Generation Mining Limited - Interim / Quarterly Report 2020

==> picture [435 x 34] intentionally omitted <==

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019

This Management’s Discussion and Analysis (“MD&A”) reviews the consolidated financial condition and results of operations of Generation Mining Limited and its wholly owned subsidiary company (together “Generation” or the “Company”) for the three and six months ended June 30, 2020 and 2019. The MD&A was prepared as of August 11, 2020 and should be read in conjunction with the consolidated financial statements for the three and six months ended June 30, 2020 and 2019, and the December 31, 2019 year end audited consolidated financial statements including the notes thereto prepared in accordance with the International Financial Reporting Standards or (“IFRS”). The disclosure contained in this MD&A has been approved by the Board of Directors of the Company. All figures are in Canadian dollars unless stated otherwise. Additional information relevant to the Company’s activities can be found on SEDAR at www.sedar.com.

This MD&A includes certain statements that may be deemed "forward-looking statements". All statements in this discussion, other than statements of historical fact, that address future exploration activities and events or developments that the Company expects, are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements.

OVERVIEW

The Company is an exploration and development stage company focused on the Marathon platinum group metal (“PGM”) deposit located in Marathon, Ontario Canada (the “Marathon Property” or “Marathon Project”). The Company acquired its interest in the Marathon Property in July 2019 through a joint venture with Stillwater Canada Inc., a subsidiary of Sibanye Gold Limited, trading as Sibanye-Stillwater (“Sibanye”). Sibanye is a leading international precious metals mining company, with a diverse portfolio of PGM operations in the United States and Southern Africa.

Generation has earned a 51% interest in the Marathon joint venture and has the option to increase its interest to 80% by completing a Preliminary Economic Assessment (“PEA”) and spending $10 million on the Marathon Property over a four-year period. The Company filed a PEA in February 2020 and has spent $5.7 million on the Marathon Property to date. The Company has recently commenced a Feasibility Study and Environmental Assessment on the Marathon Property.

The Company was incorporated under the Business Corporations Act (Ontario) on January 11, 2018. Its registered office is located at 100 King Street West, Suite 7010, Toronto, Ontario M5X 1B1. The Company’s common shares trade on the Toronto Stock Exchange (“TSX”) under the symbol GENM and OTCQB Venture Marketplace under the symbol GENMF. The Company also has a number of other exploration properties located in Canada.

Scientific and technical information contained in this MD&A relating to mineral reserves, mineral resources and exploration results was reviewed and approved by Rod Thomas, P.Geo., Director and Vice President, Exploration of the Company, a “Qualified Person” under National Instrument 43-101 – Standards of Disclosure for Mineral Projects.

CORPORATE HIGHLIGHTS - 2020

In February 2020, Mr. Cashel Meagher joined the board of directors and Mr. Brian Jennings was appointed Chief Financial Officer. Mr. Meagher is Senior Vice President and Chief Operating Officer of Hudbay Minerals Inc. and prior to joining Hudbay in 2008, held various positions with Vale Inco. Mr. Jennings is a Chartered Professional Accountant and geologist with over 30 years of experience working as a senior financial executive and corporate restructuring professional.
Completed a financing in February 2020 with aggregate total gross proceeds of $10.7 million.
In March 2020, Mr. Drew Anwyll joined the Company as Chief Operating Officer. Most recently, Mr. Anwyll was Senior Vice-President – Technical Services, Interim Chief Operating Officer and Vice-President Operations | Mine General Manager at Detour Gold’s large open pit gold mine in Northern Ontario.
In April of 2020 all outstanding warrants issued as part of the April 20, 2018 private placement were exercised, for gross proceeds of $2.4 million.
On June 8, 2020 Generation commenced trading on the US trading platform OTCQB Venture Marketplace under the symbol GENMF.
On July 15, 2020 generation commenced trading on the Toronto Stock Exchange under the symbol GENM. Generation believes that the TSX listing will facilitate access to a broader range of investors as well as provide exposure to larger pools of capital, including long-term institutional investors and large investors abroad such as in the USA and Europe.

TECHNICAL HIGHLIGHTS - 2020

Completed a NI 43-101 PEA in February 2020 for the Marathon Property, providing a compelling base case assessment for the development of the Marathon Palladium Mineral Resource by open pit mining. The project generates an after-tax internal rate or return (“IRR”) of 30.0% and an after-tax net present value (“NPV”) of $871 million at a 5% discount rate at November 30, 2019 two-year trailing average metal prices.
In February 2020, a large, high velocity seismic anomaly that extends at depth from the Sally deposit at the Marathon Property was discovered.
In May 2020 the Company commenced trade off studies in preparation for a feasibility study of the Marathon Property. The focus of the trade off studies is to complete a detailed analysis of the options and concepts previously outlined in prior feasibility studies and the recent PEA completed by Generation.
In June 2020 the Company restarted the Environment Assessment (“EA”) review and approval process for the Marathon Project with Federal and Provincial Government Agencies.
Quantec Geoscience Limited commenced a Spartan Magnetotelluric (MT) geophysical survey over portions of the Marathon Property. The survey will be targeting down dip extensions to palladium enrichment zones at the W-Horizon as well as the large, high velocity seismic anomaly near the Sally Deposit. MT surveys have been very successful in delineating platinum group element (PGE) and massive sulfide mineralization at various prospects in Northwestern Ontario, yet, to date, no MT surveys have been employed on the Marathon Property.
In July 2020 Generation formally commenced a Feasibility Study on the Marathon Project. The Feasibility Study is expected to take approximately 7-8 months, with completion expected in early 2021.

MARATHON PROPERTY ACQUISITION AND JOINT VENTURE

On July 10, 2019, the Company, through Generation PGM, completed the acquisition of a 51% initial interest in the Marathon PGM deposit near Marathon, Ontario and entered into a joint venture agreement with Stillwater Canada Inc. (“Stillwater”) with respect to the property (“Marathon Property”). The Company paid $3,000,000 in cash and issued 11,053,795 common shares of the Company at a deemed price of $0.2714 per common share (totaling $3,000,000), for a total consideration of $6,000,000. The

Company has the right to increase its interest in the Marathon Property to 80% by spending $10,000,000 in exploration, evaluation and development expenditures and preparing a preliminary economic assessment (“PEA”) within four years of closing. On February 19, 2020, the Company filed a PEA and as at June 30, 2020 has incurred $5,710,468 of the $10 million in exploration and evaluation expenditures required to increase its interest to 80%. During this four-year second earn-in period, the Company must sole-fund all expenditures in respect of the Marathon Property and related activities. Once the Company has increased its total interest in the Marathon Property to 80%, the parties will jointly fund future exploration expenditures on an 80/20 pro rata basis to maintain their respective interests in the joint venture, subject to normal dilution provisions. Upon completion of a definitive feasibility study and making a positive commercial production decision, Stillwater Canada Inc. will have 90 days to exercise an option to increase its interest in the joint venture to 51% by agreeing to fund 31% (if it has maintained a minimum 20% interest) of the total capital cost estimated by the feasibility study. The Company is currently the operator of the joint venture (unless its interest in the joint venture reduces to a minority interest) and has assumed all liabilities of the Marathon Property.

