PEMBRIDGE RESOURCES PLC

Share Issue/Capital Change • Dec 16, 2019

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document, or as to what action you should take, you should consult an independent professional adviser authorised under the Financial Services and Markets Act 2000 (''FSMA''), who specialises in advising on the acquisition of shares and other securities if you are resident in the UK, or, if you are not resident in the UK, from another appropriately authorised independent financial adviser in your own jurisdiction.

If you have sold or otherwise transferred all of your registered holding of ordinary shares of nominal value 1 pence each (each, an ''Ordinary Share'') in the capital of Pembridge Resources plc (the ''Company'' or ''Pembridge''), please forward this document at once to the purchaser or transferee or to the bank, stockbroker or other agent through whom or by whom the sale or transfer was made, for delivery to the purchaser or transferee. However, this document and any accompanying documents should not be sent or transmitted in, or into, any jurisdiction where to do so might constitute a violation of local securities law or regulations. If you have sold only part of your holding of Ordinary Shares, please contact the bank, stockbroker or other agent through whom or by whom the sale or transfer was made immediately.

This document comprises a prospectus relating to the Company prepared in accordance with the prospectus regulation rules of the United Kingdom Financial Conduct Authority (the ''FCA'') made under section 73A of FSMA (the ''Prospectus Regulation Rules'') and approved by the FCA, as competent authority under Regulation (EU) 2017/1129 (the ''Prospectus Regulation'') under section 87A of FSMA. This document has been filed with the FCA and made available to the public in accordance with Rule 3.2 of the Prospectus Regulation Rules by being made available, free of charge, at www.pembridgeresources.com and at the Company's registered office at Suite A, 6 Honduras Street, London EC1Y 0TH, United Kingdom. The FCA only approves this document as meeting the standards of completeness, comprehensibility and consistency imposed by the Prospectus Regulation and such approval shall not be considered an endorsement of the issuer that is the subject of this document.

The Company's entire issued share capital comprising of the Ordinary Shares (the ''Existing Issued Share Capital'') as at the date of this document is admitted to listing on the standard segment of the Official List (''Standard Listing'') maintained by the FCA (the ''Official List''), in its capacity as competent authority under FSMA (under Chapter 14 of the listing rules published by the FCA under section 73A of FSMA (the ''Listing Rules'')) and to trading on the main market for listed securities (the ''Main Market'') of London Stock Exchange plc (the ''London Stock Exchange'').

As the Company's entry into the original definitive share purchase agreement relating to acquisition of the entire issued share capital of Minto Explorations Limited (''Minto'') from Capstone Mining Corporation (''Capstone'') (the ''Minto Acquisition'') constituted a ''reverse takeover'' under the Listing Rules (''Reverse Takeover''), upon announcement of the Minto Acquisition on 15 February 2018, the Standard Listing of the Existing Issued Share Capital was suspended by the FCA. Upon announcement of the entry into the replacement definitive share purchase agreement relating to the Minto Acquisition on 4 June 2019, the Standard Listing of the Existing Issued Share Capital remained suspended. It is anticipated that, in accordance with the Listing Rules, upon publication of this document the FCA will cancel the Company's existing Standard Listing.

Applications will be made for the Company's enlarged issued share capital comprising in aggregate 68,720,947 Ordinary Shares, which includes 22,384,925 existing Ordinary Shares in issue as at the date of this document (the ''Existing Ordinary Shares''), 25,536,021 Other Subscription Shares and 20,800,000 Ordinary Shares to be issued in connection with a placing to certain institutional investors (the ''Placing'') at the issue price of 12.5 pence per share (the ''Placing Price'') (the ''Placing Shares'', and together with the Existing Ordinary Shares and the Other Subscription Shares, the ''Enlarged Issued Share Capital''), to be admitted to a Standard Listing on the Official List and to trading on the Main Market of the London Stock Exchange (together, ''Admission''). It is expected that Admission will become effective, and that unconditional dealings in the Ordinary Shares will commence, at 8:00 a.m. on 16 December 2019.

The whole of the text of this document should be read by prospective investors. Your attention is specifically drawn to the discussion of certain risks and other factors that should be considered in connection with an investment in the Ordinary Shares, as set out in Part II — Risk Factors of this document.

The Company and the directors, whose names appear on page 34 of this document (the ''Directors''), accept responsibility for the information contained in this document. To the best of the knowledge of the Company and the Directors, the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.

PEMBRIDGE RESOURCES PLC

(Incorporated and registered in England & Wales with registered number 07352056)

Proposed Placing of up to 20,800,000 Placing Shares to raise £2,600,000 at a Placing Price of 12.5 pence per share

and

Admission of the Enlarged Issued Share Capital to the Official List (by way of Standard Listing pursuant to Chapter 14 of the Listing Rules) and to trading on the Main Market of the London Stock Exchange

Joint Broker Bookrunner and Joint Broker

SI Capital Limited	Brandon Hill Capital Limited

Each of SI Capital Limited (''SI Capital'') and Brandon Hill Capital Limited (''Brandon Hill''), which are authorised and regulated in the United Kingdom by the FCA, is acting as joint broker to the Company (each, a ''Joint Broker'') and is acting exclusively for the Company. Brandon Hill is acting as placing agent to the Company in connection with the Placing (the ''Bookrunner'') and is acting exclusively for the Company. Neither of SI Capital nor Brandon Hill will regard any other person (whether or not a recipient of this document) other than the Company for providing the protection afforded to their respective clients nor, in the case of Brandon Hill only, for providing advice in relation to the Placing or any transaction, matter or arrangement referred to in this document. No representation or warranty, express or implied, is made by either of SI Capital or Brandon Hill, for the accuracy of any information or opinions contained in this document or for the omission of any material information, for which it is not responsible.

A copy of this document is available, subject to certain restrictions relating to persons resident in any Restricted Jurisdiction, at the Company's website www.pembridgeresources.com. Neither the content of the Company's website nor any website accessible by hyperlinks to the Company's website is incorporated in, or forms part of, this document.

The Ordinary Shares comprising the Enlarged Issued Share Capital will rank pari passu in all respects with all Ordinary Shares in issue on Admission, including the right to receive dividends and other distributions declared following Admission.

This document does not constitute an offer to sell or an invitation to subscribe for, or the solicitation of an offer or invitation to buy or subscribe for, Ordinary Shares in any jurisdiction where such an offer or solicitation is unlawful or would impose any unfulfilled registration, publication or approval requirements on the Company.

The distribution of this document in or into jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

None of the Ordinary Shares have been approved or disapproved by the United States Securities and Exchange Commission, any state securities commission in the United States or any other regulatory authority in the United States, nor have any of the Ordinary Shares or the accuracy or the adequacy of this document. Any representation to the contrary is a criminal offence in the United States.

Information to Distributors: Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (''MiFID II''); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the ''MiFID II Product Governance Requirements''), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any ''manufacturer'' (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Ordinary Shares have been subject to a product approval process, which has determined that such Ordinary Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the ''Target Market Assessment''). Notwithstanding the Target Market Assessment, distributors should note that: the price of the Ordinary Shares may decline and investors could lose all or part of their investment; the Ordinary Shares offer no guaranteed income and no capital protection; and an investment in the Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the Target Market Assessment, the Bookrunner will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Ordinary Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the Ordinary Shares and determining appropriate distribution channels.

Notice to overseas shareholders

The Ordinary Shares have not been, and will not be, registered under the US Securities Act of 1933 (the ''US Securities Act''). The Ordinary Shares may not be offered or sold in the United States, except to qualified institutional buyers (''QIBs''), as defined in, and in reliance on, the exemption from the registration requirements of the US Securities Act provided in Rule 144A under the US Securities Act (''Rule 144A'') or another exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. The Placing is solely being made outside of the United States in offshore transactions as defined in Regulation S of the US Securities Act. No actions have been taken to allow a public offering of the Ordinary Shares under the applicable securities laws of any jurisdiction, including Australia, Canada, Japan or South Africa. Subject to certain exceptions, the Ordinary Shares may not be offered or sold in any jurisdiction, or to or for the account or benefit of any national, resident or citizen of any jurisdiction, including Australia, Canada, Japan or South Africa. This document does not constitute an offer of, or the solicitation of an offer to subscribe for or purchase any of the Ordinary Shares to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction.

The Ordinary Shares have not been and will not be registered or qualified for distribution by this document under the applicable securities laws of Australia, Canada, Japan or South Africa. Subject to certain exceptions, the Ordinary Shares may not be offered or sold in any jurisdiction, or to or for the account or benefit of any national, resident or citizen in Australia, Japan or South Africa or to any person located or resident in Canada. The Ordinary Shares have not been recommended by any US federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this document. Any representation to the contrary is a criminal offence in the United States.

The distribution of this document and the offer and sale of the Ordinary Shares in certain jurisdictions may be restricted by law, including, without limitation, the United States, Australia, Canada, Japan or South Africa. No action has been or will be taken by the Company or the Bookrunners to permit a public offering of the Ordinary Shares under the applicable securities laws of any jurisdiction. Other than in the United Kingdom, no action has been taken or will be taken to permit the possession or distribution of this document (or any other offering or publicity materials relating to the Ordinary Shares) in any jurisdiction where action for that purpose may be required or where doing so is restricted by law. Accordingly, neither this document, nor any advertisement, nor any other offering material may be distributed or published in any jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this document comes should inform themselves about and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, no actions have been or will be taken to permit a public offering of the Ordinary Shares under the applicable securities laws of any jurisdiction, including the United States, Australia, Canada, Japan or South Africa.

Accordingly, subject to certain exceptions, the Ordinary Shares may not be offered, sold or delivered within the United States, Australia, Canada, Japan or South Africa. For a description of these and certain further restrictions on the offer, subscription, sale and transfer of the Ordinary Shares and distribution of this document, please see Part III — Important Information of this document.

Available information for investors in the United States

For so long as any of the Ordinary Shares are in issue and are ''restricted securities'' within the meaning of Rule 144(a)(3) under the US Securities Act, the Company will, during any period in which it is not subject to section 13 or 15(d) under the US Securities Exchange Act of 1934 (the ''US Exchange Act''), nor exempt from reporting under the US Exchange Act pursuant to Rule 12g3-2(b) thereunder, make available to any holder or beneficial owner of a Ordinary Share, or to any prospective purchaser of an Ordinary Share designated by such holder or beneficial owner, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the US Securities Act.

A Standard Listing will afford investors in the Company a lower level of regulatory protection than that afforded to investors in companies with listings on the premium segment of the Official List (''Premium Listing'') which are subject to additional obligations under the Listing Rules.

CONTENTS

PART I	SUMMARY	1
PART II	RISK FACTORS	8
PART III	IMPORTANT INFORMATION	24
PART IV	ADMISSION AND PLACING STATISTICS	32
PART V	EXPECTED TIMETABLE OF EVENTS	33
PART VI	DIRECTORS, AGENTS AND ADVISERS	34
PART VII	THE MINTO ACQUISITION AND THE GROUP	35
PART VIII	REGULATORY AND OPERATING ENVIRONMENT	56
PART IX	THE COMPANY, THE BOARD AND THE SENIOR MANAGERS	63
PART X	UNAUDITED PRO FORMA FINANCIAL INFORMATION FOR THE ENLARGED GROUP	67
PART XI	SELECTED HISTORICAL FINANCIAL INFORMATION ON THE COMPANY	74
PART XII	SELECTED HISTORICAL FINANCIAL INFORMATION ON MINTO	78
PART XIII	OPERATING AND FINANCIAL REVIEW (INCLUDING LIQUIDITY AND CAPITAL RESOURCES AND CAPITALISATION AND INDEBTEDNESS).	81
PART XIV	TAXATION	99
PART XV	CONSEQUENCES OF A STANDARD LISTING	105
PART XVI	ADDITIONAL INFORMATION	106
PART XVII	DEFINITIONS	135
PART XVIII	GLOSSARY	142
PART XIX	COMPETENT PERSON'S REPORT	T-1
PART XX	HISTORICAL FINANCIAL INFORMATION ON THE COMPANY	F-1
PART XXI	HISTORICAL FINANCIAL INFORMATION ON MINTO	F-21

PART I SUMMARY

This summary is made up of four sections, and contains all the sections required to be included in a summary for this type of securities and issuer.

Even though a sub-section may be required to be inserted in the summary because of the type of securities and issuer, it is possible that no relevant information can be given regarding the subsection. In this case, a short description of the sub-section is included in the summary with the mention of ''not applicable''.

		INTRODUCTION AND WARNINGS
Name and ISIN of the securities	The securities are the Ordinary Shares, which have the ISIN GB00BG107324.
Identity and contact details of the issuer	The issuer is Pembridge Resources plc, and its registered address is at Pembridge Resources plc Suite A, 6 Honduras Street, London EC1Y 0TH, United Kingdom and telephone number is +44 (0)207 9172 968.
Identity and contact details of the offeror or of the person asking for admission to trading on a regulated market	The Company is the offeror and the person asking for admission to trading of the Ordinary Shares on the Main Market of the London Stock Exchange which is a regulated market.
Date of approval of the prospectus	The prospectus was approved on 11 December 2019.
Identity and contact details of the		The competent authority approving the prospectus is the FCA.
competent authority approving the prospectus	The FCA's registered address is at 12 Endeavour Square, London E20 1JN, United Kingdom and telephone number is +44 (0)20 7066 1000.
Warnings	This summary should be read as an introduction to the prospectus.
	Any decision to invest in the Ordinary Shares should be based on consideration of the prospectus as a whole by the investor.
	The investor could lose all or part of the invested capital.
	Where a claim relating to the information contained in the prospectus is brought before a court, the plaintiff investor might, under national law, have to bear the costs of translating the prospectus before legal proceedings are initiated.
	Civil liability attaches only to those persons who have tabled this summary including any translation thereof, but only where the summary is misleading, inaccurate or inconsistent, when read together with the other parts of the prospectus, or where it does not provide, when read together with the other parts of the prospectus, key information in order to aid investors when considering whether to invest in such securities.
		KEY INFORMATION ON THE ISSUER
		Who is the issuer of the securities?
Domicile and legal form	The Company was incorporated in England and Wales on 20 August 2010 as a public company with limited liability under the Companies Act 2006 (the ''Companies Act'') with an indefinite life.
	The Company's LEI is 213800TBL26T6GO88M13.
Principal activities	The Company was originally incorporated in August 2010 to exploit a mining project in the Republic of Namibia and listed on AIM on 1 August 2011. In January 2017, the Company disposed of all of its operating assets by way of a special in specie dividend to shareholders and at the same time raised £1 million to support the making of acquisitions in the mining sector becoming an AIM Rule 15 cash shell. On 21 August 2017, the Company raised £2.27 million and was admitted to a Standard Listing as an acquisition company focused on the making of acquisitions and investments in projects and businesses involved in base and precious metals in the Americas, sub-Saharan Africa and Europe. On 15 February 2018, the Standard Listing of the Existing Issued Share Capital was suspended on the announcement of the entry into the original definitive share purchase agreement relating to the Minto Acquisition. Upon announcement of the entry into the replacement definitive share purchase agreement relating to the Minto Acquisition on 4 June 2019, the Standard Listing of the Existing Issued Share Capital remained suspended. Following completion of the Minto Acquisition, which occured on 3 June 2019, the objectives of the Company are to: (i) operate the Minto Mine with a view to generating value for Shareholders through operational improvements and enhancements designed to increase productivity and profitability, and, ultimately to extend the life of the Minto Mine; and (ii) to grow the Company's portfolio of assets by seeking out attractive acquisitions opportunities and other accretive growth initiatives.
Major shareholders	Each of the following persons, directly or indirectly, has an interest in the Company's capital or voting rights which is notifiable under English Law:
		Number of Existing	Percentage of the		Percentage of the
		Ordinary Shares held as at the date of this	Existing Issued Share Capital held as at the	Number of Ordinary Shares held immediately	Enlarged Issued Share Capital held immediately
	Name	document	date of this document	following Admission	following Admission
	Mark Lancaster	1,881,365	8.4%	1,881,365	2.7%
	East China Exploration	1,500,000	6.7%	1,500,000	2.2%
	Gati Al-Jebouri Hargreaves Lansdown Asset	1,250,000	5.6%	12,795,790	18.6%
	Management	1,138,416	5.1%	1,138,416	1.7%
	Darren Hazelwood	967,028	4.3%	967,028	1.4%
	Grant Stevens	703,216	3.1%	703,216	1.0%
	Frank McAllister Guy Le Bel	468,750 46,875	2.1% 0.2%	3,451,419 2,823,545	5.0% 4.1%
	Jonathan Armstrong	—	—	4,800,000	7.0%
Key managing directors	Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board.
Statutory auditors	PKF Littlejohn LLP.

Selection of historical key financial	What is the key financial information regarding the issuer? The tables below set out the summary audited historical financial information of the Company as derived from the audited financial information of the
information	Company as at 31 December 2018, 2017 and 2016 and unaudited historical financial information of the Company for the six month periods ended 30 June 2019 and 30 June 2018.
	AUDITED STATEMENT OF COMPREHENSIVE INCOME	6 months	6 months
		ended	ended
		30 June 2019	30 June 2018	Year ended 31 December	Year ended 31 December	Year ended 31 December
		US\$'000	US\$'000	2018	2017	2016
	Administration expenses	(unaudited) (2,885)	(unaudited) (2,231)	US\$'000 (3,829)	US\$'000 (1,768)	US\$'000 (744)
	Impairment of investment in and amounts due from
	subsidiary undertaking Loss on disposal of investments	— —	— —	— —	— (157)	(3,263) —
	Other income	—	31	—	—	192
	Operating loss	(2,885)	(2,200)	(3,829)	(1,925)	(3,815)
	Finance income Finance costs	— —	— —	— —	— —	— —
	Loss before income tax	(2,885)	(2,200)	(3,829)	(1,925)	(3,815)
	Income tax	—	—	—	—	—
	Loss for the period	(2,885)	(2,200)	(3,829)	(1,925)	(3,815)
	Other comprehensive income	(101)	—	—	—	—
	Total comprehensive income for the period	(2,986)	(2,200)	(3,829)	(1,925)	(3,815)
	Loss attributable to non-controlling interest	(567)	—	—	—	—
	Loss attributable to equity holders of the parent	(2,318)	(2,200)	(3,829)	(1,925)	(3,815)
	Total comprehensive income attributable to
	non-controlling interest	(567)	—	—	—	—
	Total comprehensive income attributable to equity holders of the company	(2,419)	(2,200)	(3,829)	(1,925)	(3,815)
		6 months ended	6 months ended
		30 June 2019	30 June 2018	Year ended	Year ended	Year ended
		US\$'000	US\$'000	31 December	31 December	31 December
		(unaudited)	(unaudited)	2018	2017	2016
	Earnings per share expressed in US cents Basic and diluted loss per share attributable to the equity
	holders of the Company	(1.04)	(0.98)	(1.7)	(1.4)	(14.9)
	AUDITED STATEMENT OF FINANCIAL POSITION
		30 June 2019	30 June 2018	31 December	31 December	31 December
		US\$'000	US\$'000	2018	2017	2016
		(unaudited)	(unaudited)	US\$'000	US\$'000	US\$'000
	Assets Non-current assets Mining assets	24,091	—	148	—	—
	Property, plant and equipment	12,287	16	15	2	3
	Goodwill Long Term deposit	7,109 2,454	— —	— —	— —	— —
	Total non-current assets	45,941	16	163	2	3
	Current assets Trade and other receivables	405	737	240	354	38
	Inventory	2,387	—	—	—	—
	Cash and cash equivalents Prepayments	9,787 193	119 —	151 —	2,027 —	1,163 —
	Total assets	58,713	872	554	2,383	1,204
	Liabilities
	Non-current liabilities Acquisition liabiity	(10,000)	—	—	—	—
	Deferred tax liability Deferred revenue	(1,658) (11,496)	— —	— —	— —	— —
	Asset retirement obligation	(24,774)	—	—	—	—
	Borrowings	(103)	—	(103)	—	—
	Total non-current liabilities Current liabilities	(48,031)	—	(103)	—	—
	Trade and other payables	(5,445)	(902)	(1,831)	(213)	(184)
	Borrowings	(8,312)	—	(279)	—	—
	Total liabilities	(61,788)	(902)	(2,213)	(213)	(184)
	Net assets (liabilities)	(3,075)	(30)	(1,659)	2,170	1,020
	Equity Share capital	295	1,306	295	1,306	1,048
	Non-controlling interest	1,003	—	—	—	—
	Share premium Capital redemption reserve	2,902 1,011	2,902 —	2,902 1,011	2,902 —	138 —
	Other reserve	66	165	66	165	112
	Retained deficit Foreign currency translation reserve	(8,251) (101)	(4,403) —	(5,933) —	(2,203) —	(278) —
	Equity attributable to Shareholders of the Company	(3,075)	(30)	(1,659)	2,170	1,020
	Set out below are details of the significant change in the financial condition, operating results and trading position of the Company for the period since 30 June 2019:
	* the execution of the Convertible Loan Agreement on 24 October 2019 between Gati Al-Jebouri and the Company, which provides for a committed term loan in Pounds Sterling in an aggregate amount equal to £1,000,000 and an uncommitted term loan in Pounds Sterling in an aggregate amount equal to £700,000 to be made available to the Company, which is to be repaid in full, together with any accrued and unpaid interest, on the date falling two years after the date of the Convertible Loan Agreement, being 23 October 2021 and carries interest at an annual rate of 8%. At any time prior to 23 October 2021, Mr. Al-Jebouri may elect to convert all or part of the monies loaned and drawn into Ordinary Shares, to be issued at Placing Price, provided that such election would not place his shareholding above 29.9% of the total issued share capital of the Company. The Company may elect to repay any portion of the monies loaned and drawn at any point prior to 23 October 2021, provided always that Mr. Al-Jebouri will have the option to have such repayment made in Ordinary Shares, to be issued at a fixed conversion price, which is the Placing Price. Save as disclosed above, there has been no significant change in the financial condition and operating results of the Company during or subsequent to
	the periods covered by the selected historical financial information of the Company set out in this Element.

Statements of income (loss) and comprehensive income (loss) (expressed in thousands of CAD\$)	Period ended 30 June 2019	Period ended 30 June 2018	31 December	Year ended	Year ended 31 December	Year ended 31 December
	(unaudited)	(unaudited)		2018	2017	2016
Revenue Operating costs	—	35,151		86,412	140,037	199,576
Production costs Royalties	— —	(40,367) —		(111,427) (919)	(106,893) (2,327)	(96,440) (2,384)
Depletion and amortization	—	(1,121)		(2,485)	(20,585)	(65,454)
Earnings (loss) from mining operations	—	(6,337)		(28,419)	10,232	35,298
Related party management fees and insurance expense Impairment reversal (expense) on	—	(738)		(2,040)	(2,089)	(1,598)
mineral properties Care and maintenance	— (3,604)	— —		— (4,035)	25,730 —	— —
Restructuring expenses	—	—		(5,936)	—	—
Earnings (loss) from operations	(3,604)	(7,075)		(40,430)	33,873	33,700
Other (expense) income Foreign exchange (loss) gain (Loss) gain on derivatives	(15,988) —	1,295 1,644		697 (4,673)	(5,206) (5,257)	(283) 297
(Loss) gain on disposal of equipment	677	90		113	(1,303)	149
Related party insurance claims income	—	—		—	2,814	—
Royalties Other income (expense)	— (31)	649 (505)		— 48	— 2,176	— (2,132)
Earnings (loss) before finance costs and income taxes	(18,946)	(3,902)		(44,245)	27,097	31,731
Interest on surety bond Other interest expense Related party interest expense	— (112) —	(564) (619) —		(909) (1,901) —	(1,194) (709) —	(1,110) (689) (973)
Earnings (loss) before income taxes	(19,058)	(5,085)		(47,055)	25,194	28,959
Income tax (expense) recovery	—	(1,509)		(945)	(15,754)	(2,537)
Net income (loss) and comprehensive income (loss)	(19,058)	(6,594)		(48,000)	9,440	26,422
Earnings (loss) per share – basic and diluted	(0.21)	(0.08)		(0.60)	0.12	0.33
Weighted average number of shares – basic and diluted	238,506,300	79,502,100		79,502,100	79,502,100	79,502,100
Statement of financial position (expressed in thousands of CAD\$)		As at 30 June 2019 (unaudited)	As at 30 June 2018 (unaudited)	As at 31 December 2018	As at 31 December 2017	As at 31 December 2016
ASSETS
Current Cash and cash equivalents Receivable from Capstone		12,239 —	9,647 —	5,203 12,985	26,525 14,724	56,700 —
Receivables Inventories Prepaids		— 3,133 238	2,414 55,511 1,594	2,438 10,864 156	2,050 37,641 1,057	15,421 31,336 1,189
Mineral properties, plant and equipment		15,610 47,776	69,166 40,560	31,646 44,996	81,997 34,080	104,646 17,254
Long term deposits Derivative asset Deferred income taxes		3,195 — —	3,148 6,030 —	3,190 — —	3,104 4,152 —	3,106 — 7,738
Total assets		66,581	118,904	79,832	123,333	132,744
LIABILITIES Current
Accounts payable and accrued liabilities Payable to Capstone Income taxes payable		1,107 — 428	12,195 — —	9,801 — —	8,593 — 1,342	11,758 2,521 13,675
Current finance lease obligation		— 1,535	— 12,195	— 9,801	— 9,935	129 28,083
Non Current Deferred revenue		15,089	13,338	13,716	315	958
Deferred income tax liabilities Asset retirement obligation Borrowings		2,176 32,516 10,412	1,787 28,354 —	2,294 32,197 —	2,541 28,044 —	— 30,645 —
Total liabilities		61,728	55,674	58,008	40,835	59,686
EQUITY
Share capital Deficit		212,618 (207,765)	210,531 (147,301)	210,531 (188,707)	210,531 (128,033)	210,531 (137,473)
Total equity		4,853	63,230	21,824	82,498	73,058

for the Modified Price Period. Save as disclosed above, there has been no significant change in the financial condition, operating results and trading position of Minto during or subsequent to the periods covered by the selected historical financial information of Minto set out in this Element.

