Annual Report
2015
Midland Exploration Midland Inc.
1, Place Ville Marie, Suite 4000, Montreal (Quebec) H3B 4M4
Tel.: 450.420.5977 Fax : 450.420.5978
Exploration Midland inc.
Table of contents
Management’s discussion and Analysis
Nature of Activities ........................................................................................................................................ 3
Overall Performance ..................................................................................................................................... 3
Results of Operations .................................................................................................................................... 4
Investing Activities ......................................................................................................................................... 5
Financing Activities ..................................................................................................................................... 28
Working Capital ........................................................................................................................................... 28
Summary of Results per Quarter ................................................................................................................ 29
Fourth Quarter ............................................................................................................................................. 29
Related Party Transactions ......................................................................................................................... 30
Subsequent Events ..................................................................................................................................... 30
Outstanding Share Sata .............................................................................................................................. 30
Stock Option Plan ....................................................................................................................................... 30
Off-balance Sheet Arrangements ............................................................................................................... 31
Commitment ................................................................................................................................................ 31
Critical Accounting Estimates...................................................................................................................... 31
Financial Instruments .................................................................................................................................. 32
Risk Factors ................................................................................................................................................ 32
Foward Looking Information........................................................................................................................ 35
Financial Statement
Independant Auditor’s Report ..................................................................................................................... 36
Statements of Financial Position ................................................................................................................. 38
Statements of Comprehensive Loss ........................................................................................................... 39
Statements of Change in Equity ................................................................................................................. 40
Statements of Cash Flows .......................................................................................................................... 41
Notes to Financial Statements .................................................................................................................... 42
Corporate Information ................................................................................................................................. 68
- 2 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
The following discussion and analysis (the “MD&A”) of the financial condition and results of the operations
of Midland Exploration Inc. (“Midland” or “the Corporation”) constitutes management’s review of the factors
that affected the Corporation’s financial and operating performance for the year ended September 30, 2015.
This MD&A should be read in conjunction with the Corporation’s audited financial statements as at
September 30, 2015 prepared in accordance with the International Financial Reporting Standards (“IFRS”).
All figures are in Canadian dollars unless otherwise noted.
Further information regarding the Corporation and its operations are filed electronically on the System for
Electronic Document Analysis and Retrieval (SEDAR) in Canada and can be obtained from
www.sedar.com.
Abbreviation
Fiscal 13
Q1-14
Q2-14
Q3-14
Q4-14
Fiscal 14
Q1-15
Q2-15
Q3-15
Q4-15
Fiscal 15
Fiscal 16
Period
October 1, 2012 to September 30, 2013
October 1, 2013 to December 31, 2013
January 1, 2014 to March 31, 2014
April 30, 2014 to June 30, 2014
July 1, 2014 to September 30, 2014
October 1, 2013 to September 30, 2014
October 1, 2014 to December 31, 2014
January 1, 2015 to March 31, 2015
April 30, 2015 to June 30, 2015
July 1, 2015 to September 30, 2015
October 1, 2014 to September 30, 2015
October 1, 2015 to September 30, 2016
1. NATURE OF ACTIVITIES
Midland, incorporated on October 2, 1995 and operating under the Business Corporations Act
(Québec), is a company in the mining exploration business. The Corporation’s operations include the
acquisition and exploration of mining properties. The Corporation’s shares are listed on the TSX
Venture Exchange (the “Exchange”) under the MD ticker.
2. OVERALL PERFORMANCE
Midland has a working capital of $9,999,139 as of September 30, 2015 ($3,137,673 as of September
30, 2014) as well as $6,496,000 of investments in guaranteed investment certificates with expiry dates
over 1 year, which will allow the Corporation to execute its exploration program for at least the next
three years.
In December 2014, the Corporation completed private placements by issuing 1,263,288 units at $0.70
per unit and 1,066,683 flow-through shares at $0.85 per share, for total gross proceeds of $1,790,982.
In May 2015, the Corporation completed a private placement of 20,622,569 units at a price of $0.70
per unit for total gross proceeds of $14,435,798. Finally, on November 20, 2015, the Corporation
completed private placements by issuing 835,365 flow-through shares respectively at $0.85 per share,
for total gross proceeds of $710,060.
On October 10, 2014, Midland signed an option agreement with SOQUEM INC. (“SOQUEM”) whereby
SOQUEM has the option to acquire a 50% interest in the Casault and Jouvex properties by funding
$4,500,000 in exploration work. In addition, Midland signed on December 12, 2014 an option
agreement with Sphinx Resources Ltd. (“Sphinx”) whereby Sphinx has the option to acquire a 50%
interest in the Adam property by funding $3,000,000 in exploration work and paying $250,000 in cash.
- 3 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
2. OVERALL PERFORMANCE (CONT’D)
As operator, Midland incurred exploration expenditures totalling $5,229,029 ($2,385,109 in Fiscal 14),
on its properties of which $4,035,663 was recharged to its partners ($1,626,633 in Fiscal 14). The
operating partners incurred $767,880 of exploration expenses ($79,819 in Fiscal 14). Also, the
Corporation invested $350,195 ($264,055 in Fiscal 14) to complete several property acquisitions in
Quebec of which $53,152 was recharged to its partners ($77,717 in Fiscal 14).
The Corporation reported a loss of $629,098 in Fiscal 15 compared to $1,974,586 for Fiscal 14.
Selected annual information
Revenues
Loss
Loss per share, basic and diluted
Total assets
3. RESULTS OF OPERATIONS
Fiscal 15
$
301,452
(629,098)
(0.02)
Fiscal 14
$
172,583
(1,974,586)
(0.07)
Fiscal 13
18,870
(688,090)
(0.02)
2015
$
24,407,655
As at September 30
2014
$
9,892,800
2013
9,953,971
Operating expenses decreased to $1,291,084 for Fiscal 15 compared to $2,359,597 in Fiscal 2014:
345,000 options were granted in Fiscal 13, 605,000 in Fiscal 14 and 475,000 in Fiscal 15. Their
fair value was estimated at $251,850, $272,250 and $123,500 respectively. This fair value was
accounted for according to its vesting period (up to 18 months) or the period in which the services
were rendered. Part of this fair value was recorded in the statement of earnings as stock-based
compensation ($187,933 in Fiscal 13, $170,451 in Fiscal 14 and $66,913 in Fiscal 15) and the
other part was capitalized within the deferred exploration expenses ($110,512 in Fiscal 13,
$96,274 in Fiscal 14 and $32,035 in Fiscal 15). The grant of options occurred in February in Fiscal
13 and Fiscal 14 while it occurred in August in Fiscal 15;
Professional fees increased to $236,859 ($197,048 in Fiscal 14) due to increased legal and
accounting corporate activities;
Impairment of exploration and evaluation assets decreased to $225,826 ($1,288,721 in Fiscal 14)
and the detailed explanations can be found in the investing activities section found later in this
MD&A.
Project management fees increased to $299,418 ($165,435 in Fiscal 14). In Fiscal 15 the Casault
Jouvex projects under option with SOQUEM, the Pallas PGE property under option with JOGMEC and
the Samson and Adam properties under option with Sphinx were very active in Fiscal 15. In Fiscal 14,
the Pallas PGE and the Valmond project under option with Sphinx were active.
A $239,297 ($155,863 in Fiscal 14) recovery of deferred income taxes was recognized to record the
amortization, in proportion of the work completed, of the premium related to flow-through shares
renunciation following the December 3 and 17, 2014 private placements (December 19, 2013 private
placement in Fiscal 14).
- 4 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES
l
y
g
o
o
e
G
$
-
20,540
8,870
88,122
30,124
12,012
3,700
57,258
4,700
4,610
21,033
$
232,965
1,310,514
208,755
290,082
346,090
18,563
123,955
-
-
-
36,641
Abitibi
Maritime
Cadillac
Laflamme Au
Patris Au
Casault Au
Jouvex Au
Heva Au
Valmond Au
Samson Au
La Peltrie
Adam
Abitibi Au
Grenville-
Appalaches
Weedon Cu Zn
Au
Gatineau Zn
Bay-James
Bay-James Au
Eleonore Au
Bay-James U
Bay-James Fe
Québec
Labrador
Deferred
exploration
expenses
Fiscal 15
e
c
n
a
l
a
B
i
g
n
n
n
g
e
b
i
s
c
i
s
y
h
p
o
e
G
$
g
n
i
l
l
i
r
D
$
-
o
e
G
y
r
t
s
i
m
e
h
c
$
g
n
i
t
t
u
c
e
n
L
i
$
g
n
i
l
l
e
v
a
r
T
$
l
a
t
o
t
b
u
S
$
-
k
c
o
t
S
d
e
s
a
b
-
n
e
p
m
o
c
n
o
i
t
a
s
$
e
g
r
a
h
c
e
R
$
s
t
i
d
e
r
c
x
a
T
$
n
o
i
t
p
O
t
n
e
m
y
a
p
$
f
f
o
-
e
t
i
r
W
$
e
g
n
a
h
c
t
e
N
$
e
c
n
a
l
a
B
d
n
e
$
-
-
-
-
-
-
-
-
-
-
24,499
-
161,205
139,704
-
-
147,106
83,047
152,750
60,248
25,525
7,258
1,565,884
282,385
-
66,107
216,491
-
-
-
119,290
-
132,650
12,166
1,967
1,063
18,896
-
-
460
5,460
-
4,417
651
47,502 13,916
8,256
49,085
2,591
-
2,018
-
2,852
49,530
-
30,000
-
-
1,815
-
199,731
246
16,779 10,388
3,425
847
-
6,787
439
462
-
-
2,009,279
521,720
16,570
72,888
492,133
117,747
157,360
83,556
-
(16,779)
(2,003,898)
(520,200)
-
(72,888)
(492,133)
-
(157,360)
-
(3,262)
-
-
-
-
-
-
-
-
(2,356)
-
-
-
-
-
(10,000)
-
-
-
-
388,013
10,440
97,870
28,766
126
-
216,677
1,175,139
14,686
42,158
-
249,812
-
-
37,758
95,972
-
-
Ytterby ETR
109,090
61,843
Northern
Quebec
Pallas PGE
Willbob Au
Projects
generation
216,088
5,116
434,673
108,829
39,547
19,373
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,764
-
-
-
-
458
108,768
-
126
-
-
-
-
- 16,548
-
-
-
-
37,758
371,096
-
-
-
6,340
-
-
787
-
235
62,865
99
-
-
-
-
-
-
-
(12,502)
-
(6,378)
(25,223)
-
-
-
307,100
-
55,401
8,934
- 25,873
-
-
823,047
117,763
2,817
185
(772,405)
-
(156)
(11,113)
-
-
-
470
19,843
-
-
-
-
-
-
-
-
-
-
-
-
-
TOTAL
4,802,845
1,136,065
1,000,159
2,470,750
360,378
181,577 80,100
5,229,029 32,035
(4,035,663)
(60,990)
(10,000)
(56,844)
1,097,567
5,900,412
- 5 -
-
196,715
10,388
8,806
2,367
16,570
(3,213)
439
118,209
-
81,200
232,965
1,507,229
219,143
298,888
348,457
35,133
120,742
439
118,209
-
117 841
96,266
484,279
126
28,892
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(14,686)
(42 158)
31,380
352,213
(14,686)
(42,158)
248,057
1,527,352
-
-
-
-
-
-
62,964
172,054
53,303
106,835
19,843
269,391
111,951
59,390
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CON’T)
Abitibi
Maritime
Cadillac Au
Laflamme Au
Patris Au
Casault Au
Jouvex Au
Heva Au
Valmond Au
Samson Au
Abitibi Au
Grenville-
Appalaches
Weedon Cu,
Zn, Au
Gatineau Zn
Bay-james
Bay-James Au
Eleonore Au
Bay-James U
Bay-James Fe
Québec
Labrador
Deferred
exploration
expenses
Fiscal 14
e
c
n
a
l
a
B
i
g
n
n
n
g
e
b
i
l
y
g
o
o
e
G
$
760
16,340
48,929
25,590
15,200
1,520
54,252
4,560
36,859
s
c
i
s
y
h
p
o
e
G
$
g
n
i
l
l
i
r
D
$
-
o
e
G
y
r
t
s
i
m
e
h
c
$
g
n
i
t
t
u
c
e
n
L
i
$
g
n
i
l
l
e
v
a
r
T
$
l
a
t
o
t
b
u
S
$
d
e
s
a
b
-
k
c
o
t
S
-
n
e
p
m
o
c
n
o
i
t
a
s
$
e
g
r
a
h
c
e
R
$
s
t
i
d
e
r
c
x
a
T
$
n
o
i
t
p
O
t
n
e
m
y
a
p
$
f
f
o
-
e
t
i
r
W
$
-
-
-
-
-
760
3,418
-
-
-
-
-
26,868
66,982
-
256,548
1,063
-
111,503
3,591
-
-
1,200
152,345
-
-
-
7,516
9,171
-
4,876 14,032
- 28,898
-
-
33,395 31,453
-
-
-
-
4,238
297
252
-
-
6,084
1,387
-
139,597
4,112
61,988 26,103
71,618
6,862
111,080
-
2,720
-
534,077 18,366
-
-
7,010
36,859
-
(56,178)
-
-
-
(530,277)
(7,010)
-
(999)
(2,334)
(2,877)
(2,566)
(306)
(1,528)
-
(218)
-
-
-
-
-
(10,190)
-
-
$
228,787
1,167,804
179,176
214,479
237,576
16,149
113,507
-
-
359,196
13,106
19,337
28,648
132
-
162,521
949,831
14,686
42,158
54,323
196,398
-
-
-
14,150
-
-
-
-
-
-
-
-
-
1,548
-
184
10,671
-
-
6,825
Ytterby ETR
1,277,720
31,759
122
Northern
Quebec
Pallas PG
Willbob Au
Projects
Generation
210,168
-
713,648
4,770
156,284
-
115,055
-
60,175
346
36,125
5,600
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,991
132
-
-
2,497
3,094
-
-
57,004
-
224,313 16,691
-
-
-
-
-
-
-
-
-
-
(5,174)
(14)
(2,848)
(15,696)
-
-
-
38,706 15,501
(15,063)
(3,212)
9,376
-
1,054,538
5,116
5,221
-
(1,018,105)
-
(35,734)
-
-
5,600
-
-
(2,178)
-
-
-
-
-
-
-
-
-
-
s
e
g
n
a
h
c
t
e
N
$
d
n
e
e
c
n
a
l
a
B
$
4,178
232,965
142,710
29,579
75,603
108,514
2,414
10,448
-
36,641
1,310,514
208,755
290,082
346,090
18,563
123,955
-
36,641
28,817
388,013
118
28,766
54,156
225,308
-
-
216,677
1,175,139
14,686
42,158
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,204,562)
(1,168,630)
109,090
-
-
-
5,920
5,116
216,088
5,116
3,422
39,547
TOTAL
5,238,531
1,223,746
541,354
383,694
134,707 74,383
27,225
2,385,109 96,274
(1,626,633)
(75,684)
(10,190)
(1,204,562)
(435,686) 4,802,845
- 6 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CON’T)
Expenses Exploration and evaluation
Actual Fiscal 14
Budget Fiscal 15
Actual Fiscal 15
Budget Fiscal 16
Properties
100% owned by Midland
Abitibi Au
Heva
Valmond
Casault Au
Jouvex Au
La Peltrie
Weedon Cu-Zn-Au
Gatineau Zn
James Bay Au
James Bay U
James Bay Fe
Éléonore Au
Willbob
Project generation
Midland
$
Partner
$
Total
$
Midland
$
Partner
$
Total
$
Midland
Partner
Total
$
$
$
Midland
$
Partner
$
Total
$
36,860
2,720
-
71,618
111,080
-
33,991
132
57,004
-
-
224,313
5,116
5,600
548,434
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36,860
2,720
-
71,618
111,080
69,000
25,000
-
-
-
-
200,000
33,991
132
57,004
-
-
80,000
20,000
56,000
10,000
10,000
224,313
311,000
5,116
5,600
61,000
83,000
548,434
925,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
83,556
16,570
-
69,000
25,000
-
-
-
200,000
117,747
80,000
108,768
20,000
56,000
10,000
10,000
126
37,758
-
-
311,000
371,096
61,000
117,763
83,000
19,843
925,000
873,227
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
83,556
100,000
16,570
-
-
-
80,000
15,000
-
-
117,747
550,000
108,768
100,000
126
37,758
20,000
50,000
-
-
371,096
100,000
117,763
400,000
19,843
40,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
80,000
15,000
-
-
550,000
100,000
20,000
50,000
-
-
100,000
400,000
40,000
873,227 1,455,000
- 1,455,000
With option, 100% owned and operated by Midland and paid by partner
Valmond Au – Sphinx
Pallas PGE Jogmec
Samson - Sphinx
Adam - Sphinx
Casault - Soquem
Jouvex – Soquem
3,800
530,277
534,077
36,433 1,018,105
1,054,538
-
-
-
-
7,010
7,010
-
-
-
-
-
-
40,233 1,555,392
1,595,625
With option, 100% owned by Midland, operated and paid by the partner
Patris Au – Teck
5,810
56,178
61,988
-
-
-
-
-
-
-
-
70,000
500,000
500,000
-
762,000
238,000
70,000
500,000
500,000
-
762,000
238,000
-
72,888
72,888
-
-
-
13,514
809,533
823,047
225,000
225,000
450,000
-
-
492,133
492,133
157,360
157,360
50,000
50,000
-
-
50,000
50,000
5,381 2,003,898 2 009,279
- 1,345,000 1,345,000
1,520
520,200
521,720
-
510,000
510,000
2,070,000
2,070,000
20,415 4,056,012 4,076,427
325,000 2,080,000 2,405,000
445,000
445,000
-
781,225
781,225
-
300,000
300,000
In joint venture
Maritime-Cadillac-Agnico Eagle
(operator) at 51%
Vermillon- Soquem at 52.5%
Ytterby REE-Jogmec at 49.5%
Laflamme Au – Aurbec at 35.1%
760
3,619
4,379
25,000
25,000
50,000
-
23,642
76,200
15,063
76,200
38,705
-
-
-
10,000
10,000
20,000
-
-
-
-
-
25,000
25,000
50,000
3,434
3,434
-
62,865
62,865
20,000
-
-
-
20,000
139,597
-
94,882
163,999
758,476 1,706,452
139,597
258,881
2,464,928
195,000
230,000
1,155,000
-
35,000
2,550,000
- 7 -
195,000
265,000
100,000
170,000
3,705,000 1,093,373 4,903,536 5,996,909 1,925,000 2,405,000 4,330,000
199,731
266,030
100,000
145,000
199,731
199,731
-
66,299
-
25,000
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
When the work is done and paid by the partners, the expenses are not included in the Midland
accounts. The previous table shows all the work being done on Midland’s properties including work
done and paid by operating partners. This table excludes stock-based compensation that has been
capitalized.
Gino Roger, geological engineer, president and director of Midland, qualified person under NI 43-101,
has reviewed the following technical disclosure.
HIGHLIGHTS
New high-grade gold discoveries on Willbob
Several new PGE reefs identified on Pallas
New gold-bearing zones discovered on Casault
Prospecting returns high-grade gold values on Heva
New priority targets identified on Jouvex
13,913.7 metres drilled in Fiscal 15
IP surveys commencing on La Peltrie and Patris
ABITIBI
4.1 Maritime-Cadillac (Au) in partnership with Agnico Eagle and operated by Agnico Eagle
Property Description
The property is located in the Abitibi region in Quebec, along the Cadillac-Larder break and is
composed of 7 claims. The Corporation holds 49% of the Maritime-Cadillac property located south of
the Lapa mine. This property is subject to a 2% net smelter return (“NSR”) royalty; half of the royalty
can be bought back for a payment of $1,000,000.
As per the agreement signed in June 2009 and amended in November 2012 and May 2013,
Agnico Eagle Mines Limited (“Agnico Eagle”) and the Corporation are in a joint venture and future work
are shared 51% Agnico Eagle - 49% the Corporation.
Exploration work on the property
Data compilation and integration continued during Fiscal 15 in the Lapa-Maritime Cadillac area by our
partner Agnico Eagle, in order to complete the construction of a 3D model. New exploration targets
will be defined for Fiscal 16 along this segment of the Cadillac Break.
