NOTES TO THE FINANCIAL STATEMENTS

1.   General information

The Company is a public limited company incorporated and domiciled in England (registered number: 06275976), which is listed on the London Stock Exchange. The registered office of the Company is 6 Heddon Street, London, W1B 4BT.

2.   Basis of preparation of Financial Statements

The condensed interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Statements" as adopted by the United Kingdom and the Disclosure and Transparency Rules of the UK Financial Conduct Authority. The condensed interim financial statements should be read in conjunction with the annual financial statements for the period ended 30 June 2023, which have been prepared in accordance with UK-adopted international accounting standards.

The interim financial information set out above does not constitute statutory accounts within the meaning of the Companies Act 2006. It has been prepared on a going concern basis in accordance with the recognition and measurement criteria of UK-adopted International Accounting Standards.

Statutory financial statements for the period ended 30 June 2023 were approved by the Board of Directors on 24 October 2023 and delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified and concluded that a material uncertainty exists that may cast doubt on the group's ability to continue as a going concern. The condensed interim financial statements are unaudited. 

Going concern

These financial statements have been prepared on the going concern basis. Given the Group's current cash position and its demonstrated ability to raise capital, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting preparing the condensed interim financial statements for the period ended 31 December 2023.

Notwithstanding the above, a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern and, therefore, that the Group may be unable to realise their assets or settle their liabilities in the ordinary course of business. As a result of their review, and despite the aforementioned material uncertainty, the Directors have confidence in the Groups forecasts and have a reasonable expectation that the Group will continue in operational existence for the going concern assessment period and have therefore used the going concern basis in preparing these consolidated financial statements.

The factors that were extant at 30 June 2023 are still relevant to this report and as such reference should be made to the going concern note and disclosures in the 2023 Annual Report and Financial Statements.

Risks and uncertainties

The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Company's medium term performance and the factors that mitigate those risks have not substantially changed from those set out in the Company's 2023 Annual Report and Financial Statements, a copy of which is available on the Company's website: www.cloudbreakdiscovery.com. The key financial risks are liquidity risk, credit risk, interest rate risk and unlisted investments.

Critical accounting estimates

The preparation of condensed interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the end of the reporting period. Significant items subject to such estimates are set out in Note 4 of the Company's 2023 Annual Report and Financial Statements. The nature and amounts of such estimates have not changed significantly during the interim period.

2.1. Accounting policies

The same accounting policies, presentation and methods of computation are followed in the interim consolidated financial information as were applied in the Group's latest annual audited financial statements except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 July 2023, and will be adopted in the 2024 annual financial statements. 

Changes in accounting policy and disclosures

i)    New standards and amendments adopted by the Group

The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial Reporting Standards and IFRIC interpretations. The amendments and revisions were applicable for the period ended 31 December 2023 but did not result in any material changes to the financial statements of the Group or Company.

ii) New standards, amendments and interpretations in issue but not yet effective or not early adopted

Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:

The Group is evaluating the impact of the new and amended standards above which are not expected to have a material impact on the Group's results or shareholders' funds.

3.   Dividends

No dividend has been declared or paid by the Company during the six months ended 31 December 2023 (2022: £nil).

4.   Intangible assets

As at December 31, 2023, the Group's exploration and evaluation assets are as follows:

As at December 31, 2023, the Group's reconciliation of exploration and evaluation assets are as follows:

South Timmins Property, Canada

During the year ended June 30, 2021, the Group paid $27,540 CAD (£16,080) in asset staking costs to acquire twelve mineral titles in Ontario, Canada known as the South Timmins property.

On 23 September 2021, the Group entered into an option agreement with 1315956 BC Ltd, under which 1315956 BC Ltd may acquire up to a 100% interest in the Group's South Timmins property subject to a 1% net smelter return ("NSR") to the Group. In order for 1315956 BC Ltd to fully exercise the option on the South Timmins Property, they must pay the Group an aggregate of $495,000 CAD, issue 2,250,000 common shares of 1315956 BC Ltd and incur exploration expenses of $1,515,000 with a minimum of $265,000 CAD in the first year.

To date, the Group has received cash payments of $270,000 (£157,579) and 500,000 shares in relation to the option payments due under the agreement.