Unaudited pro forma statement of assets	Pembridge as at 31 December 2018 US\$'000	Minto as at 31 December 2018 US\$'000	Minto Acquisition US\$'000	Issue of Placing Shares net of costs US\$'000	Enlarged Group at 31 December 2018 US\$'000
ASSETS	(note 1)	(note 2)	(note 3)	(note 4)
Non-current assets:
Goodwill and other intangibles Mineral properties, plant and equipment	— 15	— 32,982	7,109 —	— —	7,109 32,982
Intangible assets	148	—	—	—	148
Long term deposits Derivative asset	— —	2,338 —	— —	— —	2,338 —
NON-CURRENT ASSETS	163	35,320	7,109	—	42,592
Current assets:
Cash and cash equivalents	151	3,814	5,774	2,491,750	2,501,489
Receivables Inventories	240 —	11,305 7,963	(11,305) (5,712)	— —	240 2,250
Prepaids	—	114	—	—	114
CURRENT ASSETS	391	23,196	(11,243)	2,491,750	2,504,093
TOTAL ASSETS	554	58,516	(4,134)	2,491,750	2,546,685
LIABILITIES
Current liabilities:
Trade and other payables Borrowings	(1,831) (279)	(7,184) —	5,838 —	— —	(3,177) (279)
CURRENT LIABILITIES	(2,110)	(7,184)	5,838	—	(3,456)
Non-current liabilities:
Deferred revenue	—	(10,054)	—	—	(10,054)
Deferred income tax liabilities Asset retirement obligations	— —	(1,681) (23,600)	— —	— —	(1,681) (23,600)
Deferred Consideration	—	—	(10,000)	—	(10,000)
Borrowings	(103)	—	(10,000)	—	(10,103)
NON-CURRENT LIABILITIES	(103)	(35,335)	(20,000)	—	(55,438)
TOTAL LIABILITIES	(2,213)	(42,519)	(14,162)	—	(58,894)
		15,997	(18,296)	2,491,750	2,487,792
NET ASSETS (LIABILITIES) Notes 1. Pembridge financial information as at 31 December 2018 has been extracted from the Company's audited financial statements for the year ended 31 December 2018. 2. Minto financial information as at 31 December 2018 has been extracted from Minto's audited financial statements for the year ended 31 December 2018. The financial information has been translated from CAD\$ to US\$ due to Pembridge having adopted US dollars as its presentational currency. 3. A pro forma adjustment has been made to reflect the initial accounting for the Minto Acquisition by Pembridge, being the elimination of the investment in Minto against the non monetary assets acquired and recognition of goodwill. Pembridge have made an initial estimate of the fair value of the net assets acquired, but will need to accurately determine the fair value of the net assets acquired pursuant to the Minto Acquisition within 12 months of the acquisition date in accordance with IFRS 3. This process, known as a purchase price allocation exercise may result in changes to the amounts shown above for both assets, liabilities and goodwill, which may be material. The purchase price allocation process will require a valuation of identifiable intangible assets acquired. An adjustment has been made to reduce the receivables by US\$11.305 million and to reduce payables by US\$7.184 million, as the settlement of these items remains with Capstone. A reduction of US\$5.712 million has been made to inventory, as an initial management estimate, which is subject to change, of the reduction in net realisable value of purchased inventory. The US\$10 million payable under the Investor Consortium Financing Agreement is shown as a non-current US\$10 million liability. Accrued interest of US\$0.584 million has	(1,659)
been included in current liabilities as the amount of interest due under the Investor Consortium Financing Agreement falling within 12 months, at the agreed interest rate of 8% less tax relief at 27%. Consideration payable to Capstone of US\$10 million has been shown in deferred consideration (being US\$5 million payable on the re-commencement of milling operations and US\$5 million payable if the average London Metal Exchange Copper bid price is above US\$3.00/lb for two consecutive quarters after milling operations recommence). No accrual has been made for a consideration payment of US\$10 million payable to Capstone if the average London Metal Exchange copper bid price is above US\$3.50/lb for two consecutive months after milling operations recommence, on the basis that the Directors consider, that based on the forward copper price curve, such a possibility is very unlikely. Transaction costs incurred after 31 December 2018 of \$0.762m (including VAT at 20%) have been included in accrued liabilities.
4. The US\$2.5 million adjustment represents the Net Placing Proceeds, represented by a receipt of £2.6 million, being the issue of 20.8 million Placing Shares at £0.125 per share, conditional on Admission, less associated costs of Admission totalling £0.1 million. This has been converted into US dollars using the exchange rate of £1:US\$1.299.
				Minto as at 31 December	Minto as at 31 December
				2018	2018
				CAD\$'000 (note 5(a))	US\$'000 (note 5(b))
ASSETS
Non-current assets:
Mineral properties, plant and equipment Long term deposits				44,996 3,190	32,982 2,338
				48,186	35,320
Current assets:
Cash and cash equivalents				5,203	3,814
Receivables Inventories				15,423 10,864	11,305 7,963
Prepaids				156	114
TOTAL ASSETS				79,832	58,516
LIABILITIES
Current liabilities:
Trade and other payables Income tax payable				9,801 —	7,184 —
				9,801	7,184
Non-current liabilities: Deferred revenue				13,716	10,054
Deferred tax				2,294	1,681
Asset retirement obligations				32,197	23,600
TOTAL LIABILITIES NET ASSETS (note 6)				58,008 21,824	42,519 15,997

5(b): Minto's consolidated statement of net assets has been translated from CAD\$ to US\$ using the exchange rate on 31 December 2018 of CAD\$1:US\$0.733. 6: The unaudited pro forma statement of net assets has been prepared on the basis that the Minto Acquisition will be treated as an acquisition of a business in accordance with IFRS 3 Business Combinations. The pro forma statement of net assets does not reflect the final fair value adjustments to the acquired assets and liabilities as the fair value measurement of these items are still being finalised. For the purposes of the pro forma statement of net assets, the excess purchase consideration over the carrying amount of the net assets acquired has been attributed to intangible assets (goodwill) adjusted for Pembridge management estimates on the value of certain assets and liabilities.

Unaudited pro forma income statement
	Pembridge year to 31 December 2018 (note 1) US\$'000	Minto year to 31 December 2018 (note 2) US\$'000	Minto Acquisition adjustments (note 3) US\$'000	Transaction costs (note 4) US\$'000	Enlarged Group US\$'000
Revenue	—	66,451	—	—	66,451
Operating costs Production costs	—	(85,687)	—	—	(85,687)
Royalties	—	(707)	—	—	(707)
Depletion and amortisation Administration costs	— (3,829)	(1,911) —	— —	— (762)	(1,911) (4,591)
Earnings (loss) from mining operations	(3,829)	(21,854)	—	(762)	(26,445)
Related party management fees and insurance expense Care and maintenance	— —	(1,569) (3,103)	— —	— —	(1,569) (3,103)
Restructuring expense Earnings from operations	— (3,829)	(4,565) (31,091)	— —	— (762)	(4,565) (35,682)
Other (expense) income
Foreign exchange (loss) gain (Loss) gain on derivatives	— —	536 (3,594)	— —	— —	536 (3,594)
Gain on disposal of equipment	—	87	—	—	87
Other income (expense)	—	37	—	—	37
Earnings (loss) before finance costs and income taxes	(3,829)	(34,025)	—	(762)	(38,616)
Interest on surety bond Other interest expense	— —	(699) (1,462)	— (800)	— —	(699) (2,262)
Earnings (loss) before income taxes	(3,829)	(36,185)	(800)	(762)	(41,577)
Income tax (expense) recovery	—	(727)	216	—	(511)
Net income (loss) and comprehensive income (loss)
attributable to	(3,829)	(36,912) (36,912)	(584) 24,802	(762) (762)	(42,088) (16,701)
Owner of the parent	(3,829)
Non-controlling interest 1: This is the historical consolidated income statement for Pembridge for the period ended 31 December 2018 as extracted from the Company's audited financial statements for the period ended 31 December 2018. 2: Minto financial information as at 31 December 2018 has been extracted, without material adjustment, from the audited financial statements for the year ended 31 December 2018. Minto's income statement has been translated from CAD\$ to US\$ using the average exchange rate over the 12 month period to 31 December 2018 of CAD\$1:US\$0.769. 3: These adjustments are to reflect the Minto Acquisition as if it took place on 1 January 2018. The adjustment of US\$0.800 million reflects 12 months interest expense due under the US\$10 million made available by Investor Consortium pursuant to the Investor Consortium Financing Agreement, on the basis of an agreed interest rate of 8% per annum. The tax effect of the adjustments is calculated at Minto's effective tax rate of 27%. An adjustment of US\$24.608 million has been made to attribute a share of the loss for the year to the Investor Consortium who are entitled to two thirds of the economic result	—	—	(24,997)	—	(24,997)
of Minto, with the balance of US\$12.306 million attributable to the parent. The Directors consider that these adjustments will have a continuing impact on the Enlarged Group. 4: For the purposes of the unaudited pro forma income statement, transaction costs subsequent to 31 December 2018 of US\$0.762 million incurred by the Group in respect of the Minto Acquisition have been reflected as an expense. The Directors consider that these costs are not expected to be incurred on an ongoing basis in the Enlarged Group. 5: No additional depreciation and amortisation charge has been applied to reflect the impact of any fair value adjustments that might arise under IFRS 3 ''Business Combinations'' in relation to intangible assets and property, plant and equipment, for the Minto Acquisition as it is considered impractical to do so given the fair value adjustments are still being calculated. 6: No adjustment has been made to reflect the financial results of Pembridge or Minto since 31 December 2018.
				Year to 31 December	Year to 31 December
				2018 (CAD\$'000) (note 7(a))	2018 (US\$'000) (note 7(b))
Revenue				86,412	66,451
Operating costs Production costs				(111,427)	(85,687)
Royalties				(919)	(707)
Depletion and amortization				(2,485)	(1,911)
(Loss) from mining operations				(28,419)	(21,854)
Related party management fees and insurance expense Care and maintenance Restructuring expenses				(2,040) (4,035) (5,936)	(1,569) (3,103) (4,565)
(Loss) from operations				(40,430)	(31,091)
Other (expense) income
Foreign exchange (loss) gain (Loss) gain on derivatives				697 (4,673)	536 (3,594)
Gain on disposal of equipment				113	87
Other income (expense) (Loss) before finance costs and income taxes				48 (44,245)	37 (34,025)
Interest on surety bond				(909)	(699)
Other interest expense				(1,901)	(1,462)
(Loss) before income taxes Income tax (expense) recovery				(47,055) (945)	(36,185) (727)

7(a): This is the historical income statement for Minto for the year ended 31 December 2018 as extracted from Minto's audited financial statements for the year ended 31 December 2018, which is set out in Part XXI – Historical Financial Information on Minto of this document. 7(b): Minto's income statements has been translated from CAD\$ to US\$ using the average exchange rate over the year to 31 December 2018 of CAD\$1:US\$0.769.

Brief description of any qualifications in the audit report The Company's auditors disclaimed their opinion on the financial statements for the financial year ended 31 December 2018.

Their audit report contained the following comments:

''We do not express an opinion on the accompanying financial statements for the financial year ended 31 December 2018 of the Group and the Company. Neither the Group nor the Company currently has sufficient funds to meet their respective working capital needs for the next 12 months and further funding will be required. The ability to raise additional funds as at the date of approval of the financial statements for the financial year ended 31 December 2018 is dependent on successfully concluding an acquisition, which is contingent on obtaining the requisite shareholder and regulatory approvals. The Directors have been unable to provide sufficient appropriate audit evidence to support their opinion that the going concern basis of preparation is appropriate. We were unable to satisfy ourselves, through the performance of alternative audit procedures, that additional funds would be secured in the absence of achieving the above. Consequently, we were unable to confirm the adequacy of the disclosures or conclude on the adequacy of the going concern basis of preparation, for which the possible effects on the financial statements for the financial year ended 31 December 2018 of the Group and the Company could be both material and pervasive.''

Net (loss) and comprehensive (loss) (48,000) (36,912)

	What are the key risks that are specific to the issuer?
Brief description of the most material risk factors specific to the issuer contained in the prospectus	As at the date of this document, the Company shall be entitled to one-third of the economic value of Minto including one-third of all free cash flows from Minto once US\$10 million in principal, which is being utilised to recommence operations at the Minto Mine, is repaid to the Investor Consortium out of free cash-flows from Minto (the ''Company Cash-flow Entitlement''). However if the Minto Joint Advisory Committee is of the view that additional funding is required to meet Minto's short-term working capital requirements, then the Minto Joint Advisory Committee in its reasonable opinion may request the first \$3 million in additional funding in the form of an interest free loan from the Company, which the Company is obliged to pay within 90 days of receipt of such a request. Should the Company be unable to pay such sum in response to a funding request notice within 90 days of receipt of such a request, the Company Cash-flow Entitlement will be reduced pro rata to 11% (i.e., the Company will forego 22.3% of all free cash-flows from Minto), and will be further diluted by any new funds provided by the Investor Consortium if not matched pro rata by the Company in response to further such funding requests. There are a number of mining, environmental and other licences which are critical to the Minto Mine and the Company's plans for the continued commercialisation, operation and the extension of the life of the Minto Mine. Any termination, failure to secure a renewal, or failure to obtain a required licence or permit could have a material and significant effect on the current economics of the Minto Mine or the future potential of the Minto Mine. The Minto Mine is located in a remote area which may have a significant impact on infrastructure costs, supply chain efficiency and the availability of labour. The climate in the Yukon is extreme and in the winter the Minto Mine can become inaccessible by road or river which in turn can cause significant disruption to deliveries of supplies, labour and equipment and of concentrate for sale. Stockpiling of supplies and concentrate for sale can be the only viable solution, which may have a significant impact on the Company's cashflows. Whilst in recent years the CAD\$ and US\$ exchange rates have been relatively stable, the Company will be exposed to foreign exchange risk and there can be no guarantee that exchange rates between the two currencies will not become more volatile in the future. The activities of the Company and the viability of its projects will be subject to fluctuations in demand and prices of base and precious metals. Prices of base and precious metals fluctuate widely and may be affected by numerous factors beyond the Company's control, including global supply and demand, political and economic conditions, speculative activities, expectations of inflation, interest rates and currency exchange rate fluctuations. The effect of these factors on the price of base and precious metals cannot accurately be predicted. The estimating of Mineral Reserves and Mineral Resources is a subjective process and the estimates of Mineral Reserves and Mineral Resources for projects are, to a large extent, based on the interpretation of geological data obtained from drill holes and other sampling techniques and feasibility studies which derive estimates of costs based upon anticipated tonnage and grades of ores to be mined and processed, the configuration of the ore body, expected recovery rates from the ore, estimated operating costs, anticipated climatic conditions and other factors. Mineral exploration and development can be highly speculative in nature and involve a high degree of risk. The economics of developing mineral properties are affected by many factors including the cost of operations, variations of the grade of ore mined, fluctuations in the price of the minerals being mined, fluctuations in exchange rates, costs of development, infrastructure and processing equipment and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection. The Group may need to raise substantial additional capital in the future to fund the development of the Minto Mine and future prices of base and precious metals, revenues, taxes, capital expenditures, operating expenses and geological success will all be factors which will have an impact on the amount of additional capital required. Any additional equity financing may be dilutive to Shareholders and debt financing, should it be achievable, may involve restrictions on financing and operating activities. A substantial or extended decline in base and precious metal prices and/or consumption may adversely affect the Company's prospects, business, financial condition and results of operations. * The expense of meeting environmental regulations could cause a significantly negative effect on the Company's long-term profitability, as could the failure to obtain certain necessary environmental permits.
	KEY INFORMATION ON THE SECURITIES
	What are the main features of the securities?
Type, class and ISIN	The Placing Shares being offered in the Placing are Ordinary Shares with a nominal value of 1 pence each in the capital of the Company. Applications will be made for the Enlarged Issued Share Capital to be admitted to the Official List with a Standard Listing and to trading on the Main Market of the London Stock Exchange. The Ordinary Shares are registered with ISIN GB00BG107324, SEDOL code BG10732 and TIDM PERE.
Currency, denomination, par value, number of securities issues and	UK Pounds Sterling with nominal value of 1 pence each.
the term of the securities	22,384,925 Existing Ordinary Shares have been issued at the date of this document, all of which have been fully paid up. The term of the securities is perpetual.
Rights attached to the securities	Shareholders have the right to receive notice of and to attend and vote at any meetings of Shareholders. Each Shareholder entitled to attend and being present in person or by proxy at a meeting will, upon a show of hands, have one vote and upon a poll each such Shareholder present in person or by proxy will have one vote for each Ordinary Share held by such Shareholder. Pre-emption rights have been disapplied (in respect of future share issues whether for cash or otherwise) up to an aggregate nominal value of £700,000 as at the date of the Company's annual general meeting held on 28 June 2019 for a period of 15 months from that date or the holding of the Company's next annual general meeting, whichever is the earlier. Subject to the Companies Act, on a winding-up of the Company the assets of the Company available for distribution shall be distributed, provided there are sufficient assets available, first to the holders of Ordinary Shares in an amount up to 1 pence per share in respect of each fully paid up Ordinary Share. If, following these distributions to Shareholders there are any assets of the Company still available, they shall be distributed to Shareholders pro rata to the number of such fully paid up Ordinary Shares held (by each Shareholder as the case may be) relative to the total number of issued and fully paid up Ordinary Shares.
Relative seniority of the securities in the issuer's capital structure in the event of insolvency	Not applicable. The Company does not have any other securities in issue or liens over its assets and so the Ordinary Shares are not subordinated in the Company's capital structure as at the date of this prospectus, and will not be immediately following Admission.
Restrictions on the free transferability of the securities	Not applicable. The Ordinary Shares are freely transferable and tradable and there are no restrictions on transfer. Each Shareholder may transfer all or any of their Ordinary Shares which are in certificated form by means of an instrument of transfer in any usual form or in any other form which the Directors may approve. Each Shareholder may transfer all or any of their Ordinary Shares which are in uncertificated form by means of a 'relevant system' (i.e., the CREST System) in such manner provided for, and subject as provided in, the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) (the ''CREST Regulations'').
Dividend or pay-out policy	The Company's current intention is to retain earnings, if any, for use in its future business operations and expansion. The Company will only pay dividends if deemed appropriate by the Board and to the extent that to do so is in accordance with the Companies Act and all other applicable laws. There can be no assurance that the Company will declare or pay, or have the ability to declare and pay, any dividends in the future.
	Where will the securities be traded?
Application for admission to trading	As the Minto Acquisition constituted as a Reverse Takeover, upon publication of this document the Standard Listing of the Existing Issued Share Capital will be cancelled, and applications will be made for the admission of the Enlarged Issued Share Capital to a Standard Listing on the Official List and to trading on the Main Market of the London Stock Exchange. It is expected that Admission will become effective and that unconditional dealings will commence on the Main Market of the London Stock Exchange at 8.00 a.m. on 16 December 2019. The Ordinary Shares will not be listed on any other regulated market.

	What are the key risks specific to the securities?
Brief description of the most material risk factors specific to the securities contained in the prospectus	Further equity capital raisings may be required by the Company in order to complete any further acquisition or to develop any business so acquired, including the further development of Minto. If the Company does offer Ordinary Shares as consideration in making further acquisitions, depending on the number of Ordinary Shares offered and the value of such Ordinary Shares at the time, the issuance of such Ordinary Shares could materially reduce the percentage ownership represented by the Shareholders and also dilute the value of Ordinary Shares held by such Shareholders at the time. Immediately following Admission, Gati Al-Jebouri will be interested in approximately 18.6% of the Enlarged Issued Share Capital. Although he is contractually restricted from converting the principal amount owed to him pursuant to the Convertible Loan Agreement into Ordinary Shares to a level above 29.9% of the issued share capital of the Company from time to time, with such a shareholding Mr. Al-Jebouri may be able to influence the passing or blocking of an ordinary resolution or blocking of a special resolution of the Company, and the concentration of ownership in Mr. Al-Jebouri may have the effect of delaying, deferring or discouraging a potential acquirer from making a tender offer or otherwise attempting to take control of the Company, which in turn could have an adverse effect on the trading price of the Ordinary Shares. * The Company has outstanding warrants and options. These convertible instruments will have a material dilutive effect on Shareholders when and if they are exercised. The Placing will involve the issue of 20,800,000 Placing Shares, representing in aggregate 30.3% of the Enlarged Issued Share Capital. If all outstanding warrants and options were exercised, the 23,330,884 Ordinary Shares to be issued would represent 25.3% of the total subsequent Enlarged Issued Share Capital of the Company. Additionally, if the Convertible Loan Agreement conversion option was exercised a further 13,600,000 Ordinary Shares would be issued representing 12.9% of the fully diluted share capital of the Company.
KEY INFORMATION ON THE OFFER OF SECURITIES TO THE PUBLIC AND/OR THE ADMISSION TO TRADING ON THE LONDON STOCK EXCHANGE
	Under which conditions and timetable can I invest in this security?
General terms and conditions	The Company, the Directors, Senior Managers and the Bookrunner have entered into the Placing Agreement relating to the Placing pursuant to which, subject to certain conditions, the Bookrunner agreed to use its reasonable endeavours to procure subscribers for up to £2.6 million in the Placing. The 20,800,000 Placing Shares subscribed for in the Placing at the Placing Price will represent up to approximately 30.3% of the Enlarged Issued Share Capital. The Company will issue 20,800,000 Placing Shares through the Placing at the Placing Price of 12.5 pence per share. The Placing is not being underwritten. The Bookrunner, as the Company's agent, has procured irrevocable commitments to subscribe for the full amount of Placing Shares from subscribers in the Placing, and there are no conditions attached to such irrevocable commitments other than Admission. The Net Placing Proceeds after deduction of expenses, will be £2.5 million on the basis that the gross proceeds of the Placing will be £2.6 million. The Placing is conditional upon, inter alia:
	(a) the Placing Agreement becoming wholly unconditional (save as to Admission) and not having been terminated in accordance with its terms prior to Admission; and (b) Admission occurring by 8:00 a.m. on 16 December 2019 (or such later date as the Company and the Bookrunner may agree, not being later
	than 4:30 p.m. on 31 December 2019). The Placing Shares will, upon issue, rank pari passu with the Ordinary Shares. If Admission does not proceed, the Placing will not proceed and all monies paid will be refunded to subscribers. Admission is conditional upon the Placing and should the Placing Agreement be terminated prior to Admission, Admission will not take place. The Placing is not being underwritten.
Expected timetable of the offer	Publication of this prospectus 11 December 2019 Latest time and date for placing commitments under the Placing 2:30 p.m. on 5 December 2019 Admission and commencement of dealings in Ordinary Shares 8:00 a.m. on 16 December 2019 CREST members' accounts credited in respect of Placing Shares 16 December 2019 Share certificates despatched in respect of Placing Shares by 2 January 2020
Details of admission to trading on a regulated market	Applications will be made for the Ordinary Shares to be admitted to a Standard Listing on the Official List and to trading on the Main Market of the London Stock Exchange. It is expected that Admission will become effective and that dealings in Ordinary Shares will commence at 8:00 a.m. on 16 December 2019.
Plan for distribution	The Placing Shares which are the subject of this document will be offered by the Bookrunner exclusively to Qualified Investors and/or Relevant Persons. There will be no offer to the public of the Ordinary Shares and no intermediaries offer.
Amount and percentage of immediate dilution resulting from the offer	Shareholdings immediately prior to Admission will be diluted by approximately 307% as a result of Placing Shares issued pursuant to the Placing.
Estimate of total expenses of the issue and/or offer	The expenses of the Placing will be borne by the Company in full and no expenses will be charged to the investor by the Company. These expenses (including commission and expenses payable under the Placing Agreement, registration, listing and admission fees, printing, advertising and distribution costs and professional advisory fees, including legal fees, and any other applicable expenses) are not expected to exceed £0.1 million representing approximately 4.2% of the aggregate of the £2.6 million in gross proceeds of the Placing. The total Net Placing Proceeds on this basis are approximately £2.5 million.
Why is this prospectus being produced?
Reasons for the offer or for the admission to trading on a regulated market	The Company retained the Bookrunner to conduct a Placing.
Use and estimated net amount of the proceeds	The Company has raised gross proceeds of £2.6 million pursuant to the Placing and a further £1.0 million proceeds from Facility A of the Convertible Loan Agreement. The Bookrunner, as the Company's agent, has procured irrevocable commitments to subscribe for the full amount of Placing Shares from subscribers in the Placing. The costs and expenses of the Placing will be borne by the Company in full. These expenses (including commission and expenses payable under the Placing Agreement, registration, listing and Admission fees, printing, advertising and distribution costs and professional advisory fees, including legal fees, and any other applicable expenses) are not expected to exceed £0.1 million, representing approximately 4.2% of the gross proceeds of the Placing. The total net placing proceeds on this basis will be £2.5 million (the ''Net Placing Proceeds''). Pembridge will use the Net Placing Proceeds, together with £1.0 million proceeds from Facility A of the Convertible Loan Agreement, to loan Minto £2.3 million, held in restricted cash for collateral towards a surety bond, and the remainder will be allocated towards general and administrative functions at its office in London and to cover the costs of Admission.
Indication of whether the offer is subject to an underwriting agreement	The Placing is not being underwritten. The Bookrunner, as the Company's agent, has procured irrevocable commitments to subscribe for the full amount of Placing Shares from subscribers in the Placing, and there are no conditions attached to such irrevocable commitments other than Admission.
Indication of the most material conflicts of interests relating to the offer or admission to trading	Not applicable.

