Oceanic Iron Ore Corp. Management s Discussion and Analysis of Financial Condition and Results of Operations Year ended March 31, 2018 and 2017

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1 The fllwing discussin is management s assessment and analysis f the results and financial cnditin f Oceanic Irn Ore Crp. ( Oceanic r the Cmpany ), and shuld be read in cnjunctin with the accmpanying audited annual financial statements and related ntes fr the years ended March 31, 2018 and The Cmpany reprts its financial statements in accrdance with Internatinal Financial Reprting Standards ( IFRS ) as issued by the Internatinal Accunting Standards Bard ( IASB ). All figures are reprted in Canadian dllars unless therwise indicated. Certain infrmatin included in this discussin may cnstitute frward lking statements. Frward lking statements are based n current expectatins and entail varius risks and uncertainties. These risks and uncertainties culd cause r cntribute t actual results that are materially different frm thse expressed r implied. Please see the sectin entitled Frward Lking Statements f this dcument fr further detail n frward lking statements. The effective date f this reprt is July 26, Descriptin f Business The Cmpany was incrprated n March 8, 1986 under the British Clumbia Business Crpratins Act. Its cmmn shares are traded n the TSX Venture Exchange. The Cmpany is fcused n the develpment f the Ungava Bay irn prperty (the Prperty ) in Nunavik, Québec, which the Cmpany acquired in Nvember, The Prperty cmprises three prject areas: Hpes Advance, Mrgan Lake and Rberts Lake, which cver ver 39,717 hectares f irn frmatin and are lcated within km f tidewater. The Cmpany has a 100% interest, subject t a 2% net smelter returns ryalty ( NSR ) in the Prperty. The Cmpany is currently fcused n cntinuing its develpment f the Hpes Advance prject thrugh a feasibility study and envirnmental assessment as well as securing a strategic partner fr the Hpes Advance prject. Hpes Advance Prject Update In January 2018, the Cmpany signed a Memrandum f Understanding ( MOU ) with Sinsteel Equipment and Engineering C. Ltd. ( SinSteel ), t frmalize the understanding and intentins f the parties in respect f cperatin fcused n the Cmpany s Hpes Advance prject develpment. Specifically, SinSteel intends t assist in the arrangement f a future equity investment, ff-take and prject financing in exchange fr future mining and plant related infrastructure EPC wrk. The MOU is a nn-binding agreement that bth the Cmpany and Sinsteel intend t evlve t binding prject financing arrangement and EPC agreements at a future date. Management als cntinue discussins with ther ptential strategic partners and management will prvide updates as and when required. The Cmpany cntinues t fcus its effrts n surcing the capital required t meaningfully prgress the develpment f the Hpes Advance Prject. Such effrts have nt cme withut its challenges given the intensive up frnt capital required and the challenging envirnment in China. Management is als currently cnsidering a study t revisit the initial scale f prductin f Hpes Advance in rder t quantify the ptential ecnmic benefits f a lwer capital expenditure. A decisin n this and the cst f the study and hw it might be finished is expected t be made in the secnd half f Management remain cnfident in ultimately securing the requisite financing t mve frward with Hpes Advance because f the desirable characteristics f the Prject being a high quality, lw cst, and lw impurity prduct. Achievements t Date Hpes Advance Prject Active develpment f the Hpes Advance prject cmmenced in March 2011 with the start f the Cmpany s resurce verificatin prgram. Page 1

2 Since then, milestnes have been achieved in a number f areas: 1. Prject Technical Study and Ecnmics 2. Resurce definitin In Nvember 2012, the Cmpany published its Pre-Feasibility Study. Further infrmatin in respect f the Cmpany s Pre-Feasibility Study is available in the full Natinal Instrument ( NI ) technical reprt n the Cmpany s website ( and n SEDAR ( In Nvember 2012, as part f its Pre-Feasibility Study, the Cmpany published an updated NI cmpliant In-Pit Mineral Resurce Estimate fr the Hpes Advance prject. The Resurce Estimate NI technical reprt is available n the Cmpany s website ( and n SEDAR ( 3. Ecnmic Mineral Reserves 4. Metallurgy In Nvember 2012, as part f its Pre-Feasibility Study, the Cmpany published an NI cmpliant mineral reserve estimate. Metallurgical bench scale testing prgram and pilt plant testwrk was cnducted by SGS Mineral Services Lakefield which was cmpleted t ptimize the prcess flw sheet fr the recvery f hematite and magnetite res. 5. Prduct Versatility and Marketability Cmpletin f a Prduct Value-In-Use Marketing Study, led by Vulcantech Technlgies Pty Ltd. Further discussin f the results f the study can be fund in the press release n the Cmpany s website ( Cmpleted a Pt Grate test wrk prgram, perfrmed by Cleraine Minerals Research Labratry and supervised by Rd Jhnsn, VP Gemetallurgy. Details n the results f the prgram can be fund in the press release n the Cmpany s website ( Cmpletin f a Shipping Optimizatin Study, led by AMEC Envirnment and Infrastructure. Details n the results f the study can be fund in the press release n the Cmpany s website ( 6. Cmmunity/Gvernment Relatins and Supprt As nted abve, in June 2015, the Québec gvernment, thrugh its subdivisin Ressurces Québec, prvided the Cmpany with a Letter f Intent, whereby Ressurces Québec wuld cntribute up t 25% r $3.75 millin f a ptential future $15 millin financing t bring the Hpes Advance prject thrugh a Feasibility Study, subject t additinal future gvernment apprvals. Page 2

