Pediatrix Medical Group
Annual Report 2018

Plain-text annual report

Annual Report 2018 Midland Exploration Inc. 1, Place Ville Marie, Suite 4000, Montreal (Quebec) H3B 4M4 Tel.: 450.420.5977 Fax : 450.420.5978 Midland Exploration inc. Table of contents Message to Shareholders Management’s discussion and Analysis Nature of Activities ........................................................................................................................................ 5 Overall Performance ..................................................................................................................................... 5 Results of Operations .................................................................................................................................... 7 Exploration Activities ..................................................................................................................................... 8 Financing Activities ..................................................................................................................................... 28 Working Capital ........................................................................................................................................... 29 Summary of Results per Quarter ................................................................................................................ 30 Fourth Quarter ............................................................................................................................................. 30 Related Party Transactions ......................................................................................................................... 31 Subsequent Events ..................................................................................................................................... 31 Outstanding Share Data .............................................................................................................................. 31 Stock Option Plan ....................................................................................................................................... 31 Off-balance Sheet Arrangements ............................................................................................................... 32 Commitment ................................................................................................................................................ 32 Critical Accounting Estimates...................................................................................................................... 32 New Accounting Standards ......................................................................................................................... 33 Financial Instruments .................................................................................................................................. 34 Risk Factors ................................................................................................................................................ 34 Foward Looking Information........................................................................................................................ 37 Financial Statement Independant Auditor’s Report ..................................................................................................................... 38 Statements of Financial Position ................................................................................................................. 40 Statements of Comprehensive Loss ........................................................................................................... 41 Statements of Change in Equity ................................................................................................................. 42 Statements of Cash Flows .......................................................................................................................... 43 Notes to Financial Statements .................................................................................................................... 44 Corporate Information ................................................................................................................................. 68 - 3 - Midland Exploration Inc. Message to Shareholders For the fiscal year ended September 30, 2018 Dear shareholders, It is a sincere pleasure for me to present Midland Exploration Inc.’s 2018 annual report. Midland is a dynamic and pro-active mineral exploration company that is led by a highly respected and experienced management and technical team with a proven mine-finding track record. During the year 2018, we further improved our exploration team by hiring new and very talented geologists, and appointed a new valuable member to our Board of Directors with the arrival of Virginia Mines Inc.’s former VP Exploration, Mr. Paul Archer. Midland targets the excellent mineral potential and the favourable investment climate of Quebec to discover new world-class deposits of gold, platinum group elements and base metals. Midland is proud to count on reputable partners such as Agnico Eagle Mines Limited, Osisko Mining Inc., Altius Minerals Corporation, SOQUEM Inc., NioBay Metals Inc., the Nunavik Mineral Exploration Fund, and Abcourt Mines Inc. Midland continues to pursue its strategy of exploring in partnership across Quebec and achieved significant progress in 2018. Midland discovered new mineralized zones on different projects. The highlight of the year was certainly the discovery of a significant Cu-Au-Mo-Ag mineralized system on our Mythril project in the James Bay region. This new high-grade copper system was traced over more than 2 kilometres on surface and remains open in all directions. Extensive geophysical surveys are currently underway and a significant exploration budget will be devoted to this project in 2019. We also signed a new partnership agreement with the Nunavik Mineral Exploration Fund on a new Ni-Cu-Co project near Kuujjuaq and continued to generate and acquire new gold and polymetallic properties with very strong potential for discoveries (in the Detour, Eleonore and Mythril areas). In addition, we also increased Midland’s visibility and exposure in 2018, taking part in a number of major promotional events throughout the year, which enabled us to attract new and important shareholders. Here are the main highlights of the past year: • New significant Cu-Au-Mo-Ag discovery on Mythril, James Bay • New Vortex gold zone extended over more than 1.5 km strike length on the Casault JV with SOQUEM • New significant gold occurrences discovered on Willbob (Ants & Didgeridoo) • New agreement signed for a Ni-Cu-Co project with the Nunavik Mineral Exploration Fund • Generation and acquisition of 100% interest in the Soissons Ni-Cu-Co project • 14,661 metres drilled in 2018 Midland intends to continue aggressively exploring its various projects for gold, platinum group elements and base metals in 2019, to discover world-class deposits. An ambitious exploration program, one of the most significant since the Company was founded, is currently in preparation and will be deployed on the Company’s best projects. Midland will continue to generate several new projects and seek to rapidly conclude additional partnership agreements for properties recently acquired in 2017 and 2018. Midland also intends to continue assessing interesting business opportunities as they arise in 2019. Midland has a very strong financial position, with an adjusted working capital of more than $14 million and no debt. On behalf of the management team and the Board of Directors, I would like to express our most sincere acknowledgements for your confidence, your patience and your renewed support throughout the year. I would also like to take this opportunity to welcome the new shareholders who joined us during 2018. Midland is a company that counts on a high-calibre Board of Directors and a dynamic and talented technical team who will spare no effort in 2019 to make one or many significant discoveries in Quebec. (s) Gino Roger Gino Roger, P.Eng. President and CEO Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 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, 2018. This MD&A should be read in conjunction with the Corporation’s audited financial statements as at September 30, 2018 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 16 Q1-17 Q2-17 Q3-17 Q4-17 Fiscal 17 Q1-18 Q2-18 Q3-18 Q4-18 Fiscal 18 Fiscal 19 Period October 1, 2015 to September 30, 2016 October 1, 2016 to December 31, 2016 January 1, 2017 to March 31, 2017 April 30, 2017 to June 30, 2017 July 1, 2017 to September 30, 2017 October 1, 2016 to September 30, 2017 October 1, 2017 to December 31, 2017 January 1, 2018 to March 31, 2018 April 30, 2018 to June 30, 2018 July 1, 2018 to September 30, 2018 October 1, 2017 to September 30, 2018 October 1, 2018 to September 30, 2019 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 an adjusted working capital of $11,214,039 as of September 30, 2018 ($11,678,771 as of September 30, 2017) which includes $1,200,000 of investments in guaranteed investment certificates with expiry dates over 1 year (nil as of September 30, 2017)), which will allow the Corporation to execute its exploration program for at least the next three years (note: adjusted working capital is a non-IFRS financial performance measure which has no standard definition under IFRS. See section 6: Working Capital). On November 22, 2017 and December 5, 2018, the Corporation completed private placement by issuing respectively 1,692,854 and 1,969,638 flow-through shares at $1.35 for total gross proceeds of $2,285,354 and $2,659,012 (see section 5 for details). On May 3, 2018, 1,522,000 warrants were exercised at $1.15 for total gross proceeds of $1,750,300. The Corporation signed 50%-50% joint venture agreements with Altius Resources Inc. (“Altius”) for the following designated projects: Elrond, Gondor, Helms Deep, Isengard, Minas Tirith, Moria, Shire, Mythril and Fangorn (the “Designated Projects”). On July 13, 2018, the Corporation amended the James Bay strategic alliance (“Alliance”) memorandum of understanding (“MOU”) signed on March 30, 2017 as follows: - 5 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 2. OVERALL PERFORMANCE (CONT’D) • • • • • Altius exchanged its 50% interest in the Designated Projects for 461,487 common shares valued at $507,636, which corresponds to Altius’ portion of the accumulated expenditures on the designated projects; Altius subscribed 198,386 common shares at $1.10 which corresponds to Altius’ portion of the phase 2 approved exploration budget of 2018; Altius will subscribe additional common shares for its portion of future work program on the Designated Projects, at market price; If further designated projects are declared, Altius will subscribe additional common shares of the Corporation for its portion of the work programs, at market price; All designated projects share require the registration of a 2% net smelter return (“NSR”) royalty, 50% 50% to the respective parties (“Alliance Royalty”), with a mutual right of first offer on the sale of any interest in the Alliance Royalty. The MOU will expire on December 31, 2019, with an option to continue the Alliance for two additional years. The duration of this MOU can be reduced or extended by mutual consent. On July 27, 2018, the Corporation signed a partnership agreement (50%-50%) with the Nunavik Mineral Exploration fund (“NMEF”), to explore an area of the Soissons property located between 50 and 100 kilometers southeast of Kuujjuaq, Nunavik, Quebec. The NMEF will be the operator of the partnership. The Corporation signed an option agreement with Teck Resources Ltd (“Teck”) on September 6, 2013 whereby Teck could have earned, in three options, a maximum interest of 65% in the Patris property. On March 29, 2018, the Corporation received a termination notice for the Patris option agreement. On April 27, 2017, the Corporation signed an option agreement with IAMGOLD Corporation (“IAMGOLD”) whereby IAMGOLD may earn, in three options, a maximum interest of 65% in the Héva property. On November 20, 2018, the Corporation received a termination notice for the Héva option agreement. As operator, Midland incurred exploration expenditures totalling $6,019,773 ($6,243,161 in Fiscal 17), on its properties of which $1,890,528 was recharged to its partners ($1,274,505 in Fiscal 17). The operating partners incurred $704,099 of exploration expenses ($631,255 in Fiscal 17). Also, the Corporation invested $337,741 ($619,147 in Fiscal 17) to complete several property acquisitions in Quebec of which $35,113 was recharged to its partners ($100,422 in Fiscal 17). Selected annual information Project management fees Loss Loss per share, basic and diluted Fiscal 18 $ 109,548 (807,530) (0.01) Fiscal 17 $ 96,193 (1,214,056) (0.02) Fiscal 16 $ 107,423 (807,158) (0.01) 2018 $ As at September 30, 2017 $ 2016 $ Total assets 29,736,269 26,477,605 24,456,678 - 6 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 3. RESULTS OF OPERATIONS The Corporation reported a loss of $807,530 in Fiscal 18 compared to $1,214,056 for Fiscal 17. Operating expenses are stable at $1,821,623 for Fiscal 18 compared to $1,864,707 in Fiscal 17: • • • Salaries decreased to $540,288 ($584,630 in Fiscal 17). A $18,387 refund was received in Fiscal 18 relating to a rate adjustment on benefits of Fiscal 17. Stock-based compensation (non-cash item) decreased to $192,395 ($285,429 in Fiscal 17). 