Nicola Mining — Capital/Financing Update 2020

May 9, 2020

51-102F3 MATERIAL CHANGE REPORT [F]

Item 1 Name and Address of Company

Nicola Mining Inc. (the “ Company ”) 3329 Aberdeen Road Lower Nicola, BC V0K 1Y0

Item 2 Date of Material Change

May 4, 2020

Item 3 News Release

The news release dated May 4, 2020 was issued by Stockwatch and Market News on May 4, 2020.

Item 4 Summary of Material Change

On May 4, 2020, the Company announced announce a non-brokered private placement (the “ Offering ”) of up to an aggregate principal amount of $250,000 of secured convertible debentures (the “ Debentures ”) of the Company.

The aggregate gross proceeds from the sale of the Offering will be used to repay existing debentures of $250,000.

Insiders may also participate in the Offering. The Debentures will include the following key terms:

• the minimum aggregate principal amount of the Debentures issued pursuant to the Offering will be $250,000;

• the Debentures shall bear interest at a rate of 10% per annum, which interest shall be payable annually, in cash or in common shares (each, a “ Share ”) of the Company, at the option of the Company;

• the Debentures will mature three years after the date of issuance (the “ Maturity Date ”), and the principal amount of the Debentures, together with any accrued and unpaid interest shall be payable on the Maturity Date;

• the principal amount of the Debentures shall be convertible into Shares prior to the Maturity Date, at the option of the holder, at a conversion price of $0.10 per Share; and

• the repayment of the outstanding principal and interest of the Debentures will be secured against the assets of the Company.

All securities issued in connection with the Offering will be subject to a statutory hold period expiring four months and one day after closing of the Offering. Completion of the Offering is subject to the approval of the TSX Venture Exchange (the “ Exchange ”). Any participation by insiders in the Offering will constitute a related party transaction under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (“ MI 61-101 ”) but is expected to be exempt from the formal valuation and minority shareholder approval requirements of MI 61-101.

None of the securities sold in connection with the Offering will be registered under the United States Securities Act of 1933, as amended, and no such securities may be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Item 5 Full Description of Material Change

5.1 Full Description of Material Change

The material change is fully described in Item 4 above and in the News Release attached hereto.

MI 61-101 Requirements

Peter Espig, the chief executive officer, president and a director of the Company will be issued a Debenture in the amount of $20,000. As such, a portion of the Offering will be a “related-party transaction” as such term is defined in MI 61-101.

The following supplementary information is provided in accordance with Section 5.2 of MI 61-101.

• (a) a description of the transaction and its material terms:

See Item 4 above for a description of the Offering.

• (b) the purpose and business reasons for the transaction:

The purpose of the Offering is for the repayment of outstanding convertible debentures.

• (c) the anticipated effect of the transaction on the issuer’s business and affairs:

The Company does not anticipate any material effect on the Company’s business and affairs.

• (d) a description of:

• (i) the interest in the transaction of every interested party and of the related parties and associated entities of the interested parties:

Peter Espig will enter into a subscription agreement with the Company whereby Mr. Espig will acquire a Debenture in the principal amount of $20,000.

• (ii) the anticipated effect of the transaction on the percentage of securities of the issuer, or of an affiliated entity of the issuer, beneficially owned or controlled by each person or company referred to in subparagraph (i) for which there would be a material change in that percentage:

The following table sets out the effect of the Offering on the percentage of securities of the Company beneficially owned or controlled by Mr. Espig:

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Name and Position	Dollar Amount of Debenture Acquired	Number of Securities	No. of Shares Held prior to the Issuance	Percentage of Issued and Outstanding Shares prior to the Issuance	No. of Shares Held After the Issuance	Percentage of Issued and Outstanding Shares After the Issuance
Peter Espig Chief Executive Officer, President and Director	$25,000	Secured Convertible Debenture	Undiluted: 9,226,529 Diluted: 13,550,755(1)	Undiluted: 3.74%(2) Diluted: 5.40%(3)	Undiluted: 9,226,529 Diluted: 13,250,755(4)	Undiluted: 3.742%(2) Diluted: 5.47%(5)

