PAGET MINERALS CORP. (An Exploration Stage Company) MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2016

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1 Trading Symbol (TSX-V: PGS) Howe Street Vancouver, British Columbia Canada V6C 1Z7 Tel: (604) Fax: PAGET MINERALS CORP. (An Exploration Stage Company) MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, INTRODUCTION This is Management s Discussion and Analysis ( MD&A ) for Paget Minerals Corp. ( Paget or the Company ) and has been prepared based on information known to management as of March 28, This MD&A is intended to help the reader understand the financial statements of Paget. The following information should be read in conjunction with the audited financial statements and the related notes for the years ended and 2015 and the related notes thereto, prepared in accordance with International Financial Reporting Standards ( IFRS ). The MD&A provides a review of the performance of the company for the year ended December 31,. Additional information relating to the Company can be found on SEDAR Management is responsible for the preparation and integrity of the financial statements, including the maintenance of appropriate information systems, procedures and internal controls. Management also ensures that information used internally or disclosed externally, including the financial statements and MD&A, is complete and reliable. The Company s board of directors follows recommended corporate-governance guidelines for public companies to ensure transparency and accountability to shareholders. The board s audit committee meets with management regularly to review the financial statements, including the MD&A, and to discuss other financial, operating and internal-control matters. All currency amounts are expressed in Canadian dollars unless otherwise noted. FORWARD LOOKING STATEMENTS Certain sections of this MD&A provide, or may appear to provide, a forward-looking orientation with respect to the Company s activities and its future financial results. Consequently, certain statements contained in this MD&A constitute express or implied forward-looking statements. Terms including, but not limited to, anticipate, estimate, believe and expect may identify forward-looking statements. Forward-looking statements, while they are based on the current knowledge and assumptions of the Company s management, are subject to risks and uncertainties that could cause or contribute to the actual results being materially different than those expressed or implied. Readers are cautioned not to place undue reliance on any forwardlooking statement that may be in this MD&A. Paget Minerals Corp. Page 1 of 18

2 Trading Symbol (TSX-V: PGS) Howe Street Vancouver, British Columbia Canada V6C 1Z7 Tel: (604) Fax: The following forward looking statements have been made in this MD&A: Expectations regarding the ability to raise capital and to continue its search for opportunities in the exploration and evaluation assets. ADDITIONAL INFORMATION Financial statements, MD&A s and additional information relevant to the Company and the Company s activities can be found on SEDAR at and/or on the Company s website at SUMMARY AND OUTLOOK Paget is a publicly traded company focused on mineral exploration and as a prospect generator continues to identify and acquire target properties in Canada and the Americas Cordillera During 2015, the Company reduced its corporate head office costs, sold its 100% interest in Ball Creek to Evrim Resources Corp. ( Evrim ), and settled certain indebtedness with shares. On January 21,, the Company completed a non-brokered private placement by issuing 3,000,000 subscription receipts ( Subscription Receipts) at a price of $0.05 per Subscription Receipt for gross proceeds of $150,000. On January 21,, the Subscription Receipts converted into units ( Units ) upon the Company receiving the approvals from its shareholders and the TSX-V regarding the consolidation of its common shares ( Share Consolidation ) on the basis of one (1) post-consolidated common share for every fifteen (15) pre-consolidated common shares held. With the funds in hand and a tight share structure, Paget will focus on gold, silver and copper opportunities in mining-friendly, stable jurisdictions of the Americas Cordillera and Canada. Ore grade will be a prime determinant in acquisitions ranging from early-stage exploration to initial resource stage. Following the Annual General Meeting held on June 8,, Alan Whitehead and George Tikkanen retired from the Board while Paul Kuhn and Richard Topham were elected as new directors, along with Arnold Armstrong, David Volkert and Mark T. Brown being re-elected. On July 11,, David Volkert resigned as the Chief Executive Officer ( CEO ) and Mark T. Brown was appointed as the interim CEO. On September 2,, David Volkert resigned as the director of the Company. Management s overall expectations for the Company are positive, due in part to the following factors: The Company has no property commitments or any property holding costs. The Company completed a 15 to 1 Share Consolidation. The Company might receive further payments from Evrim on the Ball Creek arrangement. The management is highly experienced in the Americas Cordillera area and is actively looking for opportunities. Paget Minerals Corp. Page 2 of 18