500,000 options were granted in Fiscal 16 at a weighted average exercise price of $1.10, 695,000 in Fiscal 17 at a weighted average exercise price of $1.13 and 570,000 in Fiscal 18 at an exercice price of $0.89. Their fair value was estimated at $250,000, $362,250 and $245,100 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 ($96,951 in Fiscal 16, $285,429 in Fiscal 17 and $192,395 in Fiscal 2018) and the other part was capitalized within the deferred exploration expenses ($16,162 in Fiscal 16, $164,088 in Fiscal 17 and $104,646 for Fiscal 18). The options vest over 18 months and it should be noted that the main grant of options occurred in August for Fiscal 16 while it occurred in February for Fiscal 17 and Fiscal 18. to Impairment of exploration and evaluation assets $303,610 ($232,075 in Fiscal 17) and the explanations can be found in the investing activities section found later in this MD&A. (non-cash item) increased Interest income increased to $203,475 ($169,368 in Fiscal 17) due to gradual increase in the interest rates. A $694 070 ($382,090 in Fiscal 17) recovery of deferred income taxes (non-cash item) was recognized to record the amortization, in proportion of the work completed, of the premium related to flow-through shares renunciation following the November 2017 private placement (November 2016 and March 2017 in Fiscal 17). All exploration work imposed by the November 2016 and March 2017 flow-through financings was completed before September 30, 2017. Also, all the exploration work imposed by the November 2017 flow-through financings was completed before September 30, 2018. - 7 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES Deferred exploration expenses Fiscal 18 Maritime Cadillac Laflamme Au Patris Au Casault Au Jouvex Au Heva Au Valmond Samson La Peltrie Wawagosic Adam Mistaouac Turgeon Manthet Abitibi Gold Weedon Cu Zn Au Gatineau Zn Bay-James Au Eleonore Au JV Eleonore AU Isengard Minas Tirith Shire Elrond Gondor Moria Helms Mythril Fangorn Pallas PGE Willbob Au Soissons Soissons NMEF Generation i g n n n g e b i e c n a l a B $ 292,271 2,202,064 221,844 963,965 412,833 261,985 124,314 83,411 1,067,584 - 131,155 - - - 203,470 626,897 44,005 362,595 1,723,519 291,282 2,072 27,966 75,404 30,943 5,049 21,223 124 - - 538,746 2,126,873 - - 91,166 l y g o o e G $ 739 36,663 5,849 198,895 - 5,276 - 31,428 28,205 54,396 18,779 35,998 10,469 8,409 17,065 19,153 4,117 173,713 47,161 190,464 67,123 9,212 232,482 980 47,201 172,866 42,467 38,902 9,346 - 536,299 70,443 7,031 (4,137) s c i s y h p o e G $ - 193,334 - 49,848 - 1,615 - 53,820 62,991 - 104,153 191,885 185,114 - - - 23,480 - - 114,711 - - 51,889 - - 21,668 - - - - - - - - g n i l l i r D $ 88,024 9,532 16,742 1,802,180 - 500 - 518 429,008 - 1,097 - - - - - - - - - - - - - - - - - - - 33,957 - - - - o e G y r t s i m e h c $ 5,357 292 - 173,099 - - - - 26,732 - - - - - - - - 13,775 292 2,633 6,132 610 16,633 - 4,129 19,488 7,351 7,679 1,643 - 109,080 2,580 - 61 g n i t t u c e n L i $ - 11,960 - 11,296 - - - - 17,831 - 28,060 - - - - - - - - - - - - - - - - - - - - - - - l a t o t b u S $ 94,120 251,781 22,591 2,235,318 - 7,391 - 85,766 564,767 54,396 152,089 227,883 195,583 8,409 17,065 19,153 27,597 187,488 47,453 307,808 73,255 9,822 301,004 980 51,330 214,022 49,818 46,581 10,989 - 679,336 73,023 7,031 (4,076) d e s a b - k c o t S n o i t a s n e p m o c e g r a h c e R $ $ 2,719 4,407 - - - (10,379) 19,913 (1,117,659) - (6,498) - - (563,739) - - - - - - - - - - (1,440) (36,146) (966) (65,831) (490) (22,307) (47,484) (17,589) - - - - - - - 129 8,932 - 99 10,402 - 3,798 2,089 2,089 - 99 1,247 - 3,168 2,839 8,670 - - 4,750 - - 3,193 - - - 1,278 24,825 - - - s t i d e r c x a T $ - (30,414) - (221,303) - - - (1,166) (91) (21,447) (20,379) (5,470) (1,007) - (1,347) - (87) (35,585) (3,601) (23,105) (2,263) (3,111) (88,732) (27) (2,648) (67,410) (13,434) (18,366) (4,332) - (206,809) (25,741) (2,772) (2,780) TOTAL 11,932,760 2,116,994 1,054,508 2,381,558 397,566 69,147 6,019,773 104,646 (1,890,528) (803,427) - 8 - n o i t p O t n e m y a p f f o - e t i r W $ $ - - - - - - - - - - - - - - (134,548) - - - - - - - - - - - - - - - - - - (194) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - e g n a h c t e N $ 96,839 225,774 12,212 916,269 129 9,825 - 84,699 11,339 32,949 135,508 224,502 196,665 8,409 (118,731) 20,400 27,510 155,071 46,691 291,933 34,846 5,745 151,191 463 26,375 102,321 18,795 28,215 6,657 1,278 497,352 47,282 4,259 (7,050) d n e e c n a l a B 8 1 l a c s i F $ 389,110 2,427,838 234,056 1,880,234 412,962 271,810 124,314 168,110 1,078,923 32,949 266,663 224,502 196,665 8,409 84,739 647,297 71,515 517,666 1,770,210 583,215 36,918 33,711 226,595 31,406 31,424 123,544 18,919 28,215 6,657 540,024 2,624,225 47,282 4,259 84,116 (134,742) 3,295,722 15,228,482 Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CON’T) Deferred exploration expenses Fiscal 17 Abitibi Maritime Cadillac Laflamme Au Patris Au Casault Au Jouvex Au Heva Au Valmond Samson La Peltrie Adam Abitibi Gold Grenville- Appalaches Weedon Cu Zn Au Gatineau Zn Bay-James Bay-James Au Eleonore Au JV Eleonore AU JV BJ Altius Québec Labrador Ytterby REE Northern Quebec Pallas PGE Willbob Au Projects generation i g n n n g e b i e c n a l a B $ 236,090 1,893,853 221,646 352,708 351,966 157,076 120,742 78,203 652,484 42,841 173,644 523,230 29,024 261,886 1,629,303 124,692 - l y g o o e G $ 2,380 23,712 3,486 85,689 2,806 52,441 3,572 4,333 54,870 31,420 23,893 61,136 12,381 92,070 113,385 202,506 346,681 183,583 - 369,500 565,271 60,191 597,926 74,069 23,436 s c i s y h p o e G $ - 109,332 - 143,777 97,369 12,157 - - 312,312 58,410 4,050 7,000 200 40,700 - - 59,018 - - - - g n i l l i r D $ 48,313 183,492 4,827 1,056,768 - 300 - 518 16,654 4,251 114 - - - - 533 - - - o e G y r t s i m e h c $ 3,842 5,778 - 48,958 - 3,609 - - - - 1,376 32,763 - 3,889 10,650 16,368 24,228 - 474,576 1,164,421 32,084 328,509 - - n o i t p O t n e m y a p $ f f o - e t i r W $ g n i t t u c e n L i $ l a t o t b u S $ - - - 25,523 20,923 35,580 - - 49,275 - - 54,535 322,314 8,313 1,358,610 119,695 102,897 3,572 4,851 428,152 94,081 26,627 d e s a b - k c o t S n o i t a s n e p m o c $ 1,700 9,692 198 18,247 1,871 11,325 - 1,379 16,409 1,700 1,254 e g r a h c e R $ - - (8,313) (686,997) (60,549) (1,193) - - (23,947) - - 100,899 4,346 14,981 - - - 136,659 124,035 219,407 429,927 - 6,423 18, 280 4,328 - - - (214,964) s t i d e r c x a T $ (54) (23,795) - (80,708) (1,553) (9,310) - (1,022) (10,473) (7,467) (861) (1,578) - (35,950) (36,242) (71,097) (56,510) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - e g n a h c t e N d n e e c n a l a B 7 1 l a c s i F $ $ 56,181 308,221 198 611,257 60,867 104,909 3,572 5,208 415,100 88,314 29,826 292,271 2,202,064 221,884 963,965 412,833 261,985 124,314 83,411 1,067,584 131,155 203,470 103,667 626,897 14,981 44,005 100,709 94,216 166,590 162,781 362,595 1,723,519 291,282 162,781 - - - - - - - - - - - - - - - - - - - - - 566,851 2,090,856 6,703 60,233 (278,542) - (125,766) (589,487) 23,436 - - (6,339) (183,583) (183,583) - - - - 169,246 1,561,602 538,746 2,126,873 17,097 91,166 TOTAL 8,041,811 1,798,314 844,325 2,954,767 512,054 133,701 6,243,161 164,088 (1,274,505) (1,058,212) - (183,583) 3,890,949 11,932,760 - 9 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CON’T) Expenses Exploration and evaluation Properties Midland Partners Actual Fiscal 17 100% owned by Midland Patris Heva Au Valmond Samson Wawagosic Adam Mistaouac Turgeon Manthet Abitibi Gold Weedon Cu-Zn-Au Gatineau Zn Baie James Au Éléonore Au Isengard Minas Tirith Shire Elrond Gondor Moria Helms Mythril Fangorn Willbob Pallas PGE Soissons Générations de projet $ $ - 102,894 3,572 4,851 - 94,081 - - - 29,433 100,899 14,981 136,659 124,035 2,809 37,900 98,715 41,934 6,842 26,639 124 - - 2,090,856 288,309 - 23,436 3,228,969 292,255 71,744 - - - - - - - - - - - - 2,810 37,900 98,715 41,934 6,842 26,639 124 - - - 278,542 - - 857,505 Option, operated by Midland and paid by partner La Peltrie In joint venture Maritime-Cadillac- Agnico-Eagle 51% Vermillon- Soquem 53.4% Laflamme Au – Abcourt 27.4% Casault – Soquem 50% Jouvex – Soquem 50% JV Eleonore Osisko 50% Soissons NMEF 50% 54,535 - 322,314 673,718 60,549 219,407 - 56,761 - - 687,591 60,549 219,407 - 1,330,523 1,024,308 4,968,656 1,881,813 Total $ 292,255 174,638 3,572 4,851 - 94,081 - - - 29,433 100,899 14,981 136,659 124,035 5,619 75,800 197,430 83,868 13,684 53,278 248 - - 2,090,856 566,851 - 23,436 4,086,474 Midland $ Actual Fiscal 18 Partners $ Budget Fiscal 18 Budget Fiscal 19 Total $ Midland Partners $ $ Total $ Midland Partners $ $ Total $ 12,212 893 - 85,766 54,396 152,089 227,883 195,583 8,409 17,065 19,153 27,597 187,488 47,453 37,109 8,856 235,173 490 29,023 166,538 32,229 46,581 10,989 679,336 - 73,023 9,765 2,365,099 10,379 282,303 - - - - - - - - - - - - 36,146 966 65,831 490 22,307 47,484 17,589 - - - - - - 292,682 22,591 283,196 - 85,766 54,396 152,089 227,883 195,583 8,409 17,065 19,153 27,597 187,488 47,453 73,255 9,822 301,004 980 51,330 214,022 49,818 46,581 10,989 - - 5,000 100,000 - 100,000 - - - 30,000 60,000 5,000 300,000 100,000 - - 300,000 - - - - - - 379,336 2,000,000 5,000 - 120,000 2,657,781 3,125,000 - 73,023 9,765 5,000 15,000 15,000 5,000 500,000 500,000 5,000 5,000 - 5,000 100,000 - 5,000 - - 5,000 100,000 - 5,000 - - 5,000 - - 5,000 - - 25,000 30,000 - 50,000 60,000 - 5,000 5,000 - 200,000 300,000 - 100,000 100,000 - 5,000 - - 5,000 - - 5,000 600,000 300,000 - - - 5,000 - - 5,000 - - - - - - 2,000,000 - 5,000 - - 475,000 - 2,000,000 5,000 5,000 - 5,000 - - 30,000 120,000 - 815,000 3,940,000 2,970,000 5,000 - 5,000 - 5,000 - 5,000 - 5,000 - 5,000 - 5,,000 - 5,000 - 5,000 - 25,000 - 50,000 - 5,000 - 200,000 - 100,000 - 5,000 - 5,000 - 5,000 - - - 5,000 - 5,000 - - - - 2,000,000 5,000 - 475,000 - 5,000 - 5,000 - - 30,000 - 2,970,000 111,296 - 322,314 1,361,309 121,098 438,814 - 2,354,831 6,946,160 94,120 236 251,781 1,117,659 - 306,368 7,031 1,777,195 4,143,322 97,888 270 - 1,117,659 - 324,545 7,031 1,547,393 2,403,814 - 10 - 100,000 192,008 - 506 150,000 251,781 900,000 2,235,318 350,000 - 300,000 630,913 100,000 14,062 3,324,588 875,000 1,900,000 6,547,136 4,105,000 2,095,000 6,200,000 4,000,000 1,000,000 5,000,000 50,000 - 150,000 450,000 175,000 150,000 50,000 780,000 1,760,000 1,025,000 100,000 5,000 200,000 300,000 100,000 275,000 - 980,000 200,000 10,000 200,000 600,000 200,000 550,000 - 100,000 5,000 - 300,000 100,000 275,000 - 50,000 - - 450,000 175,000 150,000 50,000 409,164 23,947 457,058 1 028 563,739 564,767 - 500,000 500,000 5,000 125,000 130,000 Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION 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 chief executive officer of Midland, qualified person under NI 43-101, has reviewed the following technical disclosure. HIGHLIGHTS Vortex zone extended to 1.5 km long on Casault JV • New significant Cu-Au-Mo-Ag discovery on Mythril, James Bay • • New significant gold showings found on Willbob ( Ants & Didgeridoo) • A total of 14,661 metres were drilled during Fiscal 18 (10,357 metres during Fiscal 17). Moreover, an additional 2,850 metres were drilled in October and November 2018. 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 During the year, two (2) drill holes were completed on Maritime-Cadillac for a total of 1,485.0 metres. This program was testing the possible extension at depth of the gold-bearing zone intersected in hole 141-17-36 on the historic Maritime-Cadillac showing. This drill hole had intersected an interval grading 1.46 g/t Au over 31.6 metres, from 112.80 to 144.40 metres, including 2.2 g/t Au over 15.6 metres at a vertical depth of approximately 100 metres. This zone included several higher-grade sections, namely 4.3 g/t Au over 0.9 metre (124.1 to 125.0 m), 3.4 g/t Au over 1.0 metre (126.0 to 127.0 m), and 5.7 g/t Au over 0.6 metre (135.0 to 135.6 m). Hole 141-18-38 was completed at a final depth of 654.0 metres. This hole intersected the Maritime- Cadillac zone between 486.3 and 493.0 metres. The zone consists in a felsic-intermediate dyke mineralized with traces to 1% pyrite and arsenopyrite. The best assay results returned 0.83 g/t Au over 7.60 m (485.4 to 493.0 m) including 1.3 g/t Au over 2.0 m and 1.58 g/t Au over 3.30 m (497.2 to 500.5 m). Hole 141-18-39 was completed during the summer and ended at a depth of 831.0 metres. The best interval returned 1.6 g/t Au over 3.0 metres between 363.7 and 366.7 metres. - 11 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) 4.2 Laflamme (Au-Ni-Cu-PGE), in partnership with Abcourt 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, 2018, the Laflamme property consists of a total of 636 claims covering an area of approximately 33,752 hectares and Midland holds 74.3% of the property. On August 17, 2009, the Corporation signed an agreement with Aurbec Mines Inc., (previously a subsidiary of North American Palladium Ltd.). As of July 31, 2011, Aurbec had earned its 50% interest in the Laflamme property but no longer contributed in the exploration programs and therefore was diluted. On June 17, 2016, Abcourt Mines Inc. acquired the property following the bankruptcy of Aurbec. Some claims were dropped in Fiscal 18, therefore the Corporation impaired partially for $5,874 the exploration property cost ($6,846 in Fiscal 17). Exploration work on the property Three (3) geophysics surveys were completed during the year on the Laflamme. These surveys include an heliborne magnetic survey over the southern block, a ground SQUID-EM survey in the Copernick area and finally an IP-OreVision survey to the west of the NW Comtois zone held by Osisko. The heliborne magnetic survey identified several lineaments that were interpreted as structural features within the felsic intrusion. The ground SQUID-EM survey covered the ultramafic unit identified east of the Copernick zone. A weak conductor was identified to the east of Copernick on the preliminary data and could be related to weakly connected or veinlets of sulphides. A weak conductor oriented SW-NE has been interpreted to the northeast of Copernick associated with the ultramafic rocks. Finally, the IP-OreVision survey identified several new interesting chargeability anomalies interpreted to be surrounding a small felsic intrusion. Midland is currently planning a winter drilling program in order to test these new geophysical anomalies near Copernick and NW Comtois. 4.3 Patris (Au), operated by Midland Property Description The Patris property is located about 30 kilometres to the north-east of Rouyn-Noranda and as at September 30, 2018 consists in 307 claims covering an area of approximately 13,031 hectares. Some claims are subject to the following NSR royalties: • 1.5%, the Corporation can buy it back for $500,000 per 0.5% tranche for a total of $1,500,000. • 1%, the Corporation can buy it back for $500,000 per 0.5% tranche for a total of $1,000,000; • 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 on September 6, 2013 whereby Teck could have earned, in three options, a maximum interest of 65% in the Patris property. On March 29, 2018, the Corporation received a termination notice for the Patris option agreement. Exploration work on the property No exploration work conducted on Patris during Fiscal 18. Midland is currently looking for a new partner for this project. - 12 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) 4.4 Casault (Au), in partnership with SOQUEM and operated by Midland Property Description The Casault property is located about 40 kilometres to the east of the Detour Lake gold project located north of the city of La Sarre, Abitibi and as at September 30, 2018, this property consists in 316 claims covering an area of approximately 17,393 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. By October 10, 2016, SOQUEM completed the $4,500,000 work commitment, acquired a 50% undivided interest in the Casault Jouvex property and is now in joint venture with Midland. Exploration work on the property During Fiscal 18, three (3) drilling programs comprising twenty-two (22) drill holes were completed on the Casault, for a total meterage of 8,209.0 metres. These drilling programs resulted in the discovery and the follow-up of a new significant gold-bearing zone named Vortex. This system includes four (4) parallel gold zones, named Vortex 475, 450, 435 and 425. The envelope encompassing these mineralized zones forms a corridor approximately 50 metres wide. The system is now interpreted as a Syenite-Associated Gold system because of the presence of alkaline dykes. The Vortex zone is a major gold-bearing structure located at about 100 metres north of the regional Sunday Lake deformation zone. It is characterized by a strongly foliated and folded unit of block and lapillis tuff altered with hematite, albite and ankerite. Mineralization consists in finely disseminated pyrite (0.5 to 5%). So far, the best grades are obtained in altered and mineralized breccias within the main Vortex structure. The most important gold zone identified to date at Vortex, Zone 450, was intersected in all the drill holes, over a strike length of at least 1.5 kilometres and locally down to 600 metres. The zone trends east-west and is steeply dipping to the north and remains open in all directions. Results 2017-2018 – Vortex Zone 450 CAS-17-92 (Section 628200) Vertical depth : -100 m • 0.46 g/t Au over 13.5 m ; incl. 2.83 g/t Au over 1.3 m ; incl. 5.52 g/t Au over 0.3 m CAS-17-93 (Section 628000) Vertical depth : -160 m • 2.10 g/t Au over 6.7 m ; incl. 6.82 g/t Au over 0.4 m & 5.58 g/t Au over 0.4 m CAS-17-94 (Section 628100) Vertical depth : -230 m • 1.91 g/t Au over 7.2 m ; incl. 5.18 g/t Au over 1.4 m ; incl. 7.71 g/t Au over 0.8 m CAS-17-95 (Section 628300) Vertical depth : -75 m • 1.30 g/t Au over 23.5 m ; incl. 3.46 g/t Au over 6.0 m ; incl. 23.86 g/t Au over 0.5 m CAS-17-96 (Section 628500) Vertical depth : -120 m • 1.38 g/t Au over 26.2 m ; incl. 7.87 g/t Au over 2.2 m ; incl. 14.55 g/t Au over 0.8 m CAS-18-97 (Section 628400) Vertical depth : -160 m • No significant results (Faulted Out) CAS-18-98 (Section 628400) Vertical depth : -240 m • 0.23 g/t Au over 6.0 m CAS-18-99 (Section 