During the period ended 31 December 2023, $75,000 CAD (£44,475) was due as a cash payment and is still owed to the group in relation to the option payments due under the agreement. 750,000 shares were also due during the period as part of the agreement, which are yet to be received.

Rupert, Canada

On September 11, 2018, the Group entered into an asset purchase agreement with a company controlled by a director of the Group and two unrelated persons to purchase the Rupert Property, located in British Columbia, Canada. As consideration for the property, the Group issued 2,000,000 common shares valued at $100,000 CAD (£59,000) and granted a 2% NSR. At any time, 1% of the NSR can be purchased by the Group for $1,500,000 CAD. Of the common shares issued to acquire the property, 1,000,000 were issued to a company that was controlled by a director of the Group. The Group also agreed to incur aggregate expenditures on the property of $800,000 ($100,000 CAD - £59,000 incurred).

On December 11, 2020, the Group sold the Rupert Property to Buscando Resources Corp. ("Buscando"), a company with a director in common. Payments to be received by the Group are as follows:

•     $150,000 CAD in total cash payments with $25,000 CAD (£14,750) on closing (received), $50,000 CAD on or before 12 months after Buscando is listed on a public exchange, $75,000 CAD on or before 24 months after Buscando is listed on a public exchange;

•     3,750,000 shares in total issued to the Group with 1,000,000 shares issued on closing (received and valued at $50,000 CAD - £29,500, 1,250,000 on or before 12 months after Buscando is listed on a public exchange, 1,500,000 on or before 24 months after Buscando is listed on a public exchange; and

•     $200,000 expenditures incurred on the property with $100,000 CAD on or before 12 months after Buscando is listed on a public exchange, $100,000 CAD on or before 24 months after Buscando is listed on a public exchange.

As a result of the sale to Buscando, the original vendors waived the exploration commitments required by the Group under the September 11, 2018, agreement.

During the year ended 30 June 2023, $50,000 CAD (£28,862) was due as a cash payment and is still owed to the Group at 31 December 2023.

Atlin West, Canada

On August 9 2021, the Group entered into an option agreement with 1315843 BC Ltd to purchase 100% of the rights to the Atlin West Project located in British Columbia, Canada. To earn a 100% interest, 1315843 BC Ltd make aggregate cash payments of $700,000 CAD, issue 8,000,000 shares in 1315843 BC Ltd and make payments of $325,000 over a three-year period to Cloudbreak. Upon completion of the work Cloudbreak will transfer 100% interest. Cloudbreak will retain a net 2% NSR. The Group has received cash payments of $100,000 CAD and 3,000,000 shares in relation to the option payments due under the agreement.

During the period ended 31 December 2023, $75,000 CAD (£44,475) was due as a cash payment and is still owed to the group in relation to the option payments due under the agreement. 2,500,000 shares were also due during the period as part of the agreement, which are yet to be received.

Yak, Canada

On 13 October 2021, the Group entered into an option agreement with Moonbound Mining Ltd ('Moonbound'). In respect of the Yak Project located in British Columbia, Canada. Moonbound will issue Cloudbreak 2,700,000 common shares and make aggregate cash payments of $145,000 CAD over a three-year period. Additionally, Moonbound will commit to spending up to $700,000 CAD in exploration expenditure on the property and enter into a public transaction within six months of the agreement. Upon completion of the obligations, Cloudbreak will transfer 100% interest and retain a net 2% NSR. The Group received cash payments of $35,000 CAD and 700,000 shares in relation to the option payments due under the agreement.

No payments were made during the period ended 31 December 2023.

Stateline, United States

On 9 February 2022, Cloudbreak and Alianza Minerals entered into an option agreement with Volt Lithium Corp (formerly known as Allied Copper Corp) in respect of the Stateline Project in Colorado, United States. Volt Lithium will issue the alliance 4,250,000 common shares over a three-year period and make aggregate cash payments of $315,000 CAD ($40,000 CAD paid) with a further $50,000 CAD due on closing. Additionally, Volt Lithium will commit to spending up to £3,750,000 CAD in exploration expenditure on the property over three years. The alliance will retain a net 2% NSR, not subject to a buy down provision.

