrowings as of December 31, 2024
| As at December 31, | 2024 | 2023 | ||||||
| Balance, start of year | $ | $ | ||||||
| Advances | ||||||||
| Transaction Costs | ( | ) | ( | ) | ||||
| Accrued Interest | ||||||||
| Amortization of transaction cost | ||||||||
| Balance, end of year | $ | $ | ||||||
Page 16 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
Amounts drawn on the Senior Loan bears
interest payable quarterly at the higher of (a) adjusted term secured overnight financing rate (“SOFR”) and (b)
The Company has the option quarterly to elect to pay the interest in cash or accruing it to the principal amount of the Senior Loan and pay it upon maturity. The quarterly interest for the year ended December 31, 2024 was accrued to the principal amount of the Senior Loan. The principal amount and all accrued and unpaid interest are due on its maturity date on December 11, 2027. The Company may prepay all or any part of the principal amount owing at any time without any premium or penalty.
Any net proceeds received by the Company
from the sale of particular assets, the issuance of securities, or compensation for liquidated damages must be allocated toward repaying
a portion or all of the Senior Loan, along with accrued interest. However, this repayment requirement does not apply to net proceeds raised
from the issuance of securities, provided such net proceeds are: (i) used in connection with the Warintza project; or (ii) used for general
corporate and administrative expenses unrelated to the Warintza project in an amount up to $
The Senior Loan is secured by a first-priority
security ranking over the Warintza property and all the presently held and acquired undertakings, property, and assets including the equity
interests in Lowell Mineral Exploration Ecuador S.A. and Lowell Copper Holdings Inc. but excluding subsidiaries and assets that are not
related to the Warintza project. The Company must comply with certain covenants including maintaining a minimum unrestricted balance of
$
| ii. | Equity subscription agreements – OMF Fund IV SPV E LLC (the “Investor”) |
On December 11, 2023, under the terms
of the subscription agreement, the Investor purchased an initial tranche of
| iii. | Offtake agreements |
Under the terms of the offtake agreements,
OMF will purchase the greater of (i)
The offtake agreements will expire 20 years after the achievement of commercial production as defined in the agreements. If commercial production has not been achieved by December 31, 2027, then the term will extend by one year for each calendar year that commercial production has not been achieved, and if commercial production has not been achieved by December 31, 2032, then the term is extended for the duration of the mine life as defined in the offtake agreements.
If prior to the 18-month anniversary
of the Senior Loan closing date a change of control transaction (as defined in the offtake agreements) is approved by the Company’s
board and announced, either party may terminate the offtake agreements prior to the end of the term which will require the Company to
then pay $
| 11. | Derivative |
Pursuant to the Arrangement under
which Equinox distributed
As at December 31, 2023, the Company
no longer had an obligation with respect to the Equinox Warrants as the last tranche of the Equinox Warrants expired on May 7, 2023 (Note
12(iv)). During the year ended December 31, 2023, the Company issued
| As at December 31, | 2023 | |||
| Balance, start of year | $ | |||
| Exercise of warrants | ( | ) | ||
| Change in fair value | ||||
| Foreign exchange on translation | ( | ) | ||
| Balance, end of year | $ | |||
Page 17 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
| 12. | Share capital |
| i. | Common shares |
Authorized:
Issued and fully paid:
| ii. | Share placements |
In addition to the shares issued in
connection with the Warintza project financing (note 10(ii)), on June 10, 2024 the Company issued
| iii. | Share purchase options |
For the year ended December 31, 2024
the Company recognized a share-based compensation expense included in general and administrative expenditures of $
| As at December 31, | 2024 | 2023 | ||||||
| Balance, start of year | ||||||||
| Granted | ||||||||
| Exercised | ( | ) | ( | ) | ||||
| Forfeited / Expired / Cancelled1 | ( | ) | ( | ) | ||||
| Balance, end of year | ||||||||
| 1 |
The weighted average exercise
price per share of options granted, exercised and forfeited / expired / cancelled during the year ended December 31, 2024 was
