Esrey Resources Ltd — Management Reports 2021

Feb 2, 2021

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MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended September 30, 2019

The following Management’s Discussion and Analysis (“MD&A”) is intended to assist the reader to assess material changes in financial condition and results of operations of Esrey Resources Ltd. (“Esrey” or the “Company”) as at and for the years ended September 30, 2019 and 2018.

This MD&A should be read in conjunction with the audited consolidated financial statements for the year ended September 30, 2019. These audited consolidated financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

All dollar amounts are expressed in Canadian dollars unless otherwise indicated. Note that additional information relating to the Company is available on SEDAR at www.sedar.com.

The effective date of this MD&A is August 6, 2020.

Contents of the MD&A

1. Financial highlights for the year ended September 30, 2019

2. Overview and operational summary

3. 2.1 Pilot metal recovery plant (Macedonia)

4. 2.2 Future location for commercial plant

5. Results of operations

6. 3.1 Results of operations for the years ended September 30, 2019 and 2018

7. 3.2 Results of operations for the three months ended September 30, 2019 and 2018

8. Selected annual and quarterly information

9. Liquidity, going concern and capital resources

10. 5.1 Liquidity and going concern

11. 5.2 Share capital

12. Risk factors

13. 6.1 General

14. 6.2 Foreign operations

15. 6.3 Political risks

16. 6.4 Fluctuations in the prices of zinc and other metals

17. 6.5 Foreign exchange rates and foreign

18. 6.6 Repatriation of earnings

19. 6.7 Environmental and other governmental regulations

20. 6.8 Dependence on key personnel

21. 6.9 Additional financing

22. 6.10 Price volatility of public stock and shares reserved for future issuance

23. 6.11 Legal matters

24. 6.12 Conflicts of interest

25. 6.13 Uninsurable risks

26. 6.14 General economic conditions

7. Off-balance sheet transactions

1. Proposed transactions and subsequent events

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1. Transactions between related parties

2. 9.1 Transactions

3. 9.2 Compensation of key management personnel

4. Financial instruments

5. 10.1 Fair value of financial instruments

6. 10.2 Financial risk management

7. 10.3 Credit risk

8. 10.4 Liquidity and funding risk

9. 10.5 Market risk

10. Adoption of accounting standards and pronouncements under IFRS

11. 11.1 Application of new and revised IFRSs

12. 11.2 Accounting standards issued but not yet effective

13. Critical accounting estimates and critical accounting judgments

14. Limitations of controls and procedures

15. Cautionary statement on forward-looking information

1. Financial highlights for the year ended September 30, 2019

• During the year ended September 30, 2019 (“2019”), Esrey recorded a net loss attributable to equity shareholders of the Company of $4,756,940 ($0.05 per share), compared to a net loss attributable to equity shareholders of the Company of $3,437,574 ($0.04 per share) during the year ended September 30, 2018 (“2018”).

• In 2019, the Company spent $1,153,231 at its pilot metal recovery plant in Macedonia, compared to $2,943,845 in 2018.

• During the quarter ended September 30, 2019, the Company’s operations in Macedonia were put on hold until such time as financing becomes available, and accordingly, the Company wrote off the remaining undepreciated value of its pilot plant and equipment of $1,834,250 in 2019.

• At September 30, 2019, the Company had cash and cash equivalents of $228,195 compared to $1,210,003 at September 30, 2018. At September 30, 2019, the Company had a working capital deficit of $1,603,154 (September 30, 2018 – working capital of $688,353).

• The Company will require funding to eliminate this working capital deficit. The Company has no ability to raise financing until its financial disclosures are up to date with the TSX Venture Exchange and other regulatory authorities in Canada. The Company is currently the subject of cease trade orders due to not having completed the audit and filing of its consolidated financial statements and MD&A for the year ended September 30, 2019, and consequently the filing of its consolidated financial statements and MD&A for the three months ended December 31, 2019 and for the six months ended March 31, 2020 by the required regulatory filing deadlines. The Company will actively seek to raise financing once the cease trade orders are revoked. There can be no assurance that funding will be available to the Company when needed or, if available, that this funding will be on acceptable terms. If adequate funds are not available, the Company may not be able to continue as a going concern.

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• The Company also has certain outstanding matters with PRG Plc., a company controlled by a former director concerning its operations in Macedonia, as described in Note 21 of the financial statements for the year ended September 30, 2019. The outcomes of these matters are currently uncertain.

2. Overview and operational summary

During the years ended September 30, 2018 and 2019, the Company had a pilot metal recovery plant in Macedonia which focused on developing a hydrometallurgical process to efficiently extract zinc and other metals from feed waste material on an economically viable scale. The Company expects that the hydrometallurgical process can also be applied in active mining operations and is currently looking for new mineral resources projects where this process can be used.

2.1 Pilot metal recovery plant (Macedonia)

The Company’s pilot metal recovery plant, which includes a Company-owned laboratory to test plant samples, is located in Macedonia. During the year ended September 30, 2019, the Company focused the activities of the pilot plant on the recovery of zinc and other by-products from zinc-containing feed and continued to refine the hydro-metallurgical process with the assistance of international laboratories.

Around July 2019, the Company put its pilot plant activities on hold as a result of a lack of financing. At the time of ceasing its activities, the hydro-metallurgical process was in its final stages of development. It is expected that the successful piloting of the process could, subject to the Company’s ability to raise financing, lead to the construction of a full-scale commercial facility to process zinc bearing waste materials, or lead to the application of the process in active mining operations. It is anticipated that the process may be capable of producing London Metal Exchange special high-grade zinc, lead and other recovered metals and contribute to the cleanup of metallurgical wastes around the Balkans and other regions.

The costs relating to the development of the hydro-metallurgical process have been recorded as project development costs in the Company’s statements of loss and comprehensive loss. During the year ended September 30, 2019, the Company spent $1,153,231 ($2,943,845 – 2018) in project development costs. The amount was higher in 2018 as the Company had entered into a services contract (effective October 1, 2017) with PRG Plc., a company controlled by a former director of Esrey, to complete the construction and make the necessary modifications to the pilot plant in order to get it fully operational and to assist the Company in designing a full scale hydro-metallurgical zinc processing plant. The fees for PRG’s services under this arrangement were fixed at US$180,000 per month from October 1, 2017 through March 31, 2018 and were reduced to approximately US$60,000 between April 1, 2018 and June 30, 2018. The contract was formally terminated on June 30, 2018. See Section 9.1 of this MD&A for more details on the services contract.

