i3 Interactive Inc. — Management Reports 2020

Feb 28, 2020

Fairmont Resources Inc Management Discussion & Analysis; for the year ended October 31, 2019

FAIRMONT RESOURCES INC.

MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION AND RESULTS OF OPERATIONS

For the Year Ended October 31, 2019

This MD&A is dated February 28, 2020

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Fairmont Resources Inc

Management Discussion & Analysis; for the year ended October 31, 2019

Introduction

The following Management Discussion and Analysis (“MD&A”) of Fairmont Resources Inc. (the “Company” or “Fairmont”) has been prepared by management, in accordance with the requirements of National Instrument 51-102 as of February 28, 2020, and should be read in conjunction with the financial statements for the year ended October 31, 2019 and the related notes contained therein which have been prepared under International Financial Reporting Standards (“IFRS”). The information contained herein is not a substitute for detailed investigation or analysis on any particular issue. The information provided in this document is not intended to be a comprehensive review of all matters and developments concerning the Company. The Company is presently a “Venture Issuer” as defined in NI 51-102. For the purposes of preparing this MD&A, management, in conjunction with the Board of Directors, considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of Fairmont’s common shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. Management, in conjunction with the Board of Directors, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity. For the purposes of preparing this MD&A, management, in conjunction with the Board of Directors, considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of Fairmont’s common shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. Management, in conjunction with the Board of Directors, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.

All financial information in this MD&A related to 2019, 2018 and 2017 has been prepared in accordance with IFRS and all dollar amounts are quoted in Canadian dollars, the reporting and functional currency of the Company, unless specifically noted.

Additional information related to the Company is available for view on SEDAR at www.sedar.com.

Cautionary Note Regarding Forward-Looking Information

Certain information included in this discussion may constitute forward-looking statements. Readers are cautioned not to put undue reliance on forward-looking statements. These statements relate to future events or the Company’s future performance, business prospects or opportunities. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These forward-looking statements include statements regarding the future price of metals, the timing and amount of estimated future production, costs of production, capital expenditures, the success of exploration activities, permitting time lines, currency fluctuations, the requirements of future capital, drill results and the estimation of mineral resources and reserves. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements contained in this report should not be unduly relied upon. These statements speak only as of the date of this report. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this report. Such statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions about general business and economic conditions; the supply and demand for, deliveries of, and the level and volatility of prices of iron ore and other commodities; the availability of financing for the Company’s exploration programs; the ability to procure equipment and operating supplies in sufficient quantities and on a timely basis; and the ability to attract and retain skilled staff.

These forward-looking statements involve risks and uncertainties relating to, among other things, changes in commodity and, particularly, iron ore prices, access to skilled mining development personnel, results of exploration and development activities, uninsured risks, regulatory changes, defects in title, availability of materials and equipment, timeliness of government approvals, actual performance of facilities, equipment and processes relative to specifications and expectations and unanticipated environmental impacts on operations. Actual results may differ materially from those expressed or implied by such forwardlooking statements. Factors that could cause actual results to differ materially include, but are not limited to, the risk factors hereinabove. Additional risk factors are described in more detail hereinafter. Investors should not place undue reliance on forward-looking statements as the plans, intentions or expectations upon which they are based might not occur. The

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Fairmont Resources Inc Management Discussion & Analysis; for the year ended October 31, 2019

Company cautions that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on the Company's forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. The forward-looking statements contained in this report are expressly qualified by this cautionary statement. The Company intends to discuss in its quarterly and annual reports referred to as the Company’s management’s discussion and analysis documents, any events and circumstances that occurred during the period to which such document relates that are reasonably likely to cause actual events or circumstances to differ materially from those disclosed in this management discussion and analysis.

Qualified Person

Neil Pettigrew, P.Geo, a director of the Company, is a Qualified Person as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects and has reviewed and approved all technical information in this management discussion and analysis. Mr. Roger Ouellet, P. Geo, consultant to Fairmont Resources and a Qualified Person (“QP”) under NI 43-101 regulations, reviews and approves technical work on our Quebec Projects.

Description of Business

Fairmont Resources Inc. (the “Company”) was incorporated on May 25, 2007 under the British Columbia Business Corporations Act. The Company’s head office address is Suite 820 – 1130 West Pender Street, Vancouver, BC V6E 4A4, Canada. The registered and records office address is Suite 820 – 1130 west Pender Street, Vancouver, BC V6E 4A4, Canada. The Company was listed on the TSX Venture Exchange under the symbol “FMR”. On October 26, 2018, shares of the Company were delisted from the TSX Venture Exchange subsequent to the approval by the shareholders of the Company in its annual general meeting and special meeting on September 21, 2018.