3 Trading Symbol (TSX-V: PGS) Howe Street Vancouver, British Columbia Canada V6C 1Z7 Tel: (604) Fax: TABLE OF CONTENTS 1. Background Overview (a) Company Mission and Focus (b) Description of Metal Markets (c) Use of the terms Mineral Resources and Mineral Reserves (d) Historical estimates are not NI compliant Mineral Properties... 5 a) Ball Creek Project (British Columbia)... 5 b) Exploration and prospect generation Risks and Uncertainties Impairment of Long-lived Assets Material Financial and Operations Information (a) Selected Annual Financial Information (b) Summary of Quarterly Results (c) Review of Operations and Financial Results (d) Liquidity and Capital Resources (e) Disclosure of Outstanding Share Data (f) Commitment and Contingency (g) Off-Balance Sheet Arrangements (h) Transactions with Related Parties (i) Financial Instruments Management of Capital Risk Segment information Subsequent Events Policies and Controls Information on the Board of Directors and Management Paget Minerals Corp. Page 3 of 18

4 1. Background The Company is a publicly listed company incorporated on May 24, 2007 under the laws of British Columbia. 2. Overview 2(a) Company Mission and Focus The Company is focused on exploring and developing economic mineral projects in the Americas Cordillera and Canada as a prospect generator company. The Company plans to explore different stages exploration projects, and to acquire and option out these exploration projects, while keeping a retained interest. 2(b) Description of Metal Markets Market interest for all metals such as gold and copper is volatile and the Company will monitor its resources relative to its opportunities during the coming fiscal year. 2(c) Use of the terms Mineral Resources and Mineral Reserves Any reference in this MD&A to Mineral Resources does not mean Mineral Reserve. A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories. An Inferred Mineral Resource has a lower level of confidence than that applied to an Indicated Mineral Resource. An Indicated Mineral Resource has a higher level of confidence than an Inferred Mineral Resource but has a lower level of confidence than a Measured Mineral Resource. 2(d) Historical estimates are not NI compliant The historical estimates contained in this MD&A have not been calculated in accordance with the mineral resources or mineral reserves classifications contained in the CIM Definition Standards on Mineral Resources and Mineral Reserves, as required by National Instrument ("NI "). Accordingly, the Company is not treating these historical estimates as current mineral resources or mineral reserves as defined in NI , and such historical estimates should not be relied upon. A qualified person has not done sufficient work to date to classify the historical estimates as current mineral resources or mineral reserves. Paget Minerals Corp. Page 4 of 18

5 3. Mineral Properties a) Ball Creek Project (British Columbia) The Company owned a 100% undivided interest in the Ball Creek Gold-Copper property located in northwestern British Columbia. During the year ended 2015, the Company entered into a purchase and sale agreement (the Sale ) with Evrim Resources Corp. ( Evrim ) to sell its 100% interest in the Ball Creek property for a cash consideration of $150,000. The Company also transferred the related reclamation deposits to Evrim. The remaining reclamation deposit of $24,375 was to be paid to the Company upon Evrim redeeming the remaining reclamation deposits. In February, Evrim refunded $4,375 of its related reclamation deposits to the Company. As at, the Company had a balance of $20,000 recorded as deposits and receivables relating to the remaining reclamation deposit refunds due from Evrim. The Company may receive additional consideration listed below if Evrim enters into an option, earn-in or purchase and sale agreement with a third party in respect of the Ball Creek property. Additional Consideration Third Party Option/ Joint Venture Payment If Evrim enters into an option, earn-in or purchase and sale agreement with a third party in respect of the Ball Creek property (the Future Agreement ), Evrim shall pay to Paget a payment ( Joint Venture Payment ) within 60 days of receipt by Evrim of such Future Payment (defined as any cash payment or any payment of consideration other than cash received by Evrim as consideration payable under a Future Agreement) as follows: 40% of any Future Payment received by Evrim pursuant to a Future Agreement on or before the first anniversary date of any Future Agreement; 30% of any Future Payment received by Evrim pursuant to a Future Agreement after the first anniversary date of any Future Agreement and on or before the second anniversary date of any Future Agreement; 20% of any Future Payment received by Evrim pursuant to a Future Agreement after the second anniversary date of any Future Agreement and on or before the third anniversary date of any Future Agreement; and 10% of any Future Payment received by Evrim pursuant to a Future Agreement after the third anniversary date of any Future Agreement and on or before the fourth anniversary date of any Future Agreement. If a Future Payment received by Evrim includes consideration other than cash, Evrim may elect to make the Joint Venture Payment required by the above payment schedule by paying to the Company the cash equivalent value of such non-cash consideration. Additional Consideration Milestone Share Payments Evrim will be obligated to make the following additional payments to Paget on the occurrence of the following events: Paget Minerals Corp. Page 5 of 18