As a result of the pilot plant activities being put on hold, the Company wrote off the remaining undepreciated value of its pilot plant and equipment of $1,834,250 during the three months ended September 30, 2019.

2.2 Future location for commercial plant

During the year ended September 30, 2018, the Company investigated various industrial sites in Macedonia for a suitable location for a proposed full-scale hydro-metallurgical zinc processing plant and incurred $540,425 in property investigation costs. During the year ended September 30, 2019, the Company suspended its property investigation activities due to uncertainty surrounding financing. As a result, the Company incurred $nil in property investigation costs during the year ended September 30, 2019.

During the year ended September 30, 2018, property investigation costs included 250,000 euros ($382,135) which the Company paid as a deposit for the purchase of a parcel of land in Macedonia. The purchase

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transaction was not successfully consummated as a result of circumstances within the control of the seller. As a result, the Company believes that it has a claim for the refund of the deposit and is seeking to recover the deposit from the seller.

3. Results of operations

The review of the results of operations should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended September 30, 2019. The table below sets forth selected results of operations for the Company for the years ended September 30, 2019 and 2018:

		2019 2018 2019 2018 (unaudited) (unaudited) Twelve months ended September 30, Three months ended September 30,
	Expenses
	Project development costs Property investigation costs Write-down of stockpile material rights Write-down of pilot plant and equipment Depreciation General and administrative expenses Salaries and management fees Legal, audit and accounting fees	152,298 $ 369,309 $ 1,153,231 $ 2,943,845 $ - 435,338 - 540,425 - 4,969,701 - 4,969,701 1,834,250 453,151 1,834,250 453,151 151,396 173,701 608,677 690,743 61,880 61,611 303,544 268,078 96,679 206,427 708,078 1,002,718 (23,948) 21,662 89,049 182,008 - (31,710) 2,945 288,437 - 24,958 - 124,369 (2,272,555) (6,684,148) (4,699,774) (11,463,475) - 3,265 1,829 8,742 1,480 25,876 11,439 37,979 (2,429) (2,282) (2,826) (2,675) (1,607) (12,088) (66,778) 23,457 (2,275,111) (6,669,377) (4,756,110) (11,395,972) - 7,945,220 - 7,945,220 (2,275,111) $ 1,275,843 $ (4,756,110) $ (3,450,752) $ 3,320 (11,579) 830 (13,178) (2,278,431) 1,287,422 (4,756,940) (3,437,574)
	Share-based payments Traveland business development
	Other income (expense) Interest income Other income Loss from investment in joint ventures Foreignexchange gain(loss)
	Loss from continuing operations Incomefromdiscontinued operations
	Net loss
	Attributable to: Non-controlling interest Equity shareholders ofthe Company
		(2,275,111) $ 1,275,843 $ (4,756,110) $ (3,450,752) $
	Net loss attributable to equity shareholders of the Company:	(2,278,431) (6,657,798) (4,756,940) (11,382,794) - 7,945,220 - 7,945,220
	Continuing operations Discontinuing operations
		(2,278,431) $ 1,287,422 $ (4,756,940) $ (3,437,574) $ (0.02) $ 0.01 $ (0.05) $ (0.04) $ (0.02) $ (0.07) $ (0.05) $ (0.12) $ September 30, September 30, 2019 2018 600,220 $ 4,138,189 $ 2,065,674 $ 944,989 $
	Basic and diluted loss per share attributable to equity shareholders of the Company Basic and diluted loss per share attributable to equity shareholders of the Company - Continuing operations
	Consolidated statements of financial position Total assets Total liabilities

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3.1 Results of operations for the years ended September 30, 2019 and 2018

During the year ended September 30, 2019 (“2019”), the Company reported a net loss attributable to equity shareholders of the Company of $4,756,940 compared to a net loss of $3,437,574 for the year ended September 30, 2018 (“2018”). The Company’s net loss increased by $1,319,366 between 2019 and 2018 primarily due to the following:

• Write-down of pilot plant and equipment of $1,834,250 in 2019 compared to $453,151 in 2018 as discussed in Section 2.1 above. The write-down in 2018 pertained to certain lab equipment in Macedonia;

• Project development costs of $1,153,231 in 2019 compared to $2,943,845 in 2018 as described in Section 2.1 above;

• Property investigation costs of $ nil in 2019 compared to $540,425 in 2018 as discussed in Section 2.2 above;

• Depreciation of $608,677 in 2019 was lower compared to $690,743 in 2018 as some equipment was written off during the quarter ended September 30, 2018;

• A decrease in salaries and management fees by $229,640 compared to 2018 as a result of termination fees paid to two former officers of the Company during 2018. There was also a reduction of personnel and consultants in April 2019 as a result of cost cutting measures;

• Share-based payments of $2,945 in 2019 compared to $288,437 in 2018 due to the recognition of options that were granted during the years ended September 30, 2017 and 2018 and due to the forfeiture of certain of these options during the year ended September 30, 2018;

• A foreign exchange loss of $66,778 in 2019 compared to a foreign exchange gain of $23,457 in 2018, mostly as a result of the depreciation of the Papua New Guinea (“PNG”) kina, as cash held in kinas was repatriated back to Canadian dollars during 2019;

• Write-down of stockpile material rights of $4,969,701 in 2018 compared to $nil in 2019; and

• The 2018 loss was offset by income from discontinued operations of $7,945,220 which represented the elimination of all balances in its accumulated other comprehensive income (“AOCI”) accounts relating to the Company’s PNG assets as at September 30, 2018. In 2018, the Company determined that, although it continued to hold its oil and gas concessions, activities in PNG have substantially ceased and it does not intend to conduct any further activities in PNG.

