Banyan Gold Corp.

  • Date: 2016-01-05

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BANYAN GOLD CORP. MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2015

Background

This discussion and analysis of financial position and results of operations is prepared as at January 5, 2016 and should be read in conjunction with the audited financial statements and the accompanying notes for the fiscal year ended September 30, 2015 for Banyan Gold Corp. (the “Company”). The financial statements, including comparatives, have been prepared using accounting policies consistent with International Financial Reporting Standards (“IFRS”). Except as otherwise disclosed, all dollar figures included therein and in the following management discussion and analysis (“MD&A”) are quoted in Canadian dollars. This MD&A contains “forward-looking statements” that are subject to risk factors set out in the cautionary statement below. Additional information relevant to the Company’s activities can be found on SEDAR at www.sedar.com and at www.banyangold.com.

Cautionary Note Regarding Forward-Looking Statements Certain statements contained in this MD&A, including statements or information that contain terminology such as “probable”, “proposed”, “anticipated”, “may”, and similar expressions constitute “forward-looking statements” within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, that address activities, events, or developments that we or a third party expect or anticipate will or may occur in the future, including our future growth, results of operations, performance and business prospects and opportunities are forward-looking statements. These forward-looking statements reflect our current beliefs and are based on information currently available to us. These statements require us to make assumptions we believe are reasonable and are subject to inherent risks and uncertainties. Actual results and developments may differ materially from the results and developments discussed in the forward-looking statements as certain of these risks and uncertainties are beyond our control. Consequently, all of the forward-looking statements made in this MD&A are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Banyan. These forward-looking statements are made as of the date of this MD&A. Except as required by applicable securities legislation, we assume no obligation to update publicly or revise any forward-looking statements to reflect subsequent information, events, or circumstances.

Company Overview The Company was incorporated by a Certificate of Incorporation issued pursuant to the provisions of the Alberta Corporations Act (“ABCA”) on July 26, 2010 under the name Banyan Coast Capital Corp, which was subsequently changed to Banyan Gold Corp under a certificate of amendment on February 14, 2013. On November 24, 2010, the Company became a reporting issuer in the

Provinces of British Columbia, Alberta, Saskatchewan and Ontario. Banyan completed its IPO and commenced trading on January 27, 2011 on the TSX Venture Exchange and trades under the symbol BYN. On February 15, 2013, the Company completed its Qualifying Transaction by completing a Definite Assignment and Transfer Agreement (“Definative Agreement”) with Argus Metals Corp. (“Argus”) to acquire a 100% interest in Hyland Gold Property (the “Hyland Property”) in the Watson Lake Mining District of the south eastern Yukon Territory, Canada. Under the terms of the agreement, Banyan acquired all of the Vendor's right, title and interest in and to the Hyland Property subject to a 2.5% capped net smelter return royalty ("NSR") in favour of Victoria Gold Corp., less existing underlying royalties, with a provisional buyback of 1.5% for $1,000,000. These claims are also subject to a 1% and 0.25% NSR on all core claims payable to Cash Minerals Ltd. and Strategic Metals Ltd., respectively. Additionally, there is a 1% NSR on 88 of the claims payable to Adrian Resources Ltd. that is capped at $1.5 million. The Corporation is engaged in the business of exploration and development of precious metals. The Corporation owns a 100% interest in the Hyland Gold Property (“Property”) in the Yukon Territory. The Property contains a Main Zone NI 43-101 Compliant Resource of 361,692 oz gold (12,503,994 tonnes of 0.90 g/t Au) and 2,248,948 oz silver (12,503,994 tonnes of 5.59 g/t Ag). Results of the Annual General Meeting Banyan Gold Corp held its Annual General Meeting ("AGM") on June 8, 2015. Richmond Graham, Mark Ayranto, Jay Collins and Tara Christie were re-elected as directors. Banyan Gold also announced that all resolutions put forward in the proxy at the annual shareholder meeting of Banyan Gold were passed by shareholders. Selected Financial Information The following selected financial information is derived from the audited financial statements of the Company prepared in accordance with International Financial Reporting Standards (“IFRS”). Audited Fiscal Year Ended All in $ Cdn Operations: Revenues Expenses Comprehensive Loss Loss per share – basic & fully diluted Balance Sheet: Working Capital Total Assets Total Long term liabilities

2015

$

225,794 (225,794) (0.01)

11,395 1,151,667 Nil

2014

$

2013

283,962 (283,962) (0.02)

$

240,233 (240,233) (0.02)

62,630 812,375 Nil

342,663 1,077,227 Nil

The following selected financial information is derived from the unaudited interim financial statements of the Company prepared in accordance with International Financial Reporting Standards (“IFRS”).

