Pediatrix Medical Group
Annual Report 2019

Plain-text annual report

Annual Report September 30, 2019 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 ......................................................................................................................... 29 Working Capital .............................................................................................................................. 29 Selected Annual Information ......................................................................................................... 30 Summary of Results per Quarter .................................................................................................... 30 Fourth Quarter ................................................................................................................................ 31 Related Party Transactions ............................................................................................................ 31 Events Subsequent to Year End .................................................................................................... 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 .................................................................................................... 42 Statements of Comprehensive Loss............................................................................................... 43 Statements of Change in Equity ..................................................................................................... 44 Statements of Cash Flows .............................................................................................................. 45 Notes to Financial Statements ........................................................................................................ 46 Corporate Information ..................................................................................................................... 71 - 2 - Midland Exploration Inc. Message to Shareholders For the fiscal year ended September 30, 2019 Dear shareholders, It is a sincere pleasure for me to present Midland Exploration Inc.’s (“Midland” or the “Corporation”) 2019 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 2019, we continued to strengthen our exploration team by hiring new and very talented geologists. 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 BHP Billiton Canada Inc., Agnico Eagle Mines Limited, Osisko Mining Inc., SOQUEM INC., the Nunavik Mineral Exploration Fund, and Abcourt Mines Inc. We intend to continue discussions with several potential new partners in order to rapidly conclude new option agreements. Midland continues to pursue its strategy of exploring in partnership across Quebec and achieved significant progress in 2019, with the discovery of several new mineralized zones on its various projects. The highlight of the year was certainly the private placement with BHP Billiton Canada Inc. (“BHP”) who acquired 5% of the Corporation. In April 2019, we closed this private placement with BHP, who subscribed 3,444,000 units at an issue price of $1.70 per unit, for an aggregate consideration of $5,854,800. The discovery of several Cu-Au-Mo-Ag mineralized zones on our Mythril and Mythril Regional projects in the James Bay region confirms the existence of a new regional Cu-Au-Mo-Ag district. The high-grade copper system at Mythril was traced over more than 2 kilometres on surface and in drill hole, and remains open in all directions. Extensive geophysical surveys will begin shortly on the new occurrences found in 2019, in an effort to define new drilling targets. A significant exploration budget will be devoted to this project in 2020. We also continued to generate and acquire new gold properties with very strong potential for discoveries in the Detour area and near new gold discoveries made by Wallbridge on their Fenelon project. Drilling will also resume shortly on the Vortex gold zone (Casault project), strategically located along the lateral extensions of the Detour mine and new gold zones recently discovered by Wallbridge. In addition, we also continued to increase Midland’s visibility and exposure in 2019, 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 • Drilling at Mythril (36 holes; 11,190 m) confirms several Cu-Au-Mo-Ag intervals • New Cu-Au-Mo-Ag boulder fields discovered NE of Mythril; geophysics and drilling to come • Private placement with BHP, at a price of $1.70 per unit for a total of $5.85 million • New Cu-Au-Mo-Ag occurrences discovered on the Mythril Regional project • Drilling on the Willbob Ants showing intersects 1.81 g/t Au over 12.06 metres (open to the west) • New drilling targets (3D model) identified on Maritime-Cadillac • Acquisition of 100% interest in three (3) new properties with strong gold potential totalling 205 claims (110 km2) located near recent discoveries by Wallbridge • A total of 16,195 metres drilled (60 drill holes) during the 2019 fiscal year (14,661 metres drilled during the 2018 fiscal year). Midland intends to continue aggressively exploring its various projects for gold, platinum group elements and base metals in 2020, to discover world-class deposits. An ambitious exploration program, one of the most significant since the Corporation was founded, is currently in preparation and will be deployed on the Corporation’s best projects. Midland will continue to generate several new projects and seek to rapidly conclude additional partnership agreements for properties recently acquired in 2018 and 2019. Midland also intends to continue assessing interesting business opportunities as they arise in 2020. Midland has a very strong financial position, with an adjusted working capital of more than $14 million and no debt. - 3 - Midland Exploration Inc. Message to Shareholders For the fiscal year ended September 30, 2019 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 2019. 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 2020 to make one or many significant discoveries in Quebec. (s) Gino Roger Gino Roger, P.Eng. President and CEO - 4 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 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, 2019. This MD&A should be read in conjunction with the Corporation’s audited financial statements as at September 30, 2019 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 17 Q1-18 Q2-18 Q3-18 Q4-18 Fiscal 18 Q1-19 Q2-19 Q3-19 Q4-19 Fiscal 19 Fiscal 20 Period 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 December 31, 2018 January 1, 2019 to March 31, 2019 April 30, 2019 to June 30, 2019 July 1, 2019 to September 30, 2019 October 1, 2018 to September 30, 2019 October 1, 2019 to September 30, 2020 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 2.1 Working capital Midland has an adjusted working capital of $14,017,423 as of September 30, 2019 ($11,214,039 as of September 30, 2018 which includes $1,200,000 of investments in guaranteed investment certificates with expiry dates over 1 year), which will allow the Corporation to execute its exploration program for at least the next three years (note: adjusted working capital is a non-IFRS financial performance measure which has no standard definition under IFRS. See section 6: Working Capital). 2.2 Private placements On December 5 and 18, 2018, the Corporation completed private placement of 3,044,605 flow-through shares at $1.35 per share for total gross proceeds of $4,110,218. On December 21, 2018 and January 18, 2019, the Corporation completed private placements of 1,333,333 units at a price of $0.90 per unit for total gross proceeds of $1,200,000. Each unit consisted of one common share and one half warrant. Each warrant entitles the holder to purchase one common share at a price of $1.25 for 2 years. - 5 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 2. OVERALL PERFORMANCE (CONT’D) Total proceeds for the December 2018 and January 2019 private placements totalled $5,310,128. In connection with the private placements, the Corporation incurred $321,946 share issue expenses of which $180,271 was paid as finder’s fees. Directors and officers of the Corporation participated in the flow-through private placement for a total consideration of $141,750 under the same terms as other investors. On April 17, 2019, the Corporation closed a private placement pursuant to an investment agreement (the “Investment Agreement”) with BHP Billiton Canada Inc. (“BHP”). BHP subscribed for 3,444,000 units at an issue price of $1.70 per unit for aggregate consideration of $5,854,800. Each unit will consist of one common share and one warrant. Each warrant will entitle BHP to acquire one additional common share at an exercise price of $2.05 per common share for a period of 18 months. Midland can accelerate the expiry of the warrants if the daily volume-weighted average trading price of the common shares on the Exchange exceeds $2.25 for 20 consecutive trading days at any time following 120 days after closing of the private placement. Pursuant to the terms of the Investment Agreement, BHP will be granted certain rights as long as BHP holds common shares equal to at least 5% of the issued and outstanding common shares (on a partially diluted basis), including: • • • • the right to participate in future equity financings by Midland to allow BHP to maintain its then current pro rata non-diluted ownership interest in Midland or to increase its ownership interest in Midland to a maximum of 19.99%, on a fully-diluted basis; certain top-up rights to subscribe for additional Common Shares following certain dilutive transactions to allow BHP to maintain its then current pro rata non-diluted ownership interest in Midland; the right of first offer for any non-equity financings, including any tolling arrangements, streaming arrangements, forward agreements, off-take agreements or royalty sales relating to any present or future copper exploration projects of Midland in Quebec; and the right of first offer on the Mythril project in the event Midland seeks to divest all or part of its interest. If BHP holds common shares equal to at least 15% of the issued and outstanding common shares (on a non-diluted basis), BHP will also have the right to designate one director for appointment to the Midland board of directors. On December 4, 2019, the Corporation completed a private placement by issuing 1,338,392 flow- through shares at $1.10 per share, for total gross proceeds of $1,472,231. 2.3 Outstanding share data: Common shares Options Warrants As at December 5, 2019 Number 70,216,614 4,320,000 4,110,667 78,647,281 As at September 30, 2019 Number 68,878,222 4,320,000 4,110,667 77,308,889 2.4 Update on agreements with partners On August 29, 2017, the Corporation had signed an option agreement with Niobay Metals Inc. (“Niobay”) whereby Niobay could have earned, in two options, a maximum interest of 65% in the La Peltrie property. On January 15, 2019, the Corporation received from Niobay a termination notice for the option agreement. - 6 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 2. OVERALL PERFORMANCE (CONT’D) On July 13, 2018, Altius Minerals Corporation (« Altius ») and the Corporation have signed an amended and restated memorandum of understanding (“Alliance”). 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 that corresponds to Altius’ portion of the phase 2 approved exploration budget of 2018. On February 12, 2019, the parties jointly decided to terminate the Alliance. The designated projects as per the Alliance (Elrond, Gondor, Helms Deep, Isengard, Minas Tirith, Moria, Shire, Mythril and Fangorn) maintain their net smelter return royalty of 1% in favor of Altius, on the claims that were active at the time of their designation. 