PART II

RISK FACTORS

Investment in the Company and the Ordinary Shares carries a significant degree of risk, including risks in relation to the Company's business strategy, risks relating to taxation and risks relating to the Ordinary Shares.

Prospective investors should note that the risks relating to the Company and its subsidiaries from time to time (the ''Group''), its industry and the Ordinary Shares summarised in Part I – Summary of this document are the risks that the Directors believe to be the most essential to an assessment by a prospective investor of whether to consider an investment in the Ordinary Shares. However, as the risks which the Group faces relate to events and depend on circumstances that may or may not occur in the future, prospective investors should consider not only the information on the key risks summarised in Part I – Summary of this document but also, inter alia, the risks and uncertainties described below.

The risks referred to below are those risks the Company and the Directors consider to be the material risks relating to the Group. However, there may be additional risks that the Group and the Directors do not currently consider to be material or of which the Group and the Directors are not currently aware that may adversely affect the Group's business, financial condition, results of operations or prospects. Investors should review this document carefully and in its entirety and consult with their professional advisers before acquiring any Ordinary Shares. If any of the risks referred to in this document were to occur, the results of operations, financial condition and prospects of the Group could be materially adversely affected. If that were to be the case, the trading price of the Ordinary Shares and/or the level of dividends or distributions (if any) received from the Ordinary Shares could decline significantly. Further, investors could lose all or part of their investment.

PART A – RISK FACTORS SPECIFIC AND MATERIAL TO THE COMPANY RISK FACTORS RELATING TO THE GROUP AND ITS ACTIVITIES

The Investor Consortium Financing Agreement

Pursuant to the Investor Consortium Financing Agreement, the Investor Consortium has committed US\$10 million to Minto, which is being utilised to recommence operations at the Minto Mine. The principal amount of US\$10 million carries an interest rate of 8% per annum, but does not entitle the Investor Consortium to any voting rights in the capital of Minto. All free cash-flows from Minto will be applied to the repayment of that principal amount and any accrued interest. Following the repayment of such sums, the Investor Consortium will have an interest equal to two-thirds of the economic value of Minto including two-thirds of all free cash-flows from Minto, and the Company will be entitled to one-third of the economic value of Minto, including the Company Cash-flow Entitlement.

However, if the Minto Joint Advisory Committee is of the view that additional funding is required to meet Minto's short-term working capital commitments, then the Minto Joint Advisory Committee in its reasonable opinion may request the first US\$3 million in additional funding in the form of an interest-free loan from the Company, which the Company is obliged to pay within 90 days of receipt of such a request. Should the Company be unable to pay such sum in response to a funding request notice within the 90 day notice period of receipt of such a request, the Company Cash-flow Entitlement will be reduced pro rata to 11% (i.e., the Company will forego 22.3% of all free cash-flows from Minto), and will be further diluted by any new funds provided by the Investor Consortium if not matched pro rata by the Company in response to further such funding requests. Any additional funds that would be provided by the Investor Consortium in those circumstances would be added to the remainder of the US\$10 million principal amount on an interest-free basis, and will receive priority repayment out of free cash-flows from Minto. Should the additional funding be paid by Pembridge in response to a funding request, the additional amount will be repayable to Pembridge together with 8% annualised interest out of all free cash-flows from Minto after the monies owed to the Investor Consortium under the Investor Consortium Financing Agreement are repaid in full. For the avoidance of doubt, the Investor Consortium does not have and will not be entitled to any voting rights in Minto pursuant to the Investor Consortium Financing Agreement.

Following 90 days from the completion of Minto Acquisition, the Company will contribute CAD\$1 million per quarter in restricted cash until the Recommencement of Commercial Production, after which Minto will contribute CAD\$1 million until a total of CAD\$10 million of surety bond collateral has been achieved. The first such CAD\$1 million contribution was made by the Company on 4 September 2019.

There can be no assurance that the Company will be able to meet any funding request from the Investor Consortium under the Investor Consortium Financing Agreement, and if it is unable to do so, it could experience a material adverse effect on its business, financial condition or results of operations.

Mining and land usage licences

Exploration, mining and processing activities are dependent upon the grant, renewal, continuance or maintenance in force of appropriate permits, licences, concessions, leases and regulatory consents, in particular the Group's mining licences, which may be valid only for a defined time period and subject to limitations or other conditions related to operational activities. The Group will hold a number of mining licences as at the date of Admission, the conditions relating to which are currently being complied with by Minto. The Directors are confident that the Company will fulfil the necessary conditions to maintain the good standing of the mining licences, in particular those relating to the Minto Mine, in order to continue to be able to execute the business strategy of the Group. If the Group fails to fulfil the specific terms of any of its mining licences or if it operates its business in a manner that violates applicable law, government regulators may impose fines or suspend or terminate the right, concession, licence, permit or other authorisation, any of which could have a material adverse effect on the Group's results of operations, cash flows and financial condition.

Infrastructure

The continued commercialisation of the Minto Mine will depend to a significant degree on adequate infrastructure. Following additional due diligence, should the Board decide to proceed with plans for operational change and future development plans and other process upgrades, significant additional funding may be required to develop any associated infrastructure. Such infrastructure may include additional plant and machinery, minehead equipment and apparatus and extensions to existing site roads and mine site buildings. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure or any failure or unavailability in such infrastructure could materially adversely affect the Group's operations, financial condition and results of operations.

Development and operating risks

The Group's profitability will depend, in part, on the actual economic returns and the actual costs of operating the Minto Mine, which may differ significantly from the Group's current estimates. The development of the Minto Mine may be subject to unexpected problems and delays. The Group's decision to develop a mineral property is typically based, in the case of an extension or, in the case of a new development, on the results of a feasibility study. Feasibility studies derive estimates of expected or anticipated project economic returns. These estimates are based on assumptions about future commodity prices, anticipated tonnage, grades and metallurgical characteristics of ore to be mined and processed, anticipated recovery rates of the mineral from the ore, anticipated capital expenditure and cash operating costs and the anticipated return on investment.

Actual cash operating costs, production and economic returns may differ significantly from those anticipated by such studies and estimates. There are a number of uncertainties inherent in the development and construction of any new mine and the further commercialisation of the Minto Mine. These uncertainties include: the timing and cost, which can be considerable, of the construction of mining and processing facilities; the availability and cost of skilled labour, power, water, consumables and transportation facilities, the availability and cost of appropriate smelting and refining arrangements, the need to obtain necessary environmental and other governmental permits and the timing of those permits, and the availability of funds to finance construction and development activities, as referred to elsewhere in this Part II – Risk Factors of this document.

General risks and uncertainties relating to operating in remote areas

The Minto Mine is located in the Yukon, a remote area of Northern Canada and accordingly the Group will be subject to the risks and uncertainties associated with operating in such an environment. These risks and uncertainties include, but are not limited to periods, particularly in winter, when the Minto Mine may become inaccessible by road or river, causing significant disruption to deliveries of suppliers, labour and equipment and of concentrate for sale. Stockpiling is the only feasible solution to this problem which may impact cashflows. Workers may demand enhanced levels of pay for working in extreme conditions and, at times, the Company may be paying staff and workers who are economically inactive due to weather conditions necessitating a supervision of operations, which may last for some weeks in extreme cases.

Concentrate is exported from the Minto Mine by barge between June through October/November, and the Yukon River can remain frozen from as early as November to as late as April. Whilst an ice bridge operates between January to early April, weather conditions can require processed concentrate to be stockpiled on site. This may impact cashflows and there may be limits on the amount of concentrate that can be physically stockpiled on site.

Minto has entered into an agreement with Sumitomo Canada and an agreement with Wheaton to sell the metal bearing concentrates produced at the Minto Mine which rely upon the Group's ability to generate production of mineral bearing material and the ability of the Group's contractual counterparties to meet their obligations

As of the date of this document, Minto has signed agreements for the sale of metal bearing concentrates, which comprise the Wheaton Purchase Agreement and the Off-Take Agreement. The Off-Take Agreement is for the total purchase of up to 55,000 DMT of copper concentrate. The Wheaton Purchase Agreement extends to all of the silver and gold produced for the life of the Minto Mine (whether contained in copper concentrate or gold concentrate). The Group's ability to successfully realise the economic benefits of such agreements is subject to certain risks and conditions, which could materially impact the economic value of these agreements to the Group or even result in the termination thereof.

Under these agreements, Sumitomo Canada and Wheaton have agreed to purchase an amount of material from the Minto Mine. However, there can be no assurance that the Minto Mine will continue to produce copper, gold and silver bearing concentrates in sufficient quantities for the Group to meet its obligations in the timeframes set out in these agreements. In addition, these agreements may provide that the price to be paid by its customers for at least a portion of the volume is linked to the market price of various minerals and deleterious material contained in material sold.

In the event that the Group is unable to meet any of its obligations under these agreements or any of the conditions imposed by these agreements, the economic value of these commitments to the Group would decrease. If this agreement were to be terminated or re-negotiated (for example, for failure to achieve a level of production or force majeure), there can be no assurances that the Group will be able to enter into similar agreements with other counterparties.

Furthermore, these agreements expose the Group to any inability of its two key counterparties to pay for their commitments or otherwise fulfil their obligations under such agreements. If either of these key counterparties were to experience financial or liquidity issues, and were unable to pay their committed amounts to the Group in a timely manner or at all, the Group may have no alternative other than to sell the relevant volume of material in the open market. There can be no assurance that the Group would be able to effect those sales at prices comparable to those agreed in these agreements, or at all. If the Group is unable to make up any shortfall in revenue anticipated under these agreements, it could experience a material adverse effect on its business, financial condition or results of operations.

Following Admission, the Group's financial results could be adversely affected by changes in foreign currency exchange rates

From Admission, the functional currency of the Group is expected to be US dollars. A majority of the Group's operating costs will be denominated in Canadian dollars, whilst the majority of the Group's revenues will be denominated in US dollars.

Therefore, fluctuations in exchange rates of the US dollar against other currencies in which the Group may generate revenue and/or incur expenses may materially affect the Group's translated results of operations. This may increase or decrease the results of operations and may adversely affect the Group's financial condition as stated in US dollars. In addition, the Group may not be able to effectively hedge certain cash resources against risks associated with currency exchange rates and/or commodity prices. Any significant adverse fluctuations in currency rates could have a material adverse effect on the Group's business, financial condition, results of operations and prospects.

The Company's ability to cover the costs of its general and administrative functions at its office in London in the longer term will depend on the Company receiving sufficient funds by way of the Company Cash-flow Entitlement, or it raising sufficient funds from alternative sources

The Company is a holding company and its ability to cover the costs of its general and administrative functions at its office in London after the 12 month period following the date of this document will be dependent on it receiving sufficient funds from Minto by way of the Company Cash-flow Entitlement. The Directors estimate the costs of the Company's general and administrative functions at its office in London to be a minimum of approximately £1.1 million for the 12 month period following the date of this document. The Directors further expect such costs to continue at a similar minimum level thereafter, save that there is a specific debt of £0.4 million in professional adviser fees that have been deferred by mutual agreement with such professional advisers, which will fall due in December 2020.

The timing and value of the Company Cash-flow Entitlement is uncertain and depends on, inter alia, realised prices for copper and precious metals and the volumes of materials mined and processed by Minto. In the event that, after the 12 month period following the date of this document, the Company does not receive sufficient funds from Minto by way of the Company Cash-flow Entitlement to cover the costs of its general and administrative functions at its office in London, the Company may require external funding from banks, the capital markets or other sources in order to provide additional working capital, or to restructure payments to its creditors. Such external funding may take time to negotiate or arrange and may not be available on acceptable terms, or at all.

The Directors consider that should the Company not receive sufficient funds from Minto by way of the Company Cash-flow Entitlement to cover the costs of the general and administrative functions in its office in London, then the Company will be able to access alternative sources of funding to remedy any shortfall on a timely basis, and therefore that the risk of the Company being unable to cover such costs in a timely manner is low. Should such external funding not be available, and the Company be unable to restructure payments to its creditors, this could limit the scope of activities that may be undertaken by the Company and negatively impact its ability to operationally implement the Group's strategy of further developing the area around the Minto Mine and creating underground extensions to extend the life of the Minto Mine. Should none of the above funding or restructuring options be available, then this could potentially affect the solvency of the Company and its ability to continue as a going concern. However, given the variety of alternative sources of funding options available to the Company, the Directors consider that the likelihood of this risk crystallising is very low.

For the avoidance of doubt, nothing in this risk factor constitutes a qualification of the working capital statement contained in paragraph 16 of Part XVI – Additional Information of this document.

The Group has budget for all near and short term activities and plans, but may require additional capital in the longer term to complete further exploration, development and production plans and initiatives, and this capital might not be available at all, on favourable terms or in sufficient amounts

The Group's strategy is to further develop the area around the Minto Mine and create underground extensions to extend the life of the Minto Mine. The Group has budget for all near and short term activities and plans, however in the longer term the potential for further exploration, development and production plans and additional initiatives may arise, which have not currently been identified and which may require additional financing which may not be available to the Group when needed, on acceptable terms, or at all. If the Group is unable to raise additional capital when needed or on suitable terms, the Group could be forced to delay, reduce or eliminate its exploration, development and production efforts. Furthermore, any additional equity fundraising in the capital markets may be limited due to disruption or uncertainty in the capital markets or may be dilutive for Shareholders. Any additional debt-based funding, should it be achievable, may bind the Group to restrictive covenants and curb its operating activities and ability to pay potential future dividends even when profitable. Finally, changes in interest rates could have an adverse impact on the Group's business by increasing the cost of capital and may negatively impact the Group's ability to secure financing on favourable terms. Any of these events could have a material adverse effect on the Group's business, financial condition, results of operations and prospects.

The Group will be subject to competition for its skilled personnel and challenges in attracting and retaining key personnel, including the Directors and Senior Managers could impair the Group's ability to conduct and grow its operations effectively

The Group's ability to compete in the competitive natural resources sector depends upon its ability to retain and attract highly qualified management, geological and technical personnel. The loss of key management and/or technical personnel could delay the development of the Group's assets and negatively impact the ability of the Group to compete in the resources sector. In addition, the Group will need to recruit new managers and key personnel to develop its business as and when it expands into fields which require additional skills. Other resource companies that it competes against for qualified personnel may have greater financial and other resources, different risk profiles or longer track records than the Group. If this competition is very intense, the Group might not be able to attract or retain these key persons on conditions that are economically acceptable. Therefore, the inability of the Group to retain and attract such key persons could prevent it from achieving its objectives overall which could have a material adverse effect on its business, financial condition, results of operations and prospects.

The Group is subject to environmental laws and regulations, and any violation of, litigation relating to or liabilities under these laws and regulations could have a material adverse effect on the Group

The Group's operations are subject to various governmental and regional environmental laws concerning, inter alia, water discharges, air emissions, waste management, toxic use reduction and environmental clean-up. Environmental laws and regulations continue to evolve, and it is likely the environmental laws and standards that regulate the Group's operations will continue to be increasingly stringent in the future, particularly under air quality and water quality laws and standards related to climate change issues, such as the reporting of greenhouse gas emissions. The Group is required to comply with environmental laws and the terms and conditions of any environmental permits and the failure to comply with these laws and/or permits, or any other applicable laws or permits, could result in fines and penalties, interruptions in operations or the need to install pollution control equipment that could be costly. The Group may be required to make additional expenditures, which could be significant, relating to environmental matters on an ongoing basis.

Reliance on third parties

The Group will be reliant on third party providers and suppliers to provide the services, equipment, infrastructure and raw materials required for the Group's business and operations and there can be no assurance that such third parties will be able to provide such services in the time scale and at the cost anticipated by the Company.

Foreign subsidiaries

The Group will conduct all of its mining operations through its subsidiaries located outside of the United Kingdom. Therefore, if the Group is successful in mining operations, distributions to Shareholders will ultimately be dependent on the ability of the Group to transfer funds to the Company. The ability of a subsidiary to make payments to the Company may be constrained by, inter alia, the level of taxation, particularly in relation to corporate profits and withholding taxes.

Unfavourable general economic conditions may have a negative impact on the results of operations, financial condition and prospects of the Group's assets

The global financial and commodity markets are experiencing continued volatility and geopolitical issues and tensions continue to arise. Many Organisation for Economic Co-operation and Development countries have continued to experience recession or negligible growth rates, which have had, and may continue to have, an adverse effect on consumer and business confidence. The resulting low consumer and business confidence has led to low levels of demand for many products across a wide variety of industries, including those industries for which commodities in the resources sector are an important raw material. The Group cannot predict the severity or extent of such recessions and/or periods of slow growth. Accordingly, the Group's estimates of results, operations or financial condition of its assets will be uncertain and may be adversely impacted by unfavourable general global, regional and national macroeconomic conditions.

For more information about the effect of general global, regional or national macroeconomic deterioration on the mining sector, see ''Risks Relating to the Mining Sector – Global supply and demand changes due to a potential economic downturn may adversely affect the business, cash flows, results of operations and financial condition of the Group'' below.

RISKS FACTORS RELATING TO THE MINING SECTOR

Recovery, Mineral Resource and Mineral Reserve estimates may prove inaccurate

There are numerous uncertainties the Group faces that are inherent in estimating quantities of reserves and cash flows to be derived therefrom, including many factors that are beyond the control of the Group. Estimation of Mineral Reserves and Mineral Resources (which cannot be measured in an exact manner) is a subjective process aimed at understanding the statistical probabilities of recovery.

The interpretation and estimates of the amounts of Mineral Reserves and Mineral Resources are subjective and the results of drilling, testing and production subsequent to the date of any particular estimate may result in substantial revisions to the original interpretation and estimates. Moreover, different mining engineers may make different estimates of Mineral Reserves, Mineral Resources and cash flows based on the same available data. Actual production, revenues and expenditures with respect to Mineral Reserves and Mineral Resources will vary from estimates, and the variances may be material.

In general, estimates of economically recoverable Mineral Reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability, grade, royalty rates, assumed effects of regulation by governmental agencies and future operating costs, all of which may vary from actual results. All such estimates are, to some degree, speculative, and classifications of reserves are only attempts to define the degree of speculation involved. For those reasons, estimates of the economically recoverable reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and estimates of future net revenues expected therefrom prepared by different engineers, or by the same engineers at different times, may vary. The Group's actual production, revenues and development and operating expenditures with respect to its reserves will vary from estimates thereof, and such variations could be material.

Estimates of proven and probable Mineral Reserves that may be developed and produced in the future are often based upon volumetric estimates without the benefit of actual production history. Estimates based solely on volumetric methods are, in some cases, more uncertain than estimates also supported by actual production history. The estimates assume that the Group's assumptions as to its capital expenditure and operating costs are accurate and that the capital expenditure strategy of the Group is successfully implemented by it. There can be no assurance that actual capital expenditures will not vary significantly from current estimates or that the Group will be able to implement its capital expenditure strategy on the timetable currently envisaged.

Furthermore, there are also numerous uncertainties in estimating the timing and quantity of development expenditures and associated production projections. The production profiles and development plans in this document are based on a number of assumptions which, together with the estimates, may prove to be materially incorrect.

If the actual Mineral Reserves or Mineral Resources of the Group are less than the current estimates or of lesser quality than expected, the Group may be unable to recover and produce the estimated levels or grade of its commodities and, as a result, the Group may not recover its initial outlay of capital expenditures and operating costs of any such operation and there may be a material adverse effect on the business, prospects, financial condition or results of operations of the Group.

Global supply and demand changes due to a potential economic downturn may adversely affect the business, cash flows, results of operations and financial condition of the Group

Global supply and demand affects commodity prices. Widespread trading activities by market participants, seeking either to secure access to commodities or to hedge against commercial risks, affects commodity prices as well. Consequently, commodity prices are subject to substantial fluctuations and cannot be accurately predicted.

The current global economic environment and the volatility of international markets have caused governments and central banks to undertake unprecedented interventions designed to stabilise global and domestic financial systems, stimulate new lending and support structurally important industries and institutions, such as banks, which are at risk of failing. Many developed economies have experienced recessions over the past several years and growth has slowed in many emerging economies with serious adverse consequences for asset values, employment levels, consumer confidence and levels of economic activity. Numerous governments and central banks have responded to these economic conditions by proposing programmes to make substantial funds and guarantees available to boost liquidity and confidence in their financial systems. It is not known whether these responses will be effective in addressing the economic and market conditions that exist at present. The impact of the reversal or withdrawal of such programmes is also uncertain.

Any further deterioration of the global economic environment could have a material adverse effect on the Group's business, results of operations and financial condition, particularly to the extent it impacts upon the price of the Group's commodities.

A material decline in commodity prices globally may adversely affect the Group's business, prospects, financial condition and results of operations

It is the Group's strategy to derive its revenue from the production of commodities. Accordingly, the Group's revenues, profitability and future rate of growth will depend substantially on the prevailing price of these commodities, which can be volatile and subject to fluctuation. At the Minto Mine, changes in copper prices will directly affect the Group's revenues and net income.

The price for commodities is subject to fluctuation and volatility in response to a variety of factors beyond the Group's control, including, but not limited to:

• * changes in the global and regional supply and demand for commodities and expectations regarding future supply and demand for commodities;
• * changes in global and regional economic conditions and exchange rate fluctuations;
• * political, economic and military developments in commodity producing regions;
• * prevailing weather conditions;
• * geopolitical uncertainty;
• * the extent of government regulation and actions, in particular export restrictions and taxes;
• * the ability of suppliers, transporters and purchasers to perform on a timely basis, or at all, under their agreements (including risks associated with physical delivery); and
• * potential influence on commodity prices due to the large volume of derivative transactions on commodity exchanges and over-the-counter markets.

It is impossible to predict accurately future commodity price movements. The Group can give no assurance that existing prices will be maintained in the future. At the Minto Mine, any material decline in the copper price will result in a reduction of its net production revenue and a decrease in the valuation of its exploration, appraisal, development and production properties. The economics of producing from some mines may change as a result of lower prices, which could result in a reduction in the production quantities. Any of these factors could potentially result in a material decrease in the Group's net production revenue and the financial resources available to it to fund operations, make planned capital expenditures, and service its financial obligations resulting in a material adverse effect on its future financial condition, business, prospects and results of operations.