The Company was primarily focused on the exploration and development of one iron-titanium-vanadium property and three quartz properties. The iron-titanium-vanadium property is called the Buttercup Property and is located in south central Quebec, 250 km North of Quebec City. Near this property we had an option on a quartz property called Lac Bouchette. We also owned two more quartz properties located about 400 km North East of Quebec City and named Forestville and Baie Comeau. The Company has decided to abandon its interest in these mineral properties and during the year ended October 31, 2018, wroteoff the carrying values of the assets.

Overall Performance

For the year ended October 31, 2019, the Company had a comprehensive loss of $112,298 (2018 – loss of $929,391). This decrease in loss is mainly due to impairment of exploration and evaluation assets in the prior year and also due to significant change in the nature of the business in that management has decided to eliminate any non-essential expense in the current year.

At October 31, 2019, the Company had cash of $247 (October 31, 2018 – $8,216). At October 31, 2019 the Company had a working capital deficit of $1,957,537 (October 31, 2018 – $1,853,694). To date, the Company’s sole source of financing has been derived from the issuance of common shares.

Financings

On February 23, 2016, the Company signed a letter of intent, conditional on securing financing, with the courts in Spain to purchase the assets of Granitos de Badajoz S.A. (“Grabasa”). Grabasa is a manufacturer of polished granite slabs, which are used for flooring, building cladding, countertops and other purposes. The assets of Grabasa included 23 premium quality dimension stone licenses, and a 42,000 square metre processing facility for cutting and polishing with an annual production capacity in excess of 250,000 square metres (the “Grabasa Assets). The Company was unable to secure the necessary financing for the acquisition and the option to purchase the Grabasa Assets expired on May 26, 2017. Consequently, the Company wrote off the €150,000 deposit being held by the courts in Spain. In addition to the deposit being held, the Company owes a €575,000 success fee to an unrelated third party

In connection with the Grabasa purchase, the Company signed a success fee agreement with a Spanish company, Eureka Trading, whereby Eureka would assist in the negotiation of the unsuccessful acquisition of certain assets in Spain belonging to Granitos de Badajoz, S.A. On June 30, 2017, the courts in Spain ordered a success fee of €575,000 ($844,158) in favor of Eureka Trading. On November 20, 2017, the matter was transferred to a Court in Ontario to enforce the ruling of the Spanish Court. As of October 31, 2019, this debt has been assigned by Eureka Trading to a third party.

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Fairmont Resources Inc Management Discussion & Analysis; for the year ended October 31, 2019

On May 22, 2018, Eureka Trading assigned the rights of the claim to a third party, and the Company executed a full and final release form, whereby €575,000 ($844,158) is owing to the third party. The Company reversed $72,010 in legal fees payables outstanding on behalf of Eureka Trading that are no longer payable based on the terms of the debt assignment.

Management continue to seek relief from this judgement, however, the likelihood of success of this action cannot be determined. This amount has been accrued in the statement of financial position as at October 31, 2019.

Share capital

Effective October 1, 2018, the Company consolidated its common shares on a 10 to 1 basis, which resulted in 4,068,328 shares outstanding post-consolidation. The consolidation was approved by the shareholders of the Company on September 21, 2018 and by the Exchange on September 28, 2018. All references to common shares, stock options and warrants in these financial statements have been adjusted to reflect this change.

Share issuances

On December 23, 2018, the Company closed a debt settlement transaction with certain creditors, pursuant to which the Company settled indebtedness of $75,436 through the issuance of 422,767 common shares with a fair value of $8,455 and agreed to assignment of debt of $586,482 to a third-party creditor including $324,678 that was owed to related parties. The Company recognized a gain in settlement of debt of $66,981 resulting from this transaction.

On August 23, 2018, the Company closed a debt settlement transaction with certain creditors, pursuant to which the Company settled indebtedness of $165,708 through the issuance of 331,416 common shares at a deemed price of $0.50 per common share.

Stock options

During the year ended October 31, 2019, no options were granted and expired.

During the year ended October 31, 2018, no options were granted and on June 16, 2018, 86,500 options at $1.80 per share expired.

Warrants

During the year ended October 31, 2019, no warrants, were issued and 356,786 warrants expired.

During the year ended October 31, 2018, no warrants, were issued and no warrants expired.

Mineral Properties

Buttercup Property (Quebec)

On January 28, 2014 the Company entered into a purchase agreement with an arm’s length party (the “Vendor”) to earn a 100% interest in certain mineral claims known as the Buttercup property in the province of Quebec.

During the year ended October 31, 2018, the Company determined there were indicators of impairment due to no substantive exploration and evaluation expenditures planned on the property. An impairment of $306,057 was recognized in the statement of loss and comprehensive loss during the year ended October 31, 2018.

Effective August 9, 2018, the Company terminated the purchase agreement.

Lac Bouchette Property (Quebec)

During the year ended October 31, 2017, the Company determined there were indicators of impairment due to no substantive exploration and evaluation expenditures planned on the property. Management had let the mineral claims lapse. An impairment of $205,375 was recognized in the statement of loss during the year ended October 31, 2017.

