Filo Mining
Annual Report 2023

Plain-text annual report

2023 YEAR END REPORT Management’s Discussion and Analysis and Consolidated Financial Statements For the Twelve Months Ended December 31, 2023 (AUDITED) FILO CORP. MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2023 (Amounts in Canadian Dollars unless otherwise indicated) This management’s discussion and analysis (“MD&A”) of Filo Corp. (“Filo” or the “Company”) should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 and related notes therein (“2023 Financial Statements”). The financial information in this MD&A is reported in Canadian dollars unless otherwise indicated and is partly derived from the Company’s consolidated financial statements prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”). The effective date of this MD&A is March 20, 2024. Additional information about the Company and its business activities is available on SEDAR+ at www.sedarplus.ca and the Company’s website www.filocorp.com. The Company’s common shares trade on the Toronto Stock Exchange under the symbol "FIL", the NASDAQ First North Growth Market under the symbol "FIL" and on the OTCQX under the symbol “FLMMF”. Effective June 23, 2023, the Company’s name was changed to Filo Corp., formerly Filo Mining Corp., to better align with the Company’s strategic vision. Some of the statements in this MD&A are forward-looking statements that are subject to risk factors set out in the cautionary note contained herein. CORE BUSINESS AND STRATEGY Filo is a mineral exploration company, focused on its 100% controlled Filo del Sol project (“Filo del Sol” or the “Filo del Sol Project”), which is comprised of two adjacent land holdings: the Filo del Sol property located in San Juan Province, Argentina, and the Tamberias property, located in Region III, Chile. The Filo del Sol Project is located in the emerging Vicuña District, located between the prolific Maricunga and El Indio mining districts. The region is an established mining jurisdiction and hosts a number of large-scale mining operations. The project area is covered under the Mining Integration and Complementation Treaty between Chile and Argentina, which provides the framework for the development of cross border mining projects. The Company’s strategy is to create value for its shareholders by expanding and increasing the confidence in and continuity of the resources and reserves at the Filo del Sol Project through further exploration, and by advancing engineering and other studies that are required to prepare the Filo del Sol Project for eventual development. 2023 HIGHLIGHTS During 2023, the Company successfully delivered its most extensive drilling campaign to date, completing 37,188m of resource drilling and 1,597 metres of geotechnical drilling. The Company’s interpretation of the high-grade Aurora Zone has improved dramatically and drilling has continued to expand the footprint of the Filo del Sol deposit via numerous small and large step-out holes. Calendar year (and subsequent to) highlights included: • Assay results announced for holes FSDH097, FSDH098 and FSDH100, which span a total distance of 1.6km, expand the Filo deposit to the west along the entire distance between the holes drilled. FSDH100 is an example of the successful Aurora Zone step-out drilling conducted by the Company, adding over 500m in depth beyond the current resource pit shell and extending the western margin of the deposit by 250m; • Assay results announced for holes FDSH086, FSDH089 and FSDH095 highlight the precious metals-rich nature of the Filo deposit. All three holes encountered the high-grade silver zone, and hole FSDH086 intersected a new phase of the porphyry, encountering high-grade porphyry-style mineralization with unusually higher gold grades and copper hosted by a chalcopyrite-bornite assemblage. Located at the northwestern edge of the Aurora Zone, the results demonstrate the significant potential that exists at Filo to find new styles of mineralization; • Assay results announced for holes FSDH093 and FSDH094, which were collared 500m apart, filled critical high- grade gaps in the Company’s interpretation as well as extending Aurora to the northeast. The high-grade 1 porphyry zone at depth in hole FSDH093 is similar to, and over 300m away from, the intersection of hole FSDH086; • Assay results announced for hole FSDH084 resulted in the second-best hole from a grade-thickness perspective ever drilled at the Filo del Sol Project. The results of hole FSDH084 confirmed the continuity of high-grade mineralization within the Aurora Zone, including the high-grade Breccia 41 Zone; • Assay results from holes FSDH087, FSDH090 and FSDH091 support the idea of continuous mineralization across the 1.3km distance between the Aurora and Bonita Zones. Additional holes in this area are underway, some of which have been completed with assays pending, which will provide critical information on the continuity of mineralization from Tamberias in the south to Bonita in the north (a distance of over five kilometres); • Assay results for hole FSDH091 resulted in the first intersection of high-grade mineralization near the Bonita Zone, and the first instance of consistent grades greater than 1% CuEq outside the Aurora Zone. FSDH091 included a high-grade section averaging 1.15% CuEq over 212m. At over 1km north of the Aurora Zone, the results from this hole opened up an entirely new area to explore for high-grade mineralization; • • In June 2023, the Company closed a $130.0 million private placement, raising funds at market prices with limited dilution and with strong support from existing shareholders and institutional investors; In June 2023, the Company announced a corporate name change to “Filo Corp.” to better align with the Company’s strategic vision. Q4 2023 DRILLING AND ASSAY RESULTS Drilling and assay results disclosed by the Company during and subsequent to the year ended December 31, 2023 are summarized in the following table: Hole-ID FSDH068A incl. incl. incl. FSDH069A incl. and incl. incl. FSDH070A incl. incl. FSDH071 incl. incl. incl. FSDH072 incl. incl. FSDH073 incl. incl. FSDH074 incl. From (m) To (m) 18.0 1,794.0 94.0 54.0 394.0 1,514.0 574.0 1,298.2 138.0 1,434.5 404.0 435.0 498.0 1,096.0 792.0 886.0 282.0 1,338.5 369.7 1,040.0 540.0 712.0 292.0 1,320.0 580.0 408.0 514.0 574.0 776.0 1,013.5 484.0 1,712.0 650.0 1,472.0 998.0 1,328.0 404.5 1,388.4 600.0 1,214.0 756.0 1,028.0 278.0 1,300.0 644.0 1,160.0 Length (m) 1,776.0 40.0 1,120.0 724.2 1,296.5 31.0 598.0 94.0 1,056.5 670.4 172.0 1,028.0 172.0 60.0 237.5 1,228.0 822.0 330.0 983.9 614.0 272.0 1,022.0 516.0 Cu (%) 0.45 0.65 0.59 0.69 0.60 0.00 0.92 1.78 0.54 0.63 0.75 0.78 1.44 2.18 1.04 0.55 0.68 0.88 0.62 0.74 0.92 0.49 0.61 Au (g/t) 0.30 0.92 0.38 0.45 0.38 0.27 0.57 1.37 0.38 0.41 0.47 0.47 0.82 1.64 0.68 0.33 0.42 0.61 0.32 0.41 0.52 0.19 0.21 Ag (g/t) 4.0 8.1 5.3 6.8 13.9 127.0 19.3 26.3 4.0 5.3 5.9 6.7 12.6 16.9 6.0 4.4 4.4 2.3 4.0 3.2 3.2 4.4 3.2 CuEq1 (%) 0.70 1.39 0.92 1.08 1.00 1.51 3.01 0.86 0.97 1.15 1.16 2.14 3.53 1.49 0.83 1.02 1.35 0.89 1.06 1.33 0.66 0.79 2 Hole-ID incl. FSDH075 incl. and incl. incl. FSDH076 incl. and incl. and incl. FSDH077 plus FSDH078 plus plus FSDH079 FSDH080 incl. incl. incl. and incl. FSDH081 FSDH082 FSDH083 incl. and incl. FSDH084 incl. and incl. incl. incl. FSDH085 Plus incl. incl. FSDH086 incl. and incl. and incl. and incl. FSDH087 incl. incl. and incl. and incl. and incl. incl. incl. and incl. To (m) From (m) 840.0 1,092.0 197.1 1,562.0 268.0 197.1 796.0 1,562.0 910.4 1,202.0 180.0 1,543.0 850.9 496.0 952.0 1,120.0 1264.0 1,490.0 194.0 920.2 348.0 422.0 579.0 76.0 122.0 1,347.5 122.0 1,058.0 216.0 122.0 148.0 126.0 882.0 494.0 242.0 192.0 192.0 404.0 334.0 392.0 516.0 68.0 418.7 1,549.8 560.0 672.0 970.0 1,180.0 170.0 1,575.8 394.0 440.0 616.0 1,258.0 827.8 772.0 812.0 778.0 26.0 18.0 320.0 1,199.0 658.0 1,114.4 667.0 658.0 400.0 1,414.0 438.0 410.0 532.8 567.5 618.0 1,414.0 1,370.0 1,414.0 42.0 1,472.0 292.0 1,472.0 194.0 190.0 233.0 232.0 304.0 300.0 442.0 350.0 374.0 358.0 440.0 436.0 940.0 937.5 Length (m) 252.0 1,364.9 70.9 766.0 291.6 1,363.0 354.9 168.0 226.0 2.0 516.2 14.0 30.0 63.0 8.0 1,225.5 936.0 94.0 22.0 388.0 50.0 Au Cu (g/t) (%) 0.23 0.65 0.12 0.31 0.19 0.33 0.13 0.40 0.18 0.52 0.35 0.48 0.40 0.63 0.48 0.52 0.55 0.42 0.05 10.35 0.11 0.11 1.28 1.16 0.77 0.01 0.66 0.87 0.40 0.25 0.29 0.39 0.33 0.42 0.42 1.02 0.35 2.25 0.36 0.39 0.13 0.16 No significant values 1,131.1 112.0 210.0 1,405.8 46.0 642.0 55.8 34.0 8.0 879.0 456.4 9.0 1,014.0 28.0 34.7 796.0 44.0 1,430.0 1,180.0 4.0 1.0 4.0 92.0 16.0 4.0 2.5 0.43 0.52 0.61 0.62 0.01 1.01 2.98 3.68 0.98 0.32 0.38 0.33 0.66 0.01 0.51 0.77 1.14 0.40 0.46 1.41 2.04 4.49 0.75 2.97 1.58 2.00 0.15 0.17 0.22 0.43 0.38 0.70 2.73 3.73 3.15 0.13 0.14 0.07 0.39 0.21 0.17 0.46 0.83 0.16 0.17 0.33 1.02 4.10 0.40 1.81 0.41 0.48 Ag (g/t) 3.6 2.9 15.4 1.3 1.2 3.9 10.0 1.1 1.2 0.5 0.9 0.5 34.6 27.8 8.9 8.9 11.3 5.8 1.0 20.7 7.2 2.8 6.2 2.1 23.2 310.2 20.6 92.8 110.5 433.8 6.0 5.8 156.8 9.3 87.0 69.0 4.2 7.5 4.3 3.7 49.9 6.6 147.0 11.3 50.1 33.0 145.2 CuEq1 (%) 0.85 0.42 0.60 0.51 0.66 0.77 1.01 0.88 0.87 0.20 2.10 1.59 0.61 0.67 0.77 1.38 2.51 0.83 0.32 0.57 0.70 0.80 1.13 1.70 5.79 7.37 7.09 0.47 0.53 1.76 1.02 1.24 1.14 1.81 0.55 0.61 2.09 2.84 8.77 1.14 4.73 2.17 3.63 3 Hole-ID FSDH088 incl. FSDH089 incl. incl. and incl. and incl. incl. FSDH090 incl. and incl. and incl. and incl. FSDH091 incl. and incl. and incl. incl. FSDH093 incl. incl. and incl. FSDH094 incl. and incl. FSDH095 incl. and incl. FSDH097 incl. incl. incl. incl. and incl. FSDH098 FSDH100 incl. FSGT006 incl. From (m) To (m) 66.0 1,058.0 436.0 1,018.0 677.0 136.0 416.0 328.0 350.0 336.0 394.0 386.0 677.0 452.0 452.0 538.0 100.0 1,618.5 130.0 108.0 272.0 268.7 539.1 540.0 665.0 1,322.0 168.0 1,536.0 200.0 185.5 504.0 508.0 672.8 1,510.0 872.0 1,084.0 338.8 1,788.0 492.0 1,144.0 804.0 1,080.0 1,674.0 1,750.0 192.0 1,490.0 416.0 364.0 748.0 444.0 496.0 122.0 294.0 274.0 332.0 427.1 368.0 1,445.0 368.0 1,126.0 521.0 372.0 474.0 450.0 474.0 466.0 944.0 707.0 410.0 1,363.8 887.3 256.0 360.0 340.0 48.0 36.0 44.0 40.0 Length (m) 992.0 582.0 541.0 88.0 14.0 8.0 225.0 86.0 1,518.5 22.0 3.3 0.9 657.0 1,368.0 14.5 4.0 837.2 212.0 1,449.2 652.0 276.0 76.0 1,298.0 52.0 304.0 374.0 20.0 95.1 1,077.0 758.0 149.0 24.0 8.0 237.0 953.8 631.3 20.0 12.0 4.0 Cu Ag Au (%) (g/t) (g/t) 0.36 3.7 0.32 0.41 5.4 0.38 0.61 49.2 0.65 0.18 278.5 0.77 0.04 754.4 1.60 0.14 904.7 0.54 1.00 3.8 0.94 1.22 6.9 1.34 0.31 10.3 0.11 0.07 490.8 0.06 2.64 127.2 0.92 2.66 132.6 2.04 0.44 2.0 0.14 0.40 2.5 0.19 0.42 30.2 0.97 1.94 9.8 1.20 0.53 1.9 0.21 0.84 2.2 0.40 0.41 5.0 0.21 0.55 8.6 0.25 0.66 6.7 0.31 0.63 2.5 0.26 0.59 15.0 0.40 0.59 252.4 0.47 0.84 9.4 0.53 0.41 69.3 0.38 0.38 0.31 1,209.9 0.79 2.8 0.59 0.52 22.4 0.25 0.53 31.0 0.30 0.35 128.0 0.10 0.36 366.8 0.15 0.44 725.2 0.19 0.73 3.0 0.60 0.31 2.1 0.13 0.38 5.8 0.35 95.8 0.42 0.29 14.1 5.21 0.07 18.8 0.09 10.25 CuEq1 (%) 0.63 0.73 1.51 1.72 2.26 0.48 4.43 5.31 0.56 0.56 2.90 0.70 1.15 0.61 0.81 0.95 0.84 1.01 3.15 1.30 1.30 1.24 0.89 1.03 1.20 0.42 0.68 (1) Copper Equivalent is calculated based on US$ 3.00/lb Cu, US$ 1,500/oz Au and US$ 18/oz Ag, with 80% metallurgical recoveries assumed for all metals. The formula is: CuEq % = Cu % + (0.7292 * Au g/t) + (0.0088 * Ag g/t) 4 Additional information on these drilling results is disclosed in the Company’s press releases. As of the date of this MD&A, additional holes have been completed with assays pending, which include: • FSDH101 • FSDH102 • FSDH104 • FSDH105 • FSDH106 • FSDH108 • FSDH111 Assay results for completed holes will be released as they are received, analyzed, and confirmed by the Company. OUTLOOK Drilling continues to be the Company’s primary focus with nine drill rigs operating at site. The planned 2024 drilling program is expected to be the Company’s most ambitious program to date, including 40,000m of drilling planned with a renewed focus on exploration growth with multiple step-out targets from zones of known mineralization. Drilling will remain a mix of both large and small step-outs in all directions from the Aurora Zone, as well as resource definition drilling within it. The Company continues to maintain a strong focus on improving drill productivity through a variety of initiatives. Data collected from the current campaign is being used to develop a comprehensive geological model which will guide further exploration and form the basis of an eventual update to the Mineral Resource estimate. The Company is continuing preliminary metallurgical testwork on the sulphide mineralization, as well as environmental and social baseline programs in support of future project permitting. The Company’s plans and timelines are subject to equipment and staff availability, along with being able to operate safely and effectively and in accordance with the Company's health and safety protocols. BHP ANTI-DILUTIVE TOP-UP RIGHTS AND SHAREHOLDING On February 7, 2023, the Company closed a non-brokered private placement to BHP Western Mining Resources International Pty Ltd, a wholly owned subsidiary of BHP Group Limited (collectively, "BHP"), whereby the Company issued 43,711 common shares to BHP for gross proceeds of $1,084,907 (the "Anti-dilution Top-Up"). The Anti-dilution Top-Up was undertaken pursuant to the terms of the March 11, 2022 private placement (the "Private Placement"), whereby BHP was granted certain anti-dilutive rights, allowing BHP to top-up and maintain its pro rata ownership interest in the Company from time to time (see news releases dated February 28, 2022 and March 11, 2022). BHP also participated in the Company’s $130 million private placement, completed on June 14, 2023, increasing their ownership of Filo to approximately 6%. RESULTS FROM OPERATIONS Year ended December 31, 2023 2022 Net loss (000’s) Total assets (000’s) Loss per share, basic and diluted $ $ 115,113 $ 68,961 $ 124,389 85,964 0.90 $ 0.57 $ 2021 32,419 30,660 0.29 Filo is an exploration company and, as such, its net losses are largely driven by its exploration and project investigation activities. There is no expectation of generating operating profits until it develops a commercially viable mineral deposit. 5 Key financial results for the last eight quarters are provided in the table below. Three Months Ended Dec-23 Sep-23 Jun-23 Mar-23 Dec-22 Sep-22 Jun-22 Mar-22 Exploration costs ($000's) 36,286 36,657 35,879 34,309 25,604 19,915 22,136 14,869 Operating loss ($000’s) 40,689 39,745 39,430 39,254 28,608 26,238 23,666 17,013 Net loss ($000’s) 32,157 23,379 29,664 29,914 21,008 20,040 13,513 14,400 Net loss per share, basic and diluted ($) 0.25 0.18 0.24 0.24 0.17 0.16 0.11 0.12 Costs increased during the three months and year ended December 31, 2023 as compared to 2022 with increased drilling and related activities being undertaken by the Company. Other relevant factors, such as the financial position of the Company, other corporate initiatives, and the scope of planned exploration/project work, could affect the level of exploration activities, operating loss, and net loss in any particular period. For the three months and year ended December 31, 2023, Filo incurred net losses of $32.2 million and $115.1 million, respectively (2022 – $21.0 million and $69.0 million) including operating losses of $40.7 million and $159.1 million, respectively (2022 – $28.6 million and $95.5 million) and net gains of $7.6 million and $38.6 million, respectively, from the use of marketable securities (2022 – $8.4 million and $25.0 million). Exploration and project investigation costs are generally the most significant expenses for the Company and for the three months and year ended December 31, 2023, they accounted for approximately 89% and 90% of the operating losses, respectively (2022 – 90% and 86%). The Company expenses its exploration costs through the consolidated statement of comprehensive loss, except for mineral property option payments and mineral property acquisition costs, which are capitalized. Exploration and project investigation expenses for the three months and year ended December 31, 2023 were $36.3 million and $143.1 million, respectively, which increased relative to expenses of $25.6 million and $82.5 million incurred during the comparative periods in 2022. The period-over-period increases are primarily the result of a larger drilling program being undertaken. The Company completed resource drilling of 9,961m and 37,188m during the three months and year ended December 31, 2023, respectively, compared to 6,060m and 19,954m drilled in 2022, increases of 64% and 86%. The detailed categories of exploration and project investigation expenses are as follows: Year ended December 31, Land holding and access costs Drilling, fuel, camp costs and field supplies Roadwork, travel and transport Conceptual and engineering studies Consultants, geochemistry and geophysics Environmental and community relations VAT and other taxes Write-down of VAT receivable Office, field and administrative salaries, overhead and other administrative costs COVID-19-related health and safety Share-based compensation 2023 $ 224,843 $ 75,891,640 20,681,907 5,946,832 4,121,064 2,614,673 2022 905,932 42,030,383 13,529,981 320,280 1,511,590 1,784,545 23,505,911 10,950,266 - 2,812,565 8,612,891 2,557 1,528,634 6,069,360 837,321 1,771,712 $ 143,130,952 $ 82,523,935 6 Excluding share-based compensation expense, general and administration costs for the three months and year ended December 31, 2023 totalled $3.6 million and $9.3 million, respectively (2022 – $1.4 million and $5.3 million). The increases are due primarily to higher general office and public company maintenance costs, such as stock exchange and regulatory fees and insurance costs. Salaries and benefits increased by $1.2 million and $2.1 million during the three months and year ended December 31, 2023, due primarily to executive and head office personnel additions. Total share-based compensation expense for the three months and year ended December 31, 2023, was $1.1 and $8.2 million, respectively (2022 – $2.0 million and $9.5 million). Share based compensation is a non-cash cost which reflects the amortization of the estimated fair value of share options over their vesting period. The fair value of share options is calculated using the Black-Scholes pricing model, which relies heavily on the Company’s share price and historical share price volatility. Due to the material increase in the Company’s share price and volatility since 2021, the calculated fair value of the Company’s share options has increased considerably, resulting in a higher share option value and resultant share-based compensation expense being recognized. The actual future value to the option holders may differ materially from these estimates as it depends on the trading price of the Company’s shares if and when the options are exercised. In addition, as the granting of options and their vesting is at the discretion of the Board, the related expense is unlikely to be uniform across quarters or financial years. Interest income for the three months and year ended December 31, 2023 was $1.6 million and $5.1 million, respectively (2022 – $0.8 million and $1.8 million). Interest income has increased due to the increase in the Company’s average cash balance combined with increases in the interest rates offered by the financial institutions with which the Company holds funds. During the three months and year ended December 31, 2023, the Company recognized net monetary gains of $1.3 million and $1.5 million, respectively (2022 – loss of $0.1 million and gain of $0.5 million) in relation to the application of hyperinflationary accounting for the Company’s Argentinian subsidiary. The monetary gains and losses recognized are the result of changes in the Argentinian price indices and changes to the Company’s net monetary position during the three months and year ended December 31, 2023. Further discussion regarding the application of hyperinflationary accounting has been provided in the note 4 to the 2023 Financial Statements. From time to time, the Company acquires and transfers marketable securities as a mechanism to facilitate intragroup funding transfers between its Canadian headquarters and its Argentinian operating subsidiary. As a result of these funding transactions, for the three months and year ended December 31, 2023, the Company recognized gains of $7.6 million and $38.6 million, respectively (2022 – $8.4 million and $25.0 million) on the use of marketable securities for such purposes, which represents the net benefit of having used this funding mechanism over traditional methods. The period-over-period increase is primarily the result of increased funding provided to the Argentinian subsidiary to facilitate the Company’s expanded drilling program. Other foreign exchange for the three months and year ended December 31, 2023 totalled losses of $0.8 million and $29,073, respectively (2022 – loss of $0.2 million and gain of $0.5 million), which is the result of the impact appreciation of the US dollar relative to the Canadian dollar on the Company’s US dollar-denominated cash and cash equivalents, from the time of when the US dollars were purchased through December 31, 2023. In other comprehensive income, the Company reported foreign exchange translation losses of $0.1 million and $0.5 million for the three months and year ended December 31, 2023, respectively (2022 – gains of $0.6 million and $0.5 million) on translation of subsidiary company accounts from their respective functional currencies to the Canadian dollar presentation currency. For the three months and year ended December 31, 2023, the impact of hyperinflation amounted to loss of $1.7 million and a gain of $3.8 million, respectively (2022 – gains of $0.4 million and $0.8 million) which consists of adjustments recognized on the continuing inflation of opening non-monetary balances during the period and the ongoing translation of the Company’s Argentinian subsidiary into the Canadian dollar presentation currency. LIQUIDITY AND CAPITAL RESOURCES As at December 31, 2023, the Company had cash and cash equivalents of $108.1 million and net working capital of $87.0 million, compared to cash and cash equivalents of $74.9 million and net working capital of $60.3 million as at December 31, 2022. The increase in the Company’s cash and cash equivalents and net working capital is due the non- 7 brokered private placement completed in June 2023 which resulted in net proceeds of $129.1 million, plus the net $1.1 million BHP Top-Up and $4.9 million in gross proceeds received by the Company in relation to the exercise of stock options during the year ended December 31, 2023. These cash inflows were offset by funds used in operations and for general corporate purposes, plus amounts used in the acquisition of mineral properties ($1.0 million) and equipment and facilities for the Filo del Sol Project ($5.5 million). The Company will continue to deploy the majority of its treasury to fund ongoing advancement of the Filo del Sol Project and, to a lesser extent, for working capital and general corporate purposes. The Company does not currently generate income from operations. The Company has sufficient working capital for the Company to fund operations for the near term. However, the Company will need further funding to support the advancement of the Filo del Sol Project towards development and to meet general corporate and working capital requirements. Historically, capital requirements have been funded through equity financing. While management is confident that additional sources of funding will be secured to fund potential future expenditures, factors that could affect the availability of financing include the progress and results of ongoing project exploration and evaluation activities at the Company’s Filo del Sol Project, the state of international debt and equity markets, investor perceptions and expectations of the global copper, gold, and/or silver markets. Based on the amount of funding raised, the Company’s planned initiatives and other work programs may be postponed, or otherwise revised, as necessary. RELATED PARTY TRANSACTIONS Under the normal course of operations, the Company may undertake transactions or hold balances with related parties. During the year ended December 31, 2023, the Company engaged with NGEx Minerals Ltd. (“NGEx Minerals”), a related party to the Company by way of directors, officers and shareholders in common. Related party services The Company has an ongoing cost sharing arrangement with NGEx Minerals. Under the terms of this arrangement, the Company provides management, technical and/or administrative services (collectively, “Management Services”) to NGEx Minerals and vice versa. These transactions were incurred in the normal course of operations, and are summarized as follows: Management Services to NGEx Minerals $ 436,784 $ 902,414 Management Services from NGEx Minerals (285,642) (364,343) Year ended December 31, 2023 2022 Related party balances The amounts due from (to) related parties, and the components of the consolidated statement of financial position in which they are included, are as follows: Receivables and other assets Related Party NGEx Minerals December 31, 2023 52,858 $ December 31, 2022 186,449 $ Accounts payable and accrued liabilities NGEx Minerals (67,466) (112,163) 8 Camp usage agreement On June 26, 2019, the Company, through a wholly-owned subsidiary, entered into a transaction with a wholly-owned subsidiary of Josemaria Resources Inc., a former related party (“Josemaria”, a 100%-owned subsidiary of Lundin Mining Corporation) whereby the Company extended its right to use Josemaria’s Batidero Camp in Argentina. The agreement may be terminated with one year’s prior notice by Josemaria, and in the absence of such notice the agreement may be renewed for another year at the Company’s election. On March 7, 2024, Filo provided formal notice of renewal for the period through April 1, 2025. Key management compensation The Company’s key management personnel have the authority and responsibility for overseeing, planning, directing and controlling its activities and consist of the Board of Directors and members of the executive management team. Total compensation expense for key management personnel, and the composition thereof, is as follows: Salaries Short-term employee benefits Directors’ fees Stock-based compensation Incentive bonuses Year ended December 31, 2023 2022 $ 1,900,000 $ 1,346,667 32,309 391,642 6,056,367 1,678,750 32,369 233,056 6,910,772 1,165,000 $ 10,059,068 $ 9,687,864 MATERIAL ACCOUNTING POLICIES The Company’s material accounting policies are described in Note 3 the consolidated financial statements for the year ended December 31, 2023, as filed on SEDAR+ at www.sedarplus.ca. New Accounting Pronouncements As at December 31, 2023, there are no IFRS Accounting Standards or International Financial Reporting Interpretations Committee interpretations that are not yet effective or early adopted that are expected to have any impact on the Company. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS The preparation of the consolidated financial statements in accordance with IFRS Accounting Standards, such as the underlying consolidated financial statements for the year ended December 31, 2023, requires management to make estimates, assumptions and judgements that affect the reported amounts of assets, liabilities and expenditures. These estimates, assumptions and judgements are based on management’s best knowledge of the relevant facts and circumstances taking into account previous experience. Actual results could differ and such differences could be material. Estimates, assumptions and judgements are reviewed on an ongoing basis and are based on historical experience and other facts and circumstances. Revisions to estimates, assumptions and judgements, and the resulting effects on the carrying amounts of the Company’s assets and liabilities, are accounted for prospectively. Information about estimates, assumptions, judgements and other sources of estimation uncertainty as at December 31, 2023 that have a risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next year are provided below: 9 Valuation of mineral properties The Company carries the acquisition costs of its mineral properties at cost less any provision for impairment. At each reporting period, management applies judgement in assessing whether there are any indicators of impairment relating to mineral properties. If any such indicator exists, then an impairment test is performed by management, which also requires the Company to make significant judgments and estimates. Information considered by management in assessing indicators of impairment may include the period for which the entity has the right to conduct its exploration and project investigation activities, including expected renewals, whether substantive expenditure on further exploration and project investigation of mineral properties is budgeted, the evaluation of the results of exploration and project investigation activities up to the reporting date and other information that may indicate that the carrying value of mineral properties may not be recovered in full from successful development or sale of the asset. The judgments and estimates mentioned above are subject to various risks and uncertainties, which may ultimately have an effect on the expected recoverability of the carrying values of the mineral properties. The Company has determined that no indicators of impairment exist for its mineral properties as of December 31, 2023. FINANCIAL INSTRUMENTS The Company’s financial instruments consist of cash, receivables and other assets, and trade payables and accrued liabilities. The carrying values of the Company’s financial instruments are considered to be reasonable approximations of fair value due to their anticipated short-term nature. As at December 31, 2023, the Company’s financial instruments are exposed to the following financial risks, including credit, liquidity and currency risks: (i) Credit risks associated with cash are minimal as the Company deposits the majority of its cash with large financial institutions that have been accorded a strong investment grade rating by a primary rating agency. (ii) Liquidity risks associated with the inability to meet obligations as they become due are minimized through the management of its capital structure and by maintaining good relationships with significant shareholders and creditors. The Company also closely monitors and reviews its costs to date and actual cash flows on a monthly basis. The maturities of the Company’s financial liabilities as at December 31, 2023, are as follows: Total Less than 1 year 1-5 years More than 5 years Accounts payable and accrued liabilities Total $ 22,442,523 $ 22,442,523 $ $ 22,442,523 $ 22,422,523 $ - $ - $ - - (iii) Foreign currency risk can arise when the Company or its subsidiaries transact or have net financial assets or liabilities which are denominated in currencies other than their respective functional currencies. At December 31, 2023, the Company’s largest foreign currency risk exposures existed at the level of its Canadian headquarters, where the Company held a net financial asset position denominated in US dollars having a Canadian dollar equivalent of approximately $65.9 million. A 10% change in the foreign exchange rate between the US dollar and the Canadian dollar, the functional currency of Filo, would give financial to an position/comprehensive loss. increase/decrease of approximately $6.6 million rise in 10 OUTSTANDING SHARE DATA As at March 20, 2024, the Company had 130,733,167 common shares outstanding and 5,783,966 share options outstanding under its share-based incentive plan. FINANCIAL INFORMATION The Company’s next scheduled financial report will be for the three months ended March 31, 2024, which is expected to be published on or around May 8, 2024. DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING Disclosure controls and procedures (“DC&P”) DC&P are designed to provide reasonable assurance that information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in the securities legislation. They include controls and procedures designed to ensure that information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted under securities legislation is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. There have not been any material changes in the Company’s DC&P during the year ended December 31, 2023. Internal controls over financial reporting (“ICFR”) The Company’s ICFR are designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with IFRS Accounting Standards. The Company’s ICFR include policies and procedures that: pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with IFRS Accounting Standards; that receipts and expenditures are being made only in accordance with authorization of management and directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements. Any system, no matter how well conceived or operated, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable, not absolute, assurance with respect to financial statement preparation and presentation and will not prevent all, or detect all, misstatements and frauds. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any control system also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Management uses the Internal Control – Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations for the Treadway Commission (COSO) in order to assess the effectiveness of the Company’s ICFR. There have not been any material changes in the Company’s internal controls during the year ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s ICFR. 11 RISKS AND UNCERTAINTIES The operations of the Company are speculative due to the high-risk nature of its business, which includes the acquisition, financing, exploration, development and operation of mineral and mining properties. There are a number of factors that could negatively affect the Company’s business and the value of its common shares, and these risk factors could materially affect the Company’s future operations and financial position and could cause actual events to differ materially from those described in forward-looking statements relating to the Company. Significant risk factors have been identified by the Company and are listed below. Further discussion and additional risk factors are also available in the Company’s most recent annual information form, as filed on SEDAR+ at www.sedarplus.ca. The following information pertains to the outlook and conditions currently known to the Company that could have a material impact on the financial condition of the Company. Other factors may arise that are not currently foreseen by management of the Company that may present additional risks in the future. Current and prospective security holders of the Company should carefully consider these risk factors, as they could materially affect the Company’s future operations and could cause actual events to differ materially from those described in forward-looking statements relating to the Company. Exploration and Development Risk Mineral exploration, development and operations generally involve a high degree of risk that cannot be eliminated, and which can adversely impact the Company’s success and financial performance. Exploration for and development of mineral deposits involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. Discovery of mineral deposits is dependent upon a number of factors, not the least of which are the technical skills of the exploration personnel involved and the capital required for the programs. The cost of conducting programs may be substantial and the likelihood of success is difficult to assess. There is no assurance that the Company’s mineral exploration activities will result in any discoveries of new bodies of commercial ore. There is also no assurance that even if commercial quantities of ore are discovered that a new ore body would be developed and brought into commercial production. The commercial viability of a mineral deposit once discovered is dependent upon a number of factors, some of which are discussed elsewhere in this MD&A, and include the particular attributes of the deposit (such as size, grade, metallurgy, expected recovery rates of metals from the ore and proximity to infrastructure and labour), the interpretation of geological data obtained from drilling and sampling, feasibility studies, the ability to acquire and access land, the availability and cost of water and power, anticipated climatic conditions; cyclical metal prices; fluctuations in inflation and currency exchange rates, higher input commodity and labour costs, commodity price fluctuations, government regulations, including regulations relating to prices, taxes, royalties, land tenure and use, allowable production, importing and exporting of minerals, and environmental protection. Most of the above factors are beyond the control of the Company. Development projects will also be subject to the successful completion of final feasibility studies, issuance of necessary permits and other governmental approvals and receipt of adequate financing, as major expenses are typically required to locate and establish Mineral Reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. The exact effect of these factors cannot be accurately predicted, but the combination of any of these factors may adversely affect the Company’s business. The Company’s operations are subject to all of the hazards and risks normally encountered in the exploration and development of copper, gold, and silver projects and properties, including unusual and unexpected geologic formations, seismic activity, rock slides, ground instabilities or failures, mechanical failures, precipitation, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of facilities, damage to life or property, environmental damage and possible legal liability. As appropriate, the Company may seek to mitigate its exploration risk by diversifying its portfolio, or through the establishment of joint ventures and option agreements with third parties. Mineral Reserves and Mineral Resources Estimates The Company’s reported Mineral Reserves and Mineral Resources are estimations only. No assurance can be given that the estimated Mineral Reserves and Mineral Resources are accurate or that the indicated level of copper, gold, silver or any other mineral will be recovered or produced. Actual mineralization or formations may be different from 12 those predicted. It may take many years from the initial phase of drilling before production is possible and during that time the economic feasibility of exploiting a discovery may change. Market price fluctuations of copper, gold and silver and certain other metals, as well as increased production and capital costs or reduced recovery rates, may render the Company’s Mineral Reserves uneconomic to develop. Moreover, short-term operating factors relating to the Mineral Reserves, such as the need for the orderly development of ore bodies, the processing of new or different ore grades, the technical complexity of ore bodies, unusual or unexpected geological formations, ore dilution or varying metallurgical and other ore characteristics may cause Mineral Reserves to be reduced. Estimated Mineral Reserves may have to be recalculated based on fluctuations in the price of metals, or changes in other assumptions on which they are based. Any of these factors may require the Company to reduce its Mineral Reserves and Mineral Resources, which could have a negative impact on the Company’s business. Failure to obtain or maintain necessary permits or government approvals or changes to applicable legislation could also cause the Company to reduce its reserves. In addition, changes to mine plans could cause the Company to reduce its Mineral Reserves. There is also no assurance that the Company will achieve indicated levels of copper, gold or silver recovery or obtain the prices assumed in determining such Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and there is no assurance that they will ever be mined or processed profitably. Due to the uncertainty which may attach to Mineral Resources, there is no assurance that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves; and no assurance that all or any part of an Inferred Mineral Resources exists or is economically or legally mineable. Permitting The Company’s development and exploration activities are subject to permitting requirements in both Argentina and Chile. In particular, comprehensive environmental assessments will be necessary for the Filo del Sol Project in Argentina in order to obtain the necessary approval for each of the Filo del Sol Project stages, which assessment will be conducted in compliance with Argentinian regulations. Project development may also require an environmental impact assessment study in Chile. Following the receipt of environmental approvals, additional permits, licences, authorizations, and certificates will be required to proceed to project construction, including, for example, mining water and fuel delivery, sewage water treatment, hazardous waste plans, drilling and closure plans. Failure to obtain required permits and/or to maintain compliance with permits once obtained could result in injunctions, fines, suspension or revocation of permits and other penalties. There can be no assurance that the Company will obtain all such permits and/or achieve or maintain full compliance with such permits at all times. Activities required to obtain and/or achieve or maintain full compliance with such permits can be costly and involve extended timelines. Previously issued permits may be suspended or revoked for a variety of reasons, including through government or court action. Failure to obtain and/or comply with required permits can have serious consequences, including: damage to the Company’s reputation, stopping the Company from proceeding with the exploration and development of a project, negatively impacting further development of a mine, and increasing the costs of development and litigation or regulatory action against the Company, and may materially adversely affect the Company’s business, results of operations or financial condition. Infrastructure Development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges, power and water supplies are important determinants that affect costs. The Company’s ability to obtain a secure supply of power and water at a reasonable cost depends on many factors, including: global and regional supply and demand; political and economic conditions; problems that can affect local supplies; delivery; and relevant regulatory regimes. Unusual or infrequent weather phenomena, sabotage or government, and other interference in the maintenance or provision of such infrastructure could adversely affect the activities and profitability of the Company. Establishing such infrastructure will require significant resources, identification of adequate sources of raw materials and supplies and necessary cooperation from national and regional governments, none of which can be assured. There 13 is no guarantee that the Company will secure these power, water and access rights going forward or on reasonable terms. Title Risk The Company has investigated its right to explore and exploit its properties and, to the best of its knowledge, those rights are in good standing. The results of the Company’s investigations should not be construed as a guarantee of title. Other parties may dispute the title to a property, or the property may be subject to prior unregistered agreements or liens and transfers or land claims by aboriginal, native, or indigenous peoples. The title may be affected by undetected encumbrances or defects or governmental actions. The Company has not conducted surveys of all its properties, and the precise area and location of claims or the properties may be challenged, and no assurances can be given that there are no title defects affecting such properties. The rules governing mining concessions in Chile and Argentina are complex and any failure by the Company to meet requirements would have a material adverse effect on the Company. Any defects in the title to the Company’s properties could have a material and adverse effect on the Company. No assurance can be given that applicable governments will not revoke or significantly alter the conditions of the applicable exploration and mining authorizations nor that such exploration and mining authorizations will not be challenged or impugned by third parties. Although the Company has not had any problem renewing its licenses in the past there is no guarantee that it will always be able to do so. Inability to renew a license could result in the loss of any project located within that license. The Company is earning an interest in the Tamberias property through an option agreement requiring property payments and acquisition of title to the properties is completed only when the option conditions have been met. If the Company does not satisfactorily complete these option conditions in the period laid out in the option agreements, the Company’s title to the related property will not vest and the Company will have to write down its previously capitalized costs related to that property. Ability to Operate Year-round The Company conducts year-round operations at the Filo del Sol Project. Risks and uncertainties associated with the Company’s ability to successfully operate year-round include, but are not limited to, the Company’s financial position, the nature, duration or extent of weather and other natural events and the availability of personnel, logistical support and key contractors to provide services in challenging winter conditions. There can be no assurances that the Company’s preparation and winterization efforts adequately anticipated, and safeguarded against, all the challenges of conducting exploration programs during the South American winter in the high Andes. Dependence on Single Project The Filo del Sol Project is currently the Company’s sole project and therefore, any adverse development with respect to the Filo del Sol Project will have a material adverse effect on the Company. Economic and Political Instability in Argentina The Filo del Sol Project is predominantly located in San Juan Province, Argentina. There are risks relating to an uncertain or unpredictable political and economic environment in Argentina, and there may be material adverse consequences with respect to the Company and its operations as a result of the political or economic instability in Argentina. In a runoff to the election held on November 19, 2023, Javier Milei, defeated center-left candidate and the incumbent finance minister, Sergio Massa, to become Argentina’s President. Since taking office on December 10, 2023, President Milei has introduced sweeping economic reforms, including devaluation of the country’s official peso exchange rate against the United States dollar, removing several government subsidies, reducing the size of the government and proposing an omnibus bill with numerous articles which was withdrawn after failing to obtain sufficient support from Congress. Economic and political uncertainty in Argentina continues to persist as of the date of this MD&A as the 14 nature, extent or scope of changes to be introduced by President Milei and enacted, if any, and the resulting impacts, are undeterminable at this time. Changes in local and federal administrations may also imply changes to current programs and policies affecting the Company’s business and operations. Both Argentina’s President and its Congress have considerable power to make decisions and determining government policies and actions that relate to the Argentinian economy. Furthermore, some of the measures proposed by the government may also generate political and social opposition, which may in turn prevent the government from adopting its proposed measures. The Company cannot foresee the measures that could be taken by any future administration, national or provincial, and the effects that such measures could have on the Argentinian economy and in Argentina’s ability to meet its financial obligations, that could adversely affect the Company’s business, financial condition and results of operations. Foreign Operations Risk The Company conducts exploration activities in foreign countries, including Argentina and Chile. Each of these countries exposes the Company to risks that may not otherwise be experienced if all operations were located in Canada. The risks vary from country to country and can include, but are not limited to, civil unrest or war, national border disputes, terrorism, illegal mining, changing political conditions, fluctuations in currency exchange rates, expropriation or nationalization without adequate compensation, changes to royalty and tax regimes, high rates of inflation, labour unrest and difficulty in understanding and complying with the regulatory and legal framework respecting ownership and maintenance of mineral properties, as well as the revocation or suspension of previously issued mining permits. Changes in mining or investment policies or shifts in political attitudes may also adversely affect the Company’s existing assets and operations. Real and perceived political risk may also affect the Company’s ability to finance exploration programs and attract joint venture or option partners, and future mine development opportunities. Chile is typically viewed as a favourable mining jurisdiction; however, certain Canadian issuers have recently experienced regulatory action with regards to Chilean operations, specifically with respect to increased permitting timelines. Numerous countries have introduced changes to mining regimes that reflect increased government control or participation in the mining sector, including, but not limited to, changes of law affecting foreign ownership, mandatory government participation, taxation and royalties, exploration licensing, export duties, and repatriation of income or return of capital. There can be no assurance that industries, which are deemed of national or strategic importance in countries in which the Company has assets, including mineral exploration, will not be nationalized. There is a risk that further government limitations, restrictions or requirements, not presently foreseen, will be implemented. Changes in policy that alter laws regulating the mining industry could have a material adverse effect on the Company. There can be no assurance that the Company’s assets in these countries will not be subject to nationalization, requisition or confiscation, whether legitimate or not, by an authority or body. In addition, in the event of a dispute arising from foreign operations, the Company may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in Canada. The Company also may be hindered or prevented from enforcing its rights with respect to a governmental instrumentality because of the doctrine of sovereign immunity. It is not possible for the Company to accurately predict such developments or changes in laws or policy or to what extent any such developments or changes may have a material adverse effect on the Company. Non-compliance with applicable laws, regulations and permitting requirements (including allegations of such) may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed or causing the withdrawal of permits or mining licenses, and the imposition of corrective measures requiring material capital expenditure or remedial action resulting in materially increased cost of compliance, reputational damage and potentially impaired ability to secure future approvals and permits. The Company may be required to compensate third parties for loss or damage and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations. Environmental and Socio-Political Risks Present or future laws and regulations with respect to environmental protection standards or corporate social responsibility may affect the Company’s operations. Environmental legislation is evolving in a manner that requires 15 stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that regulatory and environmental approvals will be obtained on a timely basis or at all. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Company’s operations. The cost of compliance with changes in governmental regulations has the potential to reduce the profitability of operations or to preclude entirely the economic development of a property. Regulation governing development of mining operations with the potential to affect glaciers continues to evolve in both Chile and Argentina. The Argentinian Congress has passed legislation designed to protect the country’s glaciers. This law would restrict development on and around glaciers. The detailed regulations that will govern implementation of the law have not yet been written but this legislation could affect the Company’s ability to develop parts of the Company’s properties in Argentina, including the Filo del Sol Project. The Company is currently engaged in exploration with limited environmental impact. Future environmental costs may increase due to changing requirements or costs associated with exploration and the developing, operating and closing of mines, as well as with respect to changing requirements for disclosure and compliance. The Company is subject to environmental regulation in the various jurisdictions in which it operates. Failure to comply with these laws, regulations and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations or in the exploration or development of mineral properties may also be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations. Furthermore, environmental hazards may exist on the properties on which the Company holds interests which are unknown to the Company at present and which have been caused by previous or existing owners or operators of the properties. Programs may also be delayed or prohibited in some areas due to technical factors, new legislative constraints, social opposition or local government capacity or willingness to issue permits to explore in a timely manner. In parts of Argentina, there is environmental opposition to both mineral exploration and mining. Accordingly, there may be a certain degree of anti-mining sentiment that could potentially affect the risk of successfully exploring and developing the Company’s assets in those provinces. Climate Change and Carbon Pricing Climate change is a top priority for many countries and jurisdictions around the world and governments and regulators continue to implement and develop new rules and regulations to control carbon gas or “green-house” gas emissions attributable to climate change. As part of their efforts to shift to lower-carbon economies, governments have implemented carbon pricing, a mechanism that harnesses market forces to address climate change by creating financial incentives to lower emissions. Some of these mechanisms include the implementation of taxes on fuel sales, emissions trading schemes, and fossil fuel extraction fees, all of which are expected to play an ongoing role in global efforts to address climate change. The cost of compliance with various climate change regulations will ultimately be determined by the regulations themselves and by the markets that evolve for carbon credits and offsets and, as a result, the financial impact, if any, on the Company’s operations cannot yet be fully understood. The potential physical impacts of climate change due to extreme weather events on the Company’s operations are also highly uncertain and may be particular to the unique geographic circumstances associated with the Company’s projects and operations. Due to changes in global climate conditions, many scientists predict an increase in the frequency of extreme weather events such as severe and unpredictable rain and snowfall precipitation, winds, floods, droughts, and other types of extreme weather conditions and events. Such events could disrupt the Company’s operations and development activities; impact the Company’s equipment and infrastructure; impede access to the Company’s projects and properties; or threaten the health and safety of the Company’s employees and contractors. Negative Operating Cash Flow The Company is an exploration stage company and has not generated cash flow from operations. The Company is devoting significant resources to the exploration and acquisition of its properties; however, there can be no assurance 16 that it will generate positive cash flow from operations in the future. The Company expects to continue to incur negative consolidated operating cash flow and losses until such time as it achieves commercial production at a particular project. The Company currently has negative cash flow from operating activities. The Company’s exploration projects have no operating history upon which to base estimates of future cash flows. Substantial expenditures are required to develop mineral projects. It is possible that actual costs and future economic returns may differ materially from Filo’s estimates. There can be no assurance that the underlying assumed levels of expenses for any project will prove to be accurate. Further, it is not unusual in the mining industry for new mining operations to experience unexpected problems during start-up, resulting in delays and requiring more capital than anticipated. There can be no assurance that Filo’s projects will move beyond the exploration stage and be put into production, achieve commercial production or that Filo will produce revenue, operate profitably or provide a return on investment in the future. Mineral exploration involves considerable financial and technical risk. There can be no assurance that the funds required for exploration and future development can be obtained on a timely basis. There can be no assurance that Filo will not suffer significant losses in the near future or that Filo will ever be profitable. Uncertainty of Long-term Funding and Dilution of Shareholders’ Interests in the Company The exploration and development of mineral properties requires a substantial amount of capital and may depend on the Company’s ability to obtain financing through joint ventures, debt financing, equity financing or other means. General market conditions which may be impacted by geopolitics or international conflict, volatile metals prices, a claim against the Company, a significant disruption to the Company’s business, or other factors may make it difficult to secure the necessary financing in the long term. There is no assurance that the Company will be successful in obtaining required financing as and when needed on acceptable terms. Failure to obtain any necessary additional financing may result in delaying or indefinite postponement of exploration or development or even a loss of property interest. If the Company needs to raise additional funds, such financing may substantially dilute the economic and voting rights of the Company’s shareholders and reduce the value of their investment. Since the Company’s capital needs depend on market conditions and other factors beyond its control, it cannot predict or estimate the amount, timing or nature of any such future offering of securities. Thus, holders of Common Shares of the Company bear the risk of any future offerings reducing the market price of the Common Shares and diluting their shareholdings in the Company. Metal Price Risk The Company’s portfolio of properties and investments have exposure to predominantly copper, gold, and silver prices. Commodity prices fluctuate widely and are affected by numerous factors beyond the Company’s control, such as the sale or purchase of metals by various central banks and financial institutions, interest rates, exchange rates, inflation or deflation, fluctuation in the value of the US$ and foreign currencies, global and regional supply and demand, and the political and economic conditions of major metals-producing and metals-consuming countries throughout the world. The prices of these metals greatly affect the value of the Company, the price of the Common Shares and the potential value of its properties and investments. This, in turn, greatly affects its ability to form joint ventures, option agreements and the structure of any joint ventures formed. This is due, at least in part, to the underlying value of the Company’s assets at different metals prices. Tax, Royalties and Other Charges The Company runs its business in different countries and strives to run its business in as tax efficient a manner as possible. The Company is potentially subject to taxes (including income taxes and mineral taxes), various fees and royalties imposed by various levels of government across the jurisdictions in which it operates. The laws imposing these taxes, fees and royalties and the manner in which they are administered may in the future be changed or interpreted in a manner that materially and adversely affects our business, financial position and results of operations. Repatriation of earnings to Canada from other countries may be subject to withholding taxes or restricted by currency controls. The Company has no control over withholding tax rates. 17 Health and Safety Hazards Mineral exploration and operations involve health and safety hazards that could adversely affect the Company’s reputation, business and future operations. By nature, exploration and mining activities present a variety of hazards and associated health and safety risks. Workers involved in the Company’s operations are subject to many inherent health and safety risks and hazards, including, but not limited to, rock falls, slides or bursts, equipment or structural fires, falls of ground, floods, chemical and biological hazards, mineral dusts, atmospheric hazards including low oxygen levels, gases and fumes, high altitude work, use of explosives, noise, electricity, fixed and moving equipment, civil disturbances and criminal activity, which could result in occupational illness or health issues, personal injury, and loss of life, and/or facility and workforce evacuation. Even though robust health and safety controls and risk mitigation measures are in place across the Company’s sites, health and safety incidents may occur. The overall management of health and safety is governed in accordance with the requirements of the Company’s Responsible Mining Development Policy. While significant effort is made to control and eliminate potential health and safety risks, these risks cannot be eliminated and may adversely affect the Company’s reputation, business, and future operations. Incidents resulting in serious injury or death, or those having a negative impact on surrounding communities (real or perceived) could result in litigation, civil or criminal sanctions, regulatory action (including, but not limited to suspension of operations and/or fines and penalties), increased community tensions, or otherwise adversely affect the Company’s reputation and ability to meet its objectives. Pandemic Virus Outbreaks Emerging infectious diseases or the threat of outbreaks of viruses or other contagions or epidemic diseases could have a material adverse effect on the Company by causing operational and supply chain delays and disruptions, labour shortages and shutdowns, social unrest, breach of material contracts and customer agreements, government or regulatory actions or inactions, changes in tax laws, payment deferrals, increased insurance premiums, decreased demand for base and precious metals, declines in the price of base and precious metals, delays in permitting or approvals, governmental disruptions, capital markets volatility, or other unknown but potentially significant impacts. In addition, governments may impose strict emergency measures in response to the threat or existence of an infectious disease, which could have a material adverse effect on the Company’s business. OFF-BALANCE SHEET ARRANGEMENTS During the year ended December 31, 2023, there were no material off-balance sheet transactions which have not been recorded in the Company’s consolidated financial statements. The Company has not entered into any specialized financial arrangement to minimize its currency risk. QUALIFIED PERSONS AND TECHNICAL INFORMATION The scientific and technical disclosure for the Filo del Sol Project included in this MD&A have been reviewed and approved by Bob Carmichael, B.A.Sc., P. Eng. (BC) and/or Jamie Beck, B.A.Sc., P.Eng. Mr. Carmichael is Filo's Vice- President of Exploration and a Qualified Person under National Instrument 43-101 Standards of Disclosure for Mineral Projects. (“NI 43-101”). Mr. Beck is Filo’s President and Chief Executive Officer and is also a Qualified Person under NI 43-101. The field programs were carried out under the supervision of the Mr. Carmichael. Samples were cut at Filo’s Batidero camp near the project site by company personnel. Beginning in the 2020/2021 season, whole core was transported to a new core processing facility located near Rodeo, Argentina, and all sampling activities were carried out there. Diamond drill core was sampled in two metre intervals (except where shortened by geological contacts) using a rock saw for sulphide mineralization. Oxide mineralization was cut with a core splitter in order to prevent dissolution of water-soluble copper minerals during the wet sawing process. Core diameter is a mix of PQ, HQ and NQ depending on the depth of the drill hole. Samples were bagged and tagged at camp, and packaged for shipment by truck to Mendoza, Argentina. RC Samples were collected at the drill site by company personnel with initial splitting carried out at a facility near the drill sites and final splitting completed at the Batidero camp. Samples were delivered to the ALS preparation laboratory in Mendoza where they were crushed and a 500g split was pulverized to 85% passing 200 mesh. The prepared samples were sent to either the ALS assay laboratory in Santiago, 18 Chile or Lima, Peru for copper, gold and silver assays and multi-element ICP and sequential copper analyses. ALS is an accredited laboratory which is independent of the Company. Gold assays were by fire assay fusion with AAS finish on a 30 g sample. Copper and silver were assayed by atomic absorption following a four-acid digestion. Samples were also analyzed for 36 elements with ICP-ES up to drillhole FSDH053. Starting in August 2021 with drillhole FSDH054, the multielement analyses were changed to ME-MS61 which offers ultra low detection limits for 48 elements. A sequential copper leach analysis was completed on each sample with copper greater than 500 ppm (0.05%). Copper and gold standards as well as blanks and duplicates (field, preparation and analysis) were randomly inserted into the sampling sequence for quality control. On average, 9% of the submitted samples are quality control samples. No data quality problems were indicated by the quality assurance/quality control program. Mineralized zones within the Filo del Sol deposit are typically flat-lying, or bulk porphyry-style zones and drilled widths are interpreted to be very close to true widths. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements made and information contained herein in the MD&A constitutes “forward-looking information” and “forward-looking statements” within the meaning of applicable securities legislation (collectively, “forward-looking information” or “forward-looking statements”) concerning the business, operations, financial performance and condition of Filo. The forward-looking information contained in this MD&A is based on information available to the Company as of the date of this MD&A. Except as required under applicable securities legislation, the Company does not intend, and does not assume any obligation, to update this forward-looking information. Generally, any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance, (often, but not always, identified by words or phrases such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", “projects” , “estimates”, “budgets”, “scheduled”, “forecasts”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”, “possible”, "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events, conditions or results “will”, "may", "could", "would", “should”, "might" or "will be taken", "will occur" or "will be achieved" or the negative connotations thereof and similar expressions) are not statements of historical fact and may be forward-looking statements. All statements other than statements of historical fact may be forward-looking statements. Forward-looking information is necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: risks and uncertainties relating to, among other things, the inherent uncertainties regarding Mineral Resource estimates, cost estimates, changes in commodity prices, currency fluctuation, financings, unanticipated resource grades, infrastructure, results of exploration activities, cost overruns, availability of materials and equipment, timeliness of government approvals, taxation, political risk and related economic risk and unanticipated environmental impact on operations as well as other risks, and uncertainties and other factors, including, without limitation, those referred to in the “Risks and Uncertainties” section of the MD&A and in the Company’s most recent Annual Information Form, under the heading “Risks Factors”, and elsewhere, which may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information. The Company believes that the expectations reflected in the forward-looking statements and information included in this MD&A are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements and information should not be unduly relied upon. This statement and information is as of the date of the MD&A. In particular, this MD&A contains forward-looking statements or information pertaining to the assumptions used in the pre-feasibility study for the Filo del Sol Project, the assumptions used in the Mineral Reserves and Resources estimates for the Filo del Sol Project, including, but not limited to, geological interpretation, grades, metal price assumptions, metallurgical and mining recovery rates, geotechnical and hydrogeological conditions, as applicable; ability to develop infrastructure; assumptions made in the interpretation of drill results, geology, grade and continuity of mineral deposits; expectations regarding access and demand for equipment, skilled labour and services needed for exploration and development of mineral properties; and that activities will not be adversely disrupted or impeded by exploration, development, operating, regulatory, political, community, economic and/or 19 environmental risks. In addition, this MD&A may contain forward-looking statements or information pertaining to: the potential exploration results or anticipated outcomes of infill or step-out drilling planned at Filo del Sol; exploration and development plans and expenditures, including but not limited to its plans to add rigs its ongoing drilling campaign, the sequencing or prioritization of drill targets, and a transition to year-round operations; the ability of the Company’s operating protocol to continue to meet government mandated health and safety guidelines enabling it to conduct its field programs as planned; the ultimate size and scope of its field programs and the Company’s ability to achieve the objectives thereof; the size and scope of its field programs and the Company’s ability to achieve the objectives thereof; the impact of the Company’s winterization efforts at Filo del Sol, and whether such efforts will enable year-round operations and have adequately anticipated the challenges of winter operation, including but not limited to weather and potential supply chain disruptions; the anticipated use of proceeds from the Private Placement; the timing or results of an upgrade to the Mineral Resources estimate at Filo del Sol, including the inputs used therein; opportunities to improve project economics; the success of future exploration activities; potential for resource expansion; potential for the discovery of new mineral deposits; ability to build shareholder value; expectations with regard to adding to Mineral Reserves or Resources through exploration; expectations with respect to the conversion of inferred resources to an indicated resources classification; ability to execute the planned work programs; estimation of commodity prices, Mineral Reserves and Resources, estimations of costs, and permitting timelines; ability to obtain surface rights and property interests; currency exchange rate fluctuations; requirements for additional capital; government regulation of mining activities; environmental risks; unanticipated reclamation expenses; title disputes or claims; limitations on insurance coverage; and other risks and uncertainties. Forward-looking information is based on certain assumptions that the Company believes are reasonable, including that the current price of and demand for commodities will be sustained or will improve, the supply of commodities will remain stable, that the general business and economic conditions will not change in a material adverse manner, that financing will be available if and when needed on reasonable terms and that the Company will not experience any material labour dispute, accident, or failure of plant or equipment. These factors are not, and should not be construed as being, exhaustive. Although the Company has attempted to identify important factors that would cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated, or intended. There can be no assurance that such statements will prove to be accurate, as the Company’s actual results and future events could differ materially from those anticipated in such statements, as a result of the factors discussed in the “Risk and Uncertainties” section of this MD&A, and elsewhere, and in the “Risk Factors” section of the Company’s most recent Annual Information Form, which is available under the Company’s profile on SEDAR+ at www.sedarplus.ca. All of the forward-looking information contained in this document is qualified by these cautionary statements. Readers are cautioned not to place undue reliance on forward-looking information due to the inherent uncertainty thereof. Statements relating to "Mineral Resources" are deemed to be forward looking information, as they involve the implied assessment, based on certain estimates and assumptions, that the Mineral Resources described can be profitably produced in the future. 