In addition, should relevant commodity prices increase significantly, governments or other counterparties may want to change their commercial terms with the Group. This may result in cancellation, termination or a unilateral change of terms (such as a change in commodity pricing policy or the renegotiation or nullification of existing agreements) by a government or counterparty, which could have a material adverse effect on the Group's future business, prospects, financial condition and results of operations.

The Group's cash flows and results of operations may be adversely affected by inflation and other cost increases

The Group will be unable to control the market prices of any commodities produced in its operations and may be unable to pass on increased production costs to customers. Therefore, significant inflation or other production cost increases in the countries in which the Group currently operates and may operate and in the future could increase operational costs without a corresponding increase in the sales prices of the commodities the Group may produce. Moreover, an interruption in the reduction of input costs relative to decreasing commodity prices will have a similar negative impact on the Group's operations. Any such elevated costs or postponements in cost reductions may negatively affect the Group's profitability, cash flows and results of operations.

Historical trends have shown that, at times of high commodity prices, the costs of mining service providers have also typically increased. Whilst the primary commodity price risk to the Group remains the situation of prolonged weak or falling prices, Shareholders should note that it is reasonable to expect the Group's cost base to also increase should commodity prices rise substantially from their current levels.

Activities in the mining sector can be dangerous and may be subject to interruption

The Group's operations are subject to the significant hazards and risks inherent in the mining sector and countries in which it operates. These hazards and risks include:

• * explosions and fires;
• * disruption to production operations;
• * natural disasters;
• * equipment break-downs and other mechanical or system failures;
• * improper installation or operation of equipment;
• * transportation accidents or disruption of deliveries of fuel, equipment and other supplies;
• * acts of political unrest, war or terrorism;
• * labour disputes; and
• * community opposition activities.

In addition, the Group's future operations will be subject to all of the risks normally incidental to the development of mines and the operation and development of mining properties, including encountering unexpected formations, equipment failures and other accidents (including vehicle accidents during equipment moves), adverse weather conditions, diseases impacting the health of personnel, pollution and other environmental risks.

If any of these events were to occur, they could result in environmental damage, injury to persons and loss of life and a failure to produce commodities in commercial quantities. They could also result in significant delays to mining programmes, a partial or total shutdown of operations, significant damage to the Group's equipment and equipment owned by third parties and personal injury or wrongful death claims being brought against the Group. These events could also put at risk some or all of the Group's licences which enable it to explore and develop, and could result in the Group incurring significant civil liability claims, significant fines or penalties, as well as criminal sanctions potentially being enforced against the Group and/or its officers.

In addition, the Group's operations, as well as the transport and other logistics on which the Group is dependent, may be adversely affected and severely disrupted by climatic conditions. Natural disasters or adverse conditions may occur in those geographical areas in which the Group operates, including severe weather, earthquakes, cyclones, excessive rain or snowfall, winter storms and blizzards, floods, bridge or road washouts and droughts.

Safety, health and environmental exposures and related regulations may expose the Group to increased litigation, compliance costs, interruptions to operations, unforeseen environmental remediation expenses and loss of reputation

The mining sector involves extractive enterprises. These endeavours often make the sector a hazardous industry. The industry is highly regulated by health, national, provincial and regional safety and environmental laws. The Group's operations may be subject to these kinds of governmental regulations in any region in which it operates. Operations are subject to general and specific regulations and restrictions governing mining and processing, land tenure and use, environmental requirements (including site specific environmental licences, permits and remediation requirements), workplace health and safety, social impacts and other laws.

The Group's operations may create environmental risks including dust, noise or leakage of polluting substances from its operations. Failing to adequately manage environmental risks or to provide safe working environments could cause harm to the Group's employees or the environment surrounding the site of operations. Facilities are subject to closure by governmental authorities and the Group may be subject to fines and penalties, liability to employees and third parties for injury, statutory liability for environmental remediation and other financial consequences, which may be significant. The Group may also suffer impairment of reputation, industrial action or difficulty in recruiting and retaining skilled employees. Subsequent changes in regulations, laws or community expectations that govern the Group's operations could result in increased compliance and remediation costs. Any of the foregoing developments could have a materially adverse effect on the Group's results of operations, cash flows or financial condition.

The Group's insurance and indemnities, if and when put in place, may not adequately cover all risks or expenses

The Group will maintain insurance cover with respect to its operations in accordance with international mining practice, including third party liability insurance up to specified limits. However, the Group will be unable to insure against all risks and may be exposed under certain circumstances to uninsurable hazards and risks which may result in financial liability, property damage, personal injury or other hazards or liability for the acts or omissions of sub-contractors, operators and joint venture partners. Although indemnities may in the future be provided by subcontractors, operators and joint venture partners, such indemnities may be difficult to enforce given the financial positions of those giving the indemnities or due to the jurisdiction in which the Group may seek to enforce the indemnities, potentially leaving the Group exposed to claims by third parties.

There is also no guarantee that the Group will be able to maintain adequate insurance cover in the future at rates the Group considers reasonable. Accordingly, the Group could incur substantial losses if an event which is not fully covered by insurance occurs, which would have a material adverse effect on the Group's business, results of operations and financial condition.

Environmental liabilities could be significant

Significant liability could be imposed on the Group for damages, clean-up costs or penalties in the event of certain discharges into the environment, environmental damage caused by previous owners of properties purchased or used by the Group, acts of sabotage by third parties or noncompliance with environmental laws or regulations by the Group. Such liabilities could have a material adverse effect on the Group. It is expected that additional environmental protection laws will be implemented in the future. It is not possible to predict what future environmental regulations will provide; however, these laws could impose additional obligations on the Group which may, for example, result in the Group incurring significant expenditures for the installation and operation of pollution control systems, as well as equipment for remedial measures and a penalty regime in the event of a breach of those laws, which could adversely affect the Group's business, financial condition and results of operations. It is also not possible to predict how environmental regulations will be applied or enforced in the future.

Furthermore, no assurance can be given that changes to environmental laws and regulations outside the Group's control will not result in a curtailment of production, a material increase in the cost of production, development or exploration activities, or increase compliance and remediation costs or otherwise adversely affect the Group's business, financial condition, results of operations or prospects.

The Group's inability to discover new reserves, enhance existing reserves or adequately develop new projects could adversely affect the Group's business

Exploration and development work is capital intensive, speculative and often unproductive, but may be necessary for the Group's business. There may be many reasons why the Group may not be able to find reserves or develop them for commercially viable production. For instance, factors such as adverse weather conditions, natural disasters, equipment or services shortages, procurement delays or difficulties arising from the environment and other conditions in the areas where the reserves are located or through which production is transported may increase costs and make it uneconomical to develop potential Mineral Reserves. Failure to discover new Mineral Reserves, to maintain existing mineral rights, to enhance existing Mineral Reserves or to extract Mineral Resources from such reserves in sufficient amounts and in a timely manner could materially and adversely affect the Group's results of operations, cash flows, financial condition and prospects. In addition, the Group may not be able to recover the funds used in any exploration programme to identify new opportunities.

Increasingly stringent requirements relating to regulatory, environmental and social approvals can result in significant delays in construction of additional facilities and may adversely affect new mining projects, the expansion of existing operations and, consequently, the Group's results of operations, cash flows and financial condition, and such effects could be material.

Natural disasters may affect mining operations and have a material impact on the productivity of the operations and may not be covered by insurance

Natural disasters, including earthquakes, drought, floods, fire, extreme winter weather and the physical effects of climate change, all of which are outside the Group's control, may adversely affect the Group's operations. Operating difficulties, such as unexpected geological variations that could result in significant failure, could affect the costs and feasibility of its operations for indeterminate periods. Damage to or breakdown of a physical asset, including as a result of fire, explosion or natural catastrophe, can result in a loss of assets and financial losses. Insurance (if arranged by the Group) may provide protection from some, but not all, of the costs that may arise from unforeseen events but the occurrence of a significant adverse event not fully covered by insurance could have a material adverse effect on the Group's business, results of operations, financial condition and prospects.

Labour disruptions could adversely affect the Group's results of operations, cash flows and financial condition

The potential for conflict with employees may occur at any one of the Group's operations or in any regions in which the Group operates. Labour interruptions may be employed to advocate labour, political or social goals. Labour interruptions have the potential to increase operational costs and decrease revenues by suspending the business activities or increasing the cost of substitute labour, which may not be available. If such disruptions are material, they may adversely affect the Group's results of operations, cash flows and financial condition.

Shortages and disruptions in lead times to deliver certain key inputs may adversely affect the Group's operations

The Group's inability to timely acquire strategic consumables, raw materials, drilling and processing equipment could have an adverse impact on any results of operations and financial condition especially during the freeze-up and break-up of the Yukon River, during autumn and spring. Periods of high demand for supplies can arise when availability of supplies is limited. This can cause costs to increase above normal inflation rates. Interruption to supplies or increase in costs could adversely affect the operating results and cash flows of the Group.

The Group's future growth potential could be adversely affected if it fails to manage relationships with local communities, First Nations groups, government and non-government organisations

The public is increasingly concerned about the perceived negative effects of globalisation. Consequently, businesses often face increasing public scrutiny of their operations. Communities may perceive the Group's operations as disadvantageous to their environmental, economic or social circumstances. Negative community reaction to such operations could have a materially adverse impact on the cost, profitability, ability to finance or even the viability of an operation. Such events could also lead to disputes with national or local governments or with local communities and give rise to material reputational damage. Moreover, the Group may choose to operate in regions where ownership of rights with respect to land and resources is uncertain and where disputes in relation to ownership or other community matters may arise. The inherent unpredictability in these disputes may cause disruption to projects or operations. Natural resources operations can also have an impact on local communities, including the need, from time to time, to relocate communities or infrastructure networks such as railways and utility services. Failure to manage relationships with local communities, government and non-government organisations may adversely affect the Group's reputation, as well as its ability to produce from its projects, which could in turn affect the Group's revenues, results of operations and cash flows.

Exploration, development and production activities are capital intensive and inherently uncertain in their outcome. As a result, the Group may not generate a return on its investments or recover its costs and it may not be able to generate cash flows or secure adequate financing for its discretionary capital expenditure plans

Exploration, development and production activities are capital intensive and inherently uncertain in their outcome. The Group's future projects may involve unprofitable efforts, due either to unsuccessful drilling campaigns or from mines that are productive but do not produce sufficient net revenues to return a profit after development, operating and other costs. Furthermore, completing the development of a mine does not guarantee a profit on the investment or recovery of the costs associated with that mine. In addition, drilling hazards or environmental damage could significantly affect operating costs, and production from successful mines may be adversely affected by conditions including delays in obtaining governmental approvals or consents. Production delays and declines, whether or not as a result of the foregoing conditions, may result in lower revenue or cash flows from operating activities until such time, if at all, that the delay or decline is cured or arrested. In the event that such cash flows are reduced in the future, the Group may be forced to scale back or delay discretionary capital expenditure resulting in delays to, or the postponement of, the Group's planned production and development activities which could have a material adverse effect on its business, results of operations, financial condition or prospects.

PART B – RISKS FACTORS RELATING TO TAXATION

Taxation of returns from assets located outside of the UK may reduce any net return to investors

To the extent that the assets, companies or businesses which the Company has acquired or may acquire is or are established outside the UK, it is possible that any return the Company receives from them may be reduced by irrecoverable foreign withholding or other local taxes and this may reduce any net return derived by investors from a shareholding in the Company.

Future changes in tax legislation applicable to the Company's entities may reduce net returns to Shareholders

The tax treatment of the Group's entities is subject to changes in tax legislation or practices in territories in which such Group entities are resident for tax purposes. Such changes may include (but are not limited to) the taxation of operating income, investment income, dividends received or (in the specific context of withholding tax) dividends paid. Any changes to tax legislation or practices in jurisdictions in which the Group's entities are resident for tax purposes may have a material adverse effect on the financial position of the Company, reducing net returns to Shareholders. In many jurisdictions, the resources sector is subject to particular taxation regimes which sometimes impose a comparatively heavy burden on activities within the sector and the comments made above with regard to change are particularly salient in relation to such regimes.

There can be no assurance that the Company will be able to make returns to Shareholders in a tax-efficient manner

It is intended that the Company will structure the Group to maximise returns for Shareholders in as fiscally efficient a manner as is practicable. The Company has made certain assumptions regarding taxation. However, if these assumptions are not borne out in practice, taxes may be imposed with respect to any of the Company's assets, or the Company may be subject to tax on its income, profits, gains or distributions in a particular jurisdiction or jurisdictions in excess of taxes that were anticipated. This could alter the post-tax returns for Shareholders (or Shareholders in certain jurisdictions). The level of return for Shareholders may also be adversely affected. Any change in laws or tax authority practices could also adversely affect any post-tax returns of capital to Shareholders or payments of dividends (if any, which the Company does not envisage the payment of, at least in the short to medium-term). In addition, the Company may incur costs in taking steps to mitigate any such adverse effect on the post-tax returns for Shareholders.

Any change in the Company's tax status or in taxation law could negatively affect the Company's ability to provide returns to Shareholders

Statements in this document concerning the taxation of the Group or Shareholders, and applicable tax rates, are based on current tax law and practice, which are subject to change. The taxation of an investment in the Company also depends on the individual circumstances of the relevant Shareholder. Any Shareholder who is in any doubt as to its tax position should consult an appropriate adviser.

PART C – RISKS FACTORS RELATING TO THE ORDINARY SHARES

The Company may be required to raise cash through issuing substantial additional equity, which may dilute the percentage ownership of a Shareholder and the value of its Ordinary Shares

The Directors believe that further equity capital raisings may be required by the Company in order to develop the Minto Mine, which may be substantial. In addition, when the Company does offer its Ordinary Shares as consideration in making an acquisition, depending on the number of Ordinary Shares offered and the value of such Ordinary Shares at the time, the issuance of such Ordinary Shares could materially reduce the percentage ownership represented by the holders of Ordinary Shares in the Company and also dilute the value of Ordinary Shares held by such Shareholders at the time. The disapplication of pre-emption rights could cause a Shareholder's percentage ownership in the Company to be reduced and the issuance of Ordinary Shares, could also dilute the value of Ordinary Shares held by such Shareholder.

An investment in the Company should be regarded as a long-term investment. There can be no assurance that the Company's objectives will be achieved. Investors may be required to bear the financial risk of an investment in Ordinary Shares for an indefinite period.

It should be remembered that the price of the Ordinary Shares and income (if any) from such Ordinary Shares, can go down as well as up.

Shareholders may not be able to realise returns on their investment in Ordinary Shares within a period that they would consider to be reasonable, if at all.

The market in Ordinary Shares may be relatively illiquid. There may be a limited number of Shareholders and this may contribute to infrequent trading in the Ordinary Shares on the Main Market of the London Stock Exchange and volatile share price movements. Investors should not expect that they will necessarily be able to realise their investment in the Ordinary Shares within a period that they would regard as reasonable. Accordingly, the Ordinary Shares may not be suitable for short-term investment. Admission should not be taken as implying that there will be an active trading market for Ordinary Shares. Even if an active trading market develops, the market price for Ordinary Shares may fall.

Gati Al-Jebouri, the Chief Executive Officer and Chairman of the Board of the Company, will be interested in a significant proportion of the Enlarged Issued Share Capital of the Company immediately following Admission and his interests may differ from, or conflict with, those of the other Shareholders

Immediately following Admission, Gati Al-Jebouri will be interested in approximately 18.6% of the Enlarged Issued Share Capital. Although he is contractually restricted from converting the principal amount owed to him pursuant to the Convertible Loan Agreement into Ordinary Shares to a level above 29.9% of the issued share capital of the Company from time to time, with such a shareholding Mr. Al-Jebouri may be able to influence the passing or blocking of an ordinary resolution or blocking of a special resolution of the Company. In some cases, this may be sufficient to determine the outcome of certain matters to be considered by Shareholders, including:

• * the election of Directors;
• * a change of control in the Company, which could deprive Shareholders of an opportunity to earn a premium for the sale of their Ordinary Shares over the then prevailing market price;
• * substantial mergers or other business combinations;
• * the acquisition or disposal of substantial assets;
• * the issuance of equity securities; and
• * the payment of any dividends on the Ordinary Shares.

The interests of Mr. Al-Jebouri on the one hand, and other Shareholders on the other hand, may not be aligned. In addition, the concentration of ownership in Mr. Al-Jebouri may have the effect of delaying, deferring or discouraging a potential acquirer from making a tender offer or otherwise attempting to take control of the Company, which in turn could have an adverse effect on the trading price of the Ordinary Shares, which could have a material adverse effect on the Group's business, financial condition, results of operations or prospects.

The Company has a number of outstanding warrants and options which, if exercised and/or converted could have a material dilutive effect on existing Shareholders. The Placing will also have a material dilutive effect on existing Shareholders

The Company has issued 14,606,084 warrants in connection with previous fundraisings to acquire Ordinary Shares, such warrants being exercisable at a price of 32 pence per Ordinary Share. The Company also has granted 2,205,000 options to acquire Ordinary Shares at prices of between 20 pence and 80 pence per Ordinary Share to current and former Directors and members of management of the Company. Subject to Admission, the Company has made conditional option awards over a further 6,219,000 Ordinary Shares on exercise price 12.5 pence, subject to the attainment of performance conditions. The combined dilutive effect of these convertible instruments would have a material dilutive effect upon existing Shareholders and may impact both the future Ordinary Share price and the ability of attract new investors or sources of equity to invest in the Company. The Company has also issued 300,800 warrants to Brandon Hill in connection with the Placing which are exercisable at a 25% premium to the Placing Price at any time up to 36 months from the date of Admission (''Bookrunner Warrants''). If all outstanding warrants and options were exercised, the resultant 23,330,884 Ordinary Shares would represent 25.3% of the subsequent Enlarged Issued Share Capital.

The Placing will involve the issuance of 20,800,000 Placing Shares representing 30.3% of the Enlarged Issued Share Capital.

Additionally, if the Convertible Loan Agreement conversion option was exercised, a further 13,600,000 Ordinary Shares would be issued representing 12.9% of the fully diluted share capital of the Company.

The pre-suspension share price may not reflect the actual price of the Ordinary Shares

On Admission, there is no certainty that the market price per Ordinary Share will be valued on the same basis as the Existing Ordinary Shares were prior to the suspension in trading of the Existing Issued Share Capital on 15 February 2018, and so it is possible that the price of the Ordinary Shares may fall on the date of Admission or thereafter.

A Standard Listing will afford Shareholders a lower level of regulatory protection than a Premium Listing

The Company is applying for a Standard Listing of the Enlarged Ordinary Share Capital and, accordingly, the Company will not be required to comply with those protections applicable to a Premium Listing. The Company is applying for a Standard Listing of the Enlarged Ordinary Share Capital on the Official List under Chapter 14 of the Listing Rules on the basis of the Prospectus Regulation requirements and the additional on-going requirements and protections applicable to a Premium Listing under the Listing Rules will not apply to the Company. With the exception of Listing Principles 1 and 2 as set out in Chapter 7 of the Listing Rules, the provisions of Chapters 6 to 13 of the Listing Rules (listing principles, sponsors, continuing obligations, significant transactions, related party transactions, dealing in own securities and treasury shares and contents of circulars), being additional requirements for a Premium Listing of equity securities, will not apply to the Group.

The Company may be unable or unwilling to transition to a Premium Listing in the future

As a consequence of the Minto Acquisition the Company is now potentially eligible for a Premium Listing under Chapter 6 of the Listing Rules. However, there can be no guarantee that the Company will meet the relevant eligibility criteria or that a transition to a Premium Listing would be obtained if the Company were to apply. The Company has chosen not to seek a Premium Listing and the Company will not be obliged to comply with the higher standards of corporate governance or other requirements which it would be subject to upon achieving a Premium Listing and, for as long as the Company continues to have a Standard Listing, it will be required to continue to comply with the lesser standards applicable to a company with a Standard Listing. This would include a period of time following a further acquisition where the Company could be operating a substantial business but would not need to comply with such higher standards. In addition, an inability to obtain a Premium Listing will prohibit the Company from gaining a FTSE indexation and may have an adverse effect on the valuation of the Ordinary Shares.

Substantial future sales or additional offerings of Ordinary Shares could impact the market price of Ordinary Shares

The Board cannot predict what effect, if any, future sales of Ordinary Shares, or the availability of Ordinary Shares for future sale, or the offer (by way of further issuance) of additional Ordinary Shares in the future, will have on the market price of Ordinary Shares. Sales or an additional offering of substantial numbers of Ordinary Shares in the public market, or the perception or any announcement that such sales or an additional offering could occur, could adversely affect the market price of Ordinary Shares and may make it more difficult for Shareholders to sell their Ordinary Shares at a time and price which they deem appropriate.

There may be volatility in the value of an investment in Ordinary Shares and the market price for Ordinary Shares may fluctuate

The market price for the Ordinary Shares may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond the Group's control, including the following: (i) actual or anticipated fluctuations in the Group's results of operations; (ii) actual or anticipated changes in base and precious metal prices and/or in the capital markets; (iii) recommendations by securities research analysts; (iv) changes in the economic performance or market valuations of other companies that investors deem comparable to the Company; (v) addition or departure of the Company's Directors, and Senior Managers and other key personnel; (vi) sales or perceived sales of additional Ordinary Shares; (vii) significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Group or its competitors; (viii) changes in laws, rules and regulations applicable to the Group and its operations; (ix) general economic, political and other conditions; (x) the Group's involvement in any litigation; and (xi) news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in the Group's industry or target markets.

Financial markets have experienced significant price and volume fluctuations in the last several years that have particularly affected the market prices of equity securities of companies and that have, in many cases, been unrelated to the operating performance, underlying asset values or prospects of such companies. Accordingly, the market price of the Ordinary Shares may decline even if the Group's operating results, underlying asset values or prospects have not changed. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. Also, certain institutional investors may base their investment decisions on consideration of the Group's environmental, governance and social practices and performance against such institutions' respective investment guidelines and criteria, and failure to meet such criteria may result in a limited or no investment in the Ordinary Shares by those institutions, which could adversely affect the trading price of the Ordinary Shares. There can be no assurance that continuing fluctuations in the price and volume of publicly traded equity securities will not occur. If such increased levels of volatility and market turmoil continue, the Group's operations could be adversely impacted and the trading price of the Ordinary Shares may be adversely affected.

The Company does not currently intend to pay dividends and its ability to pay dividends in the future may be limited

The Company has never declared or paid any dividends. The Company currently intends to retain earnings, if any, for use in its future business operations and expansion. The Company will only pay dividends to the extent that to do so is in accordance with the Companies Act and all other applicable laws. There can be no assurance that the Company will declare and pay, or have the ability to declare and pay, any dividends in the future.

In addition to the foregoing, the Company's ability to institute and pay dividends now or in the future may be limited by covenants contained in the agreements governing any indebtedness that the Group may incur in the future, including the terms of any credit facilities the Group may enter into with third party lenders. It is not uncommon that credit facilities will prevent a borrower from declaring or paying any dividends (excluding stock dividends) to any of its Shareholders or returning any capital (including by way of dividend) to any of its Shareholders. As a result of the foregoing factors, purchasers of Ordinary Shares may not receive any return on an investment in Ordinary Shares unless they sell such Ordinary Shares for a price greater than that which they paid for them.

If the Company is wound up, distributions to Shareholders will be subordinated to the claims of creditors

On a winding-up of the Company, holders of Ordinary Shares will be entitled to be paid a distribution out of the assets of the Company available to its members only after the claims of all creditors of the Company have been met.

Shareholders may be exposed to fluctuations in currency exchange rates

The Ordinary Shares are priced in Pounds Sterling and will be quoted and traded in Pounds Sterling. Accordingly, a Shareholder whose functional or local currency is a currency other than Pounds Sterling is subject to risks arising from adverse movements in such currency against Pounds Sterling, which may reduce the value of the Ordinary Shares in such currency.

Disapplied pre-emption rights and indebtedness related liquidity

The Directors anticipate that the Company may issue a substantial number of additional Ordinary Shares, or incur substantial indebtedness to complete one or more further acquisitions in the future.

Pre-emption rights were disapplied (in respect of future share issues whether for cash or otherwise) in favour of existing Shareholders up to a aggregate nominal amount of £700,000 at the Company's annual general meeting on 28 June 2019 for a period of 15 months from that date or the holding of the Company's next annual general meeting, whichever is earlier. In addition, the Company may issue shares or convertible debt securities or incur substantial indebtedness to complete a further acquisition, which may dilute the interests of Shareholders.