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Fairmont Resources Inc

Management Discussion & Analysis; for the year ended October 31, 2019

Forestville – Baie Comeau Property (Quebec)

On January 21, 2015 the Company acquired a 100% interest in the Forestville and Baie Comeau Quartzite properties (the “Properties”). The properties have been optioned for the purpose of testing the chemical and physical properties of the quartzite as a potential raw material for various products such as: high purity glass, fibre optics, countertops, ferrosilicon and silica metal.

During the year ended October 31, 2018, the Company determined there were indicators of impairment due to no substantive exploration and evaluation expenditures planned on the property. Management had let the mineral claims lapse. As a result, an impairment of $512,888 was recognized in the statement of loss during the year ended October 31, 2018.

Rome Lithium Property (Quebec)

On May 26, 2016 the Company signed an option agreement with a Quebec prospector (the “Prospector”) to acquire a 100% interest in the Rome Lithium property, near Val d’Or, Quebec (the “Property”). Accordingly, Fairmont (the “Optionee”) will issue to the Optionor 500,000 shares (issued) and will pay the Optionor $25,000 (paid).

On June 22, 2017, the Company signed a Right of First Refusal (ROFR) contract with Jourdan Resources for the Rome Lithium property. Jourdan Resources is a related party due to a common director. The terms of the ROFR required an initial $25,000 refundable payment to the Company. Should the Company not find a better offer within 30 days of signing the ROFR, Jourdan would have paid an additional $25,000 cash and issued the Company an additional 1,500,000 shares. The Company would have also received a 2% Net Smelter Royalty.

During the year ended October 31, 2017, the Company determined there were indicators of impairment due to the payments under the option agreement not being received, and no substantive exploration and evaluation expenditures planned on the property. An impairment of $147,500 was recognized in the statement of loss.

On July 15, 2018, the Company received remaining $25,000 and was issued 1,500,000 shares of Jourdan Resources with a fair value of $120,000. The Company recognized the payments received as a income on disposal of property in the statement of loss and comprehensive loss.

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Fairmont Resources Inc

Management Discussion & Analysis; for the year ended October 31, 2019

Selected Annual Information

The Company is the providing the following selected information with respect to the Company’s audited financial statements for the fiscal years ended October 31, 2019, 2018 and 2017. The audited financial statements for these fiscal years were prepared in accordance with International Financial Reporting Standards and are expressed in Canadian dollars.

This section should be read in conjunction with the Statements of Comprehensive Loss for the year ended October 31, 2019 and the audited Statements of Comprehensive Loss for the year ended October 31, 2018, and 2017, and the notes associated therewith.

Total Revenue Operating expenses Loss Before Other Items and Income Tax Income on disposal of property Income on sale of securities Gain on settlement of debt Impairment of exploration and evaluation assets Impairment of Grabasa deposit Other income Reversal of legal fees Net loss Other comprehensive loss Net change in fair value of marketable securities Net and comprehensive loss Basic and Diluted Loss Per Share	Year ended October 31, 2019 Year ended October 31, 2018 Year ended October 31, 2017
	$ $ $ Nil Nil Nil (238,498) (274,956) (1,520,198)
	(238,498) (274,956) (1,520,198) - 145,000 - (11,358) - - 92,599 - 36,725 - (818,945) (352,875) - - (217,163) 44,959 - - - 72,010 -
	(112,298) (876,891) (2,053,511) - (52,500) -
	(112,298) (929,391) (2,053,511)
	(0.03) (0.24) (0.56)
	As at October 31, 2019 As at October 31, 2018 As at October 31, 2017
Balance sheet data Total assets Total liabilities Total equity (deficit)	$ $ $ 22,495 79,493 819,267 1,980,032 1,933,187 1,909,278 (1,957,537) (1,853,694) (1,090,011)

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Fairmont Resources Inc Management Discussion & Analysis; for the year ended October 31, 2019

Results of operations

During the three months ended October 31, 2019, the Company incurred a net income of $66,702 (2018 – $910,128). The expenses for the three months ended October 31, 2019 include the following items:

• Management and consulting fees for the three months ended October 31, 2019 was $30,000 (2018-$32,500).

• Shareholders, investor relations and promotion for the three months ended October 31, 2019 was $nil (2018-$nil).

• Registration, transfer fees and promotion for the three months ended October 31, 2019 was $1,274 (2018-$21,674).

• Audit and accounting expense for the three months ended October 31, 2019 was $37,850 (2018 - $37,813).

• Administrative expense for the three months ended October 31, 2019 was $3,000 (2018 - $345).

• Office and miscellaneous expense for the three months ended October 31, 2019 was $18 (2018 - $174).

• Unrealized foreign exchange income for the three months ended October 31, 2019 was $5,055 (2018- loss of $18,399). This is mainly due to the foreign exchange income in converting the euro liability.