3. RESULTS OF OPERATIONS As operator, Midland incurred exploration expenditures totalling $8,251,795 ($6,019,773 in Fiscal 18), on its properties of which $604,753 was recharged to its partners ($1,890,528 in Fiscal 18). The operating partners incurred $95,142 of exploration expenses ($704,099 in Fiscal 18). Also, the Corporation invested $768,003 ($337,741 in Fiscal 18) to complete several property acquisitions in Quebec of which $11,148 was recharged to its partners ($35,113 in Fiscal 18). The Corporation reported a loss of $1,142,784 in Fiscal 19 compared to $807,530 for Fiscal 18. Operating expenses increased at $2,978,895 for Fiscal 19 compared to $1,821,623 in Fiscal 18, and following are the explanations for the main variances: • Salaries increased to $620,863 ($540,288 in Fiscal 18). Bonus paid to employees have increased considering the objectives completed. • Conference and mining industry involvement $265,555 ($160,203 in Fiscal 18). Following the Mythril discovery, Midland increased its participation at conferences Xplor 2018, San Francisco, Vancouver Cambridge, Vancouver roundup, PDAC Toronto and Consorem as well as regional events. Impairment of exploration and evaluation assets increased to $1,261,081 ($303,610 in Fiscal 18) and the explanations can be found in the investing activities section presented later in this MD&A. (non-cash item) • Interest income increased to $330,999 ($203,475 in Fiscal 18) due to increased funds invested following $11,165,600 of private placement closed ($2,503,579 during Fiscal 18). A $1,554,552 ($694 070 in Fiscal 18) 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 following the November 2017 private placement (November 2016 and March 2017 in Fiscal 17). All exploration work imposed by the November 2017 flow-through financing was completed before September 30, 2018. Also, all the exploration work imposed by the December 2018 flow-through financings was completed before September 30, 2019. In addition, a $113,124 (nil in Fiscal 18) deferred income taxes was recorded; a deferred tax asset relating to share issue expense recorded in equity was offset by the deferred tax liability on mining properties and exploration expenses. - 7 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES Deferred exploration expenses Fiscal 19 e c n a l a B $ i g n n n g e b i 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 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 l y g o o e G $ 14,981 74,486 4,225 58,297 30,680 2,550 1,257 6,061 6,118 - 6,519 5,110 3,284 - 11,306 25,946 1,257 23,949 5,195 28,109 - 3,920 15,219 59,832 - 7,338 55,009 1,228,112 5,028 2,100 235,634 4,799 57,871 47,482 s c i s y h p o e G $ - 81,507 - 15,950 - - - - - - - - - - - 22,550 8,500 86,065 - - - - - - - - - 527,954 - - - - - - g n i l l i r D $ - 184,052 - 666,642 375,474 - - 173 12,806 - - - - - - - - - - - - - - - - - - 2,998,126 - - 453,690 - - - - o e G y r t s i m e h c $ - 3,994 - 131,011 5,778 - - - - - - - - - - - - 1,788 - - - - 216 - - 216 3,980 536,521 - - 27,109 6,782 - 2,185 g n i t t u c e n L i $ - 52,076 - 6,851 - - - - - - - - - - - 8,125 - - - - - - - - - - - - - - - - - - l a t o t b u S $ 14,981 396,115 4,225 878,751 411,932 2,550 1,257 6,234 18,924 - 6,519 5,110 3,284 - 11,306 56,621 9,757 111,802 5,195 28,109 - 3,920 15,435 59,832 - 7,554 58,989 5,290,713 5,028 2,100 716,433 11,581 57,871 49,667 d e s a b - k c o t S n o i t a s n e p m o c $ 775 5,661 - 16,491 5,075 1,952 - - 2,354 - 1,175 776 776 - - - - 1,176 400 5,352 - - 2,354 - - - - 42,639 - - 16,284 - - - e g r a h c e R $ - - - (398,787) (205,966) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - s t i d e r c x a T $ - (20,639) (2,045) (188,484) (346) - - (1,998) (1,574) - (921) (690) (1,534) - (1,360) - (71) (3,650) (1,384) - - - (4,764) (22,186) - (1,534) (21,111) (978,950) - - (252,023) (4,869) (14,420) (15,954) f f o - e t i r W $ - - - - - - (125,571) - - - - - - (8,409) - - (65,131) (185,457) - - (36,918) - - - (31,424) - - - - - - - - (74,781) e g n a h c t e N $ 15,756 381,137 2,180 307,971 210,695 4,502 (124,314) 4,236 19,704 - 6,773 5,196 2,526 (8,409) 9,946 56,621 (55,445) (76,129) 4,211 33,461 (36,918) 3,920 13,025 37,646 (31,424) 6,020 37,878 4,354,402 5,028 2,100 480,694 6,712 43,451 (41,068) d n e e c n a l a B 9 1 l a c s i F $ 404,866 2,808,975 236,236 2,188,205 623,657 276,312 - 172,346 1,098,627 32,949 273,436 229,698 199,191 - 94,685 703,918 16,070 441,537 1,774,421 616,676 - 37,631 239,620 69,052 - 129,564 56,797 4,382,617 11,685 542,124 3,104,919 53,994 47,710 43,048 TOTAL 15,228,482 2,031,674 742,526 4,690,963 719,580 67,052 8,251,795 103,240 (604,753) (1,540,507) (527,691) 5,682,084 20,910,566 - 8 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CON’T) Deferred exploration expenses Fiscal 18 e c n a l a B $ i g n n n g e b i 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 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) 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 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) (134,742) 3,295,722 15,228,482 - 9 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CON’T) Expenses Exploration and evaluation Properties Midland Partners Actual Fiscal 18 100% owned by Midland Patris Heva Au Valmond Samson La Peltrie 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 Generation In joint venture Maritime-Cadillac- Agnico-Eagle 51% Vermillon- Soquem 53.4% Laflamme Au – Abcourt 23.7% Casault – Soquem 50% Jouvex – Soquem 50% JV Eleonore Osisko 50% Soissons NMEF 50% Generation $ $ 12,212 893 - 85,766 1 028 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 10,379 282,303 - - 563,739 - - - - - - - - - - 36,146 966 65,831 490 22,307 47,484 17,589 - - - - - - 2,366,127 1,047,234 94,120 236 251,781 97,888 270 - 1,117,659 1,117,659 - - 306,368 324,545 7,031 7,031 - - 1,777,195 1,547,393 4,143,322 2,594,627 Total $ 22,591 283,196 - 85,766 564,767 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 10,989 379,336 - 73,023 9,765 3,413,361 192,008 506 251,781 2,235,318 - 630,913 14,062 - 3,324,588 6,737,949 Midland $ Actual Fiscal 19 Partners $ Budget Fiscal 19 Budget Fiscal 20 Total $ Midland Partners $ $ Total $ Midland Partners $ $ Total $ 4,225 2,550 1,257 6,234 18,924 - 6,519 5,110 3,284 - 11,306 56,621 9,757 111,802 5,195 - 3,920 15,435 59,832 - 7,554 58,989 5,296,529 5,028 716,433 2,100 11,581 44,335 6,464,520 14,981 - 396,115 479,964 205,966 28,109 57,871 - 1,183,006 7,647,526 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2,430 - - 398,787 205,966 28,,110 64,602 - 699,895 699,895 - 10 - 4,225 2,550 1,257 6,234 18,924 - 6,519 5,110 3,284 - 11,306 56,621 9,757 111,802 5,195 - 3,920 15,435 59,832 - 7,554 58,989 5,000 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 - 5,296,529 2,000,000 5,000 475,000 5,000 5,000 30,000 6,464,520 2,975,000 5,028 716,433 2,100 11,581 44,335 60,000 5,000 - 5,000 5,000 - 5,000 5,000 - 100,000 5,000 - 10,000 130,000 125,000 - 5,000 - 150,000 5,000 - 50,000 5,,000 - 50,000 5,000 - - 5,000 - 5,000 25,000 - 50,000 50,000 - 5,000 5,000 - 135,000 200,000 - 110,000 100,000 - - 5,000 - 5,000 5,000 - 5,000 5,000 - 10,000 - - - 5,000 - 5,000 5,000 - 10,000 - - 795,000 - 2,000,000 5,000 5,000 - 15,000 475,000 - 15,000 5,000 - 10,000 5,000 - 30,000 30,000 - 125,000 3,100,000 1,640,000 60,000 - 5,000 - 5,000 - 100,000 - 10,000 - - - 150,000 - 50,000 - 50,000 - - - 5,000 - 50,000 - 5,000 - 135,000 - 110,000 - - - 5,000 - 5,000 - 10,000 - - - 5,000 - 10,000 - 795,000 - 5,000 - 15,000 - 15,000 - 10,000 - 30,000 - - 1,640,000 150,000 300,000 150,000 17,411 - 396,115 878,751 411,932 56,219 122,473 - 50,000 - 175,000 150,000 10,000 450,000 50,000 175,000 - 150,000 - 50,000 500,000 2,000,000 2,500,000 - 1,882,901 1,025,000 855,000 2,180,000 3,035,000 8,347,421 4,000,000 1,000,000 5,000,000 2,495,000 2,180,000 4,675,000 100,000 - 150,000 900,000 350,000 300,000 100,000 - 875,000 1,900,000 50,000 - - 450,000 175,000 150,000 50,000 - 175,000 5,000 25,000 - - - 5,000 25,000 - - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) Concerning the table in the previous page: • 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 • Drilling on Mythril (36 holes; 11,190 m) confirms several Cu-Au-Mo-Ag intervals • New Cu-Au-Mo-Ag float fields discovered NE of Mythril ; IP surveys and drilling planned • New Mythril regional Cu-Au-Mo-Ag showings discovered • Drilling on Willbob Ants cuts 1.81 g/t Au over 12.06 meters (Open to the West) • New drilling targets (3D-Model) identified on Maritime-Cadillac • A total of 14,661 metres (60 holes) were drilled during Fiscal 18 (14,661 metres during Fiscal 18). 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 The Leapfrog 3D modelling and targeting effort conducted by InnovExplo, based in Val-d’Or, led to the definition of six (6) new drilling targets at shallow to moderate vertical depths, for a total of 2,585 metres of drilling including the following: • Dyke West Zone (2 drill holes; 900 m) • Dyke East Zone (2 drill holes; 840 m) • Maritime Extension Zone (2 drill holes; 845 m) These new drilling targets all correspond to significant gaps ranging from 200 to 300 metres wide, along the extensions of the Maritime-Cadillac, Dyke West and Dyke East zones, where historical drilling carried out between 2010 and 2017 yielded significant gold intercepts including: • DDH 141-10-26 (Dyke West): 8.6 g/t Au over 5.5 metres, incl. 13.8 g/t Au over 3.0 metres. • DDH 141-11-31 (Dyke East): 1.7 g/t Au over 46.4 metres, incl. 21.0 g/t Au over 1.2 metres. • DDH 141-10-23 (Dyke East): 1.7 g/t Au over 37.85 metres, incl. 12.6 g/t Au over 1.5 metres. • DDH 141-17-36 (Maritime-Cadillac): 1.46 g/t Au over 31.6 metres, incl. 2.22 g/t Au over 15.6 metres. - 11 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) A drilling proposal for six (6) holes totalling 2,585 metres has been sent to Agnico Eagle for their review. This program could start this coming winter. 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, 2019, the Laflamme property consists of a total of 453 claims covering an area of approximately 24,253 hectares and Midland holds 76.3% 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 19, therefore the Corporation impaired partially for $43,542 the exploration property cost ($5,874 in Fiscal 18). Exploration work on the property The induced polarisation (“IP”) survey conducted in the summer of 2018 led to the identification of several new drilling targets located along the contacts or at the western edge of the felsic intrusion. These targets are characterized by weak chargeability highs associated with weak resistivity variations, and coincide with the northeast end of a significant gold and copper train in tills. A drilling program consisting in four (4) holes totalling approximately 650 metres was completed during Q2-19. A new gold-bearing showing, named Longshot, was discovered in an altered diorite intrusion and returned 0.25 g/t Au over 10.0 metres, including 2.19 g/t Au over 0.7 metre from 117 m to 127 m in hole LAF-19-45. Hole LAF-19-46 intersected 0.37 g/t Au over 3.8 metres from 35.0 m to 38.8 m at about 500 metres south of LAF-19-45. The correlation between the mineralized zones (Py and quartz veins) in holes 45 and 46 and the historical IP anomalies is excellent. A 54 km Gradient IP survey was completed during the 2019 summer on Laflamme, Several new IP anomalies (high chargeability and high resistivity) were detected. A drilling program consisting in five (5) holes for 1,200 metres is in preparation and the permitting process is ongoing. 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, 2019 consists in 285 claims covering an area of approximately 11,674 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. - 12 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) 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. Some claims were dropped in Fiscal 19, therefore the Corporation impaired partially for $13,558 the exploration property cost (nil in Fiscal 18). Exploration work on the property No exploration work conducted on Patris during Fiscal 19. Midland is currently looking for a new partner for this project. 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, 2019, this property consists in 322 claims covering an area of approximately 17,726 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 The drilling campaign was completed during Q1-19 on Casault. A total of seven (7) drill holes were completed (CAS-18-116 to CAS-18-122) totaling 2,800 meters in the Vortex gold discovery area located in the western sector of Casault near the Sunday Lake Fault and at the western end of the Timiskaming conglomerate basin. Hole CAS-18-116 targeted the Vortex Zone 200 m west of hole CAS-18-110. The only values obtained above 0.1 g / t Au are isolated and are: • • • • • • • 0.284 g/t Au over 0.50m (403.0-403.50m) 0.269 g/t Au over 1,00m (394.0-395.0m) 0.239 g/t Au over 0.75m (171.85-172.6m) 0,224 g/t Au over 1.00m (429.0-430.0m) 0.190 g/t Au over 1.10m (432.5-433.60m) 0.136 g/t Au over 0.40 m (138.6-139.0m) 0.121 g/t Au over 0.95m (181.2-182.15m) Hole CAS-18-117 targeted the extension of the Vortex Zone to the East. The best value is at the beginning of the hole between 221.70-222.35m; it yielded 16.1 g/t Au over 0.65m. It is inside the gabbro, close to contact with the tuffs in a fault zone with a quartz-calcite-brecciated chlorite vein (25cm) mineralized with 1% disseminated pyrite. The Interval is strongly chloritized, unfortunately this value is isolated. Another section yielded 0.157 g/t Au over 6.5m (between 161.1-167.6m) and this section is probably related to the zone of hole CAS-13-36 which returned 0.134 g/t Au over 11.87m (between 65.13 and 77m). The 450 Vortex zone yielded 0.114 g/t Au over 8.7m. Hole CAS-18-118 was targeting an IP anomaly in contact with a magnetic maximum in a high resistivity zone. The best result returned 0.27 g / t Au over 0.90 meter between 125.40 and 126.30 meters. - 13 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) Hole CAS-18-119 was targeting an IP anomaly in contact with a magnetic maximum in a high resistivity area. It also targets the Stellar Zone 1 encountered between 33.65 and 41.60 meters in hole CAS-18- 118 located 210 meters to the north. This hole was completed at 549m. The IP target was reached between 174.65 and 176.70 meters and consisted in a zone of two (2) meters mineralized with 10- 20% of fine and coarse pyrite in the gabbro strongly altered in chlorite and injected with 50% veins and veinlets of quartz and calcite epidotized. The Stellar Zone 1 was intercepted between 511.30 and 522.75 meters in foliated and heavily weathered pillowed basalts. The heart of the area is 4.25 meters wide and contains between 15-20% pyrite and 1-2% pyrrhotite. Locally, traces of sphalerite