3.2 Results of operations for the three months ended September 30, 2019 and 2018

For the three months ended September 30, 2019 (“Q4-2019”), the Company reported loss attributable to equity shareholders of the Company of $2,278,431 compared to a net income of $1,287,422 for the three months ended September 30, 2018 (“Q4-2018”). The change in the Company’s financial results between Q4-2019 and Q4-2018 is primarily due to the following:

• Project development costs of $152,298 were lower in Q4-2019 compared to $369,309 in Q4-2018 as the Company put its Macedonian project on hold during Q4-2019;

• Property investigation costs of $nil in Q4-2019 compared to $435,338 in Q4-2018 as discussed in Section 2.2 above;

• Write-down of pilot plant and equipment of $1,834,250 in Q4-2019 compared to $453,151 in Q4-2018 as discussed in Section 2.2 above. The write-down in Q4-2018 pertained to certain lab equipment in Macedonia;

• Depreciation of $151,396 in Q4-2019 was lower compared to $173,701 in Q4-2018 as some lab equipment was written off in Q4-2018;

• Share-based payments of $nil compared to ($31,710) in Q4-2018 due to the forfeiture of certain of these options during the three months ended September 30, 2018; and

• A decrease in salaries and management fees by $109,748 during Q4-2019, as there was a reduction in personnel and consultants in April 2019 as a result of cost cutting measures.

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4. Selected annual and quarterly information

Selected annual information

The table below summarizes the Company’s three most recently completed years (in Canadian dollars, except for per share amounts):

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Years ended September 30,
2019 2018 2017
-
Project development costs $ (1,153,231) $ (2,943,845) $
- -
Property investigation costs (540,425)
- -
Write-down of stockpile material rights (4,969,701)
Write-down of equipment (1,834,250) (453,151) (18,456)
Other expenses (1,712,293) (2,556,353) (1,204,673)
Loss from continuing operations (4,756,110) (11,395,972) (1,342,905)
-
Income (loss) from discontinued operations 7,945,220 (2,889,392)
Net loss (4,756,110) (3,450,752) (4,232,297)
Basic and diluted loss per share attributable to equity
shareholders of the Company $ (0.05) $ (0.04) $ (0.09)
Basic and diluted loss per share attributable to equity
-
shareholders of the Company continuing operations $ (0.05) $ (0.12) $ (0.03)
Total assets $ 600,220 $ 4,138,189 $ 12,845,169
Non-current financial liabilities $ - $ - $ -
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Selected quarterly information (unaudited)

The table below summarizes the Company’s eight most recently completed quarters (in thousands of Canadian dollars, except for share and per share amounts, or as noted).

	Sep 30,	Sep 30,	Jun 30,	Jun 30,	Mar 31,	Mar 31,	Dec 31,	Dec 31,	Sep 30,	Sep 30,	Jun 30,	Jun 30,	Mar 31,	Mar 31,	Dec 31,	Dec 31,
		2019		2019		2019		2018		2018		2018		2018		2017
Project development costs	$	(152)	$	(185)	$	(448)	$	(368)	$	(369)	$	(718)	$	(984)	$	(873)
Property investigation costs		-		-		-		-		(435)		(29)		(58)		(18)
Write-down of stockpile material rights		-		-		-		-		(4,970)		-		-		-
Write-down of equipment		(1,834)		-		-		-		(453)
Loss from continuing operations		(2,273)		(677)		(953)		(850)		(6,669)		(1,322)		(1,771)		(1,634)
Income from discontinued operations		-		-		-		-		7,945		-		-		-
Net (loss) income		(2,273)		(677)		(953)		(850)		1,276		(1,322)		(1,771)		(1,634)
Basic and diluted (loss) income per share
attributable to equity shareholders of the
Company	$	(0.02)	$	(0.01)	$	(0.01)	$	(0.01)	$	0.01	$	(0.01)	$	(0.02)	$	(0.02)
Basic and diluted loss per share attributable to
equity shareholders of the Company -
continuing operations	$	(0.02)	$	(0.01)	$	(0.01)	$	(0.01)	$	(0.07)	$	(0.01)	$	(0.02)	$	(0.02)
Weighted average number of shares (millions)		101		101		101		101		101		101		83		81

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5. Liquidity, going concern and capital resources

5.1 Liquidity and going concern

As at September 30, 2019, the Company had cash and cash equivalents of $228,195 (September 30, 2018 - $1,210,003) and working capital deficit of $1,603,154 (September 30, 2018 – working capital of $688,353). Cash and cash equivalents decreased by $981,808 during the year ended September 30, 2019 as funds were spent primarily on project development costs in Macedonia.

In the short-term, the Company will require funding to eliminate its working capital deficit. The Company has no ability to raise financing until its financial disclosures are up to date with the TSX Venture Exchange and other regulatory authorities in Canada. The Company is currently the subject of cease trade orders due to not having completed the audit and filing of its consolidated financial statements and MD&A for the year ended September 30, 2019, and consequently the filing of its consolidated financial statements and MD&A for the three months ended December 31, 2019 and for the six months ended March 31, 2020 by the required regulatory filing deadlines. The Company will actively seek to raise financing once the cease trade orders are revoked. There can be no assurance that short-term funding will be available to the Company when needed or, if available, that this funding will be on acceptable terms. If adequate funds are not available, the Company may not be able to continue as a going concern.

In the longer-term, the Company will require significant funding to seek new business opportunities in the mineral resource sector. There can be no assurance that funding will be available to the Company when needed or, if available, that this funding will be on acceptable terms. If adequate funds are not available, the Company may not be able to acquire new projects. Even if adequate funds are available, there is no guarantee that any new projects acquired would be successfully developed to a stage where they could generate future cash flows. As a result, material uncertainties exist that may cast significant doubt with respect to the Company’s ability to continue as a going concern.

In addition to the development of the Company’s zinc operations, the Company has commitments and contingencies which could have a future effect on its liquidity. Effective October 1, 2018, the Company has a five-year lease commitment for its Canadian head office premises (see Sections 9.1(ii) and 10.4 of this MD&A and Note 20 of the audited consolidated financial statements for the year ended September 30, 2019). The Company also has number of outstanding legal matters in Macedonia, including the resolution of documentation and agreements with PRG in connection with the pilot metal recovery plant which could result in potential Macedonian value-added tax payments and recoveries.