PRELIMINARY ECONOMIC ASSESSMENT – MARATHON PROPERTY

Pursuant to the Marathon JV agreement with Sibanye, and to satisfy one of the conditions to earn an additional 29% interest in the Marathon JV, the Company completed a NI 43-101 PEA in February 2020 for the Marathon Project. The PEA provides a compelling base case assessment for the development of the Marathon Palladium Mineral Resource by open pit mining. Highlights (all amounts in Canadian dollars on a 100% project ownership basis) are as follows:

The project would produce an average of 194,000 PdEq ounces per year over a 14-year mine life (including credits for copper, platinum, gold and silver).
The project generates an after-tax internal IRR of 30.0% and an after-tax NPV of $871 million at a 5% discount rate at November 30, 2019 two-year trailing average metal prices (base case).
Metal prices and the CDN:US dollar exchange rate are based on December 31, 2019 approximate two-year trailing average metal prices of US$1,275/oz Pd, US$3/lb Cu, US$900/oz Pt, US$1,300/oz Au, US$16/oz Ag, and $CDN:US$ = 0.76.
The project generates an after-tax net present value of $1,541 million and an internal rate of return of 45.8% at a 5% discount rate at recent spot metal prices (final LBMA London price fix for precious metals; final LME bid price for copper, December 31, 2019).
The project would generate base case after-tax cash flows of $520 million in years 1-3, resulting in a 2.5-year payback period.
Actual palladium production will average 107,000 ounces annually over the mine life, at a Cash Cost Per Ounce of $US504 and an All-In Sustaining Cost of $US586 per ounce, net of by-product credits.
The PEA used only Measured and Indicated Mineral Resources in the Marathon deposit in the calculations and did not include the Geordie and Sally deposits which are located on the same property. The Marathon deposit has no outstanding royalties or financing streams registered against it.

The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:

• The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:	• The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:	• The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:	• The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:	• The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:	• The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:	• The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:	• The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:	• The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:	• The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:	• The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:	• The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:	• The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:	• The Mineral Resources for the Marathon Deposit are reported against an NSR cut-off value of CDN$13/t as set out below:

MARATHON DEPOSIT PIT CONSTRAINED MINERAL RESOURCE ESTIMATE
Classification	Tonnes (k)	Pd (g/t)	Pt (g/t)	Cu (%)	Au (g/t)	Ag (g/t)	PdEq (g/t)	Pd (koz)	Pt (koz)	Cu (Mlb)	Au (koz)	Ag (koz)	PdEq (koz)
Measured	103,337	0.64	0.21	0.20	0.07	1.5	1.34	2,123	688	463	239	4,964	4,445
Indicated	75,911	0.46	0.15	0.20	0.06	1.8	1.10	1,115	376	333	151	4,371	2,685
Meas + Ind	179,248	0.56	0.18	0.20	0.07	1.6	1.24	3,238	1,064	796	390	9,335	7,130
Inferred	668	0.37	0.12	0.19	0.05	1.4	0.95	8	3	3	1	31	21

Note: Meas = Measured, Ind = Indicated, PdEq = palladium equivalent, k = thousands, M = millions.

1) Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, marketing, or other relevant issues.

2) Mineral Resources were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.

3) The Inferred Mineral Resource in this estimate has a lower level of confidence that that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.

4) Contained metal totals may differ due to rounding.

5) Mineral Resources are reported within an optimized pit shell at an NSR cut-off value of CDN$13/t.

On July 6, 2020, the Company announced the filing of a PEA (as amended), titled “Amended Technical Report, Updated Mineral Resource Estimate and Preliminary Economic Assessment of the Marathon Deposit, Thunder Bay Mining District Northwestern Ontario Canada” dated July 6, 2020 (effective date of January 6, 2020). The purpose for this (Amended) Technical Report is to provide data on the 2019-39 hole exploration drilling program that was concurrent with the Technical Report compilation and were not included with the January 6, 2020 Updated Mineral Resource Estimate and Preliminary Economic Assessment Technical Report. The Mineral Resource Estimates, Economic Analysis, Interpretations and Conclusions and Recommendations provided in the originally issued Technical Report remain unchanged.

FEASIBILITY STUDY

In July 2020 Generation formally commenced a Feasibility Study on the Marathon Project. The Feasibility Study is expected to take approximately 7-8 months, with completion expected in early 2021. The Feasibility Study Team consists of:

G-Mining Services - mine plan and Mineral Reserves, infrastructure scope of work and integration of the costs and economic analysis,
Ausenco Engineering Canada Inc. - process facility layout and design
SGS-Lakefield - metallurgical testing,
Knight-Piesold - design of the tailings facility and open pit geotechnical engineering and environment impact interactions with Stantec and Ecometrix, and
P&E Mining Consultants Inc. - responsible for the mineral resource estimate.

G-Mining is progressing with pit designs and sequencing that will prioritize the high grade Pd values for initial production to bring increased palladium production into the first half of the mine life and increase copper production in the mine’s later years.

Ausenco's plant design is expected to update the quality work that was done in prior studies with newer technology, which in turn will improve concentrator operability and lower capital costs, while increasing palladium recovery without sacrificing copper recovery. This flow sheet is expected to be validated with the current metallurgical test work that is progressing at SGS-Lakefield.

SGS-Lakefield commenced metallurgical test work which is being overseen by Steve Haggarty, P.Eng, a metallurgical engineer who has with operating and design experience from a 40 year career with Teck, Homestake Mining and Barrick Gold. As outlined in the PEA, extensive metallurgical testing was completed in the past. The objective of the current studies is to evaluate modifications to the process plant design which could simplify the circuit with a decrease in capital expenditures, a decrease operating costs and the potential for improved recoveries of palladium, platinum, gold, and copper.

Knight-Piesold is updating the past tailings dam designs to reflect current best available practices and technologies. At this early stage, the work on the Feasibility Study will consider an optimized processing and mine production rate that is more aggressive than that outlined in the PEA and contemplates starting at 5,000,000 tonnes per year and expanding to 8,000,000 tonnes per year after five years.

ENVIRONMENTAL ASSESSMENT

The initial Environmental Assessment process was initiated by the prior operator (Stillwater Canada) of the Marathon Project in 2012 and was put on hold in January 2014. At that point in time the Canadian Environmental Assessment Agency and the Joint Review Panel (JRP) had reviewed the Environmental Impact Statement (EIS) report and supporting technical reports and, determined that the material was sufficient to proceed to the public hearing stage. At that time, the JRP timeline to complete the EA process was approximately 6 months. In September 2019, the Company received confirmation from the government that the Marathon Project will remain subject to the requirements of the Canadian Environmental Assessment Act (2012) and the Ontario Environmental Assessment Act (1990) and the process could be restarted. The Company does not expect the permitting process to be delayed by the Covid-19 Pandemic.