C$
The assumptions used in the Black-Scholes option pricing model for the options granted in the years ended December 31, 2024 and 2023 were as follows:
| Weighted average | 2024 | 2023 | ||||||
| Exercise price per share issuable | C$ | C$ | ||||||
| Expected term (years) | ||||||||
| Volatility1 | % | % | ||||||
| Expected dividend yield | ||||||||
| Risk-free interest rate | % | % | ||||||
| Weighted average fair value per share | ||||||||
| 1 |
Arrangement options
Pursuant to the Arrangement under which
Equinox distributed the shares of the Company to its shareholders, option holders of Equinox received options of Solaris which were proportionate
to, and reflective of the terms of, their existing options of Equinox (“Arrangement options”). As at December 31, 2023, a
total of
Page 18 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
Solaris options
The following is a summary of the Company’s outstanding and exercisable options as at December 31, 2024:
| Outstanding | Exercisable | |||||||||||||||||||
| Grant date | Exercise price (C$) | Number of options | Weighted average remaining contractual life (years) | Number of options | Weighted average remaining contractual life (years) | |||||||||||||||
| January 2, 2020 | $ | |||||||||||||||||||
| March 20, 2020 | $ | |||||||||||||||||||
| May 27, 2020 | $ | |||||||||||||||||||
| November 2, 2020 | $ | |||||||||||||||||||
| March 16, 2021 | $ | |||||||||||||||||||
| November 10, 2021 | $ | |||||||||||||||||||
| August 9, 2022 | $ | |||||||||||||||||||
| February 24, 2023 | $ | |||||||||||||||||||
| February 23, 2024 | $ | |||||||||||||||||||
| September 18, 2024 | $ | |||||||||||||||||||
| October 4, 2024 | $ | |||||||||||||||||||
| November 19, 2024 | $ | |||||||||||||||||||
| December 13, 2024 | $ | |||||||||||||||||||
| December 20, 2024 | $ | |||||||||||||||||||
| December 27, 2024 | $ | |||||||||||||||||||
| iv. | Restricted share units |
Pursuant to the Arrangement, holders
of Equinox restricted share units (“RSUs”) or RSUs with non-market-based performance vesting conditions (“pRSUs”)
received RSUs or pRSUs of Solaris (“Arrangement RSUs”), which were proportionate to, and reflective of the terms of, their
existing RSUs or pRSUs of Equinox. The holder of the Arrangement RSUs acquires one-tenth of a Solaris share upon vesting. During the year
ended December 31, 2024, there were no RSUs redeemed under the provision of the Company’s RSU plan and as of December 31, 2024,
| v. | Shares issuable for Equinox Warrants |
Pursuant to the Arrangement, upon exercise
of each pre-existing Equinox Warrant, warrant holders were entitled to receive one-fifth of a common share of Equinox and one-twentieth
of a Solaris share. Equinox was obligated to pay to Solaris an amount equal to one-tenth of the proceeds received by Equinox on exercise
of the warrants. During the year ended December 31, 2023,
| vi. | Share purchase warrants |
During the year ended December 31,
2023, the Company received proceeds from exercises of
| 13. | Exploration expenditures |
The Company’s exploration expenditures by activity are as follows:
| For the year ended December 31, | 2024 | 2023 | ||||||
| Salaries, geological consultants and support, and travel | $ | $ | ||||||
| Site preparation, supplies, field and general | ||||||||
| Drilling and drilling related costs | ||||||||
| Assay and analysis | ||||||||
| Community relations, environmental and permitting | ||||||||
| Concession fees | ||||||||
| Studies | ||||||||
| Reclamation provision | ||||||||
| Amortization | ||||||||
| $ | $ | |||||||
Page 19 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
Pursuant to agreements with local communities, the Company is required to make certain monthly community support payments.
The Company’s exploration expenditures by jurisdiction are as follows:
| For the year ended December 31, | 2024 | 2023 | ||||||
| Ecuador | $ | $ | ||||||
| Chile | ||||||||
| Mexico | ||||||||
| Peru and other | ||||||||
| $ | $ | |||||||
| 14. | General and administrative expenditures |
| For the year ended December 31, | 2024 | 2023 | ||||||
| Share-based compensation | $ | $ | ||||||
| Salaries and benefits | ||||||||
| Office and other | ||||||||
| Filing and regulatory fees | ||||||||
| Professional fees | ||||||||
| Marketing and travel | ||||||||
| $ | $ | |||||||
| 15. | Segmented information |
The Company has determined that it has one operating segment, being the exploration of mineral properties.