• (1) Comprised of: (a) 9,226,429 Shares; (b) 3,250,000 options, each of which is exercisable into one Share, of which 750,000 are exercisable at a price of $0.175 per Share until July 10, 2021, 1,000,000 are exercisable at a price of $0.165 per Share until December 27, 2022, 1,000,000 are exercisable at a price of $0.10 per Share until December 28, 2023 and 500,000 are exercisable at a price of $0.12 per Share until January 20, 2025; (c) 733,317 warrants, each of which is exercisable into one Share, of which 618,317 are exercisable at a price of $0.18 per share until July 23, 2020 and 115,000 are exercisable at a price of $0.15 per Share until November 26, 2020; (d) 90,909 Shares that may be issuable on conversion of a convertible debenture in the principal amount of $20,000, at a deemed conversion price of $0.22 per Share, until May 20, 2020, all of which may be exercised or converted within the next 60 days; and (e) 250,000 Shares that may be issuable on conversion of a convertible debenture in the principal amount of $25,000, at a deemed conversion price of $0.10 per Share, until November 21, 2022, all of which may be exercised or converted within the next 60 days.

• (2) Based on 246,844,530 Shares outstanding prior to and after completion of the Offering.

• (3) Based on 251,168,756 Shares comprised of: (a) 246,844,530 Shares outstanding prior to the Offering; (b) 3,250,000 Shares that may be issued on exercise of options; (c) 733,317 Shares that may be issued on exercise of warrants; and (d) 340,909 Shares that may be issued on conversion of convertible debentures of the Company, all convertible within 60 days.

• (4) Comprised of: (a) 9,226,529 Shares; (b) all of the convertible securities of the Company set out in footnote (1); and (c) 200,000 Shares that may be issuable on conversion of a convertible debenture in the principal amount of $20,000, at a deemed conversion price of $0.10 per Share, until May 20, 2023, all of which may be exercised or converted within the next 60 days.

• (5) Based on 251,368,756 Shares comprised of: (a) 246,844,530 Shares outstanding prior to the Offering; (b) 3,250,000 Shares that may be issued on exercise of options; (c) 733,317 Shares that may be issued on exercise of warrants; and (d) 540,909 Shares that may be issued on conversion of convertible debentures of the Company, all convertible within 60 days.

• (e) unless this information will be included in another disclosure document for the transaction, a discussion of the review and approval process adopted by the board of directors and the special committee, if any, of the issuer for the transaction, including a discussion of any materially contrary view or abstention by a director and any material disagreement between the board and the special committee:

Mr. Espig will abstain on the resolution of the board of directors approving the Offering. A special committee will not be established in connection with the approval of the Offering, and no materially contrary view or abstention will be expressed or made by any director.

• (f) a summary in accordance with section 6.5 of MI 61�101, of the formal valuation, if any, obtained for the transaction, unless the formal valuation is included in its entirety in the material change report or will be included in its entirety in another disclosure document for the transaction:

Not applicable.

• (g) disclosure, in accordance with section 6.8 of MI 61-101, of every prior valuation in respect of the issuer that related to the subject matter of or is otherwise relevant to the transaction:

• (i) that has been made in the 24 months before the date of the material change report:

Not applicable.

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• (ii) the existence of which is known, after reasonable enquiry, to the issuer or to any director or officer of the issuer:

Not applicable.

• (h) the general nature and material terms of any agreement entered into by the issuer, or a related party of the issuer, with an interested party or a joint actor with an interested party, in connection with the transaction:

The Company will enter into a subscription agreement with Mr. Espig pursuant to which Mr. Espig will acquire a Debenture in the principal amount of $25,000.