Fiscal Quarters of the Fiscal Year Ended September 30, 2015 First Quarter

All in $ Cdn Operations: Revenues Expenses Comprehensive Loss Loss per share – basic & fully diluted

$

Balance Sheet: Working Capital Total Assets Total Long term liabilities

Second Quarter

30,656 (30,656) (0.00)

$

52,727 (52,727) (0.00)

57,190 767,330 Nil

443,996 1,201,496 Nil

Third Quarter

$

48,183 (48,183) (0.00)

275,729 1,148,704 Nil

Fourth Quarter

$

94,228 (94,228) (0.01)

11,395 1,151,667 Nil

Fiscal Quarters of the Fiscal Year Ended September 30, 2014 First Quarter

All in $ Cdn Operations: Revenues Expenses Comprehensive Loss Loss per share – basic & fully diluted Balance Sheet: Working Capital Total Assets Total Long term liabilities

$

64,649 (64,649) (0.00)

275,813 992,712 Nil

Second Quarter

$

106,908 (106,908) (0.01)

233,387 898,112 Nil

Third Quarter

$

55,020 (55,020) (0.00)

181,264 841,149 Nil

Fourth Quarter

$

57,385 (57,385) (0.01)

62,630 812,375 Nil

Results of Operations Hyland Property

2015 Work Program The 2015 Hyland Gold Project mineral exploration program was designed to drill test a deep-seated, limestone-replacement style and listric fault related gold mineralization model theorized to exist on the Hyland Gold Project. Drill testing of this mineralization concept was successful in: The 2015 Hyland drill program was designed to drill test a deep-seated, carbonate-replacement style and listric fault related gold mineralization model theorized to exist on the Hyland Gold Project. Drilling was successful in: 1) Interception of a mineralized lower limestone unit of the Hyland Group Formation metasedimentary package. 2) Penetration through a fault zone within the north-south oriented Quartz Lake Corridor which is interpreted to represent a large-scale, structural control to gold mineralization.

The Hyland Gold Project 2015 Mineral exploration program was completed during August 2015 and consisted of 739.85 metres of HQ and ND diamond drilling over three (3) drillholes within the mineralized Camp Zone. Highlights from the drill program of the 2015 Hyland Exploration program include: Drillhole HY-15-45: 31.08m of 0.4 g/t Au from 2.45 to 33.53m - including 13.43m of 0.62 g/t Au from 2.45 to 15.88m. Elevated base metals were encountered at depth in this hole, beneath the fault zone as well, including a 870 ppm Cu complete with an overlimits (>200 g/t) Ag, 1.14m interval. Drillhole HY-15-46: 76.34m of 0.32 g/t Au from 75.56 to 151.90m - including 20.95m of 0.41 g/t Au from 73.88 to 94.83m and 35.9m of 0.36 g/t Au from 116 to 151.9m. Drillhole HY-15-47: 88.7m of 0.24 g/t Au from 35.52 to 135.22m which includes intervals of 29.82m of 0.33 g/t Au from 45.52 to 75.34m and 23.68m of 0.37 g/t Au from 110.54 to 134.22m. This hole, and HY-15-46, illustrates a consistently and pervasively gold mineralized interval complete with elevated base metals at depth. Hole HY-15-47 intercepted an anomalously high interval of 2000 ppm* Pb from 94.7 to 127.43m. *2000ppm requires further definition as 3 of the intervals (5.23 m of the interval) returned >10,000ppm Pb and will require overlimits analyses to more accurately define the grades. Overlimits Zinc assays were returned from these intervals as well.

By testing these targets, Banyan has highlighted the under-tested regional mineralization potential of the Hyland Gold Project and highlights the fact that substantive mineral potential exists beyond the Main Zone. Co-incident with the diamond drilling program, Banyan’s 2013/2014 Montrose Ridge discovery, 6.5 km south of the Main Zone, was the focus of a systematic surface sampling and trenching program designed to define drill targets to continue to test the District-Scale mineral potential of the Hyland Gold Project. Over 3.5 km of access trail construction was completed during the 2015 Montrose Ridge Zone program culminating in approximately 1 km of surface trench construction and subsequent chip/channel sampling. This trenching operation represented the first time heavy machinery and vehicular access to Montrose Ridge has been possible, and afforded an exceptional opportunity to expose bedrock and sub-crop within the broad Au-As-in-soils-anomaly defined at Montrose Ridge through previous Banyan exploration programs. Trench results from the Montrose Ridge Zone were highly encouraging, with heavily alteration and sulphide (arsenopyrite, bismuithinite and pyrite) mineralization identified from a fault-hosted structural zone within a previously un-mapped member of the hosting Hyland Group, the Yusezyu Conglomerate (brittle pebble conglomerate unit), on the Hyland Gold Property. In total, 327 diamond drill samples and 193 trench samples were collected during the 2015 program and sent for chemical analyzes at Bureau Veritas Commodities Canada Ltd. Montrose Trench results highlights include: Trench MT-15-01*: 6m of 4.4 g/t Au from 0-6m in including 2m of 13.1 g/t Au from 4-6m 24 m of 0.47 g/t Au from 18 to 42m, including 6m of 1.3 g/t Au from 36-42m. *Trench MT-15-01 was 42 m long, however only 30m were sampled due to overburden conditions from 6m to 18m.