• Legal expenses for the three months ended October 31, 2019 was $1,200 (2018 - $11,076). Legal expense for the comparative period was high due to the litigation with the Spanish authorities.

• In Q4 2018, the mineral properties were written down by $818,945.

During the year ended October 31, 2019, the Company had a net loss of $112,298 (2018 – loss of $876,891). The expenses for the year ended October 31, 2019 when compared to the comparative year ended October 31, 2018 has declined by $764,593. This decrease is mainly due to the impairment of exploration and evaluation assets of $818,945 in the year ended October 31, 2018, gain on settlement of debt of $92,599 and offset by income on sale of securities of $11,358 in the year ended October 31, 2019 and also due to a significant change in the nature of the business in that management has decided to eliminate any nonessential expense.

• Management and consulting fees for the year ended October 31, 2019 was $125,639 (2018 - $125,167).

• Shareholders and investor relations for the year ended October 31, 2019 was $nil (2018 - $2,167). This decrease of $2,167 was a result of management eliminating third party expenses.

• Registration, transfer fees and promotion for the year ended October 31, 2019 was $9,188 (2018 - $29,895). This decrease was also as a result of management eliminating third party expenses.

• Audit and accounting expense for the year ended October 31, 2019 was $83,189 (2018 - $71,480).

• Administrative expense for the year ended October 31, 2019 was $12,000 (2018 - $17,012). This reduction in expense can also be attributed to management getting the work done at competitive rates.

• Office and miscellaneous expense for the year ended October 31, 2019 was $4,719 (2018 - $306).

• Unrealized foreign exchange income for the year ended October 31, 2019 was $12,103 (2018- $7,359). This is due to foreign exchange loss in converting the euro liability.

• Legal expenses for the year ended October 31, 2019 was $15,866 (2018 - $36,288). Legal expense for the comparative period was high due to the litigation with the Spanish authorities.

• Write off of expenses for the year ended October 31, 2019 was $nil (2018 - $72,010). The management decided to write off some of the liabilities related to legal expenses in the previous year.

• Impairment of exploration and evaluation assets for the year ended October 31, 2019 of $nil (2018 - $818,945).

• There were no share-based payments in the year ended October 31, 2019 (2018-$nil).

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Management Discussion & Analysis; for the year ended October 31, 2019

Fairmont Resources Inc

Summary of quarterly results

The following sets out a summary of the Company’s quarterly results for the eight most recently completed quarters. All periods listed below were prepared in accordance with International Financial Reporting Standards and are expressed in Canadian dollars.

General and administrative costs

nadian dollars. neral and administrative costs
For the three months ended	Oct 31, 2019	Jul 31, 2019	Apr 30, 2019	Jan 31, 2019
	$	$	$	$
Revenue	Nil	Nil	Nil	Nil
Income from operations	Nil	Nil	Nil	Nil
Net income(loss)for theperiod	66,702	(20,900)	(14,287)	(143,813)
Basic & diluted (loss) per share	0.00	(0.00)	(0.00)	(0.23)
Cash and cash equivalents	247	13,767	11,984	26,460
Total Assets	22,495	19,116	17,253	31,550
Working capital deficiency	(1,957,537)	(1971,737)	(1950,840)	(1,936,551)
Shareholder’s equity	(1,957,537)	(1,971,737)	(1,950,840)	(1,936,551)
For the quarter ended	Oct 31, 2018	Jul 31, 2018	Apr 30, 2018	Jan 31, 2018
	$	$	$	$
Revenue	Nil	Nil	Nil	Nil
Income from operations	Nil	Nil	Nil	Nil
Net income (loss) for the period	(910,128)	103,949	(9,652)	(46,060)
Basic & diluted (loss) per share	(0.23)	0.00	(0.00)	(0.00)
Cash and cash equivalents	8,216	11,132	1,508	57
Exploration and evaluation assets	-	807,622	807,622	818,945
Total Assets	79,493	953,764	809,130	819,341
Working capital deficiency	(1,853,694)	(1,849,396)	(1,953,345)	(1,955,016)
Shareholder’s equity	(1,853,694)	(1,041,774)	(1,145,723)	(1,136,071)

A summary of selected financial information of the Company for recently completed periods is provided below:

During the three months ended October 31, 2019, the Company had a net and comprehensive income of $66,702 (2018 – loss of $910,128). For the quarter ended October 31, 2019, the total assets stayed relatively same compared to the previous quarter while shareholders equity decreased due to the loss for the quarter. Cash and cash equivalents stayed the same compared to previous quarter.

For the quarter ended October 31, 2018, the total assets decreased from the previous quarter by $874,271 primarily due to impairment of exploration and evaluation assets.