3 7. Envirnmental T date, all f the terrestrial baseline wrk fr the Envirnmental Impact Assessment has been cmpleted. As nted abve, the utstanding cmpnents include marine baseline data inventries and additinal cnsultatins with relevant stakehlders. A time sensitive migratry bird survey was cmpleted during May Further, in September 2016, the Cmpany cmpleted baseline data cllectin fcused n marine mammals, fish studies, water quality, and mllusk habitat. With the insights btained frm baseline data cllectin and envirnmental studies the Cmpany will engage in additinal future dialgue with Inuit stakehlders in the regin t ptimize the Prject's benefits and minimize the impacts assciated with the Prject's cnstructin and subsequent peratins N additinal envirnmental wrk r expenditure is presently cntemplated until the Cmpany succeeds at securing additinal shrt term financing. Eddy Canva, P.Ge., OGQ(403), a Qualified Persn as defined by NI , has reviewed and is respnsible fr the technical infrmatin cntained in this dcument. Selected Annual Infrmatin The fllwing table presents selected annual infrmatin extracted frm the relevant audited financial statements under IFRS: Ttal Assets, March 31 $ 42,705,145 $ 42,282,529 $ 41,944,451 Nn-current financial liabilities $ 1,631,996 $ 446,078 $ 1,876,596 Revenues (Nte 1) $ - $ - $ - Net lss fr the year $ (1,453,251) $ (1,356,713) $ (1,740,023) Basic and diluted lss per share $ (0.03) $ (0.03) $ (0.05) Weighted average number f cmmn shares utstanding 56,212,517 46,368,897 37,605,844 Nte 1 As the Cmpany has yet t achieve cmmercial prductin frm its mineral asset, the Cmpany has n revenue t reprt during the financial reprting perids nted abve. Factrs that have caused changes in peratins and financial psitin frm the year ended March 31, 2017 t the year ended March 31, 2018 have been disclsed under the sectin entitled Overall Perfrmance and Results f Operatins belw. The ttal assets balance increased frm March 31, 2016 t March 31, 2017 largely as a result f $1 millin increase in mineral prperties resulting frm wrk perfrmed in respect t a time sensitive migratry bird survey and ther baseline data wrk in respect f the Cmpany s Envirnmental Impact Study, as well as accretin f the Cmpany s advance ryalty payable, and assciated hlding csts f the Cmpany s prperties, land access payments, and ffice and administrative csts. This increase was partially ffset by a cash decrease f $373 thusand resulting frm $433 thusand spent n investing activities relating t the Cmpany s mineral prperties, $778 thusand spend n perating activities, partially ffset by cash prceeds frm financing activities f $959 thusand relating t a private placement cmpleted during September 2016, partially ffset by $121 thusand interest paid n cnvertible debentures. The nn-current financial liabilities decreased frm March 31, 2016 t March 31, 2017 as a result f the Sin-Canada cnvertible debenture liability becming current, due t its maturity date f Nvember Page 3

4 On Nvember 23, 2017 the Cmpany settled the remaining principal amunt and all accrued unpaid interest f the Sin-Canada Debenture thrugh the issuance f 16,734,703 cmmn shares f the Cmpany. Refer t Liquidity and Capital Resurces discussin belw. The net lss in March 31, 2017 decreased frm the same perid in 2016, largely resulting frm a decrease in cnsulting and management fees and wages and benefits due t the Cmpany implementing management fee and salary reductins with key management f the Cmpany, as well as a decrease share based payments recgnized during the year as a result f a lwer number f stck ptins vesting. Overall Perfrmance and Results f Operatins Ttal assets increased t $42,705,145 at March 31, 2018 frm $42,282,529 at March 31, The mst significant assets at March 31, 2018 were mineral prperties f $42,325,645 (March 31, 2017: $41,974,448), and cash and cash equivalents f $330,373 (March 31, 2017: $234,085). The Cmpany had a wrking capital deficit at March 31, 2018 f $213,993. The net increase in mineral prperties f $351,197 largely reflects accretin f the Cmpany s advance ryalty payable as well as the assciated hlding csts f the Cmpany s prperties, land access payments, amrtizatin f the Cmpany s equipment, as well as ffice and administrative csts. The increase in cash during the year f $96,288 resulted largely frm $810,000 f prceeds received frm the cnvertible debenture private placement which ccurred in September 2017, partially ffset by $108,066 interest paid n the Cmpany s existing cnvertible debentures. Further, the Cmpany incurred cash utflws frm perating activities f $474,713 and $138,843 cash utflw frm investing activities. Cash utflws frm investing activities related in their entirety t mineral prperty expenditures as described abve. The Cmpany incurred a net lss f $1,453,251 during the year ended March 31, 2018 (2017: $1,356,713). The mst significant perating expenses incurred were cnsulting and management fees f $220,000 (2017: $175,000) incurred t supprt the Cmpany's peratins, wages and benefits f $157,552 (2017: $306,225), and share-based payments f $144,173 (2017: $222,836). Cnsulting and management fees increased slightly frm the same perid in the prir year as a result f cnsulting fees paid t the Cmpany s interim CEO, whereby, wages and benefits decreased frm the same perid in the prir year as a result f the resignatin f the Cmpany s frmer CEO, which ccurred in June Share-based payments decreased frm the prir year as a result f a lwer number f stck ptins vesting. Nn-cash share based payments represent the Black-Schles calculated fair value f the stck ptins vested during the perid frm ptins granted t directrs, fficers, emplyees and cnsultants. During the year ended March 31, 2018, the Cmpany incurred $308,214 f interest and accretin expense n the Cmpany s cnvertible debentures (2017: $347,231). Further, the Cmpany recgnized a $380,818 unrealized lss n its cnvertible debenture derivative liability. Because the cnversin ptin f the cnvertible debenture cntains bth a cmmn share and a warrant (refer t Cnvertible Debentures discussin belw), IFRS des nt allw the cnversin feature t be accunted fr as equity, but rather, IFRS requires this cnversin ptin t be treated as a derivative liability and fair valued each reprting perid, creating an accunting unrealized gain r lss. As a result f the applicatin f this standard, the Cmpany is required t recgnize the cnvertible debentures as having tw separate liability cmpnents. Firstly, the Units which are recgnized as a derivative liability and fair valued each reprting perid, and secndly the cnvertible debenture liability, which is fair valued at the time f issue, and then accreted t Page 4