Of the 193 samples collected and analyzed as part of the 2015 trench program, assays ranged from trace to 13.1 g/t Au and averaged 0.19 g/t Au. Selected chip and channel samples from the other trenches completed included 2.25 g/t Au, 1.35 g/t Au, 2.9 g/t Au and 1.3 g/t Au.

The 2015 Montrose Ridge trenches were designed to cross-cut interpreted strike of the controlling structures as closely as possible. In all cases the trenches remain open in all directions with potential for hosting gold-mineralized structures. In total approximately 380m of strike extent of the Montrose Ridge zone was tested in the 2015 program. A soil-geochemical XRF study was conducted coincident with the trench program and a striking bismuth-gold relationship was established from this study, and subsequently validated through chemical analyses. The 2015 XRF study also helped to fine-tune final trench locations, and provided valuable elemental relationships which will be applied to all exploration efforts going forward. This, the first detailed rock sampling program at Montrose established a lack of a silver association with the Montrose Ridge gold mineralization. This is similar to the Cuz Zone, 2.5 km to the South of Montrose and fits with management’s interpretation that both Cuz and Montrose represent a separate mineralized system from the Hyland Main Zone system, where an approximate 1:4 gold-silver ratio exits. This definition of repeated, multi-phased gold mineralization events on the Hyland Project further builds out the District-Scale gold system Banyan is working to demonstrate. The Montrose Ridge Zone was initially discovered in 2013 by Banyan, through a detailed soils/rock sampling program on the South Hyland Property, 6.5km south of the Hyland Main Zone (which hosts a NI 43-101 Inferred Resource of 396,000 gold equivalent ounces). Importantly, the Montrose Ridge Zone lies along the identified >12 km long Quartz Lake Corridor which is interpreted to control significant mineralization identified on the Hyland Project, and fits with the Company’s regional structurally controlled mineralization model for the Hyland Project and Hyland District. The Technical Report with respect to Hyland entitled “Technical Report on the Hyland Gold Property in the Yukon Territory” was written by Allan Armitage, Ph.D., P.Geol., GeoVector Management Inc., and Paul D. Gray, B.Sc., P.Geo., Paul D. Gray Geological Consultants and dated November 2, 2012. Mr. Armitage and Mr. Gray are each a “qualified person” as defined in NI 43-101. Mr. Armitage is “independent” of Banyan and was responsible for the preparation of the Technical Report. Summary Table of Resources (extracted from November 2, 2012 NI 43-101 Hyland Gold Project Technical Report) AuEq Cut-off 0.4 g/t 0.5 g/t 0.6 g/t 0.7 g/t 0.8 g/t

Tonnes

Grade

Ozs

Ag g/t

Ag Ozs

AuEq g/t

AuEq Ozs

16,820,094 14,734,230 12,503,994 9,678,679 7,038,666

0.79 0.84 0.90 0.99 1.10

425,424 397,785 361,692 307,098 248,349

4.84 5.18 5.59 6.39 7.31

2,619,911 2,453,560 2,248,948 1,988,733 1,654,686

0.86 0.92 0.99 1.09 1.21

465,946 435,738 396,468 337,824 273,942

* "Gold equivalent" or "AuEq" is based on silver metal content valued at 0.016 gold value using a $1016 US Au price and a $15.82US Ag price, which approximates the average prices for these metals over the last three years. The Inferred Mineral Resource was estimated using practices consistent with CIM (2005) and applied to the generation of the resource estimate. A database of 92 diamond and Reverse circulation drill holes (13,615 meters) with 8,704 assay values collected through 2011 were used for the estimate. This included 72 historic drill holes (9,662 metres, 2,713 assays) completed from 1988 to 2005, and 20 drill holes (3,953 metres, 5,591 assays) completed in 2010 and 2011. The drill hole database included collar locations, down hole survey data, assay data, lithology data and specific gravity (“SG”) data. Topographic data from government topographic maps was provided from which a 3D topography surface file was created. Inverse distance squared interpolation restricted to a single mineralized domain was used to estimate gold and silver grades into the block model.

