URZ ENERGY CORP. (FORMERLY SUMMIT POINT URANIUM CORP.) MANAGEMENT DISCUSSION AND ANALYSIS FOR THE PERIOD ENDED JUNE 30, 2017 TABLE OF CONTENTS

Transcription

1 URZ ENERGY CORP. (FORMERLY SUMMIT POINT URANIUM CORP.) MANAGEMENT DISCUSSION AND ANALYSIS FOR THE PERIOD ENDED JUNE 30, 2017 TABLE OF CONTENTS Description of Business... 2 Highlights for the Period Ended June 30, Overall Performance... 3 Portfolio of Mineral Properties... 3 Gas Hills Project, Wyoming... 3 Juniper Ridge Project, Wyoming... 4 Shirley Basin, Wyoming and Other Uranium Projects, Utah and Colorado... 5 Results of Operations for the Three Months Ended June 30, Results of Operations for the Nine Months Ended June 30, Liquidity, Cash Flows and Capital Resources... 6 Annual Financial Information... 7 Quarterly Financial Information... 7 Related Party Disclosures... 8 Off-Balance Sheet Arrangements... 8 Commitments... 8 Conflicts of Interest... 8 Outstanding Share Data... 8 Critical Accounting Estimates... 9 Accounting Standards and Interpretations Issued but Not Yet Adopted... 9 Risks and Uncertainties Corporate Governance Cautionary Statement Other Information... 13

2 Background URZ Energy Corp. (Formerly Summit Point Uranium Corp.) (the Company or URZ ) provides this Management Discussion and Analysis ( MD&A ) of financial position and results of operations as of August 28, This MD&A should be read in conjunction with unaudited condensed interim consolidated financial statements for the period ended June 30, 2017 and the notes thereto, as well the audited financial statements for the years ended September 30, 2016 and 2015, which have been prepared in accordance with International Financial Reporting Standards ( IFRS ). Except as otherwise disclosed, all dollar figures included therein and in the following MD&A are quoted in Canadian dollars. The Company has prepared this MD&A following the requirements of National Instrument , Continuous Disclosure Obligations. Description of Business The Company was incorporated on January 11, 2008 under the Business Corporations Act (British Columbia). On February 6, 2017, the Company changed its name from Summit Point Uranium Corp. to URZ Energy Corp. The Company s principal office is located at # West Hastings Street, Vancouver, British Columbia, Canada, V6E 2E9. The Company is in the mineral exploration and development business, with its activities located in North America. To date, no mineral development projects have been completed and no commercial development or production has commenced. Highlights for the Period Ended June 30, 2017 On September 9, 2016, the Company entered into an Asset Purchase and Sale Agreement ( Agreement ) with Strathmore Resources (US) Ltd. ( Strathmore ) whereby the Company purchased all of Strathmore s interests in the Gas Hills Property, the Juniper Ridge Property and the Shirley Basin Property (collectively the Purchased Assets ). The Purchased assets are located in Wyoming, USA and consist of: 884 unpatented mining claims located in Fremont, Carbon and Natrona Counties; 4 Wyoming State leases; 1 private mineral lease agreement; and 1 private surface use and access agreement. The consideration for the Purchased Assets is as follows: (i) Pay to Strathmore US$200,000 on closing (completed); (ii) Reimburse Strathmore for the Bureau of Land Management claim maintenance fees for 884 total claims in the amount of US$137,020 due September 1, 2016 (completed); (iii) Replace all existing permit bonds of US$63,000 (paid); and (iv) Pay to Strathmore US$200,000 on the first anniversary of the closing date. This transaction closed on October 31, On October 7, 2016, the Company completed the first tranche of a non-brokered private placement for 3,969,230 shares at a price of $0.1625, for gross proceeds of $645,000. On October 21, 2016, the Company completed the second tranche of a non-brokered private placement for 307,692 shares at a price of $0.1625, for gross proceeds of $50,000. On November 9, 2016, the Company completed the third tranche of a non-brokered private placement for 1,230,768 shares at a price of $0.1625, for gross proceeds of $200,000. On December 13, 2016, the Company completed the fourth tranche of a non-brokered private placement for 307,692 shares at a price of $0.1625, for gross proceeds of $50,000. On December 15, 2016, the Company completed a non-brokered private placement for 1,500,000 shares at a price of $0.065, for gross proceeds of $97,500. On December 16, 2016, the Company completed settlements with certain creditors, four of whom are current directors and/or officers of the Company. In consideration for settlement of accounts payable of $114,173, the Company issued 702,601 common shares of the Company at a deemed price of $ per share. 2 P a g e