5 the face value ver the life f the cnvertible debentures. At March 31, 2018, the derivative liability balance increased by $380,818 t $677,380, resulting in the Cmpany recgnizing an unrealized lss n the statement f lss and cmprehensive lss (2017: $nil). Liquidity and Capital Resurces While the financial statements have been prepared n the basis that the Cmpany will cntinue as a ging cncern, which cntemplates the realizatin f assets and settlement f liabilities in the nrmal curse f business as they cme due, certain cnditins and events result in a material uncertainty casting significant dubt n the validity f this assumptin. Fr the year ended March 31, 2018, the Cmpany reprted a lss f $1,453,251 and as at that date had an accumulated deficit f $29,913,995. The Cmpany has a wrking capital deficit f $213,993 at March 31, Althugh the Cmpany cmpleted a cnvertible debenture financing in September 2017, the Cmpany s ability t cntinue n a ging cncern basis fr and beynd the next twelve mnths depends n its ability t successfully raise additinal financing fr cntinued peratins and fr the necessary capital expenditures required t achieve planned principal peratins. The Cmpany cntinues t pursue a number f ptins t imprve its financial capacity, including securing a strategic partner t further advance the Hpes Advance prject, and btaining cash flw thrugh ther frms f financing. While the Cmpany has been successful in the past in btaining financing, there is n assurance that it will be able t btain adequate financing in the future r that such financing will be n terms acceptable t the Cmpany. These material uncertainties cast significant dubt upn the Cmpany s ability t cntinue as a ging cncern. Factrs that culd affect the availability f financing include the Cmpany s perfrmance, the state f internatinal debt and equity markets, investr perceptins and expectatins, the retentin f key executive management and the state f glbal financial and metals markets. Cnvertible Debentures 2017 Private Placement On September 26, 2017, the Cmpany cmpleted a nn-brkered financing f $810,000 by way f issuance f cnvertible debentures (the 2017 Debentures ). The 2017 Debentures carry an interest rate f 8.5%, payable quarterly, with a maturity date f September 26, The 2017 Debentures are secured against the assets f the Cmpany. The principal amunt f the 2017 Debentures are cnvertible at any time at the electin f the Cmpany. The 2017 Debentures are cnvertible int Units, whereby each Unit cnsists f ne cmmn share f the Cmpany and ne share purchase warrant f the Cmpany. The cnversin price during the first year f the 2017 Debentures is $0.08 per Unit, increasing t $0.10 per Unit fr the remainder f the life f the 2017 Debentures. Each share purchase warrant entitles the hlder t purchase ne cmmn share f the Cmpany at a price f $0.10 per cmmn share, expiring September 26, Prceeds frm the 2017 Debentures have been used t fund nging negtiatins with ptential strategic partners, general claims maintenance, and crprate and wrking capital purpses. Cnvertible Debentures Sin-Canada Natural Resurces Fund I ( Sin-Canada Debenture ) On Nvember 23, 2017 the Cmpany settled the remaining principal amunt f the Sin-Canada Debenture f $2,025,329 plus accrued and unpaid interest up t the maturity date f $17,798 thrugh the issuance f Page 5