Financial Statements Going Concern Assumption

The Company expects to incur further losses, and require additional equity financing, in the development of its business and to meet its obligations. While the Company has been successful at raising additional equity financing in the past, there is no guarantee that it will continue to do so in the future, which casts significant doubt on the Company’s ability to continue as a going concern. The Company's ability to continue its operations and to realize its assets at their carrying values is dependent upon obtaining additional financing and generating revenues sufficient to cover its operating costs. These financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying financial statements.

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Fairmont Resources Inc

Management Discussion & Analysis; for the year ended October 31, 2019

Liquidity and Capital Resources

To date, the Company has not yet realized profitable operations and has relied on equity financings and trade credit to fund the losses. The Company does not have sufficient funds to satisfy its exploration expenditure plans for the current fiscal year and will be required to raise capital through the equity market.

These financial statements have been prepared assuming the Company will continue on a going-concern basis. The Company has incurred losses since inception and the ability of the Company to continue as a going-concern depends upon its ability to develop profitable operations and to continue to raise adequate financing. Management is actively targeting sources of additional financing through alliances with financial, exploration and mining entities, or other business and financial transactions which would assure continuation of the Company’s operations and exploration programs. In order for the Company to meet its liabilities as they come due and to continue its operations, the Company is solely dependent upon its ability to generate such financing.

	October31,2019	October31,2018	October31,2017
Working capital (deficiency)	$ (1,957,537)	$ (1,853,694)	$ (1,907,538)
Deficit	$ (8,992,280)	$ (8,827,482)	$ (7,950,592)

Net cash used in operating activities during the year ended October 31, 2019, was $64,111 (2018 – net cash of $16,515).

Net cash provided by financing activities during the year ended October 31, 2019, was $nil (2018 – $nil).

Net cash from investing activities during the year ended October 31, 2019, was $56,142 (2018 – net cash used $23,581).

There can be no assurance that the Company will be able to obtain adequate financing in the future or that the terms of such financing will be favourable. If adequate financing is not available when required, the Company may be unable to continue operating. The Company may seek such additional financing through debt or equity offerings, but there can be no assurance that such financing will be available on terms acceptable to the Company or at all. Any equity offering will result in dilution to the ownership interests of the Company’s shareholders and may result in dilution to the value of such interests.

The Company has sufficient funds to cover anticipated administrative expenses and continue to conduct exploration activities throughout the current fiscal year. It will continue to focus on actively exploring its mineral properties.

Related Party Transactions

Related parties include the Board of Directors, officers, close family members and enterprises which are controlled by these individuals as well as certain persons performing similar functions. In accordance with International Accounting Standards 24 - Related Party Disclosure, key management personnel are those having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and nonexecutive) of the Company.

The terms and conditions of the transactions with key management personnel and their related parties were no more favorable than those available, or which might reasonably be expected to be available, to similar transactions to non-key management personnel related entities on an arm's length basis.

The Company entered into the following transactions with related parties:

The President and Chief Executive Officer, Mr. Michael Lerner, (“CEO”) of the Company is the President of 1820546 Ontario Inc. (‘1820546 Inc.”), (and by extension the CEO and President) has a contract with the Company. Fees and outstanding amounts due to 1820546 Ontario Inc. relating to management fees consulting services as expensed are detailed in the table below.

The Chief Financial Officer, Mr. Balu Gopalakrishnan, (“CFO”) of the Company is the president of Campus Alliance Inc., has a service contract with the Company and is entitled to fees based on this contract relating to accounting services in the normal course of business. These fees are expensed as accounting fees in the general and administrative expenses.

The table below details the fees and amounts due to related parties:

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Management Discussion & Analysis; for the year ended October 31, 2019

Fairmont Resources Inc

	Year ended	Year ended
Related Party Fees	October 31, 2019	October 31, 2018
1820546 Ontario Inc. - management fees	$ 120,000	$	110,000
1820546 Ontario Inc. - administrative fees	12,000		11,000
Greg Ball (former CFO)	-		4,000
Campus Alliance Inc.	60,000		40,000
Harvey McKenzie (former Director)	-		2,500
Total related party transactions	$ 192,000	$	167,500
Related party payables	October 31, 2019	October 31, 2018
1820546 Ontario Inc.	$ 239,869	$	143,548
Campus Alliance Inc.	92,850		36,850
Avanti Management and consulting Ltd., company controlled by the	-		244,970
former CEO
Harvey McKenzie (former Director)	-		2,500
Total Related party payables	$ 332,719	$	427,868

In addition to the above balance, during the year ended October 31, 2019, $324,678 of balance due to related parties was assigned to a third party, and $25,618 of balance due was forgiven and recognized as a gain on settlement of debt. The amounts are non-interest bearing, unsecured and have no terms of repayments.

Changes in Accounting Policies

The accounting policies set out below have been applied consistently to all periods presented in the financial statements.

The financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit or loss, which are stated at their fair value. In addition, the financial statements have been prepared using the accrual basis of accounting except for cash flow information.

The financial statements of the Company are presented in Canadian dollars unless otherwise indicated, which is the functional currency of the Company.

Significant Accounting Policies

• a. Statement of compliance and basis of presentation

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International financial Reporting Interpretations Committee (“IFRIC”).

These financial statements have been prepared on a historical cost basis, except for certain financial instruments classified at fair value through profit or loss which are stated at their fair value. In addition, these financial statements have been prepared using the accrual basis of accounting except for cash flow information.

The financial statements of the Company are presented in Canadian dollars unless otherwise indicated, the functional currency of the Company.

b. Use of estimates

The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. Significant areas requiring the use of management

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Fairmont Resources Inc

Management Discussion & Analysis; for the year ended October 31, 2019

estimates relate to the determination of impairment of exploration and evaluation assets and deferred exploration costs, sharebased payments and deferred tax valuation allowance.

c. Income taxes

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available aincomest which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

d. Cash and cash equivalent

Cash and cash equivalents includes cash on hand, deposits held at financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

e. Impairment

The carrying amounts of the Company’s non-financial assets, other than deferred tax assets if any, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit” or “CGU”). The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss.

Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. A reversal of an impairment loss is recognized immediately in profit or loss.

f. Provision for closure and reclamation

The Company recognizes statutory, contractual or other legal obligations related to the retirement of its exploration and evaluation assets and its tangible long-lived assets when such obligations are incurred, if a reasonable estimate of fair value

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Fairmont Resources Inc

Management Discussion & Analysis; for the year ended October 31, 2019

can be made. These obligations are measured initially at fair value and the resulting costs are capitalized to the carrying value of the related asset. In subsequent periods, the liability is adjusted for any changes in the amount or timing and for the discounting of the underlying future cash flows. The capitalized asset retirement cost is amortized to operations over the life of the asset. Management has determined that there was no provision required for closure and reclamation as at October 31, 2018 and 2017.

g. Share-based payments

The Company applies the fair value method to share-based payments and all awards that are direct awards of stock, that call for settlement in cash or other assets or are stock appreciation rights that call for settlement by the issuance of equity instruments. Compensation expense is recognized over the applicable vesting period with a corresponding increase in equity reserves. When the options are exercised, the exercise price proceeds together with the amount initially recorded in equity reserves are credited to share capital.

h. Basic and diluted loss per share:

Basic loss per share is computed by dividing the loss available to common shareholders by the weighted average number of common shares outstanding during the year. The computation of the diluted earnings per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on the earnings per share. The dilutive effect of convertible securities is reflected in diluted earnings per share by application of the “if converted” method. The dilutive effect of outstanding options and warrants and their equivalents is reflected in diluted earnings per share by application of the treasury stock method. Since the Company has losses the exercise of outstanding options and warrants has not been included in this calculation as it would be anti-dilutive.

i. Share issue costs

Professional, consulting, regulatory and other costs directly attributable to financing transactions are recorded as deferred financing costs until the financing transactions are completed, if the completion of the transaction is considered likely; otherwise they are expensed as incurred. Share issue costs are charged to share capital when the related shares are issued. Deferred financing costs related to financing transactions that are not completed are charged to operations.

j. Financial instruments

Changes in Accounting Policies

The Company adopted the following new standards issued by the IASB or the IFRIC:

IFRS 9, Financial Instruments

Effective November 1, 2018, the Company adopted IFRS 9. In July 2014, the IASB issued the final publication of the IFRS 9 standard, which supersedes IAS 39, Financial Instruments: recognition and measurement (IAS 39). IFRS 9 includes revised guidance on the classification and measurement of financial instruments, new guidance for measuring impairment on financial assets, and new hedge accounting guidance. The Company adopted the standard retrospectively and prior periods were not restated. IFRS 9 did not impact the Company’s classification and measurement of financial assets and liabilities except for marketable securities.

As a result of adopting this standard, the Company has changed its accounting policy for financial assets retrospectively, for assets that were recognized at the date of application. An assessment has been made and the impact to the Company’s financial statements was to reclassify its available-for-sale marketable securities to fair value through profit or loss. As the Company adopted IFRS 9 retrospectively without restatement of comparative amounts, this resulted in a reclassification of $52,500 from accumulated other comprehensive income to deficit on November 1, 2018. Future changes in the fair value of these marketable securities will be recorded directly in profit or loss. No other differences of any significance have been noted in relation to the adoption of IFRS 9.

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Fairmont Resources Inc Management Discussion & Analysis; for the year ended October 31, 2019

Under IFRS 9, financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. IFRS 9 contains the primary measurement categories for financial assets: measured at amortized cost, fair value through other comprehensive income ("FVTOCI") and fair value through profit and loss ("FVTPL").