The Company has commenced the process to restart the Environmental Assessment approval process and to complete an EIS Report Addendum. At a high-level, the steps that are required to complete the process are as follows:

update and confirm existing baseline studies,
capture and model the optimizations being progressed in the feasibility study work,
document these conclusions in the Environmental Impact Statement report addendum, and
undertake the Joint Review Panel (“JRP”) hearings.

To assist with the permitting program, the sustainability team is being supported by:

Stantec, a global engineering consulting firm will lead the EA process and EIS report addendum update,
Knight-Piesold - lead the tailing facility designs,
EcoMetrix - geochemistry, aquatics, water quality modelling,
Northern BioScience - monitoring of species at risk and terrestrial studies on the property, and
Stantec and Ecometrix are involved in the Feasibility Study Team to help facilitate the update of the Environment Impact Study Report addendum and to help inform the critical path regulatory approvals process.

EXPLORATION AND EVALUATION ACTIVITIES – MARATHON PROPERTY

During the first quarter, Generation announced the discovery of a large, high velocity seismic anomaly that extends at depth from the Sally deposit, following a 200-sensor passive seismic survey on the Sally area conducted in the third quarter of 2019. The anomaly continues into the Archean footwall which constitutes a previously unexplored area for platinum group elements and copper mineralization. The velocity anomaly when projected to surface coincides with a reversely polarized magnetic trend which is used as an exploration tool to identify prospective lithologies.

During the second quarter the Company engaged Quantec Geoscience Limited to complete a Spartan Magnetotelluric (MT) geophysical survey over portions of the Company’s Marathon Property. The survey will target down dip extensions to palladium enrichment zones at the W-Horizon as well as the large, high velocity seismic anomaly near the Sally Deposit. MT surveys have been very successful in delineating platinum group element (PGE) and massive sulfide mineralization at various prospects in Northwestern Ontario. To date no MT surveys have been employed on the Marathon Property. These successes include several significant PGE/Cu drill intersections at the Impala Platinum (North American Palladium) and Transition Metals’ Sunday Lake property, targeting conductive sources from a 2018-19 Quantec Spartan MT survey. The Spartan MT survey has two main objectives:

To provide deep resistivity imaging over a portion of the W-Horizon and its presumed down dip extension to the west of the Marathon Deposit resource. The W-Horizon constitutes a portion of the Marathon Deposit resource and is recognized in the scientific literature as a zone of extreme palladium enrichment. The Spartan MT survey will facilitate geologic correlation and map potential structures which may have provided a locus for mineralization. The survey has the potential to delineate drill targets down dip and to the west of the Marathon Deposit resource which is the subject of an ongoing feasibility study, and
To provide resistivity imaging on a broader scale of the Sally Deposit and environs. Of specific interest is a large high velocity seismic anomaly that extends at depth from the Sally Deposit. The anomaly continues into the Archean footwall which constitutes a previously unexplored area for PGE and copper mineralization. The velocity anomaly when projected to surface coincides with a reversely polarized magnetic trend, which is used as an exploration tool to identify prospective lithologies. Previous exploration on surface at the Sally area in 2014 yielded a number of highgrade surface samples, including one grading 188.2 g/t PGE, 9.1% copper and 0.60% nickel.

In August, Generation announced the preliminary results from the MT survey over a portion of the Marathon Deposit resource including the W Horizon and structures to the west of the deposit which are believed to have provided a favourable environment for enriched palladium mineralization. Analysis of the MT data has identified one prospective target which consists of a discrete, previously undrilled, conductive MT anomaly situated at a vertical depth of approximately 650 meters downdip and immediately west of the Marathon Project deposit. The anomaly is at a depth beyond the depth penetration capabilities of a preexisting airborne electromagnetic survey of this area (completed by a previous operator) and most importantly the anomaly is more conductive than Marathon Project deposit mineralization. Consequently, the anomaly constitutes a high priority drill target given its coincidence with the presumed down dip extension of the Marathon Series Gabbros which constitute the feeder zones to, and are the host of, PGM-Cu mineralization at the Marathon Deposit.

The Company plans to follow up the MT survey with a minimum of 5,000 metres of drilling, which could potentially be expanded depending upon results.

OUTLOOK

The Company will continue to focus on advancing the Marathon Project. Over the next several months Generation will focus on completing a Feasibility Study, progressing the Environmental Assessment, and completing the MT survey and follow up drill program. During the Second Earn-In Period, the Company will continue to engage in such operational programs that will contribute to meeting the $10 million in exploration, evaluation and development expenditures required in order to earn the Second Interest of 29% thereby increasing its initial 51% interest to 80%.

COVID-19

At the end of 2019, a novel strain of coronavirus (“COVID-19”) was reported in China. The COVID-19 outbreak has developed rapidly in 2020, with a significant number of infections around the world. On March 11, 2020, it was labelled a pandemic by the World Health Organization. During the first and second quarter of 2020, attempts at containment of COVID-19 have resulted in decreased economic activity, which has adversely affected the broader global economy. The rapid development and fluidity of the situation precludes any prediction as to the ultimate impact of COVID-19; however, the Company seeks to obtain the best possible information to enable the assessment of the risks involved and implement appropriate measures to respond. During the six months ended June 30, 2020, the Company has taken a number of measures to safeguard the health of its employees and the local communities where it operates.

OTHER MINERAL PROPERTIES AND AGREEMENTS

In addition to the Marathon Property, the Company holds options, rights and/or ownership interest in the following mineral properties as of June 30, 2020:

Darnley Bay Anomaly, Northwest Territories: The Company holds 100% of the rights to a mineral concession covering the Inuvialuit Settlement Region’s lands where the Inuvialuit hold the mineral and surface rights. The area hosts potential base metal and diamond exploration targets. The Company has an agreement regarding exploration and development with the Inuvialuit Regional Corporation which requires cash payments of $50,000 per year commencing in 2020, or when the TSX-Venture Exchange composite index reaches 1500, and minimum exploration expenditures of $1,000,000 per year commencing in 2020 and cumulative exploration expenditures of $6.3 million by 2025. It is the Company’s intention to renegotiate the agreement prior to making any cash payments or incurring any exploration expenditures during 2020.

Darnley Bay Diamond, Northwest Territories: The property consists of jointly held mineral leases on the Parry Peninsula northeast of Paulatuk in the Inuvialuit Settlement Region’s lands where the Inuvialuit hold the surface rights and the Crown holds the mineral rights. The focus is on diamond exploration. The Company and Diadem Resources Ltd. continue to advance exploration through a joint venture agreement where Diadem is currently responsible for all expenditures relating to the project.