3 On February 6, 2017, the Company consolidated all of its common shares, of which a total of 72,341,582 were issued, fully paid and currently outstanding, on a [1] for [6.5] basis. The number of common shares outstanding has been adjusted retrospectively to reflect the effect of the reverse share split. On March 1, 2017, the Company completed the first tranche of a non-brokered private placement for 7,225,034 units at a price of $0.15 for total gross proceeds of $1,083,755. Each unit is comprised of one common share and one-half of one share purchase warrant. Each whole warrant will entitle the holder to purchase one additional share for $0.40 until August 15, On March 10, 2017, the Company completed the second tranche of a non-brokered private placement for 4,141,667 units at a price of $0.15 for total gross proceeds of $621,250. Each unit is comprised of one common share and one-half of one share purchase warrant. Each whole warrant will entitle the holder to purchase one additional share for $0.40 until August 15, Overall Performance During the period ended June 30, 2017, the Company maintained its priority on the Gas Hills, Juniper Ridge, and Shirley Basin projects. The Company continued to investigate new properties and mineral claims that show exploration potential and create shareholder value. As well, the continued exploration success in the vicinity of the Company s projects is being continually monitored. Portfolio of Mineral Properties Gas Hills Project, Wyoming The Gas Hills Project, located in the historic Gas Hills uranium district, is situated 45 miles east of Riverton, Wyoming. The Gas Hills Project consists of approximately 11,000 acres of unpatented lode mining claims, State of Wyoming mineral leases, and private mineral leases, within a brownfield site which has experienced extensive development including mine and mill site production. 3 P a g e

4 History of the Gas Hills Project Between 1953 and 1988, various companies explored, developed, and produced uranium in the Gas Hills uranium district, including on lands now controlled by URZ. Three uranium mills operated in the district and two others nearby were also fed by ore mined from the Gas Hills uranium district. Cumulative production from the district is in excess of 100 million pounds of uranium, mainly from open-pit mining. The Gas Hills Project was owned by Strathmore Minerals Corporation from 2007 until 2013, at which time the company and the project was acquired by Energy Fuels Inc. Summary of Mineral Resources Gas Hills Project In June 2017, a technical report was prepared by BRS Inc. on the Gas Hills Project titled Amended and Restated Gas Hills Uranium Project, Mineral Resource and Exploration Target NI Technical Report, Fremont and Natrona Counties, Wyoming, USA (the Gas Hills Report ). The Gas Hills Report outlines an indicated resource of 4.7 million pounds eu3o8 (2.4 million tons at an average grade of 0.098% eu3o8) and an inferred resource of 2.5 million pounds eu3o8 (2.3 million tons at an average grade of 0.054% eu3o8) see Table 1 below for further details. The Gas Hills Report has been filed under the Company s profile on SEDAR ( The uranium mineralization is contained in Wyoming type roll-front deposits hosted by arkosic sandstone beds of the Eocene Wind River Formation. The deposits are stratabound and occur from the surface to depths of ~450 feet in areas amenable to open-pit mining, and to depths in excess of 1,200 ft which may be amenable to ISR. Data sources for the estimation of uranium mineral resources for the Gas Hills Project included radiometric equivalent data (eu3o8) for 4,228 drill holes and eu3o8 and Prompt Fission Neutron ( PFN ) logging data for 182 drill holes completed between 2007 and Based on areas of wide-spaced limited historical drilling and areas of past mine production, the Company believes that there is sufficient geological evidence to interpret that mineralization may extend from current mineral resource areas along identified trends. Based on a detailed review of previous work, URZ has outlined five high priority exploration targets within the project for follow-up including Day Loma, Day Loma/Loco-Lee, Loco-Lee, George-Ver, and Bullrush. For the period ended June 30, 2017, the Company expended $449,164 at the Gas Hills Project, which increased the exploration and evaluation assets associated to the advancement of the Gas Hills Project to $449,164. Juniper Ridge Project, Wyoming In addition to the Gas Hills Project, URZ also owns the advanced stage Juniper Ridge Project. The Juniper Ridge Project is located in the southwest portion of Wyoming, approximately 10 miles west of the town of Baggs and accessible by county and local roads. The Juniper Ridge Project consists of approximately 3,300 acres of unpatented lode mining claims and State of Wyoming mineral leases, and is located within a brownfield site which has experienced extensive exploration, development, and mine production. History of the Juniper Ridge Project Uranium was discovered in the Juniper Ridge Project area in 1951, with commercial uranium mining occurring intermittently from 1954 until Seven companies have mined uranium in the area producing over 0.5 million pounds via open-pit and shallow underground mines. The Juniper Ridge Project was owned by Strathmore Minerals Corporation from 2007 until 2013, at which time the company and the project were acquired by Energy Fuels Inc. Summary of Mineral Resources Juniper Ridge Project In June 2017, a technical report was prepared by BRS Inc. and T.P. McNulty and Associates Inc. on the Juniper Ridge Project titled Juniper Ridge Uranium Project, Amended and Restated Mineral 4 P a g e