have been observed at the exit of the Stellar Zone 1, in the pillow borders. The best results returned: • • • 0.375 g/t Au over 0.50m (308.40-308.90m) 0.387 g/t Au over 0.40m (348.15-348.55m) 0.156 g/t Au over 1.60m (360.00-361.60m) Hole CAS-18-120 was targeting an IP anomaly in contact with a magnetic maximum in a high resistivity area. The hole was interrupted at 260.6m in pillowed basalt. After 27m of casing the hole started in the pillowed basalts strongly altered in chlorite. In the first 85m we note the presence of 5 felsic dykes from 1.5m to 5m thick, they are quite dry on the mineralization side. From 107.35 to 226.15 metres, a heavily chloritized dark green gabbro was intersected. In general it is mineralized with traces of pyrite at 0.5-1% locally and contains several sections of felsic dykes that are weekly mineralised in pyrite 0.5-2%. The best result returned 0.33 g/t Au over 3.0 metres from 123.0 to 126.0 metres. Hole CAS-18-121 was targeting a magnetic high, the northern contact of the Timiskaming conglomerate basin, a weak IP anomaly and a rise in resistivity. The hole has been completed at 400.50m. The IP anomaly is explained by a sheared interval from 248.8 to 249.55m, injected with quartz veinlets + calcite and mineralized with 10-15% disseminated fine pyrite from 248.8m to 249.25m. The best results are: • • • • • 0.113 g/t Au over 0.45m (103.39-104.35m) 0.312 g/t Au over 0.40m (218.65-219.05m) 0.435 g/t Au over 0.45m (248.80-249.25m) 2.02 g/t Au over 0.90m (263.3-264.2m) 0.136 g/t Au over 0.60m (270.0-270.6m) Hole CAS-18-122 passed through the 61.6 to 181m magnetic unit which is a blocks tuff and lapillis with fragments / strips of semi-massive py and Mt as typically seen in the 475 Vortex Zone. Subsequently, the hole intercepted a non-magnetic ash tuff and ended in a deformed mafic volcanic unit (chlorite shale), which appears to be on the Sunday Lake deformation corridor. The latter is very weakly mineralized with 0.1% of locally disseminated py. The best results returned: • • • 0.43 g/t Au over 0.50 m (43.80 to 44.30m) 0.12 g/t Au over 0.80 m (46.70 to 47.50m) 1.59 g/t Au over 0.35 m (60.05 to 60.40m) Three(3) lines of IP (multi-separations) were completed on the eastern block of claims of Casault. At least three anomalies were detected and graphite-sulphides are expected. The final report is pending. A new drilling program proposal (6 ddh ; 2,500 m) is in preparation in order to test a ENE splay fault of the Sunday Lake deformation zone to the east of Vortex and north of the Timiskaming conglomerates. Drilling is expected to start during the next coming winter. - 14 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) 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, 2019 is composed of 264 claims covering an area of approximately 14,733 hectares. Some claims were dropped therefore the Corporation impaired partially for $3,702 ($3,303 in Fiscal 18). See the Casault section for the details on the agreement signed with SOQUEM. Exploration work on the property During Q2-19, a drilling program was initiated on the Jouvex property. Unfortunately, due to the lack of production and the severe weather conditions, this program was stopped after only a total of 614.0 metres of drilling before its completion. The most interesting interval came from hole JOU-19-15 which returned 0.22 g/t Au over 2.25 metres from 243.95 to 246.20 metres while testing an IP-OreVision anomaly. This zone consisted in 0.5% arsenopyrite and 1% pyrite in contact with felsic breccia volcanic. 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 No exploration work on the ground was conducted on Heva during Fiscal 19. Midland is currently looking for a new partner for this project. 4.7 Valmond (Au), operated by Midland Property Description The Corporation acquired claims by map staking about 50 kilometres to the west of the town of Matagami, Abitibi. As at September 30, 2019, this property consists in 76 claims covering an area of approximately 4,231 hectares. The Corporation wrote off the property for $143,106 in Fiscal 19. 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. - 15 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) 4.8 Samson Ni-Cu-PGE operated by Midland Property Description As at September 30, 2019, the Samson property consists of 265 claims covering a surface area of about 14,710 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 An heliborne high-resolution magnetic survey (2 blocks ) was completed on the eastern portion of the Samson property during Q4-19. The final interpretation and the report by ProspecTEM are pending. 4.9 La Peltrie (Au), operated by Midland Property Description As at September 2019, the La Peltrie property comprises 337 claims covering a surface area of about 18,548 hectares and encompasses possible subsidiary faults to the south of the regional Lower Detour Fault over a distance of more than 10 kilometres. During Fiscal 19, some claims were dropped therefore the Corporation impaired partially for $20,146. 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 had signed an option agreement with Niobay whereby Niobay could have earned, in two options, a maximum interest of 65% in the La Peltrie property. On January 15, 2019, the Corporation received from Niobay a termination notice for the option agreement. Exploration work on the property Midland is currently looking for a new partner for this project. 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, 2019, it consists of 61 claims covering a surface area of about 3,384 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 No exploration work conducted on Wawagosic during Fiscal 19. Midland is currently looking for a new partner for this project. - 16 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) 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, 2019, it consists of 176 claims covering a surface area of about 9,787 hectares in the Abitibi region of Quebec. Some claims were dropped therefore the Corporation impaired partially for $3,804 ($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 No exploration work on the ground was conducted on Adam during Fiscal 19. Midland is currently looking for a new partner for this project. 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, 2019, it consists of 213 claims covering a surface area of about 11,579 hectares in the Abitibi region of Quebec. Some claims were dropped therefore the Corporation impaired partially for $12,045 ($1,253 in Fiscal 18). Exploration work on the property No exploration work conducted on Mistaouac during Fiscal 19. Midland is currently looking for a new partner for this project. 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, 2019, it consists of 244 claims covering a surface area of about 13,675 hectares in the Abitibi region of Quebec. Exploration work on the property No exploration work on the ground was conducted on Turgeon during Fiscal 19. Midland is currently looking for a new partner for this project. 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, 2019, it consists of 7 claims covering a surface area of about 386 hectares in the Abitibi region of Quebec. The Company wrote off the property in Fiscal 19 and incurred an impairment change of $16,185. - 17 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) Exploration work on the property No exploration work conducted during Fiscal 19. 4.15 Abitibi Gold (Au) operated by Midland Property Description As at September 2019, the Abitibi Gold property comprises 2 claims covering a surface area of about 112 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 on the ground was conducted during Fiscal 19. 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, 2019 is comprised of 132 claims covering an approximate area of 7 280 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 $7,728 in Fiscal 19 the exploration property cost. Exploration work on the property During Q2-19 and IP survey was completed to the NE of the Lingwick deposit. Several weak anomalies were detected, including new axis found in the direct extension of the Lingwick deposit. A prospecting program was conducted during the Q3-19 on Weedon and several floats with anomalous values in base metals (Zn-Cu) were discovered west of the Lingwick deposit. A field follow- up program is in preparation . 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, 2019, 15 claims covering 893 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 $96,627 in Fiscal 19. - 18 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) Exploration work on the property During Q3-19, a Drone magnetic survey was completed to cover the Leitch showing. The final results show a great improvement compared to the historical ground magnetic survey. 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, 2019 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 19. JAMES BAY 4.19 Mythril (Au-Cu-Mo), operated by Midland Property Description The Mythril property and consists as at September 30, 2019 of 1966 contiguous claims covering a total surface area of 100,138 hectares. Exploration work on the property Following the significant discovery in 2018 of Cu-Mo-Au-Ag floats and surface showings on Mythril over more than 2 kilometres, Midland conducted an heliborne magnetic and electromagnetic survey totalling approximately 2,500 line-kilometres in order to cover the main Mythril block. Also, the final results of the soil geochemistry survey were received. 2018 Highlights are: • Continuous zone of copper soil anomalies that is at least 2.4 kilometres long, observed on each survey line, and from 25 to 250 metres wide. Strongest and widest copper anomalies (up to 0.12 % Cu in soil) are found on the last line to the west, still open and unexplained. • Molybdenum soil anomalies mostly overlap the copper anomalies but are clearly stronger in the eastern part of the known system. Similar Cu vs Mo zoning also observed in surface showings and float fields; typical of large magmatic-hydrothermal mineralized systems, with Cu highest in shallower/colder parts and Mo in deeper/hotter parts. Preliminary results from an airborne magnetic-electromagnetic survey indicate that the known Cu-Au-Mo-Ag showings are located at the northern edge of a strong and laterally continuous magnetic anomaly. • • Copper mineralization at Mythril is hosted in a variably altered, foliated granodiorite intrusion, previously interpreted as a quartz-feldspar paragneiss based on limited outcrop exposures. The granodiorite is cut by barren granitic pegmatite dykes and granitic dykes that host variable mineralization. Copper mineralization in the granodiorite is closely associated with decimeter- to metre-scale potassic alteration zones; visually, the latter are darker and exhibit a stronger foliation, are enriched in biotite and commonly contain magnetite. - 19 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) A dipole-dipole array IP survey covered an area of approximately 4.5 × 1.2 kilometres, with lines spaced every 100 metres and stations at 25-metre intervals (n=1 to 6) along each line. A new chargeability zone was identified along the northeast extension of Mythril, over a minimum distance of 1.3 km (open to the east). It is defined by chargeability values > 10 mV/V (up to 19 mV/V) relative to a background of 5-7 mV/V. It is locally accompanied by resistivity values as low as 2,500 ohm*m, relative to background values of 20,000 to 30,000 ohm*m. On line 37+00E, a copper-in-soil geochemical anomaly was identified last fall in the last sample collected just south of the IP anomaly. Moreover, a mineralized float was found near the IP anomaly on line 32+00E and had returned 0.17% Cu and 4.7 g/t Ag. Other chargeability anomalies, parallel to the main Mythril trend, were identified and remain unexplained. These will be the focus of a prospecting campaign next summer. An IP-Gradient survey totalling approximately 175 kilometres (lines spacing 200 m) was also completed and identified at least five (5) new target areas located in the eastern extension of the Mythril mineralized trend. 2019 Highlights are: During 2019, three (3) phases of drilling (36 holes ;11,190 metres) as well as trenching and prospecting were completed on Mythril. Highlights of Phase 1 drilling (Holes MYT-19-01 to MYT-19-10): • MYT-19-06: 1.07 % Cu, 0.37 g/t Au, 8.87 g/t Ag (1.41 % CuEq.*) over 12.55 meters, including 3.03 % Cu, 1.03 g/t Au, 24.63 g/t Ag (3.94 % CuEq.*) over 4.0 meters, and including 11.8 % Cu, 3.96 g/t Au, 81.3 g/t Ag (15.16 % CuEq.*) over 0.6 meter. • MYT-19-01: 0.23 % Cu over 54.0 meters (0.27 % CuEq.*), including 1.65 % Cu, 0.27 g/t Au and 6.88 g/t Ag over 4.93 meters (1.90 % CuEq.*). • MYT-19-03: 0.86 % Cu, 0.13 g/t Au, 12.1 g/t Ag (1.08 % CuEq.*) over 3.51 meters. • MYT-19-04: 0.97 % Cu, 0.11 g/t Au, 0.028 % Mo, 6.1 g/t Ag (1.20 % CuEq.*) over 2.5 meters. (*Metal prices used to calculate CuEq.: Au $1,285/oz, Cu $2.77/lb, Ag $15/oz, Mo $10.90/lb. Recoveries of 100% of all metals are assumed.) Highlights of Phase 2 drilling (Holes MYT-19-11 to MYT-19-26), trenching and prospecting: • Drill hole MYT-19-11 (1300E) intersected a mineralized zone grading 3.00% Cu, 1.59 g/t Au, 0.09% Mo and 21.30 g/t Ag (4.60% CuEq.