Anacortes Mining : Audited Financial Statements for year ended December 31, 2021

ANACORTES MINING CORP.

(formerly First Light Capital Corp.)

CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars)FOR THE YEARS ENDED DECEMBER 31, 2021 and 2020

Index	Page
Independent Auditor's Report	2 -3
Consolidated Financial Statements
Consolidated Statements of Financial Position	4
Consolidated Statements of Loss and Comprehensive Loss	5
Consolidated Statements of Changes in Equity	6
Consolidated Statements of Cash Flows	7
Notes to Consolidated Financial Statements	8 - 26
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INDEPENDENT AUDITORS' REPORT

To the Shareholders and Directors of Anacortes Mining Corp.

Opinion

We have audited the consolidated financial statements of Anacortes Mining Corp. (the "Company") which comprise the statement of financial position as at December 31, 2021, and the statements of loss and comprehensive loss, changes in equity and cash flows for the year ended December 31, 2021, and the related notes comprising a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2021 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

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 Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

Management is responsible for the other information, which comprises the information included in the Company's Management Discussion & Analysis to be filed with the relevant Canadian securities commission.

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 on this other information, 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.

Other Matter

The consolidated financial statements of the Company as of December 31, 2020 and for the year then ended, which are presented for comparative purposes, were audited by another auditor who expressed an unmodified opinion on those financial statements on April 23, 2021.

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 International Financial Reporting Standards as issued by the International Accounting Standards Board, 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.

Auditors' 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 auditors' 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 disclosures made by management.

  related

• • 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 auditors' 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 auditors' 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.

The engagement partner on the audit resulting in this independent auditors' report is Michael Ryan Ayre.

CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, Canada

April 12, 2022

(Formerly First Light Capital Corp.) Consolidated statements of financial position (Expressed in Canadian dollars)

As at December 31, 2021 and 2020

NoteDecember 31 2021

December 31 2020

Assets

Current

Cash and cash equivalents Receivables

Prepaid expenses

3(n)

$

12,862,013

$ 1,820,538

332,339 43,151

28,438 14,583

Non-current

Exploration and evaluation properties

13,222,790 3,173,826

1,878,272

5, 7(a)

$

16,396,616

$

365,870 2,244,142

Liabilities

Current

Trade payables and accrued liabilities

Equity

Share capital

Reserves - stock options Reserves - warrants

Other comprehensive income Deficit

$

274,784

$

125,368

6 6(c) 6(d)

63,879,101 35,701,029

4,802,260 2,482,948

2,932,515

(2,561) (55,489,483)

- - (36,065,203)

16,121,832 2,118,774

$

16,396,616

$ 2,244,142

Approved and Authorized for Issue by the Board on April 12, 2022:

"

Barry Hildred" ……………………………………………… Director

"Brian Storseth" ……………………………………………… Director

(Formerly First Light Capital Corp.)

Consolidated statements of loss and comprehensive loss (Expressed in Canadian dollars)

For the years ended December 31, 2021 and 2020

NoteYear ended December 31, 2021

2020

Expenses Transaction costs Consulting fees Directors fees

General and administration Salaries and benefits Insurance

Legal and audit Property maintenance Regulatory fees

Rent

Travel

Shareholders communications Share-based payments

4, 7

$

16,397,735

$

-

7

122,702 151,500

7

60,427 42,000

7

131,470 134,276

7

122,473

-28,090 21,277

135,750 71,570

194 195

11,938 13,523

4,500 6,000

6(c)

1,029 154,088 2,298,137

- - 1,074,318

Other

Proceeds of option payments in excess of costs Foreign exchange gain (loss)

(19,468,533)

(1,514,659)

5

44,253

-

192,465 (47,484)

Net loss for the year

$ (19,424,280)

$

(1,369,678)

Other comprehensive loss

Loss on foreign currency translation

Net loss and other comprehensive loss for the year

(19,426,841)

(2,561)

- (1,369,678)

Loss per share, basic and diluted

$

(0.63)

$

(0.05)

Weighted average number of common shares outstanding

30,591,825

24,472,399