20 FILO CORP. MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2023 (Amounts in Canadian Dollars unless otherwise indicated) This management’s discussion and analysis (“MD&A”) of Filo Corp. (“Filo” or the “Company”) should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 and related notes therein (“2023 Financial Statements”). The financial information in this MD&A is reported in Canadian dollars unless otherwise indicated and is partly derived from the Company’s consolidated financial statements prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”). The effective date of this MD&A is March 20, 2024. Additional information about the Company and its business activities is available on SEDAR+ at www.sedarplus.ca and the Company’s website www.filocorp.com. The Company’s common shares trade on the Toronto Stock Exchange under the symbol "FIL", the NASDAQ First North Growth Market under the symbol "FIL" and on the OTCQX under the symbol “FLMMF”. Effective June 23, 2023, the Company’s name was changed to Filo Corp., formerly Filo Mining Corp., to better align with the Company’s strategic vision. Some of the statements in this MD&A are forward-looking statements that are subject to risk factors set out in the cautionary note contained herein. CORE BUSINESS AND STRATEGY Filo is a mineral exploration company, focused on its 100% controlled Filo del Sol project (“Filo del Sol” or the “Filo del Sol Project”), which is comprised of two adjacent land holdings: the Filo del Sol property located in San Juan Province, Argentina, and the Tamberias property, located in Region III, Chile. The Filo del Sol Project is located in the emerging Vicuña District, located between the prolific Maricunga and El Indio mining districts. The region is an established mining jurisdiction and hosts a number of large-scale mining operations. The project area is covered under the Mining Integration and Complementation Treaty between Chile and Argentina, which provides the framework for the development of cross border mining projects. The Company’s strategy is to create value for its shareholders by expanding and increasing the confidence in and continuity of the resources and reserves at the Filo del Sol Project through further exploration, and by advancing engineering and other studies that are required to prepare the Filo del Sol Project for eventual development. 2023 HIGHLIGHTS During 2023, the Company successfully delivered its most extensive drilling campaign to date, completing 37,188m of resource drilling and 1,597 metres of geotechnical drilling. The Company’s interpretation of the high-grade Aurora Zone has improved dramatically and drilling has continued to expand the footprint of the Filo del Sol deposit via numerous small and large step-out holes. Calendar year (and subsequent to) highlights included: • Assay results announced for holes FSDH097, FSDH098 and FSDH100, which span a total distance of 1.6km, expand the Filo deposit to the west along the entire distance between the holes drilled. FSDH100 is an example of the successful Aurora Zone step-out drilling conducted by the Company, adding over 500m in depth beyond the current resource pit shell and extending the western margin of the deposit by 250m; • Assay results announced for holes FDSH086, FSDH089 and FSDH095 highlight the precious metals-rich nature of the Filo deposit. All three holes encountered the high-grade silver zone, and hole FSDH086 intersected a new phase of the porphyry, encountering high-grade porphyry-style mineralization with unusually higher gold grades and copper hosted by a chalcopyrite-bornite assemblage. Located at the northwestern edge of the Aurora Zone, the results demonstrate the significant potential that exists at Filo to find new styles of mineralization; • Assay results announced for holes FSDH093 and FSDH094, which were collared 500m apart, filled critical high- grade gaps in the Company’s interpretation as well as extending Aurora to the northeast. The high-grade 1 porphyry zone at depth in hole FSDH093 is similar to, and over 300m away from, the intersection of hole FSDH086; • Assay results announced for hole FSDH084 resulted in the second-best hole from a grade-thickness perspective ever drilled at the Filo del Sol Project. The results of hole FSDH084 confirmed the continuity of high-grade mineralization within the Aurora Zone, including the high-grade Breccia 41 Zone; • Assay results from holes FSDH087, FSDH090 and FSDH091 support the idea of continuous mineralization across the 1.3km distance between the Aurora and Bonita Zones. Additional holes in this area are underway, some of which have been completed with assays pending, which will provide critical information on the continuity of mineralization from Tamberias in the south to Bonita in the north (a distance of over five kilometres); • Assay results for hole FSDH091 resulted in the first intersection of high-grade mineralization near the Bonita Zone, and the first instance of consistent grades greater than 1% CuEq outside the Aurora Zone. FSDH091 included a high-grade section averaging 1.15% CuEq over 212m. At over 1km north of the Aurora Zone, the results from this hole opened up an entirely new area to explore for high-grade mineralization; • • In June 2023, the Company closed a $130.0 million private placement, raising funds at market prices with limited dilution and with strong support from existing shareholders and institutional investors; In June 2023, the Company announced a corporate name change to “Filo Corp.” to better align with the Company’s strategic vision. Q4 2023 DRILLING AND ASSAY RESULTS Drilling and assay results disclosed by the Company during and subsequent to the year ended December 31, 2023 are summarized in the following table: Hole-ID FSDH068A incl. incl. incl. FSDH069A incl. and incl. incl. FSDH070A incl. incl. FSDH071 incl. incl. incl. FSDH072 incl. incl. FSDH073 incl. incl. FSDH074 incl. From (m) To (m) 18.0 1,794.0 94.0 54.0 394.0 1,514.0 574.0 1,298.2 138.0 1,434.5 404.0 435.0 498.0 1,096.0 792.0 886.0 282.0 1,338.5 369.7 1,040.0 540.0 712.0 292.0 1,320.0 580.0 408.0 514.0 574.0 776.0 1,013.5 484.0 1,712.0 650.0 1,472.0 998.0 1,328.0 404.5 1,388.4 600.0 1,214.0 756.0 1,028.0 278.0 1,300.0 644.0 1,160.0 Length (m) 1,776.0 40.0 1,120.0 724.2 1,296.5 31.0 598.0 94.0 1,056.5 670.4 172.0 1,028.0 172.0 60.0 237.5 1,228.0 822.0 330.0 983.9 614.0 272.0 1,022.0 516.0 Cu (%) 0.45 0.65 0.59 0.69 0.60 0.00 0.92 1.78 0.54 0.63 0.75 0.78 1.44 2.18 1.04 0.55 0.68 0.88 0.62 0.74 0.92 0.49 0.61 Au (g/t) 0.30 0.92 0.38 0.45 0.38 0.27 0.57 1.37 0.38 0.41 0.47 0.47 0.82 1.64 0.68 0.33 0.42 0.61 0.32 0.41 0.52 0.19 0.21 Ag (g/t) 4.0 8.1 5.3 6.8 13.9 127.0 19.3 26.3 4.0 5.3 5.9 6.7 12.6 16.9 6.0 4.4 4.4 2.3 4.0 3.2 3.2 4.4 3.2 CuEq1 (%) 0.70 1.39 0.92 1.08 1.00 1.51 3.01 0.86 0.97 1.15 1.16 2.14 3.53 1.49 0.83 1.02 1.35 0.89 1.06 1.33 0.66 0.79 2 Hole-ID incl. FSDH075 incl. and incl. incl. FSDH076 incl. and incl. and incl. FSDH077 plus FSDH078 plus plus FSDH079 FSDH080 incl. incl. incl. and incl. FSDH081 FSDH082 FSDH083 incl. and incl. FSDH084 incl. and incl. incl. incl. FSDH085 Plus incl. incl. FSDH086 incl. and incl. and incl. and incl. FSDH087 incl. incl. and incl. and incl. and incl. incl. incl. and incl. To (m) From (m) 840.0 1,092.0 197.1 1,562.0 268.0 197.1 796.0 1,562.0 910.4 1,202.0 180.0 1,543.0 850.9 496.0 952.0 1,120.0 1264.0 1,490.0 194.0 920.2 348.0 422.0 579.0 76.0 122.0 1,347.5 122.0 1,058.0 216.0 122.0 148.0 126.0 882.0 494.0 242.0 192.0 192.0 404.0 334.0 392.0 516.0 68.0 418.7 1,549.8 560.0 672.0 970.0 1,180.0 170.0 1,575.8 394.0 440.0 616.0 1,258.0 827.8 772.0 812.0 778.0 26.0 18.0 320.0 1,199.0 658.0 1,114.4 667.0 658.0 400.0 1,414.0 438.0 410.0 532.8 567.5 618.0 1,414.0 1,370.0 1,414.0 42.0 1,472.0 292.0 1,472.0 194.0 190.0 233.0 232.0 304.0 300.0 442.0 350.0 374.0 358.0 440.0 436.0 940.0 937.5 Length (m) 252.0 1,364.9 70.9 766.0 291.6 1,363.0 354.9 168.0 226.0 2.0 516.2 14.0 30.0 63.0 8.0 1,225.5 936.0 94.0 22.0 388.0 50.0 Au Cu (g/t) (%) 0.23 0.65 0.12 0.31 0.19 0.33 0.13 0.40 0.18 0.52 0.35 0.48 0.40 0.63 0.48 0.52 0.55 0.42 0.05 10.35 0.11 0.11 1.28 1.16 0.77 0.01 0.66 0.87 0.40 0.25 0.29 0.39 0.33 0.42 0.42 1.02 0.35 2.25 0.36 0.39 0.13 0.16 No significant values 1,131.1 112.0 210.0 1,405.8 46.0 642.0 55.8 34.0 8.0 879.0 456.4 9.0 1,014.0 28.0 34.7 796.0 44.0 1,430.0 1,180.0 4.0 1.0 4.0 92.0 16.0 4.0 2.5 0.43 0.52 0.61 0.62 0.01 1.01 2.98 3.68 0.98 0.32 0.38 0.33 0.66 0.01 0.51 0.77 1.14 0.40 0.46 1.41 2.04 4.49 0.75 2.97 1.58 2.00 0.15 0.17 0.22 0.43 0.38 0.70 2.73 3.73 3.15 0.13 0.14 0.07 0.39 0.21 0.17 0.46 0.83 0.16 0.17 0.33 1.02 4.10 0.40 1.81 0.41 0.48 Ag (g/t) 3.6 2.9 15.4 1.3 1.2 3.9 10.0 1.1 1.2 0.5 0.9 0.5 34.6 27.8 8.9 8.9 11.3 5.8 1.0 20.7 7.2 2.8 6.2 2.1 23.2 310.2 20.6 92.8 110.5 433.8 6.0 5.8 156.8 9.3 87.0 69.0 4.2 7.5 4.3 3.7 49.9 6.6 147.0 11.3 50.1 33.0 145.2 CuEq1 (%) 0.85 0.42 0.60 0.51 0.66 0.77 1.01 0.88 0.87 0.20 2.10 1.59 0.61 0.67 0.77 1.38 2.51 0.83 0.32 0.57 0.70 0.80 1.13 1.70 5.79 7.37 7.09 0.47 0.53 1.76 1.02 1.24 1.14 1.81 0.55 0.61 2.09 2.84 8.77 1.14 4.73 2.17 3.63 3 Hole-ID FSDH088 incl. FSDH089 incl. incl. and incl. and incl. incl. FSDH090 incl. and incl. and incl. and incl. FSDH091 incl. and incl. and incl. incl. FSDH093 incl. incl. and incl. FSDH094 incl. and incl. FSDH095 incl. and incl. FSDH097 incl. incl. incl. incl. and incl. FSDH098 FSDH100 incl. FSGT006 incl. From (m) To (m) 66.0 1,058.0 436.0 1,018.0 677.0 136.0 416.0 328.0 350.0 336.0 394.0 386.0 677.0 452.0 452.0 538.0 100.0 1,618.5 130.0 108.0 272.0 268.7 539.1 540.0 665.0 1,322.0 168.0 1,536.0 200.0 185.5 504.0 508.0 672.8 1,510.0 872.0 1,084.0 338.8 1,788.0 492.0 1,144.0 804.0 1,080.0 1,674.0 1,750.0 192.0 1,490.0 416.0 364.0 748.0 444.0 496.0 122.0 294.0 274.0 332.0 427.1 368.0 1,445.0 368.0 1,126.0 521.0 372.0 474.0 450.0 474.0 466.0 944.0 707.0 410.0 1,363.8 887.3 256.0 360.0 340.0 48.0 36.0 44.0 40.0 Length (m) 992.0 582.0 541.0 88.0 14.0 8.0 225.0 86.0 1,518.5 22.0 3.3 0.9 657.0 1,368.0 14.5 4.0 837.2 212.0 1,449.2 652.0 276.0 76.0 1,298.0 52.0 304.0 374.0 20.0 95.1 1,077.0 758.0 149.0 24.0 8.0 237.0 953.8 631.3 20.0 12.0 4.0 Cu Ag Au (%) (g/t) (g/t) 0.36 3.7 0.32 0.41 5.4 0.38 0.61 49.2 0.65 0.18 278.5 0.77 0.04 754.4 1.60 0.14 904.7 0.54 1.00 3.8 0.94 1.22 6.9 1.34 0.31 10.3 0.11 0.07 490.8 0.06 2.64 127.2 0.92 2.66 132.6 2.04 0.44 2.0 0.14 0.40 2.5 0.19 0.42 30.2 0.97 1.94 9.8 1.20 0.53 1.9 0.21 0.84 2.2 0.40 0.41 5.0 0.21 0.55 8.6 0.25 0.66 6.7 0.31 0.63 2.5 0.26 0.59 15.0 0.40 0.59 252.4 0.47 0.84 9.4 0.53 0.41 69.3 0.38 0.38 0.31 1,209.9 0.79 2.8 0.59 0.52 22.4 0.25 0.53 31.0 0.30 0.35 128.0 0.10 0.36 366.8 0.15 0.44 725.2 0.19 0.73 3.0 0.60 0.31 2.1 0.13 0.38 5.8 0.35 95.8 0.42 0.29 14.1 5.21 0.07 18.8 0.09 10.25 CuEq1 (%) 0.63 0.73 1.51 1.72 2.26 0.48 4.43 5.31 0.56 0.56 2.90 0.70 1.15 0.61 0.81 0.95 0.84 1.01 3.15 1.30 1.30 1.24 0.89 1.03 1.20 0.42 0.68 (1) Copper Equivalent is calculated based on US$ 3.00/lb Cu, US$ 1,500/oz Au and US$ 18/oz Ag, with 80% metallurgical recoveries assumed for all metals. The formula is: CuEq % = Cu % + (0.7292 * Au g/t) + (0.0088 * Ag g/t) 4 Additional information on these drilling results is disclosed in the Company’s press releases. As of the date of this MD&A, additional holes have been completed with assays pending, which include: • FSDH101 • FSDH102 • FSDH104 • FSDH105 • FSDH106 • FSDH108 • FSDH111 Assay results for completed holes will be released as they are received, analyzed, and confirmed by the Company. OUTLOOK Drilling continues to be the Company’s primary focus with nine drill rigs operating at site. The planned 2024 drilling program is expected to be the Company’s most ambitious program to date, including 40,000m of drilling planned with a renewed focus on exploration growth with multiple step-out targets from zones of known mineralization. Drilling will remain a mix of both large and small step-outs in all directions from the Aurora Zone, as well as resource definition drilling within it. The Company continues to maintain a strong focus on improving drill productivity through a variety of initiatives. Data collected from the current campaign is being used to develop a comprehensive geological model which will guide further exploration and form the basis of an eventual update to the Mineral Resource estimate. The Company is continuing preliminary metallurgical testwork on the sulphide mineralization, as well as environmental and social baseline programs in support of future project permitting. The Company’s plans and timelines are subject to equipment and staff availability, along with being able to operate safely and effectively and in accordance with the Company's health and safety protocols. BHP ANTI-DILUTIVE TOP-UP RIGHTS AND SHAREHOLDING On February 7, 2023, the Company closed a non-brokered private placement to BHP Western Mining Resources International Pty Ltd, a wholly owned subsidiary of BHP Group Limited (collectively, "BHP"), whereby the Company issued 43,711 common shares to BHP for gross proceeds of $1,084,907 (the "Anti-dilution Top-Up"). The Anti-dilution Top-Up was undertaken pursuant to the terms of the March 11, 2022 private placement (the "Private Placement"), whereby BHP was granted certain anti-dilutive rights, allowing BHP to top-up and maintain its pro rata ownership interest in the Company from time to time (see news releases dated February 28, 2022 and March 11, 2022). BHP also participated in the Company’s $130 million private placement, completed on June 14, 2023, increasing their ownership of Filo to approximately 6%. RESULTS FROM OPERATIONS Year ended December 31, 2023 2022 Net loss (000’s) Total assets (000’s) Loss per share, basic and diluted $ $ 115,113 $ 68,961 $ 124,389 85,964 0.90 $ 0.57 $ 2021 32,419 30,660 0.29 Filo is an exploration company and, as such, its net losses are largely driven by its exploration and project investigation activities. There is no expectation of generating operating profits until it develops a commercially viable mineral deposit. 5 Key financial results for the last eight quarters are provided in the table below. Three Months Ended Dec-23 Sep-23 Jun-23 Mar-23 Dec-22 Sep-22 Jun-22 Mar-22 Exploration costs ($000's) 36,286 36,657 35,879 34,309 25,604 19,915 22,136 14,869 Operating loss ($000’s) 40,689 39,745 39,430 39,254 28,608 26,238 23,666 17,013 Net loss ($000’s) 32,157 23,379 29,664 29,914 21,008 20,040 13,513 14,400 Net loss per share, basic and diluted ($) 0.25 0.18 0.24 0.24 0.17 0.16 0.11 0.12 Costs increased during the three months and year ended December 31, 2023 as compared to 2022 with increased drilling and related activities being undertaken by the Company. Other relevant factors, such as the financial position of the Company, other corporate initiatives, and the scope of planned exploration/project work, could affect the level of exploration activities, operating loss, and net loss in any particular period. For the three months and year ended December 31, 2023, Filo incurred net losses of $32.2 million and $115.1 million, respectively (2022 – $21.0 million and $69.0 million) including operating losses of $40.7 million and $159.1 million, respectively (2022 – $28.6 million and $95.5 million) and net gains of $7.6 million and $38.6 million, respectively, from the use of marketable securities (2022 – $8.4 million and $25.0 million). Exploration and project investigation costs are generally the most significant expenses for the Company and for the three months and year ended December 31, 2023, they accounted for approximately 89% and 90% of the operating losses, respectively (2022 – 90% and 86%). The Company expenses its exploration costs through the consolidated statement of comprehensive loss, except for mineral property option payments and mineral property acquisition costs, which are capitalized. Exploration and project investigation expenses for the three months and year ended December 31, 2023 were $36.3 million and $143.1 million, respectively, which increased relative to expenses of $25.6 million and $82.5 million incurred during the comparative periods in 2022. The period-over-period increases are primarily the result of a larger drilling program being undertaken. The Company completed resource drilling of 9,961m and 37,188m during the three months and year ended December 31, 2023, respectively, compared to 6,060m and 19,954m drilled in 2022, increases of 64% and 86%. The detailed categories of exploration and project investigation expenses are as follows: Year ended December 31, Land holding and access costs Drilling, fuel, camp costs and field supplies Roadwork, travel and transport Conceptual and engineering studies Consultants, geochemistry and geophysics Environmental and community relations VAT and other taxes Write-down of VAT receivable Office, field and administrative salaries, overhead and other administrative costs COVID-19-related health and safety Share-based compensation 2023 $ 224,843 $ 75,891,640 20,681,907 5,946,832 4,121,064 2,614,673 2022 905,932 42,030,383 13,529,981 320,280 1,511,590 1,784,545 23,505,911 10,950,266 - 2,812,565 8,612,891 2,557 1,528,634 6,069,360 837,321 1,771,712 $ 143,130,952 $ 82,523,935 6 Excluding share-based compensation expense, general and administration costs for the three months and year ended December 31, 2023 totalled $3.6 million and $9.3 million, respectively (2022 – $1.4 million and $5.3 million). The increases are due primarily to higher general office and public company maintenance costs, such as stock exchange and regulatory fees and insurance costs. Salaries and benefits increased by $1.2 million and $2.1 million during the three months and year ended December 31, 2023, due primarily to executive and head office personnel additions. Total share-based compensation expense for the three months and year ended December 31, 2023, was $1.1 and $8.2 million, respectively (2022 – $2.0 million and $9.5 million). Share based compensation is a non-cash cost which reflects the amortization of the estimated fair value of share options over their vesting period. The fair value of share options is calculated using the Black-Scholes pricing model, which relies heavily on the Company’s share price and historical share price volatility. Due to the material increase in the Company’s share price and volatility since 2021, the calculated fair value of the Company’s share options has increased considerably, resulting in a higher share option value and resultant share-based compensation expense being recognized. The actual future value to the option holders may differ materially from these estimates as it depends on the trading price of the Company’s shares if and when the options are exercised. In addition, as the granting of options and their vesting is at the discretion of the Board, the related expense is unlikely to be uniform across quarters or financial years. Interest income for the three months and year ended December 31, 2023 was $1.6 million and $5.1 million, respectively (2022 – $0.8 million and $1.8 million). Interest income has increased due to the increase in the Company’s average cash balance combined with increases in the interest rates offered by the financial institutions with which the Company holds funds. During the three months and year ended December 31, 2023, the Company recognized net monetary gains of $1.3 million and $1.5 million, respectively (2022 – loss of $0.1 million and gain of $0.5 million) in relation to the application of hyperinflationary accounting for the Company’s Argentinian subsidiary. The monetary gains and losses recognized are the result of changes in the Argentinian price indices and changes to the Company’s net monetary position during the three months and year ended December 31, 2023. Further discussion regarding the application of hyperinflationary accounting has been provided in the note 4 to the 2023 Financial Statements. From time to time, the Company acquires and transfers marketable securities as a mechanism to facilitate intragroup funding transfers between its Canadian headquarters and its Argentinian operating subsidiary. As a result of these funding transactions, for the three months and year ended December 31, 2023, the Company recognized gains of $7.6 million and $38.6 million, respectively (2022 – $8.4 million and $25.0 million) on the use of marketable securities for such purposes, which represents the net benefit of having used this funding mechanism over traditional methods. The period-over-period increase is primarily the result of increased funding provided to the Argentinian subsidiary to facilitate the Company’s expanded drilling program. Other foreign exchange for the three months and year ended December 31, 2023 totalled losses of $0.8 million and $29,073, respectively (2022 – loss of $0.2 million and gain of $0.5 million), which is the result of the impact appreciation of the US dollar relative to the Canadian dollar on the Company’s US dollar-denominated cash and cash equivalents, from the time of when the US dollars were purchased through December 31, 2023. In other comprehensive income, the Company reported foreign exchange translation losses of $0.1 million and $0.5 million for the three months and year ended December 31, 2023, respectively (2022 – gains of $0.6 million and $0.5 million) on translation of subsidiary company accounts from their respective functional currencies to the Canadian dollar presentation currency. For the three months and year ended December 31, 2023, the impact of hyperinflation amounted to loss of $1.7 million and a gain of $3.8 million, respectively (2022 – gains of $0.4 million and $0.8 million) which consists of adjustments recognized on the continuing inflation of opening non-monetary balances during the period and the ongoing translation of the Company’s Argentinian subsidiary into the Canadian dollar presentation currency. LIQUIDITY AND CAPITAL RESOURCES As at December 31, 2023, the Company had cash and cash equivalents of $108.1 million and net working capital of $87.0 million, compared to cash and cash equivalents of $74.9 million and net working capital of $60.3 million as at December 31, 2022. The increase in the Company’s cash and cash equivalents and net working capital is due the non- 7 brokered private placement completed in June 2023 which resulted in net proceeds of $129.1 million, plus the net $1.1 million BHP Top-Up and $4.9 million in gross proceeds received by the Company in relation to the exercise of stock options during the year ended December 31, 2023. These cash inflows were offset by funds used in operations and for general corporate purposes, plus amounts used in the acquisition of mineral properties ($1.0 million) and equipment and facilities for the Filo del Sol Project ($5.5 million). The Company will continue to deploy the majority of its treasury to fund ongoing advancement of the Filo del Sol Project and, to a lesser extent, for working capital and general corporate purposes. The Company does not currently generate income from operations. The Company has sufficient working capital for the Company to fund operations for the near term. However, the Company will need further funding to support the advancement of the Filo del Sol Project towards development and to meet general corporate and working capital requirements. Historically, capital requirements have been funded through equity financing. While management is confident that additional sources of funding will be secured to fund potential future expenditures, factors that could affect the availability of financing include the progress and results of ongoing project exploration and evaluation activities at the Company’s Filo del Sol Project, the state of international debt and equity markets, investor perceptions and expectations of the global copper, gold, and/or silver markets. Based on the amount of funding raised, the Company’s planned initiatives and other work programs may be postponed, or otherwise revised, as necessary. RELATED PARTY TRANSACTIONS Under the normal course of operations, the Company may undertake transactions or hold balances with related parties. During the year ended December 31, 2023, the Company engaged with NGEx Minerals Ltd. (“NGEx Minerals”), a related party to the Company by way of directors, officers and shareholders in common. Related party services The Company has an ongoing cost sharing arrangement with NGEx Minerals. Under the terms of this arrangement, the Company provides management, technical and/or administrative services (collectively, “Management Services”) to NGEx Minerals and vice versa. These transactions were incurred in the normal course of operations, and are summarized as follows: Management Services to NGEx Minerals $ 436,784 $ 902,414 Management Services from NGEx Minerals (285,642) (364,343) Year ended December 31, 2023 2022 Related party balances The amounts due from (to) related parties, and the components of the consolidated statement of financial position in which they are included, are as follows: Receivables and other assets Related Party NGEx Minerals December 31, 2023 52,858 $ December 31, 2022 186,449 $ Accounts payable and accrued liabilities NGEx Minerals (67,466) (112,163) 8 Camp usage agreement On June 26, 2019, the Company, through a wholly-owned subsidiary, entered into a transaction with a wholly-owned subsidiary of Josemaria Resources Inc., a former related party (“Josemaria”, a 100%-owned subsidiary of Lundin Mining Corporation) whereby the Company extended its right to use Josemaria’s Batidero Camp in Argentina. The agreement may be terminated with one year’s prior notice by Josemaria, and in the absence of such notice the agreement may be renewed for another year at the Company’s election. On March 7, 2024, Filo provided formal notice of renewal for the period through April 1, 2025. Key management compensation The Company’s key management personnel have the authority and responsibility for overseeing, planning, directing and controlling its activities and consist of the Board of Directors and members of the executive management team. Total compensation expense for key management personnel, and the composition thereof, is as follows: Salaries Short-term employee benefits Directors’ fees Stock-based compensation Incentive bonuses Year ended December 31, 2023 2022 $ 1,900,000 $ 1,346,667 32,309 391,642 6,056,367 1,678,750 32,369 233,056 6,910,772 1,165,000 $ 10,059,068 $ 9,687,864 MATERIAL ACCOUNTING POLICIES The Company’s material accounting policies are described in Note 3 the consolidated financial statements for the year ended December 31, 2023, as filed on SEDAR+ at www.sedarplus.ca. New Accounting Pronouncements As at December 31, 2023, there are no IFRS Accounting Standards or International Financial Reporting Interpretations Committee interpretations that are not yet effective or early adopted that are expected to have any impact on the Company. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS The preparation of the consolidated financial statements in accordance with IFRS Accounting Standards, such as the underlying consolidated financial statements for the year ended December 31, 2023, requires management to make estimates, assumptions and judgements that affect the reported amounts of assets, liabilities and expenditures. These estimates, assumptions and judgements are based on management’s best knowledge of the relevant facts and circumstances taking into account previous experience. Actual results could differ and such differences could be material. Estimates, assumptions and judgements are reviewed on an ongoing basis and are based on historical experience and other facts and circumstances. Revisions to estimates, assumptions and judgements, and the resulting effects on the carrying amounts of the Company’s assets and liabilities, are accounted for prospectively. Information about estimates, assumptions, judgements and other sources of estimation uncertainty as at December 31, 2023 that have a risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next year are provided below: 9 Valuation of mineral properties The Company carries the acquisition costs of its mineral properties at cost less any provision for impairment. At each reporting period, management applies judgement in assessing whether there are any indicators of impairment relating to mineral properties. If any such indicator exists, then an impairment test is performed by management, which also requires the Company to make significant judgments and estimates. Information considered by management in assessing indicators of impairment may include the period for which the entity has the right to conduct its exploration and project investigation activities, including expected renewals, whether substantive expenditure on further exploration and project investigation of mineral properties is budgeted, the evaluation of the results of exploration and project investigation activities up to the reporting date and other information that may indicate that the carrying value of mineral properties may not be recovered in full from successful development or sale of the asset. The judgments and estimates mentioned above are subject to various risks and uncertainties, which may ultimately have an effect on the expected recoverability of the carrying values of the mineral properties. The Company has determined that no indicators of impairment exist for its mineral properties as of December 31, 2023. FINANCIAL INSTRUMENTS The Company’s financial instruments consist of cash, receivables and other assets, and trade payables and accrued liabilities. The carrying values of the Company’s financial instruments are considered to be reasonable approximations of fair value due to their anticipated short-term nature. As at December 31, 2023, the Company’s financial instruments are exposed to the following financial risks, including credit, liquidity and currency risks: (i) Credit risks associated with cash are minimal as the Company deposits the majority of its cash with large financial institutions that have been accorded a strong investment grade rating by a primary rating agency. (ii) Liquidity risks associated with the inability to meet obligations as they become due are minimized through the management of its capital structure and by maintaining good relationships with significant shareholders and creditors. The Company also closely monitors and reviews its costs to date and actual cash flows on a monthly basis. The maturities of the Company’s financial liabilities as at December 31, 2023, are as follows: Total Less than 1 year 1-5 years More than 5 years Accounts payable and accrued liabilities Total $ 22,442,523 $ 22,442,523 $ $ 22,442,523 $ 22,422,523 $ - $ - $ - - (iii) Foreign currency risk can arise when the Company or its subsidiaries transact or have net financial assets or liabilities which are denominated in currencies other than their respective functional currencies. At December 31, 2023, the Company’s largest foreign currency risk exposures existed at the level of its Canadian headquarters, where the Company held a net financial asset position denominated in US dollars having a Canadian dollar equivalent of approximately $65.9 million. A 10% change in the foreign exchange rate between the US dollar and the Canadian dollar, the functional currency of Filo, would give financial to an position/comprehensive loss. increase/decrease of approximately $6.6 million rise in 10 OUTSTANDING SHARE DATA As at March 20, 2024, the Company had 130,733,167 common shares outstanding and 5,783,966 share options outstanding under its share-based incentive plan. FINANCIAL INFORMATION The Company’s next scheduled financial report will be for the three months ended March 31, 2024, which is expected to be published on or around May 8, 2024. DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING Disclosure controls and procedures (“DC&P”) DC&P are designed to provide reasonable assurance that information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in the securities legislation. They include controls and procedures designed to ensure that information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted under securities legislation is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. There have not been any material changes in the Company’s DC&P during the year ended December 31, 2023. Internal controls over financial reporting (“ICFR”) The Company’s ICFR are designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with IFRS Accounting Standards. The Company’s ICFR include policies and procedures that: pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with IFRS Accounting Standards; that receipts and expenditures are being made only in accordance with authorization of management and directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements. Any system, no matter how well conceived or operated, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable, not absolute, assurance with respect to financial statement preparation and presentation and will not prevent all, or detect all, misstatements and frauds. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any control system also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Management uses the Internal Control – Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations for the Treadway Commission (COSO) in order to assess the effectiveness of the Company’s ICFR. There have not been any material changes in the Company’s internal controls during the year ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s ICFR. 11 RISKS AND UNCERTAINTIES The operations of the Company are speculative due to the high-risk nature of its business, which includes the acquisition, financing, exploration, development and operation of mineral and mining properties. There are a number of factors that could negatively affect the Company’s business and the value of its common shares, and these risk factors could materially affect the Company’s future operations and financial position and could cause actual events to differ materially from those described in forward-looking statements relating to the Company. Significant risk factors have been identified by the Company and are listed below. Further discussion and additional risk factors are also available in the Company’s most recent annual information form, as filed on SEDAR+ at www.sedarplus.ca. The following information pertains to the outlook and conditions currently known to the Company that could have a material impact on the financial condition of the Company. Other factors may arise that are not currently foreseen by management of the Company that may present additional risks in the future. Current and prospective security holders of the Company should carefully consider these risk factors, as they could materially affect the Company’s future operations and could cause actual events to differ materially from those described in forward-looking statements relating to the Company. Exploration and Development Risk Mineral exploration, development and operations generally involve a high degree of risk that cannot be eliminated, and which can adversely impact the Company’s success and financial performance. Exploration for and development of mineral deposits involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. Discovery of mineral deposits is dependent upon a number of factors, not the least of which are the technical skills of the exploration personnel involved and the capital required for the programs. The cost of conducting programs may be substantial and the likelihood of success is difficult to assess. There is no assurance that the Company’s mineral exploration activities will result in any discoveries of new bodies of commercial ore. There is also no assurance that even if commercial quantities of ore are discovered that a new ore body would be developed and brought into commercial production. The commercial viability of a mineral deposit once discovered is dependent upon a number of factors, some of which are discussed elsewhere in this MD&A, and include the particular attributes of the deposit (such as size, grade, metallurgy, expected recovery rates of metals from the ore and proximity to infrastructure and labour), the interpretation of geological data obtained from drilling and sampling, feasibility studies, the ability to acquire and access land, the availability and cost of water and power, anticipated climatic conditions; cyclical metal prices; fluctuations in inflation and currency exchange rates, higher input commodity and labour costs, commodity price fluctuations, government regulations, including regulations relating to prices, taxes, royalties, land tenure and use, allowable production, importing and exporting of minerals, and environmental protection. Most of the above factors are beyond the control of the Company. Development projects will also be subject to the successful completion of final feasibility studies, issuance of necessary permits and other governmental approvals and receipt of adequate financing, as major expenses are typically required to locate and establish Mineral Reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. The exact effect of these factors cannot be accurately predicted, but the combination of any of these factors may adversely affect the Company’s business. The Company’s operations are subject to all of the hazards and risks normally encountered in the exploration and development of copper, gold, and silver projects and properties, including unusual and unexpected geologic formations, seismic activity, rock slides, ground instabilities or failures, mechanical failures, precipitation, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of facilities, damage to life or property, environmental damage and possible legal liability. As appropriate, the Company may seek to mitigate its exploration risk by diversifying its portfolio, or through the establishment of joint ventures and option agreements with third parties. Mineral Reserves and Mineral Resources Estimates The Company’s reported Mineral Reserves and Mineral Resources are estimations only. No assurance can be given that the estimated Mineral Reserves and Mineral Resources are accurate or that the indicated level of copper, gold, silver or any other mineral will be recovered or produced. Actual mineralization or formations may be different from 12 those predicted. It may take many years from the initial phase of drilling before production is possible and during that time the economic feasibility of exploiting a discovery may change. Market price fluctuations of copper, gold and silver and certain other metals, as well as increased production and capital costs or reduced recovery rates, may render the Company’s Mineral Reserves uneconomic to develop. Moreover, short-term operating factors relating to the Mineral Reserves, such as the need for the orderly development of ore bodies, the processing of new or different ore grades, the technical complexity of ore bodies, unusual or unexpected geological formations, ore dilution or varying metallurgical and other ore characteristics may cause Mineral Reserves to be reduced. Estimated Mineral Reserves may have to be recalculated based on fluctuations in the price of metals, or changes in other assumptions on which they are based. Any of these factors may require the Company to reduce its Mineral Reserves and Mineral Resources, which could have a negative impact on the Company’s business. Failure to obtain or maintain necessary permits or government approvals or changes to applicable legislation could also cause the Company to reduce its reserves. In addition, changes to mine plans could cause the Company to reduce its Mineral Reserves. There is also no assurance that the Company will achieve indicated levels of copper, gold or silver recovery or obtain the prices assumed in determining such Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and there is no assurance that they will ever be mined or processed profitably. Due to the uncertainty which may attach to Mineral Resources, there is no assurance that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves; and no assurance that all or any part of an Inferred Mineral Resources exists or is economically or legally mineable. Permitting The Company’s development and exploration activities are subject to permitting requirements in both Argentina and Chile. In particular, comprehensive environmental assessments will be necessary for the Filo del Sol Project in Argentina in order to obtain the necessary approval for each of the Filo del Sol Project stages, which assessment will be conducted in compliance with Argentinian regulations. Project development may also require an environmental impact assessment study in Chile. Following the receipt of environmental approvals, additional permits, licences, authorizations, and certificates will be required to proceed to project construction, including, for example, mining water and fuel delivery, sewage water treatment, hazardous waste plans, drilling and closure plans. Failure to obtain required permits and/or to maintain compliance with permits once obtained could result in injunctions, fines, suspension or revocation of permits and other penalties. There can be no assurance that the Company will obtain all such permits and/or achieve or maintain full compliance with such permits at all times. Activities required to obtain and/or achieve or maintain full compliance with such permits can be costly and involve extended timelines. Previously issued permits may be suspended or revoked for a variety of reasons, including through government or court action. Failure to obtain and/or comply with required permits can have serious consequences, including: damage to the Company’s reputation, stopping the Company from proceeding with the exploration and development of a project, negatively impacting further development of a mine, and increasing the costs of development and litigation or regulatory action against the Company, and may materially adversely affect the Company’s business, results of operations or financial condition. Infrastructure Development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges, power and water supplies are important determinants that affect costs. The Company’s ability to obtain a secure supply of power and water at a reasonable cost depends on many factors, including: global and regional supply and demand; political and economic conditions; problems that can affect local supplies; delivery; and relevant regulatory regimes. Unusual or infrequent weather phenomena, sabotage or government, and other interference in the maintenance or provision of such infrastructure could adversely affect the activities and profitability of the Company. Establishing such infrastructure will require significant resources, identification of adequate sources of raw materials and supplies and necessary cooperation from national and regional governments, none of which can be assured. There 13 is no guarantee that the Company will secure these power, water and access rights going forward or on reasonable terms. Title Risk The Company has investigated its right to explore and exploit its properties and, to the best of its knowledge, those rights are in good standing. The results of the Company’s investigations should not be construed as a guarantee of title. Other parties may dispute the title to a property, or the property may be subject to prior unregistered agreements or liens and transfers or land claims by aboriginal, native, or indigenous peoples. The title may be affected by undetected encumbrances or defects or governmental actions. The Company has not conducted surveys of all its properties, and the precise area and location of claims or the properties may be challenged, and no assurances can be given that there are no title defects affecting such properties. The rules governing mining concessions in Chile and Argentina are complex and any failure by the Company to meet requirements would have a material adverse effect on the Company. Any defects in the title to the Company’s properties could have a material and adverse effect on the Company. No assurance can be given that applicable governments will not revoke or significantly alter the conditions of the applicable exploration and mining authorizations nor that such exploration and mining authorizations will not be challenged or impugned by third parties. Although the Company has not had any problem renewing its licenses in the past there is no guarantee that it will always be able to do so. Inability to renew a license could result in the loss of any project located within that license. The Company is earning an interest in the Tamberias property through an option agreement requiring property payments and acquisition of title to the properties is completed only when the option conditions have been met. If the Company does not satisfactorily complete these option conditions in the period laid out in the option agreements, the Company’s title to the related property will not vest and the Company will have to write down its previously capitalized costs related to that property. Ability to Operate Year-round The Company conducts year-round operations at the Filo del Sol Project. Risks and uncertainties associated with the Company’s ability to successfully operate year-round include, but are not limited to, the Company’s financial position, the nature, duration or extent of weather and other natural events and the availability of personnel, logistical support and key contractors to provide services in challenging winter conditions. There can be no assurances that the Company’s preparation and winterization efforts adequately anticipated, and safeguarded against, all the challenges of conducting exploration programs during the South American winter in the high Andes. Dependence on Single Project The Filo del Sol Project is currently the Company’s sole project and therefore, any adverse development with respect to the Filo del Sol Project will have a material adverse effect on the Company. Economic and Political Instability in Argentina The Filo del Sol Project is predominantly located in San Juan Province, Argentina. There are risks relating to an uncertain or unpredictable political and economic environment in Argentina, and there may be material adverse consequences with respect to the Company and its operations as a result of the political or economic instability in Argentina. In a runoff to the election held on November 19, 2023, Javier Milei, defeated center-left candidate and the incumbent finance minister, Sergio Massa, to become Argentina’s President. Since taking office on December 10, 2023, President Milei has introduced sweeping economic reforms, including devaluation of the country’s official peso exchange rate against the United States dollar, removing several government subsidies, reducing the size of the government and proposing an omnibus bill with numerous articles which was withdrawn after failing to obtain sufficient support from Congress. Economic and political uncertainty in Argentina continues to persist as of the date of this MD&A as the 14 nature, extent or scope of changes to be introduced by President Milei and enacted, if any, and the resulting impacts, are undeterminable at this time. Changes in local and federal administrations may also imply changes to current programs and policies affecting the Company’s business and operations. Both Argentina’s President and its Congress have considerable power to make decisions and determining government policies and actions that relate to the Argentinian economy. Furthermore, some of the measures proposed by the government may also generate political and social opposition, which may in turn prevent the government from adopting its proposed measures. The Company cannot foresee the measures that could be taken by any future administration, national or provincial, and the effects that such measures could have on the Argentinian economy and in Argentina’s ability to meet its financial obligations, that could adversely affect the Company’s business, financial condition and results of operations. Foreign Operations Risk The Company conducts exploration activities in foreign countries, including Argentina and Chile. Each of these countries exposes the Company to risks that may not otherwise be experienced if all operations were located in Canada. The risks vary from country to country and can include, but are not limited to, civil unrest or war, national border disputes, terrorism, illegal mining, changing political conditions, fluctuations in currency exchange rates, expropriation or nationalization without adequate compensation, changes to royalty and tax regimes, high rates of inflation, labour unrest and difficulty in understanding and complying with the regulatory and legal framework respecting ownership and maintenance of mineral properties, as well as the revocation or suspension of previously issued mining permits. Changes in mining or investment policies or shifts in political attitudes may also adversely affect the Company’s existing assets and operations. Real and perceived political risk may also affect the Company’s ability to finance exploration programs and attract joint venture or option partners, and future mine development opportunities. Chile is typically viewed as a favourable mining jurisdiction; however, certain Canadian issuers have recently experienced regulatory action with regards to Chilean operations, specifically with respect to increased permitting timelines. Numerous countries have introduced changes to mining regimes that reflect increased government control or participation in the mining sector, including, but not limited to, changes of law affecting foreign ownership, mandatory government participation, taxation and royalties, exploration licensing, export duties, and repatriation of income or return of capital. There can be no assurance that industries, which are deemed of national or strategic importance in countries in which the Company has assets, including mineral exploration, will not be nationalized. There is a risk that further government limitations, restrictions or requirements, not presently foreseen, will be implemented. Changes in policy that alter laws regulating the mining industry could have a material adverse effect on the Company. There can be no assurance that the Company’s assets in these countries will not be subject to nationalization, requisition or confiscation, whether legitimate or not, by an authority or body. In addition, in the event of a dispute arising from foreign operations, the Company may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in Canada. The Company also may be hindered or prevented from enforcing its rights with respect to a governmental instrumentality because of the doctrine of sovereign immunity. It is not possible for the Company to accurately predict such developments or changes in laws or policy or to what extent any such developments or changes may have a material adverse effect on the Company. Non-compliance with applicable laws, regulations and permitting requirements (including allegations of such) may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed or causing the withdrawal of permits or mining licenses, and the imposition of corrective measures requiring material capital expenditure or remedial action resulting in materially increased cost of compliance, reputational damage and potentially impaired ability to secure future approvals and permits. The Company may be required to compensate third parties for loss or damage and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations. Environmental and Socio-Political Risks Present or future laws and regulations with respect to environmental protection standards or corporate social responsibility may affect the Company’s operations. Environmental legislation is evolving in a manner that requires 15 stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that regulatory and environmental approvals will be obtained on a timely basis or at all. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Company’s operations. The cost of compliance with changes in governmental regulations has the potential to reduce the profitability of operations or to preclude entirely the economic development of a property. Regulation governing development of mining operations with the potential to affect glaciers continues to evolve in both Chile and Argentina. The Argentinian Congress has passed legislation designed to protect the country’s glaciers. This law would restrict development on and around glaciers. The detailed regulations that will govern implementation of the law have not yet been written but this legislation could affect the Company’s ability to develop parts of the Company’s properties in Argentina, including the Filo del Sol Project. The Company is currently engaged in exploration with limited environmental impact. Future environmental costs may increase due to changing requirements or costs associated with exploration and the developing, operating and closing of mines, as well as with respect to changing requirements for disclosure and compliance. The Company is subject to environmental regulation in the various jurisdictions in which it operates. Failure to comply with these laws, regulations and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations or in the exploration or development of mineral properties may also be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations. Furthermore, environmental hazards may exist on the properties on which the Company holds interests which are unknown to the Company at present and which have been caused by previous or existing owners or operators of the properties. Programs may also be delayed or prohibited in some areas due to technical factors, new legislative constraints, social opposition or local government capacity or willingness to issue permits to explore in a timely manner. In parts of Argentina, there is environmental opposition to both mineral exploration and mining. Accordingly, there may be a certain degree of anti-mining sentiment that could potentially affect the risk of successfully exploring and developing the Company’s assets in those provinces. Climate Change and Carbon Pricing Climate change is a top priority for many countries and jurisdictions around the world and governments and regulators continue to implement and develop new rules and regulations to control carbon gas or “green-house” gas emissions attributable to climate change. As part of their efforts to shift to lower-carbon economies, governments have implemented carbon pricing, a mechanism that harnesses market forces to address climate change by creating financial incentives to lower emissions. Some of these mechanisms include the implementation of taxes on fuel sales, emissions trading schemes, and fossil fuel extraction fees, all of which are expected to play an ongoing role in global efforts to address climate change. The cost of compliance with various climate change regulations will ultimately be determined by the regulations themselves and by the markets that evolve for carbon credits and offsets and, as a result, the financial impact, if any, on the Company’s operations cannot yet be fully understood. The potential physical impacts of climate change due to extreme weather events on the Company’s operations are also highly uncertain and may be particular to the unique geographic circumstances associated with the Company’s projects and operations. Due to changes in global climate conditions, many scientists predict an increase in the frequency of extreme weather events such as severe and unpredictable rain and snowfall precipitation, winds, floods, droughts, and other types of extreme weather conditions and events. Such events could disrupt the Company’s operations and development activities; impact the Company’s equipment and infrastructure; impede access to the Company’s projects and properties; or threaten the health and safety of the Company’s employees and contractors. Negative Operating Cash Flow The Company is an exploration stage company and has not generated cash flow from operations. The Company is devoting significant resources to the exploration and acquisition of its properties; however, there can be no assurance 16 that it will generate positive cash flow from operations in the future. The Company expects to continue to incur negative consolidated operating cash flow and losses until such time as it achieves commercial production at a particular project. The Company currently has negative cash flow from operating activities. The Company’s exploration projects have no operating history upon which to base estimates of future cash flows. Substantial expenditures are required to develop mineral projects. It is possible that actual costs and future economic returns may differ materially from Filo’s estimates. There can be no assurance that the underlying assumed levels of expenses for any project will prove to be accurate. Further, it is not unusual in the mining industry for new mining operations to experience unexpected problems during start-up, resulting in delays and requiring more capital than anticipated. There can be no assurance that Filo’s projects will move beyond the exploration stage and be put into production, achieve commercial production or that Filo will produce revenue, operate profitably or provide a return on investment in the future. Mineral exploration involves considerable financial and technical risk. There can be no assurance that the funds required for exploration and future development can be obtained on a timely basis. There can be no assurance that Filo will not suffer significant losses in the near future or that Filo will ever be profitable. Uncertainty of Long-term Funding and Dilution of Shareholders’ Interests in the Company The exploration and development of mineral properties requires a substantial amount of capital and may depend on the Company’s ability to obtain financing through joint ventures, debt financing, equity financing or other means. General market conditions which may be impacted by geopolitics or international conflict, volatile metals prices, a claim against the Company, a significant disruption to the Company’s business, or other factors may make it difficult to secure the necessary financing in the long term. There is no assurance that the Company will be successful in obtaining required financing as and when needed on acceptable terms. Failure to obtain any necessary additional financing may result in delaying or indefinite postponement of exploration or development or even a loss of property interest. If the Company needs to raise additional funds, such financing may substantially dilute the economic and voting rights of the Company’s shareholders and reduce the value of their investment. Since the Company’s capital needs depend on market conditions and other factors beyond its control, it cannot predict or estimate the amount, timing or nature of any such future offering of securities. Thus, holders of Common Shares of the Company bear the risk of any future offerings reducing the market price of the Common Shares and diluting their shareholdings in the Company. Metal Price Risk The Company’s portfolio of properties and investments have exposure to predominantly copper, gold, and silver prices. Commodity prices fluctuate widely and are affected by numerous factors beyond the Company’s control, such as the sale or purchase of metals by various central banks and financial institutions, interest rates, exchange rates, inflation or deflation, fluctuation in the value of the US$ and foreign currencies, global and regional supply and demand, and the political and economic conditions of major metals-producing and metals-consuming countries throughout the world. The prices of these metals greatly affect the value of the Company, the price of the Common Shares and the potential value of its properties and investments. This, in turn, greatly affects its ability to form joint ventures, option agreements and the structure of any joint ventures formed. This is due, at least in part, to the underlying value of the Company’s assets at different metals prices. Tax, Royalties and Other Charges The Company runs its business in different countries and strives to run its business in as tax efficient a manner as possible. The Company is potentially subject to taxes (including income taxes and mineral taxes), various fees and royalties imposed by various levels of government across the jurisdictions in which it operates. The laws imposing these taxes, fees and royalties and the manner in which they are administered may in the future be changed or interpreted in a manner that materially and adversely affects our business, financial position and results of operations. Repatriation of earnings to Canada from other countries may be subject to withholding taxes or restricted by currency controls. The Company has no control over withholding tax rates. 17 Health and Safety Hazards Mineral exploration and operations involve health and safety hazards that could adversely affect the Company’s reputation, business and future operations. By nature, exploration and mining activities present a variety of hazards and associated health and safety risks. Workers involved in the Company’s operations are subject to many inherent health and safety risks and hazards, including, but not limited to, rock falls, slides or bursts, equipment or structural fires, falls of ground, floods, chemical and biological hazards, mineral dusts, atmospheric hazards including low oxygen levels, gases and fumes, high altitude work, use of explosives, noise, electricity, fixed and moving equipment, civil disturbances and criminal activity, which could result in occupational illness or health issues, personal injury, and loss of life, and/or facility and workforce evacuation. Even though robust health and safety controls and risk mitigation measures are in place across the Company’s sites, health and safety incidents may occur. The overall management of health and safety is governed in accordance with the requirements of the Company’s Responsible Mining Development Policy. While significant effort is made to control and eliminate potential health and safety risks, these risks cannot be eliminated and may adversely affect the Company’s reputation, business, and future operations. Incidents resulting in serious injury or death, or those having a negative impact on surrounding communities (real or perceived) could result in litigation, civil or criminal sanctions, regulatory action (including, but not limited to suspension of operations and/or fines and penalties), increased community tensions, or otherwise adversely affect the Company’s reputation and ability to meet its objectives. Pandemic Virus Outbreaks Emerging infectious diseases or the threat of outbreaks of viruses or other contagions or epidemic diseases could have a material adverse effect on the Company by causing operational and supply chain delays and disruptions, labour shortages and shutdowns, social unrest, breach of material contracts and customer agreements, government or regulatory actions or inactions, changes in tax laws, payment deferrals, increased insurance premiums, decreased demand for base and precious metals, declines in the price of base and precious metals, delays in permitting or approvals, governmental disruptions, capital markets volatility, or other unknown but potentially significant impacts. In addition, governments may impose strict emergency measures in response to the threat or existence of an infectious disease, which could have a material adverse effect on the Company’s business. OFF-BALANCE SHEET ARRANGEMENTS During the year ended December 31, 2023, there were no material off-balance sheet transactions which have not been recorded in the Company’s consolidated financial statements. The Company has not entered into any specialized financial arrangement to minimize its currency risk. QUALIFIED PERSONS AND TECHNICAL INFORMATION The scientific and technical disclosure for the Filo del Sol Project included in this MD&A have been reviewed and approved by Bob Carmichael, B.A.Sc., P. Eng. (BC) and/or Jamie Beck, B.A.Sc., P.Eng. Mr. Carmichael is Filo's Vice- President of Exploration and a Qualified Person under National Instrument 43-101 Standards of Disclosure for Mineral Projects. (“NI 43-101”). Mr. Beck is Filo’s President and Chief Executive Officer and is also a Qualified Person under NI 43-101. The field programs were carried out under the supervision of the Mr. Carmichael. Samples were cut at Filo’s Batidero camp near the project site by company personnel. Beginning in the 2020/2021 season, whole core was transported to a new core processing facility located near Rodeo, Argentina, and all sampling activities were carried out there. Diamond drill core was sampled in two metre intervals (except where shortened by geological contacts) using a rock saw for sulphide mineralization. Oxide mineralization was cut with a core splitter in order to prevent dissolution of water-soluble copper minerals during the wet sawing process. Core diameter is a mix of PQ, HQ and NQ depending on the depth of the drill hole. Samples were bagged and tagged at camp, and packaged for shipment by truck to Mendoza, Argentina. RC Samples were collected at the drill site by company personnel with initial splitting carried out at a facility near the drill sites and final splitting completed at the Batidero camp. Samples were delivered to the ALS preparation laboratory in Mendoza where they were crushed and a 500g split was pulverized to 85% passing 200 mesh. The prepared samples were sent to either the ALS assay laboratory in Santiago, 18 Chile or Lima, Peru for copper, gold and silver assays and multi-element ICP and sequential copper analyses. ALS is an accredited laboratory which is independent of the Company. Gold assays were by fire assay fusion with AAS finish on a 30 g sample. Copper and silver were assayed by atomic absorption following a four-acid digestion. Samples were also analyzed for 36 elements with ICP-ES up to drillhole FSDH053. Starting in August 2021 with drillhole FSDH054, the multielement analyses were changed to ME-MS61 which offers ultra low detection limits for 48 elements. A sequential copper leach analysis was completed on each sample with copper greater than 500 ppm (0.05%). Copper and gold standards as well as blanks and duplicates (field, preparation and analysis) were randomly inserted into the sampling sequence for quality control. On average, 9% of the submitted samples are quality control samples. No data quality problems were indicated by the quality assurance/quality control program. Mineralized zones within the Filo del Sol deposit are typically flat-lying, or bulk porphyry-style zones and drilled widths are interpreted to be very close to true widths. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements made and information contained herein in the MD&A constitutes “forward-looking information” and “forward-looking statements” within the meaning of applicable securities legislation (collectively, “forward-looking information” or “forward-looking statements”) concerning the business, operations, financial performance and condition of Filo. The forward-looking information contained in this MD&A is based on information available to the Company as of the date of this MD&A. Except as required under applicable securities legislation, the Company does not intend, and does not assume any obligation, to update this forward-looking information. Generally, any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance, (often, but not always, identified by words or phrases such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", “projects” , “estimates”, “budgets”, “scheduled”, “forecasts”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”, “possible”, "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events, conditions or results “will”, "may", "could", "would", “should”, "might" or "will be taken", "will occur" or "will be achieved" or the negative connotations thereof and similar expressions) are not statements of historical fact and may be forward-looking statements. All statements other than statements of historical fact may be forward-looking statements. Forward-looking information is necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: risks and uncertainties relating to, among other things, the inherent uncertainties regarding Mineral Resource estimates, cost estimates, changes in commodity prices, currency fluctuation, financings, unanticipated resource grades, infrastructure, results of exploration activities, cost overruns, availability of materials and equipment, timeliness of government approvals, taxation, political risk and related economic risk and unanticipated environmental impact on operations as well as other risks, and uncertainties and other factors, including, without limitation, those referred to in the “Risks and Uncertainties” section of the MD&A and in the Company’s most recent Annual Information Form, under the heading “Risks Factors”, and elsewhere, which may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information. The Company believes that the expectations reflected in the forward-looking statements and information included in this MD&A are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements and information should not be unduly relied upon. This statement and information is as of the date of the MD&A. In particular, this MD&A contains forward-looking statements or information pertaining to the assumptions used in the pre-feasibility study for the Filo del Sol Project, the assumptions used in the Mineral Reserves and Resources estimates for the Filo del Sol Project, including, but not limited to, geological interpretation, grades, metal price assumptions, metallurgical and mining recovery rates, geotechnical and hydrogeological conditions, as applicable; ability to develop infrastructure; assumptions made in the interpretation of drill results, geology, grade and continuity of mineral deposits; expectations regarding access and demand for equipment, skilled labour and services needed for exploration and development of mineral properties; and that activities will not be adversely disrupted or impeded by exploration, development, operating, regulatory, political, community, economic and/or 19 environmental risks. In addition, this MD&A may contain forward-looking statements or information pertaining to: the potential exploration results or anticipated outcomes of infill or step-out drilling planned at Filo del Sol; exploration and development plans and expenditures, including but not limited to its plans to add rigs its ongoing drilling campaign, the sequencing or prioritization of drill targets, and a transition to year-round operations; the ability of the Company’s operating protocol to continue to meet government mandated health and safety guidelines enabling it to conduct its field programs as planned; the ultimate size and scope of its field programs and the Company’s ability to achieve the objectives thereof; the size and scope of its field programs and the Company’s ability to achieve the objectives thereof; the impact of the Company’s winterization efforts at Filo del Sol, and whether such efforts will enable year-round operations and have adequately anticipated the challenges of winter operation, including but not limited to weather and potential supply chain disruptions; the anticipated use of proceeds from the Private Placement; the timing or results of an upgrade to the Mineral Resources estimate at Filo del Sol, including the inputs used therein; opportunities to improve project economics; the success of future exploration activities; potential for resource expansion; potential for the discovery of new mineral deposits; ability to build shareholder value; expectations with regard to adding to Mineral Reserves or Resources through exploration; expectations with respect to the conversion of inferred resources to an indicated resources classification; ability to execute the planned work programs; estimation of commodity prices, Mineral Reserves and Resources, estimations of costs, and permitting timelines; ability to obtain surface rights and property interests; currency exchange rate fluctuations; requirements for additional capital; government regulation of mining activities; environmental risks; unanticipated reclamation expenses; title disputes or claims; limitations on insurance coverage; and other risks and uncertainties. Forward-looking information is based on certain assumptions that the Company believes are reasonable, including that the current price of and demand for commodities will be sustained or will improve, the supply of commodities will remain stable, that the general business and economic conditions will not change in a material adverse manner, that financing will be available if and when needed on reasonable terms and that the Company will not experience any material labour dispute, accident, or failure of plant or equipment. These factors are not, and should not be construed as being, exhaustive. Although the Company has attempted to identify important factors that would cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated, or intended. There can be no assurance that such statements will prove to be accurate, as the Company’s actual results and future events could differ materially from those anticipated in such statements, as a result of the factors discussed in the “Risk and Uncertainties” section of this MD&A, and elsewhere, and in the “Risk Factors” section of the Company’s most recent Annual Information Form, which is available under the Company’s profile on SEDAR+ at www.sedarplus.ca. All of the forward-looking information contained in this document is qualified by these cautionary statements. Readers are cautioned not to place undue reliance on forward-looking information due to the inherent uncertainty thereof. Statements relating to "Mineral Resources" are deemed to be forward looking information, as they involve the implied assessment, based on certain estimates and assumptions, that the Mineral Resources described can be profitably produced in the future. 