*) over 3.72 metres (150.95-154.67 m); this zone is included in a wider interval that graded 1.34% Cu, 0.69 g/t Au, 0.04% Mo and 9.54 g/t Ag (2.04% CuEq.*) over 9.00 metres (147.00-156.00 m). This mineralized zone remains open below drill hole MYT-19-11. • Drill hole MYT-19-12 (300E) intersected an extensive mineralized zone grading 0.17% CuEq.* over 227.10 metres (180.80-407.90 m), including higher-grade intervals such as 2.51% Cu, 0.10 g/t Au, 0.05% Mo and 5.2 g/t Ag (2.82% CuEq.*) over 1.55 metres (266.65- 268.20 m) and 2.60% Cu, 0.20 g/t Au, 0.003% Mo and 10.7 g/t Ag (2.83% CuEq.*) over 3.05 metres (383.90-386.95 m). • Drill hole MYT-19-14 (150E) intersected a mineralized zone grading 3.55% Cu, 0.49 g/t Au, 0.006% Mo and 21.56 g/t Ag (4.07% CuEq.*) over 2.00 metres (114.50-116.50 m); this zone is included in a wider interval that graded 0.93% Cu, 0.12 g/t Au, 0.002% Mo and 5.66 g/t Ag (1.14% CuEq.*) over 9.80 metres (107.50-117.30 m). - 20 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) • Drill hole MYT-19-016 (900E) intersected numerous high-grade intervals such as 1.30 % Cu, 0.20 g/t Au, 0.26 % Mo, 8.9 g/t Ag (2.52 % Cu Equ.*) over 1 meter (240 – 241 m), 1.80 % Cu, 0.20 g/t Au, 0.02 % Mo and 8.1 g/t Ag (2.09 % Cu Equ.*) over 1.45 meter (260.95 – 262.4 m), contained within a larger interval yielding 0.11 % Cu, 0.02 g/t Au, 0.01 % Mo and 0.8 g/t Ag (0.16 % Cu Equ.*) over 130 meters (177.5 – 307.5 m). • Drill hole MYT-19-018 (900E) intersected several high-grade mineralized zones yielding grades such as 0.88 % Cu, 0.29 g/t Au, 0.02 % Mo and 7.5 g/t Ag (1.20 % Cu Equ.*) over 3.35 meters (423.3 – 426.65 m), and 3.69 % Cu, 0.62 g/t Au, 0.02 % Mo and 25.8 g/t Ag (4.40 % Cu Equ.*) over 0.5 meter (401.65 – 402.15 m). These intervals are contained within a larger zone that yielded 0.11 % Cu, 0.03 g/t Au, 0.008 % Mo, and 0.8 g/t Ag (0.16 % Cu Equ.*) over 106.24 meters (376.85 – 483.09 m). This larger zone is still open at the end of the hole. • Drill hole MYT-19-019 (2500E) tested the Haldir copper zone. It yielded 1.12 % Cu, 0.38 g/t Au, 0.06 % Mo, 7.2 g/t Ag (1.65 % Cu Equ.) over 3.35 meters (67.28 – 70.5 m). • • Drill hole MYT-19-024 (200E) intersected high-grade mineralized zones yielding 1.61 % Cu, 0.09 g/t Au, 0.01 % Mo and 6.7 g/t Ag (1.77 % Cu Equ.*) over 3.12 meters (45 – 48.12 m), and 2.16 % Cu, 0.14 g/t Au, 0.14 % Mo and 3.1 g/t Ag (2.81 % Cu Equ.*) over 1.28 meter (84 – 85.28 m). These are included in a larger zone grading 0.29 % Cu, 0.03 g/t Au, 0.007 % Mo and 1.0 g/t Ag (0.35 % Cu Equ.*) over 51.0 meters (45 – 96 m). Two channel samples spaced 5 metres apart on the Haldir/Council zone yielded high molybdenum values reaching 0.30% Mo over 2.0 metres and 0.22% Mo over 2.4 metres (open); another channel sample at the western end graded 0.41% Cu, 0.13 g/t Au, 0.04% Mo and 2.3 g/t Ag (0.67% CuEq.*) over 4.40 metres, including 0.67% Cu, 0.21 g/t Au, 0.07% Mo and 3.7 g/t Ag (1.10% CuEq.*) over 1.90 metres (open). A channel sample on the Celeborn showing returned values of 0.41% Cu, 0.15 g/t Au, 0.01% Mo and 3.0 g/t Ag (0.58% CuEq.*) over 5.10 metres, including 0.81% Cu, 0.28 g/t Au, 0.03% Mo and 7.1 g/t Ag (1.18% CuEq.*) over 1.60 metres. Three (3) new mineralized boulder fields were discovered in the west part of Mythril (sections 000E to 300E); grab samples yielded values reaching 12.0% Cu and 0.71% Mo and respective average grades are: 1.18% Cu, 0.25 g/t Au, 0.11% Mo and 14.7 g/t Ag (1.90% CuEq.*) (11 boulders – WF #1); 2.24% Cu, 0.21 g/t Au, 0.08% Mo and 10.2 g/t Ag (2.78% CuEq.*) (10 boulders – WF #2); and 0.84% Cu, 0.35 g/t Au, 0.02% Mo and 18.1 g/t Ag (1.30% CuEq.*) (5 boulders – WF #3). • • Highlights of Phase 3 drilling (Holes MYT-19-27 to MYT-19-36): • Drill hole MYT-19-33 tested the depth extension, to the west, of mineralization intersected in drill holes MYT-19-006 (1.41% CuEq.* over 12.55 metres) and MYT-19-011 (2.04% CuEq.* over 9.0 metres). The drill hole intersected seven (7) higher-grade mineralized zones from 168.0 to 261.1 metres, forming an envelope grading 0.11% Cu, 0.06 g/t Au and 2.7 g/t Ag (0.19% CuEq.*) over 93.1 metres, including 0.24% Cu, 0.22 g/t Au and 10.1 g/t Ag (0.47% CuEq.*) over 21.29 metres (223.62-244.91 metres). One of these zones is particularly enriched in precious metals, with grades of 5.43% Cu, 8.78 g/t Au and 400 g/t Ag (14.52% CuEq.*) over 0.51 metre (234.69-235.2 metres). It is characterized by a quartz-bornite vein with disseminated chalcopyrite in the granodioritic country rock. Another zone also graded 1.28% Cu, 0.09 g/t Au, 0.02% Mo and 5.5 g/t Ag (1.45% CuEq.*) over 1.4 metres, from 259.7 to 261.1 metres. • Drill hole MYT-19-029 tested the western extension of mineralization encountered in drill hole MYT-19-006. The hole intersected three high-grade mineralized intervals. The most significant graded 0.91% Cu, 0.21 g/t Au, 0.01% Mo and 6.5 g/t Ag (1.14% CuEq.*) over 3.98 metres (146.69-150.67 metres), whereas the other two yielded values of 1.28% Cu, 0.21 g/t Au, 0.15% Mo and 12.4 g/t Ag (2.11% CuEq.*) over 0.53 metre (178.3-178.83 metres), and 1.18% Cu, 0.13 g/t Au, 0.05 % Mo and 6.6 g/t Ag (1.50% CuEq.*) over 0.61 metre (224.69- 225.3 metres). - 21 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) • Drill hole MYT-19-028 tested the depth extension of mineralization intersected in drill hole MYT-19-012 (2.83% CuEq.* over 3.05 metres). It intersected a mineralized zone grading 0.56% Cu, 0.12 g/t Au and 4.1 g/t Ag (0.69% CuEq.*) over 4.1 metres (274.75-278.85 metres). This zone is included in a wider interval grading 0.17% Cu, 0.03 g/t Au and 1.1 g/t Ag (0.20% CuEq.*) over 40.25 metres (274.75-315.0 metres). • Drill hole MYT-19-032 tested the eastern extension of mineralization encountered in drill hole MYT-19-011 (2.04% CuEq.* over 9.0 metres). It intersected several mineralized intervals, including a zone grading 0.36% Cu, 0.03 g/t Au and 1.2 g/t Ag (0.41% CuEq.*) over 7.39 metres (346.61-354.0 metres). Two additional higher-grade zones yielded values of 1.20% Cu, 0.13 g/t Au, 0.07% Mo and 8.4 g/t Ag (1.62% CuEq.*) over 0.6 metre (264.36-264.96 metres), and 0.68% Cu, 0.08 g/t Au, 0.07% Mo and 2.5 g/t Ag (1.04% CuEq.*) over 0.58 metre (328.48-329.06 metres). • Drill hole MYT-19-030 tested the depth extension of mineralization intersected in drill hole MYT-19-011. Three high-grade mineralized intervals were intersected. The most significant zone graded 0.58% Cu, 0.08 g/t Au, 0.03% Mo and 4.0 g/t Ag (0.77% CuEq.*) over 3.34 metres, from 160.95 to 164.29 metres. Another zone also yielded values of 3.22% Cu, 1.70 g/t Au, 0.03% Mo and 26.2 g/t Ag (4.68% CuEq.*) over 0.5 metre (174.34-174.84 metres). These two zones are included in a wider interval grading 0.18% Cu, 0.08 g/t Au, 0.01% Mo and 1.4 g/t Ag (0.28% CuEq.*) over 23.23 metres (151.61-174.84 metres). A third zone yielded values of 0.88% Cu, 0.08 g/t Au and 6.7 g/t Ag (1.01% CuEq.*) over 1 metre (215.0- 216.0 metres). • Drill hole MYT-19-035 tested the bedrock near the Arwen gold-rich boulder field (section 3500E). It intersected a mineralized zone grading 0.17% Cu, 0.04 g/t Au, 0.11% Mo and 0.2 g/t Ag (0.61% CuEq.*) over 4.28 metres (37.10-41.38 metres), including a particularly molybdenum-rich interval, which graded 0.10% Cu, 0.02 g/t Au, 0.69% Mo and 0.2 g/t Ag over 0.51 metre (40.87-41.38 metres). Highlights of new float fields discovered NE of Mythril (August) The August prospecting campaign on Mythril led to the discovery of five (5) new significant Cu-Au-Mo- Ag mineralized float fields located several kilometers the north and northeast of the known Mythril trend. A total of 74 mineralized floats were found in five main float fields. The most important float field is located about 5 km northeast of the known Mythril trend and contains 48 floats scattered over an area of 1.2 kilometers by 200 meters large. These 48 floats yielded an average of 0.78 % Cu, 0.56 g/t Au, 0.07 % Mo and 6.73 g/t Ag, with values up to: 8.6 % Cu, 10.4 g/t Au and 25.6 g/t Ag (Sample #410279) and 0.83 % Mo (Sample #410288) from grab samples. The large number of mineralized floats in this field suggest a very local origin. Two (2) additional float fields were found about 4 kilometers northeast of Mythril and collectively yield an average of 0.39 % Cu, 0.55 g/t Au, and 6.92 g/t Ag from 4 grab samples. Two locally mineralized outcrops in the same area yielded respectively 1.17 % Cu, 0.55 g/t Au and 23.2 g/t Ag, and 0.47 % Cu, 0.52 g/t Au, 0.03 % Mo et 15.2 g/t Ag in grab samples. Finally, two (2) more mineralized float fields (21 floats) were found about 2 kilometers north of Mythril and are distinguished as being dominated by bornite over the usual chalcopyrite. These bornite-rich float fields yielded an average of 0.66 % Cu, 0.36 g/t Au and 6.14 g/t Ag from 21 grab samples, with values up to: 2.09 % Cu (Sample #410575) and 1.52 g/t Au (Sample #410574). These new discoveries highlight the very significant regional exploration potential for Cu-Au-Mo-Ag in the Mythril area. Discovery of new gold-rich boulders NE of Mythril (September) During the prospecting campaign conducted in September, several new mineralized boulders and one showing were discovered in the northeast part of the Mythril claim block. The latter are located approximately 6.5 kilometres northeast of the main Mythril area and 2 kilometres north of the Cu-Au- Mo-Ag float fields discovered in August. - 22 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) The three northernmost boulders are scattered over a distance of 150 metres and are characterized by high gold grades (2.84 g/t Au; 2.83 g/t Au; 0.59 g/t Au; grab samples) combined with low copper (<0.15% Cu) and molybdenum (<0.01% Mo) values. Mineralization consists of pyrite (up to 1%), magnetite and trace chalcopyrite in a granodiorite with biotite alteration. This is the first occurrence of predominantly gold mineralization on Mythril. Areas to the north, east and west of these boulders remain unexplored. Ten (10) new granodiorite boulders with Cu-Au-Mo-Ag mineralization were also discovered further south. These boulders yielded average grades of 0.32% Cu, 0.38 g/t Au, 0.04% Mo and 4.7 g/t Ag (grab samples). A showing with grades of 0.48% Cu, 0.93 g/t Au and 15.9 g/t Ag was also discovered in the vicinity. The boulders and the showing are also relatively gold-rich compared to other mineral occurrences on the Mythril project. These observations suggest a systematic increase in gold versus copper content to the east and north of the project. This type of multi-kilometre-scale variation is typical of large-scale hydrothermal systems. Highlights prospecting on Mythril regional • New Tornado Au-Cu-Mo showing, with values up to 4.7 g/t Au and 0.39 % Cu in grab samples; mineralized float yielding 3.13 g/t Au and 0.35 % Cu in a grab sample in the same area (Tilly claim block, Pasithee area). • New Eomer gold showing in an iron formation: 2.79 g/t Au and 1.31 g/t Au in grab samples (Tilly south claim block) • New Faramir showing yielding up to 0.34 % Cu, and the Boromir float field containing 22 mineralized floats yielding an average of 0.12 % Cu (grab samples; Tilly south claim block, western area). The showing and the floats occur as dense stockworks of quartz, chlorite, ankerite, epidote veins, in very strongly altered granitoids. • New Mo-bearing showing and floats northeast of Faramir: up to 1.72 % Mo (grab sample from a locally sourced float). • New Mo-Au-Cu showing on the new Corvette claim block: up to 3.84 g/t Au and 0.45 % Mo • (grab sample, locally sourced float); up to 1.79 % Mo (grab sample from an outcrop). Arsenopyrite-bearing tonalite float discovered on the Corvette claim block, that yielded 3.47 g/t Au and 1.1 g/t Au (grab samples). Upcoming work on Mythril The results of drilling conducted in 2019 on Mythril will be analyzed in detail and modelled in 3D during the coming weeks. An induced polarization survey is planned for the coming winter, to cover the northeast part of Mythril, including the gold-rich boulders discovered in September and the copper-rich float fields discovered in August. The geophysical survey and 3D modelling will be followed by another drilling campaign. The final results of the lake sediments survey are still pending and are expected during Q2-20. 4.20 Isengard (Au) operated by Midland Property Description The Corporation decided to drop the claims of the Isengard property since, amongst other reasons, no gold or base metals anomalies were found. The Corporation wrote off the property for $64,468 during Fiscal 19. - 23 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) 4.21 Minas Tirith, operated by Midland Property Description The Minas Tirith property consists as at September 30, 2019 of 111 contiguous claims covering a total surface area of 5,923 hectares. Some claims were dropped therefore the Corporation impaired partially for $56,994 in Fiscal-19. 4.22 Shire, operated by Midland Property Description The Shire property consists as at September 30, 2019 of 183 contiguous claims covering a total surface area of 9,734 hectares. Some claims were dropped therefore the Corporation impaired partially for $204,017 in Fiscal-19. 