5 Resource and Preliminary Economic Assessment Technical Report (the Juniper Ridge Report ). The Juniper Ridge Report outlines an indicated resource of 6.0 million pound eu3o8 (5.1 million tons at an average grade of 0.058% eu3o8) and an inferred resource of 0.2 million pound eu3o8 (0.1 million tons at an average grade of 0.085% eu3o8) see Table 1 below for further details. The Juniper Ridge Report has been filed under the Company s profile on SEDAR ( The uranium mineralization is characterized as Wyoming sandstone mineralization. While local mineralization displays some of the characteristics of known uranium deposits in the Gas Hills uranium district and in the Powder River Basin of Wyoming, the mineralization at the Juniper Ridge Project is sandstone hosted. Data sources for the estimation of uranium mineral resources for the Juniper Ridge Project consists of 2,716 drill holes including radiometric equivalent data (eu3o8) for 2,167 drill holes completed pre-2011, Uranium Spectral Analysis Tool ( USAT ) assay data for 400 drill holes completed during the 2011 drilling program, and radiometric equivalent and PFN assay data for 149 drill holes completed in For the period ended June 30, 2017, the Company expended $107,942 at the Juniper Ridge Project, which increased the exploration and evaluation assets associated to the advancement of the Juniper Ridge Project to $107,942. Mineral Resource Estimate Gas Hills Project and Juniper Ridge Project Table 1: URZ NI Resource Estimate Class Cut-off Tons (x1,000) (1) Weighted Average Grade (% eu 3O 8) Pounds eu 3O 8 (x1,000) (1) Gas Hills Indicated 0.10 GT 2, ,729 Inferred 0.10 GT 2, ,529 Juniper Ridge Indicated 0.10 GT 5, ,006 Inferred 0.10 GT Total Indicated 10,735 Total - Inferred 2,711 1 Columns may not add due to rounding Shirley Basin, Wyoming and Other Uranium Projects, Utah and Colorado The Company also owns the prospective Shirley Basin Project in Wyoming, as well as uranium stockpiles in Utah (situated between Anfield Resources Inc. s Ticaboo Mill and Energy Fuels Inc. s Tony M Mine) and exploration properties in the well known Uravan District, straddling the Colorado and Utah border. For the period ended June 30, 2017, the Company expended $37,730 at the Shirley Basin Project, which increased the exploration and evaluation assets associated to the advancement of the Shirley Basin Project to $37,730. For the period ended June 30, 2017, the Company expended $1,197 at the Ticaboo Project, which increased the exploration and evaluation assets associated to the advancement of the Ticaboo Project to $486,624. For the period ended June 30, 2017, the Company expended $Nil at the JB Project, which increased the exploration and evaluation assets associated to the advancement of the JB Project to $858, P a g e

6 Results of Operations for the Three Months Ended June 30, 2017 For the three months ended June 30, 2017, the Company recorded a net loss of $136,970 versus a loss of $749 incurred during the three-month period ended June 30, The increase in net loss during the three-month period ended June 30, 2017 is due primarily from an increase in audit and accounting fees ($6,930), consulting fees ($68,879), office rent and parking ($6,897), property investigation ($30,743), and travel ($7,982). The increase in audit and accounting is due to an increased amount of transactions and events. The increase in consulting fees is due to the hiring of new consultants to facilitate the increased activity. The increase in office rent and parking is due to the commencement of payments for office rent, beginning in March The increase in property investigation is due to activities related to exploring new potential properties. The increase in travel is due to increased travel between the Vancouver and Wyoming offices and other mining conferences. Results of Operations for the Nine Months Ended June 30, 2017 For the nine months ended June 30, 2017, the Company recorded a net loss of $476,937 versus a loss of $4,297 incurred during the nine-month period ended June 30, The increase in net loss during the nine-month period ended June 30, 2017 is due primarily from an increase in consulting fees ($84,364), interest and bank charges ($13,246), stock-based compensation ($301,132), insurance expense ($9,626), property investigation ($30,743), and office rent and parking ($8,905). The increase in consulting fees is due to the hiring of new consultants to facilitate the increased activity. The increase in interest and bank charges is due to a one-time payment for filings prior to becoming a publicly listed company. The increase in stock-based compensation is due to the granting of 2,240,000 options during the current period, and the