628300) Vertical depth : -220 m • 0.56 g/t Au over 12.55 m ; incl. 2.26 g/t Au over 0.75 m - 13 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) CAS-18-100 (Section 628500) Vertical depth : -220 m • 0.74 g/t Au over 8.8 m ; incl. 2.0 g/t Au over 0.75 m & 1.69 g/t Au over 2.25 m CAS-18-101 (Section 628000) Vertical depth : -250 m • 12.4 g/t Au over 1.05 m CAS-18-102 (Section 628600) Vertical depth : -150 m • Hole abandonned CAS-18-103 (Section 628600) Vertical depth : -250 m • Hole abandonned CAS-18-104 (Section 627800) Vertical depth : -170 m • 0.51 g/t Au over 5.25 m; incl. 3.29 g/t Au over 0.5 m CAS-18-105 (Section 627800) Vertical depth : -250 m • 0.20 g/t Au over 5.7 m CAS-18-106 (Section 628700) Vertical depth : -80 m • 0.35 g/t Au over 0.6 m CAS-18-108 (Section 629100) Vertical depth : -80 m • 0.34 g/t Au over 21.45 m ; incl. 0.98 g/t Au over 2.85 m CAS-18-109 (Section 627850) Vertical depth : -600 m • 0.31 g/t Au over 18.05 m CAS-18-110 (Section 627600) Vertical depth : -200 m • 0.46 g/t Au over 25.7 m ; incl. 1.1 g/t Au over 6.2 m ; incl. 3.8 g/t Au over 1.15 m CAS-18-111 (Section 628250) Vertical depth : -525 m • 0.77 g/t Au over 12.0 m CAS-18-112 (Section 628650) Vertical depth : -530 m • 0.22 g/t Au over 5.55 m Best Results 2017-2018 – Vortex Zone 475 CAS-17-92 (Section 628200) Vertical depth : -75 m • 0.29 g/t Au over 16.7 m ; incl. 1.72 g/t Au over 1.0 m CAS-17-93 (Section 628000) Vertical depth : -110 m • 0.23 g/t Au over 12.85 m ; incl. 1.16 g/t Au over 1.05 m CAS-17-94 (Section 628100) Vertical depth : -200 m • 0.36 g/t Au over 8.0 m ; incl. 2.72 g/t Au over 0.5 m CAS-17-96 (Section 628500) Vertical depth : -100 m • 18.7 g/t Au over 0.5 m CAS-18-98 (Section 628400) Vertical depth : -195 m • 0.44 g/t Au over 1.9 m CAS-18-100 (Section 628500) Vertical depth : -200 m • 0.16 g/t Au over 1.0 m CAS-18-101 (Section 628000) Vertical depth : -210 m • 0.16 g/t Au over 14.25 m - 14 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) CAS-18-104 (Section 627800) Vertical depth : -150 m • 0.23 g/t Au over 18.5 m ; incl. 2.72 g/t Au over 0.5 m CAS-18-105 (Section 627800) Vertical depth : -225 m • 0.51 g/t Au over 26.0 m ; incl. 2.09 g/t Au over 2.3 m CAS-18-109 (Section 627850) Vertical depth : -550 m • 0.14 g/t Au over 21.0 m CAS-18-110 (Section 627600) Vertical depth : -170 m • 0.34 g/t Au over 2.95 m CAS-18-111 (Section 628250) Vertical depth : -480 m • 0.18 g/t Au over 12.0 m CAS-18-112 (Section 628650) Vertical depth : -510 m • 0.28 g/t Au over 3.1 m Best Results 2017-2018 – Vortex Zones 435 & 425 CAS-17-93 (Section 628000) Vertical depth : -180 m • 3.45 g/t Au over 2.8 m ; incl. 5.0 g/t Au over 0.95 m (Zone 435) CAS-17-93 (Section 628000) Vertical depth : -200 m • 0.29 g/t Au over 7.3 m (Zone 425) CAS-17-94 (Section 628100) Vertical depth : -250 m • 0.34 g/t Au over 10.9 m ; incl. 5.18 g/t Au over 1.4 m ; incl. 7.71 g/t Au over 0.8 m (Zone 435) CAS-18-110 (Section 627600) Vertical depth : -300 m • 1.42 g/t Au over 6.2 m (Zone 425) CAS-18-112 (Section 628650) Vertical depth : -550 m • 0.71 g/t Au over 7.25 m (Zone 435) Holes CAS-18-113, 114 and 115 were drilled outside the Vortex zone on other IP-OreVision targets. No significant results were obtained A new drilling program (8 ddh; 2,850 m) is commencing in order to test the eastern and western extensions of the Vortex zone as well as a newly identified potential area located about 1 kilometre north of Vortex. 4.5 Jouvex (Au), in partnership with SOQUEM and operated by Midland Property Description The Jouvex property is located about 50 kilometres to the southwest of Matagami and as at September 30, 2018 is composed of 268 claims covering an area of approximately 14,956 hectares. Some claims were dropped therefore the Corporation impaired partially for $3,303 ($7,707 in Fiscal 17). See the Casault section for the details on the agreement signed with SOQUEM. Exploration work on the property No exploration work conducted on Jouvex during Fiscal 18. Midland is currently preparing a drilling program for next winter in order to test the best remaining targets on the property. - 15 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) 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 49% Midland / 51% Agnico Eagle. The Heva East block is located about 4 kilometres to the southeast and consists of 30 contiguous claims largely covering sedimentary rocks of the Cadillac Group just north of the Piché Group. 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. On April 27, 2017, the Corporation had signed an option agreement with IAMGOLD whereby IAMGOLD could have earned, in three options, a maximum interest of 65% in the Héva property, On November 20, 2018, the Corporation received from IAMGOLD a termination notice for the Héva option agreement. Exploration work on the property During Fiscal 18, IAMGOLD completed a drilling program consisting in five (5) holes totalling 1,390 metres. This program tested the best structural, geological and geophysical (IP-Mag) targets identified during the compilation phase. Unfortunately, no significant results were obtained but some small anomalous intervals were intersected. The best result returned 2.28 g/t Au over 1.15 metre in hole HV-17-04 and 0.97 g/t Au over 2.30 metres in hole HV-17-03. 4.7 Valmond (Au), operated by Midland Property Description The Corporation acquired claims by map staking about 50 kilometres to the west of the town of Matagami, Abitibi. As at September 30, 2018, this property consists in 80 claims covering an area of approximately 4,453 hectares. Some claims were dropped therefore the Corporation impaired partially for $1,831 in Fiscal 17. Exploration work on the property A ground magnetic survey was completed on Valmond during Q2-18. This survey covered the NW extension of the main showing. No significant magnetic feature was identified. 4.8 Samson Ni-Cu-PGE operated by Midland Property Description As at September 30, 2018, the Samson property consists of 264 claims covering a surface area of about 14,654 hectares about 50 kilometres west of the town of Matagami, in Abitibi. Some claims were dropped therefore the Corporation impaired partially for $1,332 in Fiscal 18. Exploration work on the property A ground Armit-EM survey was completed on three grids during Q2-18 in order to cover three structurally complex areas having week airborne conductors. One weak conductor has been identified on each of the three grids. 4.9 La Peltrie (Au), operated by Midland Property Description As at September 2018, the La Peltrie property comprises 419 claims covering a surface area of about 23,110 hectares and encompasses possible subsidiary faults to the south of the regional Lower Detour Fault over a distance of more than 10 kilometres. - 16 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) On August 24, 2017, the Corporation acquired 4 claims from Globex Mining Enterprises Inc. (“Globex”) by granting a 1% Gross Metal royalty to Globex. On August 29, 2017, the Corporation signed an option agreement (amended August 3, 2018) with Niobay Metals Inc. (“Niobay”) whereby Niobay may earn, in two options, a maximum interest of 65% in the La Peltrie property, by fulfilling the following conditions: First Option for a 50% initial interest Upon signature (completed, 200,000 shares of Niobay received, valued at $30,000) On or before December 31, 2017 (completed) On or before January 31, 2019 On or before August 31, 2019 On or before August 31, 2020 On or before August 31, 2021 Payments in cash $ 30,000 - 30,000 50,000 70,000 70,000 250,000 Work $ - 500,000 - 400,000 600,000 1,500,000 3,000,000 Following the initial earn-in of its 50% interest, NioBay may earn an additional tranche of 15% interest for an undivided 65% interest in the Properties, by producing a Preliminary Economic Study on or before August 31, 2023. The Corporation is the operator. Exploration work on the property During Q1-18, a drilling program comprising seven (7) drill holes totalling 1,881.0 metres was completed. This program tested the best IP-OreVision targets identified on the West and Central grids. The best results of this campaign come from two drill holes spaced about 300 metres apart, which tested the gold-bearing iron formation. Drill holes LAP-17-04 and LAP-17-05 yielded 14 gold values above 0.1 g/t Au with gold intersections ranging from 0.10 g/t Au over 2.0 metres to a maximum of 1.23 g/t Au over 2.50 metres. The auriferous mineralization is hosted by semi-massive to massive pyrrhotite-bearing sulphide horizons between 10 and 60 metres thick. (Note that true thicknesses cannot be determined with the information available at this time; intervals are therefore reported in core length). The remaining drill holes in this campaign, drilled to test areas other than the iron formation, explained the IP anomalies with the presence of sulphides but no significant values were obtained. The massive sulphides occur near the contact between calc-alkaline felsic tuffs (F1-type) to the south and andesites to the north. The geochemical signature of these felsic tuffs is very similar to that of the felsic tuff and rhyolite sequences that host the Bousquet-LaRonde volcanogenic gold deposits in the Southern Abitibi. Moreover, the pyrrhotite-bearing massive sulphides show enrichments in gold, and also in silver and lead, near the contact with andesites, indicating the presence of a particularly favourable proximal exhalative horizon in this location. Integration of all the results of this campaign has led to the identification of a high-priority exploration target at the intersection between an interpreted synvolcanic fault and the favourable felsic tuff-andesite contact. This target remains to be drill-tested. An interpretation of the VTEM survey was completed by consultant Marc Boivin. He proposed ten (10) targets to be followed-up with TDEM ground surveys. Following internal discussions, one grid (VTEM LAP-1-2-4) was selected and extended for a follow-up. The TDEM survey was completed during December and a strong conductor was detected. - 17 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) 4.10 Wawagosic (Au), operated by Midland Property Description The Wawagosic property is wholly owned by Midland and is located 30 kilometres east of Detour Lake. As at September 30, 2018, it consists of 81 claims covering a surface area of about 4,493 hectares in the Abitibi region of Quebec. Some claims were dropped therefore the Corporation impaired partially for $2,143 in Fiscal 18. Exploration work on the property An heliborne High-Resolution magnetic survey was completed during the summer 2018. Several structural lineaments were interpreted. 4.11 Adam (Cu-Au), operated by Midland Property Description The Adam property is wholly owned by Midland and is located about 65 kilometres west of the town of Matagami. As at September 30, 2018, it consists of 205 claims covering a surface area of about 11,397 hectares in the Abitibi region of Quebec. Some claims were dropped therefore the Corporation impaired partially for $2,632 in Fiscal 18. The Adam property has 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. Exploration work on the property During Q2-18, an IP-OreVision survey was completed on Adam. The three grids covered the southern portion of the property where historical till gold anomalies had been identified. The survey also targeted some unexplained VTEM conductors. Two strong IP- chargeability anomalies were identified and represent new drilling targets in the southern portion of the main block east of the B26 deposit owned by SOQUEM. During Q4-18, two (2) grids were covered with ground TDEM surveys. One strong conductor was identified on Grid A while no conductor was detected on Grid B. 4.12 Mistaouac (Au), operated by Midland Property Description The Mistaouac property is wholly owned by Midland and is located about 75 kilometres to the south- west of Matagami. As at September 30, 2018, it consists of 390 claims covering a surface area of about 20,023 hectares in the Abitibi region of Quebec. Some claims were dropped therefore the Corporation impaired partially for $1,253 in Fiscal 18. Exploration work on the property An important VTEM survey was completed over the Mistaouac and Turgeon properties located in the vicinity of the Casa Berardi mine. Some new conductors have been identified on the Mistaouac West survey. For the main Mistaouac block, the VTEM detected almost the same anomalies as the previous Input surveys. - 18 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) 4.13 Turgeon (Au), operated by Midland Property Description The Turgeon property is wholly owned by Midland and is located 150 kilometres to the south-west of Matagami. As at September 30, 2018, it consists of 246 claims covering a surface area of about 13,786 hectares in the Abitibi region of Quebec. Exploration work on the property An important VTEM survey was completed over the Mistaouac and Turgeon properties located in the vicinity of the Casa Berardi mine. For the Turgeon block, a few new conductors were identified. 4.14 Manthet (Au), operated by Midland Property Description The Manthet property is wholly owned by Midland and is located about 30 kilometres north-east of Detour Lake. As at September 30, 2018, it consists of 7 claims covering a surface area of about 386 hectares in the Abitibi region of Quebec. Exploration work on the property No exploration work conducted during Fiscal 18. 4.15 Abitibi Gold (Au) operated by Midland Property Description and exploration work on the property As at September 2018, the Abitibi Gold property comprises 17 claims covering a surface area of about 943 hectares. Some projects included in Abitibi Gold were dropped therefore the Corporation wrote off $264,944 during Fiscal 18 ($130,396 in acquisition costs and $134,548 in exploration work). On May 28, 2018, the Corporation signed a letter of intent, formalized by a definitive agreement signed on July 16, 2018, whereby it sold 17 claims for $8,000 cash and a 1% NSR royalty. Exploration work on the property No exploration work conducted during Fiscal 18. GRENVILLE-APPALACHES 4.16 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, 2018 is comprised of 153 claims covering an approximate area of 7 859 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 $7,091 in Fiscal 17 the exploration property cost. - 19 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) Exploration work on the property A till geochemical survey was completed during Q1-18 to the north-east of the Weedon mine. The till survey identified a new unexplained gold and zinc anomaly to the northwest of the Lingwick deposit. A field follow-up program is in preparation for November-December. 