On 9 August 2022, Cloudbreak and Alianza Minerals agreed to amend the terms of the Stateline option agreement with Allied Copper Corp entered into on 9 February 2022. Under the modified terms, Allied will be able to delay the issuance of shares and warrants whilst keeping the agreement in good standing.  Outstanding Allied shares will become payable to Alianza and Cloudbreak is either party reduces its equity holding through sale or other type of divesture, or if additional shares are issued in Allied which would dilute either party's holdings. Up to 30 June 2022, the Group has received cash payments of $65,000 CAD and 250,000 shares in relation to the option payments due under the agreement.

Up to the period ending 30 June 2023, the Group has received cash payments of $25,000 CAD (£15,301) and 250,000 shares in relation to the option payments due under the agreement.

On 11 August 2023, the option agreement was terminated by Volt Lithium so no further payments will be received.

Icefall, Canada

On 3 March 2022, the Group entered into an option agreement with 1311516 BC Ltd in respect of the Icefall Project in British Colombia, Canada. 1311516 BC Ltd will issue 2,000,000 common shares to Cloudbreak's subsidiary Cloudbreak (Canada) Ltd and make an aggregate of $120,000 CAD in cash payments to the Group. Additionally, 1311516 will commit to spending up to £700,000 CAD in exploration expenditure on the property over three years. This will need to be done to earn an interest of 75% in the project. Upon completion of the terms Cloudbreak and 1311516 BC Ltd will enter a joint venture in which each party will be responsible for its pro-rata share of expenditures on the project. Up to 30 June 2022, the Group has received cash payments of $25,000 CAD and 2,000,000 shares in relation to the option payments due under the agreement.

As at 31 December 2022, there is still an outstanding cash payment owed to the Group of $25,000 CAD (£15,301) in relation to the option payments due under the agreement.

During the period ended 30 June 2023, $25,000 CAD (£14,931) was due as a cash payment and is still owed to the Group of in relation to the option payments due under the agreement.

No payments were due during the period up to 31 December 2023.

Rizz, Canada

On 25 February  2022, the Group entered into an option agreement with 1311516 BC Ltd in respect of the Rizz Project in British Colombia, Canada. 1311516 BC Ltd will issue 3,000,000 common shares to Cloudbreak and make an aggregate of $120,000 CAD in cash payments to the Group. Additionally, 1311516 will commit to spending up to $750,000 CAD in exploration expenditure on the property over three years. This will need to be done to earn an interest of 75% in the project.  Upon completion of the terms, Cloudbreak and 1311516 BC Ltd will enter a joint venture in which each party will be responsible for its pro-rata share of expenditures on the project. Up to 30 June 2022, the Group received cash payments of $25,000 CAD and 3,000,000 shares in relation to the option payments due under the agreement.

During the period ended 30 June 2023, $25,000 CAD (£14,931) was due as a cash payment and is still owed to the Group of in relation to the option payments due under the agreement.

No payments were due during the period up to 31 December 2023.     

Northern Treasure, Canada

During 2022, the Group staked the Northern Treasure property for $50,645 CAD which is located in Northern British Columbia. The Company continues to actively explore this property and look for a partner to develop the property further.

On 28 October 2022, Cloudbreak announced that Precision GeoSurveys has completed a high-resolution helicopter-borne magnetic survey over the Northern Treasure Project in British Columbia.

Foggy Mountain, Canada

During 2022, the Group staked the Foggy Mountain property which is located in Central British Columbia. The Company continues to actively explore this property and look for a partner to develop the property further.

On 19 October 2022, Cloudbreak announced that that it has completed a reconnaissance surface programme at the Foggy Mountain Project in north central British Columbia, located immediately east of the past producing Kemess Mine. The property was originally staked in April 2022.

On 14 December 2023, the Company transferred their ownership and rights of a property based in Canada, the 'Foggy Mountain' project. This was disposed of as part of a settlement agreement entered with Cronin Services and Cronin Capital.

Bobcat, United States

On 6 December 2022, the Group entered a holding and cost share agreement with Longford Capital Corp pertaining to the holding, exploration, operations and development of the Bob Cat property in Idaho. The Group acquired 50% interest in the property for $60,000 USD (£47,927).

Elk Creek, United States

On 21 November 2022, the Group acquired an oil and gas lease for $43,157 USD (£33,900), for a property based in Pennsylvania, USA. The lease gives the Group full permission to conduct any and all due diligence on the leased premises, which includes inspections, tests, environmental assessments, soil studies, surveys and more.