4.2 Laflamme (Au-Ni-Cu-PGE), in partnership with Aurbec Mines Inc. and operated by Midland
Property Description
In 2009, the Corporation staked claims by map staking about 25 kilometres west of Lebel-sur-Quévillon
in the Abitibi region. As at September 30, 2015, the Laflamme property consists of a total of 506 claims
covering an area of approximately 26,630 hectares. As of September 30, 2015, Midland holds 64.9%
of the property.
On August 17, 2009, the Corporation signed an agreement with Aurbec Mines Inc., (previously a
subsidiary of North American Palladium Ltd.) that was sold to Maudore Minerals Ltd in March 2013.
As of July 31, 2011, Aurbec earned its 50% interest in the Laflamme property but no longer contributes
in the exploration programs and is therefore being diluted. In January, 2015, Aurbec was declared
bankrupt and the liquidation process is proceeding.
Some claims were dropped in Fiscal 15, therefore the Corporation impaired partially for $14,690 the
exploration property cost ($2,784 in Fiscal 14).
- 8 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
Exploration work on the property
In December 2014, Midland completed a grid and a ground-based electromagnetic survey in order to
investigate a series of untested VTEM conductors located about 2 kilometres north of drill hole LA-11-
08.
The latter intersected a new zone with Ni-Cu-PGE mineralization along the contact with an ultramafic
intrusion, which graded 0.66% Ni, 0.35% Cu, 0.17 ppm Pt and 0.16 ppm Pd over 8.0 metres, including
a high-grade zone at 1.55% Ni, 0.53% Cu, 0.26 ppm Pt and 0.28 ppm Pd over 1.60 metres.
A drilling program totalling 1,263.0 metres in four (4) holes was completed during Q3-15. This program
was aiming to test the best Max-Min and TDEM-ARMIT conductors in the northeastern portion of the
property.
Hole LAF-15-34 tested a Max-Min conductor (EM-1) on the SSE grid. The conductor is well explained
by the presence of a graphitic mudstone mineralized with 2-5% Py with local massive sulphide (Py)
sections. A second mineralized zone (1-5% Py) with local massive pyrite was intersected between
170.3 and 178.0 m. The best result returned 0.35 g/t Au over 1.5 metre from 114.0 to 115.50 metres.
Hole LAF-15-35 also tested a Max-Min conductor (EM-4) along the same structure and at about 2 km
to the NW of hole 34. In addition to a graphitic mudstone with pyrite that explains the conductor, three
(3) other mineralized zones containing between 2-10% pyrite were intersected from 259.2 to 261.95m,
from 272.85 to 277.50 m and from 300.0 to 320.0 metres. No significant assay results obtained in this
hole.
Hole LAF-15-36 tested a TDEM-ARMIT conductor associated with a strong magnetic anomaly to the
north of the 2011 Ni-Cu-PGE shoeing in hole LA-11-08. The mag is explained by the presence of a
magnetic gabbro and not by ultramafics as anticipated. The explanation for the weak conductor in not
clear, 3% of qtz-cb veins with traces-1% py were intersected from 170.75 to 180.15 m or from 211.65
to 214.0 m where a rhyolite unit containing local stringers of Sp-Cpy-Po was intersected. No significant
assay results obtained in this hole.
Hole LAF-15-37 tested a weak TDEM-ARMIT conductor as well but in this case it is associated with a
mag low. A strongly sericitized rhyolite unit was intersected but no clear evidence for a conductor. The
best assay returned 185 ppb Au over 1.5 metre.
A drilling campaign is currently in preparation for Fiscal 16. This program will aim to test a BHEM off-
hole anomaly detected in the discovery hole of the Ni-Cu-PGE showing in hole LA-11-08.
4.3 Patris (Au), in partnership with Teck and operated by Teck
Property Description
The Corporation acquired claims by map staking about 30 kilometres to the north-east of Rouyn-
Noranda. As at September 30, 2015, this property consists in 248 claims covering an area of
approximately 10,284 hectares. Some claims are subject to the following NSR royalties:
1%, the Corporation can buy it back for $500,000 per 0.5% tranche for a total of $1,000,000;
1.5%, the Corporation can buy it back for $500,000 per 0.5% tranche for a total of $1,500,000.
2%, the Corporation can buy it back for $1,000,000 per 1% tranche for a total of $2,000,000;
2%, the Corporation can buy it back for $1,000,000 per 1% tranche for a total of $2,000,000;
2%, the Corporation can buy it back for $500,000 the first 1% tranche and for $1,000,000 for the
second 1% tranche, for a total of $1,500,000.
- 9 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
The Corporation signed an option agreement with Teck Resources Ltd (“Teck”) on September 6, 2013
and amended it on May 20, 2014 to accommodate the delays in permitting. Under the agreement,
Teck may earn, in three options, a maximum interest of 65%, by fulfilling the following conditions:
First Option for a 50% initial interest
On or before August 31, 2015 (firm commitment)(completed)
On or before August 31, 2016
On or before August 31, 2017
Second Option for a 10% additional interest
On or before August 31, 2019, $500,000 of exploration work and
$60,000 cash payment for each additional 2% interest
Payments in
cash
$
Work
$
-
-
-
-
500,000
800,000
1,700,000
3,000,000
300,000
2,500,000
Third Option for a 5% additional interest
On or before August 31, 2021, $1,000,000 of exploration work for each
additional 1% interest
Total, for a 65% maximum interest
-
5,000,000
300,000 10,500,000
Teck will be project operator during the First Option.
Exploration work on the property
During Q2-15, a diamond drilling program consisting in seven (7) holes totalling 1,298.0 metres was
completed by Teck on the Patris property. These holes tested the best IP anomaly located along the
Porcupine-Destor and the La Pause fault zones. One of these holes was extended in order to test
100 metres below hole PAT-11-15 which had returned 0.48 g/t Au over 17.0 metres.
Holes PAT-15-01 and PAT-15-02 tested the IP anomaly located just north of the Caste Lake
sediments to the east of the Caste Lake. Both holes intersected mineralized mafic-ultramafic rocks
and sediments that explained the IP responses.
PAT-15-03 intersected altered (fuschite) alteration and local hematized dykes. Traces of VG were
identified in a quartz-carbonate vein at about 29.9 metres. The hole got stucked in a fault zone and
was abandoned at 56.0 metres.
PAT-15-04 was re-collared and the casing was rimed trough the fault zone. The hole intersected
sediments with pyrite that can explain the IP anomaly.
PAT-15-05 intersected approximately 100m of alteration and mineralization including but not limited
to: 2 zones with 20+ m of quartz veining containing galena, chalcopyrite in the upper quartz vein and
molybdenite, pyrite, chalcopyrite with trace arsenopyrite in the lower quartz vein. This zone has up to
10% sulphides. The wall rock is fuchsite altered ultramafic with quartz-dolomite veining, syenite dykes
and narrow iron carbonate veins.
PAT-15-06 (PAT-11-16EXT) was completed at a final depth of 369.0 metres. This hole intersected a
strongly silicified and hematized zone with pyrite in the altered monzonite intrusion.
PAT-15-07 (Target IP-E) was completed at a depth of 198.0 metres. This hole intersected basalts and
ultramafic rocks cut by hematized and sericitized felsic dykes. Local possible potassic alteration was
also noted. Local milky quartz veins with traces of pyrite were intersected in the felsic intrusion. A
major fault zone was intersected at about 66.0 metres.
- 10 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
All assay results have been received during Q3-15 for the winter drilling program. The main highlight
consists in the identification of a large alteration zone in hole PAT-15-05. Drill hole PAT-15-05 tested
an induced polarization anomaly located near the Destor-Porcupine Fault. The drill hole intersected a
wide alteration zone with pyrite, pyrrhotite, chalcopyrite, galena, and molybdenite within ultramafic
rocks strongly altered to fuchsite, quartz and carbonates.
This alteration zone was intersected over a drill length of approximately 100 metres and locally yielded
anomalous copper, molybdenum, silver, and lead values. Grades of 82.6 g/t Ag, 0.10 g/t Au, 0.22%
Cu and 1.0% Pb over 1.0 metre were obtained from 176.5 to 177.5 metres.
An IP survey totalling 18.0 kilometres is in progress and is trying to identify new anomalies laterally of
the alteration zone in drill hole PAT-15-05 over a distance of about 2.5 km.
4.4 Casault (Au), in partnership with SOQUEM and operated by Midland
Property Description
The Corporation acquired claims by map staking about 40 kilometres to the east of the Detour Lake
gold project located north of the city of La Sarre. At the end of Fiscal 14, this property consists in 300
claims covering an area of approximately 16,507 hectares.
On October 10, 2014, the Corporation signed a letter of intent with SOQUEM to grant SOQUEM the
option to acquire a 50% undivided interest in its Casault and Jouvex properties, and to create a joint
venture once the option has been exercised, under the following conditions:
On or before October 10, 2015 (firm commitment)(completed)
On or before October 10, 2016 (completed)
On or before October 10, 2017
On or before October 10, 2018
Midland is the project operator during the option period.
Work
$
1,000,000
1,000,000
1,000,000
1,500,000
4,500,000
Exploration work on the property
During Q2-15, a drilling program consisting in seventeen (17) holes and totalling 3,467.2 metres was
completed on Casault in partnership with SOQUEM. This program targeted the most promising gold
occurrences discovered in 2012-2013. These areas include the north contact of the Turgeon pluton,
where drill hole CAS-12-07 returned 10.4 g/t Au over 1.45 metres, as well as areas immediately north
and west of the conglomerate basin with pyrite and jasper clasts identified in 2013. In the northern
area, drill hole CAS-13-28A had been terminated in a gold-bearing zone grading 0.29 g/t Au over 9.0
metres. Two holes have also been completed to test IP anomalies on the central block.
An IP-Orevision survey was also completed during the Q2-15 (South Grid). This survey totalling 17.1
km identified several strong chargeability responses near the granodiorite contact. These anomalies
correspond to the mineralized package (sediments and diorite intrusions) found between the Turgeon
Pluton and the mafic volcanics. Two drillholes (CAS-15-47 and 48) were completed respectively on
lines 13+00E and 2+00W t test this IP axis.
Another IP-Orevision survey was also completed in March 2015 on the North Grid. This grid totalled
approximately 25 kilometres. Several new IP anomalies were identified on this North grid.
- 11 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
CAS-13-30EXT was completed at a final depth of 195.0 metres, for a deepening of 45.0 metres. This
hole was drilled 250 metres west of hole CAS-12-07 and intersected over 10-15% Po-Py over 5.0
metres before ending in a granodiorite. Assays did not return any significant gold results with a
maximum of 43 ppb Au over 0.60 m from 163.0 to 163.6 metres.
CAS-13-28AEXT was deepened from 202.2 to 300.0 metres. The mineralized (Py) and gold-bearing
zone associated with a quartz-carbonate swarm in a gabbro in hole CAS-13-28AEXT was intersected
for an additional 15-20 metres. The best mineralized zones were between 214.32 and 214.78 m (3-
5% Py, loc.7%) and between 223.77 and 224.53 m (5-7% Py). The rest is mineralized with 1-3% Py.
The best assay results returned 0.12 g/t Au over 0.50 metre from 216.7 to 217.2 m; 0.11 g/t Au over
0.50 metre from 217.7 to 218.2 m and 0.17 g/t Au over 0.76 metre from 223.77 to 224.53 m.
CAS-15-38 (Target L; central block) was completed at 162.0 metres. After 25.1 m of casing, the hole
intersected chloritized conglomerates with traces of pyrite-pyrrhotite. No significant result was
obtained.
CAS-15-39 (Target M; central block) ended at a final depth of 165.0 metres. This hole targeted an IP
anomaly at the southern edge of the conglomerates. From 68.5 to 106.35 m, the hole intersected
chloritized tuffs locally mineralized with pyrite. From 106.35 to 124.8 metres, a sericitized conglomerate
was intersected with local graphite. No significant assay result was obtained in this hole.
CAS-15-40 (Target A; 100 m below hole CAS-12-07) finished at a depth of 405.0 metres. Several Py-
Po zones were intersected within the MCZ diorite (mixed contact zone) between the granodiorite and
the mafic volcanics. A quartz vein in the granodiorite returned 6.27 g/t Au over 0.5 m from 59.5 to 60.0
m. The other best results returned 1.54 g/t Au over 0.50 m from 83.5 to 84.0 m and 1.25 g/t Au over
0.50 m from 312.9 to 313.4 m and finally 0.11 g/t Au over 0.95 m from 353.0 to 353.95 m.
CAS-15-41 (Target B; 100 m west of CAS-12-07) traversed 31.3 metres of overburden and intersected
the granodiorite down to 97.5 metres. Following that, it intersected a mix of mudstones and granodiorite
injections with locally pegmatite dykes down to 235.45 metres. The hole finished in the basalt at a
depth of 297.0 metres. Several mineralized zones (Py-Po-+/- Cp) were intersected. The best results
returned 1.19 g/t Au over 2.5 m including 3.65 g/t Au over 0.5 m.
CAS-15-42 (Target C; 100 m east of CAS-12-07) was completed at 261.0 metres. This hole intersected
several silicified and sericitized zones mineralized with Py-Po-Mo-Cpy within the MCZ diorite. From
203.45 to 210.0 metres, assays returned 0.22 g/t Au over 6.55 metres including 1.46 g/t Au over 0.85
metre and 0.47 g/t Au over 0.93 metre.
CAS-15-43 (Target D; 300 metres east of 28AEXT) ended at 171.0 metres, Veins of quartz-carbonate-
tourmaline were intersected at the beginning of the hole. The best assay result returned 0.22 g/t Au
over 0.60 metre from 61.7 to 62.3 metres.
CAS-15-44 (Target E; 600 metres east of 28AEXT) was completed at a final depth of 172.0 metres.
Mineralized (py) felsic porphyry intrusions were intersected. This hole also intersected a silicified-
sericitised and albitized alteration zone with fine pyrite.. This hole intersected a series of silica, sericite
and hematite alteration zones with anomalous gold values (> 100 ppb Au), occurring in discontinuous
fashion over more than 100 metres and locally grading up to 0.47 g/t Au over 1.0 metre from 146.0 to
147.0 metres. The entire contact of the QFP body has not been explored yet, and the contact with the
magnetic gabbros remains untested.
This new exploration target is located about 5.5 kilometres west of the Bug Lake zone held by Balmoral
Resources Ltd, where felsic porphyry intrusions were observed and where a drill intersection grading
19.55 g/t Au over 44.45 metres was recently reported. The best results within the QP intrusion returned
0.47 g/t Au over 1.0 m, 0.29 g/t Au over 1.95 m, 0.19 g/t Au over 2.20 m, 0.13 g/t Au over 1.95 m and
0.13 g/t Au over 1.50 m.
- 12 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
CAS-15-45 (Target F; 600 metres east of 28AEXT) was completed at 167.4 metres. The hole
intersected a mineralized (Py) felsic porphyry intrusion at 135.05 metres. The hole ended in basalt. No
significant result was obtained.
CAS-15-46 (Target G; 1.8 km east of 28AEXT) intersected blocky and lapillis tuffs weakly mineralized
from 107.4 to 108.4 m. The hole ended at 204.0 metres. No significant result was obtained.
CAS-15-47 (Target IP L13+00E) was completed at a final depth of 285.0 metres. After 33.2 metres of
casing, the hole cut the granodiorite intrusion down to 85.9 metres. After that, the hole intersected
graywackes cut by several granodioritic and pegmatitic dykes. The sediments are strongly silicified in
general with local biotite-garnet enrichment. No significant result was received.
CAS-15-48 (Target IP L2+00W) ended at 300.0 metres and the IP anomaly is well explained by the
presence of several well mineralized zones (Py-Po). No significant result was obtained.
CAS-15-49 (Target IP-I, 100 m west of CAS-13-36) did traverse 60.7 metres of overburden before
intersecting a mafic volcanic rock containing up to 40% quartz veins with 1-3% Py from 60.7 to 64.25
metres. Following that, a mix of mafic volcanic and intermediate sericitized tuffs (2-3% Py) was
intersected down to 70.40 metres. Between 70.4 and 126.2 metres, a crystal tuff (fp) mixed with altered
(sericite-potassic and chlorite) mineralized with 1-2% Py QFP dykes was intersected. The hole then
intersected pillowed basalt and finished in a gabbro at a depth of 186.0 metres. No significant assay
result to report.
CAS-15-50 (Target IP-H) was completed at a final depth of 174.0 metres. This hole intersected mafic
volcanics and gabbros locally mineralized with traces to 1% pyrite. The volcanics are cut by several
altered zones consisting in quartz-carbonate veinlets with up to 3% pyrite. No significant result to
report.
CAS-15-51 (Target IP-J) and CAS-15-52 (Target IP-K) have been completed respectively to final
depths of 219.0 and 156.0 metres. Both holes tested historical IP anomalies identified by Placer Dome
in 1995. Both holes intersected mineralized conglomerates containing mineralized (Py) fragments and
mineralized quartz veins (cm) mineralized in pyrite explaining well the IP anomalies. No significant
result was obtained during Q4-15.
Following this program, a new 5,000 metres drilling program was approved. This program was
designed to test the contacts of the gold-bearing QP intrusion identified in hole CAS-15-44, to drill the
2012 showing towards the west to test for possible N-S oriented veins, to test the intersection of the
interpreted extension of the Bug Lake fault with the Sunday Lake fault and to test the best IP and
TDEM-ARMIT anomalies respectively on the north grid and the East Block.
During Q3-15, a total 15 holes totalling 5,002.0 metres was competed and a total of 3,341 samples
were sent for analysis (plus an additional 143 standards and 156 blanks).
Following is the description for each hole of this 2015 summer drilling program.
Hole CAS-15-53A was abandoned at 30.0 metres because the dip was at -50 instead of -60 degrees.
Hole CAS-15-53 was competed at a final depth of 353.0 metres. This cisor hole was targeting the high
grade gold zone which has been discovered in 2012 in hole CAS-12-07 which had returned 10.4 g/t
Au over 1.45 metres. Hole 53 intersected mineralized quartz veins (+/-5% Py overall) over 5.7 metres
from 174.8 to 180.5m. These veins are hosted by the mixed assemblage of meta-rhyolites and meta-
diorite found within the contact zone just north of the Turgeon pluton.
- 13 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
Hole CAS-15-54 was designed to test the IP and the low mag anomaly identified on line 8+00E
approximately 200 metres to the east of holes CAS-12-07 and within the same stratigraphic package
as hole 53. Hole 54 was completed at a final depth of 302.0 metres. This hole intersected a tension
quartz vein with traces of pyrite over 5.0 metres from 212.5 to 217.5 m.
Hole CAS-15-55 was drilled towards the west in order to verify the possibility of a major N-S structure
in this area. No major fault zone was intersected but altered gabbros with local quartz-tourmaline veins
with traces of Py were intersected down to 171.0 metres. Some local minor shear zones have also
been intersected with this hole which ended at 418.0 metres within a tuff unit.
Hole CAS-15-56 was drilled as a cisor hole towards the south in order to cross the southern contact
of the gold-bearing QFP intrusion intersected in hole CAS-15-44 during the winter program. The hole
intersected the QFP dyke from 103.0 to 126.7 metres. The southern contact with the gabbro is strongly
sericitized and sheared over 4-5 metres while the northern contact with the mafic volcanics is heavily
mineralized with pyrite over a couple of metres. Another sericitized porphyry dyke mineralized with 1-
4% Py was intersected from 164.4 to 177.85 metres. The hole ended at 382.0 metres within a gabbro.
Hole CAS-15-57 was completed at a final depth of 418.0 metres. This hole tested the two IP anomalies
located about 600 metres to the east of the QFP intersected in holes 44 and 56. The hole entered
bedrock at 18.0 metres and intersected an altered (hematite-quartz-sericite) QFP intrusion containing
traces to locally 1% pyrite down to 137.8 metres. The contact zone between 137.8 and 182.0 metres
shows the presence of porphyritic Qtz-Fp grains with traces of pyrite. From 182.0 to 218.0 metres, the
hole intersected chloritized mafic volcanics containing several Qtz-Cb veins with heavy pyrite, locally
semi-massive with traces of chalcopyrite. Again from 218.0 to 231.0 metres, up to 10% Qtz-Cb veins
with heavy pyrite was intersected within the chloritized mafic volcanics. From 231.0 to 374.0 m, the
Qtz-Cb veins with local pyrite are still present and an epidote alteration appears at about 374.0 metres.
The hole ended at 418.0 metres in a gabbro.
Hole CAS-15-58A was abandonned at 91.0 metres because of an alignment or a deviation problem
within the casing.