The new hedge accounting guidance had no impact on the Company's unaudited condensed interim financial statements. Financial assets:

Below is a summary showing the classification and measurement bases of the Company’s financial instruments as at November 1, 2018 as a result of adopting IFRS 9 (along with comparison to IAS 39).

November 1, 2018 as a result of	adopting IFRS 9 (along with comparison to IAS	39).
Classification	IAS 39	IFRS 9
Cash	Loans and receivables	Amortized cost
Marketable securities	Available-for-sale	FVTPL
Amounts receivable	Loans and receivables	Amortized cost
Prepaid expense	Other financial liabilities	Amortized cost
Accounts payable and accrued liabilities Other financial liabilities		Amortized cost
Debt advances	Other financial liabilities	Amortized cost

As a result of the adoption of IFRS 9, the accounting policy for financial instruments is as follows:

Financial assets

Financial assets are classified as either financial assets at FVTPL, amortized cost, or FVTOCI. The Company determines the classification of its financial assets at initial recognition.

• Financial assets recorded at FVTPL Financial assets are classified as FVTPL if they do not meet the criteria of amortized cost or FVTOCI. Incomes or losses on these items are recognized in profit or loss.

• Amortized cost Financial assets are classified as measured at amortized cost if both of the following criteria are met and the financial assets are not designated as at fair value through profit and loss: 1) the object of the Company’s business model for these financial assets is to collect their contractual cash flows; and 2) the asset’s contractual cash flows represent "solely payments of principal and interest".

Financial liabilities

Financial liabilities are classified as either financial liabilities at fair value through profit or loss or at amortized cost. The Company determines the classification of its financial liabilities at initial recognition.

• Amortized cost

Financial liabilities are classified as measured at amortized cost unless they fall into one of the following five categories: financial liabilities at FVTPL, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition, financial guarantee contracts, commitments to provide a loan at a below-market interest rate, or contingent consideration recognized by an acquirer in a business combination.

• Financial liabilities recorded at FVTPL

Financial liabilities are classified as FVTPL if they fall into one of the five exemptions detailed above.

Transaction costs

Transaction costs associated with financial instruments, carried at FVTPL, are expensed as incurred, while transaction costs associated with all other financial instruments are included in the initial carrying amount of the asset or the liability. Pg.13

Management Discussion & Analysis; for the year ended October 31, 2019

Fairmont Resources Inc

Subsequent measurement

Instruments classified as FVTPL are measured at fair value with unrealized incomes and losses recognized in profit or loss. Instruments classified as amortized cost are measured at amortized cost using the effective interest rate method. Instruments classified as FVTOCI are measured at fair value with unrealized incomes and losses recognized in other comprehensive income.

Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Incomes and losses on derecognition are generally recognized in the statements of loss and comprehensive loss.

Financial liabilities

The Company derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, cancelled, or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

Expected Credit Loss Impairment Model

IFRS 9 introduced a single expected credit loss impairment model, which is based on changes in credit quality since initial application. The adoption of the expected credit loss impairment model had no impact on the Company’s financial statements.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Company in full or when the financial asset is more than 90 days past due.

The carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.

Financial Instruments

a) Fair Value

The Company’s financial instruments consist of cash, amounts receivable, accounts payable and accrued liabilities and due to related parties. The fair values of these financial instruments approximate their carrying values because of their current nature.

b) Credit Risk

Credit risk is the risk of loss associated with the counterparty’s inability to fulfill its payment obligations. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. To minimize the credit risk the Company places these instruments with a high credit quality financial institution.

c) Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure and financial leverage as outlined above.

The Company monitors its ability to meet its short-term exploration and administrative expenditures by raising additional funds through share issuances when required. All of the Company’s financial liabilities have contractual maturities of 30 days or are due on demand and are subject to normal trade terms. The Company does not have investments in any asset backed deposits.

d) Foreign Exchange Risk

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Fairmont Resources Inc Management Discussion & Analysis; for the year ended October 31, 2019

Foreign exchange risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in foreign exchange rates. The Company, has exposure to foreign exchange risk as the success fee liability is denominated in Euros.

e) Interest Rate Risk

The Company is not exposed to significant interest rate risk.

Adopted and Future Accounting Standards

New accounting policies adopted

The IASB issued a number of new and revised accounting standards that are not yet effective. These standards include the following:

IFRS 16, Leases – IFRS 16 was issued by the IASB on January 13, 2016, and will replace IAS 17, Leases. IFRS 16 will bring most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. Lessor accounting however, remains largely unchanged and the distinction between operating and finance leases is retained. IFRS 16 is effective for annual reporting periods beginning on or after January 1, 2019. The Company does not expect the adoption of IFRS 16 will impact its financial statements.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements as at October 31, 2019.