5.2 Share Capital

During the year ended September 30, 2019, 1,197,000 and 35,000 stock options were forfeited at an exercise price of $0.125 and $0.15 respectively, and 639,500 stock options with at an exercise price of $0.12 expired unexercised. No options were granted or exercised during the year ended September 30, 2019.

On April 2, 2020, a further 1,507,000 stock options with an exercise price of $0.095 expired unexercised.

Following the forfeiture and expiry of the above options, the Company has a total of 3,172,000 options outstanding pursuant to its stock option plan as at September 30, 2019, and a total of 1,665,000 at August 6, 2020 which represent approximately 3.2% and 1.7% of the issued and outstanding common shares of the Company as at September 30, 2019 and as at August 6, 2020, respectively.

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As at September 30, 2019 and as at August 6, 2020, the Company had 100,175,306 shares issued and outstanding and the following options outstanding and exercisable:

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As at September 30, 2019 As at August 6, 2020
Options Options Options Options Exercise
outstanding exercisable outstanding exercisable price Expiry date
1,507,000 1,507,000 - - $0.095 April 2, 2020
1,060,000 1,060,000 1,060,000 1,060,000 $0.125 August 9, 2022
555,000 555,000 555,000 555,000 $0.15 October 5, 2022
50,000 50,000 50,000 50,000 $0.24 March 1, 2023
3,172,000 3,172,000 1,665,000 1,665,000
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As at September 30, 2019 and as at August 6, 2020, the Company had the following warrants outstanding and exercisable:

Warrants outstanding
and exercisable	Exercise price	Expiry date
12,725,000 7,428,100 20,153,100	$0.40 $0.40	March 29, 2023 April 10, 2023

6. Risk factors

An investment in the shares of the Company should be considered speculative due to the nature of the business of the Company, and involves significant risks which should be carefully considered by prospective investors. In addition to the other information set forth elsewhere in this MD&A, the following risk factors should be given special consideration when evaluating trends, risks and uncertainties relating to the Company’s business, more particularly its zinc projects. Any of the following risks could have a materially adverse effect upon the Company, its business and future prospects. In addition, other risks and uncertainties not presently known by management of the Company could impair the Company's business in the future.

6.1 General

The Company’s projects involve a degree of risk which even a combination of experience, knowledge and careful evaluation may not be able to overcome. The Company is subject to a variety of risks, many of which are outside the Company’s control. Management has identified certain key risks, which are discussed below, along with their potential impact on the Company’s operations. There is no assurance that the Company will achieve commercial production on its zinc projects or that its hydro-metallurgical process will prove to be successful.

6.2 Foreign operations

The Company’s zinc projects have taken place principally in Macedonia and other neighbouring Balkan countries. As such, the Company’s operations are subject to a number of risks over which it has no control. These risks may include risks related to economic, social or political instability or change, terrorism, hyperinflation, currency non-convertibility or instability, changes of laws affecting foreign ownership, government participation, taxation, working conditions, rates of exchange, exchange control, exploration licensing, and export licensing and export duties. The Company endeavours to operate in such a manner in order to minimize and mitigate its exposure to these risks. However, there can be no assurance that the Company will be successful in protecting itself from the impact of all of these risks.

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6.3 Political risks

The Company's pilot metal recovery plant is located in Macedonia where it conducted its principal activities in 2018 and 2019. Operations in Macedonia are subject to risks due to the potential for social, political, economic, legal and fiscal instability. The governments in Macedonia and in neighbouring countries which may affect Macedonia face ongoing issues such as inflation, unemployment and inequitable income distributions. Should the Company continue to operate in Macedonia, such instability may impact the Company's operations on its properties as future political actions, which may adversely affect the Company, cannot be predicted. Future operations may be affected in varying degrees by government regulations with respect to, but not limited to, restrictions on production, price controls, export controls, currency remittance, income taxes, foreign investment, obtaining and maintenance of licenses, environmental legislation, land use, land claims of local people, and water use. Changes, if any, in foreign investment policies or shifts in political attitudes in the Balkans may adversely affect the Company’s operations or profitability.

Failure to comply strictly with applicable laws, regulations and local practices relating to the Company’s zinc assets could result in loss, reduction or expropriation of entitlements. The occurrence of these various factors and uncertainties cannot be accurately predicted and could have an adverse effect on the Company's consolidated results of operations and financial condition.

6.4 Fluctuations in the prices of zinc and other metals

The prices of zinc and other metals have fluctuated widely during recent years and are determined by various factors outside the Company’s control, including supply and demand, general economic conditions, inflation, political instability, government regulation and taxes, and changes in global production of such metals. Such fluctuations will have a positive or negative effect on any revenue that the Company may receive in the future. If zinc and other metal prices become depressed or decline, the Company’s potential revenue and earnings and the value of its assets would be expected to decline.

6.5 Foreign exchange rates and foreign exchange controls

The operations of the Company in Macedonia or any of the countries in which the Company may operate in the future are subject to currency fluctuations against the Canadian dollar, the US dollar, the Euro and the Macedonian denar, and such fluctuations may materially affect the financial position and results of the Company.

The Company may be subject from time to time to foreign exchange controls in Macedonia and other countries in which it may operate outside of Canada.

6.6 Repatriation of earnings

There is no assurance that Macedonia or any of the countries in which the Company may operate in the future will not impose restrictions on the repatriation of earnings to foreign entities.

6.7 Environmental and other governmental regulations

The current and future operations of the Company, including development activities, construction and commercial production of its zinc and metals projects, may require permits from various state and local governmental authorities. Such operations are and will be governed by laws and regulations governing development, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, safety and other matters. The Company may experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. The Company believes it is currently in substantial compliance with all material

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laws and regulations that currently apply to its activities, particularly those in Macedonia where it has a pilot metal recovery plant. There can be no assurance, however, that all permits which the Company may require for the conduct of its operations will be obtainable on reasonable terms or that such laws and regulations would not have an adverse effect on any project which the Company might undertake. Failure to comply with applicable laws, regulations and permitting requirements may result in the imposition of fines or issuance of clean up orders in respect of the Company or its projects. Such legislation may be changed to impose higher standards and potentially more costly obligations. The Company endeavours to operate in such a manner to ensure it conforms to the standards and government regulations required for each jurisdiction in which it operates.