Hole CAS-15-58 hit bedrock at 45.0 metres was completed with the gabbro at a final depth of 355.0
metres. Several silicified zones with quartz veins and minor pyrite were intersected. This hole tested
300 metres west of the 0.29 g/t Au over 9.0 metres intersected in the pyritized gabbro in hole CAS-13-
28A.
Hole CAS-15-59 was completed to a depth of 357.0 metres. This hole is testing an IP anomaly
associated with a high mag anomaly where the mag changes from E-W to a SW-NE orientation. The
hole entered bedrock at 54.0 metres into a grey quartz siltstone up to 125.0 metres and on worth to a
gabbro till the end of the hole. However, from 322.0 to 332.0 metres a QP intrusion is present with
sericite alteration and quartz veins present at its contacts.
Hole CAS-15-60 was completed to a depth of 292.0 metres. This hole is testing the intersection
between the Sunday Lake deformation zone and the interpreted extension of the Bug Lake fault
(Martinière). The hole entered bedrock at 43.0 metres and the hole is summarized by an alternation of
mafic to felsic tuffs. From 133.5 to 140.0m the tuff is altered in sericite and contains up-to 5% pyrite
and quartz veins. From 133.6 to 135.0 up to 10% cubic pyrite can be observed.
This mineralized zone is also deformed and could correspond to the Bug Lake structure. From 219.0
to 223.0m another mineralized horizon is intersected containing traces of pyrrhotite-pyrite and
chalcopyrite locally.
- 14 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
Hole CAS-15-61 was completed to a depth of 397 metres. The hole is testing the southeast extension
of the Bug Lake mineralized fault on our property near and north of the Sunday Lake deformation zone.
The hole entered bedrock at 48.0 metres into a mafic tuff unit. The tuff is fine grained, strongly foliated
and weak carbonate alteration is present throughout the hole. At around 307.0 metres, the tuff
becomes more felsic and breeched (breccia). It is then mineralized in pyrrhotite-pyrite stringers for
several meters. At 385.0 metres, the mineralization is weaker with only traces of pyrite in a block tuff
and finally ends in a gabbro.
Hole CAS-15-62 was completed to a depth of 320.0 metres. This hole is testing an IP chargeability
anomaly associated with a low magnetic anomaly, located in the western extension of Balmoral’s 2014
newly identified gold structure, on line 68+00E. The hole entered bedrock at 12.0 metres into basaltic
rocks. From 44.5 to 51.5 a QP intrusion is present and from 51.1 to 92.8 half-centimetre pyrrhotite-
pyrite veinlets are present locally. These are conductive and resemble pillow boundaries. Later from
294.0 to 299.5 metres, another horizon rich in pyrrhotite and pyrite is present (in basalt).
Hole CAS-15-63 was completed to a depth of 202.0 metres. This hole is testing an IP anomaly (Line
71+00E) associated to a strong magnetic anomaly and near a northwest-southeast structure
interpreted on the ground magnetic survey. The hole entered bedrock at 6.0 metres into a basalt.
Pillow structures are observed and sulfides (pyrrhotite – pyrite) are locally present at their boundary.
The hole can be summarized by a mafic volcanic unit (basalt) intruded several times by four (4) QP
dykes of varying width (from 0.5 to 10.0 metres). From 50.0 to 54.0 metres approximately, semi-
massive pyrrhotite-pyrite veinlets are present which could explain the strong anomaly. Also, the
deepest QP intrusion, from 183.5 to 191.0 metres is hematised and contains veinlets of epidote with
traces up to 1% pyrite.
Hole CAS-15-64 was completed to a depth of 229.0 metres. This hole is testing a moderate
chargeability IP anomaly (Line 80+00E) near another northwest-southeast interpreted structure and
also in the extension of a north-south interpreted second structure. The hole entered bedrock at 15.0
metres into a silt rich sediment. A fault might be present at 73.0 metres. The siltstone is present until
84.0 metres and is a gabbro until the end of the hole. From 129.2 to 133.0m quartz stringers, or
stockworks, containing traces of disseminated pyrite and chalcopyrite is present.
Hole CAS-15-65 was completed to a depth of 232.0 metres. This hole is testing a strong but small
TDEM conductor on the eastern claim block. The hole entered bedrock at 24.0 metres into an Andesite
with maybe felsic tuffs intervals throughout the entire hole. Several pyrrhotite-pyrite and chalcopyrite
traces stringers and veinlets are present from 42.0 to 43.0, 58.0 to 58.5, 59.8 to 59.9, 63.4 to 64.3,
114.9 to 115 and finally 119.0 to 120.0. Some of these horizons are quartz rich and some show
similarities to cherty layers.
Hole CAS-15-66 was completed to a depth of 286.0 metres. The hole is testing a moderate but large
conductor identified by the TDEM survey about 500 metres southeast of CAS-15-65. The hole entered
bedrock a 24.0 metres into an andesite until the end of hole. From 89.0 to 280.0 metres there are at
least 11, smaller than 1.0 metre wide, pyrrhotite stringers associated to pillow boundaries and/or quartz
veins or cherty horizons. These stringers contain traces of chalcopyrite and are explain the conductor.
Arsenopyrite (tr) has also been observed 166.0 to 166.4 metres in the host rock of a quartz cherty
vein.
Hole CAS-15-67 was completed to a depth of 214.0 metres. The hole is testing a strong TDEM vertical
conductor in contact with a high magnetic anomaly near the Sunday Lake deformation zone.
The hole entered bedrock at 48.0 metres into a graphitic siltstone which was observed until the end of
the hole. At least 7 several metres thick graphitic and pyrite bearing horizons were observed. From
186.5 metres to 202.0 metres felsic and QFP intrusions are present. The thickest one is from 199.2 to
202.0 metres and contains disseminated pyrite. Also, several faults (fault mud) are present within the
graphitic horizons. These graphitic horizons explain the strong conductor.
- 15 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
Following are the assay results for this 2015 summer drilling program received in Q4-15.
Drill hole CAS-15-53 was drilled westward in order to verify the possibility of an auriferous veins system
oriented roughly north-south. These veins had not been intersected by previous works because they
had been drilled with a northward direction. From 163.80 to 164.00 metres and 169.00 to 169.60
meters, two gold zones interpreted as corresponding with the 2012 discovery in the drill hole CAS-12-
07, respectively reported 8.3 g/t Au over 0.20 metre and 6.1 g/t Au over 0.60 metre. In addition to this
area, three (3) new zones of gold-bearing quartz veins were intersected slightly to the west and
reported:
3.8 g/t Au on 0.60 metre
5.4 g/t Au on 1.00 metre
6.9 g/t Au on 1.10 metre
(From 277.90 to 278.50 metres)
(From 295.00 to 296.00 metres)
(From 335.00 to 336.10 metres)
In addition, several other gold anomalous zones were also identified in drill hole CAS-15-53 and
reported:
0.38 g/t Au on 4.50 metres
0.98 g/t Au on 1.00 metre
0.58 g/t Au on 1.15 metre
0.35 g/t Au on 3.05 metres
(From 150.00 to 154.50 metres)
(From 176.00 to 177.00 metres)
(From 209.45 to 210.60 metres)
(From 274.85 to 277.90 metres)
These new areas remains unexplored and open in all directions and they identify a new potential for
more than 10 kilometres of possible structures oriented north-south near the northern contact of
syntectonic Turgeon pluton.
Gold-bearing porphyry sector (QFP)
During the summer drill campaign, a total of fifteen (15) drill holes totaling 5,002.00 metres was
completed. Of these, five (5) drill holes, CAS-15-55 to CAS-15-59, were drilled in the gold-bearing
porphyry intrusion sector which had been updated in drill hole CAS-15-44 last winter. These five holes,
spread over a distance of 2 kilometres, intersected several anomalous gold values associated with
porphyry intrusions and altered gabbro in silica, sericite, and hematite locally, confirming the excellent
gold potential of this sector which is strategically located in a folded zone in contact between the basin
conglomerates 'Timiskaming' type and the mafic volcanics. In addition, new anomalous zones were
intersected for the first time in the mafic volcanics north contact of the porphyry intrusion. Among the
best anomalous zones above 150 ppb Au on at least half a meter intersected in the area, note that:
Drill hole CAS-15-55 (Drilling west to test the north-south possible structure)
0.64 g/t Au on 0.50 metre
(From 173.70 to 174.20 metres)
Drill hole CAS-15-56 ( Cisor drill hole with CAS-15-44 survey)
0.29 g/t Au on 5.05 metres
0.16 g/t Au on 1.50 metre
0.15 g/t Au on 1.50 metre
(From 90.50 to 95.55 metres)
(From 117.00 to 118.50 metres)
(From 190.00 to 191.50 metres)
- 16 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
Drill hole CAS-15-57 (Drilling northward at 600 metres east of CAS-15-56)
0.22 g/t Au on 1.50 metre (From 35.00 to 36.50 metres)
0.18 g/t Au on 0.50 metre (From 38.33 to 38.83 metres)
0.16 g/t Au on 0.80 metre
(From 97.45 to 98.25 metres)
0.19 g/t Au on 0.50 metre (From 122.50 to 123.00 metres)
0.52 g/t Au on 0.50 metre (From 129.10 to 129.60 metres)
0.24 g/t Au on 1.00 metre (From 183.00 to 184.00 metres)
(From 204.00 to 205.10 metres)
0.18 g/t Au on 1.10 metre
(From 385.90 to 386.50 metres)
0.15 g/t Au on 0.60 metre
Drill hole CAS-15-58 (Drilling south at 330 metres west of CAS-13-28A)
0.22 g/t Au on 3.00 metres
0.20 g/t Au on 0.80 metre
0.42 g/t Au on 0.50 metre
0.31 g/t Au on 6.00 metres
(From 145.00 to 148.00 metres)
(From 152.00 to 152.80 metres)
(From 171.00 to 171.50 metres)
(From 199.00 to 205.00 metres)
Drill hole CAS-15-59 (Drilling north-west at 600 metres south-west of CAS-15-58)
0.20 g/t Au on 2.50 metres
0.39 g/t Au on 1.50 metre
(From 192.50 to 195.00 metres)
(From 249.50 to 251.00 metres)
The other drill holes completed during this campaign to test geological and structural targets and also
induced polarization geophysical regional target and TDEM, did not return significant in gold value
despite the fact that all targets were explained by the presence of sulfides. Midland and SOQUEM are
currently studying the opportunity to add more drill holes in order to follow in the area of drill hole CAS-
15-53 as well as in the gold porphyry intrusion sector.
A new drilling program consisting of eight (8) holes totalling 2,800 metres is commencing and will be
completed during Fiscal 16.
4.5 Jouvex (Au), in partnership with SOQUEM and operated by Midland
Property Description
The Corporation acquired claims by map staking about 50 kilometres to the southwest of Matagami.
As at September 30, 2015, this property consists in 378 claims covering an area of approximately
21,102 hectares. Some claims were dropped in Fiscal 14 therefore the Corporation impaired partially
in 2015 for $3,150 the exploration property cost.
See the Casault section for the details on the agreement signed with SOQUEM.
Exploration work on the property
During Q2-15, a drilling program consisting in eight (8) holes and totalling 1,258.0 metres was
completed on Jouvex in partnership with SOQUEM. This program targeted the best historical IP
anomalies and a VTEM conductor identified during the last years. One hole (JOU-15-01) was also
completed to test a very strong conductor located east of the historical intersection that returned 6.2
g/t Au over 1.52 metre.
Moreover, three (3) holes were completed to test the best IP-Orevision anomalies identified during the
2015 survey.
- 17 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
The IP Orevision survey on Jouvex totalling about 35 km was completed during Q2-15. Several new
anomalies have been identified in the regional magnetic low. Following the interpretation of the survey,
three (3) drilling targets were added namely H-I-J.
JOU-15-01 (Target A) was completed at a final depth of 171.0 metres. This hole targeted a very strong
conductor associated with a high chargeability IP anomaly. The hole intersected a graphitic mudstone
with 5-10% Py from 82.0 to 82.45 m followed by a massive sulphide (Po) horizon from 82.45 to 83.45
metres, explaining the conductor. A second zone with graphite was intersected from 90.0 to 93.2
metres. This hole also cut a large alteration zone (quartz-carbonate) mineralized with up to 2-5% Py
from 83.45 m to 90.0 metres and between 93.2 and 133.0 metres. Analyses were received and the
best result returned 0.19 g/t Au over 1.0 metre from 74.0 to 75.0 metres.
JOU-15-02 (Target B) was completed at 140.0 metres. This hole cut a few bans of semi to massive
pyrite within intermediate tuffs. A graphitic mudstone with 3% Py was cut between 101.0 and 106.0
metres. From 41.26 to 42.66 m, an interval with semi-massive pyrite returned 0.43 g/t Au over 1.4
metres.
JOU-15-03 (Target C) was abandoned in the overburden at a depth of 86.0 metres because of a broke
casing. No significant assay result was obtained.
JOU-15-04 (Target D) tested an IP anomaly and intersected 1-5% Py nodules within a conglomerate
unit between 90.0 and 100.0 metres. The hole ended at 159.0 metres. No significant assay result was
obtained in this hole. No significant assay result was obtained.
JOU-15-05 (Target J) was completed at a final depth of 195.0 metres. After 38.0 metres of overburden,
the hole intersected a graywackes-mudstone sequence with local graphite beds down to 146.8 metres.
Locally, 3-5% Py was intersected over 1.0 metre. No significant assay result was obtained.
JOU-15-06 (Target I) was completed at a depth of 174.0 metres. This hole intersected several units of
hematite-jasper iron formations with local magnetite and a low sulphide content. Some strongly
portions with a strong sericite alteration were intersected. No significant assay result was obtained
JOU-15-07 (Target H) was completed at a final depth of 186.0 metres. After 12.3 metres of casing, the
hole intersected a mix of mudstones-graywackes and banded hematite iron formations containing
some jasper and magnetite. The mudstones show locally quartz-carbonate veins stockwork with traces
of pyrite. No significant assay result was obtained.
JOU-15-08 (Target G) was designed to test a VTEM conductor which has been explained by the
presence of a pyritic mudstone over 3 metres. The hole ended at 147.0 metres. Assay results returned
0.22 g/t Au over 1.50 metre from 136.2 to 137.7 metres.
An induced polarization survey totalling 35 kilometres was completed during Q4-15. This survey was
completed along a formationnal conductor at the contact of the Taibi Group sediments and the
volcanics of the Cartwright Group. Several anomalies were identified and a drilling program (3 holes;
850 m) is in preparation for Fiscal 16.
4.6 Heva (Au), operated by Midland
Property Description
The Heva West block consists of 4 contiguous claims adjacent to the west of the Maritime-Cadillac
property, currently a 50% Midland / 50% Agnico Eagle. The Heva East block is located about 4
kilometres to the southeast and consists of 28 contiguous claims largely covering sedimentary rocks
of the Cadillac Group just north of the Piché Group.
- 18 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
Exploration work on the property
During Q4-15, the exploration campaign consisted of one week prospection on the west part of the
Heva East block and also of channel sampling on two trenches that had previously been made in 2010.
Following these recent works, the best gold results returned values of 18.0 g / t Au and 5.1 g / t Au
from sampling of an old trench dynamited and dating back more than twenty years which was found
during reconnaissance work and a value of 5.6 g / t Au obtained in sampling mineralized ore masses
found near the old Dempsey-Cadillac showing from the 1930's.
In addition, some new gold showings were discovered during prospecting, including a conglomerate
outcrop which returned 1.9 g / t Au and a mineralized angular boulder that returned a value of 1.1 g / t
Au. Several channels sampling was made on the 2010 trenches and returned anomalous gold values,
including intervals of 0.57 g/t Au over 1.30 metres (trench 2010-05) and 0.18 g/t Au over 1,00 metre,
0.17 g/t Au over 0.70 metre and 0.12 g/t Au over 0.60 metre (trench 2010-01).
Midland is currently seeking a partner for this project.
4.7 Valmond (Au), operated by Midland
Property Description
The Corporation acquired claims by map staking about 50 kilometres to the west of Matagami. As at
September 30, 2015, this property consists in 111 claims covering an area of approximately 6,179
hectares.
On November 19, 2013, the Corporation signed an agreement with Sphinx Resources Ltd. (“Sphinx”)
whereby Sphinx could have acquired 50% of the Valmond property subject to $250,000 payments in
cash ($30,000 completed) and $2,500,000 exploration work ($670,350 completed). In August 2015,
Sphinx terminated the agreement on the Valmont property.
Exploration work on the property
In December, Midland completed a 225 metres drill hole to test an induced polarization anomaly
consisting of a chargeability high with no related drop in resistivity. This target is located in a structurally
complex area marked by the intersection of several NW-SE and NE-SW-trending structures. No
significant result was obtained.
4.8 Samson Ni-Cu-PGE in partnership with Sphinx and operated by Midland
Property Description
As at September 30, 2015, the Samson property consists of 551 claims covering a surface area of
about 30,592 hectares about 50 kilometres west of the town of Matagami, in Abitibi, Quebec.
On September 3, 2014, the Corporation signed an agreement with Sphinx whereby Sphinx can
acquire 50% of the Samson property subject to the following conditions:
Upon signing (completed)
On or before September 3, 2015 ($350,000 firm commitment) 1)
On or before September 3, 2016
On or before September 3, 2017
On or before September 3, 2018
Total
1)
Terms of the September 3, 2015 cash payment are under discussion. The work commitment is completed.
Payments in
cash
$
40,000
40,000
50,000
70,000
75,000
275,000
Work
$
-
500,000
700,000
900,000
1,400,000
3,500,000
- 19 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
The Corporation will be the operator during the option;
Upon acquiring a 50% interest, a joint venture will be formed;
If a party’s interest dilutes to 10% or less, its interest will be converted to a 2% NSR royalty, 1% of
which can be purchased back for $1,500,000.
Exploration work on the property
During December 2014, a major ground-based geophysical program totalling about 60 kilometres and
including magnetic and ground electromagnetic surveys was completed in an effort to characterize a
series of untested MegaTEM conductors coinciding with strong magnetic responses. About a dozen
high-priority MegaTEM targets were selected for this ground follow-up, due to their association with
strongly magnetic units interpreted as ultramafic rocks. Following the TDEM-ARMIT survey conducted
over the best MegaTEM conductors, six conductors were selected for drilling.
During Q2-15, six (6) diamond drill holes totalling 1,625.5 metres were completed on Samson to test
the selected TDEM-ARMIT conductors.
SAM-15-01 (Target 14-01) ended at a final depth of 252.0 metres within a pyroxenite unit. After 56.0
metres of casing, a contact between a gabbro/diorite a pyroxenite was intersected at 212.0 metres.
However, there was no clear evidence a conductor except maybe a fault zone at about 154.0 metres.
The BHEM survey did not detect any anomaly. One sample returned 101 ppb Au and 263 ppb Pd over
1.0 metre from 240.0 to 241.0 metres. The ultramafics showed background values between 300 to
500 ppm Ni.
SAM-15-02 (Target 14-01a2) was completed at a depth of 225.0 metres. The hole intersected a
gabbroic intrusion down to 225.0 metres after 49.5 metres of casing. No clear explanation for the
conductor, possible overburden anomaly. The BHEM survey did not detect any anomaly. This hole
returned elevated background values between 100 and 500 ppm Cu.
SAM-15-03 (Target 14-01b3) was also completed at a depth of 225.0 metres. A granitic intrusion with
several fault zones was intersected. These fault zones could possibly explain the conductor. The
BHEM survey did not detect any anomaly. No significant result was obtained.
SAM-15-04 (Target 14-01c4) has been completed to a final depth of 250.5 metres after having
traversed 126.0 metres of overburden. A major fault zone was intersected between 143.0 and 145.0
metres. Between 147.0 and 153.0 metres, a mineralized zone consisting of mineralized quartz veins
with some tourmaline and 1-2% pyrite was intersected. The BHEM did not detect any anomaly. No
significant result was obtained.
SAM-15-05 (Target 14-04a) ended at a final depth of 177.0 metres. This hole intersected graphitic
mudstones between 144.0 and 151.0 metres. Also, a horizon of cherty sediment containing some
minor pyrite was intersected from 119.0 to 122.0 metres and again from 126.0 to 128.0 metres. The
BHEM did not detect any anomaly. A six (6) metres gold anomalous interval between 145.0 and 151.0
m returned 0.12 g/t Au over 1.0 m (146.0 to 147.0 m) and 0.20 g/t Au over 1.0 m from 150.0 to 151.0
metres.