related vesting. The increase in insurance expense is due to additional premiums. The increase in property investigation is due to is due to activities related to exploring new potential properties. The increase in office rent and parking is due to the commencement of payments for office rent, beginning in March Liquidity, Cash Flows and Capital Resources Period Ended June 30, 2017 Period Ended June 30, 2016 Sources and Uses of Cash Cash used in operations prior to changes in working capital $ (174,615) $ (2,842) Changes in non-cash working capital (66,189) (2,466) Cash provided by operating activities (240,804) (5,308) Cash used in investing activities (602,460) (214) Cash provided by financing activities 2,377,110 6,785 Change in cash and cash equivalents $ 1,533,846 $ 1,263 Operating Activities For the period ended June 30, 2017, cash used in operating activities, prior to changes in non-cash working capital, was $174,615 compared to $2,842 used during the period ended June 30, The increase in cash used is due primarily to the variances as outlined under the Results of Operations for the Nine Months Ended June 30, 2017 section. For the period ended June 30, 2017, non-cash working capital increased by $66,189, as compared to an increase of $2,466 for the period ended June 30, The increase in noncash working capital is primarily the result of an increase deferred finance costs ($97,604), and prepaid expenses ($17,083), partially offset by an increase in accounts payable and accrued liabilities ($49,550). For the period June 30, 2017 cash used in operating activities was $240,804 compared to a use of $5,308 for the period ended June 30, Investing Activities For the period June 30, 2017, cash used in investing activities was $602,460, which primarily reflects expenditures on mineral property interests. For the period ended June 30, 2016, the total cash used for investing activities was $214, which also relates to expenditures on mineral property interests. 6 P a g e

7 Financing Activities For the period ended June 30, 2017, cash provided by financing activities was $2,377,110, which primarily relates to the net proceeds received from the completion of private placements ($2,621,624), partially offset by the repayment of notes payable of $245,039. The Company s principal source of liquidity is cash which is raised by way of the sale of common shares from treasury. At June 30, 2017, the Company had a working capital of $1,664,158 (September 30, 2016 deficit of $270,594) which consisted of current assets of cash totaling $1,639,770 (September 30, $105,924); prepaid expenses $17,083 (September 30, $Nil); $7,470 (September 30, $6,418) in receivables, and $97,604 in deferred financing costs (September 30, $Nil). Current liabilities include accounts payable and accrued liabilities of $97,769 (September 30, $138,422) and notes payable of $Nil (September 30, $244,514). To date, the Company has relied entirely upon the sale of common shares to provide working capital to fund the administration of the Company. The Company s access to additional capital may not be available on terms acceptable or at all. As the Company relies on equity financings to continue into the future, current market conditions could make it difficult or impossible for the Company to raise necessary funds to meet its longer term capital requirements. If the Company is unable to obtain financing, it could seek multiple solutions including, but not limited to, credit facilities, asset sales or debenture issuances. At the current rate of expenditure, the Company has sufficient working capital to meet its ongoing administrative costs. Annual Financial Information The financial statements have been prepared in accordance with IFRS for fiscal years 2016, 2015 and Year Ended September 30, 2016 Year Ended September 30, 2015 Year Ended September 30, 2014 $ $ $ Operations: Revenues Net income (loss) (72,724) (373) (3,742) Net income (loss) per share Basic (0.02) (0.00) (0.00) Net income (loss) per share Diluted (0.02) (0.00) (0.00) Balance Sheet: Working capital deficit (270,594) (263,659) (236,674) Total current assets 112,342 8,671 7,305 Total liabilities 411, , ,376 Quarterly Financial Information The following selected financial information is derived from the condensed interim consolidated financial statements of the Company prepared in accordance with IFRS. Quarter ended June 30, March 31, December 31, June 30, March 31, December 31, $ $ $ $ $ $ Revenue Net income (loss) (136,970) (335,434) (4,533) (749) (4,067) 519 Basic Earnings per share (loss) (0.01) (0.02) (0.00) (0.00) (0.00) (0.00) Diluted Earnings per share (loss) (0.01) (0.02) (0.00) (0.00) (0.00) (0.00) 7 P a g e