Davidson, British Columbia: The Company has an option to acquire a 100% interest in a property hosting a molybdenum-tungsten deposit. The option agreement was signed on April 1, 2016 and payments totalling $450,000 were made as at June 30, 2020. There is an ongoing commitment of $100,000 payable on each anniversary of the agreement until commercial production is achieved or the agreement is terminated. Upon commercial production, the vendor will be entitled to a net smelter return royalty of 3%.

Clear Lake, Yukon Territory: On May 24, 2016, the Company entered into an option agreement to earn a 100% interest in a zinc-lead-silver property. Total payments and work commitments of $23,320 were made during the period from January 11, 2018 to October 1, 2018. On October 1, 2018, the Company entered into an Assignment, Assumption and Amending Agreement (“Clear Lake Assignment Agreement”) with Eastern Zinc Corp. (“Eastern Zinc”) and the optionor of the Clear Lake property to

assign the exclusive right and option to acquire a 100% interest in the property to Eastern Zinc. Pursuant to the agreement, Eastern Zinc paid $50,000 in cash and issued 12,600,000 common shares of Eastern Zinc to the Company. An additional $50,000 in cash and 5,010,000 common shares of Eastern Zinc were due to the Company on October 1, 2019 which was extended to October 1, 2020. On January 31, 2020, Eastern Zinc provided notice of termination pursuant to the underlying option agreement which has no effect on the Company’s Eastern Zinc receivables. On May 13, 2020, the Company entered into an assignment agreement assigning the Company’s right to the Eastern Zinc receivable to a third party for cash consideration of $300,500 and also entered into a share purchase agreement agreeing to sell 4,000,000 common shares of Eastern Zinc to a third party for cash consideration of $200,000. On June 19, 2020 Eastern Zinc changed its name to Major Precious Metals Corp. Subsequent to the quarter end, the assignment agreement and share purchase agreement closed resulting in Generation holding a balance of 8,600,000 shares of Major Precious Metals. Major Precious Metals shares are traded on the CSE under the symbol SIZE.

Nak, British Columbia: The Company has an option to earn a 100% interest in a copper-gold project consisting of four mineral claims over 1,640 hectares. The option agreement was signed on August 30, 2016 and is subject to a 2% royalty of which 62.5% can be purchased from the optionor for $1.5 million. There has been $60,000 in cash paid to the optionor as at June 30, 2020. Future cash payments consist of: $30,000 on August 30, 2020, $60,000 on August 30, 2021, $25,000 on completion of 1,500 metres of drilling, $25,000 on completion of an additional 3,000 metres of drilling on or before December 31, 2022, and $125,000 and a minimum 250,000 common shares (or cash equivalent) in the capital of the Company upon completion of an additional 7,000 metres of drilling on or before December 31, 2022. Pursuant to the option agreement the Company is required to spend $500,000 on the property prior to August 31, 2019. As at June 30, 2020, the Company incurred $37,600 in work commitments, $12,500 in work commitments were waived by the optionor, leaving a work commitment balance of $449,900. The vendor and the Company are currently in discussions regarding possible amendments to the option agreement for payment and work commitment terms.

Rawdon Zinc, Nova Scotia: On March 16, 2018, the Company entered into a Claims Acquisition Agreement to acquire a 100% interest in an exploration property with the potential to host lead-zincsilver-copper mineralization in central Nova Scotia. Pursuant to the agreement, the Company issued 3,000,000 common shares valued at $191,400 to the optionor. At June 30, 2020, the Company held seven mineral licenses covering an area of 6,444 hectares.

Alberta Zinc, Alberta: On May 10, 2018, the Company entered into an option agreement to acquire a 100% interest in the Alberta Zinc project in Alberta currently covering 32,057 hectares and consisting of four mineral rights permits. The Company paid $10,000 and issued 500,000 common shares valued at $31,900 to the vendor upon signing the agreement and committed to a minimum of $100,000 in expenditures on the property which was fulfilled as at December 31, 2019. A further payment of $250,000 (in cash or shares) was required on May 10, 2020. The Company has no intention of making this payment. The property is subject to a 2% gross metals royalty, of which the Company can purchase half at any time for $1 million.

EXPLORATION AND EVALUATION ACTIVITIES – OTHER PROPERTIES

There were no exploration activities during the quarter on the Company’s other properties.

ACQUISITION, EVALUATION AND EXPLORATION EXPENDITURES

The following table displays the acquisition, evaluation and exploration expenses by project for the three and six months ended June 30, 2020 compared with the three and six months ended June 30, 2019.

	Three months ended	Three months ended	Six months ended	Six months ended
Projects	June 30, 2020	June 30, 2019	June 30, 2020	June 30, 2019
Marathon Darnley Bay Anomaly Davidson Nak Rawdon Zinc Alberta Zinc	1,224,586 - 104,281 - - -	- - - - 7,245 -	1,807,234 - 132,636 - - -	- 24,806 133,191 8,429 23,859 26,018
Total expenditures in theperiod	$ 1,328,867	$ 7,245	$ 1,939,870	$ 216,303

The following table displays the cumulative mineral property expenditures by project at June 30, 2020.

	Cumulative as at December 31, 2019	Six months ended June 30 Exploration and Evaluation	Cumulative as at June 30, 2020
Marathon Darnley Bay Anomaly Davidson Nak Clear Lake Rawdon Zinc Alberta Zinc	9,422,874 576,941 314,480 67,599 23,320 550,917 179,626	1,807,234 - 132,636 - - - -	11,230,108 576,941 447,116 67,599 23,320 550,917 179,626
Total expenditures in the period Mineral properties acquired(1)	$ 11,135,757 1,216,848	$ 1,939,870 -	$ 13,075,627 1,216,848
Total cumulative mineral propertyexpenditures	$ 12,352,605	$ 1,939,870	$ 14,292,475

(1) Properties acquired on December 15, 2017 pursuant to a court approved plan of arrangement between Generation, Pine Point Mining Limited and Osisko Metals Incorporated (“Transferred Properties” or the “Arrangement Agreement”). The transferred properties included the Darnley Bay Anomaly and Darnley Bay Diamond in the Northwest Territories, Davidson and Nak in British Columbia, Lac Lessard in Quebec and Clear Lake in Alberta.

RESULTS FROM OPERATIONS

The following table sets forth financial information for the Company which has been summarized from and should be read in conjunction with the Company’s unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2020 and 2019, including the notes thereto.