20 Independent auditor’s report To the Shareholders of Filo Corp. Our opinion In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Filo Corp. and its subsidiaries (together, the Company) as at December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards). What we have audited The Company’s consolidated financial statements comprise:      the consolidated statements of financial position as at December 31, 2023 and 2022; the consolidated statements of comprehensive loss for the years then ended; the consolidated statements of cash flows for the years then ended; the consolidated statements of changes in equity for the years then ended; and the notes to the consolidated financial statements, comprising material accounting policy information and other explanatory information. Basis for opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements. PricewaterhouseCoopers LLP PwC Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7 T.: +1 604 806 7000, F.: +1 604 806 7806, Fax to mail: ca_vancouver_main_fax@pwc.com “PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2023. 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. Key audit matter How our audit addressed the key audit matter Assessment of impairment indicators of mineral properties Our approach to addressing the matter included the following procedures, among others: Refer to note 3(b) – Critical accounting estimates, assumptions and judgments, note 3(d) – Mineral properties and exploration expenditure, note 3(f) – Impairment of non-financial assets and note 7 – Mineral properties to the consolidated financial statements. The total book value of mineral properties amounted to $10.1 million as at December 31, 2023. At each reporting period, management applies judgment in assessing whether there are any indicators of impairment relating to mineral properties. If any such indicator exists, then an impairment test is performed by management. Information considered by management in assessing indicators of impairment may include (i) the period for which the entity has the right to conduct its exploration and project investigation activities, including expected renewals; (ii) whether substantive expenditure on further exploration and project investigation of mineral properties is budgeted; (iii) the evaluation of the results of exploration and project investigation activities up to the reporting date; and (iv) other information that may indicate that the carrying value of mineral properties may not be recovered in full from successful development or sale of the asset. No impairment indicators were identified by management as at December 31, 2023.     Assessed the period for which the entity has the right to conduct its exploration and project investigation activities, including expected renewals, by agreeing the Company’s list of mining titles to government agency websites, and other regulatory bodies, as applicable, and vouching payments of required fees on a sample basis. Assessed whether substantive expenditure on further exploration and project investigation of mineral properties is budgeted by considering the results of current year work programs and management’s long-term plans, the Board of Directors’ meeting minutes and approved budgets. Assessed the evaluation of the results of exploration and project investigation activities up to the reporting date by considering the results of the current year work programs and considering evidence obtained in other areas of the audit. Assessed whether there is other information that may indicate that the carrying amount may not be recovered from successful development or sale of the asset, by considering evidence obtained in other areas of the audit. Key audit matter How our audit addressed the key audit matter We considered this a key audit matter due to (i) the significance of the mineral properties balance and (ii) the subjectivity in performing audit procedures to evaluate management’s indicators of impairment assessment, which required management judgment. Other information Management is responsible for the other information. The other information comprises the Management’s Discussion and Analysis. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of management and those charged with governance for the consolidated financial statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:  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.  Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would 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 Ranbir Gill. /s/PricewaterhouseCoopers LLP Chartered Professional Accountants Vancouver, British Columbia March 20, 2024 Filo Corp. Consolidated Statements of Financial Position (Expressed in Canadian Dollars) (Audited) ASSETS Current assets Cash and cash equivalents Receivables and other assets Non-current assets Equipment and facilities Mineral properties TOTAL ASSETS LIABILITIES Current liabilities Trade payables and accrued liabilities TOTAL LIABILITIES SHAREHOLDERS’ EQUITY Share capital Contributed surplus Deficit Accumulated other comprehensive income (loss) TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY Note December 31, 2023 December 31, 2022 5 6 7 8 $ 108,120,145 $ 1,317,138 109,437,283 4,876,795 10,075,286 14,952,081 124,389,364 74,915,331 831,388 75,746,719 480,760 9,736,629 10,217,389 85,964,108 22,442,523 22,442,523 15,450,886 15,450,886 425,437,833 21,229,653 (347,187,081) 2,466,436 101,946,841 287,955,759 15,499,303 (232,073,903) (867,937) 70,513,222 $ 124,389,364 $ 85,964,108 The accompanying notes are an integral part of these consolidated financial statements. On behalf of the Board: /s/Joyce Ngo Director /s/James Beck Director Filo Corp. Consolidated Statements of Comprehensive Loss (Expressed in Canadian Dollars) (Audited) Note 2023 Year ended December 31, 2022 Expenses Exploration and project investigation 10 $ 143,130,952 $ 82,523,935 General and administration: Salaries and benefits Share-based compensation Management fees Professional fees Travel Promotion and public relations Office and general Operating loss Other (income) and expenses Interest income Net monetary gain Gain on use of marketable securities Other foreign exchange loss (gain) Other non-income taxes Net loss 9 4 14 5,391,704 6,681,874 726,980 551,762 217,699 866,520 1,550,083 3,327,768 7,688,403 198,900 221,385 264,767 338,817 961,835 159,117,574 95,525,810 (5,077,137) (1,530,696) (38,595,726) 29,073 1,170,090 (1,846,038) (478,705) (25,015,866) (459,211) 1,235,341 115,113,178 68,961,331 Other comprehensive (income) loss Items that may be subsequently reclassified to net loss: Foreign currency translation adjustment Impact of hyperinflation 4 Comprehensive loss Basic and diluted loss per common share Weighted average common shares outstanding 471,608 (3,805,981) (458,688) (774,380) 111,778,805 $ 67,728,263 $0.90 $ 0.57 $ $ 127,473,242 120,914,843 The accompanying notes are an integral part of these consolidated financial statements. 2 Filo Corp. Consolidated Statements of Cash Flows (Expressed in Canadian Dollars) (Audited) Cash flows used in operating activities Net loss for the year Items not involving cash Share-based compensation Net monetary loss Unrealized foreign exchange loss (gain) Depreciation Net changes in working capital and other items Receivables and other Trade payables and accrued liabilities Cash flows from (used in) financing activities Proceeds from option exercises Proceeds from equity financings, gross Share issuance costs Cash flows used in investing activities Acquisition of equipment and facilities Mineral properties and related expenditures Effect of foreign exchange rate changes on cash and cash equivalents Increase in cash and cash equivalents during the year Cash and cash equivalents, beginning of the year Note 2023 Year ended December 31, 2022 $ (115,113,178) $ (68,961,331) 9 6, 10 9 8 8 6 7 8,210,508 3,614,201 15,357 144,590 9,460,115 1,532,312 (460,321) 15,632 (674,603) 18,107,157 1,535,742 11,592,776 (85,695,968) (45,285,075) 4,876,018 131,084,919 (959,021) 4,788,719 100,682,181 (286,700) 135,001,916 105,184,200 (5,521,937) (989,436) (6,511,373) (289,671) (1,118,190) (1,407,861) (9,589,761) (2,992,917) 33,204,814 55,498,347 74,915,331 19,416,984 Cash and cash equivalents, end of the year $ 108,120,145 $ 74,915,331 The accompanying notes are an integral part of these consolidated financial statements. 3 Filo Corp. Consolidated Statements of Changes in Equity (Expressed in Canadian Dollars) (Audited) Note Number of Shares Share Capital Contributed Surplus Deficit Accumulated Other Comprehensive Loss Total Shareholders’ Equity Balance, January 1, 2022 Shares issued pursuant to Private Placements Share issuance costs Share-based compensation Shares issued pursuant to stock option exercises Net loss and other comprehensive loss Balance, December 31, 2022 Shares issued pursuant to Private Placements Share issuance costs Share-based compensation Shares issued pursuant to stock option exercises Net loss and other comprehensive loss 8 8 9 9 8 8 9 9 115,042,939 $ 180,266,718 $ 8,544,029 $ (163,112,572) $ (2,101,005) $ 23,597,170 6,314,047 100,682,181 (286,700) - 9,460,115 1,727,832 7,293,560 (2,504,841) - - - - - - - - 100,682,181 (286,700) 9,460,115 4,788,719 - - - (68,961,331) 1,233,068 (67,728,263) 123,084,818 $ 287,955,759 $ 15,499,303 $ (232,073,903) $ (867,937) $ 70,513,222 6,204,849 131,084,919 (959,021) - 8,210,508 1,443,500 7,356,176 (2,480,158) - - - - - - - - 131,084,919 (959,021) 8,210,508 4,876,018 - - - (115,113,178) 3,334,373 (111,778,805) - - - - - - - - Balance, December 31, 2023 130,733,167 $ 425,437,833 $ 21,229,653 $ (347,187,081) $ 2,466,436 $ 101,946,841 The accompanying notes are an integral part of these consolidated financial statements. 4 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) 1. NATURE OF OPERATIONS Filo Corp. (the “Company” or “Filo”) was incorporated on May 12, 2016 under the Canada Business Corporations Act. Effective June 23, 2023, the Company’s name was changed to Filo Corp., formerly Filo Mining Corp., to better align with the Company’s strategic vision. The Company’s principal business activities are the exploration and development of the Filo del Sol and Tamberias properties, which are comprised of adjacent mineral titles in San Juan Province, Argentina and Region III, Chile. The Company’s registered office is located at Suite 2200, 885 West Georgia Street, Vancouver, British Columbia, V6C 3E8, Canada. The Company’s common shares trade on the Toronto Stock Exchange under the symbol “FIL”. In addition, the Company’s common shares trade on the NASDAQ First North Growth Market under the symbol "FIL" and on the OTCQX under the symbol “FLMMF”. 2. BASIS OF PRESENTATION These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”), on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business. These consolidated financial statements are prepared on a historical cost basis except for certain financial assets, which are measured at fair value. These consolidated financial statements were authorized for issuance by the Board of Directors of the Company on March 20, 2024. 3. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION a) Consolidation The consolidated financial statements of the Company include the following subsidiaries: Subsidiaries Filo Del Sol Holdings Inc. (formerly “NGEx Filo Del Sol Holdings Inc.) Filo Del Sol Chile Holdings Inc. (formerly “NGEx Chile Holdings Inc.”) Filo del Sol Uruguay S.A. Frontera Holdings (Bermuda) IV Ltd. Frontera Holdings (Bermuda) V Ltd. Filo del Sol Exploración S.A. Frontera Chile Limitada Jurisdiction Nature of operations Canada Holding company Canada Holding company Uruguay Bermuda Bermuda Argentina Chile Holding company Holding company Holding company Exploration company Exploration company The Company consolidates an entity when it has control over that entity, is exposed, or has rights, to variable returns from its involvement with that entity and has the ability to affect those returns through its control over that entity. All the Company’s subsidiaries are wholly owned and all intercompany balances, transactions, including income and expenses arising from inter-company transactions are eliminated in preparing the consolidated financial statements. 5 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) b) Critical accounting estimates, assumptions and judgements The preparation of the consolidated financial statements in accordance with IFRS Accounting Standards requires management to make estimates, assumptions and judgements that affect the reported amounts of assets, liabilities and expenditures on the financial statements. These estimates, assumptions and judgements are based on management’s best knowledge of the relevant facts and circumstances taking into account previous experience. Actual results could differ and such differences could be material. Estimates, assumptions and judgements are reviewed on an ongoing basis and are based on historical experience and other facts and circumstances. Revisions to estimates, assumptions and judgements, and the resulting effects on the carrying amounts of the Company’s assets and liabilities, are accounted for prospectively. Information about estimates, assumptions, judgments and other sources of estimation uncertainty as at December 31, 2023 that have a risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next year are provided below: Valuation of mineral properties The Company carries the acquisition costs of its mineral properties at cost less any provision for impairment. At each reporting period, management applies judgement in assessing whether there are any indicators of impairment relating to mineral properties. If any such indicator exists, then an impairment test is performed by management, which also requires the Company to make significant judgments and estimates. Information considered by management in assessing indicators of impairment may include the period for which the entity has the right to conduct its exploration and project investigation activities, including expected renewals, whether substantive expenditure on further exploration and project investigation of mineral properties is budgeted, the evaluation of the results of exploration and project investigation activities up to the reporting date and other information that may indicate that the carrying value of mineral properties may not be recovered in full from successful development or sale of the asset. The judgments and estimates mentioned above are subject to various risks and uncertainties, which may ultimately have an effect on the expected recoverability of the carrying values of the mineral properties. The Company has determined that no indicators of impairment exist for its mineral properties as of December 31, 2023. c) Foreign currency translation These consolidated financial statements are presented in Canadian dollars, which is the Company’s functional and presentation currency. The functional currencies of its material subsidiaries, which have operations in Chile and Argentina, are the Chilean peso and the Argentinian peso, respectively. For the Company’s Argentinian subsidiary, which uses the Argentinian peso as its functional currency and is affected by hyperinflationary accounting as described in Notes 3 and 4 below, the results and financial position of this subsidiary are translated into the presentation currency using the exchange rate prevailing at the date of the statement of financial position. The results and financial position of all other subsidiaries that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • Assets and liabilities for each statement of financial position presented are translated using the exchange rate prevailing at the date of that statement of financial position; • Income, expenses, and other comprehensive income for each statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in 6 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) which case income and expenses are translated at the rate on the dates of the transactions); and • All resulting exchange differences are recognized as a separate component of equity and in other comprehensive income. d) Mineral properties and exploration expenditure The Company capitalizes acquisition costs for property rights, including payments for exploration rights and estimated fair value of exploration properties acquired as part of an acquisition. Mineral exploration costs and maintenance payments are expensed prior to the determination that a property has economically recoverable ore reserves. When it has been established that a mineral property is considered to be sufficiently advanced to the development stage, with economic viability and technical feasibility demonstrated, all further expenditures for the current year and subsequent years are capitalized as incurred and subsequently amortized on a units of production based on proven and probable reserves of the assets to which they relate. e) Equipment and facilities Equipment and facilities are carried at cost less accumulated depreciation and impairment losses. The cost of an asset consists of its purchase price, any directly attributable costs of bringing the asset to the working condition and location of its intended use and an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Depreciation of each asset is calculated using the straight-line method to allocate its cost less its residual value over its estimated useful life. Depreciation of an asset begins when it is available for use at the location, and in the condition, as intended by management. The assets’ residual values, depreciation methods, and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. When an asset is disposed of, the difference between the net sale proceeds and its carrying amount is recognized as a gain or loss within net loss in the consolidated statement of comprehensive loss. f) Impairment of non-financial assets Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows (cash-generating units, or “CGU’s”). Value in use is determined as the present value of future cash inflows expected to be derived from a CGU using a pre-tax discount rate that reflects the current time value of money and the risks specific to that CGU. Non-financial assets that have been previously impaired are reviewed for possible reversal of the impairment at each reporting date. 7 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) g) Financial instruments (i) Recognition The Company measures and classifies its financial assets based on its business model for managing its financial assets and the contractual cash flow characteristics of those financial assets. Financial assets are classified into three measurement categories on initial recognition: those measured at fair value through profit or loss, those measured at fair value through other comprehensive income (“OCI”) and those measured at amortized cost. Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment. Investments in marketable securities, such as equity instruments of publicly listed entities, are required to be measured at fair value through profit or loss, unless the Company makes an irrevocable election to present subsequent changes in the fair value of such instruments through OCI. The Company has not elected to measure any of its marketable securities through OCI. (ii) Derecognition The Company derecognizes financial assets when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all the associated risk and rewards of ownership to another entity. A financial liability is derecognized when the obligation under the liability is discharged, canceled or expired. Gains and losses on derecognition of financial assets and liabilities are generally recognized in the consolidated statement of comprehensive loss. (iii) Impairment The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost based on a probability-weighted estimate of credit losses over the expected life of the financial asset. At each reporting date, the Company measures the loss allowance for the financial asset 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 Company measures the loss allowance for the financial asset at an amount equal to twelve month expected credit losses. Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the expected credit losses are reversed after the impairment was recognized. h) Cash and cash equivalents Cash and cash equivalents includes cash on hand, and deposits held with financial institutions with a fixed deposit term of three months or less, net of bank overdrafts. i) Current and deferred income tax The Company follows the liability method of accounting for income taxes. Under the liability method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, unused tax losses and other income tax deductions. Deferred income tax assets are recognized for deductible temporary differences, unused tax losses and other income tax 8 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) deductions to the extent that it is probable the Company will have taxable income against which those deductible temporary differences, unused tax losses and other income tax deductions can be utilized. Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply when the related assets are realized or the liabilities are settled. The measurement of deferred income tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover and settle the carrying amounts of its assets and liabilities, respectively. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period in which the change is substantively enacted. j) Share capital Common shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds. k) Share-based compensation The Company has a share-based compensation plan, whereby it is authorized to grant share options to officers, employees, directors, and other eligible persons. The fair value of the options is measured at the date the options are granted, using the Black-Scholes option-pricing model with assumptions for risk-free interest rates, dividend yields, volatility of the expected market price of the common shares and an expected life of the options. The fair value less estimated forfeitures is charged over the vesting period of the related options as an expense on its financial statements. l) Provisions Provisions for restructuring costs and legal claims are recognized when: the Company has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligations using the pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as interest expense. m) Leases The Company recognizes a right-of-use asset, and corresponding lease liability, for almost all leases, unless the lease term is 12 months or less or the underlying asset has a low value, in which case, lease payments are recognized as an expense on a straight-line basis over the lease term or another systematic basis, if deemed more representative. n) Segment reporting As the Company primarily focuses its activity on the exploration and development of mineral properties, its operating and reportable segments are the Filo del Sol Project, comprised of the Filo del Sol property and the Tamberias property, other general exploration and project generation initiatives, and the Company’s corporate administration function. Operating segments are components of an entity that engage in business activities from which they incur expenses and whose operating results are regularly reviewed by a chief operating decision maker to make resource allocation decisions and to assess performance. The Chief Executive Officer, the chief operating decision-maker for the Company, obtains and reviews operating results of each operating segment on a monthly basis. 9 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) o) Hyperinflation The Company applies IAS 29, Financial Reporting in Hyperinflationary Economies, which outlines the use of the hyperinflationary accounting, to consolidate and report its Argentinian operating subsidiary. The application of hyperinflationary accounting requires restatement of the Argentinian subsidiary’s non-monetary assets and liabilities, shareholders’ equity and comprehensive loss items from the transaction date when they were first recognized into the current purchasing power which reflects a price index current at the end of the reporting period before being included in the consolidated financial statements. To measure the impact of inflation on its financial position and results, the Company has elected to use the Wholesale Price Index (Indice de Precios Mayoristas or “IPIM”) for periods up to December 31, 2016, and the Retail Price Index (Indice de Precios al Consumidor or “IPC”) thereafter. These price indices have been recommended by the Government Board of the Argentinian Federation of Professional Councils of Economic Sciences (“FACPCE”). As the consolidated financial statements of the Company have been previously presented in Canadian dollars, a stable currency, the comparative period amounts do not require restatement. 