8 Related Party Disclosures As at June 30, 2017, $Nil (September 30, 2016 $244,514) is due to a director of the Company, which is included in notes payable. The notes payable bear interest at a fixed rate of 2.00% per annum. As at June 30, 2017, $15,331 (September 30, 2016 $84,423), is due to directors and officers of the Company or companies controlled by a director and officers of the Company. During the period ended June 30, 2017, the Company paid consulting fees of $45,418 (June 30, $Nil) to an officer of the Company and companies controlled by an officer and a director of the Company. During the period ended June 30, 2017, the Company paid consulting fees of $22,312 (June 30, $Nil) to a company controlled by officer and a director of the Company. Of these fees, $22,312 (June 30, $Nil) has been capitalized under exploration and evaluation assets as the fees were incurred directly for exploration and evaluation projects. During the period ended June 30, 2017, the Company completed settlements with certain directors and/or officers of the Company. In consideration for settlement of accounts payable of $77,000, the Company issued 473,846 common shares of the Company at a deemed price of $ per share. The above noted transactions have been reported at the exchange amount, which is the amount that has been agreed to by the transacting parties and have no interest or stated terms of repayment. Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements. Commitments The Company has no commitments. Conflicts of Interest The Company s directors and officers may serve as directors and/or officers, or may be associated with, other reporting companies, or have significant shareholdings in other public companies. To the extent that such other companies may participate in business or asset acquisitions, dispositions or ventures in which the Company may participate, the directors and officers of the Company may have a conflict of interest in negotiating and concluding terms respecting the transaction. If a conflict of interest arises, the Company will follow the provisions of the Business Corporations Act (British Columbia) ( Corporations Act ) dealing with conflict of interest. These provisions state that where a director has such a conflict, that director must, at a meeting of the Company s directors, disclose his or her interest and refrain from voting on the matter unless otherwise permitted by the Corporations Act. In accordance with the laws of the Province of British Columbia, the directors and officers of the Company are required to act honestly, in good faith and in the best interests of the Company. Outstanding Share Data Number of Shares Outstanding (Diluted) Outstanding as at August 28, ,416,171 Shares reserved for issuance pursuant to share purchase options outstanding 2,240,000 Shares reserved for issuance pursuant to agent s warrants outstanding 7,643,350 Shares outstanding - fully diluted 36,299,521 As at the date of this MD&A, the Company had outstanding stock options enabling holders to acquire common shares of the Company as follows: 8 P a g e

9 Number Exercise Outstanding Price Expiry Date 2,240,000 $0.15 March 13, 2027 As at the date of this MD&A, the Company had outstanding share purchase warrants enabling holders to acquire common shares of the Company as follows: Number Exercise Outstanding Price Expiry Date 7,643,350 $0.40 August 15, 2018 Events After the Reporting Period On July 5, 2017, the Company completed its Initial Public Offering ( IPO ) and listing on the TSX Venture Exchange, and trading commenced on July 7, 2017 under the symbol URZ. In connection with the completion of the IPO, the Company issued 3,500,000 units ( Unit ) at a price of $0.15 per Unit for total gross proceeds of $525,000. Each Unit is comprised of one common share and one-half of one transferable common share purchase warrant (each full warrant, a Warrant ). Each Warrant is exercisable to purchase one additional common share of the Company at an exercise price of C$0.40 until August 15, 2018, provided that in the event that the closing price of the Company s common shares on any stock exchange is C$1.00 or greater during any 20 consecutive trading day period, the Company shall be entitled to accelerate the expiry of the Warrants to a date that is 30 days following the date which the Company provides notice to the holders thereof. In consideration of the services provided by the agent in connection with the IPO, the Company has agreed to pay the agent a cash commission equal to 3% of the gross proceeds raised from the IPO. In addition, the agent was paid a corporate finance advisory fee of $80,000. Additionally, on July 5, 2017, the Company completed a private placement of 260,000 units for total gross proceeds of $39,000. Each Unit is comprised of one common share and one-half of one non-transferable common share purchase warrant (each full warrant, a Warrant ). Each Warrant is exercisable to purchase one additional common share of the Company at an exercise price of C$0.40 until August 15, 2018, provided that in the event that the closing price of the Company s common shares on any stock exchange is C$1.00 or greater during any 20 consecutive trading day period, the Company shall be entitled to accelerate the expiry of the Warrants to a date that is 30 days following the date which the Company provides notice to the holders thereof. Critical Accounting