Analysis of Hyland Expenditures: Balance, September 30, 2013

$

683,868

Government grant for work completed

(35,000)

Exploration and evaluation expenses capitalized Balance, September 30, 2014

65,308

$

714,176

Government grant & accrual for work completed

(87,965)

Exploration and evaluation expenses capitalized

423,156

Balance, September 30, 2015

$

1,049,367

During the fiscal year ended September 30, 2015, the Company recorded a net loss of $(225,794) vs a loss of $(283,962) in fiscal 2014. The current year loss is mostly the result of Professional fees ($84.8K in 2015 vs $64.8K in 2014), G&A ($61.4K in 2015 vs $69.1K in 2014), Management Fees ($44.0K in 2015 vs $107.0K in 2014, stock based compensation ($26.6K in 2015 vs $32.4K in 2014) and listing and filing fees ($9.2K in 2015 vs 11.8K in 2014). The increase in Professional fees was driven by additional efforts to seek out acquisitions while the decrease in Management Fees was driven by leaving the President and CEO position open during the fiscal year. During the fourth quarter ended September 30, 2015, the Company recorded a net loss of $(94,228) vs a loss of $(57,385) in the fourth quarter of 2014. The current quarter loss is mostly the result of Professional fees ($29.9K in 2015 vs $24.9K in 2014), stock based compensation ($26.6K in 2015 vs $ nil in 2014), general and administrative ($24.2K in 2015 vs $19.6K in 2014) and management fees ($12.5K in 2015 vs $12.5K in 2014). The general driver of the $36.7K loss increase for the quarter year over year was the issuance of stock options in the fourth quarter of 2015 vs none in the prior year ($25.6K increase), increase in professional fees ($5K increase) year over year partially due to the search for acquisitions and the initiation of promotional activities and the timing of insurance premiums offsetting a decline in travel resulting in a $4.7K increase in general and administrative expenses. Additional Disclosure for General & Administrative Costs Since the Corporation has no revenue from operations, the following is a breakdown of general and admin expenses and material costs incurred in the last two fiscal periods: General & Admin & Material Costs General & Admin: Advertising & Promotions Insurance Transfer Agent Fees Travel Shareholder Com – AGM Office Supplies Telephone Storage Courier & Postage Interest & Bank Charges Profession Dues Bad Debt

Fiscal Year End September 30, 2015 25,231 10,450 7,416 7,137 5,534 1,831 1,722 1,287 489 258 0 0

Fiscal Year End September 30, 2014 9,812 9,720 9,767 23,229 5,277 1,492 2,183 1,243 515 46 1,805 4,028

Liquidity and Capital Resources The accompanying interim financial statements are presented on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of operations. The Company does not generate cash flows from operations and has therefore relied principally on the issuance of equity securities to finance its operation activities to the extent that such instruments are issuable under terms acceptable to the Company. If future financing is unavailable, the Company may not be able to meet its ongoing obligations, in which case the realizable values of its assets may decline materially from current estimates. The financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue operations. From inception to September 30, 2015, the Company raised gross proceeds of $1,595,050 from the sale of its common shares.. As at September 30, 2015, the Company had working capital of $11,395 (2014 - $62,630) which will be insufficient to fund the Company thru the next fiscal year and a financing will be required to fund the Company’s short and long term cash requirements. The Company has no contractual obligations and the recent Hyland work program will maintain the Company in good standing into 2019.

Off-Balance Sheet Arrangements None

Proposed Transactions See the subsequent event note below.

Transactions With Related Parties During the year, $84,000 (2014 - $147,000) was charged to the corporation by officers of the Company. $42,000 (2014 - $105,000) has been billed to management fees by 1195472 Ontario Ltd. for the CFO, $38,500 (2014 - $38,500) to professional fees by Paul D. Gray Geological Consulting, and a further $3,500 (2014 – $3,500) has been capitalized against the Hyland Project by Paul D.Gray Geological Consulting Critical Judgments and Accounting Estimates These financial statements, including comparatives have been prepared using accounting policies consistent with International Financial Reporting Standards (“IFRS”). The financial statements have been prepared on a historical costs basis, except for financial instruments classified as financial instruments at fair value through profit and loss, which are stated at their fair value. In addition these financial statements have been prepared using the accrual basis of accounting except for cash flow information. The preparation of these financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported expenses during the period. Actual results could differ from these estimates.