Statements of Income (Loss)	Three months ended June 30, 2020	Three months ended June 30, 2019	Six months ended June 30, 2020	Six months ended June 30, 2019
Expenses Acquisition, evaluation and exploration expenditures Share-based compensation Audit, legal and advisory fees Management and corporate administration services Shareholder and investor communications costs Occupancy cost Interest	$ 1,328,867 956,963 90,653 313,626 179,427 30,213 13,722	$ 7,425 - 180,552 107,978 289,150 27,826 7,523	$ 1,939,870 1,252,458 205,168 433,392 400,009 64,329 27,571	$ 216,303 - 239,164 196,056 305,238 52,012 11,642
Operating loss Gain (loss) on marketable securities and receivable marketable securities Interest income	(2,913,471) 5,164,366 16,415	(620,454) (714,200) -	(4,322,797) 5,288,625 16,415	(1,020,414) (578,100) -
Net Income (Loss) and Comprehensive Income (Loss)	$ 2,267,310	$ (1,334,654)	$ 982,243	$ (1,598,514)
Net Income (Loss) per Share – Basic and diluted	$ 0.02	$ (0.03)	$ 0.01	$ (0.04)

Three Months Ended June 30, 2020 vs. 2019

Generation incurred net income of $2,267,310 or $0.02 per share for the three months ended June 30, 2020 compared to a net loss of $1,334,654 or $0.03 per share for the three months ended June 30, 2019. The significant differences are outlined below.

Acquisition, evaluation and exploration expenses were $1,328,867 for the three months ended June 30, 2020 compared to $7,425 for the six months ended June 30, 2019. The increase is the result of expenditures relating to the Marathon Property including costs associated with the feasibility study, environmental assessment, exploration and maintaining the property. The expenditures in 2019 are related to the Company’s other non-material properties.
During the three months ended June 30, 2020, 3,600,000 stock options were granted to directors and officers compared to no stock options granted in the prior comparable period. Share based compensation is a non-cash item calculated using the Black Scholes valuation model and fluctuates period to period depending on the number of options granted or vested.
Audit, legal and advisory fees were higher in 2019 as a result of the acquisition of the Marathon Property.
Management and corporate administration services expenses increased in 2020 compared to the prior period due to increased administration activities and executive compensation at the corporate level as the Company expanded in order to complete a feasibility and environmental assessment on the Marathon Project.
Shareholder and investor communications costs decreased in 2020 compared to the prior quarter of 2019. During the prior quarter Generation was engaged in more robust marketing and investor relations programs related to the new acquisition of the Marathon Project.
Occupancy costs are related to an office lease entered into on May 1, 2019. The amount increased slightly in comparison to the prior year’s period due to the timing and expense related to the move into new, larger office space.
Interest expense represents the interest portion of the monthly office lease resulting from the recognition and depreciation of the corporate office lease as a right-of-use asset upon adopting IFRS 16 Leases in the second quarter of 2019.

During the three months ended June 30, 2020, Generation recorded an unrealized gain on marketable securities and marketable securities receivable of $5,164,366 arising from the assignment of the Clear Lake project option to Eastern Zinc (renamed Major Precious Metals), in comparison to a loss of $714,200 in the same period of the prior year. The change is due to the fluctuation in the Major Precious Metals share price period to period. See Other Mineral Properties and Agreements – Clear Lake.

Six Months Ended June 30, 2020 vs. 2019

Generation incurred net income of $988,243 or $0.01 per share for the six months ended June 30, 2020 compared to a net loss of $1,598,514 or $0.04 per share for the six months ended June 30, 2019. The significant differences are outlined below.

Acquisition, evaluation and exploration expenses were $1,939,870 for the six months ended June 30, 2020 compared to $216,303 for the six months ended June 30, 2019. The increase is the result of expenditures relating to the Marathon Property including costs associated with the feasibility study, environmental assessment, exploration and maintaining the property. The expenditures in 2019 related to the Company’s other non-material properties.
During the six months ended June 30, 2020, 4,100,000 stock options were granted to directors and officers compared to no stock options granted in the prior comparable period. Share based compensation is a non-cash item calculated using the Black Scholes valuation model and fluctuates period to period depending on the number of options granted or vested.
Audit, legal and advisory fees were higher in 2019 as a result of the acquisition of the Marathon Property.
Management and corporate administration services expenses increased in 2020 compared to the prior period due to increased administration activities and executive compensation at the corporate level as the Company expanded in order to complete a feasibility and environmental assessment on the Marathon Project.
Shareholder and investor communications costs increased in 2020 compared to the prior quarter as Generation enhanced its marketing and investor relations programs in an effort to market the Marathon Project to current and prospective shareholders.
Occupancy costs are related to an office lease entered into on May 1, 2019. The amount increased in comparison to the prior comparable period due to the increased size of the premises to accommodate current business activities.
Interest expense represents the interest portion of the monthly office lease resulting from the recognition and depreciation of the corporate office lease as a right-of-use asset upon adopting IFRS 16 Leases in the second quarter of 2019.
During the six months ended June 30, 2020, Generation recorded an unrealized gain on marketable securities and marketable securities receivable of $5,288,625, arising from the assignment of the Clear Lake project option to Eastern Zinc (renamed Major Precious Metals), in comparison to a loss of $578,100 in the same period of the prior year. The change is due to the fluctuation in the Major Precious Metals share price period to period. See Other Mineral Properties and Agreements – Clear Lake.

Summary of Quarterly Results

Three Months Ended	Jun 30, 2020	Mar 31 2020	Dec 31 2019	Sep 30 2019	Jun 30 2019	Mar 31 2019	Dec 31 2018	Sep 30 2018
Acquisition, evaluation and exploration General and administration Share-based payments	$1,328,867 627,641 956,963	$611,003 502,828 295,495	$1,980,217 413,937 -	$7,475,824 402,562 1,101,000	$7,425 613,029 -	$208,878 191,083 -	$126,056 191,093 33,162	$500,900 140,316 -
Operatingloss	(2,913,471)	(1,409,326)	(2,394,154)	(8,979,386)	(620,454)	(399,961)	(350,311)	(641,216)
Gain (loss) on marketable securities andreceivablemarketable securities	5,164,366	124,259	(504,119)	(525,798)	(714,200)	136,100	625,191	-
Net income (loss) and comprehensiveincome (loss)	2,267,310	(1,285,067)	(2,768,662)	(9,505,184)	(1,334,654)	(263,860)	1,803,461	(641,216)
Basic and diluted earnings (loss) per share	$0.02	$(0.01)	$(0.030)	$(0.110)	$(0.030)	$(0.006)	$0.040	$(0.010)
Weighted average number of common shares outstanding	130,134,113	111,061,988	91,522,675	83,909,901	45,573,475	45,469,934	45,469,934	45,469,934

The Company’s operating losses are driven mainly by the extent and cost of the company’s acquisition, evaluation and exploration activities. The significant changes over the most recent eight completed quarters are outlined below.

