Graphite One : Annual Financial Statements – December 31, 2023

GRAPHITE ONE INC.

Consolidated Financial Statements

December 31, 2023

GRAPHITE ONE INC.

Consolidated Statements of Financial Position (Expressed in United States dollars)

Approved by the Board of Directors:
«Anthony Huston»	«Douglas Smith»
Director		Director

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

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GRAPHITE ONE INC.

Consolidated Statements of Loss and Comprehensive Loss (Expressed in United States dollars)

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

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GRAPHITE ONE INC.

Consolidated Statements of Shareholders' Equity (Expressed in United States dollars)

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

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GRAPHITE ONE INC.

Consolidated Statements of Cash Flows (Expressed in United States dollars)

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

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GRAPHITE ONE INC.

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

(Expressed in United States dollars, unless otherwise indicated)

1. NATURE OF OPERATIONS

Graphite One Inc. ("Graphite One" or the "Company") is a Canadian publicly traded mineral exploration company headquartered in Vancouver, British Columbia and its common shares trades on the TSX Venture Exchange (TSX-V) under the symbol GPH and the over-the-counter market exchange (OTCQX) in the United States under the symbol GPHOF. The Company's registered office is located at Suite 600 - 777 Street Hornby, Vancouver, B.C. V6Z 1S4.

The Company is focused on developing its Graphite One Project (the "Project") with a plan to mine graphite from the Company's Graphite Creek Property, process the graphite into concentrate at a mineral processing plant located adjacent to the proposed mine, and shipped to the Company's proposed manufacturing plant in Washington State where anode materials and other value-added graphite products would be produced.

The ability of the Company to proceed with the evaluation and development of the Project depends on a number of factors, the key ones including obtaining the necessary financing to complete the evaluation and development, and ultimately upon future profitable production or proceeds from disposition of the Project.

2. GOING CONCERN

These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue to operate for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period.

As at December 31, 2023, the Company had a cash balance of $1,824,331 (December 31, 2022: $501,704), working

capital of $74,499 (December 31, 2022: $3,769,381 working capital deficit), and an accumulated deficit of

$47,931,655 (December 31, 2022: $39,479,688). The Company has incurred losses since inception and does not generate any cash inflows from operations. For the year ended December 31, 2023, cash used in operating activities totaled $3,550,498 (December 31, 2022: $3,354,647) and $15,030,673 (December 31, 2022: $13,612,647) were spent on project related expenditures. Subsequent to December 31, 2023, the Company issued 5,130,873 common shares for gross proceeds of approximately $3,800,000 (CA$5,130,873) pursuant to the exercise of outstanding common share purchase warrants at an exercise price of $0.74 (CA$1.00) per share (the "April 2024 Warrants Exercises").

The Company's ability to continue to meet its obligations and conduct its planned exploration and development activities is uncertain and dependent upon the continued financial support of its shareholders and on securing additional financing. During the year ended December 31, 2023, the Company entered into a loan for $5,000,000 (subsequently settled with a 1% Net Smelter Returns Royalty) and completed a non-brokered private placement. Including the April 2024 Warrant Exercises, the Company has raised gross proceeds of $20,263,251 since January 1, 2023. Based on projected administrative and project expenditures for 2024, the Company will require additional financings to continue to operate. There can be no assurance that the Company will be successful in securing adequate funding through additional financings, which gives rise to material uncertainty that may cast significant doubt regarding the going concern assumption and, accordingly, the ultimate appropriateness of the use of accounting principles applicable to a going concern. These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations for the foreseeable future. These adjustments could be material.

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GRAPHITE ONE INC.

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

(Expressed in United States dollars, unless otherwise indicated)

3. BASIS OF PRESENTATION AND SUMMARY OF MATERIAL ACCOUNTING POLICIES

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"), effective as of December 31, 2023.

The consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments which have been measured at fair value.