4.17 Gatineau Zinc (Zn), operated by Midland Property Description Midland owns a 100% interest in a land position for zinc, including as at September 30, 2018, 168 claims covering 9,883 hectares distributed in the Gatineau Area, approximately 200 kilometres northwest of the city of Montreal. Some claims were dropped therefore the Corporation impaired partially for $3,808 in Fiscal 17. Exploration work on the property A gravimetric survey was completed during Q2-18 on the Bouchette property. Results show two nice anomalies coincident with dolomitic marbles to the SE of the Bouchette showing and also further to the east. 4.18 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, 2018 of 16 contiguous claims covering a total surface area of 934 hectares in joint venture 53.4% SOQUEM/ 46.6% Midland. Some claims are subject to a 1% NSR royalty and the Corporation can buy it back the royalty for $500,000 per 0.5% tranche for a total of $1,000,000. Exploration work on the property No exploration work conducted on Vermillon for Fiscal 18. JAMES BAY 4.19 James Bay Gold JV (Au), operated by Osisko Property Description On June 13, 2016, a joint-venture agreement (50%-50%) was signed with Osisko Exploration James Bay Inc. (“Osisko”) whereby Osisko and the Corporation will cooperate and combine their efforts to explore the JV Eleonore property recently staked by the two corporations. The property is located 12 kilometres southeast and northwest of Goldcorp’s Eleonore deposit. The property regroups several properties for a total of 246 claims covering a surface area of about 12,868 hectares. Each partner obtained a 0.5% NSR royalty as a mutual consideration for the constitution of the joint- venture. Exploration work on the property During Q3-18 the IP survey was completed and covered an area where a field of copper-rich, glacially transported, sub-angular diorite boulders were discovered (see the September 26, 2017 press release). Four (4) diorite boulders sampled in 2016 and 2017 returned 8.28% Cu, 6.85% Cu, 4.54% Cu and 3.45% Cu in grab samples (note that grab samples are selective by nature and values reported may not be representative of mineralized zones). The Cu±Mo±Ag±Bi geochemical signature of the boulders and the dioritic host rock suggest a porphyry copper system. These boulders are all found within a 100-meter diameter zone, which suggests a local source. - 20 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) The IP survey revealed two strong zones of chargeability anomalies that could indicate areas of disseminated copper or iron sulfides within the bedrock. The first strong IP chargeability anomaly is located less than 100 metres north-east (up-ice) from the copper-bearing boulder field and is a prime target for follow-up. The second strong IP chargeability anomaly, located about 600 metres north of the boulders, is also very interesting because it is also associated with a preeminent magnetic high and an electromagnetic anomaly that were delineated by a historical Mag-EM airborne survey performed in the area. Such a combination of magnetic and chargeability anomalies is typical of the copper-rich core zones of porphyry copper deposits, which contain both sulfides and magnetite. Trenching and channeling of the IP anomaly closest to the boulder field has revealed a significant copper-bearing mineralized horizon in TR-004. Channels yielded the following significant values: (note that all thicknesses reported in this press release are apparent thicknesses; true thicknesses cannot be determined at this time) • 2.10% Cu and 44.1 g/t Ag over 0.9 m (TR-004-G2) • 1.33% Cu and 81.2 g/t Ag over 2.0m, including 2.47% Cu and 159 g/t Ag over 1.0m (TR-004-R3) • 0.892% Cu and 10.7 g/t Ag over 0.5 m (TR-004-G3) Copper mineralization in TR-004 is hosted in a diorite that is strongly altered in epidote and mineralized in chalcopyrite-pyrite. It is very similar to the mineralization found in the nearby boulders. Trenches TR-007 and TR-008, located about 750 meters northwest of TR-004, also exposed a very significant porphyry-style quartz stockwork in a diorite/granodiorite with strong chlorite, K-feldspar, hematite, pyrite and epidote alterations. Anomalous copper grades (up to 0.05% Cu) were also found in these trenches. The trenches targeted an IP anomaly but could not explain it because of thick overburden. In addition, a grab sample of a coarse-grained granodiorite outcrop located about 1 km southeast of TR-004 also yielded 0.31% Cu, 0.32 g/t Au and 5.6 g/t Ag, hinting at the presence of additional copper mineralization as well as gold in that area. Finally, an outcrop of a felsic dyke located about 800 km meters southeast of TR-004 with massive molybdenite clusters also yielded >1 % Mo in a grab sample. 4.20 JV JB Altius (Au), operated by Midland Properties description On February 10, 2017, the Corporation signed a letter of intent creating a strategic alliance with Altius, whereby Altius and the Corporation will combine their efforts to jointly explore the gold potential of the extensive James Bay region. The Corporation is the operator. The following projects were identified as designated projects (with number of claims and hectares disclosed as at September 30, 2018): Elrond (109 claims on 5 649 hectares), Gondor (41 claims on 2 107 hectares), Helms Deep (70 on 3,699 hectares), Isengard (132 claims on 6 758 hectares), Minas Tirith (152 claims on 8,110 hectares), Moria (104 claims on 5,495 hectares), Shire (573 claims on 30,474 hectares), Mythril (66 claims on 3,378 hectares) et Fangorn (16 claims on 816 hectares). On July 13, 2018, the Corporation amended, subject to the Exchange approval, the James Bay strategic alliance (“Alliance”) memorandum of understanding (“MOU”) signed on March 30, 2017 as follow: • Altius exchanged its 50% interest in the Designated Projects for 461,487 common shares valued at $507,636, which corresponds to Altius’ portion of the accumulated expenditures on the designated projects; Altius subscribed 198,386 common shares at $1.10 which corresponds to Altius’ portion of the phase 2 approved exploration budget of 2018; • - 21 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) • • • Altius will subscribe additional common shares for its portion of future work program on the Designated Projects, at market price; If further designated projects are declared, Altius will subscribe additional common shares of the Corporation for its portion of the work programs, at market price; All designated projects share require the registration of a 2% NSR, 50% 50% to the respective parties (“Alliance Royalty”), with a mutual right of first offer on the sale of any interest in the Alliance Royalty. The MOU will expire on December 31, 2019, with an option to continue the Alliance for two additional years. The duration of this MOU can be reduced or extended by mutual consent. Exploration work on the properties During Fiscal 18, Midland completed prospecting over a new generation of reccy targets that were generated earlier this year. Prospecting was carried out on Mythril (formerly Lothlorien), Fangorn, Hel’s Deep, Minas Tirith while trenching and channel sampling was completed on Shire and Moria. The main highlight of this project is the discovery of a new significant Cu-Au-Mo-Ag mineralized system called Mythril. The mineralized system is interpreted based on outcrops and locally sourced, angular float fields. It is interpreted to be of the “Cu-Au-Mo porphyry” type. The full dimensions of the mineralization are not known yet. Midland significantly increased its land position around the discovery and plans to start geophysical surveys in the coming weeks. September 2018 Phase of Work The Cu-Au-Mo-Ag mineralized system is at least 700 meters long on surface, oriented east-west, open in both directions. Highlights • Fifty-four (54) new high-grade Cu-Au-Mo-Ag mineralized floats; average values of 2.61% Cu, 1.25 g/t Au, 0.13% Mo, 28.7 g/t Ag over the 54 floats (grab samples); maximum values of: 13.2% Cu; 16.8 g/t Au; 0.58% Mo; 112 g/t Ag. Float are concentrated in five major fields. Most of the float are angular and are interpreted to be locally derived (<100m transport distance). • Channel result of 2.74% Cu, 0.44 g/t Au, 0.06% Mo, and 24.3 g/t Ag over 2.7 meters, including 4.52% Cu, 0.65 g/t Au, 0.1% Mo, and 40.1 g/t Ag over 1.5 meters on the Celeborn showing. Mineralization open in all directions. • New “Arwen” Cu-Au-Mo-Ag mineralized float field, that returned high-grade gold values, with up to 16.8 g/t Au. It is the easternmost float field. • New “Legolas” showing with grab sample of 4.89% Cu, 1.5 g/t Au, 46 g/t Ag. October 2018 Phase of Work The copper-gold-molybdenum-silver mineralized system is now identified over 2 kilometers strike length on surface (E-W), up from 0.7 kilometers in September, and is still open in both directions. The mineralized system is interpreted based on surface Cu-Au-Mo-Ag showings. The full dimensions of the mineralization are not known yet. Highlights • Discovery of several new Cu-Au-Mo-Ag showings and one new Mo-only showing (3.04% Mo), extending the mineralized system from 0.7 kilometers to more than 2 kilometers strike length, open east and west. - 22 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) • Average values over 45 mineralized (>0.1 % Cu) grab samples from these new showings are: 2.04 % Cu, 0.36 g/t Au, 0.11 % Mo, 17.6 g/t Ag (2.85 % Cu Eq*). Maximum values of : 12.65 % Cu; 1.7 % Mo ; 1.51 g/t Au ; 69.8 g/t Ag. • Fifty-six (56) new Cu-Au-Mo-Ag mineralized floats (>0.1 % Cu) discovered in the eastern and western extensions of the system. Average values of 1.33 % Cu, 0.52 g/t Au, 0.09 % Mo, 13.3 g/t Ag (2.12 % Cu Eq*) over 56 floats (grab samples). Maximum values of : 16.95 % Cu; 4.91 g/t Au; 0.44 % Mo; 49.4 g/t Ag. Most of the floats are angular and are interpreted to be locally derived (<100m transport distance). 4.21 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 258 claims covering an area of approximately 13,532 hectares as at September 30, 2018. Exploration work on the property During Q4-17 a prospecting program was completed on the Eleonore Centre property. No significant result was obtained during this program. 4.22 James Bay Gold (Au), operated by Midland Property Description Midland owns a 100% interest on 321 claims as at September 30, 2018 covering 15,587 hectares in the James Bay Area. Some claims were dropped therefore the Corporation impaired partially for $1,657 the exploration property cost ($12,002 in Fiscal 17). Exploration work on the property Last fall on the Lasalle property, a grab sample of a silicified and foliated amphibolite containing about 1% pyrite, located in a 100 meters thick shear zone, had returned 22.6 g/t Au, as well as strongly anomalous copper, bismuth and molybdenum (note that grab samples are selective by nature and values reported may not be representative of mineralized zones). Along the same shear zone, 750 meters east, another grab sample of foliated amphibolite had returned 7.03 g/t Au and anomalous copper and bismuth. Finally, a further 800 meters east in the same shear zone, a grab sample of paragneiss with pyrite, galena and sphalerite stringers had returned 2.35 g/t Au, 105 g/t Ag, 3.32% Pb and 5.53% Zn, along with strongly anomalous bismuth and antimony. The shear zone that hosts these showings is located at the contact between metavolcanic and metasedimentary rocks, is about 100 meters thick and is now interpreted to be more than 8 kilometers long. On Galinée, prospection focussed on the northeastern part of the block, where interesting gold values were obtained in 2015 (3.63 g/t Au; 1.07 g/t Au; 0.76 g/t Au). In the same area, a shear zone about 3 meters wide containing quartz-tourmaline veins with pyrite stringers yielded gold values of 14.85 g/t Au, 4.35 g/t Au and 0.67 g/t Au (“Elsa” showing) in grab samples (note that grab samples are selective by nature and values reported are not representative of mineralized zones). This mineral assemblage and mineralization style are typical of orogenic gold deposits. Four (4) of seven (7) samples collected in the shear zone yielded more than 0.1 g/t Au. The zone is still open to the east and west. - 23 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) On Lasalle, the trenches mainly targeted a silicified and foliated amphibolite that had returned 22.6 g/t Au in a grab sample in 2017, as well as strongly anomalous copper, bismuth and molybdenum. Two channels separated by 3 meters yielded 3.08 g/t Au / 1.25 m, and 1.87 g/t Au / 1.25 m (note that all thicknesses reported in this press release are apparent thicknesses; true thicknesses cannot be determined at this time). The gold-bearing intervals occur in a one-meter wide sheared and altered zone within amphibolites, with disseminated chalcopyrite, pyrrhotite and pyrite. Some trenches also targeted a strong gold grain anomaly in till, but did not return any significant results. NORTHERN QUEBEC 4.23 Pallas (PGE), operated by Midland Property Description As at September 30, 2018, the property totals 576 claims covering approximately 26,139 hectares in the Labrador Trough («Trough») some 80 kilometres west of Kuujjuak, Québec. Some claims were dropped therefore the Corporation impaired partially for $5,923 the exploration property cost in Fiscal 17. On March 28, 2017, JOGMEC withdrew from the option agreement signed on January 21, 2014 and abandoned its right to exercise its option to acquire a 50% interest in the Pallas PGE property. Exploration work on the property No exploration work conducted on Pallas during Fiscal 18. 4.24 Willbob (Au), operated by Midland Property Description The Willbob property in the Labrador Trough consists of 1,498 claims covering about 68,789 hectares as of September 30, 2018, 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. On October 2, 2017, the Corporation signed an acquisition agreement whereby it acquired 8 claims for a $10,000 cash payment and a 2% NSR royalty of which 1% can be bought back for a payment of $1,000,000. Exploration work on the property During Q1-18, Midland received the complete and final assay results of the fall prospecting program and released the results of the drilling campaign. Prospecting Highlights The Wayne showing was first identified in August 2017, with two grab samples separated by about 200 meters that returned 32.7 g/t Au and 2.47 g/t Au, in an area that was not explored previously. First, an elevated value of 250.10 g/t Au was obtained from a single, isolated sample located about 225 meters south-east of the initial 32.7 g/t Au value. Re-sampling of the original 32.7 g/t Au sample yielded 6.54 g/t Au, while values of 40.10 g/t Au, 24.80 g/t Au, 1.94 g/t Au, 1.81 g/t Au, 1.56 g/t Au were obtained from grab samples collected in a 10 meters radius around the original sample. Another grab sample collected about 25 meters south also yielded 1.15 g/t Au. Mineralisation in the Wayne showing area consists in a quartz diorite that contains numerous mm- to cm-thick quartz veinlets; the veinlets and the wallrock are mineralized in pyrrhotite with usually no arsenopyrite. Ten (10) samples out of 29 samples collected from the Wayne area yielded more than 1 g/t Au, with three additional ones yielding between 0.1 and 1 g/t Au. - 24 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) The new Didgeridoo gold zone is located about 15 kilometers southeast of Osisko/Barrick’s Pump Pad Ridge gold showing, and about 70 kilometers south of Midland’s Golden Tooth zone. It is part of a new claim block staked in January 2017. Channel samples on Didgeridoo yielded 1.37 g/t Au / 6.1 m. Several grab samples collected north and south of this channel along the zone also yielded significant gold values: 2.77 g/t Au, 1.82 g/t Au and 0.62 g/t Au located between 15 and 40 meters north of the channel, and 2.35 g/t Au, 1.35 g/t Au, 1.235 g/t Au, 1.20 g/t Au and 0.63 g/t Au from 15 to 25 meters south. Note that grab samples are selective by nature and values reported may not be representative of mineralized zones. The Didgeridoo zone appears to be at least 60 meters long by 5 to 10 meters wide, and is open to the south. It is a shear zone with abundant fault-filling quartz-calcite veins and veinlets, along with minor disseminated pyrrhotite within the veins and in the strongly chloritized host gabbro. Six (6) grab samples out of 19 at Didgeridoo yielded more than 1 g/t Au, and four (4) samples also yielded between 0.1 and 1.0 g/t Au. Following the discovery, Midland acquired 8 adjacent claims that contain an historical gold showing that returned up to 2.8 g/t Au in grab sampling, located on-strike about 500 meters northwest of Didgeridoo. Several additional gold showings were also discovered in the Fall 2017 campaign and include (grab samples): the Cross Lake Showing (8.82 g/t Au, 39.20 g/t Ag; 1.28 g/t Au; 1.03 g/t Au), the Nak showing (6.26 g/t Au), the Lac H showing (1.75 g/t Au) and the West Smokey Bear showing (2.35 g/t Au; 2.21 g/t Au; 2.16 g/t Au; 1.23 g/t Au). Highlights of the 2017 drilling campaign The objective of the 2017 drilling campaign was