6 100,000 Evrim Shares or cash equivalent within 14 days of Evrim entering into a Future Agreement; 250,000 Evrim shares or cash equivalent upon the completion by Evrim, or any third party with which Evrim has entered into a Future Agreement, of an aggregate of 10,000 meters of drilling as part of mining work; 400,000 Evrim shares or cash equivalent upon the announcement by Evrim, or any third party which Evrim has entered into a Future Agreement, of a measured or indicated mineral resource estimate of at least 500,000,000 tonnes at a grade of at least 0.50% copper equivalent in accordance with National Instrument ,000 Evrim shares or cash equivalent upon the completion by Evrim, or any third party which Evrim has entered into a Future Agreement, of a Feasibility Study on the Ball Creek property. If Evrim elects to deliver a cash payment in lieu of the Evrim shares, the value of the Evrim shares will be determined as the quotient of (i) the sum of the volume-weighted average price for such Evrim shares on the Exchange for each of the 10 trading days ending at the close of business on the Exchange immediately prior to the applicable delivery date, and (ii) 10. On February 7, 2017, Evrim announced that it signed an exclusivity agreement with a wholly owned subsidiary of Antofagasta PLC ( Antofagasta ) on the Ball Creek property. Antofagasta will have the exclusive right to complete the due diligence and negotiate a definitive agreement to acquire up to a 70% interest in the Ball Creek property by spending up to US$31 million over a 13-year period, with a minimum commitment of US$300,000 in It was announced that the signing of a definitive agreement is expected to be completed on or before April 15, b) Exploration and prospect generation The Company continues to look for gold, silver and copper opportunities with high ore grades in the Americas Cordillera and Canada. With a prospect generator business model, the Company will acquire such opportunities and advance them in order to then attract larger, mining-oriented companies to take on the projects for further, higher-risk exploration, and hopefully development into metals production. 4. Risks and Uncertainties The Company is engaged in the exploration for mineral deposits. These activities involve significant risks which even with careful evaluation, experience and knowledge may not, in some cases, be eliminated. The Company s success depends on a number of factors, many of which are beyond its control. The primary risk factors affecting the Company include inherent risks in the mining industry, metal price fluctuations and operating in foreign countries and currencies. Inherent risks within the mining industry The commercial viability of any mineral deposit depends on many factors, not all of which are within the control of management. Some of the factors that will affect the financial viability of a Paget Minerals Corp. Page 6 of 18

7 given mineral deposit include its size, grade and proximity to infrastructure. Government regulation, taxes, royalties, land tenure and use, environmental protection and reclamation and closure obligations could also have a profound impact on the economic viability of a mineral deposit. Mining activities also involve risks such as unexpected or unusual geological operating conditions, floods, fires, earthquakes, other natural or environmental occurrences and political and social instability. It is not always possible to obtain insurance against all such risks and the Company may decide not to insure against certain risks as a result of high premiums or for other reasons. The Company does not currently maintain insurance against political or environmental risks. Should any uninsured liabilities arise, they could result in increased costs, reductions in profitability, and a decline in the value of the Company s securities. There is no assurance at this time that the Company s current mineral properties will be economically viable for development and production. Prices for metals Metals prices are subject to volatile price fluctuations and have a direct impact on the commercial viability of the Company s exploration properties. Price volatility results from a variety of factors, including global consumption and demand for metals, international economic and political trends, fluctuations in the US dollar and other currencies, interest rates, and inflation. The Company has not hedged any of its potential future metal sales. The Company closely monitors metal prices to determine the appropriate course of action to be taken by the Company. Foreign currency risks The Company uses the Canadian dollar as its measurement and reporting currency, and therefore fluctuations in exchange rates between the Canadian dollar and other currencies may affect the results of operations and financial position of the Company. The Company does not currently have any foreign currency or commercial risk hedges in place. The Company raises the majority of its equity financings in Canadian dollars. Fluctuations in the exchange rates between the Canadian dollar and other currencies may impact the Company s financial condition. Risks Associated with Foreign Operations Investments in foreign countries carry certain risks associated with different political, business, social and economic environments. The Company evaluates various commodities in foreign countries and will undertake new investments only when it is satisfied that the risks and uncertainties of operating in different cultural, economic and political environments are manageable and reasonable relative to the expected benefits. Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently Paget Minerals Corp. Page 7 of 18