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could results in a material adjustment to the carry amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following: i) ii) iii) iv) v) vi)

the recoverability of receivables which are included in the statements of financial position; the inputs used in accounting for stock-based compensation expense, which are included in the statement of operations; recoverability of future income tax asset; recoverability of exploration and evaluation expense asset; the valuation of the rehabilitation provision; and the valuation of share-based payments transactions.

Foreign Exchange The functional currency is the currency of the primary economic environment in which the entity operates. The functional currency is the Canadian dollar. The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates. Transactions in currencies other than the Canadian dollar are recorded at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, the monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the rate of exchange at the statement of financial position date while non-monetary assets and liabilities are translated at historical rates. Revenues and expense are translated at the exchange approximating those in effect on the date of the transactions. Exchange gains and losses arising on translation are included in the consolidated statements of operations.

Cash and cash equivalents Cash and cash equivalents are comprised of cash on deposit and highly liquid short-term interest bearing variable rate investments with an original maturity of three months or less, which are readily convertible into a known amount of cash. Financial instruments Financial assets The Company classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. The Company's accounting policy for each category is as follows: • Fair value through profit or loss - this category comprises derivatives, or assets acquired or incurred principally for the purpose of selling or repurchasing it in the near term. These assets are carried in the statement of financial position at fair value with changes in fair value recognized in the statement of operations. • Loans and receivables - these assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These assets are carried at cost less

any provision for impairment. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. • Held-to-maturity investments - these assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Company's management has the positive intention and ability to hold to maturity. These assets are measured at amortized cost using the effective interest method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings and other relevant indicators, the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognized in the statement of operations. • Available-for-sale - non-derivative financial assets not included in the above categories are classified as available-for-sale. These assets are carried at fair value with changes in fair value recognized directly in equity. Where a decline in the fair value of an available-for-sale financial asset constitutes objective evidence of impairment, the amount of the loss is removed from equity and recognized in the consolidated statement of operations. All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described above. Financial liabilities The Company classifies its financial liabilities into one of two categories, depending on the purpose for which the asset was acquired. The Company's accounting policy for each category is as follows: Fair value through profit or loss - this category comprises derivatives, or liabilities acquired or incurred principally for the purpose of selling or repurchasing it in the near term. These liabilities are carried in the statement of financial position at fair value with changes in fair value recognized in the statement of operations. Other financial liabilities include amounts due to related parties and accounts payables and accrued liabilities. This category is measured in the statement of financial position at amortized cost using the effective interest method. The Company has classified its cash and cash equivalents as fair value through profit and loss. The Company’s receivables are classified as loans and receivables. Impairment At the end of each reporting period, the Company’s assets are reviewed to determine whether there is any indication that those assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount

of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit or loss for the period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cashgenerating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss. Property Plant & Equipment At acquisition, the Company records property and equipment at cost, including all expenditures incurred to prepare an asset for its intended use. These expenditures consist of: the purchase price; broker’s commissions; and installation costs including architectural, design and engineering fees, legal fees, survey costs, site preparation costs, freight charges, transportation insurance costs, duties, testing and preparation charges. The Company capitalizes costs that meet the asset recognition criteria. Costs incurred that do not extend the productive capacity or useful economic life of an asset are considered repairs and maintenance expenses and are accounted for in the profit and loss in the period. The Company provides for amortization using the declining balance method at rates designed to amortize the cost of the property over their estimated useful lives. The annual amortization rates are as follows: Automotive

30%

Depreciation of property and equipment utilized in the exploration of assets, including mine exploration, is recapitalized as exploration and evaluation costs attributable to the related asset. Interest income Interest income is recognized as it accrues in the statement of income, using the effective interest method. Loss per share The Company presents basic loss per share for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti-dilutive. Share-based payments The Company may grant stock options to acquire common shares of the Company to directors, officers, employees and consultants. An individual is classified as an employee when the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee.