6 16,734,703 cmmn shares f the Cmpany. The cnversin price used t determine the cmmn shares issued t the Sin-Canada Debenture hlders was based n the vlume weighted average share price during the 20 trading days ending n the day befre the Cmpany prvided ntice f its intent t repay the Sin-Canada Debenture in cmmn shares f the Cmpany, being Nvember 17, Off-Balance Sheet Arrangements As at March 31, 2018, the Cmpany had n ff-balance sheet arrangements. Summary f Quarterly Results Belw is a summary f results fr the eight mst recently cmpleted quarters in accrdance with IFRS: Q4 Q3 Q2 Q Revenues (Nte 1) $ - $ - $ - $ - Net lss $ (654,224) $ (173,306) $ (291,829) $ (333,892) Basic and diluted lss per share $ (0.01) $ (0.00) $ (0.01) $ (0.01) Q4 Q3 Q2 Q Revenues (Nte 1) $ - $ - $ - $ - Net lss $ (414,562) $ (314,935) $ (307,669) $ (319,547) Basic and diluted lss per share $ (0.01) $ (0.01) $ (0.01) $ (0.01) Nte 1 As the Cmpany has yet t achieve cmmercial prductin frm its mineral related assets, the Cmpany has n revenue t reprt during the financial reprting perids nted abve. The increase in net lss in Q frm prir quarters is largely a result f an increase in share-based payments as a result f the stck ptin grant that ccurred during Q The decrease in the net lss in Q frm Q was a result f lwer prfessinal fees incurred due t the Cmpany s year end audit which tk place in the prir quarter, in additin t decreased crprate develpment csts due t less travel in management s effrts t preserve cash. Lastly there was decreased share-based payment expense recgnized during the quarter as a result f a lwer number f stck ptins vesting during the quarter. The decrease in Q frm Q is a result f lwer wages and benefits resulting frm the Cmpany s CEO resigning in June Further, there was a decrease in share-based payment expense recgnized during the quarter as a result f lwer number f stck ptins and restricted share units vesting during the quarter. The increase in Q frm Q frm Q is a result f the Cmpany recgnizing an unrealized lss n the cnvertible debenture due t the fair value adjustment t the derivative liability. Refer t Results f Operatins fr the three-mnth perid ended, discussin belw. Page 6

7 Furth Quarter Results The Cmpany incurred a net lss f $654,223 during the three mnths ended March 31, 2018 (2017: $414,562). The mst significant perating expenses incurred were cnsulting and management fees f $58,750 (2017: $43,750) incurred t supprt the Cmpany's peratins, wages and benefits f $30,158 (2017: $69,468). Cnsulting and management fees increased slightly frm the same perid in the prir year as a result f cnsulting fees paid t the Cmpany s interim CEO, whereas wages and benefits decreased frm the same perid in the prir year as a result f the resignatin f the Cmpany s frmer CEO, which ccurred in June During the three mnths ended March 31, 2018, the Cmpany incurred $27,315 f accretin expense n the Cmpany s cnvertible debentures (2017: $91,072). Further, the Cmpany recgnized a $380,818 unrealized lss n its cnvertible debenture derivative liability. Because the cnversin ptin f the cnvertible debenture cntains bth a cmmn share and a warrant (refer t Cnvertible Debentures discussin belw), IFRS des nt allw the cnversin feature t be accunted fr as equity, but rather, IFRS requires this cnversin ptin t be treated as a derivative liability and fair valued each reprting perid, creating an accunting unrealized gain r lss. As a result f the applicatin f this standard, the Cmpany is required t recgnize the cnvertible debentures as having tw separate liability cmpnents. Firstly, the Units which are recgnized as a derivative liability and fair valued each reprting perid, and secndly the cnvertible debenture liability, which is fair valued at the time f issue, and then accreted t the face value ver the life f the cnvertible debentures. At March 31, 2018, the derivative liability balance increased by $380,818 t $677,380, resulting in the Cmpany recgnizing an unrealized lss n the statement f lss and cmprehensive lss (2017: $nil). Critical Accunting Plicies A detailed summary f all the Cmpany's significant accunting plicies is included in Nte 3 t the audited annual financial statements fr the year ended March 31, Critical Accunting Estimates The preparatin f the financial statements requires management t make judgments, estimates and assumptins that affect the applicatin f accunting plicies and the reprted amunts f assets, liabilities, incme and expenses. Areas f estimates include measurement f advance ryalty payables, and the fair value f the embedded derivative liability related t the 2017 Debentures (a Level 3 financial instrument). Actual results may differ frm these estimates. Estimates and underlying assumptins are reviewed n an nging basis. Revisins t accunting estimates are recgnized in the perid in which the estimates are revised and in any future perids affected. Infrmatin abut critical judgments in applying accunting plicies that have the mst significant effect n the amunts recgnized in the financial statements is included in the ntes t the annual audited financial statements fr the year ended March 31, 2018 where applicable. Page 7