8 ambiguous conveyance and regulatory characteristics of property rights in certain foreign countries. Future government, political, legal or regulatory changes in the foreign jurisdictions in which the Company plans to operate could affect many aspects of the Company s business, including title to properties and assets, environmental protection requirements, labor relations, taxation, currency convertibility, repatriation of profits or capital, the ability to import necessary materials or services, or the ability to export produced materials. 5. Impairment of Long-lived Assets The Company completed an impairment analysis as at and concluded that no impairment charge was required because the Company didn t own any mineral property as of the year end. 6. Material Financial and Operations Information 6(a) Selected Annual Financial Information Year Ended Year Ended 2015 Year Ended 2014 Total revenues $ - $ - $ - Operating and administrative expenses 172, ,195 3,716,975 Loss for the year (172,834) (116,195) (3,716,975) Loss per share (0.02) (0.02) (0.62) Total assets 67,057 67, ,060 Total long-term financial liabilities Cash dividends declared per share N/A N/A N/A 6(b) Summary of Quarterly Results The following is a summary of the Company s financial results for the last eight quarters: Three months ended September 30, June 30, March 31, Total revenues $ - $ - $ - $ - Net (loss) $ (19,865) $ (62,018) $ (46,628) $ (44,323) (Loss) per share $ (0.00) $ (0.01) $ (0.01) $ (0.01) Paget Minerals Corp. Page 8 of 18

9 2015 September 30, 2015 June 30, 2015 March 31, 2015 Total revenues $ - $ - $ - $ - Net (loss) income $ (57,559) $ (30,400) $ (63,357) $ 35,121 (Loss) Earnings per shar $ (0.01) $ (0.01) $ (0.01) $ (c) Review of Operations and Financial Results Three months ended For three months ended and three months ended 2015 During the three months ended, the Company had a net loss of $19,865 ($0.00 loss per share) compared to a net loss of $57,559 ($0.01 loss per share) for the same period in Excluding the write-off of equipment of $nil ( $5,268), the Company s net loss amounted to $19,865 during the three months ended compared to $52,291 for the same period in 2015, a decrease of $32,426. The decrease in loss was mainly due to the Company keeping its administrative expenses down. For the year ended and year ended 2015 During the year ended, the Company had a net loss of $172,834 ($0.02 loss per share) compared to a net loss of $116,195 ($0.02 loss per share) for the year ended Excluding the write-off of equipment of $nil ( $5,268), a non-cash gain from the settlement of debt of $nil (2015 gain of $37,548) and non-cash share-based payments of $36,944 (2015 $nil), the Company s net loss amounted to $135,890 during the year ended, compared to 2015 s $148,475, a decrease of $12,585. The decrease in loss was a result of (a) a decrease in general and administration from 2015 s $171,728 to s $97,456 as a result of the Company conserving cash and offset by (b) an increase in salaries and wages from 2015 s negative $29,244 to s $36,283 due to the reversal of the accrued management salaries in fiscal There was a non-cash gain recorded for the settlement of debt in By agreement dated January 15, 2015, the Company agreed to issue 58,865 common shares (882,968 preconsolidation common shares) to Sundance Minerals Ltd. ( Sundance ) as full payment of its indebtedness to Sundance in the amount of $46,378 (US$37,000) resulting from certain obligations of the Company under the Option Agreement dated August 17, 2002 and amended on April 25, The shares were issued on March 2, 2015 and had a fair value of $8,830. A non-cash gain of $37,548 was recorded in connection with the settlement of debt. Paget Minerals Corp. Page 9 of 18