The fair value of stock options is measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration paid for the shares on the exercise of stock options is credited to share capital. In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of goods or services received. Income Taxes The income tax expense or benefit for the period consists of two components: current and deferred. Income tax expense is recognized in the statements of comprehensive loss except to the extent it relates to an item recognized directly in equity or other comprehensive income. Current tax is the expected tax payable or receivable on the taxable profit or loss for the year. Current tax is calculated using tax rates and laws that were enacted or substantively enacted at the reporting date in each of the jurisdictions and includes any adjustments for taxes payable or recovery in respect of prior periods. Deferred tax is recognized using the liability method, on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. However, the deferred tax is not recognized if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Mineral exploration and evaluation expenditures Costs that are directly related to exploration and evaluation expenditures are recognized and capitalized, in addition to the acquisition costs. These direct expenditures include such cost as: materials used, surveying costs, geological costs, drilling costs, travel to and from the site, and payments made to contractors. Costs not directly attributable to exploration and evaluation activities, including general and administrative overhead, are expensed in the year in which they occur.

Rehabilitation provision The Company is subject to various government laws and regulations relating to environmental disturbances caused by exploration and evaluation activities. The Company records the present value of the estimated costs of restoration obligation in the year in which the obligation is incurred. When the liability is recognized, the present value of the estimated costs is capitalized by increasing the carrying amount of the related exploration properties. The discounted liability is increased for the changes in present value based on current market discount rates and liabilities specific risks.

Segment reporting The Company determined that it only had one operating segment.

New Standards and Interpretations The following new standards were adopted during the year by the Company:

i) IFRS 10 Consolidated Financial Statements IFRS 10 will replace portions of IAS 27 Consolidated and Separate Financial Statements and interpretation SIC-12 Consolidation – Special Purpose Entities. IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements. The standard provides additional guidance to assist in determining control where this is difficult to assess. ii) IFRS 11 Joint Arrangements IFRS 11 applies when accounting for interests in joint arrangements where there is joint control. Joint arrangements would be classified as either joint operations or joint ventures. The structure of the joint arrangement would no longer be the most significant factor when classifying the joint arrangement as either a joint operation or a joint venture. The option to account for joint ventures (previously called jointly controlled entities) using proportionate consolidation would be removed and equity accounting would be required. Ventures would transition the accounting for joint ventures from the proportionate consolidation method to the equity method by aggregating the carrying values of the proportionately consolidated assets and liabilities into a single line item. Future Accounting Policies The following new standards have been issued but are not yet applicable to the Company: i) IFRS 9 Financial Instruments As part of the project to replace IAS 39 Financial Instruments: Recognition and Measurement, this standard retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets. More specifically, the standard: -

Deals with classification and measurement of financial assets; Establishes two primary measurement categories for financial assets: amortized cost and fair value;

-

Prescribes that classification depends on entity’s business model and the contractual cash flow characteristics of the financial asset; Eliminates the existing categories: held to maturity, available for sale, and loans and receivables. Certain changes were also made regarding the fair value option for financial liabilities and accounting for certain derivatives linked to unquoted equity instruments. This standard is effective for annual periods beginning on or after January 1, 2015. The Company will adopt this standard when it becomes effective. The Company has currently not assessed the impact of adopting this standard.

ii) IFRS 15 Revenue from Contracts with Customers IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when it becomes effective. The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by IFRS 15. This standard is effective for annual periods beginning on or after January 1, 2017. The Company will adopt this standard when it becomes effective. The Company has currently not assessed the impact of adopting this standard. Risks and Uncertainties The Company’s financial performance is likely to be subject to the following risks: The Issuer is a relatively new company with limited operating history and no history of business or mining operations, revenue generation or production history. The Issuer was incorporated on July 26, 2010 and has yet to generate a profit from its activities. The Issuer will be subject to all of the business risks and uncertainties associated with any new business enterprise, including the risk that it will not achieve its growth objective. The Issuer anticipates that it may take several years to achieve positive cash flow from operations.

Exploration, Development and Operating Risks The exploration for and development of minerals involves significant risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. Few properties which are explored are ultimately developed into producing mines. There can be no guarantee that the estimates of quantities and qualities of minerals disclosed will be economically recoverable. With all mining operations there is uncertainty and, therefore, risk associated with operating parameters and costs resulting from the scaling up of extraction methods tested in pilot conditions. Mineral exploration is speculative in nature and there can be no assurance that any minerals discovered will result in an increase in the Issuer's resource base. The Issuer's operations will be subject to all of the hazards and risks normally encountered in the exploration, development and production of minerals. These include unusual and unexpected geological formations, rock falls, seismic activity, flooding and other conditions involved in the extraction of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and possible legal liability. Although precautions to minimize risk will be taken, operations are subject to hazards that may result

in environmental pollution, and consequent liability that could have a material adverse impact on the business, operations and financial performance of the Issuer.