Estimates The preparation of financial statements in conformity IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues (if applicable) and expenditures during the reporting period. Accounting Standards and Interpretations Issued but Not Yet Adopted The following new standards and standards changes have been issued but are not yet adopted: IFRS 9 Financial Instruments. IFRS 9 was issued in November 2009 and contained requirements for financial assets. This standard addresses classification and measurement of financial assets and replaces the multiple category and measurement models in IAS 39 for debt instruments with a new mixed measurement model having only two categories: amortized cost and fair value through profit or loss. IFRS 9 also replaces the models for measuring equity instruments, and such instruments are either recognized at fair value through profit or loss or at fair value through other comprehensive income. This standard is required to be applied for the Company s accounting periods beginning on January 1, Management is currently assessing the impact of this new standard on the Company s accounting policies and financial statement presentation. 9 P a g e

10 IFRS 15 Revenue from contracts with customers. IFRS 15 is effective for annual periods beginning on or after January 1, IFRS 15 specifies how and when to recognize revenue as well as requires entities to provide users of financial statements with more informative, relevant disclosures. The standard supersedes IAS 18, Revenue, IAS 11, Construction Contracts, and a number of revenue-related interpretations. The new standard will apply to nearly all contracts with customers: the main exceptions are leases, financial instruments and insurance contracts. IFRS 16 Leases. In January 2016, the IASB issued IFRS 16 which replaces IAS 17 Leases and its associated interpretative guidance. IFRS 16 applies a control model to the identification of leases, distinguishing between a lease and a service contract on the basis of whether the customer controls the asset being leased. For those assets determined to meet the definition of a lease, IFRS 16 introduces significant changes to the accounting by lessees, introducing a single, on-balance sheet accounting model that is similar to current finance lease accounting, with limited exceptions for shortterm leases or leases of low value assets. Lessor accounting remains similar to current accounting practice. The standard is effective for annual periods beginning on or after January 1, 2019, with early application permitted for entities that apply IFRS 15. Risks and Uncertainties The Company is in the business of acquiring and exploring mineral properties. It is exposed to a number of risks and uncertainties that are common to other mineral exploration companies in the same business. The industry is capital intensive at all stages and is subject to variations in commodity prices, market sentiment, exchange rates for currency, inflation and other risks. The Company currently has no source of revenue other than interest on cash balances. The Company relies mainly on equity financing to fund exploration activities on its mineral properties. The risks and uncertainties described in this section are not inclusive of all the risks and uncertainties to which the Company may be subject. Early Stage Need for Additional Funds The Company has no history of profitable operations and its present business is at an early stage. As such, the Company is subject to many risks common to other companies in the same business, including undercapitalization, cash shortages and limitations with respect to personnel, financial and other resources, and the lack of revenues. There is no assurance that the Company will be successful in achieving a return on shareholders investment and the likelihood of success must be considered in light of its early stage of operations. Exploration and Development Mineral exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits, but also from finding mineral deposits that, though present, are of insufficient size and/or grade to return a profit from production. All of the mineral claims in which the Company has a right to acquire an interest are in the exploration stages only and are without a known body of commercial ore. Upon discovery of a mineralized occurrence, several stages of exploration and assessment are required before its economic viability can be determined. Development of the subject mineral properties would follow only if favourable results are determined at each stage of assessment. Few precious and base metal deposits are ultimately developed into producing mines. Operating Hazards and Risks Mining operations involve many risks which even a combination of experience, knowledge and careful evaluation may not be able to overcome. In the course of exploration, development and production of mineral properties, certain risks, and in particular unexpected or unusual geological operating conditions including rock bursts, cave-ins, fires, flooding and earthquakes, may occur. Operations in which the 10 P a g e