Any issue of Ordinary Shares, preferred shares or convertible debt securities may:

• * significantly dilute the value of the Ordinary Shares held by existing Shareholders;
• * cause a change of control if a substantial number of Ordinary Shares are issued, which may, inter alia, result in the resignation or removal of one or more of the Directors;
• * in certain circumstances, have the effect of delaying or preventing a change of control;
• * subordinate the rights of holders of Ordinary Shares if preferred shares are issued with rights senior to those of Ordinary Shares; or
• * adversely affect the market prices of the Ordinary Shares.

If Ordinary Shares, preferred shares or convertible debt securities are issued as consideration for a further acquisition, existing Shareholders will have no pre-emptive rights with regard to the securities that are issued. The issue of such Ordinary Shares, preferred shares or convertible debt securities is likely to materially dilute the value of the Ordinary Shares held by existing Shareholders. Where a target company has an existing large shareholder, an issue of Ordinary Shares, preferred shares or convertible debt securities as consideration may result in such shareholder subsequently holding a significant or majority stake in the Company, which may, in turn, enable it to exert significant influence over the Company (to a greater or lesser extent depending on the size of its holding) and could lead to a change of control.

If the Company were to incur substantial indebtedness in relation to a further acquisition, this could result in:

• * default and foreclosure on the Company's assets, if its cash flow from operations were insufficient to pay its debt obligations as they become due;
• * acceleration of its obligation to repay indebtedness, even if it has made all payments when due, if it breaches, without a waiver, covenants that require the maintenance of financial ratios or reserves or impose operating restrictions;
• * a demand for immediate payment of all principal and accrued interest, if any, if the indebtedness is payable on demand; or
• * an inability to obtain additional financing, if any indebtedness incurred contains covenants restricting its ability to incur additional indebtedness. The occurrence of any or a combination of these factors could decrease an investor's ownership interests in the Company or have a material adverse effect on its financial condition and results of operations.

A further acquisition may result in adverse tax, regulatory or other consequences for Shareholders which may differ for individual Shareholders depending on their status and residence

It is possible that any further acquisition structure determined necessary by the Company to complete a further acquisition may have adverse tax, regulatory or other consequences for Shareholders which may differ for individual Shareholders depending on their individual status and residence.

The issuance of additional Ordinary Shares in the Company in connection with future acquisitions or the share option plan, or otherwise, may dilute all other shareholdings

The Company may, over the longer term, seek to raise finance to fund future acquisitions and other growth opportunities and may, for these and other purposes (for example, in connection with share incentive and share option plans), issue additional equity or convertible equity securities. As a result, the Company's then-existing Shareholders would suffer dilution in their percentage ownership of the Company following any such issue.

Transfer restrictions for Shareholders in the United States may make it difficult to resell the Ordinary Shares or may have an adverse impact on the market price of the Ordinary Shares

The Ordinary Shares have not been registered in the United States under the Securities Act or under any other applicable securities laws and are subject to restrictions on transfers contained in such laws. There are additional restrictions on the resale of Ordinary Shares by Shareholders who are in the United States and on the resale of Ordinary Shares by any Shareholders to any person who is in the United States. These restrictions will make it more difficult to resell the Ordinary Shares in many instances and this could have an adverse effect on the market value of the Ordinary Shares. There can be no assurance that Shareholders in the United States will be able to locate acceptable purchasers or obtain the required certifications to effect a sale.

The ability of overseas shareholders to bring actions or enforce judgments against the Company or the Directors may be limited

The ability of an overseas shareholder to bring an action against the Company may be limited under law. The Company is a public company with limited liability incorporated in England and Wales. The rights of holders of Ordinary Shares are governed by English law and by the Company's articles of association in force from time to time (''Articles''). These rights may differ from the rights of shareholders in non-UK corporations. An overseas shareholder may not be able to enforce a judgment against some or all of the Directors and Senior Managers. The Directors are residents of the UK. Consequently, it may not be possible for an overseas shareholder to effect service of process upon the Directors and executive officers within the overseas shareholder's country of residence or to enforce against the Directors and Senior Managers judgments of courts of the overseas shareholder's country of residence based on civil liabilities under that country's securities laws. There can be no assurance that an overseas shareholder will be able to enforce any judgments in civil and commercial matters or any judgments under the securities laws of countries other than the UK against the Directors or Senior Managers who are residents of the UK or countries other than those in which judgment is made. In addition, English or other courts may not impose civil liability on the Directors or executive officers in any original action based solely on foreign securities laws brought against the Company or the Directors in a court of competent jurisdiction in England or other countries.

The ability of Shareholders to participate in rights offerings may be limited and Shareholders could therefore experience dilution of their holdings

The Company may, from time to time, distribute rights to its Shareholders, including rights to acquire securities. Compliance with securities laws or other regulatory provisions in some jurisdictions may prevent certain purchasers of Ordinary Shares from participating in any rights issuances and thereby result in dilution of their existing shareholdings. The Company is under no obligation to register the shares in any jurisdiction to permit foreign purchasers of Ordinary Shares to participate in any rights offerings the Company may undertake. Accordingly, Shareholders who are based outside of the UK may be unable to participate in rights offerings and may experience dilution of their holdings as well as further dilution in their voting interest following any such offering. In addition, if the rights that are not exercised or not distributed are not sold or if the sale is not lawful or reasonably practicable, the Company may allow the rights to lapse, in which case holders of the Ordinary Shares would receive no value for these rights.

PART III

IMPORTANT INFORMATION

The distribution of this document and the Placing may be restricted by law in certain jurisdictions and therefore persons into whose possession this document comes should inform themselves about and observe any restrictions, including those set out below. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

General

No action has been or will be taken in any other jurisdiction that would permit a public offering of any Ordinary Shares, or possession or distribution of this document or any other offering material in any other country or jurisdiction where action for that purpose is required. Accordingly, no Ordinary Shares may be offered or sold, directly or indirectly, and neither this document nor any other offering material or advertisement in connection with any Ordinary Shares may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any and all applicable rules and regulations of any such country or jurisdiction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This document does not constitute an offer to subscribe for any of the Ordinary Shares offered hereby to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction.

Investors should only rely on the information in this document. No person has been authorised to give any information or to make any representations in connection with the Placing, other than those contained in this document and, if given or made, such information or representations must not be relied upon as having been authorised by or on behalf of the Company, the Directors, the SI Capital or Brandon Hill. No representation or warranty, express or implied, is made by SI Capital or Brandon Hill as to the accuracy or completeness of such information, and nothing contained in this document is, or shall be relied upon as, a promise or representation by SI Capital or Brandon Hill as to the past, present or future. Without prejudice to any obligation of the Company to publish a supplementary prospectus pursuant to the FSMA, neither the delivery of this document nor any subscription or purchase of any Ordinary Shares shall, under any circumstances, create any implication that there has been no change in the business or affairs of the Group since the date of this document or that the information contained herein is correct as of any time subsequent to its date.

The Company does not accept any responsibility for the accuracy or completeness of any information reported by the press or other media, nor the fairness or appropriateness of any forecasts, views or opinions expressed by the press or other media regarding the Placing, Admission or the Group. The Company makes no representation as to the appropriateness, accuracy, completeness or reliability of any such information or publication.

This document has been approved by the FCA as a prospectus which may be used to offer securities to the public for the purposes of section 85 of FSMA, and of the Prospectus Regulation. No arrangement has however been made with the competent authority in any other member states of the European Economic Area (''EEA'') (''EEA Member States'') (or any other jurisdiction) for the use of this document as an approved prospectus in such jurisdiction and accordingly no public offer is to be made in such jurisdiction. Issue or circulation of this document may be prohibited in Restricted Jurisdictions and in countries other than those in relation to which notices are given below.

Withdrawal rights

In the event that the Company is required to publish any supplementary prospectus, applicants who have applied to subscribe for or purchase Placing Shares in the Placing will have at least two business days (i.e., any day (other than a Saturday or Sunday) or an English bank or public holiday (each, a ''Business Day'')) following the publication of the supplementary prospectus within which to withdraw their offer to acquire Placing Shares in the Placing in its entirety. If the application is not withdrawn within the stipulated period, any offer to apply for Placing Shares in the Placing will remain valid and binding.

Details of how to withdraw an application will be made available if a supplementary prospectus is published. Any supplementary prospectus will be published in accordance with the Prospectus Regulation Rules (and notification thereof will be made to a Regulatory Information Service) but will not be distributed to investors individually. Any such supplementary prospectus will be published in printed form and available free of charge at the Company's registered office Suite A, 6 Honduras Street, London EC1Y 0TH, United Kingdom and (subject to certain restrictions) on the Company's website at www.pembridgeresources.com until 14 days after Admission.

The contents of this document are not to be construed as legal, business or tax advice and related aspects of a purchase of any Ordinary Shares. Each prospective investor should consult their own lawyer, financial adviser or tax adviser for legal, financial or tax advice. In making an investment decision, each investor must rely on their own examination, analysis and enquiry of the Company and the terms of the Placing, including the merits and risks involved.

This document is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Company, the Directors, SI Capital or Brandon Hill or any of their respective representatives that any recipient of this document should subscribe for any Ordinary Shares. Prior to making any decision as to whether to subscribe for Ordinary Shares, prospective investors should read this document. Investors should ensure that they read the whole of this document carefully and not just rely on key information or information summarised within it.

In making an investment decision, prospective investors must rely upon their own examination, analysis and enquiry of the Company and the terms of this document, including the risks involved. Investors will be deemed to have acknowledged that: (i) they have not relied on SI Capital, Brandon Hill or any person affiliated with any of them in connection with any investigation of the accuracy of any information contained in this document or their investment decision; and (ii) they have relied on the information contained in this document, and no person has been authorised to give any information or to make any representation concerning the Group or the Ordinary Shares (other than as contained in this document) and, if given or made, any such other information or representation should not be relied upon as having been authorised by the Company, the Directors, SI Capital or Brandon Hill.

In connection with the Placing, SI Capital, Brandon Hill and any of their respective affiliates, may take up a portion of the Placing Shares in the Placing as a principal position and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in any Ordinary Shares and other securities of the Company or related investments in connection with the Placing or otherwise. Accordingly, references in this document to the Ordinary Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any or issue, offer, subscription, acquisition, dealing or placing to SI Capital, Brandon Hill and any of their respective affiliates acting in that capacity as investors for their own accounts. Neither SI Capital nor Brandon Hill intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

For the attention of all investors

In making an investment decision, prospective investors must rely on their own examination of the Company, this document and the terms of the Placing, including the merits and risks involved. The contents of this document are not to be construed as advice relating to legal, financial, taxation, accounting, regulatory, investment or any other matter.

Prospective investors must rely upon their own representatives, including their own legal and financial advisers and accountants, as to legal, tax, financial, investment or any other related matters concerning the Company and an investment therein.

An investment in the Company should be regarded as a long-term investment. There can be no assurance that the Company's objective will be achieved. It should be remembered that the price of the Ordinary Shares, and any income from such Ordinary Shares, can go down as well as up. This document should be read in its entirety before making any investment in the Ordinary Shares. All Shareholders are entitled to the benefit of, are bound by, and are deemed to have notice of, the provisions of the Articles, which prospective investors should review.

Selling restrictions

The distribution of this document and the offer of any Ordinary Shares in certain jurisdictions may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any restrictions, including those set out in the paragraphs that follow. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

European Economic Area

Pursuant to the Prospectus Regulation, an offer to the public of the Ordinary Shares may only be made once the prospectus has been passported in an EEA Member State of in accordance with the Prospectus Regulation. For any other EEA Member State an offer to the public in that EEA Member State of any Ordinary Shares may only be made at any time under the following exemptions under the Prospectus Regulation, if they have been implemented in that EEA Member State:

• (a) to any legal entity which is a Qualified Investor, within the meaning of Article 2(e) of the Prospectus Regulation;
• (b) to fewer than 150 natural or legal persons (other than Qualified Investors, within the meaning of Article 2(e) of the Prospectus Regulation) in such EEA Member State subject to obtaining prior consent of the Company for any such offer; or
• (c) in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of Ordinary Shares shall result in a requirement for the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Regulation and each person who initially acquires Ordinary Shares or to whom any offer is made will be deemed to have represented, warranted and agreed with the Bookrunner and the Company that it is a ''Qualified Investor'' within the meaning of Article 2(e) of the Prospectus Regulation.

For the purposes of this provision, the expression an 'offer to the public' in relation to any offer of Ordinary Shares in any EEA Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Ordinary Shares to be offered so as to enable an investor to decide to purchase or subscribe for the Ordinary Shares and the expression ''Prospectus Regulation'' means Regulation (EU) 2017/1129.

This prospectus may not be used for, or in connection with, and does not constitute, any offer of Ordinary Shares or an invitation to purchase or subscribe for any Ordinary Shares in any EEA Member State in which such offer or invitation would be unlawful.

The distribution of this prospectus in other jurisdictions may be restricted by law and therefore persons into whose possession this prospectus comes should inform themselves about and observe any such restrictions.

United Kingdom

This prospectus comprises a prospectus relating to the Company prepared in accordance with the Prospectus Regulation Rules and approved by the FCA under section 87A of FSMA. This prospectus has been filed with the FCA and made available to the public in accordance with Rule 3.2 of the Prospectus Regulation Rules.

This prospectus is being distributed only to and is directed at persons who (if they are in the EEA) will fall within one of the categories of persons set out above in the paragraph entitled 'For the attention of EEA investors'. In addition, this prospectus is being distributed only to and is directed at persons in the UK who are: (i) persons having professional experience in matters relating to investments falling within the definition of 'investment professionals' in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion Order) 2005 (the ''Order''); or (ii) persons who are high net worth bodies corporate, unincorporated associations and partnerships and the trustees of high value trusts, as described in Article 49(2)(a) to (d) of the Order; or (iii) persons to whom it may otherwise be lawful to distribute.

United States

The Ordinary Shares have not been, and will not be, registered under the US Securities Act or with any securities regulatory authority of any state of the United States, and may not be offered or sold within the United States except to QIBs as defined in, and in reliance on, Rule 144A under the US Securities Act or pursuant to another exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. The Ordinary Shares are being offered and sold outside the United States in offshore transactions in compliance with Regulation S under the US Securities Act and in accordance with applicable law. Prospective investors are hereby notified that the sellers of the Ordinary Shares may be relying on the exemption from the registration requirements under the US Securities Act provided by Rule 144A.

Due to the foregoing restrictions, subscribers for Ordinary Shares in the United States are advised to consult legal counsel prior to making any offer for the resale, pledge or other transfer of the Ordinary Shares.

Canada

The Ordinary Shares may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act of 1990 (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the Ordinary Shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this document (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the Bookrunner and the Joint Brokers are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with the Placing.

Australia

This document does not constitute a prospectus or other disclosure document under the Corporations Act 2001 (Cth) (''Australian Corporations Act'') and does not purport to include the information required of a disclosure document under the Australian Corporations Act. This document has not been, and will not be, lodged with the Australian Securities and Investments Commission (whether as a disclosure document under the Australian Corporations Act or otherwise). Any offer in Australia of the Ordinary Shares under this document or otherwise may only be made to persons who are ''sophisticated investors'' (within the meaning of section 708(8) of the Australian Corporations Act), to ''professional investors'' (within the meaning of section 708(11) of the Australian Corporations Act) or otherwise pursuant to one or more exemptions under section 708 of the Australian Corporations Act so that it is lawful to offer the Ordinary Shares in Australia without disclosure to investors under Part 6D.2 of the Australian Corporations Act.

Any offer for on-sale of the Ordinary Shares that is received in Australia within 12 months after their issue by the Company is likely to need prospectus disclosure to investors under Part 6D.2 of the Australian Corporations Act, unless such offer for on-sale in Australia is conducted in reliance on a prospectus disclosure exemption under section 708 of the Australian Corporations Act or otherwise. Any persons acquiring Ordinary Shares should observe such Australian on-sale restrictions.

The Company is not licensed in Australia to provide financial product advice in relation to the Ordinary Shares. Any advice contained in this document is general advice only. This document has been prepared without taking account of any investor's objectives, financial situation or needs, and before making an investment decision on the basis of this document, investors should consider the appropriateness of the information in this document, having regard to their own objectives, financial situation and needs. No cooling off period applies to an acquisition of the Ordinary Shares.

Japan

The Ordinary Shares have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended (the ''FIEA'')). Neither the Ordinary Shares nor any interest therein may be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or entity organised under the laws of Japan), or to others for reoffering or resale, directly or indirectly, in Japan or to, or for the benefit of, a resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEA and any other applicable laws, regulations and ministerial guidelines of Japan.

South Africa

This document will not be registered as a prospectus in terms of the Companies Act 1973 in South Africa and as such, any offer of Ordinary Shares in South Africa may only be made if it shall not be capable of being construed as an offer to the public as envisaged by section 144 of such Act. Furthermore, any offer or sale of the Ordinary Shares shall be subject to compliance with South African exchange control regulations.

General

No action has been or will be taken in any jurisdiction that would permit a public offering of the Ordinary Shares, or possession or distribution of this document or any other offering material, in any country or jurisdiction where action for that purpose is required. Accordingly, the Ordinary Shares may not be offered or sold, directly or indirectly, and neither this document nor any other offering material or advertisement in connection with the Ordinary Shares may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction.

Persons into whose possession this document comes should inform themselves about and observe any restrictions on the distribution of this document and the offer of Ordinary Shares, including those in the paragraphs above. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This document does not constitute an offer to subscribe for or purchase any of the Ordinary Shares offered hereby to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction.

Presentation of reserves and resources

Unless otherwise stated, statements in this document relating to the Group's mineral reserves have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (''CIM'') ''Estimation of Mineral Resources and Mineral Reserves Best Practices'' guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards Mineral Resources are not Mineral Reserves and do not have demonstrated economic liability. All references to ''reserves'' are to proved and probable.

The accuracy of reserves estimates and associated economic analysis is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. This document should be accepted with the understanding that reserves, resources and financial performance subsequent to the date of the estimates may necessitate revision. These revisions may be material. Unless otherwise stated, all information about mineral reserves and resources, forward-looking production estimates and other geological information has been extracted without material adjustment from the Competent Person's Report in Part XIX – Competent Person's Report of this document.

Rounding

Percentages in tables have been rounded and accordingly may not add up to 100%. Certain financial data have also been rounded. As a result of this rounding, the totals of data presented in this document may vary slightly from the actual arithmetic totals of such data.

Data protection

The Company may delegate certain administrative functions to third parties and will require such third parties to comply with data protection and regulatory requirements of any jurisdiction in which data processing occurs. Such information will be held and processed by the Company (or any third party, functionary or agent appointed by the Company) for the following purposes:

• * verifying the identity of the prospective investor to comply with statutory and regulatory requirements in relation to anti-money laundering procedures;
• * carrying out the business of the Company and the administering of interests in the Company;
• * meeting the legal, regulatory, reporting and/or financial obligations of the Company in the United Kingdom or elsewhere; and
• * disclosing personal data to other functionaries of, or advisers to, the Company to operate and/or administer the Company.

Where appropriate it may be necessary for the Company (or any third party, functionary or agent appointed by the Company) to:

• * disclose personal data to third party service providers, agents or functionaries appointed by the Company to provide services to prospective investors; and
• * transfer personal data outside of the EEA to countries or territories which do not offer the same level of protection for the rights and freedoms of prospective investors as the United Kingdom.

If the Company (or any third party, functionary or agent appointed by the Company) discloses personal data to such a third party, agent or functionary and/or makes such a transfer of personal data it will use reasonable endeavours to ensure that any third party, agent or functionary to whom the relevant personal data is disclosed or transferred is contractually bound to provide an adequate level of protection in respect of such personal data.

In providing such personal data, investors will be deemed to have agreed to the processing of such personal data in the manner described above. Prospective investors are responsible for informing any third party individual to whom the personal data relates of the disclosure and use of such data in accordance with these provisions.

Presentation of financial information

Prospective investors should consult their own professional advisers to gain an understanding of the financial information contained in this document. An overview of the basis for presentation of financial information in this document is set out below. Part XX – Historical Financial Information on the Company of this document presents selected financial information extracted without material adjustment from the audited historical financial information on the Company for the 12 month periods ended 31 December 2018, 31 December 2017 and 31 December 2016 and unaudited historical financial information for the six month periods ended 30 June 2019 and 30 June 2018. Part XXI – Historical Financial Information on Minto of this document presents the audited historical financial information on Minto for the 12 month periods ended 31 December 2018, 31 December 2017 and 31 December 2016 and unaudited historical financial information for the six month periods ended 30 June 2019 and 30 June 2018. Additionally it contains financial information that has been extracted or derived, without material adjustment, from the Capstone Consolidated Financial Statements and Management Discussion and Analysis for the 12 month periods ended 31 December 2018, 31 December 2017, 31 December 2016 and 31 December 2015 as published on the website www.capstonemining.com, together with additional commentary provided by Capstone.

The financial and volume information in this document, including in a number of tables, has been rounded to the nearest whole number or the nearest decimal place. The sum of the numbers in a column in a table may not conform exactly to the total figure given for that column. In addition, certain percentages presented in the tables in this document reflect calculations based on the underlying information prior to rounding, and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers.

Pro forma wording

In this document, any reference to ''pro forma'' financial information is to information which has been extracted without material adjustment from the unaudited pro forma financial information contained in Part X – Unaudited Pro Forma Financial Information for the Enlarged Group of this document. The unaudited pro forma statement of net assets and the unaudited pro forma income statement of the Enlarged Group have been prepared for illustrative purposes only in accordance with Annex 20 of the Prospectus Regulation Rules and should be read in conjunction with the notes set out in Part X – Unaudited Pro Forma Financial Information for the Enlarged Group of this document. The unaudited pro forma financial information has been prepared to illustrate the effect of the Minto Acquisition as if it had taken place on 1 January 2018 as the Directors consider that presenting the results for a full year, which includes a period in which the Minto Mine was operational, gives a better illustration than an illustration for the six month period ended 30 June 2019, during which time the Minto Mine was not operational. By its nature, the pro forma financial information addresses a hypothetical situation and, therefore, does not represent the Group's actual financial position nor is it indicative of the results that may or may not be expected to be achieved in the future.

Market data

Where information contained in this document has been sourced from a third party, the Company and the Directors confirm that such information has been accurately reproduced and, so far as they are aware and have been able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.

CREST

CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by written instrument. The Articles permit the holding of Ordinary Shares under the CREST system. The Ordinary Shares are admitted to CREST and accordingly, settlement of transactions in the Ordinary Shares following Admission may take place within the CREST system if any investor so wishes.

CREST is a voluntary system and Shareholders who wish to receive and retain certificates for their Ordinary Shares will be able to do so. Shareholders may elect to receive Ordinary Shares in uncertificated form if such Shareholder is a system-member (as defined in the CREST Regulations) in relation to CREST.

Transferability

The Ordinary Shares are freely transferable and tradable and there are no restrictions on transfer.

International Financial Reporting Standards

As required by the Companies Act and Article 4 of the European Union (''EU'') International Accounting Standards Regulation, the financial statements of the Company are prepared in accordance with International Financial Reporting Standards as adopted by the EU (''IFRS'') issued by the International Accounting Standards Board (''IASB'') and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB as adopted by the EU.

Incorporation of information by reference

The contents of the Company's website (www.pembridgeresources.com), any website mentioned in this document or any website directly or indirectly linked to these websites have not been verified and do not form part of this document, and prospective investors should not rely on them.

Forward-looking statements

This document includes statements that are, or may be deemed to be, 'forward-looking statements'. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms 'targets', 'believes', 'estimates', 'anticipates', 'expects', 'intends', 'may', 'will', 'should' or, in each case, their negative or other variations or comparable terminology. They appear in a number of places throughout the document and include statements regarding the intentions, beliefs or current expectations of the Company and the Directors concerning, inter alia: (i) the Company's objective, acquisition and financing strategies, results of operations, financial condition, capital resources, prospects, capital appreciation of the Ordinary Shares and dividends; and (ii) future deal flow and implementation of active management strategies, including with regard to acquisitions. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The Company's actual performance, results of operations, financial condition, distributions to shareholders and the development of its financing strategies may differ materially from the forwardlooking statements contained in this document. In addition, even if the Company's actual performance, results of operations, financial condition, distributions to shareholders and the development of its financing strategies are consistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in subsequent periods.

Prospective investors should carefully review the risk factors set out in Part II – Risk Factors of this document for a discussion of additional factors that could cause the Company's actual results to differ materially, before making an investment decision. For the avoidance of doubt, nothing appearing under the heading ''Forward-looking statements'' constitutes a qualification of the working capital statement set out in paragraph 16 of Part XVI – Additional Information of this document.