Substantial Capital Requirements and Liquidity Substantial additional funds for the establishment of the Issuer's current and planned exploration program and potential mining operations will be required. No assurances can be given that the Issuer will be able to raise the additional funding that may be required for such activities, should such funding not be fully generated from operations, mineral prices, environmental rehabilitation or restitution. Revenues, taxes, transportation costs, capital expenditures and operating expenses and geological results are all factors which will have an impact on the amount of additional capital that may be required. To meet such finding requirements, the Issuer may be required to undertake additional equity financing, which would be dilutive to shareholders. Debt financing, if available, may also involve restrictions on financing and operating activities. There is no assurance that additional financing will be available on terms acceptable to the Issuer or at all. If the Resulting Issuer is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations or anticipated expansion, and pursue only those development plans that can be funded through cash flows generated from its existing operations.

Fluctuating Mineral Prices The economics of mineral exploration is affected by many factors beyond the Issuer's control including, commodity prices, the cost of operations, variations in the grade of minerals explored and fluctuations in the market price of minerals. Depending on the price of minerals, it may be determined that it is impractical to continue the mineral exploration operation. Mineral prices are prone to fluctuations and the marketability of minerals is affected by government regulation relating to price, royalties, allowable production and the importing and exporting of minerals, the effect of which cannot be accurately predicted. There is no assurance that a profitable market will exist for the sale of any minerals found on the Property.

Regulatory Requirements The current or future operations of the issuer require permits from various governmental authorities, and such operations are and will be governed by laws and regulations governing exploration, development, production, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, site safety and other matters. Companies engaged in the exploration and development of mineral properties generally experience increased costs and delays in development and other schedules as a result of the need to comply with the applicable laws, regulations and permits. There can be no assurance that all permits which the Issuer may require for the facilities and conduct of exploration and development operations will be obtainable on reasonable terms or that such laws and regulation would not have an adverse effect on any exploration and development project which the Resulting Issuer might undertake. Failure to comply with applicable 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 exploration and development operations may be required to compensate those suffering loss or damage by reason of the exploration and development activities and may have civil or criminal fines or penalties imposed upon them for violation of applicable laws or regulations. Amendments to current laws, regulation and permits governing operations and activities of mineral companies, or more stringent implementation thereof, could have a material adverse impact on the Issuer and cause increases in capital expenditures or exploration and development costs or require abandonment or delays in the development of new properties.

Financing Risks and Dilution to Shareholders The Issuer has limited financial resources. If the Issuer's exploration programs on the Property are successful, additional funds will be required for the purposes of further exploration and development. There can be no assurance that the Issuer will be able to obtain adequate financing in the future or that such financing will be available on favourable terms or at all. It is likely such additional capital will be raised through the issuance of additional equity which will result in dilution to the Issuer's shareholders.

Requirement for Permits and Licenses A substantial number of additional permits and licenses may be required should the Issuer proceed beyond exploration; such licenses and permits may be difficult to obtain and may be subject to changes in regulations and in various operational circumstances. It is uncertain whether the Issuer will be able to obtain all such licenses and permits.

Competition There is competition within the mining industry for the discovery and acquisition of properties considered to have commercial potential. The Issuer will compete with other mining companies, many of which have greater financial, technical and other resources than the Issuer, for, among other things, the acquisition of minerals claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees and other personnel.

Reliance on Management and Dependence on Key Personnel The success of the Issuer is currently largely dependent upon on the performance of its directors and officers and the ability to attract and retain its key personnel. The loss of the services of these persons may have a material adverse effect on the Issuer's business and prospects. The Issuer will compete with numerous other companies for the recruitment and retention of qualified employees and contractors. There is no assurance that the Issuer can maintain the service of its directors and officers or other qualified personnel required to operate its business. Failure to do so could have a material adverse effect on the Resulting Issuer and its prospects.

No Mineral Reserves Mineral reserves are, in the large part, estimates and no assurance can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery will be realized. Reserve estimates for properties that have not yet commenced production may require revision based on actual production experience. Market price fluctuations of metals, as well as increased production costs or reduced recovery rates may render mineral reserves containing relatively lower grades of mineralization uneconomic and may ultimately result in a restatement of reserves. Moreover, shortterm operating factors relating to the mineral reserves, such as the need for orderly development of the ore bodies and the processing of new or different mineral grades may cause a mining operation to be unprofitable in any particular accounting period.

Environmental Risks The Issuer's exploration and appraisal programs will, in general, be subject to approval by regulatory bodies. Additionally, all phases of the mining business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of international conventions and state and municipal laws and regulations. Environmental legislation provides for, among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in association with mining operations. The legislation also requires that wells and facility sites be

operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities. Compliance with such legislation can require significant expenditures and a breach may result in the imposition of fines and penalties, some of which may be material. Environmental legislation is evolving in a manner expected to result in stricter standards and enforcement, larger fines and liability and potentially increased capital expenditures and operating costs.