SAM-15-06 (Target 14-04) was completed at a final depth of 381.0 metres within an intermediate dyke.
From 324.0 to 377.0 metres, an ultramafic unit locally altered with talc was intersected. Traces of
sulphides (Py-Po) were noted throughout the unit. The southern contact of this unit has not been
reached. The BHEM survey (Z component) identified a weak off-hole anomaly at the end of the hole.
The X and Y probes were also surveyed but the response is very weak and insufficient to be able to
locate the anomaly. Two assay results returned anomalous values of 0.13 g/t Au over 1.0 m from 330.0
to 331.0 metres and 0.26 g/t Au over 1.0 m from 339.0 to 340.0 metres near the northern contact of
the ultramafic rocks.
- 20 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
No exploration work conducted during Q4-15. Midland and Sphinx has agreed on the next exploration
program which would consist in three IP surveys followed-up by a drilling program to test the new IP
anomalies near the best historical gold showings found on the property. This program is conditional to
the financing by Sphinx.
4.9 La Peltrie (Au), operated by Midland
Property Description
As at September 2015, the La Peltrie property comprises 387 claims covering a surface area of about
21,336 hectares and encompasses possible subsidiary faults to the south of the regional Lower Detour
Fault over a distance of more than 10 kilometres.
Exploration work on the property
Line cutting and ground geophysics IP of over 100 kilometres started during Q4-15 and are still in
progress. The results will be received for Fiscal 16 in preparation for a drilling program during the
winter of 2016.
Midland is currently seeking for a partner for this project.
4.10 Adam (Cu-Au), in partnership with Sphinx and operated by Midland
Property Description
The Adam property was acquired by map designation and is a property with strong gold and copper
potential located about 15 kilometres east of the B26 zone held by SOQUEM and about 20 kilometres
east of the former Selbaie mine, which historically produced 56.5 Mt grading 1.9% Zn, 0.9% Cu, 38.0
g/t Ag and 0.6 g/t Au.
The Adam property is wholly owned by Midland and is located about 65 kilometres west of the town of
Matagami. As at September 30, 2015, it consists of 194 cells covering a surface area of about 100,793
hectares in the Abitibi region of Quebec. The B26 and East Zone gold-copper deposits, held and
worked actively by SOQUEM, respectively host historical resources on the order of 600,000 metric
tonnes grading 2.9 g/t Au and 2.8% Cu and 750,000 metric tonnes grading 2.0% Cu and 0.4 g/t Au
(Source: SOQUEM website; historical resources non-compliant with NI 43-101). In addition, drill holes
completed in 2012 by Excellon Resources Inc. ("Excellon") on the Beschefer property (B-14 zone)
located less than 7 kilometres west of the Adam property, intersected high-grade gold intervals
reaching 13.07 g/t Au over 8.75 metres, including 58.5 g/t Au over 1.50 metre (Source: press release
by Excellon dated April 17, 2012).
This new acquisition with strong gold and copper potential covers, over more than 8 kilometres, the
regional contact between tholeiitic volcanic rocks of the Enjalran Group and calc-alkaline volcanic
rocks of the Brouillan Group as well as an assemblage of felsic volcaniclastic rocks. The B26 zone is
hosted in felsic to mafic volcaniclastic rocks with iron carbonate, chlorite, sericite, and silica alteration.
In the south part of the Adam property lies another favourable contact, between volcanic rocks of the
Enjalran Group and wackes, mudrocks, and iron formations of the Taibi sedimentary Group. A gold
showing is located less than 5 kilometres west of the Adam property, where a historical drill hole
yielded grades reaching 19.9 g/t Au over 0.77 metre (Source: SIGEOM map sheet 32E10, GM56241).
On the Adam property, historical INPUT electromagnetic surveys identified several conductors that
have never been drill-tested, located near the felsic volcanic units identified near the favourable
regional contact between the Enjalran and Brouillan groups.
- 21 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
On December 12, 2014, the Corporation signed an agreement with Sphinx whereby Sphinx can
acquire 50% of the Adam property subject to the following conditions:
Upon signing (completed)
On or before December 12, 2015
On or before December 12, 2016
On or before December 12, 2017
On or before December 12, 2018
Total
Payments in
cash
$
20,000
40,000
50,000
70,000
70,000
250,000
Work
$
-
400,000
400,000
1,000,000
1,200,000
3,000,000
The Corporation is the operator during the option.
Exploration work on the property
A helicopter-borne VTEM electromagnetic survey totalling about 800 line-kilometres was completed in
December 2014 to cover the entire property. Several new conductors have been identified near the
favorable contact between the Enjalran and Brouillan Groups.
4.11 Abitibi Gold (Au) operated by Midland
Property Description and exploration work on the property
The Corporation acquired by map designation 178 claims covering a surface area of about 9,553
hectares.
Exploration work on the property
Compilation of historical data is in progress for the Abitibi Gold project. A VTEM survey totalling
approximately 225 line-kilometres was completed during Q1-15 on the Jeremie block. The final
interpretation highlighted several new conductors associated with strong magnetic anomalies.
For the Jeremie property, a few geophysics grids are being planned for Fiscal 16.
GRENVILLE-APPALACHES
4.12 Weedon (Cu-Zn-Au) operated by Midland
Property Description
This property is located in the Eastern Townships, about 120 km south of Quebec City and as at
September 30, 2015 is comprised of 132 claims covering an approximate area of 7,121 hectares.
Some claims are subject to NSR royalties of:
1%, the Corporation can buy it back the royalty for $500,000 per 0.5% tranche for a total of
$1,000,000;
0.5%, the Corporation can buy it back this royalty for $500,000;
1.5% on all metals except gold and silver, the Corporation can buy it back for $500,000 per 0.5%
tranche for a total of $1,500,000.
Some claims were dropped therefore the Corporation impaired partially for $13,100 ($9,200 in Fiscal
2014) the exploration property cost.
- 22 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
Exploration work on the property
A ground TDEM survey was completed during Q1-15 on Weedon in areas where previous gravimetric
and IP surveys had identified interesting anomalies and several conductors have been detected.
Midland is currently seeking a partner for this project.
4.13 Gatineau Zinc (Zn), operated by Midland
Property Description
Midland owns a 100% interest in a large land position for zinc, including as at September 30, 2015 92
claims covering 5,247 hectares distributed in the Gatineau Area, approximately 200 kilometres
northwest of the city of Montreal. The Corporation owns claims located in the Gatineau region. Some
claims were dropped therefore the Corporation impaired partially for $9,344 ($2,693 in Fiscal 14).
Exploration work on the property
No work conducted during Fiscal 2015 on the property. Midland is currently seeking a partner for this
project.
4.14 Vermillon (Cu-Au), in partnership with SOQUEM and operated by SOQUEM
Property Description
The Vermillon property is located some 90 km southwest of the town of La Tuque, Quebec and
consists as at September 30, 2015 of 16 contiguous claims covering a total surface area of 934
hectares in joint venture 52.5% SOQUEM/ 47.5% Midland
Exploration work on the property
During Q4-15, a prospecting and a soil geochem survey was completed and the final results are
pending.
JAMES BAY
4.15 James Bay Gold (Au), operated by Midland
Property Description
Midland owns a 100% interest on 323 claims as at September 30, 2015 covering 16,693 hectares in
the James Bay Area, an area that has the potential to soon become a significant new gold producer in
Quebec after the Abitibi Belt. Some claims were dropped therefore the Corporation impaired partially
for $66,293 the exploration property cost ($8,686 in Fiscal 14).
Exploration work on the property
A prospecting program was completed during Fiscal 15 on the James Bay Gold project. The final assay
results are pending.
4.16 Éléonore Gold Properties (Au) operated by Midland
Property Description
The Éléonore new property is divided in three distinct blocks with two of them within 25 kilometres
from the Éléonore gold discovery of Goldcorp and one southeast 30 km further along strike. It
encompasses a group of 289 claims covering an area of approximately 15,139 hectares as at
September 30, 2015.
- 23 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
Exploration work on the property
A 31.5 kilometres ground geophysical IP and magnetic (“Mag”) survey was completed in the eastern
part of the Éléonore Centre property. This survey completes and extends the 2013 survey where
several gold showings were uncovered by Midland (Golden Gun and Golden Gun South showings).
The final data of the survey is pending. The 31.5 kilometres IP-Mag survey focussed on identifying
sulphide rich targets for further follow-up during the summer exploration program.
During Q4-15, trenching works and prospecting were completed over the IP anomalies identified in the
northern portion of the property. The final results are pending.
4.17 James Bay Uranium (U) operated by Midland
Property Description
The property is located in the James Bay region and is composed of 8 claims as at September 30,
2015. The Company wrote off the property in September 2015 for $24,577 since no exploration
program had been planned for the near future.
4.18 Bay James Iron (Fe) operated by Midland
Property Description
As at September 30, 2015, the Montagne-du-pin property consist in a total of 71 wholly owned claims
covering 3,621 hectares and are located along the Trans-Taiga road, James Bay. The Company wrote
off the property in September 2015 for $97,822 since no exploration program had been planned for
the near future (a partial impairment of $73,717 was recorded in Fiscal 14).
NORTHERN QUEBEC
4.19 Pallas (PGE), in partnership with JOGMEC and operated by Midland
Property Description
As at September 30, 2015, the property totals 560 claims covering approximately 25,482 hectares in
the Labrador Trough («Trough») some 80 kilometres west of Kuujjuak, Québec.
On January 21, 2014, the Corporation signed an option agreement with Japan Oil, Gas and Metals
National Corporation (« JOGMEC ») whereby JOGMEC has the option to acquire 50% interest in the
Pallas project prior to March 31, 2016 by funding $2,000,000 in expenditures spread as following:
On or before March 31, 2014 (completed)
On or before March 31, 2015 (completed)
On or before March 31, 2016 (completed)
Total
Work
$
250,000
700,000
1,050,000
2,000,000
Midland will be operator as long as it will hold an interest equal to or higher than 50% in the project.
In September 2015, JOGMEC has funded $2,000,000 of exploration work and now has the right to
exercise its option to acquire a 50% interest in the Pallas PGE property.
- 24 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
Exploration work on the property
Acquiring a large land package in the Labrador Trough for the Platinum Group Elements plus gold
(PGE + Au) followed an exhaustive compilation of all the old PGE + Au showings found between 1986
and 2000 by various exploration companies. Once officially recorded, our mining titles were covering
already tenth of occurrences with more than 1.0 g/t PGE + Au. Late in 2013, Midland’s exploration
team added another tenth occurrence with about the same PGE + Au grade. All mineralization are
concentrated in differentiated mafic sills comprising mineralized gabbroic horizons alike reefs.
Following the option agreement signature with JOGMEC, a detail airborne magnetic survey has been
completed. A total of 3,201 line-kilometers has been completed on Juno-Ceres, Itokawa, Gaspar and
Palladin grids respectively. In the meantime, Midland has acquired four high-resolution colored satellite
images (50 centimetres per pixel) covering the same areas.
In about thirty days during summer 2014, an exploration program including prospecting and channel
sampling was completed to further evaluate the best PGE + Au known of Ceres, Gaspar, Itokawa and
Palladin. This work led to the discovery of several new showings from which some were followed up
by channel sampling and drilling.
During Q4-15, a reconnaissance sampling program led to the discovery of new significant PGE
showings with one that returned grade up to 31.0 g/t PGE + Au. With the objective to find more PGE
+ Au showings, the 2015 summer exploration program, was very prolific with the discovery of 42 new
PGE + Au showings returning more than 1 g/t PGE + Au including 18 with more than 2 g/t Au from 426
selected grab samples collected on the Ceres, Itokawa and Gaspar claim blocks. The program was
also successful to extend and to identify new PGE + Au bearing corridors.
On the Ceres claim block, three new mineralized corridors (reefs) were discovered and 3 known
corridors were extended laterally. Near the Ceres Showing (2.9 g/t PGE + Au), a new occurrence 350
metres away was discovered and a grab sample returned 5.2 g/t PGE + Au extending the corridor to
the south. The Ceres mineralized corridor can now be traced over 2100m. Four hundred meters
southwest of the Ceres showing, a new mineralized trend has been discovered with select grab
samples returning 1.2, 1.0 and 1.0 g/t PGE + Au respectively. Some 1700m south of the Ceres
Showing, a new high grade NNW trending mineralized corridor has been discovered with significant
PGE values returning 31.0 and 7.5 g/t PGE + Au respectively, both sample 215 metres apart. Historical
and combined recent samplings define a discontinuous new corridor traceable over near 7 kilometres.
Farther north along strike NNW with the Ceres PGE rich-corridor, 4 selected grab samples collected
around the Cynthia Showing found in 2014 (4.3 g/t PGE + Au) confirmed the presence of PGE and
returned 3.0, 1.3, 1.1 and 1.1 g/t PGE + Au respectively. About 1600 metres NNW from the Cynthia
showing, a 3 kilometres long new mineralized corridor named Big Papi Reef was discovered with more
than 25 selected grab sample returning more than 0.5 g/t PGE + Au and with 14 with more than 1 g/t,
5 with more than 2 g/t up to 3.1 g/t PGE + Au. On the western portion of the Ceres claim block along
the Enish corridor, five new showings returning 2.3, 2.2, 1.8, 1.7 and 0.8 g/t PGE + Au were found
respectively at 1700, 2200, 2300, 3500 and 5200 metres north of the Enish Showing (7.1 g/t PGE +
Au). This mineralized trend alone can be traced over more than 5 km. Closer from the Enish Showing
a new grab sample 230m along strike north returned 2.2 g/t PGE + Au. None of these new occurrences
has been channel sampled or drill tested before.
On the Gaspar claim block, 3 known corridors were extended laterally and one new mineralized
corridor (reef) was discovered. Prospecting around the Herculina Showing (up to 1.1 g/t PGE + Au)
found in 2014, three new selected grab samples returned 1.1, 1.1 and 1.2 g/t PGE + Au.
- 25 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
One kilometre north, selected grab samples returned 3.3, 2.5, 1.1 and 0.9 g/t PGE + Au extending the
reef another 600 metres farther NNW for a total of 1800 metres. Prospecting also around the Olympus
showing (0.9, 0.8, 0.6 and 0.6 PGE + Au) found in 2014, new selected grab samples returned 2.9, 1,1
and 0.9 g/t PGE + Au extending the mineralized corridor at 1000 metres. A new single showing located
between the Herculina and the Olympus mineralized corridor returned 2.0 g/t PGE + Au. This
occurrence could potentially define a new PGE bearing corridor.
On the Itokawa claim block, one new mineralized corridor (reef) was discovered and one known
corridor was extended laterally. Located in the central south portion of the Itokawa claim block, two
selected grab samples, 30 metres apart, on a new mineralized zone returned 6.2 and 0.9 g/t PGE +
Au respectively. Located along the same magnetic NNW trend, another discovery showing returned
1.0, 0.7 and 0.4 g/t PGE + Au forming a 1800 metres long new corridor open in both directions. While
prospecting along strike with the Itokawa Showing (1.3 g/t over 2.8 metres incl. 4.1g/t over 0.3 metre)
and guided by airborne magnetic data, a new showing was found returning 1.5 g/t PGE + Au 500m
NNW. Another cluster of selected grab samples, 3000 metres along strike, returned 0.7, 0.6 and 0.5
among other anomalous PGE + Au values. None of these new occurrences has been channel sampled
or drill tested before.
From a subsequent exploration phase, Midland has channel sampled 17 of these new occurrences
with 724 half-metre long channel. The assay results are pending.
4.20 Willbob (Au), operated by Midland
Property Description
The Willbob property in the Labrador Trough consists of 215 claims covering about 9 513 hectares,
and is located approximately 66 kilometres west-southwest of Kuujjuaq (Québec), near and in a
geological environment similar to Midland’s Pallas Project which is currently being worked in
partnership with JOGMEC.
Exploration work on the property
The Willbob property covers a series of gabbro sills, where numerous gold showings were historically
discovered, over more than 8 kilometres. Exploration work conducted by the Nunavik Mineral
Exploration Fund ("NMEF") from 2004 to 2006 reported several gold showings that returned up to 31.3
g/t Au on selected grab samples. Visible gold was reported at the Kuni Showing which returned 19.8
g/t Au. Another sample returned 9.5 g/t Au at about 120 metres to the north-west of the Kuni Showing.
The Lafrance Showing, located about 6.5 kilometers north of the Kuni Showing, returned up to 21.9
g/t Au on selected grab samples and gold values are traced over 130 metres surface length. Historical
channel sampling on the Lafrance Showing returned 3.0 g/t Au over 2.90 metres and 2.6 g/t Au over
3.90 metres in a second channel located about 40 metres north. About 3.5 kilometres from and along
the Lafrance mineralized zone trend, the NMEF reported the Polar Bear Showing with values up to 6.4
g/t Au. There, the NMEF reports a gold anomalous corridor that can be traced over 330 metres in the
area. (Source: Nunavik Mineral Exploration Fund 2006 Activity Report).
Midland 2014 grab resampling along the Lafrance auriferous corridor returned up to 5.4 g/t Au and
more sample assays are pending. Several gold showings on the Willbob property are associated to a
felsic unit intruding the gabbro sills.
During Q4-15, a reconnaissance sampling program has been completed on the gold Willbob Project
with 10 and 47 grab samples collected in the Lafrance and Kuni Showing areas; the latest being 6
kilometers south of the Lafrance Showing. The best assay result returned up to 77.6 g/t Au. This new
auriferous occurrence is well located within a high grade gold corridor and along strike with several
other showings which include Showing 31 (up to 31.0 g/t Au), Kuni (up to 19.8 g/t Au), Lafrance (up to
21.9 g/t Au), East Dupuis (up to 15.0 g/t Au) and Polar Bear (up to 6.4 g/t Au).
- 26 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
Midland’s 2015 field program led to the discovery of 2 new showings with one returning 1.25 g/t Au
located 500 metres south of the Kuni Showing and closer the second one, a new polymetallic showing
returned 1.2 g/t Au, 132 g/t Ag, 8.5% Pb and 7.1% Zn. None of the new showings have been channel
sampled or drilled tested before.
The 2015 summer also included a systematic sampling program over the Willbob Showing (Lafrance)
with the attempt to better map the quartz-iron carbonate alteration halo that wraps its gold system. The
sampling covers a 350 meters by 500 meters area centered on the Willbob Showing. A review of the
geochemical data defined a 350 meters long by 50 meters wide gold, copper, lead, zinc and sulfur
anomalous area. While sampling the gold enrich zone, using a 50 metres grid separation, three half a
meter long channel samples returned 4.7, 3.5 and 3.0 g/t Au, and while prospecting, 4 selected grab
samples within that same zone returned 9.3, 2.7, 2.4 and 1.1 g/t Au. All these showings remains open
in all directions and were never drill tested.
Following these encouraging results, Midland has increased it land position adding 135 new claims to
the Willbob property.
From a second phase of reconnaissance, a new auriferous corridor, named Golden Tooth Showing,
was found 2.0 kilometers south-west of the Kuni Showing. Assay results from thirty samples collected
along a new altered sheared zone confirm presence of gold with ten values greater than 3.0 g/t Au
reaching up to 25.2 g/t Au. The NNW-SSE sheared zone, traceable over at least 300 meters long by
25 meters wide, is marked by quartz-albite injections traversed by multiple massive and millimetric
arsenopyrite veinlets into a silicified, ankeritized and hematized felsic intrusion with dissiminated
arsenopyrite and pyrite in its walls.
Selected of these new occurrences were channel sampled and the assays results are pending.
QUEBEC / LABRADOR
4.21 Ytterby (REE), in partnership with JOGMEC and operated by Midland
Property Description
As at September 30, 2015, the Ytterby Project comprises 261 claims in Labrador and 151 claims in
Québec, located between 200 and 230 kilometres east and northeast of Schefferville.
The claims on the main bloc were kept and the ones on the other blocs were dropped, therefore the
Corporation impaired partially the project for $1,230,273 in Fiscal 14.
On February 23, 2010, the Corporation signed a memorandum of agreement (and on July 29, 2011 a
definitive agreement) with JOGMEC whereby JOGMEC acquired a right to acquire a 50% interest in
the Ytterby property by funding $2,700,000 exploration work. As of September 30, 2015, JOGMEC
has not yet given its notice of exercise of option. In spring 2015, JOGMEC indicated that it would not
participate in the summer 2015 exploration program and its interest has now been diluted to 49.5%.