6.8 Dependence on key personnel

The business of the Company is highly dependent on the technical and financial ability of the Company’s management. Although the Company experienced a significant change in its management and board composition in February 2020, it continues to have a small management and technical team and any change in management or technical personnel of the Company could therefore have a negative effect on the business of the Company as it may not be successful in attracting suitably qualified personnel in the future. The Company does not have key person insurance in place.

6.9 Additional financing

To the extent that external sources of capital, including the issuance of additional common shares, remain limited or unavailable, the Company’s ability to make necessary capital investments for the acquisition of new projects, or to construct a full-scale hydrometallurgical zinc processing plant, will be impaired.

6.10 Price volatility of public stock and shares reserved for future issuance

Publicly quoted securities are subject to a relatively high degree of price volatility. It may be anticipated that the quoted market for the common shares of the Company will be subject to market trends generally, notwithstanding any potential success of the Company’s projects, and there may be significant fluctuations in the price of the Company's common shares.

The Company has reserved shares for issuance in respect of stock options and warrants granted to date. The Company may also enter into commitments in the future which could result in the issuance of additional common shares or the consolidation of its current outstanding share capital, and the Company may also grant share purchase warrants and additional stock options. Any issue of shares reserved for future issuance may result in dilution to the existing shareholdings.

6.11 Legal matters

Due to the nature of the Company’s business, various legal matters are outstanding from time to time. As described in Note 21 of the Company’s financial statements for the year ended September 30, 2019, the Company currently has a number of outstanding legal matters in Macedonia including the recovery of a deposit in connection with the Company’s investigation of a potential site for a future full scale zinc processing plant, and the resolution of documentation and agreements with PRG in connection with the pilot metal recovery plant which could result in potential Macedonian value-added tax payments and recoveries. In the event that these matters are not resolved in the Company’s favour, the Company’s cash flow could be negatively impacted.

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6.12 Conflicts of interest

Some of the directors and officers of the Company are, or may be, on the boards of other natural resource companies from time to time resulting in conflicts of interests. Some are also considered related parties. Therefore, there is the potential for a conflict of interest between the Company and some of its directors and officers. The Company requires its directors and officers to notify management and the board if they are aware of any conflicts.

6.13 Uninsurable risks

In the course of mineral production, certain risks, and in particular, unexpected or unusual operating conditions including, fires, flooding and earthquakes may occur. It is not always possible to fully insure against such risks and the Company may decide not to take out insurance against such risks as a result of high premiums or other reasons, or the amounts of its insurance may not be sufficient to fully insure against risks covered by insurance. Should liabilities arise as a result of insufficient insurance or uninsured risks, they could reduce or eliminate any future profitability and result in increased costs and a decline in the value of the securities of the Company.

6.14 General economic conditions

There has been a high level of volatility in the world financial markets over the past few years. This volatility has caused investors to become less willing to provide debt or equity financing to most companies and in particular to junior resource companies. This could potentially make completing financings for the Company difficult in the foreseeable future.

7. Off-balance sheet transactions

As at September 30, 2019 and August 6, 2020 , the Company did not have any off-balance sheet arrangements.

8. Proposed transactions and subsequent events

There are no proposed transactions or reportable subsequent events during the year ended September 30, 2019 through August 6, 2020, other than as disclosed below:

• a) On February 27, 2020, David Cohen, the Company’s then President, Chief Executive Officer (“CEO”), director and interim Chief Financial Officer (“CFO”) resigned from the Company, along with then directors Paul Larkin and Pablo Marcet. They were replaced by Allen D. Leschert, who assumed the role of CEO and director, Malcolm Fraser, who assumed the role of interim CFO and director, and W. Joseph Yelder and David Pasko, who joined as the Company’s new independent directors.

• b) On or about February 27, 2020, the Company’s former CEO, CFO and directors assigned their respective management fees and directors’ fees receivable (Note 16(b)) aggregating $581,506 to Armex Mining Corp., a company under the control of Allen D. Leschert, the current CEO and director of the Company. On or about the same date, Sterling West Management Ltd. also assigned its management fees receivable of $199,613 (as at September 30, 2019)(Note 16(a)(ii)) to Armex.

• c) On April 2, 2020, a total of 1,507,000 options with an exercise price of $0.095 expired unexercised.

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9. Transactions between related parties

9.1 Transactions

During the years ended September 30, 2019 and 2018, the Company’s related parties consisted of (a) private companies owned by executive officers and directors and (b) a private company owned by a family member of one of the Company’s directors and (c) an entity partly owned and having a cost-sharing agreement with the Company (see (a)(ii)), as follows:

==> picture [478 x 169] intentionally omitted <==

----- Start of picture text -----

Nature of transactions involved Relationship to the Company
Maluti Services Limited Management, general and administrative, CEO
("Maluti") and travel and business development
TRG Resources Ltd. Management CEO until October 5, 2017
Jazz Financial Ltd. ("Jazz") Management CFO until September 30, 2019
Pangea Management Corp. Consulting Family member of CEO
Sterling West Management Ltd.
Management and general and administrative See (ii) below
("Sterling")
PRG Plc. Construction and assembly of pilot metal Director until August 31, 2018
recovery plant and project development costs (see (i) below) and significant
shareholder
----- End of picture text -----

The Company incurred the following fees and expenses in the normal course of operations in connection with companies owned by key management and directors and their relatives.

		Year ended	Year ended
		September 30,	September 30,
Salaries and management fees	Note (ii)	2019 694,436	2018 662,528
General and administrative expenses	(ii)	168,293	161,664
Travel and business development		-	108,241
Project development costs	(i)	-	1,906,424

• (i) Effective October 1, 2017, the Company entered into a services contract with PRG (“PRG Services Contract”) to make the necessary modifications to the pilot plant in order to get it fully operational and to assist the Company in designing a full-scale hydro-metallurgical zinc processing plant. The fees for PRG’s services under this arrangement were fixed at US$180,000 per month until March 31, 2018 and were reduced to approximately US$60,000 from April 1, 2018 and June 30, 2018. The contract was terminated on June 30, 2018.