Governmental Regulations and Licenses and Permits The activities of the Issuer are subject to provincial and federal approvals, various laws governing prospecting, development, land resumptions, production taxes, labour standards and occupational health, mine safety, toxic substances and other matters. Although the Issuer believes that its activities are currently carried out in accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail production or development. Amendments to current laws and regulations governing operations and activities of exploration and mining, or more stringent implementation thereof, could have a material adverse impact on the business, operations and financial performance of the Issuer. Further, the licenses and permits issued in respect of its projects may be subject to conditions which, if not satisfied, may lead to the revocation of such licenses. In the event of revocation, the value of the Issuer's investments in such projects may decline.

Local Resident Concerns Apart from ordinary environmental issues, work on, or the development and mining of the Property could be subject to resistance from local residents that could either prevent or delay exploration and development of the Property.

Conflicts of Interest Certain of the directors and officers of the Issuer will be engaged in, and will continue to engage in, other business activities on their own behalf and on behalf of other companies (including mineral resource companies) and, as a result of these and other activities, such directors and officers of the Issuer may become subject to conflicts of interest. The ABCA provides that in the event that a director has a material interest in a contract or proposed contract or agreement that is material to the issuer, the director shall disclose his interest in such contract or agreement and shall refrain from voting on any matter in respect of such contract or agreement, subject to and in accordance with the ABCA. To the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the ABCA.

Uninsurable Risks Exploration, development and production operations on mineral properties involve numerous risks, including unexpected or unusual geological operating conditions, rock bursts, cave-ins, fires, floods, earthquakes and other environmental occurrences. It is not always possible to obtain insurance against all such risks and the Issuer may decide not to insure against certain risks as a result of high premiums or other reasons. Should such liabilities arise, they could have an adverse impact on the Issuer's results of operations and financial condition and could cause a decline in the value of the Issuer Share. The Issuer does not intend to maintain insurance against environmental risks.

Investor Relations Activities The Company does not have any investor relations arrangements.

Disclosure of Outstanding Share Data a)

Authorized and Issued capital stock: As of September 30, 2015:

Unlimited number of: Unlimited Class A voting common shares Unlimited Class B non-voting, common shares Unlimited Preferred Shares All issued shares are fully paid The Company’s authorized share capital is unlimited common shares without par value. As at September 30, 2015, there are 24,384,000 issued and outstanding common shares. b)

Warrants Outstanding: As of September 30, 2015 Number 4,350,000 600,000

Exercise Price $ 0.075 $ 0.075

Expiry Date March 13, 2017* April 10, 2017*

4,950,000 Note: The warrants may have their expiry time accelerated at any time prior to the expiry of the warrants if the volume-weighted average trading price of the corporation's shares on the TSX Venture Exchange is greater than 12 cents for 15 consecutive trading days, at which time the corporation may give notice in writing to the warrant holders within 10 days of such an occurrence that the warrants shall expire on the 30th day following the giving of such notice.

c)

Options Outstanding: Number

Exercise Price

250,050 650,000 75,000 675,000 1,650,050

$ 0.15 $ 0.05 $ 0.05 $ 0.05

Expiry Date January 21, 2021 January 31, 2019 April 22, 2019 August 10, 2020

Subsequent Event On December 31, 2015, the Company announced that, subject to TSX Venture Exchange approval, it is conducting a non-brokered private placement of up to five million units at 5 cents per unit for gross proceeds of $250,000. Each unit consists of one common share and one full non-transferable common share purchase warrant, with each full warrant exercisable into one common share of the company at an exercise price of 10 cents, exercisable for a period of thirty-six months from the date of issuance. The Warrants, which form part of the Unit, may have their expiry time accelerated at any time prior to the expiry of the Warrants if the volume weighted average trading price of the Corporation's shares on

the TSX Venture Exchange is greater than $0.15 for 15 consecutive trading days, at which time the Corporation may give notice in writing to the Warrant holders within 10 days of such an occurrence that the Warrants shall expire on the 30th day following the giving of such notice. The financing may be closed in tranches at the discretion of the Corporation. A finder’s fee of up to 6% may be paid on a portion of the financing. The funds raised will be used for general and administrative costs. Also on December 31, 2015, the Company announced it would issue 600,000 stock options to directors and officers at an exercise price of $0.05, exercisable for a period of five years from the date of issuance.