Included in the acquisition, evaluation and exploration expenses from the third quarter of 2018 to the second quarter of 2019 are costs related to the Company’s Transferred Properties, the acquisition of the Rawdon project, and the cost of the Alberta Zinc option.
During the first and second quarter of 2020 and the third and fourth quarters of 2019 acquisition, evaluation and exploration expenditures increased significantly compared to the prior six quarters. This is the result of the acquisition of the initial 51% of the Marathon Property, the completion a 12,000-metre drill program, a preliminary economic assessment during the third and fourth quarters of 2019 and initiation of a feasibility study and environmental assessment during the first and second quarters of 2020.
General and administrative expenses increased during the last three quarters of 2019 and the first and second quarter of 2020 as a result of the expanded corporate administrative function following the Marathon Property acquisition.
Share based payments is a non-cash item calculated using the Black Scholes valuation model and fluctuates period to period depending on the number of options granted and vesting.

The Company’s gain (loss) on marketable securities and receivable marketable securities is the result of the fluctuation in market value of shares of Major Precious Metals. See Other Mineral Properties and Agreements – Clear Lake.

FINANCIAL POSITION

Assets

As at June 30, 2020, the Company had total assets of $20,393,089 (December 31, 2019 - $2,929,674) which consisted of current assets of $19,538,337 (December 31, 2019 - $2,049,751) and non-current assets of $854,752 (December 31, 2019 - $879,923).

Current assets as at June 30, 2020 consists primarily of cash and cash equivalents of $13,241,070 (December 31, 2019 - $1,218,516), marketable securities $4,136,930 (December 31, 2019 - $256,638) and accounts receivable $1,970,171 (December 31, 2019 - $540,910). Accounts receivable is mainly comprised of HST receivable of $376,700 (December 31, 2019 - $405,489) and Major Precious Metals marketable securities and cash receivable of $1,543,754 (December 31, 2019 - $135,421) (see Other Mineral Properties and Agreement - Clear Lake). Major Precious Metals is a public company traded on the CSE under the symbol SIZE. The share price fluctuates significantly from period to period and the

historical average daily volume is not significant. There can be no assurance that Generation will be able to monetize its investment in Major Precious Metals at quoted market prices.

Non-current assets as at June 30, 2020 consist of restricted cash and cash equivalents pursuant to the GICs held as security for the corporate office lease, land and building acquired pursuant to the acquisition of the initial 51% of the Marathon Property and the corporate office lease right of use asset.

Liabilities

As at June 30, 2020, the Company had total liabilities of $1,053,315 (December 31, 2019 - $719,541) which consisted of current liabilities of $845,156 (December 31, 2019 - $496,368) and long term liabilities of $208,159 (December 31, 2019 - $223,173).

Current liabilities as at June 30, 2020 primarily consists of accounts payable and accrued liabilities of $626,474 (December 31, 2019 - $288,982) short term debt of $189,732 (December 31, 2019 - $180,516), and short term lease liability of $28,950 (December 31, 2019 - $26,870). The increase in accounts payable is due mainly to the increased expenditures relating to the operation of the Marathon Project. Short term debt represents an unsecured amount, including accrued interest, owing to a former officer of Pine Point (formerly Darnley Bay Resources Limited) incurred from October 3, 2003 to April 28, 2006. The debt payments were suspended on March 30, 2012, however the Company continues to accrue interest. This liability was part of the liabilities assumed by the Company through the Arrangement Agreement.

As a result of adopting IFRS 16 in 2019, the Company recognized a right-of-use asset for its corporate office lease. As at June 30, 2020, the balance of the current lease liability is $28,950 and the long term lease liability is $208,159.

LIQUIDITY

The Company relies on equity financings to fund its acquisition, evaluation and exploration activities, cover administrative expenses and to meet obligations as they become due.

The Company's main source of liquidity is its cash. These funds are primarily used to finance working capital, exploration and evaluation expenditures, capital expenditures, and acquisitions. The Company manages its liquidity risk by regularly monitoring its cash flows from operating activities and holding adequate amounts of cash. Cash is held on deposit and in Guaranteed Investment Certificates with a major Canadian chartered bank.

Cash used in operating activities during the six months ended June 30, 2020 was $2,831,544 compared with $885,375 for the same period in the prior year. The increase in cash used in operations in 2020 is due mainly to the acquisition, exploration and evaluation of the Marathon Project, and corresponding increases in audit, legal and advisory fees, investor communications expenses and general and administrative expenses, as the Company expanded over the year.

Cash used in investing activities included the purchase of vehicles for use at the Marathon Property (2019 – nil).

Cash generated from financing activities during the six months ended June 30, 2020 amounted to $14,882,007, compared to $7,272,399 for the same period in the prior year. The increase is in connection with the private placement for total gross proceeds of $10.7 million and receipts from the exercise of warrants in the amount of $4,499,586 (2019 – nil). (See Outstanding Security Data section below for details of the transaction.)

CAPITAL RESOURCES

The Company does not have any debt or credit facilities with financial institutions.

At present, the Company’s operations do not generate cash in-flows and its financial success is dependent on management’s ability to discover economically viable mineral deposits. The mineral exploration process can take many years and is subject to factors that are beyond the Company’s control. To finance the Company’s exploration programs, feasibility study, environmental assessment and to cover administrative and overhead expenses, the Company raises money through equity financings. Many factors influence the Company’s ability to raise funds, including the health of the resource market, the climate for mineral exploration investment, the Company’s track record, and the experience and caliber of its management. Actual funding requirements may vary from those planned due to a number of factors, including the progress of exploration and development activities.

Management believes it will be able to raise capital as required in the long term but recognizes there will be risks involved that may be beyond their control. If the Company is unable to raise sufficient financing, it may need to scale back its intended operational programs and its other expenses. Other than as discussed herein, the Company is not aware of any trends, demands, commitments, events or uncertainties that may result in its liquidity either materially increasing or decreasing at present or in the foreseeable future, other than general market conditions, which are uncertain for junior exploration companies. Material increases or decreases in the Company’s liquidity will be substantially determined by the success or failure of its exploration and development programs, as well as its continued ability to raise capital.

DIVIDENDS

The Company has neither declared nor paid any dividends on its common shares. The Company intends to retain its earnings, if any, to finance growth and expand its operation and therefore does not anticipate paying any dividends on its common shares in the foreseeable future.

RELATED PARTY TRANSACTIONS

Key management includes the Company’s directors, officers and any employees with authority and responsibility for planning, directing, and controlling the activities of an entity, directly or indirectly. Compensation awarded to key management includes the following:

	Three months ended Six months ended
	June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
Salaries and bonuses Share based payments - options Total compensation to key management	$ 516,333 $ 131,250 $ 753,666 $ 240,600 817,463 - 1,112,958 -
	$ 1,333,796 $ 131,250 $ 1,866,624 $ 240,600

As at June 30, 2020, accounts payable included $13,125 (June 30, 2019 - $69,685) due to key management of the Company.