Exploration work on the property
Discussions with JOGMEC to plan the next exploration campaign are underway with the objective to
further evaluate the economic potential to extract the mineralized boulders from the Strange Lake
glacial dispersal train.
Durant Q4-15 Midland has completed a rock sampling program over the Strange Lake dispersal train.
A total of 70 grab samples were collected. Assay results confirm presence of rare earth elements
oxides from the selected samples with an average of 0.63% TREO + Y2O3 from which 38% are heavy
rare earths oxides.
- 27 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
4.
INVESTING ACTIVITIES (CONT’D)
PROJECTS GENERATION
Midland continued some geological compilation programs in Quebec for the acquisition of new
strategic gold, uranium and base metal properties.
Other Activities
Midland is pro-active in the acquisition of new mineral exploration properties in Quebec. Management
is constantly reviewing other opportunities and other projects to improve the portfolio of the
Corporation. Acquisition opportunities outside of Quebec will also be considered. Midland prefers to
work in partnership and fully intends to secure new partnerships for its properties and its 100% owned
properties.
5. FINANCING ACTIVITIES
The Corporation finances itself mainly through share issuance.
In December 2014, the Corporation completed private placements by issuing 1,263,288 units at $0.70
per unit for total gross proceeds of $884,302. Each unit is comprised of one common share and one-
half of a warrant. Each whole warrant will entitle the holder to purchase one additional common share
at $0.95 until December 2016. In addition, the Corporation completed private placements by issuing
1,096,683 flow-through shares at $0.85 per share, for total gross proceeds of $906,680.
In May 2015, the Corporation completed a private placement of 20,622,569 units at a price of $0.70
per unit for total gross proceeds of $14,435,798. Each unit consisted of one common share and one
warrant. Each warrant entitles the holder to purchase one common share at a price of $1.15 until May
3, 2018. In connection with that private placement, the Corporation paid finder’s fees of $457,980 and
issued compensation warrants entitling the finders to acquire 555,000 common shares of Midland at
a price of $0.70 per share until May 3, 2017.
Subsequent to September 30, 2015, the Corporation completed a private placement of 835,365 flow-
through shares at $0.85 per share, for total gross proceeds of $710,610.
6. WORKING CAPITAL
Midland has a working capital of $9,999,139 as of September 30, 2015 ($3,137,673 as of September
30, 2014) as well as $6,496,000 of investments in guaranteed investment certificates with expiry dates
over 1 year.
Cash flow required
Operating expenses, excluding non-cash items
Project management fees and interest income
Exploration budget paid by Midland (covering the exploration work requirements
following the November 2015 flow-through private placement of $710,060)
Mining credits
Staking and property maintenance
Total
Annualized
$
1,141,000
(323,000)
1,925,000
(65,000)
75,000
2,753,000
- 28 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
6. WORKING CAPITAL (CONT’D)
Management is of the opinion that it will be able to maintain the status of its current exploration
obligations and to keep its properties in good standing. Advanced exploration of some of the mineral
properties would require substantially more financial resources. In the past, the Corporation has been
able to rely on its ability to raise financing in privately negotiated equity offerings. There is no assurance
that such financing will be available when required, or under terms that are favourable to the
Corporation. The Corporation may also elect to advance the exploration and development of mineral
properties through joint-venture participation.
7. SUMMARY OF RESULTS PER QUARTERS
For the eight most recent quarters:
Q4-15
$
Q3-15
$
Q2-15
$
Q1-15
$
Revenues
Net loss
Loss per share
Total assets
62,401
(184,764)
(0.01)
24,407,655
42,672
(155,960)
-
25,078,324
98,516
(185,672)
(0.01)
11,044,082
97,863
(102,702)
-
11,187,994
Q4-14
$
Q3-14
$
Q2-14
$
Q1-14
$
Revenues
Net loss
Loss per share
Total assets
74,204
(1,397,949)
(0.05)
9,892,800
27,059
(141,146)
-
10,741,442
35,856
(248,268)
(0.01)
10,888,313
35,464
(187,223)
(0.01)
10,869,758
8. FOURTH QUARTER
The Corporation reported a loss of $184,764 for Q4-15 compared to a loss of $1,397,949 for Q4-14.
The Corporation earned project management fees of $62,401 in Q4-15 ($67,056 in Q4-14). In Q4-15,
the most active projects with partners were Pallas (Jogmec) and Casault (SOQUEM). In Q4-14, the
most active project with partners was Pallas.
Total expenses decreased to $432,550 in Q4-15 compared to $1,555,803 in Q4-14:
Following the May 2015 financing, the Corporation will aim to increase its visibility. For the first time,
Midland was present at the Denver conference and a part-time employee was hired to support this
objective.
The stock-based compensation expense decreased to $19,955 ($37,297 in Q4-14) for the same
reason explained in section 3.
During Q4-15, some claims were dropped and the following properties were partially impaired:
BJ Au for $22,146, Laflamme for $7,981 and Gatineau for $6,728. On the other hand, the following
properties were written off since no exploration program is planned in the near future: BJ Fe for
$66,412, BJ U for $24,577, During Q4-14, one important impairment was recognized since most of
the claims on the Quebec side of the Ytterby project were dropped and therefore the Corporation
impaired partially that property for $1,230,273.
- 29 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
8. FOURTH QUARTER (CONT’D)
Interest income increased to $58,948 ($13,985 in Q4-14) due to the guaranteed investments
certificates purchased following the $14,435,798 financing completed in May 2015.
The Corporation incurred $1,461,481 ($945,234 in Q4-14) in exploration expenses of which $856,730
($661,776 in Q4-14) was recharged to the partners. The exploration expenses incurred in Q4-15 were
mostly executed on Casault, Jouvex and Pallas whereas in Q4-14 the exploration work was mostly
done on the James Bay Eleonore. The Corporation acquired properties for $126,573 net mostly on
Pallas, La Peltrie and Willbob ($50,566 in Q4-14 for Samson, La Peltrie and Jouvex).
9. RELATED PARTY TRANSACTIONS
The following are the related party transactions that occurred in Fiscal 15:
In the normal course of operations:
A firm in which René Branchaud (director and corporate secretary) is a partner charged legal fees
amounting to $125,932 ($49,624 in Fiscal 14);
A company controlled by Ingrid Martin (chief financial officer) charged accounting fees totaling
$137,918 ($106 225 in Fiscal 14) of which $57,660 ($48,368 in Fiscal 14) relates to her staff;
As at September 30, 2015, the balance due to the related parties amounted to $21,563 ($7,394 in
September 30, 2014).
Out of the normal course of operations:
Directors and officers of the Corporation participated in the flow-through private placement of
December 2014 for $79,050 and in the units private placement of May 2015 for $15,400 ($103,600
in the private placement closed in December 2013).
10. SUBSEQUENT EVENTS
See section 5 on financing activities.
11. OUTSTANDING SHARE DATA
Common shares
Options
Warrants
12. STOCK OPTION PLAN
As at
December 10, 2015
Number
54,094,417
21,809,213
2,020,000
77,923,630
As at
September 30, 2015
Number
53,259,052
21,809,213
2,020,000
77,088,265
The purpose of the stock option plan is to serve as an incentive for the directors, officers and service
providers who will be motivated by the Corporation’s success as well as to promote ownership of
common shares of the Corporation by these people. There is no performance indicator relating to
profitability or risk attached to the plan.
- 30 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
12. STOCK OPTION PLAN (CONT’D)
The number of common shares granted is determined by the Board of Directors. The number of
common shares reserved for issuance under the Corporation's fixed number stock option plan is
4,000,000. The exercise price of any option granted under the plan shall be fixed by the Board of
Directors at the time of grant and shall not be lower than the closing price on the day preceding the
grant. The term of the option will not exceed ten years from the date of grant. The options normally
vest 1/6 per 3 months from the grant date, or otherwise as determined by the Board of Directors.
13. OFF-BALANCE SHEET ARRANGEMENTS
The Corporation does not have any off-balance sheet arrangements.
14. COMMITMENT
In September 2012, an amendment was signed to extend the lease for office space for five years, from
March 2013 to February 2018. The rent was $21,875 for the first year and thereafter will be indexed
annually at the highest of the increase of the consumer price index or 2.5%.
15. CRITICAL ACCOUNTING ESTIMATES
When preparing the financial statements, management undertakes a number of judgments, estimates
and assumptions about recognition and measurement of assets, liabilities, income and expenses. The
actual results could differ from the judgments, estimates and assumptions made by management, and
will seldom equal the estimated results. Information about the significant judgments that have the most
significant effect on the recognition and measurement of assets, liabilities, income and expenses are
discussed below.
JUGMENTS
15.1 Impairment of exploration and evaluation (“E&E”) assets
Determining if there are any facts and circumstances indicating impairment loss or reversal of
impairment losses is a subjective process involving judgment and a number of estimates and
interpretations in many cases.
Determining whether to test for impairment of E&E assets requires management’s judgment, among
others, regarding the following: the period for which the entity has the right to explore in the specific
area has expired during the period or will expire in the near future, and is not expected to be renewed;
substantive expenditure on further E&E of mineral resources in a specific area is neither budgeted nor
planned; exploration for and evaluation of mineral resources in a specific area have not led to the
discovery of commercially viable quantities of mineral resources and the entity has decided to
discontinue such activities in the specific area; or sufficient data exists to indicate that, although a
development in a specific area is likely to proceed, the carrying amount of the E&E asset is unlikely to
be recovered in full from successful development or by sale.
When an indication of impairment loss or a reversal of an impairment loss exists, the recoverable
amount of the individual asset must be estimated. If it is not possible to estimate the recoverable
amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset
belongs must be determined. Identifying the cash-generating units requires considerable management
judgment. In testing an individual asset or cash-generating unit for impairment and identifying a
reversal of impairment losses, management estimates the recoverable amount of the asset or the
cash-generating unit. This requires management to make several assumptions as to future events or
circumstances.
- 31 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
15. CRITICAL ACCOUNTING ESTIMATES (CONT’D)
These assumptions and estimates are subject to change if new information becomes available. Actual
results with respect to impairment losses or reversals of impairment losses could differ in such a
situation and significant adjustments to the Corporation’s assets and earnings may occur during the
next period.
The total impairment loss of the E&E assets is $225,826 for Fiscal 15 ($1,288,721 for Fiscal 14). No
reversal of impairment losses has been recognized for the reporting periods.
15.2 Deferred taxes
The assessment of availability of future taxable profits involves judgment. A deferred tax asset is
recognized to the extent that it is probable that taxable profits will be available against which deductible
temporary differences and the carry-forward of unused tax credits and unused tax losses can be
utilized. Judgment is also involved in the determination of the expected manner of realisation or
settlement of the carrying amount of the Corporation's assets and liabilities which is expected to be
through the sale of the Corporation's assets.
Valuation of credit on duties refundable for loss and the refundable tax credit for resources.
Refundable credit on mining duties and refundable tax credit related to resources for the current and
prior periods are measured at the amount expected to be recovered from the taxation authorities using
the tax rates and tax laws that have been enacted or substantively enacted at the statement of financial
position date. Uncertainties exist with respect to the interpretation of tax regulations, including credit
on mining duties and tax credit related to resources for which certain expenditures could be disallowed
by the taxation authorities in the calculation of credits, and the amount and timing of their collection.
The calculation of the Corporation’s credit on mining duties and tax credit related to resources
necessarily involves a degree of estimation and judgment in respect of certain items whose tax
treatment cannot be finally determined until notice of assessments and payments have been received
from the relevant taxation authority. Differences arising between the actual results following final
resolution of some of these items and the assumptions made, or future changes to such assumptions,
could necessitate adjustments to credit on mining duties and tax credit related to resources, exploration
and evaluation assets and expenses, and income tax expense in future periods.
The amounts recognized in the financial statements are derived from the Corporation’s best estimation
and judgement as described above. However, the inherent uncertainty regarding the outcome of these
items means that eventual resolution could differ from the accounting estimates and therefore impact
the Corporation’s financial position and its financial performance and cash flows.
16. FINANCIAL INSTRUMENTS
For a description of the financial instruments and the risk associated, please refer to notes 2.5 and 14
of the September 30, 2015 financial statements.
17. RISK FACTORS
The following discussions review a number of important risks which management believes could
impact the Corporation’s business. There are other risks, not identified below, which currently, or may
in the future exist in the Corporation’s operating environment.
- 32 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
17. RISK FACTORS (CONT’D)
17.1 Exploration and Mining Risks
The business of exploration for minerals and mining involves a high degree of risk. Few properties that
are explored are ultimately developed into producing mines.
Currently, there are no known bodies of commercial ore on the mineral properties of which the
Corporation intends to acquire an interest and the proposed exploration program is an exploratory
search for ore. Unusual or unexpected formations, formation pressures, fires, power outages, labor
disruptions, flooding, cave-ins, landslides and the inability to obtain suitable or adequate machinery,
equipment or labor are other risks involved in the conduct of exploration programs. The Corporation,
from time to time, increases its internal exploration and operating expertise with due advice from
consultants and others as required.
The economics of developing gold and other mineral properties is affected by many factors including
the cost of operations, variation of the grade of ore mined and fluctuations in the price of any minerals
produced. There are no underground or surface plants or equipment on the Corporation’s mineral
properties.
17.2 Titles to Property
While the Corporation has diligently investigated title to the various properties in which it has interest,
and to the best of its knowledge, title to those properties are in good standing, this should not be
construed as a guarantee of title. The properties may be subject to prior unregistered agreements or
transfer, or native or government land claims, and title may be affected by undetected defects.
17.3 Permits and Licenses
The Corporation’s operations may require licenses and permits from various governmental authorities.
There can be no assurance that the Corporation will be able to obtain all necessary licenses and
permits that may be required to carry out exploration, development and mining operations at its
projects.
17.4 Metal Prices
Even if the Corporation's exploration programs are successful, factors beyond the control of the
Corporation may affect marketability of any minerals discovered. Metal prices have historically
fluctuated widely and are affected by numerous factors beyond the Corporation's control, including
international, economic and political trends, expectations for inflation, currency exchange fluctuations,
interest rates, global or regional consumption patterns, speculative activities and worldwide production
levels. The effect of these factors cannot accurately be predicted.
17.5 Competition
The mining industry is intensely competitive in all its phases. The Corporation competes with many
companies possessing greater financial resources and technical facilities than itself for the acquisition
of mineral interests as well as for recruitment and retention of qualified employees.
17.6 Environmental Regulations
The Corporation's operations are subject to environmental regulations promulgated by government
agencies from time to time. Environmental legislation provides for restrictions and prohibitions of spills,
release or emission of various substances produced in association with certain mining industry
operations, such as seepage from tailing disposal areas, which could result in environmental pollution.
- 33 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
17. RISK FACTORS (CONT’D)
A breach of such legislation may result in imposition of fines and penalties. In addition, certain types
of operations require submissions to and approval of environmental impact assessments.
Environmental legislation is evolving in a manner, which means stricter standards, and enforcement,
fines and penalties for non-compliance are more stringent. Environmental assessments of proposed
projects carry a heightened degree of responsibility for companies and directors, officers and
employees. The cost of compliance with changes in governmental regulations has a potential to reduce
the profitability of operations. The Corporation intends to fully comply with all environmental
regulations.
17.7 Conflicts of Interest
Certain directors and officers of the Corporation are also directors, officers or shareholders of other
companies that are similarly engaged in the business of acquiring, developing and exploiting natural
resource properties. Such associations may give rise to conflicts of interest from time to time. The
directors or officers of the Corporation are required by law to act honestly and in good faith with a view
to the best interests of the Corporation and to disclose any interest, which they may have in any project
or opportunity of the Corporation. If a conflict of interest arises at a meeting of the board of directors,
any director in a conflict will disclose his interest and abstain from voting on such matter. In determining
whether or not the Corporation will participate in any project or opportunity, the directors will primarily
consider the degree of risk to which the Corporation may be exposed and its financial position at that
time.
17.8 Stage of Exploration
The Corporation's properties are in the exploration stage and to date none of them have a proven ore
body. The Corporation does not have a history of earnings or return on investment, and there is no
assurance that it will produce revenue, operate profitably or provide a return on investment in the
future.
17.9 Industry Conditions
Mining and milling operations are subject to government regulations. Operations may be affected in
varying degrees by government regulations such as restrictions on production, price controls, tax and
mining duty increases, expropriation of property, pollution controls or changes in conditions under
which minerals may be mined, milled or marketed. The marketability of minerals may be affected by
numerous factors beyond the control of the Corporation, such as government regulations. The
Corporation undertakes exploration in areas that are or could be the subject of native land claims.
Such claims could delay work or increase exploration costs. The effect of these factors cannot be
accurately determined.
17.10 Uninsured Hazard
Hazards such as unusual geological conditions are involved in exploring for and developing mineral
deposits. The Corporation may become subject to liability for pollution or other hazards, which cannot
be insured against or against which the Corporation may elect not to insure because of high premium
costs or other reasons. The payment of any such liability could result in the loss of Corporation assets
or the insolvency of the Corporation.
- 34 -
Midland Exploration Inc.
Management Discussion & Analysis
For the year ended September 30, 2015
17. RISK FACTORS (CONT’D)
17.11 Capital Needs
The exploration, development, mining and processing of the Corporation’s properties will require
substantial additional financing. The only current source of future funds available to the Corporation is
the sale of additional equity capital. There is no assurance that such funding will be available to the
Corporation or that it will be obtained on terms favourable to the Corporation or will provide the
Corporation with sufficient funds to meet its objectives, which may adversely affect the Corporation’s
business and financial position. Failure to obtain sufficient financing may result in delaying or indefinite
postponement of exploration, development or production on any or all of the Corporation’s properties
or even a loss of property interest.
17.12 Key Employees
Management of the Corporation rests on a few key officers, the loss of any of whom could have a
detrimental effect on its operations. The Corporation has a key man insurance covering the President
of the Corporation.
17.13 Canada Revenue Agency and provincial agencies
No assurance can be made that Canada Revenue Agency and provincial agencies will agree with the
Corporation's characterization of expenditures as Canadian exploration expenses or Canadian
development expense or the eligibility of such expenses as Canadian exploration expense under the
Income Tax Act (Canada) or any provincial equivalent.
18. LORWARD LOOKING INFORMATION
Some statements contained in this MD&A, specially the opinions, the projects, the objectives, the
strategies, the estimates, the intent and the expectations of Midland that are not historical data, are
forward looking statements. Such statements can be recognized by the terms “forecast”, “anticipate”,
“consider”, “foresee” and other terms and similar expressions. These statements are based on
information available at the time they are made, on assumptions established by the management and
on the management expectation, acting in good faith, concerning future events and concerning, by
their nature, known and unknown risks and uncertainties mentioned herein (see the section 17 Risks
factors). The real results for Midland could differ in an important way of those which state or that these
forward looking statements show the possibility for. Consequently it is recommended not to trust unduly
these statements. These statements do not reflect the potential incidence of special events which
could be announced or take place after the date of this MD&A. These statements speak only as of the
date of this MD&A. Midland undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, other than as required
by applicable law.
December 10, 2015
(s) Gino Roger
Gino Roger
President and CEO
(s) Ingrid Martin
Ingrid Martin
CFO
- 35 -
December 10, 2015
Independent Auditor’s Report
To the shareholders of
Midland Exploration Inc.
We have audited the accompanying financial statements of Midland Exploration Inc., which comprise the
statements of financial position as at September 30, 2015 and 2014 and the statements of comprehensive
loss, changes in equity and cash flows for the years then ended, and the related notes, which comprise a
summary of significant accounting policies and other explanatory information.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a
basis for our audit opinion.
PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l.
1250 René-Lévesque Boulevard West, Suite 2800, Montréal, Quebec, Canada H3B 2G4
T: +1 514 205 5000, F: +1 514 876 1502, www.pwc.com/ca
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
- 36 -
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of
Midland Exploration Inc. as at September 30, 2015 and 2014 and its financial performance and its cash
flows for the years then ended in accordance with International Financial Reporting Standards.
1 CPA auditor, CA, public accountancy permit No. A123642
- 37 -
(2)
Midland Exploration Inc.