During the year ended September 30, 2018, the total fees pursuant to the PRG Services Contract amounted to US$1,273,317 ($1,619,463). In addition, the Company paid PRG $286,960 for external security services at the pilot plant, rent for using PRG’s leased premises for the pilot plant and the laboratory, and the reimbursement of miscellaneous laboratory and pilot plant equipment and supplies which the Company requested PRG to purchase on its behalf.

• (ii) The Company is party to a shareholders’ cost-sharing agreement with certain other public and private companies (the “Other Companies”) pursuant to which the Company and the Other Companies are equal shareholders in Sterling and, through Sterling, share office space (until September 30, 2018 after which the Company entered into a separate office lease), furnishings, equipment and communications facilities

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(on a cost recovery basis) and the employment of various administrative, office and management personnel in Vancouver, B.C., Canada. Costs of the shared office facilities and the shared employees are recovered from the Company in proportion to the time spent by the shared employees on matters pertaining to the Company. During the year ended September 30, 2019, the Company’s share of management and overhead costs was $293,223 (September 30, 2018 - $288,280), recorded as general and administrative expenses in the consolidated statements of loss and comprehensive loss.

The Company accounts for Sterling using the equity method. As at September 30, 2019, the amount owing to Sterling was $185,915 (September 30, 2018 – $30,100). This amount is net of a $57,000 deposit with Sterling which was included in prepaid expenses and deposits at September 30, 2018. Subsequent to the year-end, Sterling assigned its $199,613 receivable to Armex Mining Corp., a private company controlled by the Company’s current CEO.

9.2 Compensation of key management personnel

The remuneration of directors and other key members of management personnel during the years ended September 30, 2019 and 2018 were as follows:

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----- Start of picture text -----

Year ended Year ended
September 30, September 30,
Note 2019 2018
Remuneration (i) 557,506 692,527
Directors' fees 16,000 16,072
Share-based payments (ii) 1,100 157,506
$ 574,606 $ 866,105
----- End of picture text -----

(i) Remuneration includes management fees disclosed in Section 9.1 above which also included termination fees aggregating $150,786 (US$120,000) paid to two former officers of the Company during the year ended September 30, 2018.

• (ii) Share-based payments are the fair value of options granted to key management personnel.

The services of the Company’s CEO and CFO are provided pursuant to management services contracts with Maluti and Jazz, respectively. Under the terms of these contracts, in the event of termination without cause, Maluti and Jazz are entitled to termination payments of US$240,000 ($317,832) and US$180,000 ($238,374), respectively. The Company’s CFO resigned on September 30, 2019 and the Company’s CEO resigned on February 27, 2020. Termination payments were not paid with these resignations.

Except as disclosed under Section 9.1 above, key management personnel were not paid post-employment benefits, termination benefits, or other long-term benefits during the year ended September 30, 2019 and 2018. Amounts due to related parties are unsecured, non-interest bearing and due on demand. Accounts payable and accrued liabilities at September 30, 2019 included directors’ fees of $12,000 (September 30, 2018 – $nil), consulting fees of $12,000 (September 30, 2018 – $nil), and remuneration of $557,506 to other key management personnel (September 30, 2018 – $nil). Subsequent to the year-end, all amounts due to related parties noted above were assigned to Armex Mining Corp., a private company controlled by the current CEO of the Company.

10. Financial instruments

The Company’s financial instruments consist of cash and cash equivalents, amounts receivable, accounts payable and accrued liabilities, and loan payable.

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10.1 Fair value of financial instruments

The carrying amount for cash and cash equivalents, amounts receivable, and accounts payable and accrued liabilities on the statement of financial position approximate their fair value due to the short-term to maturities of these financial instruments.

The carrying amount for loans payable approximates its fair value due to the short-term to maturity of this financial instrument.

10.2 Financial risk management

The Company’s financial instruments are exposed to certain financial risks, including credit risk, liquidity and funding risk, and market risk. There have been no substantive changes in the Company’s exposure to financial instrument risk, the Company’s objectives, policies and processes for managing those risks or the methods used to measure them from previous years.

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The overall objective of the Board is to set policies that seek to reduce the Company’s risk as far as possible without unduly affecting the Company’s competitiveness and flexibility. Further details regarding these policies are set out below.

10.3 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 credit risk arises principally from the Company’s cash and cash equivalents and amounts receivable. Cash and cash equivalents consist of cash on hand, deposits in major banks that are considered to be creditworthy, and highly liquid investments with an original maturity date of less than one year. Amounts receivable are comprised primarily of amounts due from a related party, GST receivables from the government of Canada and value-added tax receivables from the government of Macedonia. The carrying values of the financial assets represent the maximum credit exposure.

10.4 Liquidity and funding risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company ensures that there is sufficient capital in order to meet short-term business requirements, after taking into account the Company’s holdings of cash and cash equivalents. The Company’s cash is invested in business accounts and is available on demand.

Funding risk is the risk that the Company may not be able to raise equity financing in a timely manner and on terms acceptable to management. There is no assurance that such financing will be available when, and if, the Company requires additional equity financing.

In the normal course of business, the Company enters into contracts and performs business activities that give rise to commitments for future minimum payments. The following table summarizes the Company’s significant remaining contractual maturities for financial liabilities as at September 30, 2019:

		Less than		1 - 5
		1year		years		Total
Accounts payable and accrued liabilities	$	1,831,977	$	-	$	1,831,977
Loans payable		233,679		-		233,679
Lease commitments		129,727		479,302		609,029
Total	$	2,195,383	$	479,302	$	2,674,685

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In connection with this lease, the Company has a $25,973 deposit with the landlord. This deposit has been recorded as deposit on the Company’s consolidated statement of financial position as at September 30, 2019.

10.5 Market risk

The Company is subject to normal market risks including fluctuations in foreign exchange rates and interest rates. While the Company manages its operations in order to minimize exposure to these risks, the Company has not entered into any derivatives or contracts to hedge or otherwise mitigate this exposure.