4.23 Elrond (Au) operated by Midland Property Description The Elrond property consists as at September 30, 2019 of 119 contiguous claims covering a total surface area of 6,167 hectares. Exploration work on the property A 6 days prospecting program was carried out during July on the Elrond project. Prospecting on Elrond has yielded further evidence of a regional intrusion-related gold system associated with late pegmatites/granites in the area (Cheechoo-type). In the southwest part of the project, a granite dyke with tourmaline trace pyrite returned 2.49 g/t Au along with a very high Bi content (0.2% Bi). Two samples of Mo-bearing tonalites/pegmatites have yielded anomalous gold values (0.11 and 0.23 g/t Au, with high Mo-Bi). A follow-up on a shear zone sampled that yield 1.81 g/t Au in 2017 yielded consistent values of 2.17 g/t Au and 1.68 g/t Au laterally. Finally, a felsic dyke sampled east of the 2017 As-bearing zone (4 g/t Au) yielded 0.45 g/t Au. 4.24 Gondor (Au) operated by Midland Property Description The Corporation decided to drop the claims of the Gondor property since, amongst other reasons, no gold anomaly was found. The Corporation wrote off the property for $47,022 during Fiscal-19. 4.25 Helm’s Deep (Au) operated by Midland Property Description The Helm’s Deep property consists as at September 30, 2019 of 70 contiguous claims covering a total surface area of 3,699 hectares. Exploration work on the property A 6 days prospecting program was carried out during July 2019 on the Helm’s Deep project. No significant result was received. - 24 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) 4.26 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 Newmont Goldcorp Corporation’s (“Goldcorp”) Eleonore deposit. The property regroups several properties for a total of 578 claims covering a surface area of about 30,281 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 No exploration work conducted on the ground on James Bay Gold JV for Fiscal 19. 4.27 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 261 claims covering an area of approximately 13,690 hectares as at September 30, 2019. Exploration work on the property Results from one day of prospecting in the south end of Eleonore Centre were received. No significant gold values were returned. 4.28 James Bay Gold (Au), operated by Midland Property Description Midland owns a 100% interest on 199 claims as at September 30, 2019 covering 10,219 hectares in the James Bay Area. Some claims were dropped therefore the Corporation impaired partially for $262,798 the exploration property cost ($1,657 in Fiscal 18). Exploration work on the property An IP survey was completed during Q2-19 in the extensions of the Elsa showing found in 2018. At least two strong anomalous IP responses were obtained. Prospecting in the vicinity of the IP anomalies was carried out during Q3-19. On Galinée, we have obtained a value of 0.90 g/t Au on an outcrop adjacent to one on which we had a 0.96 g/t Au value in June. It is a small 10cm thick semi-massive pyrite zone in an amphibolite. However, 8 other samples collected on the 0.96 g/t Au outcrop yielded low gold values. Further southeast on Galinee, two boulders of amphibolite with arsenopyrite yielded 0.79 g/t Au and 0.43 g/t Au. - 25 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) 4.29 McDuff (Cu-Au-Mo-Ag), operated by Midland Exploration work on the property A prospection campaign on the Macduff project was held in September. The 120 grab samples from the campaign are presently in process at the lab. Assays are pending. NORTHERN QUEBEC 4.30 Pallas (PGE), operated by Midland Property Description As at September 30, 2019, the property totals 349 claims covering approximately 15,822 hectares in the Labrador Trough («Trough») some 80 kilometres west of Kuujjuak, Québec. Some claims were dropped therefore the Corporation impaired partially for $49,873 the exploration property cost in Fiscal 19. Exploration work on the property No exploration work on the ground was conducted on Pallas during Fiscal 19. 4.31 Willbob (Au), operated by Midland Property Description The Willbob property in the Labrador Trough consists of 1,016 claims covering about 46,517 hectares as of September 30, 2019, and is located approximately 66 kilometres west-southwest of Kuujjuaq (Québec), near and in a geological environment similar to Midland’s Pallas Project. 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. Some claims were dropped therefore the Corporation impaired partially for $114,391 the exploration property cost in Fiscal 19. Exploration work on the property The Ants zone was discovered by surface prospecting in July 2018. It occurs as a large outcropping zone of disseminated pyrrhotite-chalcopyrite and minor quartz veins in a strongly chloritized and ankeritized quartz diorite. A single channel (ANTS-18-01) in July cut in the western part of the zone yielded 0.81 g/t Au over 5.8 meters, including 1.48 g/t Au over 2.8 meters. New channel sampling in September 2018 significantly extended the gold zone to the southeast, also yielding higher gold values. Channel ANTS-18-03, located 30 meters to the southeast of ANTS-18-02, yielded 1.78 g/t Au over 23.3 meters, including 3.19 g/t Au over 10.0 meters. The interval is still open to the southwest, as the last channel sample yielded 0.6 g/t Au. The zone is also completely open to the southeast. Channel ANTS-18-02, located about 20 meters southeast of ANTS-18-01, yielded 3.33 g/t Au over 5.0 meters. The interval is still open to the southwest, as the last sample in the channel returned 2.2 g/t Au. - 26 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) The Ants-4G zone is located approximately 100 meters east of channel ANTS-18-03. A grab sample in July had yielded 4.27 g/t Au in a diorite mineralized in pyrrhotite, with ankerite-chlorite alteration. It is visually similar to the Ants zone. Channel sampling of the Ants-4G zone returned 2.22 g/t Au over 4.5 meters in ANTS-18-04. Visible gold was observed in small tension quartz veins. Highlights 2019 drilling program (Ants and Stars) The drilling campaign, comprising eleven (11) drill holes for a total of 1,141.5 metres, was designed to test the Ants and Stars surface showings with nine (9) and two (2) drill holes respectively. During the drilling campaign on the Ants showing in September 2019, nine (9) drill holes totalling 910.5 metres were drilled (WB-19-25 to WB-19-33). Drill hole WB-19-33 was drilled the furthest to the west, near surface, on section 200E and intersected an interval grading 1.81 g/t Au over 12.06 metres from 32.14 metres to 44.20 metres, including an interval grading 2.99 g/t Au over 4.56 metres from 32.14 metres to 36.70 metres. This gold intercept remains completely open to the west and at depth. On a section located 100 metres further east (section 300E), drill hole WB-19-26 intersected an interval grading 2.09 g/t Au over 6.01 metres from 46.39 metres to 52.40 metres, including a zone grading 4.05 g/t Au over 2.50 metres from 46.90 metres to 49.40 metres. On the same section but very near surface, drill hole WB-19-25 intersected a mineralized zone grading 1.04 g/t Au over 3.20 metres from 7.80 metres to 11.0 metres. The Ants mineralized zone is characterized by the presence of sulphides, mainly composed of 1-15% pyrrhotite with trace to 1% chalcopyrite. These sulphides are disseminated or clustered in a quartz diorite host rock that is strongly altered to iron carbonates and albite and locally cut by a network of quartz-carbonate veinlets. Note that visible gold was observed in many locations. The remaining drill holes all intersected anomalous gold values associated with the mineralized diorite, thus defining an anomalous gold-bearing envelope to the north of the mineralized zone on surface, over a strike length of at least 300 metres. No significant results was obtained on Stars. Prospecting highlights on lake Canyon showings Prospecting in July had led to the discovery of three new high-grade gold showings on new claims acquired by Midland in 2019 in the lake Canyon area (press release date August 22, 2019). A follow- up campaign was done in September on these showings. On the Canyon-1 showing, a gold value of 10.2 g/t Au had been obtained in July (grab sample). New high-grade gold values were returned from the follow-up: 31.5 g/t Au, 5.95 g/t Au and 3.77 g/t Au (grab samples). Three (3) other grab samples yielded between 0.1 and 1 g/t Au and ten (10) more yielded less than 0.1 g/t Au. The Canyon-2 showing is located 250 meters northwest of Canyon-1 and had yielded 18.55 g/t Au, 4.94 g/t Au and 1.01 g/t Au in grab samples in July. Gold values of 23.5 g/t Au and 2.08 g/t Au were obtained in September on this showing (grab samples). Seven (7) grab samples yielded between 0.1 and 1 g/t Au while fourteen (14) more yielded less than 0.1 g/t Au. Finally, the Canyon-3 showing is located 30 meters north of Canyon-3 and had yielded 16.85 g/t Au in July. A value of 3.35 g/t Au was obtained in September. A float (subcrop) collected on the showing also yielded 6.64 g/t Au from a grab sample. Two (2) more grab samples collected on Canyon-3 yielded between 0.1 and 1 g/t Au and four (4) other grab samples yielded less than 0.1 g/t Au. - 27 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) 4.32 Soissons (Ni-Cu-Co), operated by Midland Property description 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. Exploration work on the property The Soissons property 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 indicates that several very promising off-hole electromagnetic anomalies remain untested in the extensions of these mineralized intervals. During Q4-18, Midland completed a prospecting and channel sampling program on Soissons Channel samples collected in 2018 graded up to 0.61% Ni, 0.31% Cu and 0.04% Co over 6.6 metres. 4.33 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, 2019, this project consists of a total of 51 claims covering about 2,362 hectares Exploration work on the property A new prospecting program was completed during Q3-19 on the JV properties and three samples returned anomalous Ni-Cu results. 4.34 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 $85,393 during Fiscal 18 ($20,472 in Fiscal 18). - 28 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 4. EXPLORATION ACTIVITIES (CONT’D) 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. Please refer to section 2.2 for private placements closed in Fiscal 19. 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 $14,017,423 as of September 30, 2019 ($11,214,039 as of September 30, 2018) which is calculated as follows: Current assets Investments – non-current portion Current liabilities Adjusted working capital 6.2 Cash flow required Fiscal 19 $ 15,074,053 - (1,056,630) 14,017,423 Fiscal 18 $ 10,639,766 1,200,000 (625,727) 11,214,039 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, 2019 6. WORKING CAPITAL (CONT’D) Working capital opening Operating expenses, excluding non-cash items Project management fees and interest income Flow-through private placement Share issue expenses Exploration budget paid by Midland Mining credits of preceding years Property maintenance Cash used Working capital ending 7 SELECTED ANNUAL INFORMATION Project management fees Loss Loss per share, basic and diluted Fiscal 19 $ 33,684 (1,142,784) (0.02) Fiscal 18 $ 109,548 (807,530) (0.01) Fiscal 20 forecast $ 14 017 000 (1 400 000) 100 000 1,472,000 (100 000) (2 495 000) 1 541 000 (447 000) (1 329 000) 12 688 000 Fiscal 17 $ 96,193 (1,214,056) (0.02) Total assets 38,615,831 29,736,269 26,477,605 2019 $ As at September 30, 2018 $ 2017 $ 8. SUMMARY OF RESULTS PER QUARTERS For the eight most recent quarters: Project management fees Net earnings (loss) Loss per share Total assets Project management fees Net earnings (loss) Loss per share Total assets Q4-19 $ Q3-19 $ Q2-19 $ Q1-19 $ 863 (862,300) (0.01) 38,615,831 1,084 483,606 0.01 39,668,731 11,609 (216,876) - 33,371,418 20,128 (547,214) (0.01) 32,934,533 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 No adjustments were required following the adoption of IFRS 15 (see Section 16). A $993,400 recovery of deferred income taxes (non-cash item) was recognized in Q3-19 ($360,900 in Q3-18) to record the amortization, in proportion of the work completed, of the premium related to flow- through shares renunciation following the December 2018 private placement (November 2017 in Q3- 18). - 30 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 9. FOURTH QUARTER The Corporation reported a loss of $962,300 for Q4-19 compared to a loss of $450,974 for Q4-18. The Corporation project management fees decreased to $863 in Q4-19 ($27,085 in Q4-18). Projects for which Midland is the operator (Casault: SOQUEM and Jouvex: SOQUEM) were less active in Q4- 19 versus Q4-18. Total expenses increased to $984,877 in Q4-19 compared to $594,630 in Q4-18: • Impairment of exploration and evaluation assets (non-cash items) increased to $661,964 ($281,885 in Fiscal 18). See section 4 for the detailed explanations. Interest income increased to $92,916 ($57,121 in T4-18) due to increased funds invested following $11,165,600 of private placement closed ($2,503,579 during Fiscal 18). A favorable change in fair value of listed shares (non-cash) of $30,000 (unfavorable for $3,000 in Q4- 18) was recorded on the Niobay Metals Inc. (‘Niobay”) shares received as part of the La Peltrie option agreement. A $1,202 deferred tax expense ($62,450 deferred income tax recovery in Q4-18) (non-cash item) was recognized. See detailed exploration in section 3 The Corporation incurred $2,942,656 ($2,162,786 in Q4-18) in exploration expenses of which $8,835 ($423,688 in Q4-18) was recharged to the partners. The exploration expenses incurred in Q4-19 were mostly executed on Mythril and Willbob whereas in Q4-18, the exploration expenses were mostly executed on Willbob, Casault, Shire and Moria. The Corporation acquired properties for $26,417 ($592,886 net in Q4-18 mostly to buy back the 50% interest of Altius in the BJ Altius properties by issuing 461,487 common shares valued at $507,636. 