OUTSTANDING SECURITY DATA

Common Shares

The following table summarizes the continuity of common shares for the period ending June 30, 2020 and August 11, 2020:

Common Shares	Number of shares
Balance at December 31, 2019	91,631,689
Shares issued for private placement(1)	20,577,403
Shares issued for exercise of warrants(2)	18,050,345
Shares issued for exercise of options(3)	246,500
Balance at June 30,2020	130,505,937
Shares issued for exercise of finders options	29,880
Balance at August 11,2020	130,535,817

(1) On February 13, 2020, the Company completed a bought deal private placement of 19,231,250 units and a concurrent non-brokered private placement of 1,346,153 units, for an aggregate of 20,577,403 units at a price of $0.52 per unit for aggregate total gross proceeds of $10,700,250. Each unit consists of one common share in the capital of the Company and one-half of one common share purchase warrant. Each whole warrant is exercisable to acquire one common share at $0.75 for a period of 24 months.
(2) During the six month period ended June 30, 2020, there were 1,014,000 finders warrants exercised at $0.10, 11,525,000 warrants exercised at $0.20, 634,488 finders options exercised at $0.28, and 4,876,857 warrants exercised at $0.45 for total proceeds of $4,778,643.
(3) During the six month period ended June 30, 2020, there were 46,500 options exercised at $0.15, 100,000 options exercised at $0.10 and 100,000 exercised at $0.30 for total proceeds of $46,975.
(4) In August, 2020, there was a total of 29,880 finders options exercised at $0.28 for gross proceeds of $8,366. The options entitled the holder to a common share and one half of a share purchase warrant. There were 14,941 share purchase warrants issued exercisable for $0.45 up to July 9, 2021.

Warrants

The following table summarizes the continuity of warrants for the period ended June 30, 2020 and August 11, 2020.

	Number of warrants
Outstanding, December 31, 2019	28,825,040
Warrants issued(1)	10,288,701
Finders options(1)	961,567
Warrants issued(2)	183,670
Warrants issued(3)	133,574
Warrants exercised	(16,401,857)
Finders warrants and options exercised	(1,648,488)
Outstanding, June 30, 2020	22,342,207
Finders options exercised	(29,880)
Warrantsissued	14,941
Outstanding, August 11, 2020	22,327,268

(1) Pursuant to the private placement completed on February 13, 2020 described above the fair value of the common share purchase warrants and finders options have an estimated grant date fair value of $4,115,480 and $413,474 respectively which was estimated using the Black Scholes option pricing model using the following assumptions:

Risk-free interest rate 1.51% Expected volatility[*] 151% Dividend yield nil Expected life-units 2 years * Based on historical volatility.

(2) On January 31, 2020, 183,670 common share purchase warrants were issued upon exercise of finders options issued pursuant to the private placement completed on July 9, 2019. The fair value of the common share purchase warrants and finders options have an estimated grant date fair value of $84,488 which was estimated using the Black Scholes option pricing model and the following assumptions:

Risk-free interest rate 1.47% Expected volatility[*] 152% Dividend yield nil Expected life-units 1.44 years * Based on historical volatility.

(3) On February 28, 2020, 133,574 common share purchase warrants were issued upon exercise of finders options issued pursuant to the private placement completed on July 9, 2019 described in note 11) a) i). 2021. The fair value of the common share purchase warrants and finders options have an estimated grant date fair value of $36,065 which was estimated using the Black Scholes option pricing model and the following assumptions:

Risk-free interest rate	1.19% Expected volatility*	151%
Dividend yield	nil Expected life-units	1.36 years
*Based on historical volatility.

Warrants outstanding as at June 30, 2020 are as follows:

Number of warrants	Exercise price $	Type	Expiry date	Remaining contractual life (years)
9,726,387	0.45	Share purchase warrants	July 9, 2021	1.0
1,365,552	0.28	Finders options	July 9 2021	1.0
10,288,701	0.75	Share purchase warrants	February 13, 2022	1.4
961,567	0.52	Finders options	February 13, 2022	1.4
22,342,207	0.58(1)			1.2(1)

(1) Weighted average

Stock Options

On May 9, 2018, the Company adopted an incentive Stock Option Plan (the “Plan”). Under the Plan, options are non-assignable and may be granted for a term not exceeding five years. The total number of common shares that may be reserved for issuance may not exceed ten percent of outstanding common shares at the grant date and may not exceed five percent for any one person in any 12-month period. The exercise price of an option may not be lower than the market price of the common shares on the Toronto Stock Exchange. The options are non-transferable. Outstanding options may be adjusted by the Board in certain events, as to exercise price and number of common shares, to prevent dilution or enlargement.

The following table sets forth the continuity of outstanding stock options for the period ended June 30 and August 11, 2020:

	Number of	Exercise
	options	price $
Outstanding, December 31, 2019	7,346,500
Options granted(1)	500,000		0.65
Options granted(2)	750,000		0.45
Options granted(3)	2,850,000		0.52
Options exercised	(46,500)		0.15
Options exercised	(100,000)		0.10
Options exercised	(100,000)		0.30
Outstanding, June 30, 2020	11,200,000
Options granted	600,000		0.52
Outstanding,August11,2020	11,800,000

The fair value of options granted under the Plan is measured on the date of grant using the Black-Scholes pricing model and expensed to net income (loss) using the following inputs and assumptions at the measurement date:

	February 5, 2020(1)	March 18, 2020(1)	April 20, 2020(3)
Number of options	500,000	750,000	2,850,000
Exercise price ($)	0.65	0.45	0.52
Market Price ($)	0.63	0.34	0.35
Expected volatility (%)*	152	152	151
Risk-free interest rate (%)	1.41	0.73	0.44
Expected life (years)	5	2.87	5
Dividend yield (%)	-	-	-
Fair value of options	$ 285,000	$ 198,750	$ 883,500

Based on the Company’s historical volatility.

On July 31, 2020, there were 600,000 options granted exercisable at $0.52 for two years.

The 750,000 options granted on March 18, 2020 are subject to a vesting schedule; 375,000 vesting in 6 months and 375,000 vesting in 12 months. One third of the options options granted on July 31, 2020 vested immediately, one third will vest six months after the grant date and the remainder will vest after 12 months. All other options vested immediately on the grant date.

As at June 30, 2020, stock options carry exercise prices and terms to maturity as follows:

Exercise price $	Options Outstanding	Options Exercisable	Expiry date	Remaining contractual life (years)
0.15	200,000	200,000	November 21, 2020	0.4
0.10	2,900,000	2,900,000	May 11, 2023	2.8
0.30	3,600,000	3,600,000	July 16, 2024	4.0
0.30	200,000	200,000	August 7, 2024	4.1
0.35	200,000	200,000	September 6, 2024	4.2
0.65	500,000	500,000	February 5, 2025	4.6
0.45	750,000	-	March 18, 2025	4.7
0.52	2,850,000	2,850,000	April 20, 2025	4.8
0.38(1)	11,200,000			4.2(1)

(1) Weighted average

SUBSEQUENT EVENTS

Clear Lake Assignment Agreement

On July 13, 2020 and pursuant to an assignment agreement dated May 13, 2020, the Company assigned the right to the Major Precious Metals receivable to a third party for cash consideration of $300,500. In addition, the Company disposed of 4,000,000 common shares of Major Precious Metals for cash consideration of $200,000. As a result, the Company holds 7.7% (June 30, 2020 – 11.3%) of the outstanding common shares of Major Precious Metals.