8 Financial Instruments and Other Instruments Financial Risk Management The Cmpany is expsed in varying degrees t a variety f financial instrument related risks. The bard apprves and mnitrs the risk management prcesses. Credit Risk Credit risk arises frm the ptential fr nn-perfrmance by cunterparties f cntractual financial bligatins. The Cmpany s expsure t credit risk is n its cash and cash equivalents and receivables. The Cmpany has cncentratin f risk with respect t cash being held with ne large Canadian financial institutin. The Cmpany s credit risk is mitigated by maintaining its financial liquid assets with highly reputable cunterparties. The maximum expsure t credit risk is equal t the carrying value f the financial assets nted abve. Liquidity Risk Liquidity risk is the risk that the Cmpany cannt meet its bligatins as they fall due. The Cmpany s cash and cash equivalents are invested in business accunts and term depsits which are available n demand. The Cmpany manages liquidity risk by preparing and maintaining cash frecasts, which illustrate cash spent t date and the Cmpany s cash needs ver the shrt term. Cntractual undiscunted cash flw requirements fr financial liabilities as at March 31, 2018 and 2017 are presented belw. March 31, 2018 Less than 1 year 1-3 years 4-5 years Ttal Accunts payable and accrued liabilities $ 126,510 $ - $ - $ 126,510 Due t related parties 188, ,835 Cnvertible debenture - liability cmpnent 68, , ,129 1,116,529 Advance ryalty payable 300, , ,000 1,100,000 March 31, 2017 Less than 1 year 1-3 years 4-5 years Ttal Accunts payable and accrued liabilities $ 149,361 $ - $ - $ 149,361 Due t related parties 4, ,374 Cnvertible debenture - liability cmpnent 2,025, ,025,329 Advance ryalty payable 200, , ,000 1,000,000 The Cmpany s ability t cntinue peratins in the nrmal curse f business is dependent n several factrs, including the ability t secure additinal financing. In additin, the recverability f the amunts shwn fr mineral prperties are dependent upn the existence f ecnmically recverable reserves, the ability f the Cmpany t btain necessary financing t cmplete the develpment f thse reserves and upn future prfitable prductin, all f which are uncertain. Page 8

9 Market Risk Market risk is the risk that the fair market value f the Cmpany s financial instruments will significantly fluctuate due t changes in market prices. The value f the financial instruments can be affected by changes in interest rates, freign exchange rates and equity and cmmdity prices. The Cmpany is expsed t market risk in its cash and cash equivalents. The Cmpany manages market risk by investing funds with a reputable financial institutin that prvides cmpetitive rates f return. The Cmpany s financial instruments are nt subject t significant fluctuatin due t changes in equity prices f investments included in cmmdity prices r freign exchange rates. The Cmpany als invests surplus cash in fixed rate term depsits. It is the Cmpany s plicy t reduce interest rate risk ver future cash flws thrugh the use f instruments with a histry f returns. A 1% change in interest rates wuld have a negligible impact n net lss and cmprehensive lss. Fair value Fair value is based n available public market infrmatin r, when such infrmatin is nt available, estimated using present value techniques and assumptins cncerning the amunt and timing f future cash flws and discunt rates which factr in the apprpriate credit risk. The carrying values f cash and cash equivalents, receivables, restricted cash, accunts payable cnvertible debenture liability and accrued liabilities, and due t related parties apprximate their fair values due t their shrt-term nature. Cmmitments Effective March 1, 2011 (amended n July 1, 2012) the Cmpany entered int an agreement with an affiliated cmpany, with a directr and fficer in cmmn, in respect f shared lease, verhead and service csts. Under the agreement, the Cmpany is billed quarterly fr ffice rental and ther services relating t its ffice in Vancuver. The agreement expires n December 31, Either party may terminate the agreement by prviding 90 days ntice. As part f the acquisitin f the Ungava Bay mineral prperties, cmmencing n Nvember 30, 2011, Oceanic must pay advance net smelter ryalty ( NSR ) payments f $200,000 per year, which will be credited against all future NSR payments payable frm prductin. The cmmitted charges fr the Cmpany are as fllws: March 31, Vancuver ffice rent NSR payments Ttal cmmitments , , , , , ,872 Thereafter - 600, ,000 $ 60,091 $ 1,100,000 $ 1,160,091 Page 9

10 Related Party Transactins and Key Management Cmpensatin a) Key management cmpensatin Key management includes the Cmpany s directrs, Chief Executive Officer, Chief Financial Officer and President and Chief Operating Officer. Cmpensatin awarded t key management is presented in the table belw: As at March 31, 2018, the Cmpany had the fllwing balances wed t certain fficers and directrs f the Cmpany: b) Payments fr services by related parties Year end Year end Related Party Relatinship Cmpensatin Type March March Steven Dean Executive Chairman and Share-based payments and $ 35,073 $ 63,974 Directr Directrs' fees Alan Grman * Frmer President and Wages, benefits, and sharebased 70, ,556 CEO payments Bing Pan * Interim CEO Share-based payments 9,364 Grdn Keep Directr Directrs' fees and sharebased payments 21,549 26,518 Hn. Jhn D. Reynlds Directr Directrs' fees and sharebased 21,549 25,348 P.C. payments Jean Martel** Directr Directrs' fees and sharebased 11,549 26,128 payments Daisy Zhu*** Directr Share-based payments 7,958 5,684 Chris Batalha CFO and Crprate Secretary Wages, benefits, and sharebased payments 75,293 83,334 $ 252,741 $ 469,542 *On June 14, 2017, Mr. Alan Grman resigned as President, CEO and directr f the Cmpany. Mr. Bing Pan succeeded Mr. Grman as Interim CEO.Mr. Bing Pan was frmerly a cnsultant t the Cmpany. **On April 7, 2017, Mr. Jean Martel resigned as a directr f the Cmpany. ***On September 26, 2017, Daisy Zhu resigned as a directr f the Cmpany, Cathy Chan succeeded Ms. Zhu as a directr f the Cmpany. Related Party Relatinship Cmpensatin Type Amunt Payable ($) Grdn Keep Directr Directrs' fees 5,000 Hn. Jhn D. Reynlds Directr Directrs' fees 5,000 P.C. Steven Dean** Directr Cnsulting fees and Directrs' fees 72,562 Chris Batalha CFO and Crprate Wages and benefits 35,000 **Includes $67,563 f cnsulting fees due t Sircc Advisry Services Ltd., a cmpany cntrlled by Steven Dean. During the year ended March 31, 2018, the Cmpany incurred crprate cnsulting fees f $115,000 (2017: $115,000), t Sircc Advisry Services Ltd., a cmpany cntrlled by Steven Dean, a directr and fficer f the Cmpany. During the year ended March 31, 2018, the Cmpany incurred crprate cnsulting fees f $60,000 (2017: $47,500) t Sincan Cnsultant Hng Kng Ltd., a cmpany cntrlled by Bing Pan, the Interim CEO f the Cmpany. Page 10