• (i) disclosure of the formal valuation and minority approval exemptions, if any, on which the issuer is relying under sections 5.5 and 5.7 of MI 61-101 respectively, and the facts supporting reliance on the exemptions:

The Offering is exempt from the valuation and minority shareholder approval requirements of MI 61-101 by virtue of the exemptions contained in Section 5.5(b) as the Company’s shares are not listed on a specified market and from the minority shareholder approval requirements of MI 61-101 by virtue of the exemption contained in Section 5.7(1)(a) of MI 61-101 in that the fair market value of the consideration of the Debentures issued to the related party did not exceed 25% of the Company’s market capitalization.

As this material change report is being filed less than 21 days before the closing of the Offering, there is a requirement under MI 61-101 to explain why the shorter period is reasonable or necessary in the circumstances. In the view of the Company, such shorter period is reasonable and necessary in the circumstances because the Company wished to complete the Offering in a timely manner.

• 5.2 Disclosure for Restructuring Transactions

Not Applicable

Item 6 Reliance on subsection 7.1(2) of National Instrument 51-102

Not Applicable

Item 7 Omitted Information

None

Item 8 Executive Officer

Peter Espig, President and Chief Executive Officer, 778.385.1213

Item 9 Date of Report

May 8, 2020

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NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

TSX.V: NIM

NICOLA MINING ANNOUNCES NON-BROKERED PRIVATE PLACEMENT OF SECURED CONVERTIBLE DEBENTURES

VANCOUVER, BC , May 4, 2020 – Nicola Mining Inc. (the “ Company ”) is pleased to announce a nonbrokered private placement (the “ Offering ”) of up to an aggregate principal amount of $250,000 of secured convertible debentures (the “ Debentures ”) of the Company.

The aggregate gross proceeds from the sale of the Offering will be used to repay existing debentures of $250,000.

Insiders may also participate in the Offering. The Debentures will include the following key terms:

• the minimum aggregate principal amount of the Debentures issued pursuant to the Offering will be $250,000;

• the Debentures shall bear interest at a rate of 10% per annum, which interest shall be payable annually, in cash or in common shares (each, a “ Share ”) of the Company, at the option of the Company;

• the Debentures will mature three years after the date of issuance (the “ Maturity Date ”), and the principal amount of the Debentures, together with any accrued and unpaid interest shall be payable on the Maturity Date;

• the principal amount of the Debentures shall be convertible into Shares prior to the Maturity Date, at the option of the holder, at a conversion price of $0.10 per Share; and

• the repayment of the outstanding principal and interest of the Debentures will be secured against the assets of the Company.

All securities issued in connection with the Offering will be subject to a statutory hold period expiring four months and one day after closing of the Offering. Completion of the Offering is subject to the approval of the TSX Venture Exchange (the “ Exchange ”). Any participation by insiders in the Offering will constitute a related party transaction under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (“ MI 61-101 ”) but is expected to be exempt from the formal valuation and minority shareholder approval requirements of MI 61-101.

None of the securities sold in connection with the Offering will be registered under the United States Securities Act of 1933, as amended, and no such securities may be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This news release shall not

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constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

On behalf of the Board of Directors

“ Peter Espig ” Peter Espig CEO & Director

For additional information contact:

Peter Espig Telephone: (604) 647-0142 Email: peter@nicolamining.com

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

- Cautionary Statement Regarding Forward Looking Statements

This news release includes certain “forward-looking statements” under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, statements with respect to the expectations of management regarding the proposed Offering, the expectations of management regarding the use of proceeds of the Offering, closing conditions for the Offering, the expiry of hold periods for securities distributed pursuant to the Offering, and Exchange approval of the proposed Offering. Although the Company believes that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. Such forward-looking statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements including that: the Company may not complete the Offering on terms favorable to the Company or at all; the Exchange may not approve the Offering; the proceeds of the Offering may not be used as stated in this news release; the Company may be unable to satisfy all of the conditions to the Closing; and those additional risks set out in the Company’s public documents filed on SEDAR at www.sedar.com. Although the Company believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

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