primarily to test several arsenopyrite-bearing gold showings within shear zones, found in the northern corner of the project (Golden Tooth, Polar Bear, GTN, Kuni and Kuurok showings). A total of ten (10) holes totalling 3116 meters tested these shear zones. One (1) hole 189 meters deep tested the quartz-ankerite brittle veins and breccias of the Sunshine showing. Three (3) more holes also tested the Stars gold-bearing volcanogenic massive sulfide prospect at a very shallow depth (less than 25m vertical depth), for a total of 186 meters. shears. WB-17-18 Drillhole WB-17-18 tested the Sunshine showing (up to 7.16 g/t Au in surface grab sampling in 2016). Sunshine represents a different mineralization style compared to the arsenopyrite-bearing shear zones mentioned previously; it contains no arsenopyrite and is hosted within brittle structures and breccias instead of ductile-brittle intervals: 36.40 g/t Au / 0.50 m, 1.99 g/t Au / 0.45 m, and 0.50 g/t Au / 1.05 m, all found between 96.35 and 107.55 meters. Unless otherwise stated, all drill intersections reported in this report are apparent thicknesses; true thicknesses cannot be determined at this time for most intersections. Mineralization consists in a non-sheared, altered diorite containing un-mineralized quartz veins, with pyrite and pyrrhotite in the wallrock of the veins. Hole WB-17-18 confirms that the Sunshine showing is a newly recognized mineralization style that has the potential for high gold grades. The mineralized zone intersected in WB-17-18 is still open in all directions. three gold-bearing intersected Holes WB-17-09, 10 and 11 tested the extensions of the Golden Tooth gold-arsenopyrite shear zone that returned up to 3.1 g /t Au / 1.7 m in 2016 drilling. All three holes successfully intersected the zone. Hole WB-17-11 tested the zone on a section located 100m northwest of WB-16-05, and yielded 2.23 g/t Au / 1.25 m (0.91 m true width). Hole WB-17-09 tested the southwestern extension of the zone at depth, and returned 0.422 g/t Au / 2.15 m (1.32 m true width) between 280.85 and 283 meters. Finally, hole WB-17-10 tested the zone on a section 100 meters southeast of WB-16-07; it yielded 0.81 g/t Au / 1.95 m (1.43 m true width). The Golden Tooth zone was demonstrated to be at least 250 meters long on surface, continuous over more than 300 meters downdip, and is still open in all directions. Field and core observations indicate it is a classic, orogenic-style, gold-arsenopyrite shear zone, typical of many major gold deposits worldwide. - 25 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) Hole WB-17-13 tested the Kuurok arsenopyrite-bearing shear zone (up to 14.5 g/t Au in grab sample); it yielded 3.50 g/t Au / 0.35 m. In the Polar Bear area, hole WB-17-14 intersected an arsenopyrite- bearing shear zone near a diorite/mudstone contact that yielded 0.73 g/t Au / 2.7 m. In the Kuni area, numerous quartz-arsenopyrite tension veins scattered over tens of meters yielded 1.82 g/t Au / 0.55 m, 2.54 g/t Au / 0.35 m meters as well as many weakly anomalous Au values. Holes WB-17-20, 21 and 22 tested the Stars gold-bearing massive sulfide prospect at a very shallow depth (maximum of 25 meters vertical depth). Holes WB-17-21 and 22 were drilled from the same drill setup but at different angles. Both holes intersected the massive sulfide lens. WB-17-21 yielded 0.40 g/t Au, 0.79% Cu and 0.046% Co / 1.9 m, in pyrrhotite-rich massive sulfides. WB-17-22 yielded 0.49 g/t Au, 0.59% Cu and 0.042% Co / 4.55 m, including 2.56 g/t Au, 0.51% Cu and 0.153% Co over 0.45 m in pyrite-rich massive sulfides. A section of sulfides-rich black shales further down also yielded 0.28 g/t Au / 5.65 m. Hole WB-17-20, drilled on a section 25 meters to the southeast, narrowly missed the massive sulfide lens because of a surface erosion feature. Summer 2018 program During Q3-18, Midland completed a new prospecting on Willbob including channel sampling program of the Didgeridoo and Ants showings. Didgeridoo Zone Channel sampling conducted on the Didgeridoo Zone returned several gold results including an interval grading 2.30 g/t Au over 8.95 metres, including 3.56 g/t Au over 3.15 metres. This channel sample is located at the northwestern edge of trench DJ-05; the zone thus remains open to the northwest. (Note that true thicknesses of the channels cannot be determined at this time with the information available). The Didgeridoo Zone is located in the south part of the Willbob project, approximately 15 km southeast of the main gold showings found on the Kan project held by Osisko Mining and currently optioned by Barrick Gold. The Didgeridoo Zone consists of a 5 to 10-metre-wide shear zone trending NW-SE that hosts abundant fault-filling quartz-calcite veins, occurring in gabbros and quartz diorites. Up to six (6) occurrences of visible gold were observed within this zone, which was stripped over a distance of approximately 100 metres in length and which remains open at both ends. Best results – 2018 channel sampling – Didgeridoo Zone Channel DJ-05: 2.30 g/t Au over 8.95 m incl. 3.56 g/t Au over 3.15 m (open to the NW) Channel DJ-02: 4.71 g/t Au over 2.90 m incl. 9.30 g/t Au over 1.30 m Channel DJ-01: 1.67 g/t Au over 8.80 m (extension of the 2017 channel) Channel DJ-04: 1.45 g/t Au over 6.70 m Several other new promising results on Willbob The prospecting campaign has also revealed a new gold-bearing zone (“Ants”), located near the junction between the Mélèzes and Caniapiscau rivers. The Ants zone occurs as disseminated pyrrhotite-chalcopyrite and minor quartz veins in a strongly chloritized and ankeritized quartz diorite. The mineralized zone is observed on outcrop to be 70 meters long and 5 to 25 meters wide and is open to the east. A channel cut in the western part of the zone returned 0.81 g/t Au / 5.8 m, including 1.48 g/t Au / 2.8 m. Of the fourteen (14) grab samples collected on the zone, eleven (11) returned more than 0.1 g/t Au, and seven (7) returned more than 0.5 g/t Au, with a maximum of 1.8 g/t Au. The average grade of the grab samples is 0.66 g/t Au. Another grab sample of a strongly altered diorite with disseminated pyrrhotite, collected about 100 meters east of the zone, also yielded 4.27 g/t Au. It could represent a higher-grade eastern extension of the zone. - 26 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) The Wayne showing is located in the northern part of the project and was found during the 2017 prospection campaign. Several high-grade gold values were found in grab samples, including 40.1 g/t Au, 32.7 g/t Au, 24.8 g/t Au and 6.5 g/t Au, as well as several lower grade values between 1 and 2 g/t Au. The Wayne showing was trenched and channeled in 2018. Many gold-bearing intervals were found in channel sampling: 2.70 g/t Au / 0.7 m, 1.76 g/t Au / 0.5 m, 1.37 g/t Au / 1.4 m, 1.34 g/t Au / 0.7 m, 0.84 g/t Au / 1.4 m, 0.59 g/t Au / 0.7 m and 0.56 g/t Au / 0.5 m. Mineralization at Wayne occurs as tension quartz veins and fractures and with strong chlorite-ankerite-pyrrhotite alteration of the host quartz diorite. A grab sample of a 5 cm thick quartz-galena tension vein about 250 meters southeast of the Wayne showing yielded 140.5 g/t Au (“Janet” showing). The quartz diorite wallrock, mineralized in pyrrhotite- arsenopyrite, also returned 1.06 g/t Au in a grab sample. This vein is located about 25 meters west of another similar vein that returned 250.1 g/t Au in 2017. The new “Roméo” showing is located about 4 km west of the Wayne showing, in an area that was not previously explored. It is a 50 cm thick quartz vein within a quartz diorite mineralized in pyrrhotite. The vein returned 3.15 g/t Au while the host diorite yielded 1.94 g/t Au in grab samples. Finally, the Lac H showing (1.75 g/t Au in a 2017 grab sample) was revisited and manually trenched. Further grab sampling revealed the following gold grades: 4.25 g/t Au, 3.81 g/t Au, 2.05 g/t Au, 1.37 g/t Au and 0.51 g/t Au. The Lac H showing occurs as tension fractures and quartz veinlets with pyrrhotite mineralization within a quartz diorite. (Note that gold values obtained from selected grab samples during this program are not representative of mineralized zones). During October 2018, Midland returned for an additional channel sampling program on Ants. Final results are still pending. 4.25 Soissons (Ni-Cu-Co), operated by Midland Exploration work on the property During Q2-18, Midland announced the acquisition by map staking of a new, 100% owned, nickel- copper-cobalt project in the Churchill geological province, Quebec. This new project consists of a total of 175 claims covering about 8,226 hectares and is located approximately 150 kilometers southeast of the town of Kuujjuaq, Quebec. The new project, called Soissons, covers a series of Ni-Cu-Co showings associated with two distinct troctolite to olivine-bearing gabbronorite intrusions (Soissons intrusive suite). Work done in 2000 and 2001 by previous explorers revealed the following Ni-Cu-Co grades in grab samples: 1.22% Ni, 0.5% Cu, 0.06% Co; 1.03% Ni, 0.47% Cu, 0.05% Co (Papavoine showing); 0.63% Ni, 0.15% Cu, 0.04% Co (A14-1W showing); 0.67% Ni, 0.43% Cu, 0.05% Co (A14-1E showing); 0.30% Ni, 0.29% Cu, 0.03% Co (A17-1 showing) (note that grab samples are selective by nature and may not be representative of mineralized zones). A limited drilling campaign in 2001 (9 drill holes) also revealed the following intersections: 1.07% Ni, 0.23% Cu, 0.09% Co / 0.75m; 0.55% Ni, 0.43% Cu, 0.03% Co / 1.7m (Papavoine); 0.57% Ni, 0.29% Cu, 0.03% Co / 1.0m (Papavoine West) (note that the true thicknesses of the mineralized intervals are still undetermined). Drilling also returned several significant intervals of disseminated sulfides with Ni values between 0.1% and 0.2% over tens of meters. Re-examination of historical borehole geophysical surveys that several very promising off-hole electromagnetic anomalies remain untested in the extensions of these mineralized intervals. indicates During Q4-18, Midland completed a prospecting and channel sampling program on Soissons, final results are pending. - 27 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 4. EXPLORATION ACTIVITIES (CONT’D) 4.26 Soissons-NMEF (Ni-Cu-Co), operated by NMEF Property Description On July 27, 2018, the Corporation signed a partnership agreement (50%-50%) with NMEF, to explore an area of the Soissons property located between 50 and 100 kilometers southeast of Kuujjuaq, Nunavik, Quebec. The NMEF will be the operator of the partnership. As at September 30, 2018, this project consists of a total of 31 claims covering about 1 431 hectares Exploration work on the property A small 8 days prospecting and mapping program was conducted by the NMEF. Results of the 50 collected samples are pending. QUEBEC / LABRADOR 4.27 Ytterby (REE), operated by Midland Property Description On December 2, 2017, the last 31 claims of Ytterby Quebec were dropped while all the claims in Labrador were dropped during Fiscal 2017. The Corporation wrote off entirely the Labrador claims for $185,625. Therefore, as of December 2, 2017, the February 23, 2010 memorandum of agreement signed with JOGMEC is de facto terminated and JOGMEC has lost its 49.4% interest. Exploration work on the property No exploration work conducted during Fiscal 18. PROJECTS GENERATION Midland continued some geological compilation programs in Quebec for the acquisition of new strategic gold and base metal properties. Some projects included in Projects Generation were dropped therefore the Corporation wrote off $20,472 during Fiscal 18 ($20,278 in acquisition costs and $194 in exploration work). 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. On November 17 and 24, 2016, the Corporation completed a private placement by issuing 1,284,354 flow-through shares at $1.35 per share, for total gross proceeds of $1,733,876. In connection with the private placement, the Corporation paid finder’s fees of $60,650. Directors and officers of the Corporation participated in this placement for a total consideration of $136,100. On March 16, 2017, the Corporation completed a private placement by issuing 614,000 flow-through shares at $1.35 per share, for total gross proceeds of $828,900. - 28 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 5. FINANCING ACTIVITIES (CONT’D) On November 22, 2017, the Corporation completed a private placement by issuing a total of 1,692,854 flow-through shares at $1.35 per share, for total gross proceeds of $2,285,354. In connection with the private placement, the Corporation paid finder’s fees of $64,572. Directors and officers of the Corporation participated in this placement for a total consideration of $131,625 under the same terms as other investors. On December 5, 2018, the Corporation completed a private placement of 1,969,637 flow-through shares at $1.35 per share for total gross proceeds of $2,659,012. In connection with the private placement, the Corporation paid finder’s fees of $127,414. Directors and officers of the Corporation participated in this placement for a total consideration of $141,750 under the same terms as other investors. On May 3, 2018, 1,522,000 warrants were exercised at $1.15 for total gross proceeds of $1,750,300. 6. WORKING CAPITAL 6.1 Non-IFRS Financial Performance Measure Midland has included a non-IFRS measure, “Adjusted working capital”, to supplement its financial statements, which are presented in accordance with IFRS. Midland believes that this measure, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Corporation. Non-IFRS measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Midland has an adjusted working capital of $11,214,039 as of September 30, 2018 ($11,678,771 as of September 30, 2017) which is calculated as follows: Current assets Investments – non-current portion Current liabilities Adjusted working capital 6.2 Cash flow required Fiscal 18 $ 10,639,766 1,200,000 (625,727) 11,214,039 Fiscal 17 $ 12,497,871 - (819,100) 11,678,771 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. - 29 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 6. WORKING CAPITAL (CONT’D) 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 December 2018 flow-through private placement of $2,659,012) Mining credits of preceding years Staking and property maintenance Total Annualized $ 1 400 000 (240 000) 4 000 000 (920 000) 250 000 4 490 000 7. SUMMARY OF RESULTS PER QUARTERS For the eight most recent quarters: Project management fees Net earnings (loss) Loss per share Total assets Q4-18 $ Q3-18 $ Q2-18 $ Q1-18 $ 27,085 (450,974) (0.01) 29,736,269 29,361 139,272 - 29,690,768 7,589 (233,834) - 27,692,038 45,513 (261,994) (0.01) 27,955,415 Q4-17 $ Q3-17 $ Q2-17 $ Q1-17 $ Project management fees Net loss Loss per share Total assets 25,587 (550,307) (0.01) 26,477,605 12,850 (110,435) - 26,956,987 24,997 (261,195) - 27,010,601 32,759 (292,119) (0.01) 25,846,801 No adjustments were required following the adoption of IFRS 15 (see Section 16). A $360,900 recovery of deferred income taxes (non-cash item) was recognized in Q3-18 ($169,110 in Q3-17) to record the amortization, in proportion of the work completed, of the premium related to flow- through shares renunciation following the November 2017 private placement (November 2016 and March 2017 in Q3-17). 