10 6(d) Liquidity and Capital Resources On January 21,, the company completed a non-brokered private placement by issuing 3,000,000 units ( Unit ) at a price of $0.05 per unit for gross proceeds of $150,000. Each Unit consists of one common share and one non-transferable warrant. Each warrant entitles the holder to purchase one additional common share for a 36-month period ending January 5, 2019 at a price of $0.10. In connection with the financing, the Company paid $2,500 as a cash finder s fee and issued 70,000 finder s options, each of which is exercisable into one Unit at a price of $0.05 until January 5, On April 11,, the Company issued 200,000 common shares at a fair value of $0.05 per share to its former Chief Executive Officer for past services. As at, the Company had a working capital of $33,856 ( 2015 working capital deficiency of $293). Cash totaled $29,177 as at, an increase of $2,987 from $26,190 as at The increase was a result of $146,013 net proceeds from the non-brokered private placement which being offset by $143,026 spent in operating activities. As of the date of this MD&A, the Company has no outstanding commitments and has not pledged any of its assets as security for loans. The Company is aware of the current conditions in the financial markets and has planned accordingly. If the market conditions prevail or improve, the Company will make adjustment to the budgets accordingly. Management estimates that the current cash position and potential future cash flows from warrants, finder s options and options might not be sufficient for the Company to carry out its anticipated operating plans through and thus, the Company will therefore rely on debt or equity financing in 2017 to continue with its operation. 6(e) Disclosure of Outstanding Share Data The authorized share capital of the Company consists of an unlimited number of common shares without par value. On January 5,, the Company completed a consolidation of its common shares ( share consolidation ) on the basis of one (1) post-consolidated common share for every fifteen (15) preconsolidated common shares held. All references to share, per share amounts, and exercise prices have been retroactively restated to reflect the effect of the share consolidation. As at, the Company s share capital was $13,089,947 ( $12,946,780) representing 9,279,834 common shares ( ,079,834 common shares). Paget Minerals Corp. Page 10 of 18

11 Stock option transactions and the number of stock options for the year ended are summarized as follows: Expiry date Exercise price 2015 Granted Exercised Expired / cancelled December 1, $ , (6,667) - November 25, 2017 $ , ,667 December 7, 2017 $ , ,667 December 19, 2018 $ ,334 (1) ,334 December 9, 2019 $ ,667 (2) ,667 August 15, 2021 $ , ,000 Options outstanding 190, ,000 - (6,667) 683,335 Options exercisable 190, (6,667) 683,335 Weighted average exercise price $ 1.31 $ 0.10 $ - $ 3.75 $ 0.40 (1) 6,667 of these options will expire on (2) 10,000 of these options will expire on As of, the Company had 3,000,000 warrants outstanding. Expiry date Exercise price 2015 Issued Exercised Expired January 5, 2019 $ ,000, ,000,000 Outstanding - 3,000, ,000,000 Weighted average exercise price $ - $ 0.10 $ - $ - $ 0.10 As of, the Company had 70,000 finder s options outstanding. Expiry date Exercise price 2015 Issued Exercised Expired January 5, 2019 (1) $ , ,000 Outstanding - 70, ,000 Weighted average exercise price $ - $ 0.05 $ - $ - $ 0.05 (1) Each finder's option is exercisable into one share and one warrant, with each warrant exercisable at $0.10 until January 5, If the remaining options and warrants were exercised, the Company s available cash would increase by $584,253. As of the date of this MD&A, there were 9,279,834 common shares issued and outstanding and 13,103,169 common shares outstanding on a diluted basis. Paget Minerals Corp. Page 11 of 18

12 6(f) Commitment and Contingency None. 6(g) Off-Balance Sheet Arrangements None. 6(h) Transactions with Related Parties Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of executive and non-executive members of the Company s Board of Directors and corporate officers. The aggregate value of transactions and outstanding balances relating to key management personnel and entities over which they have control or significant influence were as follows: For the year ended David Volkert Former Chief Short-term employee benefits Other expenses Share-based payments Total Executive Officer (1) $ - $ 864 $ 11,847 (2) $ 12,711 Mark Brown Interim Chief Executive Officer $ - $ - $ 7,389 $ 7,389 Winnie Wong Chief Financial Officer $ - $ - $ 5,542 $ 5,542 For the year ended 2015 David Volkert Former Chief Short-term employee benefits Other expenses Share-based payments Total Executive Officer (1) $ (35,099) (3) $ 5,855 $ - $ (29,244) (1) On July 11,, David Volkert resigned as the Chief Executive Officer. Mark T. Brown was appointed as the interim CEO of the Company. Mr. Volkert was paid through his company Volkert ExploResources Ltd. (See the next table). (2) On April 11,, the Company issued 200,000 common shares at a fair value of $0.05 per share to David Volkert for past services for a total fair value of $10,000. The amount also includes $1,847 related to the fair value of options vested during the year. Paget Minerals Corp. Page 12 of 18