The functional currency of the Company is Canadian dollars (CA$) and for its wholly owned subsidiary, Graphite One (Alaska) Inc. ("G1 Alaska") is United States dollars ($). The presentation currency of the Company is the United States dollar. Transactions in currencies other than the functional currency are recorded at rates approximating those in effect at the time of the transactions. Monetary items are translated at the exchange rate in effect at the balance sheet date and non-monetary items are translated at historical exchange rates. Translation gains and losses are reflected in the consolidated statements of loss and comprehensive loss for the period.

Balance sheet items are classified as current if receipt or payment is due within twelve months. Otherwise, they are presented as non-current.

These consolidated financial statements include the accounts of the Company andG1 Alaska Control is defined as the exposure, or rights, to variable returns from involvement with an investee and the ability to affect those returns through power over the investee. Power over an investee exists when we have existing rights that give us the ability to direct the activities that significantly affect the investee's returns. The financial statements of subsidiaries are included in the consolidated financial statement from the date that control commences until the date that control ceases.

These consolidated financial statements were approved for issuance by the Board of Directors of the Company on April 26, 2024.

1. Cash and cash equivalents
   Cash and cash equivalents include cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash within three months of purchase.
2. Property and equipment

Property consists of right-of-use assets which is initially measured at cost, and subsequently at cost less accumulated depreciation and impairment losses and is adjusted for certain remeasurements of lease liability. Equipment is recorded at cost and carried net of accumulated depreciation and accumulated impairment losses. The cost of additions and improvements are capitalized. An item of equipment is derecognized upon disposal, or impaired when no future economic benefits are expected to arise from continued use of the asset. Any gain or loss on disposal of the asset, determined as the difference between the proceeds and the carrying amount of the asset is recognized in profit or loss.

Depreciation Rate
Right of Use Assets	Term of the lease
Computer equipment	3 years straight line
Analytical equipment	20%
Mobile equipment	5 years straight line
Preparation lab	50%

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GRAPHITE ONE INC.

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

(Expressed in United States dollars, unless otherwise indicated)

3. BASIS OF PRESENTATION AND SUMMARY OF MATERIAL ACCOUNTING POLICIES (Cont'd)

1. Property and equipment
   The Company provides for depreciation using the straight-line method at rates designed to depreciate the cost of individual items over their estimated useful lives, less any residual value. Depreciation on operating assets is included in the statements of net loss as a component of office and administrative expenses. Depreciation of assets utilized in mineral exploration activities is capitalized as a cost of mineral properties.
2. Exploration and Evaluation Properties
3. 1. Pre-licensecosts
      Costs incurred before the Company has obtained the legal right to explore are expensed, as incurred.
   2. Exploration and evaluation costs
      Once the legal right to explore has been acquired, exploration and evaluation expenditures are capitalized as incurred, unless future economic benefit is not expected to be realized. The Company capitalizes the costs of acquiring, maintaining its interest in, exploring and evaluating mineral properties until such time as the lease expires, the property is abandoned, sold or considered impaired in value, on a property-by- property basis. Exploration and evaluation properties are not amortized during the exploration and evaluation stage.
      Once the technical feasibility and commercial viability of the extraction of mineral reserves or resources from a particular mineral property has been determined, the related expenditures are assessed for impairment and are then reclassified to mineral property development costs.
      The establishment of technical feasibility and commercial viability of a mineral property is assessed based on a combination of factors, including:
   3. • the extent to which mineral reserves or mineral resources as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") have been identified through a feasibility study or similar document;
      • the results of optimization studies and further technical evaluation carried out to mitigate project risks identified in the feasibility study; and
      • the status of environmental and mining permits and mining leases.

Although the Company has taken steps to verify title to exploration and evaluation properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers, non-compliance with regulatory requirements or title may be affected by undetected defects or changes in applicable law.

The sale of net smelter royalties is generally charged against the exploration and evaluation asset; however, each transaction will be evaluated for the appropriate accounting treatment based on the royalty agreement.