Forward-looking statements contained in this prospectus apply only as at the date of this prospectus. Subject to any obligations under the Listing Rules, the Market Abuse Regulation (EU 596/2014) (the ''Market Abuse Regulation''), the Disclosure Guidance and Transparency Rules and the Prospectus Regulation Rules, the Company undertakes no obligation publicly to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Definitions

A list of defined terms used in this document is set out in Part XVII — Definitions of this document.

Glossary

A list of technical terms used in this document is set out in Part XVIII — Glossary of this document.

Currency

Unless otherwise indicated, all references in this document to:

• * ''UK Pounds Sterling'', ''Pounds Sterling'', ''pound'', ''pence'', ''GBP'', ''£'' or ''p'' is to the lawful currency of the United Kingdom;
• * ''CAD\$'' and ''CAD dollars'' is to the lawful currency of Canada; and
• * ''US Dollars'', ''US\$'' or ''cents'' is to the lawful currency of the United States.

PART IV

ADMISSION AND PLACING STATISTICS

Number of Existing Ordinary Shares in issue prior to the Placing	22,384,925
Placing Price per Placing Share	12.5p
Number of Placing Shares being issued pursuant to the Placing	20,800,000
Number of Other Subscription Shares to be issued at Admission	25,536,021
Percentage of Enlarged Issued Share Capital represented by the Placing Shares	30.3%
Enlarged Issued Share Capital following the Placing	68,720,947
Number of warrants in issue prior to the Placing	14,606,084
Number of options in issue prior to the Placing	2,205,000
Total number of warrants and options in issue following the Placing (including the Bookrunner Warrants)	23,330,884
Gross proceeds of the Placing	£2,600,000
Estimated Net Placing Proceeds receivable by the Company	£2,491,750
Market capitalisation of the Company at the Placing Price*	£8,590,118
Placing Shares as a percentage of the total Enlarged Issued Share Capital	30.3%

* The market capitalisation of the Company at any given time will depend on the market price of the Ordinary Shares at that time. There can be no assurance that the market price of Ordinary Shares will equal or exceed the Placing Price.

The dealing codes for the Ordinary Shares will be as follows:

TIDM	PERE
ISIN	GB00BG107324
SEDOL code	BG10732
LEI	213800TBL26T6GO88M13

PART V

EXPECTED TIMETABLE OF EVENTS

Publication of this prospectus	11 December 2019
Latest time and date for placing commitments under the Placing	2:30 p.m. on 5 December 2019
Admission and commencement of dealings in Ordinary Shares	8:00 a.m. on 16 December 2019
CREST members' accounts credited in respect of Placing Shares	16 December 2019
Share certificates despatched in respect of Placing Shares	by 2 January 2020

References to time are to London time unless otherwise stated. Each of the dates in the above timetable is subject to change without further notice.

PART VI

DIRECTORS, AGENTS AND ADVISERS

Directors	Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board Guy Le Bel, Non-Executive Director Frank McAllister, Non-Executive Director
Registered office address	Pembridge Resources plc Suite A, 6 Honduras Street London EC1Y 0TH United Kingdom
Company Secretary	London Registrars Limited Suite A, 6 Honduras Street London EC1Y 0TH United Kingdom
Bookrunner and Joint Broker	Brandon Hill Capital Limited 1 Tudor Street London EC4Y 0AH United Kingdom
Joint Broker	SI Capital Limited 46 Bridge Street Godalming GU7 1HL United Kingdom
Legal advisers to the Company	Cooley (UK) LLP Dashwood 69 Old Broad Street London EC2M 1QS United Kingdom
Legal advisers to the Bookrunner	Charles Russell Speechlys LLP 5 Fleet Place London EC4M 7RD United Kingdom
Auditors and Reporting Accountant	PKF Littlejohn LLP 15 Westferry Circus Canary Wharf London E14 4HD United Kingdom
Competent Person	Mr. Carl Schulze of Aurora Geosciences Limited 34A Laberge Road Whitehorse Yukon Y1A 5T6 Canada
Registrars	Link Asset Services 34 Beckenham Road Beckenham Kent BR3 4ZF United Kingdom
Company's website	www.pembridgeresources.com

PART VII

THE MINTO ACQUISITION AND THE GROUP

1. Introduction

The Company announced on 15 February 2018 it had signed a definitive share purchase agreement relating to the Minto Acquisition on 14 February 2018 with Capstone to acquire 100% of Minto and the Company subsequently announced on 4 June 2019 that on 3 June 2019 it had entered into the Minto Acquisition Agreement, which replaced the original agreement. Under the terms of the Minto Acquisition Agreement, Pembridge acquired Capstone's 100% shareholding in the share capital of Minto. The consideration payable under the Minto Acquisition Agreement comprises of three elements, totalling up to US\$20 million, dependent on production milestones and future copper prices (the ''Purchase Price'').

The Purchase Price will be payable out of free cash-flows from Minto as follows:

• * US\$5 million within 60 days following the earlier of: (i) any period of 60 consecutive production days during which ore has been processed through the Minto Mine mill facilities at a rate of production of not less than 2,400 tonnes per day; or (ii) 31 January 2021 (the ''Recommencement of Commercial Production'');
• * US\$5 million (the ''Deferred Balance'') within ninety (90) days following the last day of two consecutive standard calendar quarters following the Recommencement of Commercial Production in which the average London Metals Exchange Cash Copper bid price during each of such consecutive quarters is greater than US\$3.00 per pound (the ''US\$3.00 Two Quarter Threshold''); and
• * the balance of the Purchase Price, being US\$10 million (the ''Further Deferred Balance''), to Capstone in immediately available funds within ninety (90) days following the last day of two consecutive standard calendar quarters following the Recommencement of Commercial Production in which the average London Metals Exchange Cash Copper bid price during each of such consecutive quarters is greater than US\$3.50 per pound (the ''US\$3.50 Two Quarter Threshold'').

The Company's obligation to pay the Deferred Balance and the Further Deferred Balance is conditional on the US\$3.00 Two Quarter Threshold and US\$3.50 Two Quarter Threshold, respectively, having been met or exceeded within the three-year period immediately following the Recommencement of Commercial Production.

The Minto Mine is an underground copper-gold-silver mine located in central Yukon, approximately 240 kilometres north of the capital Whitehorse, along the Klondike Highway. The Minto Mine was in continuous production between 2007 and October 2018. In excess of US\$350 million of capital expenditure has been invested in the Minto Mine since site construction began some 12 years ago.

The Minto Mine started as an open pit mining operation utilising conventional truck and shovel mining. Open pit mining was halted in May 2018. Concurrent underground operations commenced in 2014 using a combination of room and pillar and long-hole stoping retreat mining methods. Underground operations ceased when the Minto Mine was placed onto temporary care and maintenance. Ore was transported 1km overground, from the underground portal, to the processing plant, which has a capacity of up to 4,000 tonnes per day. The processing plant produces a high quality concentrate averaging 35-40% of contained copper.

In 2017 (the last full year of production), the Minto Mine produced 16,332 tonnes of copper, 170,809 ounces of silver and 25,205 ounces of gold. Production guidance for the Minto Mine from Capstone for 2018 was 19,000 tonnes of copper. C1 cash costs were forecast by Capstone to be US\$2.35 to US\$2.45 per pound of copper with all-in sustaining costs of US\$2.55 to US\$2.65 per pound of copper. This production guidance assumed the continued mining of the open pit at Ridgetop which was not mined, the impact of which was to reduce cash costs and all-in sustaining costs. At the time of Minto Acquisition, the Minto Mine had been on temporary care and maintenance since October 2018.

The Minto Mine produces both a copper concentrate and a gold concentrate. Historically, average revenue from gold recovery represents between 5-10% of total revenue (net of the Wheaton Purchase Agreement) with approximately 75% of gold recovery as a refining payable from the produced copper concentrate and 25% from sales of gold concentrate. The gold concentrate is produced by a gravity circuit composed of a Knelson concentrator and associated equipment. Historically, the gold concentrate has been purchased by Glencore and shipped, for refining, to its Horne Smelter in Rouyn-Noranda, Quebec. Silver is recovered in the same way as gold at the Minto Mine, but in smaller quantities and historically, average revenue from silver recovery represents, approximately 1% of total revenue. All silver ounces and up to 30,000 ounces of gold production per annum, for the life of the Minto Mine, are subject to the Wheaton Purchase Agreement. Further details are given in paragraph 8 of this Part VII – The Minto Acquisition and the Group of this document.

Capstone placed the Minto Mine on temporary care and maintenance in October 2018, citing low copper prices, lack of management resources following a company-wide restructuring and poor equity market conditions. A skeleton operating crew remained at site during the temporary care and maintenance phase in anticipation of being able to restart mining operations at a future date.

Since the completion of the Minto Acquisition, Pembridge was focussed on restarting operations at the Minto Mine as soon as reasonably and commercially practicable. Both mining and milling operations restarted in October 2019. During the ramp up phase, concurrent to underground mining operations and underground development work is ongoing, allowing for an increase in mining rate. All underground work is carried out by an appointed underground labour contractor, utilising Minto supplied equipment. The mill will continue to operate on a 2-weeks-on, 2-weeks-off schedule in the ramp up phase, until the mining rate increases to trigger the Recommencement of Commercial Production, at which point milling operations will be full time.

The Company retained the Bookrunner to conduct a Placing to raise gross proceeds of £2.6 million. Pembridge will use the Net Placing Proceeds (which will be £2.5 million) and the proceeds of Facility A of the Convertible Loan Agreement (which will be £1.0 million) to loan Minto £2.3 million, held in restricted cash for collateral towards a surety bond, and the remainder will be allocated towards general and administrative functions at its office in London and to cover the costs of Admission. Minto entered into the Off-Take Agreement with Sumitomo Canada in respect of production from the Minto Mine on 22 July 2019. Minto also entered into the Investor Consortium Financing Agreement, whereby the Investor Consortium has advanced US\$10 million to Minto to fund the recommencement of operations at the Minto Mine. Further details of the Off-Take Agreement, the Wheaton Purchase Agreement, and the Investor Consortium Financing Agreement are set out in paragraph 8 below.

The inherited Minto Mine plan, prepared by Capstone, contemplates a remaining life of the Minto Mine to be approximately four years at full production. This is based on the mining of certain underground deposits comprising a portion of the existing Minto Mine resource base. Between 2008 and 2012, Capstone invested approximately US\$24 million in exploration and added almost 1,000,000 tonnes (84 mt at 1.4% Cu) of contained copper resource at the Minto Mine. No exploration activities have been undertaken on the Minto Mine property since. However, a number of prospective exploration targets have been identified for future drilling. On 21 March 2018, the Company's otherwise dormant wholly-owned subsidiary, 536545 Yukon Inc. entered into an option agreement with Pan Andean Minerals Limited in respect of 100km2 of land along the North West and South East Minto trench, for a total payment of CAD\$210,000, and an agreement to pay a royalty of 0.5% of the revenues generated from such land if prospected and developed, subject to the Group's ability to buy out the option for CAD\$0.5 million. This land, together with a further 100km2 in newly stated claims by the Group in the Minto Mine vicinity constitute exploration targets only.

The Company entered into a joint operating agreement with the Investor Consortium on 3 June 2019 which sets out the working relationship between Pembridge and Minto and established a Minto joint advisory committee consisting of five individuals responsible for advising on the operations of the Minto Mine, three nominated representatives from the Investor Consortium and two nominated representatives from Pembridge (the ''Minto Joint Advisory Committee'').

Mineral Reserves and Mineral Resources for the Minto Mine are prepared in accordance with Canada's National Instrument 43-101 – Standards of Disclosure for Mineral Projects and have, in the past, have been annually stated by Capstone.

You should read the whole of this document and not just rely on the information contained in this letter. In particular, you should consider carefully the risk factors set out in Part II – Risk Factors of this document. Your attention is also drawn to the information set out in Parts III – Important Information to Part XXI – Historical Financial Information on Minto of this document.

2. Background to and reasons for this document

The Minto Acquisition constituted a Reverse Takeover and, accordingly, the Company requested that the FCA suspend the listing of the Existing Ordinary Share Capital with immediate effect when the Company announced the proposed Minto Acquisition on 15 February 2018.

This document is required in connection with the Placing and Admission. The Placing is conditional upon, inter alia, the Placing Agreement becoming wholly unconditional (save as to Admission) and not having been terminated in accordance with its terms prior to Admission, and Admission occurring by 8:00 a.m. on 16 December 2019 (or such later date as the Company and the Bookrunner may agree, not being later than 4:30 p.m. on 31 December 2019). It is expected that Admission will become effective and dealings in the Ordinary Shares will commence on or around 16 December 2019. If Admission does not proceed, the Placing will not proceed and all monies paid will be refunded to subscribers.

3. Background to the Minto Acquisition

(a) Introduction

The Minto Mine is found in the north-northwest trending Minto copper belt along the eastern margin of the Yukon-Tanana Composite Terrain, which is comprised of several metamorphic assemblages and batholiths. The Minto copper belt is host to several intrusion related copper (Cu) - gold (Au) mineralized hydrothermal systems. The Yukon-Tanana Composite Terrain is the easternmost and largest of the pericratonic terrains accreted to the Paleozoic north-western margin of North America. It is regarded to be the product of a continental arc and back-arc system, preserving meta-igneous and metasedimentary rocks of Permian age on top of pre-Late Devonian metasedimentary basement. The Minto copper belt is centred approximately on NAD 83; UTM Zone 8 coordinates 6,945,000 m N,385,000 m E. The Minto Mine is located on the west side of the Yukon River on Selkirk First Nation (''Selkirk'') Category A settlement land (Selkirk Parcel R-6A).

The mineralistion at Minto occurs over a series of high grade lenses interspersed with larger lower grade deposits. The original Minto Mine plan was designed for the highest grade deposits to be mined sequentially in a series of small pits supplemented with additional high grade ore from underground.

The Minto Mine is accessible via the Klondike Highway to the Minto Landing on the east side of the Yukon River, where the Minto Mine operates a barge across the river in the summer months and constructs an ice bridge for accessibility during the winter months. For approximately six weeks in each of spring and autumn there is no access to the Minto Mine via ground transportation so concentrate is produced and stored on site until the Yukon River becomes accessible.

The Minto Mine commenced production in October 2007 at 1,600 tonnes of ore per day with a 6-7 year mine life. The Minto Mine used conventional open pit mining techniques and equipment for surface ore and waste extraction; this was supplemented from 2014 with ore from underground using a modified room & pillar long-hole stope retreat mining method. Explosives are loaded into blast holes and the rock is blasted to manageable rock sizes. Scoops are used to load haul trucks that transport the rock to the mill and stockpiles. The various stockpiles of ore are blended and fed into the crusher feeding the mill. Waste rock is transported to waste rock storage piles.

The processing plant has a capacity of up to 4,000 tonnes per day, and produces a high quality concentrate averaging 35-40% contained copper. The ore is fed into the primary crusher and the semi-autogenous grinding mill where it is crushed and ground to reduce particle size. The crushed ore is blended with water, to create a slurry that is fed through a number of flotation circuits where copper, gold and silver minerals are separated out from other waste materials. The concentrated solution is thickened and de-watered using thickeners. The copper concentrate and gold concentrate is temporarily stored on site, before being trucked to the concentrated storage shed where it is loaded onto trucks and exported via the Port of Skagway, Alaska, to overseas markets for further processing. In 2018 the Minto Mine transitioned to be a solely underground mining operation that continued to use the same crushing, grinding and flotation operations in the processing plant.

(b) Current operations and production

In 2017, the Minto Mine produced 16,332 tonnes of copper, 170,809 ounces of silver and 25,205 ounces of gold. Production guidance for the Minto Mine from Capstone for 2018 was 19,000 tonnes of copper. C1 cash costs were forecast by Capstone to be US\$2.35 to US\$2.45 per pound of copper with all-in sustaining costs of US\$2.55 to US\$2.65 per pound of copper. The open pit mine at Ridgetop which is included in Capstone's 2018 guidance has been deferred indefinitely and is expected to result in a nominal decrease in 2018 production.

The copper ore also contains significant payable gold and silver content, which is expected to continue to be recovered in both the copper concentrate and gold concentrate. Gold and silver may be considered as accessory payable metals, rather than by-products, along with copper as the primary commodity. The open pit operations ceased in April 2018, with underground operations also ceasing in October 2018, which was when the mine was placed on temporary care and maintenance. Gold and silver provide a significant financial contribution to revenues at the Minto Mine and are subject to the Wheaton Purchase Agreement and, during the Modified Price Period, the Amendment Agreement.

There are no outstanding development obligations with respect to any of the mining licences save for periodic licensing / renewal fees, which are not material to the Group.

(c) Minto

Property Description and Location

The Minto Mine property comprises 164 Yukon quartz mining claims covering 2,760 hectares (6,817 acres), centered at 62837'05'' N Latitude, 137814'56'' W Longitude within the Whitehorse mining district. All claims are held by Minto, the status of which was last formally verified in October 2018.

The Minto Mine also includes three other properties, the BOND 1-70 claims located 39 km to the NNW of the Minto Mine property and centered at 628 46' 26'' N Latitude, 1378 56' 02'' W; the MEL claims, roughly 5 km NNW of Minto and centered at 628 39' 32'' N Latitude, 1378 18' 11'' W Longitude; and the DEL 1-113 claims, centered at 628 27' 07'' N Latitude, 1368 44' 52'' W Longitude, roughly 32 km SE of Minto. All were acquired by Northern Tiger Resources Inc. in 2008 and subject to short surface exploration programs in 2008 and an airborne magnetic-radiometric survey in 2009.

The Minto Mine property is located within a package of Category A settlement land held by Selkirk, and within the traditional territory of Selkirk. There is a co-operation agreement between Minto and Selkirk, with a NSR royalty payable to Selkirk as amended by an amendment agreement dated 15 October 2009 (collectively, the ''Co-operation Agreement''). A notice to renew the Minto lease agreements for the airport area, mill site and camp, overburden dump and explosives plant/ magazine, tailings disposal area and waste dump – open pit (together, the ''Lease Agreements'') was submitted to the Chief of Selkirk on 23 March 2016. There are no known back-in rights, payments, other agreements or encumbrances to which the property is subject to, other than the lease payments to Selkirk. The notice to renew the Lease Agreements specifies a renewal for a further 10 years, under the same terms and conditions in the original applicable Lease Agreements. In 2016, the Co-operation Agreement was renewed for a further 10 years.

The Co-operation Agreement is subject to the environmental regulations, covered under the Yukon Environmental and Socio-economic Assessment Act, required to operate a mine in the Yukon territory, and is liable for reclamation of the site as outlined in the most recent closure plan. On 1 August 2017, Minto received approval for its operation plan of its Quartz Mining Licence (QML-0001), allowing for continuing operations in Area 2 Stage 1 and 2, and Area 118, the Minto North and Ridgetop North and South Open Pits, and Minto East, Copper Keel and Wildfire underground areas.

The Minto Mine property is located west of the Yukon River, about 20 km west-north-west of Minto Landing, the latter on the east side of the river. The property is accessible by Yukon Highway 2 (the North Klondike Highway) to Minto Landing. In summer months, Minto operates a barge connecting the landing with an all-weather gravel road extending 27 km from the west bank to the mine site. In winter, the crossing is accessed by an ice bridge. There is typically a 6 week period associated with freeze-up and break-up, where access across the river is not possible. During freeze-up and break-up, access is provided by chartered air services from Whitehorse to an airstrip on the property.

The climate is continental sub-arctic, with short warm summers and long, very cold winters, with fairly light precipitation, falling mainly as rain in summer months. The field season for surface exploration work extends from late May to late September, although drilling may occur during early and late winter, depending on weather conditions. Mining activities continue year-round, although surface operations may be temporarily suspended during periods of extreme cold.

The Minto Mine property lies towards the eastern limit of the Dawson Range, with gentle to moderate terrain, with no accessibility issues, or avalanche risk. South facing slopes are normally stable and suitable for building and infrastructure construction while north-facing slopes are typically permafrost-bearing. Bedrock exposure is fairly abundant along ridgelines and hilltops and scarce elsewhere. Vegetation consists of typical northern boreal forest, which has undergone several episodes of burning, the most recent in 2010. There is sufficient water on the property to supply mining and milling operations, including accommodation and drilling.

The Minto Mine property is serviced by a spur of the main Yukon electrical grid. Basic fuel and grocery services, and an available work force are located at the village of Pelly Crossing, the only community of Selkirk, located along the North Klondike Highway about 35 km northeast of Minto Landing. Somewhat more comprehensive supplies and services are available at the Village of Carmacks along the North Klondike Highway roughly 70 kilometres south of the Minto Mine access road. The property is located approximately 250 road-kilometres north of the City of Whitehorse, a full-service community of about 29,000, the location of the Whitehorse Mining Recorder, and the Capital of Yukon.

History

The present Minto Mine property was first staked in 1971 as the Minto 1-16 claims, by the Dawson syndicate (Silver Standard Mines Ltd. and Asarco Inc.) (the ''Dawson Syndicate''). Exploration by the Dawson Syndicate included core drilling programs in 1971 and 1972.

In 1973, United Keno Hill Explorations (''UKHM'') discovered mineralization on the adjoining DEF claims, leading to the formation of a joint venture with the holders of the DEF claims. This joint venture completed a 7,887-metre core drilling program targeting the ''North Zone'' along the northern Minto property boundary. In 1974, a winter road was constructed to the airstrip, and another core drilling program of 11,228 metres in 58 holes was completed. In 1977, UKHM released a reserve estimate at the Main zone of 6,550,778 tonnes grading 1.86% Cu, 0.51 grams/ tonne (g/t) (Au), and 6.86 g/t silver (Ag), with 41% of the deposit located on the DEF claims. This is a historical reserve estimate and does not distinguish between proven and probable reserves or other resource categories, and is not compliant with modern resource and reserve standards in Canadian National Instrument 43-101. As such, the reserve estimate has not been verified and cannot be relied upon.

In 1984, Silver Standard transferred its interest to a subsidiary, Western Copper Holdings Ltd., which in 1989 transferred its interest in most of the claim block to Teck Corp (Teck). In 1993, Teck and Asarco sold their interests in the Minto Mine claims to Minto, incorporated specifically to acquire the Minto Mine and DEF claims. The two blocks were consolidated into the Minto Mine property.

In 1996, Minto completed a feasibility study and arranged project funding, followed by an announcement that it had entered into a joint venture with Asarco to take the project to production. Asarco gained a 70% interest by providing funding up to US\$25 million, with Minto retaining the other 30% and operatorship. In 1996 and 1997, Minto completed upgraded of the access road and moved two grinding mills to site. In April 1997, a final screening report on the Environmental Assessment of the proposed project was released by the Department of Indian and Northern Affairs (DIAND), followed in 1998 by issuance of a Type A water use licence. Also in 1997, a Cooperation Agreement with Selkirk towards development and operations of the Minto Mine was signed.

In March 2005, the Sherwood Mining Corporation (''Sherwood'') initiated a takeover offer for Minto. The offer closed in June 2005, resulting in Sherwood acquiring ownership of the Minto Mine. Minto continued as the operator as a 100% owned subsidiary of Sherwood.

In July 2005, Sherwood released an NI 43-101 compliant resource estimate for the Main zone, comprising 8,340,000 tonnes grading 1.83% Cu, 0.55 g/t Au and 7.95 g/t Ag, in the measured and indicated categories, and an additional inferred resource of 700,000 tonnes grading 1.41% Cu, 0.45 Au g/t and 6.0 Ag g/t. In September 2005, Sherwood changed its name to the Sherwood Copper Corporation and obtained a 10-year extension on its Type A water licence.

In June 2006, Sherwood received a 10-year extension of its quartz mining licence, valid until 30 June 2016. In 2006, it completed 24,252 metres of core drilling in 119 holes, included infill drilling at the Main zone and exploratory drilling to the north and west, and on ''Area 2'', 300-metres southeast of the Main zone. Sherwood also began mill construction and pre-stripping of the Main zone.

In 2007, a 23,292-metre core drilling program resulted in discovery of significant copper-gold mineralization at the Area 118, Copper Keel, Airstrip and Ridgetop zones. In February 2007, Sherwood released a resource estimate for the Area 2 deposit, comprising a measured and indicated resource base of 7.6 million tonnes grading 1.26% Cu and 0.48 Au g/t at a 0.5% Cu cutoff. Also in 2007, Sherwood produced their first copper-gold concentrates and expanded the mill to handle 2,400 tonnes per day (tpd). In July 2007, Sherwood delivered its first concentrate shipment to the Skagway, Alaska port, and announced it had reached commercial production on 1 October 2007.