8. FOURTH QUARTER The Corporation reported a loss of $450,947 for Q4-18 compared to a loss of $550,307 for Q4-17. The Corporation earned project management fees are stable at $27,085 in Q4-18 ($25,587 in Q4-17). Total expenses are stable at $594,630 in Q4-18 compared to $615,532 in Q4-17: • Stock-based compensation (non-cash item) decreased to $35,094 ($65,705 in Q4-17). See section • 3 for the detailed explanation that influence this expense. Impairment of exploration and evaluation assets (non-cash items) increased to $281,885 ($227,584 in Fiscal 17). See section 4 for the detailed explanations. - 30 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 8. FOURTH QUARTER (CONT’D) In Fiscal 18, a $62,450 ($15,960 in Q4-17) recovery of deferred income taxes (non-cash item) was recognized. See detailed exploration in section 3 The Corporation incurred $2,162,786 ($2,261,784 in Q4-17) in exploration expenses of which $423,688 ($354,964 in Q4-17) was recharged to the partners. The exploration expenses incurred in Q4-18 were mostly executed on Willbob, Casault, Shire and Moria whereas in Q4-17, the exploration expenses were mostly executed on Willbob, Casault and BJ Altius. The Corporation acquired properties for $592,886 net mostly to buy back the 50% interest of Altius in the BJ Altius properties by issuing 461,487 common share valued at $507,636 ($99,071 net in Q4-17 mostly on BJ Altius). 9. RELATED PARTY TRANSACTIONS The following are the related party transactions that occurred in Fiscal 18: In the normal course of operations: • A firm in which René Branchaud (director and corporate secretary) is a partner charged legal fees amounting to $69,469 ($76,821 in Fiscal 17); • A company controlled by Ingrid Martin (chief financial officer) charged accounting fees totaling $131,102 ($120,964 in Fiscal 17) of which $47,634 ($51,508 in Fiscal 17) relates to her staff; • As at September 30, 2018, the balance due to the related parties amounted to $4,681 ($7,861 as at September 30, 2017). 10. SUBSEQUENT EVENTS See section 5 on financing activities. 11. OUTSTANDING SHARE DATA Common shares Options Warrants 12. STOCK OPTION PLAN As at December 6, 2018 Number 63,005,922 3,760,000 - 66,765,922 As at September 30, 2018 Number 61,036,284 3,760,000 - 64,796,284 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. The number of common shares granted is determined by the Board of Directors. On February 15, 2018, the board of directors approved an increase in the number of common shares reserved for issuance under the Corporation's fixed number stock option plan from 5,400,000 to 5,790,000. In addition, the Plan was amended to allow the extension of the exercise period during a black-out period. Such amendment to the plan was approved by the Exchange. 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. - 31 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 13. OFF-BALANCE SHEET ARRANGEMENTS The Corporation does not have any off-balance sheet arrangements. 14. COMMITMENT In February 2016, the Corporation extended the lease for five years, from March 2017 to February 2022. The rent is $31,432 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. JUDGMENTS 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. 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 $303,610 for Fiscal 18 ($232,075 for Fiscal 17). No reversal of impairment losses has been recognized for the reporting periods. - 32 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 15. CRITICAL ACCOUNTING ESTIMATES (CONT’D) 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. 15.3 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 judgment 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. NEW ACCOUNTING STANDARDS The most relevant standards, amendments and interpretations issued up to the date of the issuance of these financial statements are listed below. 16.1 Accounting standards adopted a) IFRS 15, Revenue from contracts with customers (“IFRS 15”) IFRS 15 replaces all previous revenue recognition standards, including IAS 18, Revenue, and related interpretations. The standard sets out the requirements for recognizing revenue. Specifically, the new standard introduces a comprehensive framework with the general principle being that an entity recognizes revenue to depict the transfer of promised goods and services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduces more prescriptive guidance than was included in previous standards and may result in changes to the timing of revenue for certain types of revenues. The new standard will also result in enhanced disclosures about revenue that would result in an entity providing comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. As of October 1, 2017, the Company has adopted IFRS 15 on a full retrospective basis. Management has concluded that, based on its current operations, the adoption of IFRS 15 had no significant impact on the Corporation’s financial statements. - 33 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 16. NEW ACCOUNTING STANDARDS (CONT’D) 16.2 Accounting standards issued but not yet effective a) IFRS 16 Leases In January 2016, the IASB issued IFRS 16. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, which is the customer (“lessee”) and the supplier (“lessor”). IFRS 16 replaces IAS 17, Leases (“IAS 17”), and related interpretations. Save for short term leases and leases of low value assets, all leases result in the lessee obtaining the right to use an asset at the start of the lease and, if lease payments are made over time, also obtaining financing. Accordingly, IFRS 16 will eliminates the classification of leases as either operating leases or finance leases as is required by IAS 17 and, instead, introduces a single lessee accounting model. Applying that model, a lessee is required to recognize: • assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value; and • depreciation of lease assets separately from interest on lease liabilities in the statement of loss and comprehensive loss. The new standard is effective for annual periods beginning on or after January 1, 2019 with an early adoption permitted if IFRS 15 Revenue from contracts with customers is also applied. The Corporation has presently only one lease affected by IFRS 16, described in Section 14. Management has not yet evaluated the impact that this new standard will have on its financial statements. 17. 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, 2018 financial statements. 18. 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. 18.1 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. - 34 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 18. RISK FACTORS (CONT’D) 18.2 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. 18.3 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. 18.4 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. 18.5 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. 18.6 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. 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. - 35 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 18. RISK FACTORS (CONT’D) 18.7 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. 18.8 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. 18.9 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. 18.10 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. 18.11 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. - 36 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2018 18. RISK FACTORS (CONT’D) 18.12 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. 18.13 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. 19. FORWARD 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 6, 2018 (s) Gino Roger Gino Roger President and CEO (s) Ingrid Martin Ingrid Martin CFO - 37 - December 6, 2018 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, 2018 and 2017 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 2500, Montréal, Quebec, Canada H3B 4Y1 T: +1 514 205 5000, F: +1 514 876 1502 “PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership. - 38 - Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Midland Exploration Inc. as at September 30, 2018 and 2017 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 - 39 - Midland Exploration Inc. Statements of Financial Position As at September 30, 2018 and 2017 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 Total current assets Non-current assets Investments - non-current portion (note 6) Tax credits and mining rights receivable – non-current portion Listed shares Exploration and evaluation assets (note 7) Exploration properties Exploration and evaluation expenses Total non-current assets Total assets Liabilities Current liabilities Accounts payable and accrued liabilities Advance received for exploration work Total liabilities Equity Capital stock Warrants (note 8) Contributed surplus Deficit Total equity As at September 30 2017 2018 $ $ 2,752,286 6,550,000 123,188 295,262 830,776 88,254 10,639,766 4,628,896 6,503,910 105,995 279,945 922,454 56,671 12,497,871 1,200,000 90,274 40,000 - 117,623 33,000 2,537,747 15,228,482 17,766,229 1,896,351 11,932,760 13,829,111 19,096,503 13,979,734 29,736,269 26,477,605 625,727 - 625,727 477,838 341,262 819,100 39,352,127 - 4,756,224 (14,997,809) 29,110,542 35,142,832 1,922,031 2,679,002 (14,085,360) 25,658,505 Total liabilities and equity 29,736,269 26,477,605 The accompanying notes are an integral part of these financial statements. On behalf of the Board of Directors (s) Jean-Pierre Janson Jean-Pierre Janson Director (s) Gino Roger Gino Roger President, Director - 40 - Midland Exploration Inc. Statements of Comprehensive Loss For the years ended September 30, 2018 and 2017 Revenues Project management fees 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 Gain on disposal of mining assets Impairment of exploration and evaluation assets (note 7) Operating expenses Other gains or losses Interest income Change in fair value - listed shares Loss before income taxes Fiscal 18 $ Fiscal 17 $ 109,548 96,193 540,288 192,395 59,702 59,935 151,595 50,658 160,203 78,264 229,973 3,000 (8,000) 303,610 1,821,623 584,630 285,429 64,091 55,988 133,918 43,404 173,937 67,665 216,730 6,840 - 232,075 1,864,707 203,475 7,000 210,475 169,368 3,000 172,368 (1,501,600) (1,596,146) Recovery of deferred income taxes (note 11) 694,070 382,090 Loss and comprehensive loss Basic and diluted loss per share (note 10) (807,530) (1,214,056) (0.01) (0.02) The loss and comprehensive loss are solely attributable to Midland Exploration Inc. shareholders. The accompanying notes are an integral part of these financial statements. - 41 - Midland Exploration Inc. Statements of Changes in Equity For the years ended September 30, 2018 and 2017 Number of shares outstanding Capital stock $ Warrants $ Contributed surplus $ Deficit $ Balance at October 1, 2017 Loss and comprehensive loss 57,161,557 - 35,142,832 - Private placement 198,386 218,225 Flow-through private placement Less: premium 1,692,854 - 1,692,854 2,285,354 (694,070) 1,591,284 1,922,031 2,679,002 (14,085,360) (807,530) - - - - - - - - - - - - - - Warrants exercised Warrants expired Acquisition of mining assets Stock-based compensation Share issue expenses 1,522,000 - 461,487 - - 1,892,150 - 507,636 - - (141,850) - (1,780,181) 1,780,181 - - 297,041 - - - - - - - (104,919) Total equity $ 25,658,505 (807,530) 218,225 2,285,354 (694,070) 1,591,284 1,750,300 - 507,636 297,041 (104,919) Balance at Sept. 30, 2018 61,036,284 39,352,127 - 4,756,224 (14,997,809) 29,110,542 Number of shares outstanding Capital stock $ Warrants $ Contributed surplus $ Deficit $ Balance at October 1, 2016 Loss and comprehensive loss 54,674,417 - 32,332,811 - 1,997,093 2,224,411 (12,759,167) (1,214,056) - - Total equity $ 23,795,148 (1,214,056) Flow-through private placement Less: premium 1,898,354 - 1,898,354 2,562,776 (382,090) 2,180,686 - - - - - - - - - 2,562,776 (382,090) 2,180,686 Warrants exercised Warrants expired Stock-based compensation Share issue expenses 588,786 - - - 629,335 - - - (69,988) (5,074) - - - 5,074 449,517 - - - - (112,137) 559,347 - 449,517 (112,137) Balance at Sept. 30, 2017 57,161,557 35,142,832 1,922,031 2,679,002 (14,085,360) 25,658,505 The accompanying notes are an integral part of these financial statements. - 42 - Fiscal 18 $ Fiscal 17 $ (807,530) (1,214,056) 192,395 303,610 (7,000) (694,070) (1,012,595) (17,193) (15,317) - (31,583) 380,957 (341,262) (24,398) (1,036,993) 218,225 2,285,354 1,750,300 (104,919) 4,148,960 (7,750,000) 6,503,910 (320,970) - - (4,343,971) 922,454 (4,988,577) (1,876,610) 4,628,896 2,752,286 285,429 232,075 (3,000) (382,090) (1,081,642) (8,562) (22,295) 5,320 6,439 (360,755) 326,226 (53 627) (1,135,269) - 2,562,776 559,347 (112,137) 3,009,986 (3,425,000) 8,729,000 (465,274) 50,000 344,624 (4,830,008) 883,423 1,286,765 3,161,482 1,467,414 4,628,896 Midland Exploration Inc. Statements of Cash Flows For the years ended September 30, 2018 and 2017 Operating activities Loss Adjustment for: Stock-based compensation Impairment of exploration and evaluation assets Variation – fair value of listed shares 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 placement Flow-through private placement Exercise of warrants Share issue expenses Investing activities Additions to investments Disposals or maturities of investments Additions to exploration properties Option payments on exploration properties Advance paid for exploration expenses 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) The accompanying notes are an integral part of these financial statements. - 43 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 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 2.1 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”). Except for the adoption of IFRS 15 – Revenue from contracts with customers as further described in note 3, 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 6, 2018. 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. - 44 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) a) Financial assets 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. Financial assets are initially measured at fair value. If the financial asset is not subsequently accounted for at fair value through profit or loss, then the initial measurement includes transaction costs that are directly attributable to the asset’s acquisition or origination. On initial recognition, the Corporation classifies its financial instruments in the following categories depending on the purpose for which the instruments were acquired. Fair value through profit and loss listed shares: Listed shares at fair value through profit and loss are equity investments recognized initially at fair value and subsequently measured at fair value. Gains or losses arising from changes in fair value are recorded in the statement of loss and comprehensive loss. Dividend income on those investments are recognized in the statement of loss and comprehensive loss. Amortized cost: Financial assets at amortized cost are non-derivative financial assets with fixed or determinable payments constituted solely of payments of principal and interest that are held within a “held to collect” business model. Financial assets at amortized cost are initially recognized at the amount expected to be received, less, when material, a discount to reduce the financial assets to fair value. Subsequently, financial assets at amortized cost are measured using the effective interest method less a provision for expected losses. The Corporation’s cash and cash equivalents, investments and accounts receivable are classified within this category. 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. c) Impairment of financial assets Amortized cost: The expected loss is the difference between the amortized cost of the financial asset and the present value of the expected future cash flows, discounted using the instrument’s original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account. Provisions for expected losses are adjusted upwards or downwards in subsequent periods if the amount of the expected loss increases or decreases. For trade receivables, the Corporation applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the receivables. 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. - 45 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 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. • • • • 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. - 46 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 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. 