5.   Investments held by subsidiaries

Investments held by subsidiaries

Financial assets at fair value through profit or loss are as follows:

As at 30 June, 2023, investments were classified as held for trading and recorded at their fair values based on quoted market prices (if available). Investments that do not have quoted market prices are measured at cost due to the limited amount of information available related to the fair value of the investments.

6.   Debentures Receivable

Masten Unit, United States

On 31 May 2022, the Group entered into an agreement with G2 Energy Corp. ('G2') on the Masten Unit Energy Project located in Cochran County Texas, United States. Whereby the Company will provide G2 with a $2,000,000 USD debenture on a two-year term in exchange for a 3.25% Overriding Royalty Interest in the Project. G2 will pay 12% per annum interest to the Company, calculated and paid quarterly in cash or shares at the discretion of the Company. As part of the agreement, The Group received 6,500,000 warrants for G2, however management have deemed that these warrants have no value at this stage as the assets held by G2 are predominantly made up of the early-stage exploration assets on which they have received from the Company. The group is in regular communication with G2 and is monitoring the results of its exploration activities that will be undertaken as the result of the funding by the Group to G2.

During the period ended 31 December 2023, the Company received 1,022,000 shares in G2 in place of the 12% interest payment that was due on 30 June 2023. $50,000 USD has been paid during the period by G2 for the September interest due, with the remaining balance expected to be paid in due time. The quarterly interest for December 2023 remains outstanding.

A total of $2,700 USD (£2,102) of royalty income was received during the period ended 31 December 2023 from G2.

Butte Strawn, United States

On 16 August 2022, the Company entered into an agreement with Iron Forge Holdings (III) Ltd (IF3). Whereby the company will provide IF3 with a $1,500,000 USD debenture for the Butte Strawn Energy Project located in Irion County, Texas. $500,000 USD was paid on signing. IF3 will pay 12.5% per annum interest to the Company, calculated and paid quarterly in cash or shares at the discretion of the Company. The Company received 6,000,000 warrants with a strike price of $0.35 CAD with a three-year term from financial close. On 16 June 2023, it was agreed that the principal value of the debenture be reduced from $1,500,000 USD to $600,000 USD with no further obligations for the Group. All accrued interest not paid as of the date of the agreement has been forgiven and both parties agreed to cancelling the warrants. The overriding royalty was reduced from 6% to 2%.

During the period ended 31 December 2023, no royalty income was received.

7.   Convertible loan notes

A loan note instrument was drawn up creating unsecured convertible loan notes up to a nominal amount of £340,000. The notes are convertible into ordinary shares of the Company at any time between the date of issue of the notes and their redemption date. On issue, the loan notes were convertible at a rate of the lesser of 5-day VWAP or £0.005. The loan note is repayable on or before 31 January 2024, at an interest rate of 12%.

8.   Earnings per share

The calculation of the basic loss per share of £0.001 (2022: £0.01) is based on the loss attributable to equity owners of the group of £365,705 (2022: loss of £2,858,367), and on the weighted average number of ordinary shares of 607,678,805 (2022: 595,501,976) in issue during the period.

In accordance with IAS 33, no diluted earnings per share is presented as the effect on the exercise of share options or warrants would be to decrease the loss per share.

9.   Events after the reporting date

On 27 February 2024, the Company entered a three-year agreement with Lonestar Lithium Inc. ("Lonestar"), in which Lonestar purchased the proprietary database with regional modelling and data compilation across eastern Texas. Cloudbreak will receive two-million shares in Lonestar, $25,000 USD each time a qualifying transaction property is generated from the database and 0.5% royalty produced on each qualifying transaction property.

On 4 March 2024, the Company signed an amending agreement for the convertible debenture it has in place with G2 Energy TX1 Inc. ("G2"). The changes included an extension of the maturity date from 31 May 2024 to 31 May 2025, the principal amount of the debenture and all unpaid interest will be convertible into units of G2. Each unit will entitle the Company to one common share of G2 and one purchase warrant. Each warrant entitles the Company to acquire a share at a price of $0.07 CAD per warrant, or a minimum price set by the Canadian Securities Exchange (CSE). The agreement prohibits the Company from obtaining over 19.99% of shares in G2. However, if there is a default and 61 days lapse since notice is given, the debenture will be fully convertible with no limitations.

10.  Approval of interim financial statements

The Condensed interim financial statements were approved by the Board of Directors on 27 March 2024.