Information about the Company’s non-current assets by jurisdiction is detailed below:
| As at December 31, | 2024 | 2023 | ||||||
| Mexico | $ | $ | ||||||
| Ecuador | ||||||||
| Chile | ||||||||
| Peru | ||||||||
| Canada | ||||||||
| $ | $ | |||||||
Information about the Company’s impairment losses by jurisdiction is detailed in Note 6 and exploration expenditures by jurisdiction is detailed in Note 13.
| 16. | Non-controlling interest |
The Company, through its
Summarized financial information for the La Verde project is as follows:
| As at December 31, | 2024 | 2023 | ||||||
| Current assets | $ | $ | ||||||
| Non-current assets | ||||||||
| Current liabilities | ( | ) | ||||||
| For the year ended December 31, | 2024 | 2023 | ||||||
| Net loss | $ | $ | ||||||
| Attributable to shareholders of the Company | ||||||||
| Attributable to non-controlling interest | ||||||||
Page 20 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
| 17. | Income tax |
Income tax recovery differs from the amount that would result from applying the Canadian federal and provincial income tax rates to loss before income taxes. These differences result from the following items:
| For the year ended December 31, | 2024 | 2023 | ||||||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | ||
| Combined federal and provincial income tax rates | % | % | ||||||
| Expected income tax recovery | $ | ( | ) | $ | ( | ) | ||
| Non-deductible expenses | ||||||||
| Expiry of losses | ||||||||
| Difference in tax rates in foreign jurisdictions | ||||||||
| Tax effect of temporary differences for which no tax benefit has been recognized | ||||||||
| Foreign exchange and other | ( | ) | ||||||
| Income tax recovery | $ | $ | ||||||
Unused tax losses and other deductible temporary differences for which deferred tax assets have not been recognized are as follows:
| As at December 31, | 2024 | 2023 | ||||||
| Non-capital losses (see below for expiry) | $ | $ | ||||||
| Exploration and evaluation expenditures | ||||||||
| Other | ||||||||
| $ | $ | |||||||
In assessing the recoverability of deferred tax assets other than deferred tax assets resulting from the initial recognition of assets and liabilities that do not affect accounting or taxable profit, management considers whether it is probable that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company has not recognized deferred tax assets for any temporary differences as their utilization is not considered probable at this time.
The non-capital losses may be applied
to reduce future taxable income.
| As at December 31, | 2024 | Expiry | 2023 | Expiry | ||||||||
| Canada | $ | $ | ||||||||||
| Peru | ||||||||||||
| Chile | ||||||||||||
| Mexico | ||||||||||||
| Ecuador | ||||||||||||
| USA | ||||||||||||
| $ | $ | |||||||||||
| 18. | Capital management |
The Company’s primary objective when managing capital is to ensure that it will be able to continue as a going concern and that it has the ability to satisfy its capital obligations and ongoing operational expenses, as well as having sufficient liquidity to fund suitable business opportunities as they arise.
The capital of the Company includes the components of equity attributable to shareholders of the Company and loans and borrowings, net of cash and cash equivalents. Capital is summarized in the following table:
| As at December 31, | 2024 | 2023 | ||||||
| Equity attributable to shareholders of the Company | $ | ( | ) | $ | ||||
| Loans and borrowings | ||||||||
| Less: Cash and cash equivalents | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Page 21 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
The Company manages its capital structure and makes adjustments to it as necessary in light of economic conditions. In order to maintain the capital structure, the Company may, from time to time, issue or buy back equity, repay debt, or sell assets. The Company, upon approval from its Board of Directors, intends to balance its overall capital structure through a combination of equity financing, debt and other forms of financing. The Company did not have any externally imposed restrictions as at December 31, 2024 other than those imposed by the Senior Loan. To effectively manage its capital requirements, the Company has in place a planning and budgeting process to help determine the funds required to ensure the Company has appropriate liquidity to meet its business activities, including planned corporate expenditures, exploration expenses, as well as the development activities for the Warintza project.
| 19. | Financial instrument risk exposure and risk management |
The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management process.
| a) | Credit risk |
Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s financial assets.
The Company is primarily exposed to
credit risk on its cash and cash equivalents and amounts receivable. Credit risk exposure is limited through maintaining its cash with
high-credit quality financial institutions. The carrying value of these financial assets of $
| b) | Interest rate risk |
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Senior Loan which has a floating interest rate.