Additional Disclosure for Venture Issuers without Significant Revenue

Please refer to Note 4 in the financial statements for the year ended October 31, 2019 for a description of the capitalized exploration and development costs on the Buttercup, Lac Bouchette, Baie Commeau, Rome and Forestville properties. For a description of the general and administrative expenses, please refer to the condensed interim statements of comprehensive loss contained in the financial statements for the year ended October 31, 2019.

Outstanding Share Data

The following table summarizes the outstanding share capital as of the date of the MD&A:

ding Share Data wing table summarizes the outstanding share capital as of the date of the MD&A:
	Number of Shares
Balance, October 31, 2017 Shares issued on settlement of debt	3,736,912 331,416
Balance, October 31, 2018 Shares issued on settlement of debt	4,068,328 422,767
Balance, October 31, 2019	**4,491,095 **

Stock options

The Company has a rolling stock option plan under which it is authorized to grant options to directors, employees and consultants, to acquire up to 10% of the issued and outstanding shares. The exercise price of each option is based on the market price of the Company’s stock at the date of grant. The options can be granted for a maximum term of 10 years and vest as determined by the board of directors.

The following table summarizes the stock option activity:

			Number	Weighted Average	Weighted Average
			of Stock Options	Exercise Price
Balance at October	31,	2017	181,500	$	1.80
Expired			86,500		–

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Fairmont Resources Inc Management Discussion & Analysis; for the year ended October 31, 2019

Exercisable at October 31, 2018	95,000	$	1.80
Expired	–		–
Balance at October 31, 2019	95,000	$	1.80

As at October 31, 2019, the following incentive stock options are outstanding:

Number of Stock Options	Exercise
	Price	ExpiryDate
95,000	1.80	June 16,2021
95,000

Warrants

The following table summarizes the warrants and agent warrants activity.

	Number	Weighted Average Exercise
	of Warrants	Price
Balance at October 31, 2016	430,240	$ 1.00
Issued	356,786	1.50
Expired	(355,240)	1.50
Exercised	(75,000)	1.00
Balance at October 31, 2017 and 2018	356,786	$ 1.50
Expired	(356,786)	1.50
Balance at October 31,2019	-	-

SHARE CAPITAL – ISSUED AND OUTSTANDING

Issued and outstanding: October 31, 2019 – 4,491,095 Issued and outstanding: February 28, 2020 (date of this report) – 4,491,095

Warrants outstanding: October 31, 2019 – nil Warrants outstanding: February 28, 2020 – nil

Options outstanding: October 31, 2019 – 95,000 Options outstanding: February 28, 2020 – 95,000

Subsequent Events

As at the data thereof, there are no subsequent events.

Business Risks

Natural resources exploration, development, production and processing involve a number of business risks, some of which are beyond the Company's control. These can be categorized as operational, financial and regulatory risks.

• Operational risks include finding and developing reserves economically, marketing production and services, product deliverability uncertainties, changing governmental law and regulation, hiring and retaining skilled employees and contractors and conducting operations in a cost effective and safe manner. The Company continuously monitors and responds to changes in these factors and adheres to all regulations governing its operations. Insurance may be maintained at levels consistent with prudent industry practices to minimize risks, but the Company is not fully insured aincomest all risks, nor are all such risks insurable.

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Fairmont Resources Inc

Management Discussion & Analysis; for the year ended October 31, 2019

• Financial risks include commodity prices, interest rates and the Canada / United States exchange rate, all of which are beyond the Company's control.

• Regulatory risks include the possible delays in getting regulatory approval to the transactions that the Board of Directors believe to be in the best interest of the Company, and include increased fees for filings, the introduction of ever more complex reporting requirements the cost of which the Company must meet in order to maintain its exchange listing.

The Company currently does not have adequate cash for planned exploration expenditures and general and administrative expenses in the next fiscal year and will require financing in the future to continue in business. There can be no assurance that such financing will be available or, if available, that it will be on reasonable terms. If financing is obtained by issuing common shares from treasury, control of the Company may change and investors may suffer additional dilution. To the extent financing is not available, lease payments, work commitments, rental payments and option payments, if any, may not be satisfied and could result in a loss of property ownership or earning opportunities for the Company.

Internal Controls over Financial Reporting

Management has designed internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Lack of optimal segregation of duties has been observed due to the relatively small size of the Company, but management believes that these weaknesses have been adequately mitigated through management and director oversight.

Corporate update and change of directors

On January 11, 2019, the Company announced that the Board of Directors have appointed Binyomin Posen as a director of the Company. On February 8, 2019, the Company announced that the Board of Directors have appointed Jack Wortzman as a director of the Company.

Management’s Responsibility for Financial Statements

The information provided in this report, including the financial statements, is the responsibility of management. In the preparation of these statements, estimates are sometimes necessary to make a determination of future values for certain assets or liabilities. Management believes such estimates have been based on careful judgments and have been properly reflected in the financial statements.

Further Information

Additional information relating to the Company can be found on SEDAR at www.sedar.com.

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