11 Company has a direct or indirect interest are subject to all the hazards and risks normally incidental to exploration, development and production of mineral deposits, any of which could result in damage to or destruction of mines and other producing facilities, damage to life and property, environmental damage and possible legal liability for any or all damage. Although the Company maintains liability insurance in an amount which it considers adequate, the nature of these risks is such that liabilities could exceed policy limits, in which event the Company could incur significant costs that could have a materially adverse effect upon its financial conditions. Foreign Currency Exchange Foreign currency exchange rate risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. Although the Company is considered to be in the exploration stage and has not yet developed commercial mineral interests, the underlying market prices in Canada for minerals are impacted by changes in the exchange rate between Canadian and United States Dollars. The Company has not entered into any arrangements to hedge its currency risk but does maintain cash balances within each currency. Supplies and Infrastructure The Company s property interests are often located in remote, undeveloped areas and the availability of infrastructures such as surface access, skilled labour, fuel and power at an economic cost cannot be assured. These are integral requirements for exploration, production and development facilities on mineral properties. Power may need to be generated onsite. Metal Prices The mining industry, in general, is intensely competitive and there is no assurance that a profitable market will exist for the sale of metals produced, even if commercial quantities of precious and/or base metals are discovered. Factors beyond the control of the Company may affect the marketability of metals discovered. Pricing is affected by numerous factors beyond the Company s control, such as international economic and political trends, global or regional consumption and demand patterns, increased production and smelter availability. There is no assurance that the price of metals recovered from any mineral deposit will be such that it can be mined at a profit. Title Risks Although the Company has exercised the usual due diligence with respect to determining title to properties in which it has a material interest, there is no guarantee that title to such properties will not be challenged or impugned. The Company s mineral property interests may be subject to prior unregistered agreements, transfers or native claims, and title may be affected by undetected defects. Environmental Regulations, Permits and Licenses The Company s operations are subject to various laws and regulations governing the protection of the environment, exploration, development, production, taxes, labour standards, occupational health, waste disposal, safety and other matters. Environmental legislation in Wyoming, Colorado and Utah provide restrictions and prohibitions on spills, releases or emissions of various substances produced in association with certain mining industry operations, such as seepage from tailing disposal areas, which would result in environmental pollution. A breach of such legislation may result in the imposition of fines and penalties. In addition, certain types of operations require the submission and approval of environmental impact statements. Environmental legislation is evolving in a direction of stricter standards and enforcement, and higher fines and penalties for non-compliance. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and their directors, officers and employees. The cost of compliance with changes in governmental regulations has the potential to reduce the profitability of operations. The Company intends to fully comply with all environmental regulations. 11 P a g e

12 The current operations of the Company require permits from various U.S. authorities and such operations are governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental, mine safety and other matters. The Company believes that it is in compliance with all material laws and regulations which currently apply to its activities. However, there can be no assurance that all permits which the Company may require for its operations and exploration activities will be obtainable on reasonable terms, a timely basis or that such laws and regulations would not have an adverse affect on any mining project which the Company might undertake. Competition and Agreements with Other Parties The mining industry is intensely competitive in all its phases and the Company competes with other companies that have greater financial resources and technical capacity. Competition could adversely affect the Company s ability to acquire suitable properties or prospects in the future. The Company may, in the future, be unable to meet its share of costs incurred under such agreements to which it is a party and it may have its interest