Interest rate risk

Interest rate risk is the risk arising from the effect of changes in prevailing interest rates of the Company’s financial instruments. The Company has minimal exposure to interest rate fluctuations on its cash and cash equivalent balances due to current low market interest rates.

Foreign currency risk

Some of the Company’s cash, expenditures, loans and accounts payable are denominated in US dollars, Papua New Guinea kina, Macedonian denar and European euro. The Company’s exposure to foreign currency risk arises primarily on fluctuations between the Canadian dollar and the US dollar, Papua New Guinea kina, Macedonian denar and European Euro. The Company has not entered into any derivative instruments to manage foreign exchange fluctuations.

11. Adoption of accounting standards and pronouncements under IFRS

11.1 Application of new and revised IFRSs

The following accounting policies were adopted by the Company on October 1, 2018 and had no significant impact on the Company’s financial position and results of operations:

• (i) Amended standard IFRS 2, Share-based Payments

The amendments clarify the classification and measurement of share-based payment transactions.

• (ii) New standard IFRS 9, Financial Instruments – Classification and Measurement IFRS 9 introduces new requirements for classifying and measuring financial assets and liabilities and carries over from the requirements of IAS39.

• (iii) Amended standard IFRS 10, Consolidated Financial Statements The amendments deal with the sale or contribution of assets between an investor and its associate or joint venture.

• (iv) Amended standard IAS 28, Investments in Associate and Joint Ventures The amendments to IAS 28 deal with the sale or contribution of assets between an investor and its associate or joint venture.

• (v) New standard IFRS 15, Revenue from Contracts with Customers IFRS 15 provides guidance on how and when revenue from contracts with customers is to be recognized, along with new disclosure requirements in order to provide financial statement users with more information and relevant information.

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11.2 Accounting standards issued but not yet effective during the year ended September 30, 2019

The Company has not applied the following new and revised IFRSs that have been issued but are not yet adopted effective for the nine months ended June 30, 2019 statements:

• (i) New standard IFRS 16, Leases

• IFRS 16 replaces existing lease accounting guidance. All leases will be required to be reported on the statement of financial position unless certain requirements for exclusion are met. Effective for annual periods commencing on or after January 1, 2019.

• (ii) New standard IFRIC 23, Uncertainty over Income Tax Treatments

• IFRIC 23 is a new standard that sets out to clarify the accounting for uncertainties in income taxes.

The Company has not early adopted these new and amended standards and is currently assessing the impact that these standards will have on the financial statements.

12. Critical accounting estimates and critical accounting judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets, liabilities, revenue and expenses. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events, which are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.

The effect of a change in an accounting estimate is recognized prospectively by including it in net income (loss) and/or comprehensive income (loss) in the year of the change, if the change affects that year only, or in the year of the change and future years, if the change affects both.

Judgments and estimates made by management in the application of IFRS that have a significant effect on the financial statements are discussed below.

Critical accounting estimates

Share based payments

The Company measures the cost of equity-settled transactions based on the fair value of the equity instruments on the date of grant. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the stock option, volatility and dividend yield and making assumptions about them.

Critical accounting judgements

• (a) Project development costs

Project development costs are capitalized when the Company can demonstrate that certain criteria are all met. The accounting policy requires management to make certain estimates and assumptions as to future events and circumstances, including judgments about technical feasibility, whether it is likely that future economic benefits will flow to the Company, and the availability of adequate technical, financial and other resources to complete the development, which may be based on assumptions about future events or circumstances. These estimates and assumptions may change as new information becomes available.

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(b) Estimation of useful life of the pilot plant

The Company determines the estimated useful lives and related depreciation for its pilot plant and equipment. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

(c) Impairment of assets

Significant judgment is exercised in connection with the assessment of whether exploration and evaluation assets, stockpile material rights, and the pilot metal recovery plant and equipment are impaired, including the determination of and allocation of assets to CGUs for the purposes of impairment testing. The determination of CGUs requires judgment when determining the lowest level for which there are separately identifiable cash inflows generated by the asset category. The application of the Company’s accounting policies requires judgment in determining whether it is likely that future economic benefits will flow to the Company, which may be based on assumptions about future events or circumstances. At each balance sheet date, management reviews whether events or circumstances have occurred to indicate that the carrying amounts of the Company’s long-lived assets with finite useful lives may be less than their recoverable amounts. Underlying assumptions used in this assessment are influenced by industry conditions, economic uncertainty and management’s intention at the point of assessment. Judgment used in determining whether an asset or asset group is impaired, the recoverable amount of an asset or CGU may affect the amount of the impairment loss to be recorded to an asset or CGU, as well as the potential reversal of the impairment charge in the future.

(d) Business combinations

Determination of whether a set of assets acquired and liabilities assumed constitute the acquisition of a business or asset may require the Company to make certain judgements as to whether or not the assets acquired and liabilities assumed include the inputs, processes and outputs necessary to constitute a business as defined in IFRS 3 – Business Combinations. If an acquired set of assets and liabilities includes goodwill, the set is presumed to be a business. Based on an assessment of the relevant facts and circumstances, the Company concluded that the acquisition of Power Zinc on July 21, 2017 did not meet the definition of a business and the transaction has been accounted for as an asset acquisition.

(e) Determination of control of subsidiaries and joint arrangements

Judgement is required to determine when the Company has control of subsidiaries or joint control of joint arrangements. This requires an assessment of the relevant activities of the investee, being those activities that significantly affect the investee's returns, including operating and capital expenditure decisionmaking, financing of the investee, and the appointment, remuneration and termination of key management personnel; and when the decisions in relation to those activities are under the control of the Company or require unanimous consent from the investors. Judgement is also required when determining the classification of a joint arrangement as a joint venture or a joint operation through an evaluation of the rights and obligations arising from the arrangement. Changes to the Company's access to those rights and obligations may change the classification of that joint arrangement. Based on assessment of the relevant facts and circumstances, primarily, the requirement for unanimous agreement on management decisions relating to the financing and operation of the arrangement, the Company concluded that EERL Holdings met the criteria to be classified as a joint venture.