11 As disclsed in the sectin entitled Cmmitments, the Cmpany is charged shared lease and verhead, and service csts by Atlantic Gld Crpratin, a cmpany with a directr and fficer in cmmn, being Steven Dean and Chris Batalha, respectively. During the year ended March 31, 2018, the Cmpany incurred $75,850 (March 31, 2017: $74,800) in shared lease, verhead, and service csts. As at March 31, 2018, the Cmpany wed $68,772 t Atlantic Gld Crpratin (March 31, 2017: $4,374). In September 2017, the Cmpany cmpleted a nn-brkered financing by way f issuance f cnvertible debentures. The cnvertible debentures are secured against the assets f the Cmpany. The fllwing table utlines the debentures held by fficers and directrs f the Cmpany: Related party transactins were made n terms equivalent t thse that prevail in arm s length transactins. Outstanding Share Data As at the date f this reprt, there were 67,997,516 cmmn shares issued and utstanding. As at the date f this reprt, there were 4,374,283 stck ptins, 4,925,000 cmmn share purchase warrants, and 433,332 RSUs utstanding. As discussed in the sectin entitled Cnvertible Debenture, the Cmpany s 2017 Debentures with a principal balance f $810,000 can be cnverted t 10,125,000 cmmn shares f the Cmpany at a price f $0.08 per share during the first year f the 2017 Debentures, and decreasing t 8,100,000 cmmn shares f the Cmpany at a price f $0.10 per share fr the remainder f the life f the 2017 Debentures. Further, the 2017 Debentures als entitle each hlder share purchase warrants t purchase ne cmmn share f the cmpany at a price f $0.10 per cmmn share, expiring September 26, Risks and Uncertainties The Cmpany is in the business f acquiring, explring and, if warranted, develping and expliting natural resurce prperties. At present, the mineral prperties wned by the Cmpany are lcated in Québec, Canada. Due t the nature f the Cmpany s prpsed business and the present stage f explratin f its mineral prperties (which are primarily explratin), the fllwing risk factrs, amng thers, will apply: Ging Cncern Related Party Relatinship 2017 Debentures Held ($) Steven Dean* Executive Chairman 33,000 Grdn Keep Directr 50,000 Chris Batalha CFO and Crprate Secretary 22,000 *Cnvertible Debentures are held thrugh Sircc Advisry Services, a cmpany cntrlled by Steven Dean The financial statements have been prepared n a ging cncern basis, which assumes that the Cmpany will cntinue in peratin fr the freseeable future and will be able t realize its assets and discharge its liabilities in the nrmal curse f business. While these financial statements have been prepared n the basis that the Cmpany will cntinue as a ging cncern, which cntemplates the realizatin f assets and settlement f liabilities in the nrmal curse f business as they cme due, certain cnditins and events result in material uncertainty casting significant Page 11