in the properties subject to such agreements reduced as a result. Also, if other parties to such agreements do not meet their share of such costs, the Company may not be able to finance the expenditures required to complete recommended programs. Economic Conditions Unfavourable economic conditions may negatively impact the Company s financial viability. Unfavourable economic conditions could also increase the Company s financing costs, decrease net income or increase net loss, limit access to capital markets and negatively impact the availability of credit facilities to the Company. Dependence on Management The Company is very dependent upon the personal efforts and commitment of its existing management. To the extent that management s services would be unavailable for any reason, a disruption to the operations of the Company could result and other persons would be required to manage and operate the Company. Corporate Governance Management of the Company is responsible for the preparation and presentation of the annual financial statements and notes thereto, MD&A and other information contained in this MD&A. Additionally, it is management s responsibility to ensure the Company complies with the laws and regulations applicable to its activities. The Company s management is held accountable to the board of directors ( Directors ), each member of which is elected annually by the shareholders of the Company. The Directors are responsible for reviewing and approving the audited consolidated annual financial statements and MD&A. Responsibility for the review and approval of the Company s unaudited condensed interim consolidated financial statements and MD&A is delegated by the Directors to the Audit Committee, which is comprised of 3 directors, 2 of whom are independent of management. Additionally, the Audit Committee pre-approves audit and non-audit services provided by the Company s auditors. The external auditors are appointed annually by the shareholders to conduct an annual audit of the financial statements in accordance with IFRS. The external auditors have complete access to the Audit Committee to discuss the audit, financial reporting and related matters resulting from the annual audit, as well as assist the members of the Audit Committee in discharging its corporate governance responsibilities. 12 P a g e

13 Cautionary Statement The Company s unaudited condensed interim consolidated financial statements for the period ended June 30, 2017, and this accompanying MD&A contain statements that constitute forward-looking statements within the meaning of National Instrument , Continuous Disclosure Obligations of the Canadian Securities Administrators. Forward-looking statements often, but not always, are identified by the use of words such as seek, anticipate, believe, plan, estimate, expect, targeting and intend and statements that an event or result may, will, should, could, or might occur or be achieved and other similar expressions. Forward-looking statements in this MD&A include statements regarding the Company s future exploration plans and expenditures, the satisfaction of rights and performance of obligations under agreements to which the Company is a part, the ability of the Company to hire and retain employees and consultants and estimated administrative assessment and other expenses. The forward-looking statements that are contained in this MD&A involve a number of risks and uncertainties. As a consequence, actual results might differ materially from results forecast or suggested in these forward-looking statements. Some of these risks and uncertainties are identified under the heading RISKS AND UNCERTAINTIES in this MD&A. Additional information regarding these factors and other important factors that could cause results to differ materially may be referred to as part of particular forward-looking statements. The forward-looking statements are qualified in their entirety by reference to the important factors discussed under the heading RISKS AND UNCERTAINTIES and to those that may be discussed as part of particular forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause the actual results to differ include market prices, exploration success, continued availability of capital and financing, inability to obtain required regulatory approvals and general market conditions. These statements are based on a number of assumptions, including assumptions regarding general market conditions, the timing and receipt of regulatory approvals, the ability of the Company and other relevant parties to satisfy regulatory requirements, the availability of financing for proposed transactions and programs on reasonable terms and the ability of third-party service providers to deliver services in a timely manner. Forward-looking statements contained herein are made as of the date of this MD&A and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Other Information Additional information relating to the Company is available for viewing on SEDAR at Approved by the Audit Committee August 22, P a g e