10. RELATED PARTY TRANSACTIONS The following are the related party transactions that occurred in Fiscal 19, In the normal course of operations: • A firm in which René Branchaud (director and corporate secretary) is a partner charged legal fees amounting to $147,281 ($69,469 in Fiscal 18) of which $38,626 ($51,026 in Fiscal 18) was expensed and $108,655 ($18,443 in Fiscal 18) was recorded as share issue expenses; • A company controlled by Ingrid Martin (chief financial officer) charged accounting fees totaling $138,976 ($131,102 in Fiscal 18) of which $57,113 ($47,634 in Fiscal 18) relates to her staff; • As at September 30, 2019, the balance due to the related parties amounted to $5,067 ($4,681 as at September 30, 2018). 11. EVENTS SUBSEQUENT TO YEAR END See section 2.2 on financing activities. 12. STOCK OPTION PLAN 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. - 31 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 12. STOCK OPTION PLAN (CONT’D) 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. 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%. The Corporation has the option to renew the lease for an additional 3 year period under the same conditions. 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. - 32 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 15. CRITICAL ACCOUNTING ESTIMATES (CONT’D) The total impairment loss of the E&E assets recognized is $1,261,081 for Fiscal 19 ($303,610 for Fiscal 18). No reversal of impairment losses has been recognized for the reporting periods. 15.2 Deferred taxes The assessment of availability of future taxable profits involves judgment. A deferred tax asset is recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilized. Judgment is also involved in the determination of the expected manner of realisation or settlement of the carrying amount of the Corporation's assets and liabilities which is expected to be through the sale of the Corporation's assets. 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 issued but not yet effective a) IFRS 16 Leases IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees: leases of “low-value” assets; and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognize the interest expense on the lease liability and the depreciation expense on the right-of-use asset. - 33 - Midland Exploration Inc. Management Discussion & Analysis For the year ended September 30, 2019 16. NEW ACCOUNTING STANDARDS (CONT’D) Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. IFRS 16 also requires more extensive disclosures than under IAS 17. Transition to IFRS 16 IFRS 16 is effective for the Corporation’s annual period beginning on October 1, 2019. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs. The Corporation plans to adopt IFRS 16 using the modified retrospective approach, which means it will apply the standard from October 1, 2019, the cumulative impact of adoption will be recognized as at October 1, 2019 and comparatives will not be restated. Since the Corporation will recognize the right-of-use assets at the amount equal to the lease liabilities less any lease accruals, there will be no impact on the deficit upon the adoption. The Corporation has presently only one lease affected by IFRS 16, described in section 14. With a 7% incremental borrowing rate, the Management anticipate recording as of October 1, 2019, a right of use asset of $159,422 and an equivalent long term lease liability (with the short term portion being $32,452). 17. FINANCIAL INSTRUMENTS For a description of the financial instruments and the risk associated, please refer to notes 2.5 and 12 of the September 30, 2019 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, 2019 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, 2019 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, 2019 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 5, 2019 (s) Gino Roger Gino Roger President and CEO (s) Ingrid Martin Ingrid Martin CFO - 37 - Midland Exploration Inc. Statements of Financial Position As at September 30, 2019 and 2018 Assets Current assets Cash Investments (note 5) Accounts receivable Sales tax receivable Tax credits and mining rights receivable Prepaid expenses Total current assets Non-current assets Investments - non-current portion (note 5) Tax credits and mining rights receivable – non-current portion Listed shares Exploration and evaluation assets (note 6) 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 7) Contributed surplus Deficit Total equity Total liabilities and equity As at September 30 2018 2019 $ $ 349,389 12,491,000 196,770 413,804 1,540,507 82,583 15,074,053 2,752,286 6,550,000 123,188 295,262 830,776 88,254 10,639,766 - - 70,000 1,200,000 90,274 40,000 2,561,212 20,910,566 23,471,778 2,537,747 15,228,482 17,766,229 23,541,778 19,096,503 38,615,831 29,736,269 1,046,240 10,390 1,056,630 625,727 - 625,727 48,230,237 749,556 5,033,761 (16,454,353) 37,559,201 39,352,127 - 4,756,224 (14,997,809) 29,110,542 38,615,831 29,736,269 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 - 42 - Midland Exploration Inc. Statements of Comprehensive Loss For the years ended September 30, 2019 and 2018 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 6) Operating expenses Other gains or losses Interest income Change in fair value - listed shares Loss before income taxes Fiscal 19 $ Fiscal 18 $ 33,684 109,548 620,863 179,497 48,266 60,428 173,338 50,228 265,555 86,970 231,785 884 - 1,261,081 2,978,895 540,288 192,395 59,702 59,935 151,595 50,658 160,203 78,264 229,973 3,000 (8,000) 303,610 1,821,623 330,999 30,000 360,999 203,475 7,000 210,475 (2,584,212) (1,501,600) Recovery of deferred income taxes (note 10) 1,441,428 694,070 Loss and comprehensive loss (1,142,784) (807,530) Basic and diluted loss per share (note 9) (0.02) (0.01) The loss and comprehensive loss are solely attributable to Midland Exploration Inc. shareholders. The accompanying notes are an integral part of these financial statements. - 43 - Midland Exploration Inc. Statements of Changes in Equity For the years ended September 30, 2019 and 2018 Number of shares outstanding Capital stock $ Warrants $ Contributed surplus $ Deficit $ Total equity $ Balance at October 1, 2018 Loss and comprehensive loss 61,036,284 - 39,352,127 - - 4,756,224 (14,997,809) (1,142,784) - - 29,110,542 (1,142,784) Private placement 4,777,333 6,305,244 749,556 Flow-through private placement Less: premium 3,044,605 - 3,044,605 4,110,218 (1,554,552) 2,555,666 Options exercised Stock-based compensation Share issue expenses 20,000 - - 17,200 - - - - - - - - - - - - - - - - 7,054,800 4,110,218 (1,554,552) 2,555,666 (5 200) 282,737 - - - (313,760) 12,000 282,737 (313,760) Balance at Sept. 30, 2019 68,878,222 48,230,237 749,556 5,033,761 (16,454,353) 37,559,201 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 Warrants exercised Warrants expired Acquisition of mining assets Stock-based compensation Share issue expenses 1,522,000 - 461,487 - - 1,892,150 - 507,636 - - 1,922,031 2,679,002 (14,085,360) (807,530) - - - - - - - - - - (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 The accompanying notes are an integral part of these financial statements. - 44 - Midland Exploration Inc. Statements of Cash Flows For the years ended September 30, 2019 and 2018 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 Prepaid expenses Accounts payable and accrued liabilities Advance received for exploration work Financing activities Private placement Flow-through private placement Exercise of warrants Exercise of stock options Share issue expenses Investing activities Additions to investments Disposals or maturities of investments Additions to exploration properties Additions to exploration and evaluation expenses Tax credits and mining rights received Net change in cash and cash equivalents Cash and cash equivalents – beginning Cash and cash equivalents – ending Additional disclosure (see note 13) Fiscal 19 $ Fiscal 18 $ (1,142,784) (807,530) 179,497 1,261,081 (30,000) (1,441,428) (1,173,634) (73,582) (118,542) 5,671 766,990 10,390 590,927 (582,707) 7,054,800 4,110,218 - 12,000 (426,884) 10,750,134 (11,291,000) 6,550,000 (755,996) (7,994,378) 921,050 (12,570,324) 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) (2,402,897) 2,752,286 349,389 (1,876,610) 4,628,896 2,752,286 The accompanying notes are an integral part of these financial statements. - 45 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 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”). 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 5, 2019. 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 from the joint operations as well as when applicable, the Corporation’s share in the income and the expenses. 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. - 46 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 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, accrued liabilities and advances 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. - 47 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 2.7 Tax 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 acquisition costs of mining rights for each exploration properties and E&E expenses. All costs incurred prior to obtaining the mining rights to undertake E&E activities on an area of interest are expensed as incurred. E&E assets include mining 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. Individual mining rights are regrouped in area of interest and are disclosed as an exploration property. Mining rights are recorded at acquisition cost less accumulated impairment losses for each area of interest. E&E expenses for each separate area of interest are capitalized (net from E&E expenses recovered from 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 costs capitalized to E&E assets 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 in reduction of the acquisition costs of the related mining rights, then in reduction of the E&E expenses for the related area of interest and any residual is recorded in the statement of comprehensive loss unless there is contractual work required by the Corporation in which case the residual gain is deferred and will be applied against the contractual disbursements when done. - 48 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 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. Costs related to E&E assets are transferred to Property, plant and equipment when they reach the development phase and will be subject to depreciation when these properties are put into commercial production. 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 The carrying amounts of mining rights and E&E expenses are assessed for impairment, by area of interest, only when indicators of impairment exist, typically when one of the following circumstances apply: exploration rights have expired or will expire in the near future; no future substantive exploration expenditures are budgeted or planned; no commercially viable quantities or minerals have been discovered and exploration and evaluation activities will be discontinued; exploration and evaluation assets are unlikely to be fully recovered from successful development or by sale; or a significant drop in metal prices. If any such indication exists, then the asset’s recoverable amount is estimated. When some mining rights within an area of interest are abandoned during the period, the acquisition costs of those mining rights are impaired on a pro rata basis. Mining rights and E&E expenses are systematically assessed for impairment upon the transfer of exploration and evaluation assets to development assets. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less cost to sell. 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 the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit” or “CGU”). The level identified by the Company for the purposes of testing exploration and evaluation assets and mining properties for impairment corresponds to each property. An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of CGUs are allocated to the assets in the unit (“group of units”) on a pro rata basis. Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. The carrying amounts of exploration and evaluation assets and property and equipment are reviewed at each reporting date to determine whether there is any indication of impairment. - 49 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 2.11 Income taxes Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Temporary differences are not provided for if they arise from the initial recognition of goodwill or the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the financial position reporting date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred income tax assets and liabilities are presented as noncurrent and are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. 