In September 2008, Sherwood entered into an agreement with Capstone to create a mid-tier copper producer retaining the name of Capstone. The merger was completed on 24 November 2008. The following day, Capstone and Yukon Energy announced the Minto Mine was officially connected to Yukon Energy's electrical grid.

In November 2008, Sherwood, Minto and Kutcho Copper Corp. entered into an agreement with Silverstone Resources Corp. (now Wheaton Precious Metals Corp.) whereby Minto would sell to Silverstone all payable gold and silver mined, extracted, produced or otherwise recovered from the Minto Mine (''Wheaton Purchase Agreement''). Silverstone purchased the stated amount for US\$37.5 million, in return for future purchases of gold and silver the lesser of US\$3.90 per ounce of payable silver and US\$300.00 per ounce of payable gold or the prevailing market prices for these metals, subject to a 1% annual upward inflation adjustment after three years and annually thereafter. Silverstone was purchased by Silver Wheaton Corporation, now Wheaton Precious Metals Corp. in May 2009. The Wheaton Purchase Agreement was subsequently amended by a letter agreement dated 11 March 2009, an amendment agreement dated 13 October 2017 and a further Amendment Agreement dated 8 November 2019.

In 2009, Minto completed a core drilling program focusing on infilling of the Ridgetop and Area 2 deposits, and testing of other targets, leading to discovery of the Minto North and Minto East zones, and provided upgraded resource and reserve figures for the Main, Ridgetop, Area 2/Area 118 deposits.

In 2010, the Minto East deposit was defined, the copper-gold resources for the Area 2/Area 118 were expanded, and drilling led to discovery of the Wildfire and Inferno prospects. A preliminary resource estimate for the Minto East deposit was provided. In 2011, the Copper Keel and Wildfire resource subdomains were defined and incorporated into the larger Minto South deposit, and upgraded resource calculations were provided. Core drilling led to discovery of the Fireweed Prospect downdip and to the north of the Minto South deposit.

Co-operation Agreement

In September 1997, Minto entered into a Co-operation Agreement with Selkirk towards development and operations of the Minto Mine. The agreement stated that the project would provide meaningful benefits to Selkirk and its beneficiaries. In turn, Selkirk would co-operate and assist in development and operation of the project by providing access, goods and services, assisting in training and recruitment of candidates for employment, among others. The Co-operation Agreement included provision of a NSR royalty of 0.5%, to be paid directly to Selkirk in addition to the royalties which are payable during commercial production to the Federal Government pursuant to the Quartz Mining Act of 2003 (Yukon). The royalties payable to the Federal Government are then paid on to Selkirk.

An amended Co-operation Agreement was signed in October 2009 between Capstone and Selkirk, whereby 600,000 Capstone shares would to be paid out on the effective date of the Co-operation Agreement and an additional 100,000 Capstone shares would be paid on each of the next six anniversary dates. The Co-operation Agreement also called for a sliding scale of NSR payments consisting of a 0.5% NSR when benchmark copper prices on the London Metals Exchange do not exceed US\$1.80/lb, a 1.0% NSR for prices from US\$1.80 to US\$2.50; a 1.25% NSR for prices from US\$2.50 to US\$3.00/lb, and a 1.5% NSR for prices exceeding US\$3.00/lb. The agreement also states that any ''New Reserves'' exceeding 5.0M tonnes grading 1.5% copper may not be developed until Minto and Selkirk have reached a new or amended Co-operation Agreement. Also, Selkirk shall have a preferential right and opportunity to be awarded any project requirements treated as ''Preferred Opportunities''.

4. Geological Setting and Mineralization

Geological Setting

The Minto property is located within the Minto Copper belt (formerly known as the Carmacks Copper belt) (Kovacs, 2018), a 42 km long, NW-trending series of copper-gold deposits and occurrences in central Yukon. These deposits are hosted within deformed and metamorphosed inliers engulfed by the intrusions of the Late Triassic to Early Jurassic Minto pluton (204-195 Ma) (Colpron et al., 2015).

The Minto property area is underlain by the southern margin of the 204 – 195 million year old (Ma) Minto pluton. The Minto pluton consists of medium to coarse grained granite, biotite-hornblende granite to granodiorite and quartz monzonite.

The Minto pluton lies in east-west trending normal fault contact with the mafic to intermediate volcanic rocks of the Late Cretaceous Carmacks Group to the south. The Povoas Formation forms an extensive northwest trending belt and consists of variably deformed and metamorphosed greenschist and amphibolite facies, augite phyric basalt, volcaniclastic rocks, and hornblende gabbro (Hart and Radloff, 1990).

Hypogene copper sulphide mineralization is hosted within Late Triassic variably deformed, metamorphosed, and migmatized rocks that are engulfed by the undeformed and unmineralized felsic intrusive phases of the Minto pluton (Kovacs, 2018).

Copper sulphide mineralization is restricted to the metamorphic rocks and occurs in three distinct forms: disseminated chalcopyrite + pyrite, foliaform chalcopyrite, and net-textured bornitechalcopyrite + digenite (Kovacs, 2018). Contacts between foliated and massive phases are typically very sharp and lack chilled margins. Oxidation and alteration of primary mineralization indicates near-surface extensions of mineralized zones. Drill intercepts of copper-mineralized cobbles indicate ''Minto-style'' mineralization was exposed, eroded and re-deposited in sedimentary strata by the Cretaceous period.

Both brittle and ductile deformation occur in the Minto Mine vicinity. Amphibolite facies ductile deformation affected the metamorphic rocks and it is evident by the alignment of hornblende and biotite grains forming foliation, and by the segregation of quartz and feldspar grains forming gneissic texture in areas higher strain. Deformation zones occur as sub-horizontal horizons traceable for more than 1,000 metres and are commonly stacked in parallel to sub-parallel sequences. The felsic intrusive rocks are generally undeformed, although moderate to strong foliation is locally developed near the contact with the metamorphic inliers (Kovacs, 2018).

Late faulting and brittle fracturing occurring throughout the property significantly affect the economic potential. The Minto Creek fault (MC Fault), a steeply north-east dipping fault roughly bisects the Minto Main deposit into north and south blocks. The north block has moved upwards and to the left of the south block, although displacement appears minimal. To the north, the roughly east-west striking, north-northwest dipping DEF fault marks the northern limit of the Minto Main deposit. The sense of movement may be similar to the MC Fault, with a significant inferred displacement. Finding this displacement would help significantly in locating the offset extension of the Minto Main deposit. Elsewhere, the boundary between the Area 2 and Area 118 deposits is a NW-SE striking, northeast-dipping fault, showing significant displacement.

Pervasive potassic (biotite + magnetite) alteration of the metamorphic host rocks is associated with hypogene copper mineralization (Kovacs, 2018). Chloritic and/or hematitic fracturing in some areas locally host visible gold, suggesting this late structural/hydrothermal event may be economically significant. There are no veins associated with hypogene copper mineralization; however, a few late chlorite-hematite-carbonate veinlets are locally present indicating post-mineral hydrothermal alteration.

Mineralisation

Five major deposits have been delineated and/or undergone mineral extraction: the Minto Main, Minto East, Ridgetop, Minto North and Minto South deposits. The Area 2, Area 118, Copper Keel and Wildfire resource sub-domains are now considered to be continuous, comprising the Minto South deposit. A north-northwest trend is evident from the alignment of the known deposits that also includes the more recently discovered more recently Fireweed (Minto East 2), Airstrip and Inferno (Minto North 2) prospects. This north-northwest trend is also evident regionally (over 42 km), as the Carmacks Copper Cu-Au-Ag deposit and the Stu prospect are also in a northnorthwest alignment with the Minto mine as well as with the entire trend of the Minto Copper belt. Copper grades increase progressively towards the north within the trend.

The primary hypogene minerals are chalcopyrite, bornite, chalcocite, and minor pyrite. Copper sulphide minerals occur mainly as disseminated grains, foliaform stringers, and net-textured domains. Sulphide mineral content tends to increase with ductile deformation. Native gold, electrum, and gold telluride mainly occur as inclusions in bornite. Coarse free gold is locally found along late chloritic fractures, likely resulting from secondary enrichment from a hydrothermal event. Hypogene sulphide mineralization is almost always associated with biotite alteration and magnetite.

A crude zonation occurs from west to east at the Minto Main deposit, with bornite predominating in the west, transitioning to a thicker, lower grade chalcopyrite-bearing zone in the east. Both the Minto North and Minto East deposits show a similar zonation.

At the Area 2, Area 118 and Copper Keel resource subdomains of the Minto South deposit, ductile deformation appears to be more developed and mineralization is characterized by disseminated grains and minor foliaform stringers. The assemblage consists mainly of chalcopyrite-bornitemagnetite and minor pyrite. Mineralization is more homogenous and consistent than at the Minto Main and Minto North deposits, where mineralization is dominated by net-textured domains of bornite-chalcopyrite. At both the Ridgetop deposit and the Wildfire resource sub-domain, mineralization is subdivided into a near-surface horizon of supergene mineralization, and a lower zone of sulphide mineralization. The lower zone comprises chalcopyrite-bornite – magnetite + pyrite.

The predominant alteration assemblage associated with hypogene copper mineralization in the Minto mine area is a pervasive, potassic alteration, characterized by elevated biotite and magnetite content, within the horizontal mineralized zones, present in all Minto deposits. The late, postmineralization alteration assemblage includes replacement of mafic minerals by chlorite, epidote and sericite in both ore and waste rock. Hematite alteration, likely of supergene origin, is most pervasive along the DEF fault at the Minto Main deposit, and is mainly fracture controlled within narrow alteration selvages in the other deposits. Pervasive silicification tends to coincide with areas of higher grade mineralization.

Copper oxide mineralization resulting from supergene alteration processes represents either the erosional remnants of foliated horizons above the deposits, or the vertical remobilization of copper along late brittle faults and fracture zones from underlying copper sulphide zones. The oxide mineral assemblage consists of chalcocite, malachite, minor chrysocolla and azurite and rare native copper. Mineralization occurs as fracture-fill and joint coatings and, to a lesser extent, interstitially to rock-forming silicate minerals. Oxidation is also manifested as pervasive limonite, earthy hematite and clay alteration of feldspars. Oxidation is related directly to the depth of the water table, mainly less than 30 metres and is minimal at the Minto Main zone, due to its depth.

Deposit Types

The Minto deposit has been modified by deformation, amphibolite facies metamorphism, and localized metamorphic anatexis (Kovacs, 2018). Since its discovery, several hypotheses have been suggested to explain the genesis of the deposit. Previous studies attempted to look through the metamorphism and suggested a variety of deposit types, including: copper mineralization in digested Triassic volcanic rocks (A. Archer, pers. comm., in Sinclair, 1974), metasedimentary redbed copper (Kirkham, 1974), deformed and metamorphosed porphyry copper-gold (Pearson and Clark, 1979), iron oxide copper gold (IOCG) (Capstone Mining Corp., 2008), deep 'aborted' porphyry Cu-Au that formed during the early stage of porphyry Cu-Au mineralization (Tafti, 2005), and shear-hosted hydrothermal mineralization generated in the ductile root zones of porphyry systems (Hood et al., 2008; in Kovacs, 2018).

The Carmacks Copper deposit is located 42 km southeast of the Minto mine. The Minto and Carmacks Copper deposits are metallogenically related, given their spatial relation and deformed, metamorphosed, and partially oxidized nature. A recent study (Kovacs, 2018) integrated the two deposits into a single genetic model and proposed that the Minto deposit is the more migmatized analogue of the Carmacks Copper deposit (Kovacs, 2018). The same study also concluded that the two deposits together represent Late Triassic porphyry deposits hosted within Late Triassic volcanic rocks of the Stikine terrane (Stikinia) that have undergone amphibolite facies metamorphism, deformation, and partial melting (anatexis) (Kovacs, 2018).

Mineral Reserves

Current Mineral Reserves for the Minto Mine as at 31 May 2019 are set out below. These figures have been extracted without adjustment from the Competent Person's Report, which is set out in full in Part XIX – Competent Person's Report of this document.

Classification	Tonnes (kt)	Cu Grade (%)	Ag Grade (g/t)	Au Grade (g/t)	Cu Metal (kt)	Ag Metal (koz)	Au Metal (koz)
Mineral Reserve summary total
Proven	412	1.12	3.1	0.25	5	40	3
Probable	1,951	1.79	6	0.67	35	380	42
TOTAL	2,363	1.68	6	0.6	40	420	45

The Mineral Reserves can be further broken down into their component elements as shown in the table below. These figures have also been extracted without adjustment from the Competent Person's Report, which is set out in full in Part XIX – Competent Person's Report of this document:

Tonnes (kt)	Cu Grade (%)	Ag Grade (g/t)	Au Grade (g/t)	Cu Metal (kt)	Ag Metal (koz)	Au Metal (koz)
412	1.12	3.1	0.25	5	40	3
—	—	—	—	—	—	—
1,616	1.73	6	0.63	28	315	33
1,616	1.73	6	0.63	28	315	33
						—
335	2.11	6	0.88	7	63	10
335	2.11	6	0.88	7	63	10
	Mineral Reserves – Minto East underground —	—	Mineral Reserves – Minto South Deposit Copper Keel underground —	—	—	—

Operations at the Minto Mine restarted in October 2019 with mining recommencing at the Minto East underground mining area, which is to be completed by the end of the second quarter of 2020. The Copper Keel underground zone is scheduled to be mined between the first half of 2020 and the second half of 2022. The Minto East 2 underground and Minto North zones are not currently permitted under the existing Quartz Mining License. Minto East 2 is scheduled for mining from the third quarter of 2021 and the second quarter of 2023; Minto North is scheduled for the third quarter of 2022 to the third quarter of 2023.

Mineral Resources

Mineral Resources by deposit as of 31 May 2019:

		Cu	Ag	Au
Classification	Tonnes (kt)	Grade (%)	Grade (g/t)	Grade (g/t)	Cu Metal (kt)	Ag Metal (koz)	Au Metal (koz)
Stockpiles Stockpiles (measured)	412	1.12	3.05	0.25	5	40	3
Minto South Deposit (MSD) includes Copper Keel
Measured	1,632	1.49	4.6	0.57	24	243	30
Indicated	4,041	1.72	6.0	0.67	70	776	87
Total M&I	5,673	1.66	5.6	0.64	94	1,021	117
Inferred	2,338	1.54	6.1	0.56	36	458	42
Minto North 2
Measured	—	—	—	—	—	—	—
Indicated	—	—	—	—	—	—	—
Total M&I	—	—	—	—	—	—	—
Inferred	1,419	1.42	4.7	0.51	20	214	23
Minto East 2
Measured	—	—	—	—	—	—	—
Indicated	2,778	1.72	7.0	0.80	48	629	72
Total M&I	2,778	1.72	7.0	0.80	48	629	72
Inferred	1,889	1.38	4.1	0.50	26	247	30
Ridgetop
Measured	1,531	0.96	2.1	0.25	15	105	12
Indicated	3,534	0.87	2.9	0.30	31	326	34
Total M&I	5,065	0.90	2.6	0.28	45	431	46
Inferred	318	0.75	1.6	0.13	2	16	1
Minto North
Measured	221	0.94	2.9	0.21	2	20	1
Indicated	257	1.00	5.6	0.61	3	46	5

Classification	Tonnes (kt)	Cu Grade (%)	Ag Grade (g/t)	Au Grade (g/t)	Cu Metal (kt)	Ag Metal (koz)	Au Metal (koz)
Total M&I	477	0.97	4.4	0.42	5	67	7
Inferred	28	0.70	3.4	0.32	0	3	0
Minto East
Measured	—	—	—	—	—	—	—
Indicated	632	2.13	6.08	0.89	13	124	18
Total M&I	632	2.13	6.08	0.89	13	124	18
Inferred	109	1.44	4.76	0.60	2	17	2

Mineral Resources by deposit as of 31 May 2019:

Classification	Tonnes (kt)	Cu Grade (%)	Ag Grade (g/t)	Au Grade (g/t)	Cu Metal (kt)	Ag Metal (koz)	Au Metal (koz)
Measured	3,975	1.20	3.35	0.38	46	409 1,901	47
Indicated	11,242	1.46	5.26	0.60	164		216
TOTAL M&I	15,037	1.40	4.78	0.54	210	2,310	263
Inferred	6,100	1.42	4.79	0.51	86	939	100

Minto 2019 Mineral Reserves by deposit as at 31 May 2019:

Classification	Tonnes (kt)	Cu Grade (%)	Ag Grade (g/t)	Au Grade (g/t)	Cu Metal (kt)	Ag Metal (koz)	Au Metal (koz)
Reserves summary – stockpile Stockpiles (proven)	412	1.12	3.1	0.25	5	40	3
Reserves – Minto South deposit Copper Keel underground
Proven	0	0	0	0	0	0	0
Probable	1.616	1.73	6	0.63	28	315	33
TOTAL	1.616	1.73	6	0.63	28	315	33
Reserves – Minto East underground
Proven	0	0	0	0	0	0	0
Probable	335	2.11	6	0.88	7	63	10
TOTAL	335	2.11	6	0.88	7	63	10

Minto 2019 Mineral Reserve totals:

Classification	Tonnes (kt)	Cu Grade (%)	Ag Grade (g/t)	Au Grade (g/t)	Cu Metal (kt)	Ag Metal (koz)	Au Metal (koz)
Reserves summary Total
Proven	412	1.12	3.1	0.25	5	40	3
Probable	1,951	1.79	6	0.67	35	380	42
TOTAL	2,363	1.68	6	0.60	40	420	45

5. Potential future development

The inherited Minto Mine plan, prepared by Capstone, contemplates a remaining life of the Minto Mine to be approximately four years at full production. This is based on the mining of underground deposits comprising a portion of the existing resource base.

Pembridge's primary objective will be to extend the Minto Mine life beyond its forecast closure date of 2023. To do so it must upgrade the existing Mineral Resources to Mineral Reserves, and delineate new Mineral Resources to be eventually proven up into Mineral Reserves. Between 2008 and 2012, Capstone invested approximately US\$24 million in exploration and added almost 1,000,000 tonnes of contained copper resource in eight newly discovered separate deposits at the Minto Mine. No exploration activities have been undertaken on the property since. The lack of exploration since 2012 has resulted in a lack of additional known reserves for future extraction and presents a significant opportunity for Pembridge and its Shareholders. A number of prospective exploration targets have been identified and will require drilling. The Directors intend to initiate a comprehensive study of the geological, structural, alteration and mineralogical settings to improve the understanding of the setting and applicable deposit model, whilst initiating an intensive exploration on the Minto Mine property.

Pembridge management has identified a number of potential operating efficiencies that it believes could significantly lower operating costs.

6. Reclamation and closure

In February 2018, Minto submitted to the Yukon Water Board its eighth revision to the Minto Mine Reclamation and Closure Plan (''RCP''), which addresses the long-term physical and chemical stability of the Minto Mine site, and includes reclamation of surface disturbances. It includes a program for site monitoring and management during closure implementation and after completion of decommissioning and reclamation. This RCP has been scoped to fulfill requirements in closure plan submissions for both the December, 2014 updated Quartz Mining Licence QML-0001, and updated Water Use Licence QZ14-031-1 (which are described in more detail in Part XIX – Competent Person's Report of this document).

The RCP calls for a systematic approach to decommissioning and closure at the Minto Mine site, and incorporates reassessment of progressive closure and reclamation activities where possible during site operations for use during final closure. Specifically, it addresses temporary (up to five years) closure activities, followed by final closure plans, the latter with an estimated active closure period of three years.

The temporary closure period would be a result of unsuitable economics which are expected to improve. It would commence with the cessation of mining of known ore deposits and milling of stockpiles and resume when economic conditions permit. During this temporary closure period, some full-time site personnel would ensure the Minto Mine site is actively cared for.

Final closure of the Minto Mine site will commence when known ore deposits are depleted or the long-term economic conditions are unfavourable for continued mining, resulting in cessation of mining and milling of stockpiles. As soon as permanent closure commences, the mill and other facilities will be decommissioned, closure water conveyance will be constructed, and disturbed areas and waste facilities will be contoured, covered and revegetated. Personnel requirements will vary with the nature of particular activities, but will decline once the major decommissioning and reclamation tasks are completed.

Cost estimates for the proposed closure measures form the basis of financial security requirements, on the estimates of each infrastructure units described in the RCP. Estimated closure costs for ''Year 0'' (2018) and the end of Minto Mine stand at CAD\$62.2 million and CAD\$62.7 million, respectively.

7. Trends and recent movements in the copper price

Copper prices were high in 2011 when the average price over the year reached US\$8,871 per metric tonne. From 2011, the copper price went into a steady decline, hitting a recent historical low point of an average price over the year of US\$4,863 per metric tonne in 2016. 2017 saw a reversal of the trend with an average annual copper price of US\$6,166 per metric tonne with an increasing trend over the year. The copper price reached a peak at the beginning of January 2018 when it traded at US\$7,202 per metric tonne, supported by: (i) a weaker US dollar; (ii) a strong global demand outlook including from China; and (iii) increasing risk of supply deficits as a result of systemic underinvestment in the copper mining sector.

The first quarter of 2018 saw a downtrend in copper prices, but eventually returned to approximately US\$7,200 per metric tonne in early June 2018. However due to a stronger supply following smoother than anticipated labour renegotiations in Chile and growing concerns of a trade war between the USA and China, the copper price in the second quarter of 2018 fell back to around US\$6,000 per metric tonne. As of January 2019, fears of an all-out trade war between the US and China have since subsided, pushing copper back up to US\$6,500 per metric tonne. However, trade war concerns resurfaced in April 2019 and as a result prices have fallen back below US\$6,000 per metric tonne.

Table: Historical spot copper price (Source: London Metal Exchange on 23/10/2019)

8. Sales, financing and off-take

Set out below is a summary of the Wheaton Purchase Agreement, the Off-Take Agreement and the Investor Consortium Financing Agreement which comprise agreements by customers to purchase material produced to provide finance for the restart of mining operations at the Minto Mine and for general working capital purposes at the Minto Mine. The Company considers those contracts summarised below to be material.

The Wheaton Purchase Agreement is an arrangement known more commonly in the industry as a ''streaming agreement''. Further details are set out at paragraph (a) below.

Streaming agreements are commonly used in the mining sector as an alternative method of financing mining operations and typically involve the mine owner selling, for an upfront fee, the future production of the mine at a fixed price below market value. The future production subject of the sale (known as a ''stream'') is usually the by-product of the mine's main operations – for example, precious metals such as gold and silver which are the by-product of copper production.

The Off-Take Agreement is of an off-take agreement for copper concentrates. Further details are set out at paragraph (b) below.

Off-take agreements are common in the mining sector and allow producers of commodities, particularly base metals, to guarantee a market for a mine's future production. Off-take agreements, such as the Off-Take Agreement, are for the part-processed metal bearing concentrates produced from the mine. This means that the buyer under an off-take agreement will take delivery not only of the copper content but also the by-product precious metals contained in the concentrates. Accordingly when a streaming agreement, such as the Wheaton Purchase Agreement, is also in place, the purchaser under the off-take agreement will pay the mine owner for the base metal content (in this case the copper content) and the streaming agreement counterparty for the by-product metals (in this case Wheaton for the gold and silver content). The streaming agreement counterparty (in this case Wheaton) then pays the producer the price for the precious metals that has been negotiated under the streaming agreement.

The Investor Consortium Financing Agreement is a financing agreement in respect of Minto. Further details are set out at paragrah (c) below.

(a) Wheaton Purchase Agreement

On 20 November 2008, Minto signed a precious metals purchase agreement (the ''Wheaton Purchase Agreement'') with Silverstone Resources Corp. (now Wheaton Precious Metals Corp.) (''Wheaton''), Capstone, Kutcho Copper Corp. and Sherwood Copper Corporation (which was, in 2008, the owner of Minto and Kutcho Copper Corp.), as subsequently amended by a letter agreement dated 11 March 2009, an amendment agreement dated 13 October 2017 and a further amendment agreement dated 8 November 2019 (the ''Amendment Agreement'').

In exchange for an up-front cash payment of US\$37,500,000 from Wheaton to Minto, which was paid in 2008, Minto has been and remains entitled to the following sums from Wheaton in respect of the gold and silver content of all metal bearing concentrates produced over the life of the Minto Mine.