Statements of Financial Position
As at September 30, 2015 and 2014
Assets
Current assets
Cash and cash equivalents (note 5)
Investments (note 6)
Accounts receivable
Sales tax receivable
Tax credits and mining rights receivable
Prepaid expenses
Non-current assets
Investments - non-current portion (note 6)
Exploration and evaluation assets (note 7)
Exploration properties
Exploration and evaluation expenses
Total assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Advance received for exploration work
Liability related to the premium on flow-through share
Total liabilities
Equity
Capital stock
Warrants (note 8)
Contributed surplus
Deficit
Total equity
Total liabilities and equity
As at September 30
2015
$
2014
$
5,862,953
4,535,807
99,057
183,942
73,713
55,187
10,810,659
6,496,000
1,200,584
5,900,412
7,100,996
1,667,402
2,060,000
62,983
118,335
66,578
24,168
3,999,466
-
1,090,489
4,802,845
5,893,334
13,596,996
5,893,334
24,407,655
9,892,800
670,350
141,170
-
811,520
464,004
370,329
27,460
861,793
31,288,335
2,113,643
2,088,784
(11,894,627)
23,596,135
17,270,485
30,818
1,959,018
(10,229,314)
9,031,007
24,407,655
9,892,800
The accompanying notes are an integral part of these financial statements.
On behalf of the Board
(s) Jean-Pierre Janson
Jean-Pierre Janson
Director
(s) Gino Roger
Gino Roger
President, Director
- 38 -
Midland Exploration Inc.
Statements of Comprehensive Loss
For the years ended September 30, 2015 and 2014
Revenues
Project management fees
Residual gain on option payments on mining assets
Operating Expenses
Salaries
Stock-based compensation
Travel
Rent and insurance
Office expenses
Regulatory fees
Conferences and mining industry involvement
Press releases and investors relations
Professional fees
General exploration
Impairment of exploration and evaluation assets (note 7)
Operating expenses
Other gains or losses
Interest income
Loss before income taxes
Fiscal 15
$
Fiscal 14
$
299,418
2,034
301,452
165,435
7,148
172,583
348,858
66,913
62,415
50,664
92,225
44,301
99,544
60,601
236,859
2,878
225,826
1,291,084
328,600
170,451
54,310
48,074
87,593
31,368
77,477
63,896
197,048
12,059
1,288,721
2,359,597
121,237
56,565
(868,395)
(2,130,449)
Recovery of deferred income taxes (note 11)
239,297
155,863
Loss and comprehensive loss
Basic and diluted loss per share (note 10)
(629,098)
(1,974,586)
(0.02)
(0.07)
The loss and comprehensive loss are solely attributable to Midland Exploration Inc. shareholders.
The accompanying notes are an integral part of these financial statements.
- 39 -
Midland Exploration Inc.
Statements of Changes in Equity
For the years ended September 30, 2015 and 2014
Number of
shares
outstanding
Capital
stock
$
Balance at Oct. 1, 2014
Loss and comprehensive loss
Private placements
30,306,512
-
21,885,857
17,270,485
-
-
13,323,007 1,997,093
Contributed
surplus
$
Warrants
$
30,818 1,959,018
-
-
Deficit
$
Total
equity
$
(10,229,314)
(629,098)
-
9,031,007
(629,098)
15,320,100
Flow-through private placement
Less: premium
1,066,683
-
1,066,683
906,680
(211,837)
694,843
-
-
-
-
-
-
-
-
-
906,680
(211,837)
694,843
Stock-based compensation
Warrants expired
Broker warrants
Share issue expenses
Balance at Sept. 30, 2015
-
-
-
-
53,259,052
98,948
30,818
-
-
31,288,335 2,113,643 2,088,784
-
(30,818)
116,550
-
-
-
-
-
Number of
shares
outstanding
Capital
stock
$
Balance at Oct. 1, 2013
Loss and comprehensive loss
Private placement
28,671,225
-
802,001
16,133,166
-
570,683
Contributed
surplus
$
Warrants
$
52,542 1,639,751
-
-
-
30,818
-
-
(116,550)
(919,665)
(11,894,627)
98,948
-
-
(919,665)
23,596,135
Deficit
$
Total
equity
$
(8,212,542)
(1,974,586)
9,612,917
(1,974,586)
- 601,501
Flow-through private placement
Less: premium
833,286
-
833,286
749,959
(183,323)
566,636
-
-
-
-
-
-
-
-
-
Stock-based compensation
Warrants expired
Share issue expenses
Balance at Sept. 30, 2014
-
-
-
30,306,512
-
-
- (52,542)
-
-
17,270,485
-
-
(42,186)
30,818 1,959,018 (10,229,314)
266,725
52,542
-
749,959
(183,323)
566,636
266,725
-
(42,186)
9,031,007
The accompanying notes are an integral part of these financial statements.
- 40 -
Midland Exploration Inc.
Statements of Cash Flows
For the years ended September 30, 2015 and 2014
Operating activities
Loss
Adjustment for:
Residual gain on option payments on mining assets
Stock-based compensation
Impairment of exploration and evaluation assets
Recovery of deferred income taxes
Changes in non-cash working capital items
Accounts receivable
Sales tax receivable
Tax credits and mining rights receivable
Prepaid expenses
Accounts payable and accrued liabilities
Advance received for exploration work
Financing activities
Private placements
Flow-through private placement
Share issue expenses
Investing activities
Additions to investments
Disposals of investments
Additions to exploration properties
Disposals of exploration properties
Additions to exploration and evaluation expenses
Tax credits and mining rights received
Net change in cash and cash equivalents
Cash and cash equivalents – beginning (note 5)
Cash and cash equivalents – ending (note 5)
Additional disclosure (see note 15)
Fiscal 15
$
Fiscal 14
$
(629,098)
(1,974,586)
(2,034)
66,913
225,826
(239,297)
(577,690)
(36,074)
(65,607)
(6,650)
(31,019)
(58,608)
(229,159)
(427,117)
(1,004,807)
15,320,100
906,680
(919,665)
15,307,115
(11,031,807)
2,060,000
(300,840)
30,000
(924,615)
60,505
(10,106,757)
(7,148)
170,451
1,288,721
(155,863)
(678,425)
5,972
2,575
(3,534)
(1,802)
258,827
370,329
632,367
(46,058)
601,501
749,959
(42,186)
1,309,274
-
-
(178,896)
60,000
(901,795)
162,339
(858,352)
4,195,551
1,667,402
5,862,953
404,864
1,262,538
1,667,402
The accompanying notes are an integral part of these financial statements.
- 41 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
1. STATUTE OF INCORPORATION AND NATURE OF ACTIVITIES
Midland Exploration Inc. (“the Corporation”), incorporated in Canada on October 2, 1995 and operating
under the Business Corporations Act (Québec), is a company in the mining exploration business. The
Corporation’s operations include the acquisition and exploration of mining properties. Its head office is
located at 1, Place Ville Marie, suite 4000, Montreal, Quebec, H3B 4M4. The Corporation’s shares are
listed on the TSX Venture Exchange (the “Exchange”) under the MD ticker.
Until it is determined that properties contain mineral reserves or resources that can be economically
mined, they are classified as exploration properties. The recoverability of exploration and evaluation
assets is dependent upon: the discovery of economically recoverable reserves and resources;
securing and maintaining title and beneficial interest in the properties; the ability to obtain the
necessary financing to complete exploration and the profitable sale of the assets. The Corporation will
periodically have to raise additional funds to continue operations, and while it has been successful in
doing so in the past, there can be no assurance it will be able to do so in the future.
Although the Corporation has taken steps to verify title to mineral properties in which it has an interest,
in accordance with industry standards for the current stage of exploration of such properties, these
procedures do not guarantee the Corporation's title. Property title may be subject to unregistered prior
agreements and non-compliance with regulatory requirements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying financial statements have been prepared in accordance with the International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board
(“IASB”). The accounting policies, method of computation and presentation applied to these financial
statements are consistent with those of the previous financial year. These financial statements were
approved and authorized for issue by the Board of Directors on December 10, 2015.
2.2 Basis of measurement
These financial statements have been prepared on a historical cost basis except for certain assets at
fair value.
2.3 Functional and presentation currency
The financial statements are presented in Canadian dollars, which is the Corporation’s functional
currency.
2.4 Jointly controlled assets and exploration activities
A jointly controlled asset involves joint control and offers joint ownership by the Corporation and other
venturers of assets contributed to or acquired for the purpose of the joint venture, without the formation
of a corporation, partnership or other entity.
Where the Corporation’s activities are conducted through jointly controlled assets and exploration
activities, the financial statements include the Corporation’s share in the assets and the liabilities as
well as in the income and the expenses from the joint operations.
2.5 Financial instruments
Financial assets and financial liabilities are recognized when the Corporation becomes a party to the
contractual provisions of the financial instrument.
Financial assets are derecognized when the contractual rights to receive the cash flows from the
financial asset have expired, or when the financial asset and all substantial risks and rewards have
been transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or
when it expires.
- 42 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Financial assets and financial liabilities are measured initially at fair value plus transactions costs,
except for financial assets and financial liabilities carried at fair value through profit or loss, which are
measured initially at fair value. Financial assets and financial liabilities are measured subsequently as
described below.
The category of financial instruments determines subsequent measurement and whether any resulting
income and expense is recognized in profit or loss or in other comprehensive income. All income
relating to financial instruments that are recognized in profit or loss are presented within other gains
or losses.
a) Financial assets
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. Loans and receivables are recognized initially at the amount
expected to be received, less, when material, a discount to reduce the loans and receivables to fair
value. After initial recognition these are measured at amortised cost using the effective interest method,
less provision for impairment.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments
and fixed maturity other than loans and receivables. Investments are classified as held-to-maturity if
the Corporation has the intention and ability to hold them until maturity.
Held-to-maturity investments are measured subsequently at amortised cost using the effective interest
method. If there is objective evidence that the investment is impaired, determined by reference to
external credit ratings, 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
recognised in profit or loss.
As of September 30, 2015, the Corporation had no investments classified as held-to-maturity.
Impairment of financial assets
All financial assets are subject to review for impairment periodically. Financial assets are impaired only
if there is objective evidence that a financial asset or a group of financial assets is impaired.
Objective evidence of impairment could include:
– Significant financial difficulty of the issuer or counterparty;
– Default or delinquency in interest or principal payments; or
– It becoming probable that the borrower will enter bankruptcy or financial reorganization.
Individually significant accounts receivable are considered for impairment when they are past due or
when other objective evidence is received that a specific counterparty will default.
b) Financial liabilities
Financial liabilities measured at amortized cost
Accounts payable and accrued liabilities and advance received for exploration work are initially
measured at the amount required to be paid, less, when material, a discount to reduce the payables
to fair value. Subsequently, financial liabilities are measured at amortized cost using the effective
interest method.
- 43 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
c) Classification
The Corporation has classified its financial instruments as follows:
Category
Loans and receivables
Financial liabilities measured at amortized cost
Financial instruments
Bank balance and cash on hand
Guaranteed investment certificates
In trust deposits
High interest savings account
Accounts receivable
Accrued interest receivable
Accounts payable and accrued liabilities
Advance received for exploration work
2.6 Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, bank balances and short-term liquid investments
with original maturities of three months or less or cashable at any time without penalties.
2.7 Taxes credits and mining rights receivable
The Corporation is entitled to a refundable tax credit on qualified exploration expenditures incurred
and a refundable credit on duties for losses under the Mining Tax Act. These tax credits are recognized
as a reduction of the exploration and evaluation expenses incurred. As management intends to realize
the carrying value of its assets and settle the carrying value of its liabilities through the sale of its
exploration and evaluation assets, the related deferred tax has been calculated accordingly.
2.8 Exploration and evaluation assets
Exploration and evaluation (“E&E”) assets are comprised of exploration properties and E&E expenses.
All costs incurred prior to obtaining the legal rights to undertake E&E activities on an area of interest
are expensed as incurred.
E&E assets include rights in exploration properties, paid or acquired through a business combination
or an acquisition of assets, and costs related to the initial search for mineral deposits with economic
potential or to obtain more information about existing mineral deposits.
Mining rights are recorded at acquisition cost less accumulated impairment losses. Mining rights and
options to acquire undivided interests in mining rights are depreciated only as these properties are put
into commercial production.
E&E expenses for each separate area of interest are capitalized (net from E&E expenses recharged
to partners) and include costs associated with prospecting, sampling, trenching, drilling and other work
involved in searching for ore like topographical, geological, geochemical and geophysical studies.
They also reflect costs related to establishing the technical and commercial viability of extracting a
mineral resource identified through exploration or acquired through a business combination or asset
acquisition. E&E expenses include the cost of:
establishing the volume and grade of deposits through drilling of core samples, trenching and
sampling activities in an ore body;
determining the optimal methods of extraction and metallurgical and treatment processes;
studies related to surveying, transportation and infrastructure requirements;
permitting activities; and
economic evaluations to determine whether development of the mineralized material is
commercially justified, including scoping, prefeasibility and final feasibility studies.
- 44 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
E&E expenses include overhead expenses directly attributable to the related activities.
Cash flows attributable to capitalized E&E costs are classified as investing activities in the statement
of cash flows.
From time to time, the Corporation may acquire or dispose of a property pursuant to the terms of an
option agreement. Due to the fact that options are exercisable entirely at the discretion of the option
holder, the amounts payable or receivable are not recorded.
Option payments are recorded when they are made or received. Proceeds on the sale of exploration
properties are applied by property in reduction of the exploration properties, then in reduction of the
E&E expenses and any residual is recorded in the statement of comprehensive loss unless there is
contractual work required in which case the residual gain is deferred and will reduce the contractual
disbursements when done.
Funds received from partners on certain properties where the Corporation is the operator in order to
perform exploration work as per agreements, are accounted for in the statement of financial position
as advances received for upcoming exploration work. These advances are reduced gradually when
the exploration work is performed. The project management fees received when the Corporation is the
operator are recorded in the statement of comprehensive loss when the E&E expenses are charged
back to the partner. When the partner is the operator, the management fees are recorded in the
statement of financial position as E&E expenses.
2.9 Operating lease agreements
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor
are classified as operating leases. Payments under an operating lease are charged to the statement
of comprehensive loss or capitalized in the E&E expenses on a straight-line basis over the period of
the lease. Related expenses, such as maintenance and insurance expenses, are charged as incurred.
2.10 Impairment of non-financial assets
E&E assets are reviewed for impairment, by area of interest, if there is any indication that the carrying
amount may not be recoverable. If any such indication is present, the recoverable amount of the asset
is estimated in order to determine whether impairment exists. Where the asset does not generate cash
flows that are independent from other assets, the Corporation estimates the recoverable amount of
the cash generating unit (“CGU”) to which the asset belongs.
An asset’s recoverable amount is the higher of fair value less costs to sell and value in use. 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 for which estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the
carrying amount is reduced to the recoverable amount. Impairment is recognized immediately in the
statement of comprehensive loss. Where an impairment subsequently reverses, the carrying amount
is increased to the revised estimate of recoverable amount but only to the extent that this does not
exceed the carrying value that would have been determined if no impairment had previously been
recognized. A reversal is recognized as a reduction in the impairment charge for the period.
- 45 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.11 Income taxes
Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income
tax is recognized in profit or loss except to the extent that it relates to items recognized directly in
equity, in which case it is recognized in equity.
Current tax expense is the expected tax payable on the taxable income for the year, using tax rates
enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards
to previous years. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences
between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
Temporary differences are not provided for if they arise from the initial recognition of goodwill or the
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 or loss. The amount of deferred tax
provided is based on the expected manner of realization or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the financial position reporting date.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will
be available against which the asset can be utilized.
Deferred income tax assets and liabilities are presented as noncurrent and are offset when there is a
legally enforceable right to offset current tax assets against current tax liabilities and when deferred
tax assets and liabilities relate to income taxes levied by the same taxation authority on either the
same taxable entity or different taxable entities where there is an intention to settle the balances on a
net basis.
2.12 Equity
Capital stock represents the amount received on the issue of shares. Warrants represent the allocation
of the amount received for units issued as well as the charge recorded for the broker warrants relating
to financing. Contributed surplus includes charges related to stock options until they are exercised and
the warrants that are expired and not exercised. Deficit includes all current and prior period retained
profits or losses and share issue expenses.
Proceeds from unit placements are allocated between shares and warrants issued on a pro-rata basis
of their value within the unit using the Black-Scholes pricing model.
2.13 Flow-through shares
The Corporation finances some E&E expenses through the issuance of flow-through shares. The
resource expenditure deductions for income tax purposes are renounced to investors in accordance
with the appropriate income tax legislation. The difference between the amount recorded as common
share and the amount paid by the investors for the shares (the “premium”), measured with the residual
value method, is accounted for as flow-through share premium, which is reversed to income as
recovery of deferred income taxes when the eligible expenses are incurred. The Corporation
recognizes a deferred tax liability for flow-through shares and a deferred tax expense, at the moment
the eligible expenditures are incurred.
2.14 Share and warrant issue expenses
Share and warrant issue expenses are accounted for in the year in which they are incurred and are
recorded as a deduction to equity in the deficit in the year in which the shares are issued.
- 46 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.15 Stock-based compensation
The Corporation operates an equity-settled share-based remuneration plan (share options plan) for its
eligible directors, officers, employees and consultants. The Corporation's plan does not feature any
options for a cash settlement.
An individual is classified as an employee when the individual is an employee for legal or tax purposes
(direct employee) or provides services similar to those performed by a direct employee, including
directors of the Corporation. The expense is recorded over the vesting period for employees and over
the period covered by the contract for non-employees.
All goods and services received in exchange for the grant of any share-based payment are measured
at their fair values, unless that fair value cannot be estimated reliably. If the Corporation cannot
estimate reliably the fair value of the goods or service received, the Corporation shall measure their
value indirectly by reference to the fair value of the equity instruments granted. Where employees are
rewarded using share-based payments, the fair values of employees' services are determined
indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised
at the grant date using the Black Scholes option pricing model and excludes the impact of non-market
vesting conditions.
All equity-settled share-based payments (except warrants to brokers) are ultimately recognized as an
expense in the statement of comprehensive loss or capitalized as an E&E expenses on the statement
of financial position, depending on the nature of the payment with a corresponding credit to contributed
surplus, in equity. Warrants to brokers, in respect of an equity financing are recognized as share issue
expense reducing the equity in the deficit with a corresponding credit to warrants.
If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options expected to vest. Non-market
vesting conditions are included in assumptions about the number of options that are expected to
become exercisable. Estimates are subsequently revised if there is any indication that the number of
share options expected to vest differs from previous estimates.
Upon exercise of share options, the proceeds received net of any directly attributable transaction costs
are recorded as capital stock. The accumulated charges related to the share options recorded in
contributed surplus are then also transferred to capital stock.
2.16 Loss per share
Loss per share is calculated using the weighted average number of shares outstanding during the
year. Diluted loss per share is calculated using the weighted average number of shares outstanding
during the year for the calculation of the dilutive effect of warrants and stock options unless they have
an anti-dilutive effect.
2.17 Revenue recognition
The project management fees received when the Corporation is the operator are recorded in the
statement of comprehensive loss when the exploration work recharged to the partners are incurred.
2.18 Segment disclosures
The Corporation currently operates in a single segment – the acquisition, exploration and evaluation
of exploration properties. All of the Corporation’s activities are conducted in Canada.
- 47 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
3. ACCOUNTING STANDARDS ISSUED RECENTLY
The most relevant standards, amendments and interpretations issued up to the date of the issuance
of these financial statements are listed below.
3.1 New accounting standards issued and in effect
IFRIC 21, Levies (“IFRIC 21”)
a)
In May 2013, the IASB issued IFRIC 21, Levies. IFRIC 21 is effective for annual periods beginning on
or after January 1, 2014, and is to be applied retrospectively. IFRIC 21 provides guidance for levies in
accordance with IAS 37, Provision, Contingent Liabilities and Contingent Assets. The interpretation
defines a levy as an outflow from an entity imposed by a government in accordance with legislation
and confirms that an entity recognizes a liability for a levy only when the triggering event specified in
the legislation occurs. The Corporation adopted IFRIC 21 in its financial statements for the fiscal year
beginning October 1, 2014 and the adoption did not have any impact.
3.2 Accounting standards issued but not yet effective
IFRS 9, Financial Instruments, (“IFRS 9”)
a)
In November 2009 and October 2010, the IASB issued the first phase of IFRS 9, Financial Instruments.
In November 2013, the IASB issued a new general hedge accounting standard, which forms part of
IFRS 9. The final version of IFRS 9 was issued in July 2014 and includes a third measurement category
for financial assets (fair value through other comprehensive income) and a single, forward-looking
‘expected loss’ impairment model.