(f) Assets held for sale and discontinued operations

The Company applies judgement to determine whether an asset or disposal group is available for immediate sale in its present condition and that its sale is highly probable and therefore should be classified as held for sale at the balance sheet date. Conditions that support a highly probable sale include

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the following: an appropriate level of management is committed to a plan to sell the asset or disposal group, an active program to locate a buyer and complete the plan has been initiated, the asset or disposal group has been actively marketed for sale at a price that is reasonable in relation to its current fair value, and the sale of the asset or disposal group is expected to qualify for recognition as a completed sale within one year from the date of classification as held for sale.

The Company also applies judgement to determine whether a component of the Company that either has been disposed of or is classified as held for sale meets the criteria of a discontinued operation. The key area that involves management judgement in this determination is whether the component represents a separate major line of business or geographical area of operation.

(g) Income taxes

Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Company recognizes liabilities and contingencies for anticipated tax audit issues based on the Company’s current understanding of the applicable tax laws in the jurisdictions in which the Company operates. For matters where it is probable that an adjustment will be made, the Company records its best estimate of the tax liability including the related interest and penalties in the current tax provision. However, the final outcome may result in a materially different outcome.

In determining its current and deferred tax provisions, the Company must apply judgment when interpreting and applying complex and changing tax laws and regulations. The determination of the appropriate application of these laws and regulations by tax authorities may remain uncertain for several years. The final outcome of such determination could result in amounts different from those initially recorded and would impact current or deferred tax expense in the period in which a determination is made. The determination of deferred tax asset recognition also requires judgment regarding the Company’s ability to more likely than not utilize that asset.

(h) Determination of cash generating units (“CGUs”)

A CGU is defined as the lowest grouping of integrated assets that generate identifiable cash inflows that are largely independent of the cash inflows of other assets or groups of assets. The allocation of assets into CGUs requires significant judgment and interpretations with respect to the integration between assets, the existence of active markets, similar exposure to market risks, shared infrastructures, and the way in which management monitors the operations.

(i) Functional currency

The Company's functional currency is based on the primary economic environment in which it operates and is based on an analysis of several factors including which currency principally affects sales prices of products sold by the Company, which currency influences the main expenses of providing services, in which currency the Company keeps its receipts from operating activities and in which currency the Company has received financing. Management used its judgment to assess these factors.

(j) Contingencies

Due to the nature of the Company’s operations, various legal, tax, environmental and regulatory matters are outstanding from time to time. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgement and estimates of the outcome of future events.

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The Company is pursuing the recovery of a deposit paid in connection with the Company’s investigation of a potential site for a future full-scale zinc processing plant through the legal system in Macedonia. The outcome of this matter is currently uncertain.

The Company has determined that not all necessary in-country legal agreements in Macedonia were completed in the transaction with PRG and the Company is currently in the process of finalizing these agreements with PRG. The Company has been advised by its legal and tax advisors that the maximum value-added tax exposure that could result in the finalization of these agreements is US$34,811 ($46,100), for which the Company has recorded a provision within accrued liabilities as at September 30, 2019 and 2018.

While the outcomes of these matters are uncertain, based upon the information currently available, the Company does not believe that these matters in aggregate will have a material adverse effect on its financial statements. In the event that management’s estimate of the future resolution of these matters changes, the Company will recognize the effects of these changes in its financial statements in the period in which such changes occur.

13. Limitations of controls and procedures

The Company’s President & CEO and the Chief Financial Officer believe that any disclosure controls and procedures or internal controls over financial reporting, no matter how well conceived and operated, can provide only reasonable and not absolute assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, the Company’s management cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. Inherent limitations include flawed decision making or simple errors. Controls can also be circumvented by individual acts of some persons, by collusion of two or more people or by unauthorized override of the control.

The design of any control system is also based upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected. The Company’s officers are not required to certify the design and evaluation of the Company’s disclosure controls and procedures and internal controls over financial reporting and have not completed such an evaluation. Inherent limitations on the ability of the certifying officers to design and implement on a cost effective basis disclosure controls and procedures and internal controls over financial reporting for the Company may result in additional risks to the quality, reliability, transparency, and timeliness of interim and annual filings and other reports provided under securities legislation.

14. Cautionary statement on forward-looking information

This MD&A contains certain forward-looking statements and forward-looking information (collectively referred to herein as “forward-looking statements”) within the meaning of Canadian securities laws. All statements other than statements of historical fact are forward-looking statements. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “plan”, “continuous”, “estimate”, “expect”, “may”, “will”, “project”, “should”, or similar words suggesting future outcomes. In particular, this MD&A contains forward-looking statements pertaining to the following:

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• Pilot metal recovery plant, including expected useful life;

• Future location for a commercial plant;

• Environmental permitting;

• Capital expenditures; and

• Sources of funding.

Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and assumptions, and are subject to known and unknown risks and uncertainties (both general and specific) that contribute to the possibility that the future events or circumstances contemplated by the forward-looking statements will not in fact be realized. Actual results will differ, and the difference may be material and adverse to the Company and its shareholders.

Risk factors affecting future results include, but are not limited to: financing risks, price volatility of the Company’s stock, prices of zinc and other metals, dependence on key personnel, uninsurable risks, conflicts of interest, and risks of operating in foreign countries, including political risk, government regulation, environmental risks, exchange controls and variations in exchange rates.

Forward-looking statements are based on the Company’s current beliefs as well as assumptions made by, and information currently available to, the Company concerning anticipated financial performance, business prospects, strategies, regulatory developments, the impact of increasing competition, and the ability to obtain financing on acceptable terms. Although management considers these assumptions to be reasonable based on information currently available, they may prove to be incorrect.

Certain of the forward-looking statements in this MD&A may constitute “financial outlooks” as contemplated by National Instrument 51-102 Disclosure Obligations, including information related to projected revenues, expenses, capital expenditures for 2019 and future years, which are provided for the purpose of forecasting the financial position of the Company. Please be advised that the financial outlook in this MD&A may not be appropriate for purposes other than the one stated above.

The forward-looking statements contained in this MD&A are made as of the date thereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

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