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.
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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.
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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.
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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
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