12 dubt n the validity f this assumptin Fr the year ended March 31, 2018, the Cmpany reprted a lss f $1,453,251 and as at that date had an accumulated deficit f $29,913,995 and wrking capital deficit f $213,993. Despite the private placement financing that cmpleted in September 2017, the Cmpany will need t raise additinal funds in rder t finance nging explratin, develpment and administrative expenses ver the cming 12 mnths. The Cmpany cntinues t pursue a number f ptins t imprve its financial capacity, including securing a strategic partner t further advance the Hpes Advance prject, and btaining cash flw thrugh ther frms f financing. The success f raising such funds cannt be assured. Factrs that culd affect the availability f financing include the Cmpany s perfrmance, the state f internatinal debt and equity markets, investr perceptins and expectatins, the retentin f key executive management and the state f glbal financial and metals markets. These financial statements d nt reflect the adjustments t the carrying values f assets and liabilities and the reprted expenses and statement f financial psitin classificatins that wuld be necessary were the ging cncern assumptin deemed t be inapprpriate, and these adjustments culd be material. Explratin and Develpment Risks The explratin fr and develpment f mineral depsits invlves significant risks which even a cmbinatin f careful evaluatin, experience and knwledge may nt eliminate. Few prperties that are explred are ultimately develped int prducing mines. Majr expenses may be required t lcate and establish mineral reserves, t develp metallurgical prcesses and t cnstruct mining and prcessing facilities at a particular site. It is impssible t ensure that the explratin r develpment prgrams planned by the Cmpany will result in a prfitable cmmercial mining peratin. Whether a mineral depsit will be cmmercially viable depends n a number f factrs, sme f which are: the particular attributes f the depsit, such as quantity and quality f the minerals and prximity t infrastructure; mineral prices, which are highly cyclical; and gvernment regulatins, including regulatins relating t prices, taxes, ryalties, land tenure, land use, imprting and exprting f minerals and envirnmental prtectin. The exact effect f these factrs cannt be accurately predicted but culd have a material adverse effect upn the Cmpany s peratins. There is n certainty that the expenditures made by the Cmpany tward the search and evaluatin f minerals will result in discveries f mineral resurces, Mineral Reserves r any ther mineral ccurrences. Plitical Stability and Gvernment Regulatin Risks The peratins f the Cmpany are currently cnducted in Québec, Canada. As such, the peratins f the Cmpany are expsed t varius levels f plitical, ecnmic and ther risks and uncertainties. These risks and uncertainties include, but are nt limited t: terrrism; extreme fluctuatins in currency exchange rates; and changing plitical cnditins, currency cntrls and gvernmental regulatins. Changes, if any, in mining r investment plicies r shifts in plitical attitudes in Québec r Canada mre bradly may adversely affect the peratins r prfitability f the Cmpany. Operatins may be affected in varying degrees by gvernment regulatins with respect t, but nt limited t, restrictins n prductin, price cntrls, exprt cntrls, currency remittance, incme taxes, exprpriatin f prperty, freign investment, maintenance f claims, envirnmental legislatin, land use, land claims f lcal peple, water use and mine safety. Fr example, in 2013 the Gvernment f Québec annunced prpsed changes t Québec s Mining Act, which were subsequently defeated in the Legislature. It is pssible that amended changes may be prpsed at sme future date. Failure t cmply strictly with applicable laws, regulatins and lcal practices relating t mineral rights applicatins and tenure culd result in lss, reductin r exprpriatin f Page 12

13 entitlements, r the impsitin f additinal lcal r freign parties as jint venture partners with carried r ther interests. The ccurrence f these varius factrs and uncertainties cannt be accurately predicted and culd have an adverse effect n the peratins r prfitability f the Cmpany. Insurance and Uninsured Risks The business f the Cmpany is subject t a number f risks and hazards in general, including adverse envirnmental cnditins, industrial accidents, labr disputes, unusual r unexpected gelgical cnditins, grund r slpe failures, changes in the regulatry envirnment and natural phenmena such as inclement weather cnditins, flds and earthquakes. Such ccurrences culd result in damage t mineral prperties r facilities and equipment, persnal injury r death, envirnmental damage t prperties f the Cmpany r thers, delays in mining, mnetary lsses and pssible legal liability. Althugh the Cmpany may maintain insurance t prtect against certain risks in such amunts as it cnsiders being reasnable, its insurance may nt cver all the ptential risks assciated with a mining cmpany s peratins. The Cmpany may als be unable t maintain insurance t cver these risks at ecnmically feasible premiums. Insurance cverage may nt be available r may nt be adequate t cver any resulting liability. Mrever, insurance against risks such as envirnmental pllutin r ther hazards as a result f explratin and prductin is nt generally available t the Cmpany r t ther cmpanies in the mining industry n acceptable terms. The Cmpany might als becme subject t liability fr pllutin r ther hazards which it may nt be insured against r which the Cmpany may elect nt t insure against because f premium csts r ther reasns. Lsses frm these events may cause the Cmpany t incur significant csts that culd have a material adverse effect upn its financial perfrmance and results f peratins. Envirnmental Risks and Hazards All phases f the Cmpany s peratins are subject t envirnmental regulatin in the jurisdictins in which it perates. These regulatins mandate, amng ther things, the maintenance f air and water quality standards and land reclamatin. They als set frth limitatins n the generatin, transprtatin, strage and dispsal f slid and hazardus waste. Envirnmental legislatin is evlving in a manner that will require stricter standards and enfrcement and invlve increased fines and penalties fr nn-cmpliance, mre stringent envirnmental assessments f prpsed prjects, and a heightened degree f respnsibility fr cmpanies and their fficers, directrs and emplyees. There is n assurance that future changes in envirnmental regulatin, if any, will nt adversely affect the Cmpany s peratins. Envirnmental hazards may exist n prperties in which the Cmpany hlds interests which are unknwn t the Cmpany at present and which have been caused by previus r existing wners r peratrs f the prperties. Failure t cmply with applicable laws, regulatins and permitting requirements may result in enfrcement actins there under, including rders issued by regulatry r judicial authrities causing peratins t cease r be curtailed, and may include crrective measures requiring capital expenditures, installatin f additinal equipment r remedial actins. Parties engaged in mining peratins r in the explratin r develpment f mineral prperties may be required t cmpensate thse suffering lss r damage by reasn f the mining activities and may have civil r criminal fines r penalties impsed fr vilatins f applicable laws r regulatins. Page 13