This standard is part of a wider project to replace IAS 39, Financial Instruments: Recognition and
Measurement (“IAS 39”). IFRS 9 replaces the current multiple classification and measurement models
for financial assets and liabilities with a single model that has only three classification categories:
amortized cost, fair value through other comprehensive income and fair value through profit and loss.
The basis of classification depends on the entity’s business model and the contractual cash flow
characteristics of the financial asset or liability. It also introduces additional changes relating to financial
liabilities and aligns hedge accounting more closely with risk management.
The new standard is effective for annual periods beginning on or after January 1, 2018 with early
adoption permitted. Management is currently reviewing the impact that this standard will have on its
financial statements.
4. CRITICAL ACCOUNTING ESTIMATES, JUDGMENTS AND ASSUMPTIONS
When preparing the financial statements, management undertakes a number of judgments, estimates
and assumptions about recognition and measurement of assets, liabilities, income and expenses. The
actual results could differ from the judgments, estimates and assumptions made by management, and
will seldom equal the estimated results. Information about the significant judgments that have the most
significant effect on the recognition and measurement of assets, liabilities, income and expenses are
discussed below.
- 48 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
4. CRITICAL ACCOUNTING ESTIMATES, JUDGMENTS AND ASSUMPTIONS (CONT’D)
JUDGEMENTS
4.1 Impairment of E&E assets
Determining if there are any facts and circumstances indicating impairment loss or reversal of
impairment losses is a subjective process involving judgment and a number of estimates and
interpretations in many cases.
Determining whether to test for impairment of E&E assets requires management’s judgment, among
others, regarding the following: the period for which the entity has the right to explore in the specific
area has expired during the period or will expire in the near future, and is not expected to be renewed;
substantive expenditure on further E&E of mineral resources in a specific area is neither budgeted nor
planned; exploration for and evaluation of mineral resources in a specific area have not led to the
discovery of commercially viable quantities of mineral resources and the entity has decided to
discontinue such activities in the specific area; or sufficient data exists to indicate that, although a
development in a specific area is likely to proceed, the carrying amount of the E&E asset is unlikely to
be recovered in full from successful development or by sale.
When an indication of impairment loss or a reversal of an impairment loss exists, the recoverable
amount of the individual asset must be estimated. If it is not possible to estimate the recoverable
amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset
belongs must be determined. Identifying the cash-generating units requires considerable management
judgment. In testing an individual asset or cash-generating unit for impairment and identifying a
reversal of impairment losses, management estimates the recoverable amount of the asset or the
cash-generating unit. This requires management to make several assumptions as to future events or
circumstances. These assumptions and estimates are subject to change if new information becomes
available. Actual results with respect to impairment losses or reversals of impairment losses could
differ in such a situation and significant adjustments to the Corporation’s assets and earnings may
occur during the next period.
The total impairment loss of the E&E assets recognized is $225,826 for the year ended September 30,
2015 (“Fiscal 15”) ($1,288,721 for the year ended September 30, 2014 (“Fiscal 14”)). No reversal of
impairment losses has been recognized for the reporting periods.
4.2 Deferred taxes
The assessment of availability of future taxable profits involves judgment. A deferred tax asset is
recognized to the extent that it is probable that taxable profits will be available against which deductible
temporary differences and the carry-forward of unused tax credits and unused tax losses can be
utilized. Judgment is also involved in the determination of the expected manner of realisation or
settlement of the carrying amount of the Corporation's assets and liabilities which is expected to be
through the sale of the Corporation's assets.
Valuation of credit on duties refundable for loss and the refundable tax credit for resources.
Refundable credit on mining duties and refundable tax credit related to resources for the current and
prior periods are measured at the amount expected to be recovered from the taxation authorities using
the tax rates and tax laws that have been enacted or substantively enacted at the statement of financial
position date. Uncertainties exist with respect to the interpretation of tax regulations, including credit
on mining duties and tax credit related to resources for which certain expenditures could be disallowed
by the taxation authorities in the calculation of credits, and the amount and timing of their collection.
The calculation of the Corporation’s credit on mining duties and tax credit related to resources
necessarily involves a degree of estimation and judgment in respect of certain items whose tax
treatment cannot be finally determined until notice of assessments and payments have been received
from the relevant taxation authority.
- 49 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
4. CRITICAL ACCOUNTING ESTIMATES, JUDGMENTS AND ASSUMPTIONS (CONT’D)
Differences arising between the actual results following final resolution of some of these items and the
assumptions made, or future changes to such assumptions, could necessitate adjustments to credit
on mining duties and tax credit related to resources, exploration and evaluation assets and expenses,
and income tax expense in future periods. The amounts recognized in the financial statements are
derived from the Corporation’s best estimation and judgement as described above. However, the
inherent uncertainty regarding the outcome of these items means that eventual resolution could differ
from the accounting estimates and therefore impact the Corporation’s financial position and its financial
performance and cash flows.
5. CASH AND CASH EQUIVALENTS
Cash
Guaranteed investment certificate bearing interest between 1.05%
and 1.25%, maturing between December 4, 2015 and June 8,
2016
Guaranteed investment certificate bearing interest between 1.15%
and 1.25%, maturing between December 22, 2014 and February
23, 2015
As at September 30
2014
2015
$
$
664,362
794,026
5,068,927
-
-
5,862,953
1,003,040
1,667,402
As of September 30, 2014, the balance on flow-through financing not spent according to the restrictions
imposed by the December 2013 financing represents $111,510 and is included in the investments.
The Corporation has to dedicate these funds to Canadian mining properties exploration and that work
was completed by December 31, 2014. On the other hand, all the exploration work imposed by the
December 2014 financing was completed before September 30, 2015.
6.
INVESTMENTS
Current
Guaranteed investment certificates, not cashable before the expiry
date, between 1.40% and 1.60% interest payable annually,
maturing between November 27, 2015 and July 15, 2016, with a
maturity value of $4,602,894
Guaranteed investment certificates, not cashable before the expiry
date, between 1.90% and 2.05% interest, maturing between
November 26, 2014 and December 18, 2014, with a maturity value
of $2,142,129
Non-current
Guaranteed investment certificates, not cashable before the expiry
date, between 1.60% and 1.95% interest payable annually,
maturing between June 5, 2017 and July 16, 2018, with a maturity
value of $6,608,312
As at September 30
2014
2015
$
$
4,535,807
-
-
2,060,000
6,496,000
11,031,807
-
2,060,000
- 50 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
7. EXPLORATION AND EVALUATION ASSETS
The following tables disclose the acquisition costs of exploration properties:
Undivided
interest
%
As at
Sept. 30, 2014 Additions
Acquisition
costs
Abitibi
Maritime-
Cadillac
Laflamme
Patris
Casault
Jouvex
Heva
Valmond
La Peltrie
Adam
Abitibi Or
Grenville-
Appalaches
Weedon
Gatineau
James Bay
James Bay Au
Eleonore
James Bay U
James Bay Fe
Northern
Quebec
Pallas PGE
Willbob
Quebec
Labrador
Ytterby
Project
Generation
49
64.9
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
50.5
100
$
$
290,437
3
69,093
87,072
16,717
44,244
95,203
-
9,362
-
77,521
37,438
18,688
180,191
77,730
9,828
47,808
27,792
-
932
-
5,299
3,666
60,637
17,966
(8,291)
7,655
3,811
50,923
24,782
63
7,856
11,301
1,130
50,000
33,422
1,512
15,214
6,279
4,248
Option
payments
$
Impairment
$
As at
Sept. 30, 2015
$
-
-
-
-
-
-
-
-
(17,966)
-
-
-
-
-
-
-
-
-
-
-
-
290,440
(14,690)1)
-
-
-
-
-
-
-
-
(13,100)1)
(9,344)1)
(66,293)1)
-
(9,891)2)
(55,664)2)
-
-
-
-
82,195
87,072
17,649
44,244
100,502
3,666
69,999
-
69,230
31,993
13,155
164,821
102,512
-
-
61,301
34,552
7,791
19,462
1,090,489
297,043
(17,966)
(168,982)
1,200,584
1) Some claims were dropped and the Corporation impaired partially the property.
2) The Company wrote off the property since no exploration program are planned for the near future.
- 51 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
7. EXPLORATION AND EVALUATION ASSETS (CONT’D)
As at
Sept. 30, 2013 Additions
Undivided
interest
%
49
61.6
Acquisition
costs
Abitibi
Maritime-
Cadillac
Laflamme
Patris
Casault
Jouvex
Heva
Valmond
Samson
La Peltrie
Abitibi Or
Grenville-
Appalaches
Weedon
Gatineau
James Bay
James Bay Au
Eleonore
James Bay U
James Bay Fe
Northern
Quebec
Pallas PGE
Willbob
Quebec
Labrador
Ytterby
Project
Generation
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
$
290,437
61,867
88,996
3,628
8,346
89,591
-
29,978
-
$
-
10,010
(1,924)
13,089
1,464
5,612
32,852
17,416
9,362
-
77,521
43,810
19,209
160,854
88,372
9,828
44,917
2,828
2,172
28,023
18,520
-
2,891
59,540
-
(48,239)
1,130
25,307
6,292
1,916
11,695
Option
payments
$
-
-
-
-
(9,810)
-
(32,852)
-
-
-
-
-
-
-
-
-
-
-
-
Impairment
$
-
(2,784)1)
As at
Sept. 30, 2014
$
290,437
69,093
-
87,072
-
-
-
-
(3,150)1)
-
16,717
-
95,203
-
44,244
9,362
-
77,521
(9,200)1)
(2,693)1)
(8,686)1)
(29,162)1)
-
-
37,438
18,688
180,191
77,730
9,828
47,808
-
-
11,301
1,130
(25,711)1)
(2,773)1)
1,512
15,214
1)
Some claims were dropped and the Corporation impaired partially the property.
1,030,972
186,338
(42,662)
(84,159)
1,090,489
- 52 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
7. EXPLORATION AND EVALUATION ASSETS (CONT’D)
The following two tables disclose details of exploration and evaluation expenses:
E&E
expenses
Abitibi
Maritime-
Cadillac
Laflamme
Patris
Casault
Jouvex
Heva
Valmond
Samson
La Peltrie
Adam
Abitibi Au
Grenville-
Appalaches
Weedon
Gatineau
James Bay
James Bay
Au
Eleonore
James Bay U
James Bay
Fe
Northern
Quebec
Pallas PGE
Willbob
Quebec
Labrador
Ytterby
Project
Generation
Undivided
interest
%
As at
Sept. 30,
2014
$
Additions
$
Option
payments Tax credits Impairment
$
$
$
As at
Sept. 30,
2015
$
49
232,965
-
-
-
-
232,965
64.9
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
50.5
100
1,310,514
208,755
290,082
346,090
18,563
123,955
-
-
-
36,641
199,977
10,388
8,806
2,367
16,570
6,787
439
118,209
-
83,556
-
-
-
-
-
(10,000)
-
-
-
-
388,013
28,766
108,768
126
216,677
37,758
1,175,139
14,686
42,158
377,436
-
-
216,088
5,116
53,459
117,948
109,090
39,547
62,964
19,843
-
-
-
-
-
-
-
-
-
-
(3,262)
-
-
-
-
-
-
-
-
(2,356)
(12,502)
-
(6,378)
- 1,507,229
219,143
-
298,888
-
348,457
-
-
35,133
120,742
-
-
439
118,209
-
-
-
117,841
-
-
-
-
484,279
28,892
248,057
(25,223)
-
-
(14,686)1)
(42,158)1)
- 1,527,352
-
-
(156)
(11,113)
-
-
-
-
-
-
269,391
111,951
172,054
59,390
4,802,845 1,225,401
(10,000)
(60,990)
(56,844) 5,900,412
1)
The Company wrote off the property since no exploration program are planned for the near future.
- 53 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
7. EXPLORATION AND EVALUATION ASSETS (CONT’D)
Undivided
interest
%
As at
Sept. 30,
2013
$
Additions
$
Option
payments Tax credits Impairment
$
$
$
As at
Sept. 30,
2014
$
49
228,787
4,178
-
-
-
232,965
1,167,804
179,176
214,479
237,576
16,149
113,507
-
143,709
31,913
78,480
111,080
2,720
22,166
36,859
-
-
-
-
-
(10,190)
-
61.6
100
100
100
100
100
100
100
100
100
100
100
100
E&E
expenses
Abitibi
Maritime-
Cadillac
Laflamme
Patris
Casault
Jouvex
Heva
Valmond
Abitibi Au
Grenville-
Appalaches
Weedon
Gatineau
James Bay
James Bay
Au
Eleonore
James Bay U
James Bay
Fe
Northern
Quebec
Pallas PGE
Willbob
Quebec
Labrador
Ytterby
Project
Generation
359,196
28,648
33,991
132
162,521
57,004
949,831
14,686
42,158
241,004
-
-
100
100
210,168
-
41,654
5,116
50
1,277,720
39,144
100
36,125
5,600
(999)
(2,334)
(2,877)
(2,566)
(306)
(1,528)
(218)
(5,174)
(14)
(2,848)
(15,696)
-
-
- 1,310,514
208,755
-
290,082
-
346,090
-
-
18,563
123,955
-
36,641
-
-
-
-
388,013
28,766
216,677
- 1,175,139
14,686
-
42,158
-
(35,734)
-
216,088
5,116
-
(3,212) (1,204,562)
1)
109,090
(2,178)
-
39,547
-
-
-
-
-
-
-
-
-
-
5,238,531
854,750
(10,190)
(75,684) (1,204,562) 4,802,845
1) Some claims were dropped and the Corporation impaired partially the property.
ABITIBI
7.1 Maritime-Cadillac
The Corporation holds 49% of the Maritime-Cadillac property. The property is subject to a 2% net
smelter return (“NSR”) royalty; half of the royalty can be bought back for a payment of $1,000,000.
As per the agreement signed in June 2009 and amended in November 2012 and May 2013,
Agnico Eagle Mines Limited (“Agnico Eagle”) and the Corporation are in a joint venture and future work
are shared 51% Agnico Eagle - 49% the Corporation.
- 54 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
7. EXPLORATION AND EVALUATION ASSETS (CONT’D)
7.2 Laflamme Au-Cu
On August 17, 2009, the Corporation signed an agreement with Aurbec Mines Inc., (previously a
subsidiary of North American Palladium Ltd.) that was sold to Maudore Minerals Ltd in March 2013.
As of July 31, 2011, Aurbec earned its 50% interest in the Laflamme property but no longer contributes
in the exploration programs and is therefore being diluted. The Corporation holds 64.9% of the
Laflamme property. In January, 2015, Aurbec was declared bankrupt and the liquidation process is
proceeding.
7.3 Patris
The Corporation holds the Patris property and some claims are subject to the following NSR royalties:
1%, the Corporation can buy it back for $500,000 per 0.5% tranche for a total of $1,000,000;
1.5%, the Corporation can buy it back for $500,000 per 0.5% tranche for a total of $1,500,000.
2%, the Corporation can buy it back for $1,000,000 per 1% tranche for a total of $2,000,000;
2%, the Corporation can buy it back for $1,000,000 per 1% tranche for a total of $2,000,000;
2%, the Corporation can buy it back for $500,000 the first 1% tranche and for $1,000,000 for the
second 1% tranche, for a total of $1,500,000.
The Corporation signed an option agreement with Teck Resources Ltd (“Teck”) on September 6, 2013
and amended it on May 20, 2014 to accommodate the delays in permitting. Under the agreement,
Teck may earn, in three options, a maximum interest of 65%, by fulfilling the following conditions:
First Option for a 50% initial interest
On or before August 31, 2015 (firm commitment)(completed)
On or before August 31, 2016
On or before August 31, 2017
Second Option for a 10% additional interest
On or before August 31, 2019, $500,000 of exploration work and
$60,000 cash payment for each additional 2% interest
Payments in
cash
$
Work
$
-
-
-
-
500,000
800,000
1,700,000
3,000,000
300,000
2,500,000
Third Option for a 5% additional interest
On or before August 31, 2021, $1,000,000 of exploration work for each
additional 1% interest
Total, for a 65% maximum interest
-
300,000
5,000,000
10,500,000
Teck will be project operator during the First Option.
- 55 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
7. EXPLORATION AND EVALUATION ASSETS (CONT’D)
7.4 Casault
The Corporation holds claims north of the city of LaSarre.
On October 10, 2014, the Corporation signed a letter of intent with SOQUEM INC. ("SOQUEM") to
grant SOQUEM the option to acquire a 50% undivided interest in its Casault and Jouvex properties,
and to create a joint venture once the option has been exercised, under the following conditions:
On or before October 10, 2015 (firm commitment) (completed)
On or before October 10, 2016 (completed)
On or before October 10, 2017
On or before October 10, 2018
The Corporation is the operator during the option period.
Work
Commitment
$
1,000,000
1,000,000
1,000,000
1,500,000
4,500,000
7.5 Heva
The Corporation owns the Heva property and some claims are subject to a 2% NSR royalty to the
original holders, half of the royalty can be bought back for a payment of $1,000,000.
7.6 Valmond
On November 19, 2013, the Corporation signed an agreement with Sphinx Resources Ltd. (“Sphinx”)
whereby Sphinx could have acquired 50% of the Valmond property subject to $250,000 payments in
cash ($30,000 completed) and $2,500,000 exploration work ($670,350 completed). In August 2015,
Sphinx terminated the agreement on the Valmont property.
7.7 Samson
On September 3, 2014, the Corporation signed an agreement with Sphinx whereby Sphinx can acquire
50% of the Samson property subject to the following conditions:
Upon signing (completed)
On or before September 3, 2015 ($350,000 firm commitment) 1)
On or before September 3, 2016
On or before September 3, 2017
On or before September 3, 2018
Total
1)
Terms of the September 3, 2015 cash payment are under discussion. The work commitment is completed.
Payments in cash
Commitment
$
Work
Commitment
$
40,000
40,000
50,000
70,000
75,000
275,000
-
500,000
700,000
900,000
1,400,000
3,500,000
The Corporation will be the operator during the option;
Upon acquiring a 50% interest, a joint venture will be formed;
If a party’s interest dilutes to 10% or less, its interest will be converted to a 2% NSR royalty, 1%
of which can be purchased back for $1,500,000.
- 56 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
7. EXPLORATION AND EVALUATION ASSETS (CONT’D)
7.8 Adam
On December 12, 2014, the Corporation signed an agreement with Sphinx whereby Sphinx can
acquire 50% of the Adam property subject to the following conditions:
Payments in
cash
$
20,000
40,000
50,000
70,000
70,000
250,000
Work
$
-
400,000
400,000
1,000,000
1,200,000
3,000,000
Upon signing (completed)
On or before December 12, 2015
On or before December 12, 2016
On or before December 12, 2017
On or before December 12, 2018
Total
The Corporation is the operator during the option.
GRENVILLVE-APPALACHES
7.9 Weedon
The Corporation holds the Weedon property and some claims are subject to NSR royalties of:
1%, the Corporation can buy it back for $500,000 per 0.5% tranche for a total of $1,000,000;
0.5%, the Corporation can buy it back for $500,000;
1.5%, the Corporation can buy it back for $500,000 per 0.5% tranche for a total of $1,500,000.
NORTHERN QUEBEC
7.10 Pallas PGE
On January 21, 2014, the Corporation signed an option agreement with Japan Oil, Gas and Metals
National Corporation (« JOGMEC ») whereby JOGMEC has the option to acquire 50% interest in the
Pallas PGE project prior to March 31, 2016 by funding $2,000,000 in expenditures spread as following:
On or before March 31, 2014 (completed)
On or before March 31, 2015 (completed)
On or before March 31, 2016 (completed)
Total
Works
$
250,000
700,000
1,050,000
2,000,000
The Corporation will be operator as long as it will hold an interest equal to or higher than 50% in the
project.
In September 2015, JOGMEC has funded $2,000,000 of exploration work and now has the right to
exercise its option to acquire a 50% interest in the Pallas PGE property.
- 57 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
7. EXPLORATION AND EVALUATION ASSETS (CONT’D)
QUEBEC / LABRADOR
7.11 Ytterby
On February 23, 2010, the Corporation signed a memorandum of agreement (and on July 29, 2011 a
definitive agreement) with JOGMEC whereby JOGMEC acquired a right in a 50% interest in the Ytterby
property by funding $2,700,000 exploration work. As of September 30, 2015, JOGMEC has not yet
given its notice to exercise its right. In spring 2015, JOGMEC indicated that it would not participate in
the summer 2015 exploration program and its interest has now been diluted to 49.5%.