2.12 Equity Capital stock represents the amount received on the issue of shares. Warrants represent the allocation of the amount received for units issued as well as the charge recorded for the broker warrants relating to financing. Contributed surplus includes charges related to stock options until they are exercised and the warrants that are expired and not exercised. Deficit includes all current and prior period retained profits or losses and share issue expenses. Proceeds from unit placements are allocated between shares and warrants issued on a pro-rata basis of their value within the unit using the Black-Scholes pricing model. 2.13 Flow-through shares The Corporation finances some E&E expenses through the issuance of flow-through shares. The resource expenditure deductions for income tax purposes are renounced to investors in accordance with the appropriate income tax legislation. The difference between the amount recorded as common shares and the amount paid by the investors for the shares (the “premium”), measured with the residual value method, is accounted for a 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. - 50 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 2.15 Stock-based compensation The Corporation operates an equity-settled share-based remuneration plan (share options plan) for its eligible directors, officers, employees and consultants. The Corporation's plan does not feature any options for a cash settlement. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee, including directors of the Corporation. The expense is recorded over the vesting period for employees and over the period covered by the contract for non-employees. All goods and services received in exchange for the grant of any share-based payment are measured at their fair values, unless that fair value cannot be estimated reliably. If the Corporation cannot estimate reliably the fair value of the goods or service received, the Corporation shall measure their value indirectly by reference to the fair value of the equity instruments granted. Where employees are rewarded using share-based payments, the fair values of employees' services are determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date using the Black Scholes option pricing model and excludes the impact of non-market vesting conditions. All equity-settled share-based payments (except warrants to brokers) are ultimately recognized as an expense in the statement of comprehensive loss or capitalized as 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. - 51 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 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 issued but not yet effective a) IFRS 16 Leases IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees: leases of “low-value” assets; and short- term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognize the interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. IFRS 16 also requires more extensive disclosures than under IAS 17. Transition to IFRS 16 IFRS 16 is effective for the Corporation’s annual period beginning on October 1, 2019. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs. The Corporation plans to adopt IFRS 16 using the modified retrospective approach, which means it will apply the standard from October 1, 2019, the cumulative impact of adoption will be recognized as at October 1, 2019 and comparatives will not be restated. Since the Corporation will recognize the right-of-use assets at the amount equal to the lease liabilities less any lease accruals, there will be no impact on the deficit upon the adoption. The Corporation has presently only one lease affected by IFRS 16, described in note 11. With a 7% incremental borrowing rate, the Management anticipates recording as of October 1, 2019, a right of use asset of $159,422 and an equivalent long term lease liability (with the short term portion being $32,452). 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. - 52 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 4. CRITICAL ACCOUNTING ESTIMATES, JUDGMENTS AND ASSUMPTIONS (CONT’D) 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. 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 $1,261,081 for the year ended September 30, 2019 (“Fiscal 19”) ($303,610 for the year ended September 30, 2018 (“Fiscal 18”)). 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. - 53 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 4. CRITICAL ACCOUNTING ESTIMATES, JUDGMENTS AND ASSUMPTIONS (CONT’D) Differences arising between the actual results following final resolution of some of these items and the assumptions made, or future changes to such assumptions, could necessitate adjustments to credit on mining duties and tax credit related to resources, exploration and evaluation assets and expenses, and income tax expense in future periods. The amounts recognized in the financial statements are derived from the Corporation’s best estimation and 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. 5. INVESTMENTS Current Guaranteed investment certificates, not cashable before the expiry date, between 2.37% and 3.02% interest payable annually, maturing between December 10, 2019 and April 23, 2020, with a maturity value of $12,827,614 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 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 2019 $ $ 12,491,000 - - 6,550,000 - 12,491,000 1,200,000 7,750,000 - 54 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 6. 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 Minas Tirith Shire Elrond Gondor Moria Helms Mythril Fangorn Northern Quebec Pallas PGE Willbob Soissons Soissons NMEF Project Generation Undivided interest % As at Sept. 30, 2018 $ Net Additions Impairment $ $ As at Sept. 30, 2019 $ 49 76.3 100 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 50 100 290,923 130,098 104,054 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 13,464 2,537,747 67 28,334 7,408 6,724 4,424 2,379 1,818 18,508 772 3,055 4,213 3,953 4,977 - (1,152) - (43,541)1) (13,558)1) - (3,702)1) - (17,535)2) (20,146)1) - (3,804)1) - (11,340)1) - (7,776)2) - 9,059 2,057 (7,728)1) (31,496)2) 25,766 32,183 3,143 630 1,460 15,054 18,720 98 19,272 11,073 317,794 115 34,642 131,833 1,257 223 46,996 756,855 (77,341)2) - (5,778)1) (27,550)2) (56,994)1) (204,017)1) - (15,598)2) - - - - (49,873)1) (125,001)1) - - (10,612)2) (733,390) 290,990 114,891 97,904 36,708 48,416 60,368 - 95,385 7,307 26,144 40,640 17,600 34,363 - 4,688 40,743 5,146 151,921 195,139 139,507 - 3,002 73,656 89,067 - 128,520 44,698 326,851 1,303 111,320 295,801 24,963 4,323 49,848 2,561,212 The Corporation impaired partially the property for the claims that were dropped. 1) 2) The Corporation wrote off this property (or some projects included in this property) since no exploration program is planned for the near future and/or dropped all the claims. - 55 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 6. EXPLORATION AND EVALUATION ASSETS (CONT’D) 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 - - - - - - - 1,896,351 302,628 507,636 - (5,874)1) - - (3,303)1) - - - (2 143)1) (2,632)1) (1,332)1) (1,253)1) - - (130,396)2) - - (1,657)1) - - - - - - - - - - - - - - - 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)2) (168,868) 13,464 2,537,747 1) The Corporation impaired partially the property for the claims that were dropped.. 2) The Corporation wrote off this property since no exploration program is planned for the near future and/or dropped all the claims. 3) Balance was grouped in BJ Altius property in Fiscal 17. - 56 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 6. EXPLORATION AND EVALUATION ASSETS (CONT’D) The following two tables disclose details of exploration and evaluation expenses: E&E expenses Abitibi Maritime-Cadillac Laflamme Patris Casault Jouvex Heva Valmond Samson La Peltrie Wawagosic Adam Mistaouac Turgeon Manthet Abitibi Gold Grenville-Appalaches Weedon Gatineau James Bay James Bay Au Eleonore JV Eleonore Isengard Minas Tirith Shire Elrond Gondor Moria Helms Mythril Fangorn Northern Quebec Pallas PGE Willbob Soissons Soissons NMEF Project Generation Undivided interest % As at Sept. 30, 2018 $ 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 Net Additions Tax credits $ $ Impairment 1) $ As at Sept. 30, 2019 $ 15,756 401,776 4,225 496,455 211,041 4,502 1,257 6,234 21,278 - 7,694 5,886 4,060 - 11,306 - (20,639) (2,045) (188,484) (346) - - (1,998) (1,574) - (921) (690) (1,534) - (1,360) 404,866 - - 2,808,975 - 236,236 - 2,188,205 623,657 - 276,312 - - (125,571) - 172,346 - 1,098,627 32,949 - 273,436 - 229,698 - 199,191 - - (8,409) 94,685 - 647,297 71,515 56,621 9,757 - (71) - (65,131) 703,918 16,070 112,978 517,666 5,595 1,770,210 33,461 583,215 - 36,918 3,920 33,711 17,789 226,595 59,832 31,406 - 31,424 7,554 123,544 18,919 58,989 28,215 5,339,168 5,028 6,657 540,024 2,624,225 47,282 4,259 84,116 2,100 732,717 11,581 57,871 43,851 15,228,482 7,750,282 (3,650) (1,384) - - - (4,764) (22,186) - (1,534) (21,111) (979,988) - - (252,023) (4,869) (14,420) (14,916) (185,457) 441,537 - 1,774,421 616,676 - - (36,918) 37,631 - 239,620 - 69,052 - - (31,424) 129,564 - - 56,797 - 4,387,395 11,685 - - 542,124 - 3,104,919 53,994 - 47,710 - 38,270 (74,781) (1,540,507) (527,691) 20,910,566 49 76.3 100 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 1) The Corporation wrote off this property (or some projects included in this property), since no exploration program is planned for the near future and/or dropped all the claims. - 57 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 6. EXPLORATION AND EVALUATION ASSETS (CONT’D) E&E expenses 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 Undivided interest % As at Sept. 30, 2017 $ Net Additions Tax credits 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 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 - (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) 84,739 626,897 44,005 20,400 27,597 - (87) 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 - - 91,166 1,278 704,161 73,023 7,031 (4,076) 11,932,760 4,233,891 (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) - - 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 - (194)1) 84,116 (803,427) (134,742) 15,228,482 1) The Corporation wrote off some projects included in this property since no exploration program is planned for the near future and/or dropped all the claims. 2) Balance was grouped in BJ Altius property in Fiscal 17. - 58 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 6. EXPLORATION AND EVALUATION ASSETS (CONT’D) ABITIBI 6.1 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 is shared 51% Agnico Eagle - 49% the Corporation. 6.2 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 76.3% of the Laflamme property. 6.3 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. 6.4 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. 6.5 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. 6.6 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 had signed an option agreement with Niobay Metals Inc. (“Niobay”) whereby Niobay could have earned, in two options, a maximum interest of 65% in the La Peltrie property. On January 15, 2019, the Corporation received from Niobay a termination notice for the option agreement. - 59 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 6. EXPLORATION AND EVALUATION ASSETS (CONT’D) 6.7 Abitibi Gold On March 31, 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 6.8 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 6.9 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. 6.10 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. 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 that corresponds to Altius’ portion of the phase 2 approved exploration budget of 2018. On February 12, 2019, the parties jointly decided to terminate the Alliance. The designated projects as per the Alliance (Elrond, Gondor, Helms Deep, Isengard, Minas Tirith, Moria, Shire, Mythril and Fangorn) maintain their net smelter return royalty of 1% in favor of Altius, on the claims that were active at the time of their designation. NORTHERN QUEBEC 6.11 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. - 60 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 6. EXPLORATION AND EVALUATION ASSETS (CONT’D) 6.12 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. 7. EQUITY 7.1 Capital stock authorized Unlimited number of common shares without par value, voting and participating. 