14 Amendments t current laws, regulatins and permits gverning peratins and activities f mining and explratin cmpanies, r mre stringent implementatin theref, culd have a material adverse impact n the Cmpany and cause increases in explratin expenses, capital expenditures r require abandnment r delays in develpment f new mining prperties. Fluctuatins in Metal Prices The price f the cmmn shares, and the financial results and explratin, develpment and mining activities f the Cmpany, may in the future be significantly and adversely affected by declines in the prices f irn re and ther metals r minerals. The prices f irn re and ther metals r minerals fluctuate widely and are affected by numerus factrs beynd the cntrl f the Cmpany such as the sale r purchase f cmmdities by varius central banks and financial institutins, interest rates, exchange rates, inflatin r deflatin, fluctuatins in the value f the United States dllar and ther freign currencies, glbal and reginal supply and demand, the plitical and ecnmic cnditins and prductin csts f majr mineralprducing cuntries thrughut the wrld, the cst f substitutes, inventry levels and carrying charges. Future serius price declines in the market prices f irn re r ther metals r minerals culd cause cntinued develpment f and cmmercial prductin frm the prperties in which the Cmpany hlds an interest t be impracticable. Depending n the prices f irn re and ther metals and minerals, cash flw frm mining peratins culd nt be sufficient and the Cmpany may lse its interest in, r may be frced t sell, sme f its prperties. Future prductin frm the Cmpany s prperties is dependent upn the prices f irn re and ther metals and minerals being adequate t make these prperties ecnmically viable. In additin t adversely affecting the resurce estimates f the Cmpany and its financial cnditin, declining cmmdity prices can affect peratins by requiring a reassessment f the feasibility f a particular prject. Such a reassessment may be the result f a management decisin r be required under financing arrangements related t a particular prject. Even if a prject is ultimately determined t be ecnmically viable, the need t cnduct such a reassessment may cause substantial delays r interrupt peratins until the reassessment can be cmpleted. Key Persnnel The Cmpany is dependent upn the services f key executives, including the directrs f the Cmpany and a small number f highly skilled and experienced executives and persnnel. Due t the relatively small size f the Cmpany, the lss f these persns r the inability f the Cmpany t attract and retain additinal highly-skilled emplyees may adversely affect its business and future peratins. Share Price Vlatility and Liquidity Publicly quted securities are subject t a relatively high degree f price vlatility. It may be anticipated that the quted market fr ur shares will be subject t market trends generally, ntwithstanding any ptential success f us in creating sales and revenues. In additin, ur sharehlders may be unable t sell significant quantities f shares int the public trading markets withut a significant reductin in the price f their shares, if at all. Page 14

15 Frward Lking Statements This dcument includes certain "Frward-Lking Statements as that term is used in applicable securities law. All statements included herein, ther than statements f histrical fact, including, withut limitatin, statements regarding ptential mineralizatin and resurces, explratin results, and future plans and bjectives f the Cmpany, are frward-lking statements that invlve varius risks and uncertainties. In certain cases, frward-lking statements can be identified by the use f wrds such as "plans", "expects" r "des nt expect", "scheduled", "believes", r variatins f such wrds and phrases r statements that certain actins, events r results ptentially, "may", "culd", "wuld", "might" r "will" be taken, ccur r be achieved. There can be n assurance that such statements will prve t be accurate, and actual results culd differ materially frm thse expressed r implied by such statements. Frward-lking statements are based n certain assumptins that management believes are reasnable at the time they are made. In making the frward-lking statements in this presentatin, the Cmpany has applied several material assumptins, including, but nt limited t, the assumptin that: (1) there being n significant disruptins affecting peratins, whether due t labur/supply disruptins, damage t equipment r therwise; (2) permitting, develpment, expansin and pwer supply prceeding n a basis cnsistent with the Cmpany's current expectatins; (3) certain price assumptins fr irn re; (4) prices fr availability f natural gas, fuel il, electricity, parts and equipment and ther key supplies remaining cnsistent with current levels; (5) the accuracy f current mineral resurce estimates n the Cmpany's prperty; (6) labur and material csts increasing n a basis cnsistent with the Cmpany's current expectatins; and (7) the ability t achieve the required financing frm equity markets, debt markets and/r a strategic partner/fftaker t facilitate the develpment and eventual cnstructin f the Cmpany s prjects. Imprtant factrs that culd cause actual results t differ materially frm the Cmpany's expectatins are disclsed under the heading "Risks and Uncertainties" in this MD&A. Such factrs include, amng thers, risks related t the ability f the Cmpany t btain necessary financing and adequate insurance; the ecnmy generally; fluctuatins in the currency markets; fluctuatins in the spt and frward price f irn re r certain ther cmmdities (e.g., diesel fuel and electricity); changes in interest rates; disruptin t the credit markets and delays in btaining financing; the pssibility f cst verruns r unanticipated expenses; emplyee relatins. Accrdingly, readers are advised nt t place undue reliance n Frward-Lking Statements. Except as required under applicable securities legislatin, the Cmpany undertakes n bligatin t publicly update r revise Frward-Lking Statements, whether as a result f new infrmatin, future events r therwise. Additinal infrmatin relating t the Cmpany is available n SEDAR at Page 15