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. - 47 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 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. 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. - 48 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 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 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. 3. NEW ACCOUNTING STANDARDS The most relevant standards, amendments and interpretations issued up to the date of the issuance of these financial statements are listed below. 3.1 Accounting standards adopted a) IFRS 15, Revenue from contracts with customers (“IFRS 15”) IFRS 15 replaces all previous revenue recognition standards, including IAS 18, Revenue, and related interpretations. The standard sets out the requirements for recognizing revenue. Specifically, the new standard introduces a comprehensive framework with the general principle being that an entity recognizes revenue to depict the transfer of promised goods and services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduces more prescriptive guidance than was included in previous standards and may result in changes to the timing of revenue for certain types of revenues. The new standard will also result in enhanced disclosures about revenue that would result in an entity providing comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. As of October 1, 2017, the Company has adopted IFRS 15 on a full retrospective basis. Management has concluded that, based on its current operations, the adoption of IFRS 15 had no significant impact on the Corporation’s financial statements. - 49 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 3. NEW ACCOUNTING STANDARDS (CONT’D) 3.2 Accounting standards issued but not yet effective a) IFRS 16 Leases In January 2016, the IASB issued IFRS 16. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, which is the customer (“lessee”) and the supplier (“lessor”). IFRS 16 replaces IAS 17, Leases (“IAS 17”), and related interpretations. Save for short term leases and leases of low value assets, all leases result in the lessee obtaining the right to use an asset at the start of the lease and, if lease payments are made over time, also obtaining financing. Accordingly, IFRS 16 will eliminates the classification of leases as either operating leases or finance leases as is required by IAS 17 and, instead, introduces a single lessee accounting model. Applying that model, a lessee is required to recognize: • assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value; and depreciation of lease assets separately from interest on lease liabilities in the statement of loss and comprehensive loss. • The new standard is effective for annual periods beginning on or after January 1, 2019 with an early adoption permitted if IFRS 15 Revenue from contracts with customers is also applied. The Corporation has presently only one lease affected by IFRS 16, described in note 13. Management has not yet evaluated the impact that this new 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. JUDGMENTS 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. - 50 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 4. CRITICAL ACCOUNTING ESTIMATES, JUDGMENTS AND ASSUMPTIONS (CONT’D) 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 $303,610 for the year ended September 30, 2018 (“Fiscal 18”) ($232,075 for the year ended September 30, 2017 (“Fiscal 17”)). 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. 4.3 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. 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 judgment 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. - 51 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 5. CASH AND CASH EQUIVALENTS Cash Guaranteed investment certificates bearing interest between 0.80% and 1.15%, maturing between December 5, 2017 and June 6, 2018 As at September 30 2018 $ 2,752,286 2017 $ 328,896 - 2,752,286 4,300,000 4,628,896 All the exploration work imposed by the November 2016 and March 2017 flow-through financings was completed before September 30, 2017. Also, all the exploration work imposed by the November 2017 flow-through financings was completed before September 30, 2018. 6. INVESTMENTS Current Guaranteed investment certificates, not cashable before the expiry date, between 1.71% and 2.65% interest payable annually, maturing between December 6, 2018 and July 16, 2019, with a maturity value of $6,694,220 Guaranteed investment certificates, not cashable before the expiry date, between 1.40% and 1.95% interest payable annually, maturing between November 30, 2017 and July 23, 2018, with a maturity value of $6,605,807 Non-current Guaranteed investment certificate, not cashable before the expiry date, 2.84% interest payable annually, maturing July 16, 2020, with a maturity value of $1,234,080 As at September 30 2018 $ 2017 $ 6,550,000 - - 6,503,910 1,200,000 7,750,000 - 6,503,910 - 52 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 7. EXPLORATION AND EVALUATION ASSETS The following tables disclose the acquisition costs of exploration properties: Acquisition costs Abitibi Maritime-Cadillac Laflamme Patris Casault Jouvex Heva Valmond La Peltrie Wawagosic Adam Samson Mistaouac Turgeon Manthet Abitibi Gold Grenville- Appalaches Weedon Gatineau James Bay James Bay Au Eleonore JV Eleonore Isengard 3) Minas Tirith3) Shire3) Elrond3) Gondor3) Moria3) Helms3) Mythril Fangorn Northern Quebec Pallas PGE Willbob Soissons Soissons NMEF Project Generation Undivided interest % As at Sept. 30, 2017 $ Net Additions $ Share issuance $ Impairment $ As at Sept. 30, 2018 $ 49 74.3 100 50 50 100 100 100 100 100 100 100 100 100 100 100 100 100 100 50 100 100 100 100 100 100 100 100 100 100 100 100 50 100 290,838 122,347 87,072 26,995 45,432 57,906 10,756 101,601 - 16,830 20,166 - - - 138,669 36,703 32,102 198,893 141,681 96,972 9 943 1 491 20 511 8 144 3 088 7 721 5 197 - - 105,028 257,030 - - 85 13,625 16,982 2,989 5,565 83 4,961 (4,578) 8,678 12,695 17,593 26,240 29,386 7,776 (2,433) 2,709 2,483 6,260 21,275 45,170 733 3,743 8,088 271 229 - - 9,057 1,188 21,523 31,939 23,706 4,100 53,235 (19,493) - - - - - - - - - - - - - - - - - - - - 16,244 53,302 234,020 61,932 12,183 101,527 28,428 - - - - - - - - (5,874) - - (3,303) - - - (2 143) (2,632) (1,332) (1,253) - - (130,396) - - (1,657) - - - - - - - - - - - - - - - 290,923 130,098 104,054 29,984 47,694 57,989 15,717 97,023 6 535 26,893 36,427 24,987 29,386 7,776 5,840 39,412 34,585 203,496 162,956 142,142 26,920 58,536 262,619 70,347 15,500 109,248 33,625 9,057 1,188 126,551 288,969 23,706 4,100 (20,278) 13,464 1,896,351 302,628 507,636 (168,868) 2,537,747 1) 2) 3) Some claims were dropped and the Corporation impaired partially the property. The Company wrote off some projects included in this property since no exploration program is planned for the near future and/or dropped all the claims. Balance was grouped in BJ Altius property in Fiscal 17. - 53 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 7. EXPLORATION AND EVALUATION ASSETS (CONT’D) Acquisition costs Undivided interest % As at Sept. 30, 2016 $ Net Additions $ Option payments $ Impairment $ Abitibi Maritime-Cadillac Laflamme Patris Casault Jouvex Heva Valmond La Peltrie Adam Samson Abitibi Gold Grenville- Appalaches Weedon Gatineau James Bay James Bay Au Eleonore JV Eleonore JV BJ Altius Northern Quebec Pallas PGE Willbob Quebec Labrador Ytterby Project Generation 49 72.6 100 50 50 100 100 100 100 100 100 100 100 100 100 50 50 100 100 50.6 100 290,515 97,400 87,072 17,538 44,998 106,009 7,259 103,593 11,975 17,406 149,902 30,016 8,349 178,881 105,232 96,217 - 323 31,793 - 9,457 8,141 1,897 5,328 28,008 4,855 2,760 (11,233) 13,778 27,561 32,014 36,449 755 56,095 72,443 55,842 38,508 201,188 2,042 - 23,429 31,048 - - - - - (50,000) - (30,000) - - - - - - - - - - - - - 1,506,118 518,725 (80,000) As at Sept. 30, 2017 $ 290,838 122,347 87,072 26,995 45,432 57,906 10,756 101,601 16,830 20,166 138,669 36,703 32,102 198,893 141,681 96,972 56,095 - (6,846) 1) - - (7,707) 1) - (1,831) 1) - - - - (7,091) 1) (3,808) 1) (12,002) 1) - - - (5,923) 1) - 105,028 257,030 (2,042) 2) - (1,242) 1) (48,492) 53,235 1,896,351 1) 2) Some claims were dropped and the Corporation impaired partially the property. The Company wrote off this property since no exploration program is planned for the near future and/or dropped all the claims. - 54 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 7. EXPLORATION AND EVALUATION ASSETS (CONT’D) The following two tables disclose details of exploration and evaluation expenses: E&E expenses Undivided interest % As at Sept. 30, 2017 $ Net Additions $ Abitibi Maritime-Cadillac Laflamme Patris Casault Jouvex Heva Valmond Samson La Peltrie Wawagosic Adam Mistaouac Turgeon Manthet Abitibi Gold Grenville- Appalaches Weedon Gatineau James Bay James Bay Au Eleonore JV Eleonore Isengard2) Minas Tirith2) Shire2) Elrond2) Gondor2) Moria2) Helms2) Mythril Fangorn Northern Quebec Pallas PGE Willbob Soissons Soissons NMEF Project Generation 49 74.3 100 50 50 100 100 100 100 100 100 100 100 100 100 100 100 100 100 50 100 100 100 100 100 100 100 100 100 100 100 100 50 100 96,839 292,271 256,188 2,202,064 221,844 12,212 963,965 1,137,572 129 412,833 9,825 261,985 124,314 - 85,865 83,411 11,430 1,067,584 54,396 - 155,887 131,155 229,972 - 197,672 - 8,409 - 17,164 203,470 626,897 44,005 20,400 27,597 362,595 1,723,519 291,282 2,072 27,966 75,404 30,943 5,049 21,223 124 - - 190,656 50,292 315,038 37,109 8,856 239,923 490 29,023 169,731 32,229 46,581 10,989 538,746 2,126,873 - - 1,278 704,161 73,023 7,031 91,166 (4,076) 11,932,760 4,233,891 Option payments Tax credits Impairment $ $ $ As at Sept. 30, 2018 $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (30,414) - (221,303) - - - (1,166) (91) (21,447) (20,379) (5,470) (1,007) - 389,110 - - 2,427,838 - 234,056 - 1,880,234 412,962 - 271,810 - 124,314 - - 168,110 - 1,078,923 32,949 - 266,663 - 224,502 - 196,665 - 8,409 - (1,347) (134,548)1) 84,739 - (87) (35,585) (3,601) (23,105) (2,263) (3,111) (88,732) (27) (2,648) (67,410) (13,434) (18,366) (4,332) - (206,809) (25,741) (2,772) - - 647,297 71,515 - 517,666 - 1,770,210 583,215 - 36,918 - 33,711 - 226,595 - 31,406 - 31,424 - 123,544 - 18,919 - 28,215 - 6,657 - - 540,024 - 2,624,225 47,282 - 4,259 - (2,780) (194)1) 84,116 (803,427) (134,742) 15,228,482 1) 2) The Company wrote off some projects included in this property since no exploration program is planned for the near future and/or dropped all the claims. Balance was grouped in BJ Altius property in Fiscal 17. - 55 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 7. EXPLORATION AND EVALUATION ASSETS (CONT’D) E&E expenses Undivided interest % 49 72.6 100 50 50 100 100 100 100 100 100 100 100 100 100 50 50 100 100 Abitibi Maritime-Cadillac Laflamme Patris Casault Jouvex Heva Valmond Samson La Peltrie Adam Abitibi Gold Grenville- Appalaches Weedon Gatineau James Bay James Bay Au Eleonore JV Eleonore JV BJ Altius Northern Quebec Pallas PGE Willbob Quebec Labrador Ytterby Project Generation As at Sept. 30, 2016 $ 236,090 1,893,853 221,646 352,708 351,966 157,076 120,742 78,203 652,484 42,841 173,644 Net Additions $ 56,235 332,006 198 691,965 62,420 114,219 3,572 6,230 425,573 95,781 30,687 523,230 29,024 105,245 14,981 261,886 1,629,303 124,692 - 136,659 130,458 237,687 219,291 369,500 295,012 565,271 2,151,089 Option payments Tax credits Impairment $ $ $ As at Sept. 30, 2017 $ - - - - - - - - - - - - - - - - - - - - - - (54) (23,795) - (80,708) (1,553) (9,310) - (1,022) (10,473) (7,467) (861) (1,578) - (35,950) (36,242) (71,097) (56,510) - 292,271 - 2,202,064 221,844 - 963,965 - 412,833 - 261,985 - - 124,314 83,411 - - 1,067,584 131,155 - 203,470 - - - 626,897 44,005 - 362,595 - 1,723,519 291,282 - 162,781 - (125,766) (589,487) - 538,746 - 2,126,873 - (183,583)1) - (6,339) (1,058,212) - 91,166 (183,583) 11,932,760 50.6 183,583 - 100 74,069 23,436 8 041,811 5,132,744 1) The Company wrote off this property since no exploration program is planned for the near future. - 56 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 7. EXPLORATION AND EVALUATION ASSETS (CONT’D) 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. 7.2 Laflamme Au-Cu On August 17, 2009, the Corporation signed an agreement with Aurbec Mines Inc. (“Aurbec”), (previously a subsidiary of North American Palladium Ltd.) that was sold to Maudore Minerals Ltd in March 2013. As of July 31, 2011, Aurbec had earned its 50% interest in the Laflamme property but no longer contributed in the exploration programs from December 2012 and was therefore being diluted. On June 17, 2016, Abcourt Mines Inc. acquired the property following the bankruptcy of Aurbec. The Corporation holds 74.3% of the Laflamme property. 7.3 Patris The Corporation holds the Patris property and some claims are subject to the following NSR royalties: • 1.5%, the Corporation can buy it back for $500,000 per 0.5% tranche for a total of $1,500,000. • 1%, the Corporation can buy it back for $500,000 per 0.5% tranche for a total of $1,000,000; • 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 whereby Teck could have earned, in three options, a maximum interest of 65% in the Patris property. On March 29, 2018, the Corporation received a termination notice for the Patris option agreement. 7.4 Casault and Jouvex 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. By October 10, 2016, SOQUEM completed the $4,500,000 work commitment, acquired a 50% undivided interest in the Casault Jouvex property and is now in joint venture with the Corporation. The Corporation is the operator. 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. On April 27, 2017, the Corporation had signed an option agreement with IAMGOLD Corporation (“IAMGOLD”) whereby IAMGOLD could have earned, in three options, a maximum interest of 65% in the Héva property. On November 20, 2018, the Corporation received from IAMGOLD a termination notice for the Héva option agreement. 7.6 La Peltrie The Corporation owns the La Peltrie property and some claims are subject to a 1% Gross Metal royalty. On August 29, 2017, the Corporation signed an option agreement (amended August 3, 2019) with Niobay Metals Inc. (“Niobay”) whereby Niobay may earn, in two options, a maximum interest of 65% in the La Peltrie property, by fulfilling the following conditions: - 57 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 7. EXPLORATION AND EVALUATION ASSETS (CONT’D) First Option for a 50% initial interest Upon signature (completed, 200,000 shares of Niobay received, initially valued at $30,000) On or before December 31, 2017 (completed) On or before January 31, 2019 On or before August 31, 2019 On or before August 31, 2020 On or before August 31, 2021 Payments in cash $ Work $ 30,000 - 30,000 50,000 70,000 70,000 250,000 - 500,000 - 400,000 600,000 1,500,000 3,000,000 Following the initial earn-in of its 50% interest, NioBay may earn an additional tranche of 15% interest for an undivided 65% interest in the Properties, by producing a preliminary economic study on or before August 31, 2023. 7.7 Abitibi Gold On May 28, 2018, the Corporation signed a letter of intent, formalized by a definitive agreement signed on July 16, 2018, whereby it sold 17 claims for $8,000 cash and a 1% NSR royalty. GRENVILLVE-APPALACHES 7.8 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%, 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. JAMES BAY 7.9 James Bay Gold JV (Au) On June 13, 2016, a joint-venture agreement (50%-50%) was signed with Osisko Mining Inc. (previously Osisko Exploration James Bay Inc.) (“Osisko”) whereby Osisko and the Corporation cooperate and combine their efforts to explore the JV Eleonore property recently staked by the two corporations. The property is located 12 kilometres southeast and northwest of Goldcorp’s Eleonore deposit. Osisko is the operator. Each partner obtained a 0.5% NSR royalty as a mutual consideration for the constitution of the joint-venture. 