1. Government Grants
   The Company recognizes government grants at fair value when there is reasonable assurance the Company will comply with the conditions of any grant assistance, the funding for the government grant will be received, and the expenditures have been incurred. Government grants related to exploration and evaluation assets are recorded against the carrying value of related exploration and evaluation asset. Government grants related to research and development of new products or processes are charged to the statement of loss against the research and development expenses.

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GRAPHITE ONE INC.

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

(Expressed in United States dollars, unless otherwise indicated)

3. BASIS OF PRESENTATION AND SUMMARY OF MATERIAL ACCOUNTING POLICIES (Cont'd)

1. Impairment
   The carrying values of the Company's long-lived assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.
   For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generatingunit" or "CGU"). The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future pre-tax cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
   An impairment loss is recognized if the carrying value amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss.
   Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. A reversal of an impairment loss is recognized immediately in profit or loss.
2. Income Taxes
   Tax expense recognized in profit or loss comprises the sum of deferred tax and current tax not recognized in other comprehensive income or directly in equity.
   Current tax assets and liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
   Deferred taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects taxable profit or accounting profit. Deferred tax liabilities on temporary differences associated with shares in subsidiaries are not provided for if reversal of these temporary differences can be controlled by the Company and it is probable that reversal will not occur in the foreseeable future.
   Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are likely to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in profit or loss in the period that includes the substantive enactment date. Deferred tax assets are recognized for all temporary differences, carry-forward of unused tax credits and unused tax losses to the extent that it is probable that future taxable profits will be available against which they can be utilized.
   Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income.

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GRAPHITE ONE INC.

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

(Expressed in United States dollars, unless otherwise indicated)

3. BASIS OF PRESENTATION AND SUMMARY OF MATERIAL ACCOUNTING POLICIES (Cont'd)

1. Income Taxes
   Deferred tax assets and liabilities are offset only when the Company has a right and intention to offset current tax assets and liabilities from the same taxation authority and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same entity or different entities which intend to settle current tax assets and liabilities on a net basis or simultaneously in each future period in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
   Changes in deferred tax assets or liabilities are recognized as a component of tax recovery or expense in profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.
2. Share-basedPayments
   The Company grants share-based awards, including stock options ("Options"), restricted share units ("RSUs") and performance share units ("PSUs") to certain employees, directors and consultants of the Company.
   Share-based payment arrangements in which the Company has received goods or services from consultants are accounted for as equity-settled transactions and, when determinable, are recorded at the value of the goods and services received. If the value of the goods and services received are not determinable, then the fair value of the share-based payment is used.
   The Company uses the Black-Scholes Option Pricing Model to calculate the fair value for all Options granted to directors, employees and consultants. For directors, employees and consultants, the fair value of the Options is measured at the date of grant. For grants to non-employees where the fair value of the goods or services is not determinable, the fair value of the Options is measured on the date the services are received by the Company.
   The fair value of share-based payments is charged either to profit or loss, or to the exploration and evaluation property, with the offsetting credit to reserves. The fair value of the Options is recognized over the vesting period based on the best available estimate of the number of Options expected to vest. Estimates are subsequently revised if there is any indication that the number of Options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period. If options vest immediately, the expense is recognized when the Options are granted. Options granted that relate to the receipt of goods or services from certain consultants are recognized over the related service period. When Options are exercised, the amounts previously recognized reserve are transferred to share capital.
   In the event Options are forfeited prior to vesting, the associated stock-based compensation recorded to date is reversed in the period of forfeiture. The fair value of any vested Options that expire remain in reserves.
   For equity-settled RSUs and PSUs, the fair value is determined based on the quoted market price of the Company's common shares on the TSX Venture Exchange ("TSX-V") at the date of grant, and the fair value is recognized as a share-base payment expense or is capitalized to exploration and evaluation property over the vesting period with a corresponding amount recorded in reserves.

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