4. HYPERINFLATION Argentina was designated a hyperinflationary economy as of July 1, 2018 for accounting purposes. The Company recognized a gain of $3,805,981 for the year ended December 31, 2023 (2022 – $774,380) in relation to the impact of hyperinflation within other comprehensive (income) loss, which is primarily the result of continued inflation during the year and the resulting adjustments recognized on the net asset position of the Company’s Argentinian operating subsidiary. As a result of changes in the IPC and changes to the Company’s net monetary position, the Company recognized a net monetary gain of $1,530,696 for the year ended December 31, 2023 (2022 – $478,705), to adjust transactions recorded during the year into a measuring unit current as of December 31, 2023. The level of the IPC at December 31, 2023 was 3,533.2 (December 31, 2022 – 1,134.6), which represents an increase of approximately 211% over the IPC at December 31, 2022, and an approximate 79% increase over the average level of the IPC during the year ended December 31, 2023. 5. RECEIVABLES AND OTHER ASSETS Current Taxes receivable Other receivables Prepaid expenses and deposits December 31, 2023 December 31, 2022 $ 50,096 $ 133,304 1,133,738 28,427 334,091 468,870 $ 1,317,138 $ 831,388 10 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) 6. EQUIPMENT AND FACILITIES The Company’s equipment and facilities relate to mobile equipment and field facilities acquired or constructed for its Filo del Sol property in Argentina. The Company depreciates these assets over their useful lives of 10 years and classifies its depreciation expense as other administrative costs within exploration and project investigation expense (note 10). Adjustment for the impacts of hyperinflation 7,284 (673,156) (248,912) (64,302) - 64,302 Cost January 1, 2022 Additions Adjustment for the impacts of hyperinflation Reclassifications December 31, 2022 Additions Reclassifications December 31, 2023 Accumulated depreciation January 1, 2022 Depreciation Adjustment for the impacts of hyperinflation December 31, 2022 Depreciation Adjustment for the impacts of hyperinflation December 31, 2023 Net book amount December 31, 2022 December 31, 2023 Works in progress Equipment Facilities Equipment Facilities Total $ 31,780 $ 136,567 $ - $ - $ - 6,578 82,111 5,852 - (224,530) - - - 207,560 31,572 224,530 168,347 289,671 44,002 - $ 38,358 $ - $ - $ 463,662 $ 502,020 1,048,762 2,801,913 1,383,450 287,812 (58,185) - 5,521,937 (972,969) - $ 1,030,102 $ 2,128,757 $ 1,198,840 $ 693,289 $ 5,050,988 $ $ $ - $ - $ - $ - $ - - - - - - - (15,632) (5,628) (15,632) (5,628) - $ - $ - $ (21,260) $ (21,260) - - - - (64,244) (3,781) (80,346) (4,562) (144,590) (8,343) - $ - $ (68,025) $ (106,168) $ (174,193) $ 38,358 $ - $ - $ 442,402 $ 480,760 1,030,102 2,128,757 1,130,815 587,121 4,876,795 11 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) 7. MINERAL PROPERTIES January 1, 2022 Additions Adjustment for the impacts of hyperinflation Effect of foreign currency translation Filo del Sol Tamberias $ 3,493,825 $ 4,569,093 $ - 1,118,190 118,962 - - 436,559 Total 8,062,918 1,118,190 118,962 436,559 December 31, 2022 $ 3,612,787 $ 6,123,842 $ 9,736,629 - 989,436 989,436 Additions Adjustment for the impacts of hyperinflation Effect of foreign currency translation - (418,957) (231,822) - (231,822) (418,957) December 31, 2023 $ 3,380,965 $ 6,694,321 $ 10,075,286 The Company’s primary mineral property assets are the Filo del Sol and Tamberias properties (together, the “Filo del Sol Project”), which are comprised of adjacent mineral titles in San Juan Province, Argentina and Region III, Chile, and are 100% controlled by Filo either through direct ownership or option agreements. Filo del Sol Property (San Juan Province, Argentina) Sole ownership of the Filo del Sol property was acquired by Filo del Sol Exploracion S.A., a wholly owned subsidiary of the Company, in October 2014, through the acquisition of its then joint exploration partner’s 40% interest in the property. Tamberias Property (Region III, Chile) Through its wholly owned subsidiary, Frontera Chile Limitada, the Company is party to an option agreement with Compania Minera Tamberias SCM (“Tamberias SCM”) whereby the Company can earn a 100% interest in the Tamberias property by making certain scheduled option payments. In addition, Tamberias SCM will retain a 1.5% net smelter royalty, which will be paid only after the Company has recovered all its exploration and development costs. Pursuant to a series of amendments to the terms of the remaining option payments payable under the option agreement with Tamberias SCM, the last of which was executed on May 13, 2020 (the “Option Amendments”), the remaining option payments were rescheduled and extended through to June 30, 2026. In June 2023, the Company made a US$750,000 payment pursuant to the Option Amendments and as at December 31, 2023, the Company’s total remaining option payments were as follows: Payment by: June 30, 2024 June 30, 2025 June 30, 2026 TOTAL Amount (US$) 950,000 1,050,000 12,000,000 14,000,000 12 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) In addition, in June 2022, the Company acquired a five-hectare claim block, which is located within the broader Tamberias property area (the “Austral Claims”). Prior to the acquisition, the Austral Claims were the only claim blocks within the Tamberias property footprint that were not owned or controlled by the Company. The Austral Claims were acquired for a purchase price of US$400,000. 8. SHARE CAPITAL The Company has authorized an unlimited number of voting common shares without par value. On March 11, 2022, by way of a non-brokered private placement, the Company closed the sale of 6,270,000 common shares to BHP Western Mining Resources International Pty Ltd, a wholly owned subsidiary of BHP Group Limited (collectively, "BHP"), at a price of $15.95 per common share for total proceeds of $100 million (the “Private Placement”). Share issuance costs related to the Private Placement totaled $268,751 and consisted of professional fees and regulatory fees. No finder's fee or commissions were payable in connection with this Private Placement. In connection with the Private Placement, BHP has been granted certain participation and top-up rights (the “Top-Up Provision”), allowing BHP to maintain its ownership interest from time to time, provided that such participation rights will not apply to any portion of BHP's ownership interest in excess of a 9.9% undiluted ownership level in the Company. In addition, the Company and BHP have formed a joint advisory committee to share expertise, exploration concepts, and discuss future project development. On February 7, 2023, the Company closed a non-brokered private placement to BHP in accordance with the Top-Up Provision, whereby the Company sold 43,711 common shares to BHP for gross proceeds of $1,084,907, less share issuance costs of $21,967. On June 14, 2023, the Company closed a non-brokered private placement, whereby the Company sold 6,161,138 common shares at a price of $21.10 per common share for gross proceeds of $130,000,012, less share issuance costs of $937,054 which include a 5% finder’s fee in cash on a portion of the private placement. Upon closing of the non-brokered private placement, BHP owned approximately 6% of the Company’s issued and outstanding common shares on an undiluted basis. During 2023, 1,443,500 share options were exercised (2022 – 1,727,832; note 9), resulting in an increase to share capital of $7,356,176 (2022 – $7,293,560). These exercises consisted of a cash portion of $4,876,018 (2022 – $4,788,719) and a contributed surplus portion of $2,480,158 (2022 – $2,504,841). 9. SHARE OPTIONS a) Share option plan The Company has a share option plan adopted by the Board of Directors on July 8, 2016 and amended May 6, 2022, which reserves an aggregate of 10% of the issued and outstanding shares of the Company for issuance upon the exercise of options granted. The granting, vesting and terms of the share options are at the discretion of the Board of Directors. The majority of the Company’s outstanding share options vest in thirds with one third vesting immediately upon the date of grant, and the remaining two thirds vesting each on the first and second anniversary of the date of grant. 13 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) b) Share options outstanding Movements in the number of share options outstanding and their related weighted average exercise prices are as follows: Balance at January 1, 2022 Options granted Exercised Forfeited Balance at December 31, 2022 Options granted Exercised Balance at December 31, 2023 Number of shares issuable pursuant to share options Weighted average exercise price per share 6,237,598 $ 1,540,000 (1,727,832) (42,400) 6,007,366 $ 381,600 (1,443,500) 4,945,466 $ 3.47 17.17 2.77 14.06 7.11 19.59 3.38 9.16 The weighted average share price on the exercise date for the share options exercised during the year ended December 31, 2023 was $22.56. The Company uses the Black-Scholes option pricing model to estimate the fair value for all options granted and the resulting stock-based compensation. The weighted average assumptions used in this pricing model, and the resulting fair values per option, for the share options granted during the years ended December 31, 2023 and 2022 were as follows: Risk-free interest rate Expected life Expected volatility Expected dividends Fair value per option Year ended December 31, 2022 2.8% 4.8 years 62.9% Nil $9.29 2023 3.7% 4.0 years 66.5% Nil $10.39 14 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) The following table details the share options outstanding and exercisable as at December 31, 2023: Outstanding options Exercisable options Exercise price Options outstanding $ $ $ $ $ $ $ $ $ $ 1.91 2.75 8.95 11.00 15.42 16.03 16.93 19.45 19.59 20.10 1,052,333 1,210,000 837,334 15,000 80,000 226,000 905,000 210,000 376,466 33,333 Weighted average remaining contractual life (years) Weighted average exercise price 1.6 $ 0.8 $ 2.6 $ 2.4 $ 3.7 $ 3.7 $ 3.6 $ 3.2 $ 4.3 $ 3.5 $ 1.91 2.75 8.95 11.00 15.42 16.03 16.93 19.45 19.59 20.10 Weighted average remaining contractual life (years) Weighted average exercise price 1.6 $ 0.8 $ 2.6 $ 2.4 $ 3.7 $ 3.7 $ 3.6 $ 3.2 $ 4.3 $ 3.5 $ 1.91 2.75 8.95 11.00 15.95 16.03 16.93 19.45 19.59 20.10 Options exercisable 1,052,333 1,210,000 837,334 15,000 53,334 150,667 603,334 140,000 125,489 22,222 4,945,466 2.4 $ 9.16 4,209,713 2.1 $ 7.62 c) Share-based compensation Exploration and project investigation (note 10) $ 1,528,634 $ 1,771,712 General and administration 6,681,874 7,688,403 $ 8,210,508 $ 9,460,115 Year ended December 31, 2023 2022 15 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) 10. EXPLORATION AND PROJECT INVESTIGATION All exploration and project investigation costs are related to the Filo del Sol Project. The Company expensed the following exploration and project investigation costs, all incurred in relation to the Filo del Sol Project: Year ended December 31, 2023 2022 Land holding and access costs $ 224,843 $ 905,932 Drilling, fuel, camp costs and field supplies Roadwork, travel and transport Conceptual and engineering studies Consultants, geochemistry and geophysics Environmental and community relations VAT and other taxes Write-down of VAT receivable Office, field and administrative salaries, overhead and other administrative costs COVID-19-related health and safety Share-based compensation 75,891,640 20,681,907 5,946,832 4,121,064 2,614,673 23,505,911 - 8,612,891 2,557 1,528,634 42,030,383 13,529,981 320,280 1,511,590 1,784,545 10,950,266 2,812,565 6,069,360 837,321 1,771,712 $ 143,130,952 $ 82,523,935 Pursuant to statutory regulations, the Company is entitled to a refund of certain value added taxes (“VAT”) paid in Argentina, however, the Company has deemed the collection of these funds to be uncertain. As such the Company writes down its outstanding VAT receivable balances and will continue to write down any increases to the VAT receivable balances in future periods. The associated expense of these write downs is recognized in exploration and project investigation as “VAT and other taxes”. Should the Company receive a future refund of amounts written down, the corresponding impact will be credited against exploration and project investigation expense. 11. RELATED PARTY TRANSACTIONS Under the normal course of operations, the Company may undertake transactions or hold balances with related parties. During the year ended December 31, 2023, the Company engaged with NGEx Minerals Ltd. (“NGEx Minerals”), a related party to the Company by way of directors, officers and shareholders in common. 16 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) a) Related party services The Company has an ongoing cost sharing arrangement with NGEx Minerals. Under the terms of this arrangement, the Company provides management, technical, and/or administrative services (collectively, “Management Services”) to NGEx Minerals and vice versa. These transactions were incurred in the normal course of operations, and are summarized as follows: Year ended December 31, 2023 2022 Management Services to NGEx Minerals $ 436,784 $ 902,414 Management Services from NGEx Minerals (285,642) (364,343) b) Related party balances The amounts due from (to) related parties, and the components of the consolidated statements of financial position in which they are included, are as follows: Receivables and other assets Related Party NGEx Minerals December 31, 2023 52,858 $ December 31, 2022 186,449 $ Accounts payable and accrued liabilities NGEx Minerals (67,466) (112,163) c) Camp usage agreement On June 26, 2019, the Company, through a wholly-owned subsidiary, entered into a transaction with a wholly-owned subsidiary of Josemaria Resources Inc., a former related party (“Josemaria”, a 100%-owned subsidiary of Lundin Mining Corporation) whereby the Company extended its right to use Josemaria’s Batidero Camp in Argentina. The agreement may be terminated with one year’s prior notice by Josemaria, and in the absence of such notice the agreement may be renewed for another year at the Company’s election. On March 7, 2024, Filo provided formal notice of renewal for the period through April 1, 2025. 17 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) d) Key management compensation The Company’s key management personnel have the authority and responsibility for overseeing, planning, directing and controlling its activities and consist of the Board of Directors and members of the executive management team. Total compensation expense for key management personnel, and the composition thereof, is as follows: Salaries Short-term employee benefits Directors’ fees Stock-based compensation Incentive bonuses Year ended December 31, 2023 2022 $ 1,900,000 $ 1,346,667 32,309 391,642 6,056,367 1,678,750 32,369 233,056 6,910,772 1,165,000 $ 10,059,068 $ 9,687,864 12. INCOME TAXES Income tax expense differs from the amount that would result from applying the Canadian federal and provincial income tax rates to the loss for the year. These differences result from the following items: Loss before taxes Year ended December 31, 2023 2022 $ 115,113,178 $ 68,961,331 Combined Canadian federal and provincial statutory income tax rates Income tax recovery based on the above rate 27.00% 27.00% 31,080,558 18,619,559 Income tax benefits that have not been recognized and other temporary differences Non-deductible expense Other permanent differences (2,024,072) (13,415,921) (5,971,777) (3,795,236) 12,606,780 9,301,551 Impacts of changes in foreign tax and currency rates (39,582,271) (13,806,839) Differences between Canadian and foreign tax rates 3,890,782 3,096,886 Total income tax recovery $ - $ - 18 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) The Company’s unrecognized deductible temporary differences and unused tax losses for which no deferred tax asset has been recognized consist of the following: December 31, 2023 December 31, 2022 Non-capital losses carried forward $ 9,287,275 $ 8,317,504 Mineral properties and related expenditures Other 29,878,189 699,154 26,330,023 929,399 $ 39,864,618 $ 35,576,926 As at December 31, 2023, the non-capital loss carry-forwards and their respective expiration dates are as follows: Year 2024 2025 2026 2027 Canada Argentina Other $ - - - - $ 16,392 $ - $ 42,868 482,020 1,133,219 4,031,568 239,088 8,159 30,692 13,645 Total 16,392 281,956 490,179 1,163,911 32,901,783 2028 and onwards 28,856,570 $ 28,856,570 $ 5,706,067 $ 291,584 $ 34,854,221 13. SEGMENTED INFORMATION The Company is principally engaged in the acquisition, exploration and development of mineral properties in South America. The information regarding equipment and facilities, mineral properties and exploration and project investigation costs presented in Notes 6, 7, and 10, respectively, represent the manner in which management reviews its business performance. All the Company’s equipment and facilities, mineral properties and exploration and project investigation costs relate to the Filo del Sol Project, which straddles the border between the San Juan Province, Argentina and Region III, Chile and is comprised of the Filo del Sol property and the Tamberias property. The net gains on the use of marketable securities are allocated to the Filo del Sol Project, as they are the result of funding provided to the Company’s Argentinian subsidiary in support of the project. Materially, all the Company’s administrative costs are incurred by the Canadian parent, where materially all of the Company’s cash is held in the normal course of business until it is required to be deployed to the Company’s South American subsidiaries in support of ongoing and planned work programs. 19 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) The following are summaries of the Company’s current and non-current assets, current liabilities, and net losses by segment: As at December 31, Current assets 2023 Equipment and facilities Mineral properties Total assets $ $ Filo del Sol Project Total Corporate 3,153,544 $ 106,283,739 $ 109,437,283 4,876,795 4,872,213 10,075,286 10,075,286 18,101,043 $ 106,288,321 $ 124,389,364 4,582 - Current liabilities $ 20,355,305 $ 2,087,218 $ 22,442,523 December 31, Current assets $ 2022 Equipment and facilities Mineral properties Total assets 4,055,924 $ 480,760 9,736,629 71,690,795 $ - - $ 14,273,313 $ 71,690,795 $ 75,746,719 480,760 9,736,629 85,964,108 Current liabilities $ 14,590,638 $ 860,248 $ 15,450,886 Year ended December 31, Filo del Sol Project 2023 Exploration and project investigation $ 143,130,952 $ Gain on use of marketable securities (38,595,726) General and administration and other Corporate Total - $ 143,130,952 - (38,595,726) items Net loss (360,606) 10,938,558 10,577,952 $ 104,174,620 $ 10,938,558 $ 115,113,178 2022 Exploration and project investigation $ 82,523,935 $ Gain on use of marketable securities (25,015,866) - $ 82,523,935 - (25,015,866) General and administration and other items Net loss 756,636 10,696,626 11,453,262 $ 58,264,705 $ 10,696,626 $ 68,961,331 14. USE OF MARKETABLE SECURITIES From time to time, the Company may acquire and transfer marketable securities to facilitate intragroup funding transfers between the Canadian parent and its Argentinian operating subsidiary. The Company does not acquire marketable securities or engage in these transactions for speculative purposes. In this regard, under this strategy, the Company generally uses marketable securities of large, established companies, with high trading volumes and low volatility. Nonetheless, as the process to acquire, transfer and ultimately sell the marketable securities occurs over several days, some fluctuations do occur. 20 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) As the marketable securities are acquired with the intention of a near term sale, they are considered financial instruments that are held for trading. Accordingly, all changes in the fair value of the instruments, between acquisition and disposition, are recognized through profit or loss. As a result of having utilized this mechanism for intragroup funding for the year ended December 31, 2023, the Company realized net gains of $38,595,726 (2022 – $25,015,866). The net gains for the year ended December 31, 2023 were comprised of favorable foreign currency impacts of $42,116,850 (2022 – $27,414,923) and trading losses of $3,521,124 (2022 – $2,399,058), including the impact of fees and commissions. 15. CAPITAL MANAGEMENT The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to pursue the development of its mineral properties and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. In the management and definition of capital, the Company considers the items included in shareholders’ equity to be capital. The Company manages the capital structure and makes adjustments, as necessary, in light of changes in economic conditions and the risk characteristics of its assets. In order to maintain or adjust the capital structure, the Company may attempt to issue new shares or debt instruments, acquire or dispose of assets, or to bring in joint venture partners. To facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending on various factors, including, but not limited to, successful capital deployment and general industry conditions. The annual and updated budgets are approved by the Board of Directors. 16. FINANCIAL INSTRUMENTS AND MANAGEMENT OF FINANCIAL RISKS The Company has estimated the fair values of its financial instruments based on appropriate valuation methodologies. These values are not materially different from their carrying value. The Company classifies the fair value of its financial instruments according to the following hierarchy based on the amount of observable inputs used to value the instrument: • • • Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 – inputs other than quoted prices included in Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs). The Company’s financial instruments consist of cash, receivables and other assets, and trade payables and accrued liabilities. The carrying values of the Company’s financial instruments are considered to be reasonable approximations of fair value due to their anticipated short-term nature. As at December 31, 2023, the Company’s financial instruments are exposed to the following financial risks, including credit, liquidity and currency risks: (i) Credit risks associated with cash are minimal as the Company deposits the majority of its cash with large financial institutions that have been accorded a strong investment grade rating by a primary rating agency. (ii) Liquidity risks associated with the inability to meet obligations as they become due are minimized through the management of its capital structure as explained on Note 16 and by maintaining good relationships with significant shareholders and potential creditors. 21 Filo Corp. Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated) The Company also closely monitors and reviews its costs to date and actual cash flows on a monthly basis. The maturities of the Company’s financial liabilities as at December 31, 2023 are as follows: Total Less than 1 year 1-5 years More than 5 years Accounts payable and accrued liabilities Total $ 22,442,523 $ 22,442,523 $ $ 22,442,523 $ 22,442,523 $ - $ - $ - - (iii) Foreign currency risk can arise when the Company or its subsidiaries transact or have net financial assets or liabilities which are denominated in currencies other than their respective functional currencies. At December 31, 2023, the Company’s largest foreign currency risk exposures existed at the level of its Canadian headquarters, where the Company held a net financial asset position denominated in US dollars having a Canadian dollar equivalent of approximately $65.9 million. A 10% change in the foreign exchange rate between the US dollar and the Canadian dollar, the functional currency of Filo, would give rise to an increase/decrease of approximately $6.6 million in financial position/comprehensive loss. 22 CORPORATE DIRECTORY OFFICERS Jamie Beck President & CEO Robert Carmichael VP Exploration Trevor D’Sa VP Corporate Development & IR Ian Gibbs Chief Financial Officer Arndt Brettschneider VP Operations & Projects DIRECTORS Adam Lundin, Chair Jamie Beck Wojtek Wodzicki Ron Hochstein Erin Johnston Carmel Daniele William Lundin Joyce Ngo Peter O'Callaghan AUDITORS PricewaterhouseCoopers LLP Vancouver, British Columbia, Canada LEGAL COUNSEL Cassels Brock & Blackwell LLP Vancouver, British Columbia, Canada CORPORATE OFFICE Suite 2000 - 885 West Georgia Street Vancouver, British Columbia Canada V6C 3E8 Telephone: +1 604 689-7842 Fax: +1 604 689-4250 REGISTERED & RECORDS OFFICE Suite 2200 - 885 West Georgia Street Vancouver, British Columbia Canada V6C 3E8 REGISTRAR AND TRANSFER AGENT Computershare Trust Company of Canada Vancouver, British Columbia Canada SHARE LISTINGS TSX & Nasdaq First North Growth Market: FIL OTCQX: FLMMF CUSIP No.: 31730E101 ISIN: CA31730E1016 

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