RISKS AND UNCERTAINTIES

The operations of the Company are speculative due to the high-risk nature of its business, which is the acquisition, financing, exploration and development of mining properties. These risk factors could materially affect the Company’s future operating results and could cause actual events to differ materially from those described in forward–looking information relating to the Company. Accordingly, any investment in securities of the Company is speculative and investors should not invest in securities of the Company unless they can afford to lose their entire investment.

The Company assesses and attempts to minimize the effects of these risks through careful management and planning of its operations and hiring qualified personnel but is subject to a number of limitations in managing risk resulting from its early stage of development. Readers are encouraged to read and consider the risk factors and related uncertainties in the Company’s Annual Information Form and Annual Management Discussion and Analysis for the year ended December 31, 2019.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Generation follows the accounting policies described in Note 3 of the Company’s consolidated financial statements for the year ended December 31, 2019 and the period from January 11, 2018 (incorporation) to December 31, 2018.

RECENT ACCOUNTING PRONOUNCEMENTS

Certain new standards, interpretations, amendments and improvements to existing standards were issued by the IASB or IFRS Interpretation Committee that are not yet effective for the relevant reporting periods. Updates that are not applicable or are not consequential to the Company have been excluded there from. The Company is in the process of evaluating the impact on its consolidated financial statements.

The Company has applied IFRS 16 using the modified retrospective approach, with the cumulative effect of initially applying the standard as an adjustment to retained earnings and no restatement of comparative information. The Company has elected to apply the practical expedient whereby leases whose term ends within twelve months of the date of the initial application would be accounted for in the same way as short-term leases. As all leases were short term leases there were no impact on the financial statements from the initial adoption of IFRS 16.

FINANCIAL RISK MANAGEMENT

The Company examines the various financial risks to which it is exposed and assesses the impact and likelihood of those risks. These risks include credit risk, liquidity risk, foreign currency risk, interest rate risk, other price risk and fair valuation risk, and are detailed in Note 4 of the Company’s audited consolidated financial statements for the three and six months ended June 30, 2020 and 2019.

Credit Risk

Credit risk is the financial risk of non-performance of a contracted counter party. The Company's credit risk is primarily attributable to cash and receivables. The Company reduces its credit risk by maintaining its cash with a Canadian chartered bank. The Company’s maximum exposure to credit risk as at June 30, 2020 is the carrying value of cash and receivables.

Liquidity Risk

Liquidity risk encompasses the risk that the Company cannot meet its financial obligations in full. The Company's main source of liquidity is its cash and marketable securities. These funds are primarily used to finance working capital, exploration and evaluation expenditures, capital expenditures, and acquisitions. The Company manages its liquidity risk by regularly monitoring its cash flows from operating activities and holding adequate amounts of cash. As at June 30, 2020, the Company has current assets of $19,538,337 (December 31, 2019 - $2,049,751) to cover current liabilities of $845,156 (December 31, 2019 - $496,368). The current assets include restricted cash, marketable securities, receivables and prepaid expenses and other which are not available to pay current liabilities. The Company also manages liquidity risk on the basis of expected maturity dates. The following table analyze financial liabilities by remaining contractual maturity (contractual and undiscounted cash flows).

			Accounts
	Debt	Lease liability (undiscounted)	payable and accrued	Total
			liabilities
Less than 1 year	$189,732	$110,496	$626,474	$926,702
1-5 years	-	441,984	-	441,984
More than 5years	-	36,832	-	36,832
Balance at June 30, 2020	$189,732	$589,312	$626,474	$1,405,518

Foreign Currency Risk

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of change in foreign exchange rates. The Company has no significant exposure to foreign currency exchange risk as it has no significant transaction balances denominated in a foreign currency.

Interest Rate Risk

Interest rate risk is the risk borne by an interest-bearing asset or liability as a result of fluctuations in interest rates. The Company is exposed to interest rate fair value risk to the extent that a portion of the debt is at a fixed interest rate.

Other Price Risk

Other price risk is the risk that the value of financial instruments will fluctuate as a result of changes in market prices, whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. The Company is exposed to fluctuations in market prices of its marketable securities and shares receivable from a quoted mining exploration company. The fair value of these financial instruments represents the maximum exposure to price risk.

If the quoted price of these instruments had changed by 10% as at June 30, 2020, comprehensive income would have changed by approximately $563,000.

Fair Value

The carrying value of cash, accounts payable, accrued liabilities and debt are considered to be representative of their fair value due to their short-term nature. Marketable securities and a portion of receivables are recorded at fair value as of June 30, 2020 and classified as Level 2 in the fair value hierarchy as they are recorded at fair value by reference to market quoted prices less adjustments for any restrictions.

INTERNAL CONTROL OVER FINANCIAL REPORTING

The President and Chief Executive Officer and Chief Financial Officer of the Company are responsible for designing internal controls over financial reporting or causing them to be designed under their supervision in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Company’s internal control framework was designed based on the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

There was no change in the Company’s internal controls over financial reporting that occurred during the second quarter of 2020 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

Disclosure Controls and Procedures

Disclosure controls and procedures have been designed to provide reasonable assurance that all relevant information required to be disclosed by the Company is accumulated and communicated to senior management as appropriate to allow timely decisions regarding required disclosure. The Company’s President and Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation of the design of the disclosure controls and procedures, that as of June 30, 2020, the Company’s disclosure controls and procedures have been designed to provide reasonable assurance that material information is made known to them by others within the Company.

Limitations of Controls and Procedures

The Company’s management, including the Chief Executive Officer and President and Chief Financial Officer, believe that any internal controls over financial reporting and disclosure controls and procedures, no matter how well designed, can have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance that the objectives of the control system are met.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

Except for statements of historical fact relating to Generation, certain information contained in this MD&A constitutes “forward-looking information” under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the potential of the Company’s properties; the future price of precious and/or base metals; success of exploration activities; cost and timing of future exploration and development; requirements for additional capital and other statements relating to the financial and business prospects of the Company. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, ”would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, and are inherently subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to risks related to: unexpected events and delays during permitting; the possibility that future exploration results will not be consistent with the Company’s expectations; timing and availability of external financing; the uncertainty of conducting activities within a joint venture structure; currency exchange rates; government regulation of mining operations; failure of equipment or processes to operate as anticipated; risks inherent in mineral exploration and development including environmental hazards, industrial accidents, unusual or unexpected geological formations; and uncertain political and economic environments. Although management of Generation has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information,

there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such 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 forwardlooking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.