13 (3) During the year ended 2015, it was resolved that the accrued management salary of $50,313 owing to David Volkert would not be paid due to the financial situation of the Company and therefore was removed as a liability of the Company and reversed in 2015, resulting in a net recovery of salaries and wages of $29,244. Related party transactions and balances Amounts due to: Avisar Chartered Accountants (a) Services Accounting, administrative costs and CFO services Year ended $ - $ 37,700 $ - $ 16,000 Edwards, Kenny & Bray LLP (b) Legal services - 59,745-9,148 Volkert ExploResources Geological consulting 25,419 2, Ltd. (c) services Pacific Opportunity Capital Ltd. (d) Management and accounting services 30,000 5,000 2,625 2,625 TOTAL: $ 55,419 $ 104,845 $ 2,625 $ 27,773 As at (a) (b) (c) (d) A partner at Avisar Chartered Accountants was an officer of the Company until resignation during the year ended A partner at Edwards, Kenny & Bray LLP was an officer of the Company until resignation during the year ended The shareholder of Volkert ExploResources Ltd. was a director and officer of the Company until resignation in September. Pacific Opportunity Capital Ltd., a company controlled by a director and officer of the Company. The above amounts are non-interest bearing, unsecured with no specified terms of repayment. 6(i) Financial Instruments Carrying amount Financial Assets Loans and receivables Cash 29,177 Fair value Carrying amount 2015 Fair value $ $ 29,177 $ 26,190 $ 26,190 Receivables ,831 1,831 Deposits and receivables 20,000 20,000 24,375 24,375 Available-for-Sale Short-term investments 17,267 17,267 7,616 7,616 Financial Liabilities Other financial liabilities Trade and other payables $ 13,201 $ 13,201 $ 43,028 $ 43,028 Paget Minerals Corp. Page 13 of 18

14 Fair values for short-term investments are determined directly by reference to published price quotations in an active market. These instruments are classified in accordance with level 1 of the fair value hierarchy. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value as described as follows: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 Inputs other than quoted prices that are observable for the assets or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 Inputs that are not based on observable market data Level 1 Short-term investments $ 17,267 $ 7,616 The fair values of the Company s cash, receivables, and trade and other payables approximate their fair value because of the short-term nature of these instruments. Non-current deposits and receivables also approximates its carrying value. The Company s financial instruments are exposed to certain financial risks, including credit risk, liquidity risk and market risk with respect to currency risk, interest risk and price risk. (a) Credit Risk Credit risk is the risk of an unexpected loss if a third party to a financial instrument fails to meet its contractual obligations. The Company s maximum exposure to credit risk, defined as the sum of its cash, and receivables is equal to its carrying value. The Company holds its cash with a major Canadian financial institution. The Company s deposits and receivables are subject to uncertainty on the timing of collection. The maximum exposure is equal to its carrying value. (b) Liquidity Risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure. The Company plans to obtain further equity financing to fund operations and future obligations as they come due. (c) Currency Risk The Company has nominal currency risk as it operates primarily in Canada and its functional currency is the Canadian dollar. As such, the Company is not subject to currency risk. Paget Minerals Corp. Page 14 of 18

15 (d) Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk that the Company will realize a loss due to fluctuations in market rates is nominal due to surplus funds being held as cash or short-term interest bearing deposits. Assuming all other variables remain constant, a 1% change in interest rates would result in an immaterial difference in the Company s annual finance income. (e) Price Risk Price risk is the risk that fair value or future cash flows of the Company s short-term investments in quoted mining exploration companies will fluctuate and the Company will realize a loss on disposal of the short-term investments. The fair value of the Company s investments represents the maximum exposure to price risk. Assuming all other variables remain constant, a 20% change in the quoted stock prices would result in an increase/decrease in the Company s loss and comprehensive loss of approximately $3, Management of Capital Risk The Company includes equity as capital. The Company s primary objective is to pursue the advancement of its exploration and evaluation assets. In order to do so, it endeavours to safeguard its ability to continue as a going concern, while maintaining a flexible capital structure. As the Company has no regular cash inflows from operations, the Company may attempt to issue new shares, dispose of, or pursue option agreements and/or joint ventures on assets in order to raise funds. In order to facilitate the management of its capital requirements, the Company prepares periodic expenditure budgets that are updated as necessary depending on various factors, including capital deployment, results from the exploration of its properties and general industry conditions. The Company s current investment policy is to hold its cash balances at a major Canadian financial institution in order to preserve and protect its capital. The Company is not subject to any externally imposed restrictions on the management of its capital structure. There were no changes to the Company s capital management approach during the year. 8. Segment information The Company operates in one reportable segment, being the identification and acquisition of exploration and evaluation assets. The Company s non-current assets are located in Canada. 9. Subsequent Events None other than disclosed already in other sections. Paget Minerals Corp. Page 15 of 18