8. EQUITY
Authorized
Unlimited number of common shares without par value, voting and participating.
8.1 Private placements
a) December 2013
On December 19, 2013, the Corporation completed a private placement by issuing 802,001 units at
$0.75 per unit and 833,286 flow-through shares at $0.90 per share, for total gross proceeds of
$1,351,460. Each unit is comprised of one common share and one-half of a warrant. Each whole
warrant will entitle the holder to purchase one additional common share at $1.00 until June 19, 2015.
From the total compensation received from the units, $30,818 has been allocated to warrants and
$570,683 to common shares, according to a pro rata allocation of the estimated fair value of each of
the two components. The estimated fair value of the warrants was determined using the Black-Scholes
pricing model based on the following assumptions: no expected dividend yield, an expected volatility
of 44.8%, a risk free interest rate of 1.02% and an expected life of the warrants of 18 months.
On December 19, 2013, the Corporation’s share closed at $0.68 on the Exchange, therefore the
residual value attributed to the benefit related to flow-through shares renunciation is $0.22 for a total
value of $183,323 credited to the liability related to the premium on flow-through shares. As of
September 30, 2014, the Corporation completed $638,449 of exploration work relating to this flow-
through private placement and therefore the liability related to the premium on flow-through shares
was reduced to $27,460. As of December 31, 2014, the Corporation had completed all the exploration
work relating to this flow-through placement.
b) December 2014
Units
On December 3 and 17, 2014, the Corporation completed private placements by issuing 1,100,430
and 162,858 units respectively at $0.70 per unit for total gross proceeds of $884,302. Each unit is
comprised of one common share and one-half of a warrant. Each whole warrant will entitle the holder
to purchase one additional common share at $0.95 until December 2 and 16, 2016 respectively.
From the total compensation received from the units, $75,062 has been allocated to warrants and
$809,240 to common shares, according to a pro rata allocation of the estimated fair value of each of
the two components. The estimated fair value of the warrants was determined using the Black-Scholes
pricing model based on the following assumptions: no expected dividend yield, an expected volatility
of 55.1% for the units issued December 3, 2014 and 56.2% for the units issued December 17, 2014,
a risk free interest rate of 1.04% and an expected life of the warrants of 24 months.
- 58 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
8. EQUITY (CONT’D)
Flow-through
On December 3 and 17, 2014, the Corporation completed private placements by issuing 1,036,683
and 30,000 flow-through shares respectively at $0.85 per share, for total gross proceeds of $906,680.
On December 3 and 17, 2014, the Corporation’s share closed at $0.65 and $0.70 on the Exchange,
therefore the residual value attributed to the benefit related to flow-through shares renunciation is $0.20
and $0.15 respectively for a total value of $211,837 credited to the liability related to the premium on
flow-through shares. As of September 30, 2015, the Corporation had completed all the exploration
work relating to these flow-through placements.
In connection with the December 2014 private placements, the Corporation paid finder’s fees of
$29,274.
c) May 2015
Units
On May 4 and 12, 2015, the Corporation completed a private placement of 20,622,569 units at a price
of $0.70 per unit for total gross proceeds of $14,435,798. Each unit consisted of one common share
and one warrant. Each warrant entitles the holder to purchase one common share at a price of $1.15
until May 3, 2018.
From the total compensation received from the units, $1,922,031 has been allocated to warrants and
$12,513,767 to common shares, according to a pro rata allocation of the estimated fair value of each
of the two components. The estimated fair value of the warrants was determined using the Black-
Scholes pricing model based on the following assumptions: no expected dividend yield, an expected
volatility of 49.8%, a risk free interest rate of 0.51% and an expected life of the warrants of 3 years.
In connection with the private placement, the Corporation paid finder’s fees of $457,980 and issued
compensation warrants entitling the finders to acquire 555,000 common shares of the Corporation at
a price of $0.70 per share until May 3, 2017. The total compensation warrants cost amounted to
$116,550 and this fair value was estimated using the Black-Scholes model with the same assumptions
as the warrants except for an expected life of 2 years.
Share issue expenses, including the finder’s fees and compensation warrants, totalled $952,790 of
which $825,883 was allocated to capital stock and $126,907 to warrants.
8.2 Warrants
Changes in the Corporation’s number of outstanding warrants were as follow:
Fiscal 15
Fiscal 14
Number
Amount Number Amount
$
30,818 469,975
2,027,093 401,001
$
52,542
30,818
(30,818) (469,975) (52,542)
30,818
2,027,093 401,001
Balance – Beginning of year
Issued following private placements (note 8.1)
Expired
Balance – End of year
401,001
21,254,213
(401,001)
21,254,213
- 59 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
8. EQUITY (CONT’D)
Warrants outstanding as at September 30, 2015 are as follows:
Number of warrants
550,215
81,429
20,622,569
21,254,213
Exercise
price
$
0.95
0.95
1.15
Expiry date
December 2, 2016
December 16, 2016
May 3, 2018
8.3 Broker warrants
Changes in the Corporation’s number of outstanding broker warrants were as follow:
Balance – Beginning of year
Issued following a private placement (note 8.1)
Balance – End of year
-
555,000
555,000
$
-
116,550
116,550
$
-
-
-
-
-
-
Fiscal 15
Fiscal 14
Number
Amount Number Amount
Broker warrants outstanding as at September 30, 2015 are as follows:
Number of warrants
555,000
555,000
Exercise
price
$
0.70
Expiry date
May 3, 2017
8.4 Policies and processes for managing capital
The capital of the Corporation consists of the items included in equity of $23,596,135 as of September
30, 2015 ($9,031,007 as of September 30, 2014). The Corporation’s objectives when managing capital
are to safeguard its ability to continue its operations as well as its acquisition and exploration programs.
As needed, the Corporation raises funds in the capital markets. The Corporation does not use long
term debts since it does not generate operating revenues. There is no dividend policy. The Corporation
does not have any externally imposed capital requirements neither regulatory nor contractual
requirements to which it is subject, unless the Corporation closes a flow-through private placement in
which case the funds are reserved in use for exploration expenses (and the Corporation was in
compliance during the year).
- 60 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
9. EMPLOYEE REMUNERATION
9.1 Salaries
Salaries
Benefits
Less : salaries and benefits capitalized in E&E assets
Salaries disclosed on the statement of comprehensive loss
9.2 Stock-based compensation
Stock-based compensation
Less : stock-based compensation capitalized in the E&E assets
Stock-based compensation disclosed on the statement of
comprehensive loss
Fiscal 15
$
755,900
68,111
824,011
(475,153)
348,858
Fiscal 14
$
663,032
79,403
742,435
(413,835)
328,600
Fiscal 15
$
98,948
(32,035)
Fiscal 14
$
266,725
(96,274)
66,913
170,451
The Corporation has a stock option plan (the “Plan”). The number of common shares granted is
determined by the Board of Directors. The number of common shares reserved for issuance under the
Corporation's fixed number stock option is 4,000,000. The exercise price of any option granted under
the plan shall be fixed by the Board of Directors at the time of grant and shall not be lower than the
closing price on the day preceding the grant. The term of the option will not exceed ten years from the
date of grant. The options normally vest 1/6 per 3 months from the grant date, or otherwise as
determined by the Board of Directors.
On February 20, 2014, the Corporation granted to its directors, officers, employees and consultants
605,000 options exercisable at $0.85, valid for 10 years. Those options were granted at an exercise
price equal to the closing market value of the shares the previous day of the grant. Total stock-based
compensation costs amount to $272,250 for an estimated fair value of $0.45 per option. The fair value
of the options granted was estimated using the Black-Scholes model with no expected dividend yield,
55% expected volatility, 1.81% risk-free interest rate and 6 years options expected life. This expected
life was estimated by benchmarking comparable situations for companies that are similar to the
Corporation. The expected volatility was determined by calculating the historical volatility of the
Corporation’s share price back from the date of grant and for a period corresponding to the expected
life of the options.
On August 13, 2015, the Corporation granted to its directors, officers, employees and consultants
475,000 options exercisable at $0.60, valid for 10 years. Those options were granted at an exercise
price equal to the closing market value of the shares the previous day of the grant. Total stock-based
compensation costs amount to $123,500 for an estimated fair value of $0.26 per option. The fair value
of the options granted was estimated using the Black-Scholes model with no expected dividend yield,
45% expected volatility, 1.12% risk-free interest rate and 6 years options expected life. This expected
life was estimated by benchmarking comparable situations for companies that are similar to the
Corporation. The expected volatility was determined by calculating the historical volatility of the
Corporation’s share price back from the date of grant and for a period corresponding to the expected
life of the options.
- 61 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
9. EMPLOYEE REMUNERATION (CONT’D)
A summary of changes in the Corporation’s common share purchase options is presented below:
Fiscal 15
Fiscal 14
Balance – Beginning of year
Granted
Expired
Balance – End of year
Balance – End of year exercisable
Weighted
average
exercise
price
$
1.27
0.60
1.48
1.18
1.24
Number of
options
1,520,000
605,000
(345,000)
1,780,000
1,376,668
Weighted
average
exercise
price
$
1.31
0.85
0.70
1.27
1.40
Number of
options
1,780,000
475,000
(235,000)
2,020,000
1,545,000
The following table summarizes information about common share purchase options outstanding and
exercisable as at September 30, 2015:
Number of options
outstanding
Number of
options
exercisable
260,000
315,000
20,000
345,000
605,000
475 000
2,020,000
260,000
315,000
20,000
345,000
605,000
-
1,545,000
Exercise
price
$
1.76
1.54
1.61
1.25
0.85
0.60
10. LOSS PER SHARE
Expiry date
February 17, 2021
February 16, 2022
February 27, 2022
February 19, 2023
February 20, 2024
August 13, 2025
The calculation of basic loss per share is based on the loss for the year divided by the weighted
average number of shares in circulation during the year. In calculating the diluted loss per share,
potential common shares such as share options and warrants have not been included as they would
have the effect of decreasing the loss per share. Decreasing the loss per share would be antidilutive.
Details of share options and warrants issued that could potentially dilute earnings per share in the
future are given in Notes 8 and 9.
Loss
Weighted average number of basic and diluted outstanding shares
Basic and diluted net loss per share
$(629,098) $(1,974,586)
29,948,093
$(0.07)
40,639,071
$(0.02)
Fiscal 15
Fiscal 14
- 62 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
11.
INCOME TAXES
The income tax expense is made up of the following component:
Recovery of deferred income taxes
Premium on flow-through share issuance
Total recovery of deferred income taxes
Fiscal 15
$
Fiscal 14
$
239,297
239,297
155,863
155,863
The provision for income taxes presented in the financial statements is different from what would have
resulted from applying the combined Canadian Statutory tax rate as a result of the following:
Loss before income taxes
Combined federal and provincial income tax at 26.90%
Non-deductible expenses
Tax effect of renounced flow-through share expenditures
Amortization of flow-through share premiums
Unrecognized temporary differences
Other elements
Expired tax attributes
Recovery of deferred income taxes
Fiscal 15
$
(868,395)
(233,598)
Fiscal 14
$
(2,130,449)
22,917
266,610
(239,297)
(76,376)
(6,195)
26,642
(239,297)
(573,091)
85,412
171,743
(155,863)
315,525
411
-
(155,863)
The ability to realize the tax benefits is dependent upon a number of factors, including the sale of
properties. Deferred tax assets are recognized only to the extent that it is probable that sufficient
taxable profits will be available to allow the asset to be recognized. Accordingly, some deferred tax
assets have not been recognized; these deferred tax assets not recognized amount to $1,143,000.
As at September 30, 2015, significant components of the Corporation’s deferred income tax assets
and liabilities are as follows:
Deferred income tax assets
Non-capital losses
Donations
Share and warrant issue expenses
Total deferred income tax assets
Deferred income tax liabilities
E&E assets
Total deferred income tax liabilities
Fiscal 15
$
Fiscal 14
$
1,648,000
18,000
259,000
1 925 000
1,458,000
14,000
50,000
1,522,000
782,000
782,000
582,000
582,000
Deferred income tax assets not recognized
1,143,000
940,000
- 63 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
11.
INCOME TAXES (CONT’D)
As of September 30, 2015, expiration dates of losses available to reduce future years’ income tax are:
2026
2027
2027
2028
2029
2030
2031
2032
2033
2034
2035
Federal
$
84,000
126,000
177,000
540,000
645,000
726,000
677,000
748,000
906,000
760,000
820,000
Provincial
$
69,000
112,000
183,000
514,000
631,000
713,000
663,000
736,000
891,000
749,000
812,000
12. COMPENSATION TO KEY MANAGEMENT AND RELATED PARTY TRANSACTIONS
12.1 Compensation to key management
The Corporation’s key management personnel are members of the Board of Directors, as well as the
president, the vice-president exploration and the chief financial officer. Key management remuneration
is as follows:
Short-term benefits
Salaries including bonuses and benefits
Professional fees
Professional fees recorded in share issue expenses
Salaries including bonuses and benefits capitalized in E&E expenses
Long-term benefits
Stock-based compensation
Stock-based compensation capitalized in E&E expenses
Total compensation
Fiscal 15 Fiscal 14
$
$
288,781
67,534
12,724
132,260
281,875
50,206
7,651
125,400
65,050
10,842
577,191
170,451
28,248
663,831
On January 1st, 2015, the Corporation entered into an amended employment agreements with
members of the senior management which, among other things, provides that in the event of a
termination without cause or of a change of control, a compensation equivalent to between 12 to 18
months of salary will be paid. Also, on January 1st, 2015, the Corporation entered into a consulting
agreement with another senior management, which provides that in the event of a termination without
cause or of a change of control, a compensation equivalent to 18 months of remuneration will be paid.
12.2 Related party transactions
In addition to the amounts listed above in the compensation to key management (note 12a), following
are the related party transactions:
- 64 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
12. COMPENSATION TO KEY MANAGEMENT AND RELATED PARTY TRANSACTIONS (CONT’D)
In the normal course of operations:
A firm in which an officer is a partner charged professional fees amounting to $125,932 ($49,624
in Fiscal 14) of which $55,001 ($34,819 in Fiscal 14) was expensed and $70,931 ($14,805 in
Fiscal 14) was recorded as share issue expenses;
A company controlled by an officer charged professional fees of $57,660 ($48,368 in Fiscal 14)
for her staff;
As at September 30, 2015, the balance due to the related parties amounted to $21,563 ($7,394
in September 30, 2014).
Out of the normal course of operations:
Directors and officers of the Corporation participated in the flow-through private placement of
December 2014 (note 8.1 b)) for $79,050 and in the units private placement of May 2015 (note
8.1 c)) for $15,400 ($103,600 in the flow-through private placements of December 2013
(note 8.1 a))). The directors and officers subscribed to the units private placement and the flow-
through private placement under the same terms and conditions set forth all subscribers.
13. OPERATING LEASE
The Corporation's future minimum operating lease payments are as follows (assuming that the
consumer price index will be the same as the one published October 2015 by Statistic Canada for a
12-month period which was 1.0%):
Within 1 year
1 to 5 years
After 5 years
Total
As of September 30, 2015
$
23,316
33,959
-
57,275
In September 2012, the Corporation extended the lease for five years, from March 2013 to February
2018. The rent is $21,875 for the first year and thereafter will be indexed annually at the highest of the
increase of the consumer price index or 2.5%. The Corporation was also responsible for its
proportionate share of the non-residential surtax and the water surtax.
Lease payments recognized as an expense during the reporting period amounted to $24,871 ($24,256
in Fiscal 14). This amount consists of minimum lease payments.
14. FINANCIAL INSTRUMENTS AND RISKS
The Corporation is exposed to various financial risks resulting from both its operations and its
investment activities. The Corporation’s management manages financial risks. The Corporation does
not enter into financial instrument agreements including derivative financial instruments for speculative
purposes. The Corporation’s main financial risk exposure and its financial risk management policies
are as follows:
- 65 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
14. FINANCIAL INSTRUMENTS (CONT’D)
14.1 Market Risk
Interest rate fair value risk
The Corporation’s interest rate risk is the risk that the fair value of future cash flows of a financial
instrument will fluctuate due to changes in market interest rates. The investments included in cash and
cash equivalents and also investments bear interest at a fixed rate and the Corporation is, therefore,
exposed to the risk of changes in fair value resulting from interest rate fluctuations. Interest rates 1%
higher (lower) would have decreased (increased) the fair value of these by $161,007 as of September
30, 2015 ($7,048 as of September 30, 2014). The Corporation’s other financial assets and liabilities
do not comprise any interest rate risk since they do not bear interest.
14.2 Credit Risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and
cause the other party to incur a financial loss. The Corporation is subject to concentrations of credit
risk through cash and cash equivalents, investments and accounts receivable. The Corporation
reduces its credit risk by maintaining part of its cash and cash equivalents and its investments in
financial instruments held with a Canadian chartered bank, with a broker which is a subsidiary of a
Canadian chartered bank or with an independent investment dealer member of the Canadian Investor
Protection Fund. In Fiscal 15, the investments are composed of guaranteed investment certificates
issued by Canadian banks or guaranteed by the Canadian Investor Protection Fund. The Corporation
aims at signing partnership agreements with established companies and follows closely their cash
position to reduce its credit risk on accounts receivable. The carrying amount of cash and cash
equivalents and investments represents the Corporation maximum credit exposure.
14.3 Liquidity risk
Liquidity risk is the risk that the Corporation will not be able to meet the obligations associated with its
financial liabilities. As of September 30, 2015, the Corporation had enough funds available to meet its
financial liabilities and future financial liabilities from its existing commitments. All accounts payable
and accrued liabilities terms are less than 31 days.
14.4 Fair value
The carrying value of cash and cash equivalents, accounts receivable, investments and accounts
payable and accrued liabilities and advance received for upcoming exploration work are considered to
be a reasonable approximation of their fair value because of the short-term maturity and contractual
terms of these instruments.
Fair value estimates are made at the statement of financial position date, based on relevant market
information and other information about financial instruments.
15. ADDITIONAL INFORMATION ON CASH FLOWS
Stock-based compensation included in E&E expenses
Additions of exploration properties and E&E expenses included in accounts
payable and accrued liabilities
Tax credits receivable applied against E&E expenses
Interest received
2015
$
32,035
339,513
60,990
73,945
2014
$
96,274
74,559
47,469
55,245
- 66 -
Midland Exploration Inc.
Notes to Financial Statements
For the years ended September 30, 2015 and 2014
16. SUBSEQUENT EVENT
On November 20, 2015, the Corporation completed a private placement by issuing 835,365 flow-
through shares at $0.85 per share, for total gross proceeds of $710,060. On that date, the
Corporation’s share closed at $0.62 on the Exchange, therefore the residual value attributed to the
benefit related to flow-through shares renunciation is $0.23 for a total value of $192,134 credited to
the liability related to the premium on flow-through shares. In connection with the private placement,
the Corporation paid finder’s fees of $26,208. Directors and officers of the Corporation participated in
these placements for a total consideration of $96,050.
- 67 -
Midland Exploration Inc.
Corporate Information
Directors
Jean-Pierre Janson, Chairman of the board 1) 2)
Gino Roger
Germain Carrière 1) 2) 3)
Robert I. Valliant 1) 3)
René Branchaud 3)
Notes:
1) Member of the Audit Committee
2) Member of the Compensation Committee
3) Member of the Corporate Governance Committee
Officers
Gino Roger, President and Chief Executive Officer
Mario Masson, Vice-president Exploration
Ingrid Martin, Chief Financial Officer
René Branchaud, Secretary
Head Office
1, Place Ville-Marie, suite 4000
Montreal (Quebec)
H3B 4M4
Exploration Office
132, Labelle Blvd., Suite 220
Rosemere (Quebec)
J7A 2H1
Tel.: (450) 420-5977
Fax. (450) 420-5978
Email: info@midlandexploration.com
Website: www.explorationmidland.com
Auditors
PricewaterhouseCoopers, s.e.n.c.r.l.
1250, René-Lévesque Blvd. West, Suite 2500
Montreal (Quebec)
H3B 4Y1
Legal counsel
Lavery, de Billy, s.e.n.c.r.l.
1, Place Ville-Marie, Suite 4000
Montreal (Quebec)
H3B 4M4
Transfer Agent
Computershare Investor Services Inc.
1500, Robert-Bourassa, Suite 700
Montreal (Quebec)
H3A 3S8
Tel.: (514) 982-7888
- 68 -