7.2 Private placements a) 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. b) December 2018 On December 5 and 18, 2018, the Corporation a completed private placement of 3,044,605 flow-through shares at $1.35 per share for total gross proceeds of $4,110,218. On those dates, the Corporation’s share closed at $0.85 and $0.82 on the Exchange respectively, therefore the residual values attributed to the benefit related to flow-through shares renunciation are $0.50 and $0.53 for a total value of $1,554,552, credited to the liability related to the premium on flow-through shares. On December 21, 2018, the Corporation completed a private placement of 222,222 units at a price of $0.90 per unit for total gross proceeds of $200,000. Each unit consisted of one common share and one half warrant. Each warrant entitles the holder to purchase one common share at a price of $1.25 until December 21, 2020. From the total compensation received from the units, $11,210 has been allocated to warrants and $188,790 to common shares, according to a pro rata allocation of the estimated fair value of each of the two components. The estimated fair value of the warrants was determined using the Black-Scholes pricing model based on the following assumptions: no expected dividend yield, an expected volatility of 41.9%, a risk free interest rate of 1.94% and an expected life of the warrants of 2 years. In connection with the private placements, the Corporation incurred $254,100 share issue expenses of which $180,271 was paid as finder’s fees. Directors and officers of the Corporation participated in the flow-through private placement for a total consideration of $141,750 under the same terms as other investors. c) January 2019 On January 18, 2019, the Corporation completed a private placement of 1,111,111 units at a price of $0.90 per unit for total gross proceeds of $1,000,000. Each unit consisted of one common share and one half warrant. Each warrant entitles the holder to purchase one common share at a price of $1.25 until January 18, 2021. - 61 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 7. EQUITY (CONT’D) From the total compensation received from the units, $58,428 has been allocated to warrants and $941,572 to common shares, according to a pro rata allocation of the estimated fair value of each of the two components. The estimated fair value of the warrants was determined using the Black-Scholes pricing model based on the following assumptions: no expected dividend yield, an expected volatility of 43.0%, a risk free interest rate of 1.91% and an expected life of the warrants of 2 years. In connection with the private placement, the Corporation incurred $67 846 share issue expenses. d) April 2019 On April 17, 2019, the Corporation closed a private placement pursuant to an investment agreement (the “Investment Agreement”) with BHP Billiton Canada Inc. (“BHP”). BHP subscribed for 3,444,000 units at an issue price of $1.70 per unit for aggregate consideration of $5,854,800. Each unit will consist of one common share and one warrant. Each warrant will entitle BHP to acquire one additional common share at an exercise price of $2.05 per common share for a period of 18 months. Midland can accelerate the expiry of the warrants if the daily volume-weighted average trading price of the common shares on the Exchange exceeds $2.25 for 20 consecutive trading days at any time following 120 days after closing of the private placement. Pursuant to the terms of the Investment Agreement, BHP will be granted certain rights as long as BHP holds common shares equal to at least 5% of the issued and outstanding common shares (on a partially diluted basis), including: • • • • the right to participate in future equity financings by the Corporation to allow BHP to maintain its then current pro rata non-diluted ownership interest in the Corporation or to increase its ownership interest in the Corporation to a maximum of 19.99%, on a fully-diluted basis; certain top-up rights to subscribe for additional common shares following certain dilutive transactions to allow BHP to maintain its then current pro rata non-diluted ownership interest in the Corporation; the right of first offer for any non-equity financings, including any tolling arrangements, streaming arrangements, forward agreements, off-take agreements or royalty sales relating to any present or future copper exploration projects of the Corporation in Quebec; and the right of first offer on the Mythril project in the event the Corporation seeks to divest all or part of its interest. If BHP holds common shares equal to at least 15% of the issued and outstanding common shares (on a non-diluted basis), BHP will also have the right to designate one director for appointment to the Corporation board of directors. From the total compensation received from the units, $679,918 has been allocated to warrants and $5,174,882 to common shares, according to a pro rata allocation of the estimated fair value of each of the two components. The estimated fair value of the warrants was determined using the Black-Scholes pricing model based on the following assumptions: no expected dividend yield, an expected volatility of 47.4%, a risk free interest rate of 1.71% and an expected life of the warrants of 18 months. In connection with the private placement, the Corporation incurred $104,938 share issue expenses. - 62 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 7. EQUITY (CONT’D) 7.2 Warrants Changes in the Corporation’s number of outstanding warrants were as follows: Balance – Beginning of period Issued following private placement Exercised Expired Balance – End of period Fiscal 2019 Fiscal 2018 Number - 4,110,667 - - 4,110,667 Amount $ - 749,556 - - 749,556 Number Amount $ 20,622,569 1,922,031 - - (141,850) (1,522,000) (19,100,569) (1,780,181) - - Warrants outstanding as at September 30, 2019 are as follows: Number of warrants 3,444,000 111,112 555,555 4,110,667 Exercise price $ 2.05 1.25 1.25 Expiry date October 17, 2020 December 21, 2020 January 18, 2021 7.3 Policies and processes for managing capital The capital of the Corporation consists of the items included in equity of $37,559,201 as of September 30, 2019 ($29,110,542 as of September 30, 2018). 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). 8. EMPLOYEE REMUNERATION 8.1 Salaries Salaries and bonuses Director fees Benefits Less : salaries and benefits capitalized in E&E assets Salaries disclosed on the statement of comprehensive loss - 63 - Fiscal 19 $ 1,350,744 65,500 116,242 1,532,486 (911,623) 620,863 Fiscal 18 $ 1,153,221 64,500 73,585 1,291,306 (751,018) 540,288 Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 8. EMPLOYEE REMUNERATION (CONT’D) 8.2 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 19 $ 282,737 (103,240) Fiscal 18 $ 297,041 (104,646) 179,497 192,395 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 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. On February 18, 2019, the Corporation granted to its directors, officers, employees and consultants 580,000 options exercisable at $1.03, 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 $295,800 for an estimated fair value of $0.51 per option. The fair value of the options granted was estimated using the Black-Scholes model with no expected dividend yield, 50.7% expected volatility, 1.82% 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 19 Fiscal 18 Balance – Beginning of year Granted Exercised Balance – End of year Balance – End of year exercisable Weighted average exercise price $ 1.07 1.03 0.60 1.07 1.07 Number of options 3,190,000 570,000 - 3,760,000 3,363,334 Weighted average exercise price $ 1.10 0.89 - 1.07 1.09 Number of options 3,760,000 580,000 (20,000) 4,320,000 3,933,334 - 64 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 8. EMPLOYEE REMUNERATION (CONT’D) The following table summarizes information about common share purchase options outstanding and exercisable as at September 30, 2019: Number of options outstanding Number of options exercisable 260,000 315,000 20,000 345,000 605,000 430,000 500,000 50,000 545,000 100,000 570,000 580,000 4,320,000 260,000 315,000 20,000 345,000 605,000 430,000 500,000 50,000 545,000 100,000 570,000 193,334 3,933,334 Exercise price $ 1.76 1.54 1.61 1.25 0.85 0.60 1.10 1.13 1.14 1.04 0.89 1.03 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 February 18, 2029 8.3 Compensation to key management The Corporation’s key management personnel includes 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 19 $ Fiscal 18 $ 489,551 70,088 11,775 147,761 157,351 24,417 900,943 476,712 73,898 9,570 122,947 185,532 25,176 893,835 On January 1, 2015, the Corporation entered into amended employment agreements with members of senior management which, among other things, provided 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. - 65 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 8. EMPLOYEE REMUNERATION (CONT’D) 8.4 Related party transactions In addition to the amounts listed above in the compensation to key management (note 8.3), 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 $147,281 ($69,469 in Fiscal 18) of which $38,626 ($51,026 in Fiscal 18) was expensed and $108,655 ($18,443 in Fiscal 18) was recorded as share issue expenses; ♦ A company controlled by an officer charged professional fees of $57,113 ($47,634 in Fiscal 18) for her staff; and ♦ As at September 30, 2019, the balance due to the related parties amounted to $5,067 ($4,581 in September 30, 2018). 9. 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 7 and 8. Loss Weighted average number of basic and diluted outstanding shares Basic and diluted net loss per share Fiscal 19 $ (1,142,784) 66,020,362 (0.02) Fiscal 18 $ (807,530) 59,302,366 (0.01) 10. INCOME TAXES The income tax expense is made up of the following component: Deferred income taxes Premium on flow-through share issuance Total recovery of deferred income taxes Fiscal 19 $ Fiscal 18 $ (1,554,552) (1,554,552) (694,070) (694,070) - 66 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 10. INCOME TAXES (CONT’D) 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 26.60% (26.70%) 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 19 $ (2,584,212) Fiscal 18 $ (1,501,600) (687,400) 47,700 1,089,200 (1,554,552) (364,276) 27,900 - (1,441,428) (400,927) 51,369 605,619 (694,070) (262,911) 6,850 - (694,070) 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 $276 000 ($639,000 as of September 30, 2019). 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 Unrealised gain on listed shares Total deferred income tax liabilities As of September 30, 2019 $ As of September 30, 2018 $ 2,999,000 23,000 122,000 3,144,000 2,599,000 25,000 98,000 2,722,000 2,863,000 5,000 2,868,000 2,083,000 2,083,000 Deferred income tax assets not recognized 276,000 639,000 - 67 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 10. INCOME TAXES (CONT’D) As of September 30, 2019, 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 1,275,000 1,501,000 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 1,261,000 1,476,000 2026 2027 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 All the exploration work imposed by the November 2017 flow-through financings was completed before September 30, 2018. Also, all the exploration work imposed by the December 2018 flow-through financings was completed before September 30, 2019. 11. 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 Statistics Canada for a 12- month period which was 1.9%): Within 1 year 1 to 5 years After 5 years Total As of September 30, 2019 $ 33,507 48,797 - 82,304 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. The Corporation has the option to renew the lease for an additional 3 year period under the same conditions. Lease payments recognized as an expense during the reporting period amounted to $36,583 ($35,832 in Fiscal 18). This amount consists of minimum lease payments. - 68 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 12. 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: 12.1 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, 2019 would result in an estimated effect on the net income (loss) of $14,000. 12.2 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 19, 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 their cash position closely 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. 12.3 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, 2019, 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. 12.4 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. - 69 - Midland Exploration Inc. Notes to Financial Statements For the years ended September 30, 2019 and 2018 13. 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 Exercise of warrants credited to capital stock Exercise of stock options credited to capital stock Interest received Fiscal 2019 Fiscal 2018 $ 103,240 $ 104,646 784,266 - 1,540,507 - 5,200 209,572 437,789 507,636 803,427 141,850 - 159,215 14. SUBSEQUENT EVENT On December 4, 2019, the Corporation completed a private placement by issuing 1,338,392 flow-through shares at $1.10 per share, for total gross proceeds of $1,472,231. On that date, the Corporation’s share closed at $0.79 on the Exchange, therefore the residual value attributed to the benefit related to flow- through shares renunciation is $0.31 for a total value of $414,902, 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 $59,257. Directors and officers of the Corporation participated in this placement for a total consideration of $174,900 under the same terms as other investors. - 70 - 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 - 71 - - 72 - 

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