7.10 JV JB Altius (Au) On February 10, 2017, the Corporation signed a letter of intent creating a strategic alliance with Altius Minerals Corporation (“Altius”), whereby Altius and the Corporation will combine their efforts to jointly explore the gold potential of the extensive James Bay region. The Corporation is the operator. The following projects were identified as designated projects: Elrond, Gondor, Helms Deep, Isengard, Minas Tirith, Moria, Shire, Mythril et Fangorn. - 58 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 7. EXPLORATION AND EVALUATION ASSETS (CONT’D) On July 13, 2018, the Corporation amended the James Bay strategic alliance (“Alliance”) memorandum of understanding (“MOU”) signed on March 30, 2017 as follows: • Altius exchanged its 50% interests in the Designated Projects for 461,487 common shares valued at $507,636, which corresponds to Altius’ portion of the accumulated expenditures on the designated projects; Altius subscribed 198,386 common shares at $1.10 which corresponds to Altius’ portion of the phase 2 approved exploration budget of 2018; Altius will subscribe additional common shares for its portion of future work program on the Designated Projects, at market price; If further designated projects are declared, Altius will subscribe additional common shares of the Corporation for its portion of the work programs, at market price; All designated projects share require the registration of a 2% NSR, 50% 50% to the respective parties (“Alliance Royalty”), with a mutual right of first offer on the sale of any interest in the Alliance Royalty. • • • • The MOU will expire on December 31, 2019, with an option to continue the Alliance for two additional years. The duration of this MOU can be reduced or extended by mutual consent. NORTHERN QUEBEC 7.11 Pallas PGE On March 28, 2017, JOGMEC withdrew from the option agreement signed on January 21, 2014 and abandoned its right to exercise its option to acquire a 50% interest in the Pallas PGE property. 7.12 Willbob The Corporation owns the Willbob property and some claims are subject to a 2% NSR royalty. On October 2, 2017, the Corporation signed an acquisition agreement whereby it acquired claims for a $10,000 cash payment and a 2% NSR royalty of which 1% can be bought back for a payment of $1,000,000. 7.13 Soissons-NMEF property On July 27, 2018, the Corporation signed a partnership agreement (50%-50%) with the Nunavik Mineral Exploration fund (“NMEF”), to explore an area of the Soissons property located between 50 and 100 kilometers southeast of Kuujjuaq, Nunavik, Quebec. The NMEF will be the operator of the partnership. QUEBEC / LABRADOR 7.14 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 had not yet given its notice to exercise its right. In spring 2015, JOGMEC indicated that it would not participate in the exploration program and its interest has now been diluted to 49.4%. On December 2, 2017, the last 31 claims of Ytterby Quebec were dropped while all the claims in Labrador were dropped during Fiscal 2017. The Corporation wrote off entirely the Labrador claims for $185,625 (some claims were dropped in Fiscal 16 therefore the Corporation impaired partially for $7,162 the exploration property cost and all the Quebec claims had been written off in previous years). Therefore, as of December 2, 2017, the February 23, 2010 memorandum of agreement signed with JOGMEC is de facto terminated and JOGMEC has lost its 49.4% interest. - 59 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 8. EQUITY Authorized Unlimited number of common shares without par value, voting and participating. 8.1 Private placements a) November 2016 On November 17 and 24, 2016, the Corporation completed a private placement by issuing 1,284,354 flow-through shares at $1.35 per share, for total gross proceeds of $1,733,876. On those dates, the Corporation’s share closed at $1.15 and $1.14 respectively, on the Exchange, therefore the residual value attributed to the benefit related to flow-through shares renunciation is $0.20 and $0.21 respectively, for a total value of $259,290, 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 $60,650. Directors and officers of the Corporation participated in this placement for a total consideration of $136,100 under the same terms as other investors. b) March 2017 On March 16, 2017, the Corporation completed a private placement by issuing 614,000 flow-through shares at $1.35 per share, for total gross proceeds of $828,900. On that date, the Corporation’s share closed at $1.15 on the Exchange, therefore the residual value attributed to the benefit related to flow- through shares renunciation is $0.20, for a total value of $122,800, credited to the liability related to the premium on flow-through shares. c) November 2017 On November 22, 2017, the Corporation completed a private placement by issuing 1,692,854 flow- through shares at $1.35 per share, for total gross proceeds of $2,285,354. On that date, the Corporation’s share closed at $0.94 on the Exchange, therefore the residual value attributed to the benefit related to flow-through shares renunciation is $0.41 for a total value of $694,070, 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 $64,572. Directors and officers of the Corporation participated in this placement for a total consideration of $131,625 under the same terms as other investors. 8.2 Warrants Changes in the Corporation’s number of outstanding warrants were as follows : Fiscal 18 Fiscal 17 Number Amount $ Number Amount $ Balance – Beginning of year Exercised Expired Balance – End of year 20,622,569 (1,522,000) (19,100,569) - (141,850) (1,780,181) 1,922,031 21,254,213 1,997,093 (69 988) (5 074) - 20 622 569 1 922 031 (588 786) (42 858) 8.3 Policies and processes for managing capital The capital of the Corporation consists of the items included in equity of $29,110,542 as of September 30, 2018 ($25,658,505 as of September 30, 2017). 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 debt 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, 2018 and 2017 9. EMPLOYEE REMUNERATION 9.1 Salaries Salaries Director fees 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 18 $ 1,153,221 64,500 73,585 1,291,306 (751,018) 540,288 Fiscal 17 $ 1,023,499 51,000 129,666 1,204,165 (619,535) 584,630 Fiscal 18 $ 297,041 (104,646) Fiscal 17 $ 449,517 (164,088) 192,395 285,429 The Corporation has a stock option plan (the “Plan”). The number of common shares granted is determined by the Board of Directors. On February 15, 2018, the board of directors approved an increase in the number of common shares reserved for issuance under the Corporation's fixed number stock option plan from 5,400,000 to 5,790,000. In addition, the Plan was amended to allow the extension of the exercise period during a black-out period. Such amendment to the plan was approved by the Exchange. 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 21, 2017, the Corporation granted to its directors, officers, employees and consultants 545,000 options exercisable at $1.14, 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 $288,850 for an estimated fair value of $0.53 per option. The fair value of the options granted was estimated using the Black-Scholes model with no expected dividend yield, 48% expected volatility, 1.33% 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 May 10, 2017, the Corporation granted to a director 100,000 options exercisable at $1.04, 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 $48,000 for an estimated fair value of $0.48 per option. The fair value of the options granted was estimated using the Black- Scholes model with no expected dividend yield, 48% expected volatility, 1.27% 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, 2018 and 2017 9. EMPLOYEE REMUNERATION (CONT’D) On February 15, 2018, the Corporation granted to its directors, officers, employees and consultants 570,000 options exercisable at $0.89, 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 $245,100 for an estimated fair value of $0.43 per option. The fair value of the options granted was estimated using the Black-Scholes model with no expected dividend yield, 48% expected volatility, 2.22% 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. A summary of changes in the Corporation’s common share purchase options is presented below: Fiscal 18 Fiscal 17 Weighted average exercise price $ 1.10 0.89 1.07 1.09 Number of options 3,190,000 570,000 3,760,000 3,363,334 Number of options 2,495,000 695,000 3,190,000 2,551,668 Weighted average exercise price $ 1.10 1.13 1.10 1.10 Balance – Beginning of year Granted Balance – End of year Balance – End of year exercisable The following table summarizes information about common share purchase options outstanding and exercisable as at September 30, 2018: Expiry date February 17, 2021 February 16, 2022 February 27, 2022 February 19, 2023 February 20, 2024 August 13, 2025 August 11, 2026 November 23, 2026 February 21, 2027 May 10, 2027 February 15, 2028 Number of options outstanding Number of options exercisable 260,000 315,000 20,000 345,000 605,000 450,000 500,000 50,000 545,000 100,000 570,000 3,760,000 260,000 315,000 20,000 345,000 605,000 450,000 500,000 50,000 545,000 83,334 190,000 3,363,334 Exercise price $ 1.76 1.54 1.61 1.25 0.85 0.60 1.10 1.13 1.14 1.04 0.89 - 62 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 10. LOSS PER SHARE 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 Fiscal 18 $ (807,530) 59,302,366 (0.01) Fiscal 17 $ (1,214,056) 56,669,706 (0.02) 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 18 $ Fiscal 17 $ 694,070 694,070 382,090 382,090 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 26.70% (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 18 $ (1,501,600) Fiscal 17 $ (1,596,146) (400,927) 51,369 605,619 (694,070) (262,911) 6,850 - (694,070) (428,000) 84,500 679,100 (382,090) (330,900) 4,700 - (382,090) 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 $639 000. - 63 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 11. INCOME TAXES (CONT’D) 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 18 $ Fiscal 17 $ 2,599,000 25,000 98,000 2,722,000 2,162,000 25,000 145,000 2,332,000 2,083,000 2,083,000 1,432,500 1,432,500 Deferred income tax assets not recognized 639,000 899,500 As of September 30, 2018, expiration dates of losses available to reduce future years’ income tax are: Federal $ 84,000 126,000 177,000 540,000 645,000 726,000 677,000 748,000 906,000 760,000 820,000 1,062,000 1,360,000 1,259,000 Provincial $ 69,000 112,000 183,000 514,000 631,000 713,000 663,000 736,000 891,000 749,000 811,000 1,048,000 1,343,000 1,241,000 2026 2027 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 - 64 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 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 18 $ Fiscal 17 $ 476,712 73,898 9,570 122,947 185,532 25,176 893,835 433,395 61,118 8,338 134,403 279,618 42,370 959,242 On January 1, 2015, the Corporation entered into amended employment agreements with members of the senior management which, among other things, provide 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 1, 2015, the Corporation entered into a consulting agreement with another member of 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 consulting fees will be paid. 12.2 Related party transactions In addition to the amounts listed above in the compensation to key management (note 12.1), following are the related party transactions: In the normal course of operations: ♦ A firm in which an officer is a partner charged professional fees amounting to $69,469 ($76,821 in Fiscal 17) of which $51,026 ($49,469 in Fiscal 17) was expensed and $18,443 ($27,352 in Fiscal 17) was recorded as share issue expenses; A company controlled by an officer charged professional fees of $47,634 ($51,508 in Fiscal 17) for her staff; and As at September 30, 2018, the balance due to the related parties amounted to $4,581 ($7,861 in September 30, 2017). ♦ ♦ 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 in September 2018 by Statistic Canada for a 12-month period which was 1.7%): Within 1 year 1 to 5 years After 5 years Total As of September 30, 2018 $ 32,689 82,304 - 114,993 - 65 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 13. OPERATING LEASE (CONT’D) In February 2016, the Corporation extended the lease for five years, from March 2017 to February 2022. The rent is $31,432 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 is 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 $35,832 ($31,062 in Fiscal 17). 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: 14.1 Market Risk Interest rate fair value risk Since the guaranteed investment certificates are at fixed rates, the Corporation is not exposed to interest rate risk on the instruments themselves. The Corporation’s other financial assets and liabilities do not comprise any interest rate risk since they do not bear interest. Listed shares risk Listed shares risk is the risk that the fair value of a financial instrument varies due to the changes in the Canadian mining sector and equity market. For the Corporation’s listed shares at fair value through profit and loss, a variation of plus or minus 20% of the quoted market prices as at September 30, 2018 would result in an estimated effect on the net income (loss) of $8,000. 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 18, 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. Nevertheless, the management considers the credit risk to be minimal and further disclosure are not significant. 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, 2018, 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. - 66 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2018 and 2017 14. FINANCIAL INSTRUMENTS AND RISKS (CONT’D) 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. The fair value of the listed shares at fair value through profit and loss is established using the closing price on the most beneficial active market for this instrument that is readily available to the Corporation and as such are classified as Level 1 in the fair value hierarchy. 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 Acquisition of mining assets by issuing shares Tax credits receivable applied against E&E expenses Listed shares received for option payment Exercise of warrants credited to capital stock Interest received Fiscal 2018 Fiscal 2017 $ 104,646 437,789 507,636 803,427 - 141,850 159,215 $ 164,088 204,721 - 1,058,212 30,000 69,988 213,399 16. SUBSEQUENT EVENT On December 5, 2018, the Corporation completed a private placement of 1,969,638 flow-through shares at $1.35 per share for total gross proceeds of $2,659,012. In connection with the private placement, the Corporation paid finder’s fees of $127,414. Directors and officers of the Corporation participated in this placement for a total consideration of $141,750 under the same terms as other investors. - 67 - Midland Exploration Inc. Corporate Information Directors Paul Archer 2) 3) René Branchaud 2) Germain Carrière 1) 2) Jean-Pierre Janson, Chairman of the board 1) 2) Gino Roger 3) Robert I. Valliant 1) 3) Notes: 1) Member of the Audit committee 2) Member of the Compensation and Governance Committee 3) Member of the Technical 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.midlandexploration.com Auditors PricewaterhouseCoopers, LLP 1250 René-Lévesque Boulevard West, Suite 2500 Montreal, Quebec, H3B 4Y1 Legal counsel Lavery, de Billy, L.L.P. 1 Place Ville Marie, Suite 4000 Montreal, Quebec, H3B 4M4 Transfer Agent Computershare Investor Services Inc. 1500 University, Suite 700 Montreal, Quebec, H3A 3S8 Tel.: (514) 982-7888 - 68 - 

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