With all other variables held constant,
a
| c) | Liquidity risk |
Liquidity risk is the risk that the
Company will not be able to meet its financial obligations as they become due. The Company ensures that there is sufficient capital in
order to meet short term business requirements after taking into account the Company’s holdings of cash (Note 1). In December 2023,
the Company completed a financing package consisting of up to $
At December 31, 2024, the Company had contractual cash flow commitments as follows:
| < 1 Year | 1-3 Years | 4-5 Years | > 5 Years | Total | ||||||||||||||||
| Accounts payable and accrued liabilities | $ | $ | $ | $ | $ | |||||||||||||||
| Lease liabilities | ||||||||||||||||||||
| Senior loan principal and interest1 | ||||||||||||||||||||
| Other long-term liability | ||||||||||||||||||||
| Exploration expenses and other | ||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| 1 |
| d) | Foreign currency risk |
The Company is exposed to currency risk on transactions and balances in currencies other than the functional currency. At December 31, 2024, the Company had not entered into any contracts to manage foreign exchange risk.
The functional
currency of the Company is the Canadian dollar, therefore, the Company is exposed to currency risk from the assets and liabilities denominated
in the US dollar. As at December 31, 2024, cash of $
Page 22 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
The Company is also exposed to currency risk on financial assets and liabilities denominated in Peruvian soles, Mexican pesos and Guatemalan quetzals. However, the impact on such exposure is not currently material.
| 20. | Fair value measurements |
The carrying values of cash and cash
equivalents, amounts receivable, due from a related party, restricted cash and accounts payable and accrued liabilities approximate fair
value due to their short terms to maturity. The fair value of loans and borrowings is $
| 21. | Related party transactions |
Compensation of key management personnel
Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company, and comprises the Company’s Executive Chairman, President and Chief Executive Officer, Chief Financial Officer, Senior Vice President Corporate Affairs and Corporate Secretary and Directors.
Key management compensation for the years ended December 31, 2024 and 2023 is comprised of the following:
| For the year ended December 31, | 2024 | 2023 | ||||||
| Share-based compensation | $ | $ | ||||||
| Salaries and benefits | ||||||||
| Professional fees | ||||||||
| $ | $ | |||||||
During 2021, the Company entered an
agreement with Augusta Capital Corporation (“Augusta”) for consulting services. The owner of Augusta Capital Corporation is
the Executive Chairman and a major shareholder of the Company. The total amount charged by Augusta for the year ended December 31, 2024 was
$
Related party arrangement
On January 2, 2020, the Company entered
into an arrangement to share office space, equipment, personnel, consultants and various administrative services with other companies
related by virtue of certain directors and management in common. These services have been provided through a management company equally
owned by each company party to the arrangement. Costs incurred by the management company are allocated and funded by the shareholders
of the management company based on time incurred and use of services. All of the parties have jointly entered into a rental agreement
for office space. If the Company’s participation in the arrangement is terminated, the Company will be obligated to pay its share
of the rent payments for the remaining term of the office space rental agreement. On January 1, 2025, the Company terminated the arrangement
to share office space, equipment, personnel, consultants and various administrative services with other companies related by virtue of
certain directors and management in common. The agreed settlement cost associated with the termination of the agreement was $
The Company was charged for the following with respect to these arrangements in the year ended December 31, 2024 and 2023:
| For the year ended December 31, | 2024 | 2023 | ||||||
| Salaries and benefits | $ | $ | ||||||
| Office and other | ||||||||
| Filing and regulatory fees | ||||||||
| Marketing and travel | ||||||||
| $ | $ | |||||||
Page 23 of 24
Solaris Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
(In thousands of United States dollars, unless otherwise noted)
| 22. | Commitments |
The Company is committed to payments
related to exploration expenses and other of $
| 23. | Supplemental cash flow information |
| For the year ended December 31, | 2024 | 2023 | ||||||
| Non-cash items: | ||||||||
| Accrued share issuance and finance costs | $ | $ | ||||||
| Accrued interest expense | $ | $ | ||||||
| Right of use asset acquired | $ | $ | ||||||
| 24. | SUBSEQUENT EVENT |
On January 15, 2025, the Company issued
Page 24 of 24