16 10. Policies and Controls 10(a) Significant Accounting Policies and Estimates The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. The financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and further periods if the revision affects both current and future periods. Significant assumptions about the future and other sources of estimation uncertainty that management has made at the statement of financial position date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following: Fair value of stock options and warrants Determining the fair value of compensatory warrants and stock options requires the estimation of stock price volatility, the expected forfeiture rate and the expected term of the underlying instruments. Any changes in the estimates or inputs utilized to determine fair value could result in a significant impact on the Company s future operating results or on other components of equity. Income taxes The estimation of income taxes includes evaluating the recoverability of deferred tax assets based on an assessment of the Company s ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions. Management assesses whether it is probable that some or all of the deferred income tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income, which in turn is dependent upon the successful discovery, extraction, development and commercialization of mineral reserves. To the extent that management s assessment of the Company s ability to utilize future tax deductions changes, the Company would be required to recognize more or fewer deferred tax assets, and deferred income tax provisions or recoveries could be affected. To the extent that any of management s assumptions change, there could be a significant impact on the Company s future financial position, operating results and cash flows. 10(b) Future Accounting Pronouncements Certain new accounting standards and interpretations have been published that are not mandatory for the reporting period. The Company has not early adopted the following new and revised standards, amendments and interpretations that have been issue but are not yet effective: Paget Minerals Corp. Page 16 of 18

17 IFRS 9 (Amended 2010) Financial Instruments (effective January 1, 2018) IFRS 15 Revenue from Contracts (effective January 1, 2018) IFRS 16 Leases (effective January 1, 2019) The Company anticipates that the application of the above new and revised standards, amendments and interpretations will have no material impact on its results and financial position. 10(c) Changes in Internal Controls over Financial Reporting ( ICFR ) Changes in Internal Control Over Financial Reporting ( ICFR ) In connection with National Instrument , Certification of Disclosure in Issuer s Annual and Interim Filings ( NI ) adopted in December 2008 by each of the securities commissions across Canada, the Chief Executive Officer and Chief Financial Officer of the Company will file a Venture Issuer Basic Certificate with respect to financial information contained in the unaudited interim financial statements and the audited annual financial statements and respective accompanying Management s Discussion and Analysis. The Venture Issue Basic Certification does not include representations relating to the establishment and maintenance of disclosure controls and procedures and internal control over financial reporting, as defined in NI Disclosure Controls and Procedures The Company s CEO and CFO are responsible for establishing and maintaining the Company s disclosure controls and procedures. Management, including the CEO and CFO, have evaluated the procedures of the Company and have concluded that they provide reasonable assurance that material information is gathered and reported to senior management in a manner appropriate to ensure that material information required to be disclosed in reports filed or submitted by the Company is recorded, processed, summarized and reported within the appropriate time periods. While management believes that the Company s disclosure controls and procedures provide reasonable assurance, they do not expect that the controls and procedures can prevent all errors, mistakes, or fraud. A control system, no matter how well conceived or operated, can only provide reasonable, not absolute, assurance that the objectives of the control system are met. Paget Minerals Corp. Page 17 of 18

18 11. Information on the Board of Directors and Management Directors: Paul Kuhn Richard Topham G. Arnold Armstrong Mark T. Brown Audit Committee members: Mark T. Brown, Paul Kuhn, and Richard Topham Management: Mark T. Brown Interim Chief Executive Officer, President Winnie Wong Chief Financial Officer and Corporate Secretary Paget Minerals Corp. Page 18 of 18