Payable Gold: Minto is entitled to the lesser of (i) US\$300.00 per ounce of Payable Gold (subject to a 1% annual upwards inflationary adjustment after three years and yearly thereafter) and (ii) the prevailing price quoted by the London Bullion Market Association (''Market Price'') per ounce of Payable Gold (US\$329/oz as at 28 October 2019), for 100% of Payable Gold under 30,000 ounces in any 12 month period and 50% of Payable Gold over 30,000 ounces from the Minto Mine in any 12 month period. The gold price is increased when the price of copper is below US\$2.50 per pound in accordance with a formula which allows Minto to receive an enhanced payment for the gold content when the copper price is subdued. This is a common feature of streaming agreements.

Payable Silver: Minto is entitled to receive the lesser of (i) US\$3.90 per ounce of silver produced by Minto delivered under the Agreement (''Payable Silver'') (subject to a 1% annual upwards inflationary adjustment after three years and yearly thereafter) and the prevailing Market Price per ounce of Payable Silver, for 100% of the Payable Silver generated from Minto mine.

Pursuant to the terms of Amendment Agreement, for a limited period (the ''Modified Price Period'') the received price (the ''Received Gold Price'') for gold produced by Minto delivered under the Wheaton Amendment Agreement (''Payable Gold'') will increase.

For the avoidance of doubt, during the Modified Price Period the received price for Payable Silver (the ''Received Silver Price'') will remain unaltered to that provided for in the Wheaton Purchase Agreement.

Modified Gold Price

During the Modified Price Period, the Received Gold Price will increase to 75% of the Market Price (the ''Modified Gold Price'') on the day immediately prior to the time when title to the concentrate shipped passes from Minto to the buyer of concentrate, which shall be Sumitomo, as offtake partner, pursuant to and in accordance with the terms of the Off-Take Agreement (described below).

Modified Price Period

The Modified Gold Price is effective from the date that Payable Gold or Payable Silver is first delivered (or required to be delivered) to Wheaton (''First Delivery'') and shall end on the earlier of:

• (i) 12 calendar months from First Delivery plus 60 days; and
• (ii) any time at which 11,000 ounces of Payable Gold have been (or were required to be) delivered to Wheaton.

At the end of the Modified Price Period, Payable Gold will return to being priced as per the Wheaton Purchase Agreement.

The Wheaton Purchase Agreement and amendments thereto, including the Amendment Agreement, are governed by the laws of British Columbia, Canada.

Relationship with the Off-Take Agreement

Under the terms of the Off-Take Agreement, a provisional payment is made by Sumitomo to Minto on a monthly basis for 90% of the estimated value of concentrate produced at the Minto mine that month (''Advanced Payment''), with the final 10% payment due on delivery to Japan. The Advanced Payment calculation also includes precious metals credits and therefore Minto will receive 90% of the revenue from the Payable Gold and Payable Silver due under the terms of the Wheaton Purchase Agreement and, during the Modified Price Period, the Amendment Agreement.

(b) Off-Take Agreement

The Company and Sumitomo Canada entered into an off-take agreement on 22 July 2019 (the ''Off-Take Agreement''), whereby Sumitomo Canada committed to purchase all of the copper concentrate produced from the Minto Mine up to a maximum of 55,000 DMT or 31 December 2020 (whichever is the later) as exclusive off-taker of copper concentrate produced. The delivery method under the Off-Take Agreement is CIF Intercoms 2010, main Japanese Port. Pricing is based on 97.5% of copper content, 90% of silver content and 95% of gold content, all by reference to standard market index pricing quotations, and subject to standard market treatment and refining charges. The quotational period for copper is set at the third calendar month following the arrival at dispatch port and Minto is entitled to provisional invoicing in the sum of up to 90 per cent. and advance payment facility of up to 90% (at a cost of 3 month LIBOR plus 1.5%). Off specification material is subject to good faith negotiation in accordance with market practice and the specific grading issue, but could result in pricing penalties in the event of increased processing costs. Termination is available on insolvency of either party, a material breach of more than 10 Business Days' duration or mutual agreement. Additionally the Company and Sumitomo Canada shall discuss and negotiate whether Sumitomo Canada shall make a prepayment for concentrates sold under the Off-Take Agreement. In the event that no agreement is reached, the Company may terminate the Off-Take Agreement. Each party remains responsible for their respective payment or delivery obligations with regard to obligations incurred before termination. Neither party is liable for indirect, consequential, punitive or other special damages not based on direct economic losses. The Off-Take Agreement is governed by the laws of British Columbia, Canada.

(c) Investor Consortium Financing Agreement

The Company and the Investor Consortium entered into a financing agreement on 3 June 2019 (the ''Investor Consortium Financing Agreement''), pursuant to which the Investor Consortium advanced \$10 million to Minto to finance the restart of mining operations at the Minto Mine. The Investor Consortium shall be entitled to have their advance repaid from all free cash-flows arising from Minto until the holders of the Loan Note have received US\$10 million plus interest at a rate of 8% per annum (the ''Principal Repayment Amount'').

In return for providing the finance, the Investor Consortium will be entitled to a combined interest equal to two-thirds of the economic value of Minto including two-thirds of all free cash-flows from Minto, and the Company shall be entitled to one-third of the economic value of Minto including one-third of all free cash-flows from Minto provided that the Company shall not be entitled to receive any cash distributions from Minto until the Principal Repayment Amount is paid. An acquisition, sale of Minto shares, assets, merger, lease, transfer, exclusive licence or other disposition of all or substantially all of the assets of Minto will be treated as a liquidation event, thereby triggering payment of the outstanding balance of the Principal Repayment Amount unless the holders of more than 50% of the then outstanding Loan Note elect otherwise.

In the event that the Minto Joint Advisory Committee in its reasonable opinion makes a decision to request additional funding, Pembridge will fund the first US\$3 million (''Additional Pembridge Amount'') requested in the form of an interest-free loan. Such funding request will be made with at least 90 days' notice (the ''Notice Period'').

Should the Additional Pembridge Amount be lent by Pembridge in response to a funding request within the Notice Period, the Additional Pembridge Amount (which sum shall not garner any interest) will be repayable to Pembridge out of all free cash-flows and realizations from Minto after the Principal Repayment Amount has been repaid to the Investor Consortium. Should Pembridge be unable to provide the Additional Pembridge Amount in response to a funding request within the Notice Period, then the Company's economic interest will be immediately reduced pro rata to 11% from one-third prior to any new funds provided by the Investor Consortium or other third parties (i.e., Pembridge will forego 22.3% of the economic value of Minto including 22.3% of all free cash-flows and realisations from Minto) for not providing the Additional Pembridge Amount and will be further diluted by any new funds if not matched pro rata by the parties in response to further such funding requests. Any additional funds that are provided by the Investor Consortium (which shall not garner any interest) will be added to the Principal Repayment Amount and will receive priority repayment from Minto free cash flows until repaid.

In the event that Minto requires further equity finance beyond US\$3 million, Pembridge and the Investor Consortium shall provide such finance in the proportions of their respective economic interests in Minto and if either party shall fail to fund the other shall be entitled to fund all or some of the other party's share but with a corresponding adjustment to their respective economic interests based on the then market value of Minto.

For the avoidance of doubt, the Investor Consortium does not have and will not be entitled to any voting rights in Minto pursuant to the the Investor Consortium Financing Agreement.

The Investor Consortium Financing Agreement is governed by the laws of New York.

9. Key terms of the Placing

Placing

The Company has raised approximately £2.6 million (before expenses) pursuant to the proposed issue of 20,800,000 Placing Shares at a Placing Price of 12.5 pence per share. The Bookrunner, as the Company's agent, has procured irrevocable commitments to subscribe for the full amount of Placing Shares from subscribers in the Placing.

The Placing is conditional upon, inter alia:

• (a) the Placing Agreement becoming wholly unconditional (save as to Admission) and not having been terminated in accordance with its terms prior to Admission; and
• (b) Admission occurring by 8:00 am on 16 December 2019 (or such later date as the Company and the Bookrunner may agree, not being later than 4:30 p.m. on 31 December 2019.

If Admission does not proceed, the Placing will not proceed and all monies paid will be refunded to subscribers. Admission is conditional upon the Placing and accordingly if the Placing Agreement is terminated prior to Admission, Admission will not take place.

Following satisfaction of all conditions and subject to the Placing Agreement becoming unconditional in all respects, application will be made for the Enlarged Issued Share Capital to be admitted to a Standard Listing on the Official List and to trading on the Main Market of the London Stock Exchange. It is expected that Admission will become effective and that dealings for normal settlement in the Ordinary Shares will commence on 16 December 2019.

The Ordinary Shares comprising the Enlarged Issued Share Capital will, when issued, rank pari passu in all respects with the Ordinary Shares in issue on Admission, including the right to receive dividends and other distributions declared following Admission.

Immediately following Admission, the Enlarged Issued Share Capital will consist of 68,720,947 Ordinary Shares.

When admitted to trading, the Ordinary Shares (including the Existing Ordinary Shares and the Placing Shares) will continue to be registered with ISIN GB00BG107324 and SEDOL code BG10732 and trade under the TIDM PERE.

Placing Agreement

The Company, the Directors, the Senior Managers and the Bookrunner entered into the Placing Agreement on the date of this document relating to the Placing pursuant to which, subject to certain conditions, the Bookrunner agreed to use their reasonable endeavours to procure subscribers for up to 20,800,000 Placing Shares to be issued by the Company. The 20,800,000 Placing Shares subscribed for in the Placing by subscribers at the Placing Price will represent up to approximately 30.3% of the Enlarged Issued Share Capital.

The Placing is conditional upon, inter alia:

• (a) the Placing Agreement becoming wholly unconditional (save as to Admission) and not having been terminated in accordance with its terms prior to Admission; and
• (b) Admission occurring by 8:00 am on 16 December 2019 (or such later date as the Company and the Bookrunner may agree, not being later than 4:30 p.m. on 31 December 2019).

The Bookrunner, as the Company's agent, has procured irrevocable commitments to subscribe for the full amount of Placing Shares from subscribers in the Placing, and there are no conditions attached to such irrevocable commitments other than Admission.

Further details of the Placing Agreement are set out in paragraph 10 of Part XVI – Additional Information of this document.

Use of the Net Placing Proceeds

Pembridge will use the Net Placing Proceeds (which will be £2.5 million) and the proceeds of Facility A of the Convertible Loan Agreement (which will be £1.0 million) to loan Minto £2.3 million, held in restricted cash for collateral towards a surety bond, and the remainder will be allocated towards general and administrative functions at its office in London and to cover the costs of Admission.

Use of funds from the Investor Consortium Financing Agreement

The uses of the investment made by the Investor Consortium pursuant to the Investor Consortium Financing Agreement are exclusively for the Minto operations. The costs can be summarised as follows:

Underground mining

CAD\$4.0 million was budgeted to be spent on underground development, contract labour, new equipment leases, equipment mobilisation and maintenance of existing underground equipment.

Capital projects

CAD\$0.78 million was budgeted to be spent on the rehabilitation of the ventilation raise and associated equipment at Minto East.

Milling

CAD\$2.7 million was budgeted to be spent on maintenance, recommissioning of the processing plant, as well as crushing and grinding in the first month or operation.

Site general and administrative costs

CAD\$3.2 million was budgeted to be spent on site general and administrative costs, such as site service, health and safety, engineering, claim maintenance, geology and administration.

Total aggregated restart costs in the second and third quarters of 2019 were expected to be CAD\$10.8 million (US\$8.4 million).

Working capital

Following receipt of £2.18 million (net of expenses) in the 2017 Fundraise, the Company utilised such funds as working capital in connection with an assessment of prospective acquisitions, including the Minto Acquisition. As at 10 December 2019 (being the latest practicable date prior to the date of this document), the Company had £27,000 in available working capital remaining.

The Company is of the opinion that, taking into account existing cash balances, the Net Placing Proceeds, the sums available under the Convertible Loan Agreement and the Investor Consortium Financing Agreement, the Enlarged Group has sufficient working capital for its present requirements, that is, for at least the 12 months following the date of this document.

Lock-up and orderly market arrangements

Each of the Directors and Senior Managers have agreed with the Company, and the Bookrunner not to dispose of any of their interests in any Ordinary Shares held or acquired for a period of at least 12 months from the date of Admission, save in certain limited circumstances and to sell any Ordinary Shares through the Bookrunner acting in accordance with generally accepted orderly market principles for a further six months thereafter.

The aggregate interests following Admission which will be subject to the lock-up and orderly market arrangements, as described above, will amount to 19,860,351 Ordinary Shares which is equivalent to approximately 28.9% of the Enlarged Issued Share Capital.

Further details of the lock-up and orderly market arrangements are set out in paragraph 11.3 of Part XVI – Additional Information of this document.

Admission, settlement and dealings

Applications will be made for the Enlarged Issued Share Capital to be admitted to a Standard Listing on the Official List of the FCA and to trading on the Main Market London Stock Exchange. A Standard Listing will afford investors in the Company a lower level of regulatory protection than that afforded to investors in companies with Premium Listings, which are subject to additional obligations under the Listing Rules.

It is expected that Admission will become effective and dealings, for normal settlement, will commence on 16 December 2019. No application has been or will be made for any of the warrants to be admitted to trading on the Main Market of the London Stock Exchange or on any other securities market.

The Ordinary Shares are eligible for CREST settlement. Accordingly, settlement of transactions in the Ordinary Shares following Admission may take place within CREST if the relevant holder so wishes. CREST is a voluntary system and Shareholders who wish to receive and retain certificates will be able to do so.

The warrants are not eligible for CREST settlement and will remain in certificated form.

Pending the dispatch of definitive share certificates (as applicable), instruments of transfer will be certified against the register. No temporary documents of title will be issued.

10. Financial Information

The historical financial information of the Company is incorporated by reference into this document as set out in Part XX – Historical Financial Information on the Company of this document. Copies of the interim and annual accounts of the Company for the financial periods since the 12 month financial period ended 31 December 2016 may be found on the Company's website: www.pembridgeresources.com.

11. Taxation

Information regarding certain taxation with respect to the Ordinary Shares and Admission is set out in Part XIV – Taxation of this document. These details are, however, intended as a general guide to the current position under UK taxation law. If you are in any doubt as to your tax position you should consult an appropriate professional adviser.

Investors subject to tax in other jurisdictions are strongly urged to contact their tax advisers about the tax consequences of holding Ordinary Shares.

12. The Takeover Code

The City Code on Takeovers and Mergers (the ''Takeover Code'') applies to the Company. Under Rule 9 of the Takeover Code (''Rule 9''), any person who acquires an interest in shares, whether by a series of transactions over a period of time or not, which, taken together with any interest in shares held or acquired by persons acting in concert (as defined in the Takeover Code) with him, in aggregate carry 30% or more of the voting rights of a company, that person is normally required by the Takeover Panel to make a general offer to all of the remaining shareholders to acquire their shares.

Similarly when any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30% of the voting rights of such a company but does not hold shares carrying more than 50% of such voting rights, a general offer will normally be required if any further interests in shares are acquired by any such person which increases the percentage of shares carrying voting rights in which they are interested.

An offer under Rule 9 must be in cash or be accompanied by a cash alternative and at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company acquired during the 12 months prior to the announcement of the offer.

13. Warrants

At the date of this document, the Company has 14,606,084 warrants, each entitling the holder to subscribe for one Ordinary Share exercisable at a price of 32 pence per share. Details of all warrants are set out in the table in paragraph 14 below.

The Company has agreed to grant 300,800 Bookrunner Warrants to Brandon Hill pursuant to the terms of the Placing Agreement. The Bookrunner Warrants are exercisable at a 25% premium to the Placing Price at any time up to 36 months from the date of Admission.

Further details of the terms of the warrants are set out in paragraph 7 of Part XVI – Additional Information of this document.

14. Fully diluted share capital

The following table sets out the fully diluted share capital as at the date of this document and as at Admission:

Securities	As at the date of this document	As a percentage of fully diluted share capital
Existing Issued Share Capital	22,384,925	21.2%
Other Subscription Shares	25,536,021	24.2%
Warrants @ 32 pence	14,606,084	13.8%
Existing share options	2,205,000	2.1%
New share options	6,219,000	5.9%
Placing Shares	20,800,000	19.7%
Bookrunner Warrants at 12.5 pence	300,800	0.3%
Ordinary Shares issuable under Convertible Loan Agreement(1)	13,600,000	12.9%

(1) Subject to the conversion limit that Mr. Al-Jebouri (and any person acting in concert with him within the meaning set out in the Takeover Code) shall hold no more than 29.9% of the Company's issued share capital.

Accordingly, at Admission the Enlarged Issued Share Capital is expected to be 68,720,947 Ordinary Shares with a total of approximately 23,330,884 options and warrants outstanding. If all the outstanding options and warrants were to be exercised the Company would receive approximately £6.5 million in cash and the options and warrants would represent 22.1% of the fully diluted issued share capital of the Company.

15. Dividend policy

The Company currently intends to retain earnings, if any, for use in its future business operations and expansion. The Company will only pay dividends to the extent that to do so is in accordance with the Companies Act and all other applicable laws. There can be no assurance that the Company will declare and pay, or have the ability to declare and pay, any dividends in the future.

16. UK Bribery Act 2010

The government of the United Kingdom has issued guidelines setting out appropriate procedures for companies to follow to ensure that they are compliant with the UK Bribery Act 2010 which came into force with effect from 1 July 2011. The Company has conducted a risk review into its operational procedures to consider the impact of the UK Bribery Act 2010 and has drafted and implemented an anti-bribery policy as adopted by the Board and also implemented appropriate procedures to ensure that the Directors, employees (including the Senior Managers) and consultants comply with the terms of the legislation.

17. Risk factors

Shareholders and other prospective investors in the Company should be aware that an investment in the Company involves a high degree of risk. Your attention is drawn to the risk factors set out in Part II – Risk Factors of this document.

18. Further information

You should read the whole of this document and not just rely on the information contained in this Part VII – The Minto Acquisition and the Group of this document. Your attention is drawn to the information set out in Part II – Risk Factors to Part XXI – Historical Financial Information on Minto (inclusive) of this document, which contain further information on the Company.

PART VIII

REGULATORY AND OPERATING ENVIRONMENT

(a) Regulation of mining in Canada and ownership of resources

In Canada the government or Crown assumes ownership of the majority of mineral resources. This absolute ownership is, however, contested by many indigenous groups who have never ceded their territories and others who have entered treaties yet the question of subsurface ownership remains disputed. Private interests and indigenous peoples own a relatively small amount of the mineral resources in Canada.

Canada has both federal territories and provinces with relatively greater autonomy. In the provinces mining is a provincial jurisdiction according to Canada's founding constitution. In the territories however it has been a federal jurisdiction but is in the process of being devolved to territorial governments. In the Yukon, which is one of the three territories, this process is completed while in the other two territories, Nunavut and the Northwest Territories, the federal department of Aboriginal Affairs and Northern Development currently remains the authority. The differences between Canada's territories is historically and politically specific and unique to each region.

Each of the 10 provinces as well as the Yukon has their own mining acts as well as other laws and policies that apply to the mining sector. Federally the Northwest Territories and Nunavut Mining Regulations apply only in those territories while federal laws such as the Fisheries Act of 1868, Environmental Assessment Act of 2012 and Explosives Act of 2013 apply to the mining sector across the country.

In the majority of Canada, private ownership of land does not include ownership of subsurface rights. This means that private property can be staked and the mineral rights granted to an exploration company. The total area of private land in Canada is relatively small at around 11% of the country's surface area and only a small portion of this private land is in areas of active mineral exploration.

In Canada, where indigenous groups have negotiated land claim agreements, surface and subsurface lands are treated separately. In several cases indigenous groups have negotiated surface rights to land where the subsurface is still owned by the Crown. In other cases, even within the same land claim, indigenous peoples may obtain surface and subsurface title. The Nunavut Land Claim Agreement demonstrates this. While the Inuit obtained surface rights to roughly 20% of the territory of Nunavut they obtained full ownership including mineral rights to only 2% of the territory. Another example is the Tli'Cho First Nation in the Northwest Territories that settled a land claim with Canada in 2003. In the Tli'Cho territory the Tli'Cho First Nation owns the majority of sub-surface rights.

A number of indigenous nations and organizations have established their own mining codes and policies. Where they have recognized title over surface and sub-surface, and or self-government agreements the authority of these policies is relatively clear. In other cases, where title or selfgovernment has not been negotiated with the state, indigenous people are having to fight to have their own protocols recognized and respected by provincial, federal and territorial governments and by industry.

(b) Land access

Companies gain access to land in Canada by 'staking a claim' to sub-surface mineral rights. Historically this involved placing physical markers into the ground to literally 'stake' a claim to the minerals in the land. After a claim is staked, companies have to record their mineral claim with the relevant provincial or territorial agency.

In the provinces of British Columbia, Newfoundland and Labrador, Ontario and Quebec, physical claim staking has been changed to an online map staking process, this is not the case in the Yukon where physical staking predominates.

After the claim is recorded a person is entitled to hold the claim for a period of one year. Work must be done on the claim from year to year in order to keep it in 'good standing' and for the claim to remain active, however claim holders can apply for more than one year of work at one time if they have spent more than a statutory minimum amount, subject to certain statutory maximums pursuant to the Yukon Quartz Mining Act. Without any work done on the claim, mineral claims expire within a particular period of time, typically two years.

Though there are areas where mineral rights cannot be staked large expanses of Canada are open to mining companies and prospectors to claim under what is referred to as the 'free-entry' system. Free-entry provides access to a large area of land, permission to access these lands for prospecting, ability to claim land with no consultation, and with a claim comes the exclusive rights to conduct exploration work and to extract and sell minerals found within the claim. Traditionally there has been very little to stand in the way of mining companies exerting their rights to explore and mine once a claim is registered.

There is nothing within the conventional free-entry system that ensures the rights of indigenous peoples to free prior informed consent, or of municipalities and property owners to protect their interests. The establishment of mineral claims can also create barriers to alternate land use decisions including indigenous land claims and the establishment of protected areas. The free entry system is currently being challenged across Canada.

(c) Areas where mining is not allowed to occur

Canada has a number of protected areas that are designated by the federal, provincial and territorial governments for the conservation of natural ecosystems and that are off-limits to mineral exploration and mining.

Canada has a system of national parks run by the federal government with the goal of protecting representative areas of national significance in each of 39 natural regions across the country. These parks are created under the authority of the National Parks Act of 1930. The system currently covers a land area of almost 300,000 km² or about 2.25% of Canada. Claim staking or any mineral exploration activity and mining are not permitted in National Parks.

The federal government has two other types of protected areas, national wildlife areas and migratory bird sanctuaries. These areas are managed for the conservation of specific wildlife species and do not out-right prevent mining but require special authorization for it to occur.

Each of the provinces and territories have also created protected areas under their own jurisdiction – most of which do not permit mineral exploration or extraction. These protected area networks vary in the amount of area covered.

Together provincial and federal protected areas make up about 9.4% of Canada's land area with the vast majority (94%) of protected areas not being open to mining.

In cases where mining is permitted in a protected area it is usually due to the fact that mineral claims were staked prior to the establishment of the protected area. In a number of cases across Canada, creation and expansion of protected areas has been complicated by the existence of mineral rights that were granted before designation of the area as protected. Examples of this challenge include Tombstone Park in the Yukon, Nahanni National Park in the Northwest Territories, the Rivie`re George Protected area in Quebec and Wolf Lake Forest Reserve in Ontario.

Canada also has 16 biosphere reserves recognised within the international United Nations Education, Scientific and Cultural Organisation network. The designation of a biosphere reserve does not prevent mineral exploration or mine development. Biosphere reserves include core protected areas and surrounding lands that are to be managed as buffer or transition zones. In Canada most of the core conservation areas in biosphere reserves' are provincial and national parks so these areas are not open to mining but other areas of the reserve may be. Exploration activity is currently occurring within at least two Canadian biosphere reserves (Clayoquot Sound B.C. and Manicouagan-Uapishka, QC).

(d) Community and indigenous population consultation

Section 35 of the Canadian Constitution Act of 1982 recognizes and affirms existing ''Aboriginal and treaty rights'' and this section of the Constitution is frequently called on to defend indigenous rights. Important court challenges have been won in support of indigenous rights and it is now firmly entrenched in the case law that governments have a duty to ''consult and accommodate'' indigenous peoples whenever they take a decision (like recording a mineral claim, permitting mineral exploration or granting a mining lease) that could infringe on their rights. Nevertheless in much of Canada, mineral claims are staked and exploration activities occur with little or no consultation.

Development of an actual mine will almost always include consultation but the ability of an indigenous group to substantially alter a mining project or to say no to a mining project is not well respected in most areas of the country.

Free Prior Informed Consent (''FPIC'') is the right to participate in decision making and the right to say 'yes' or 'no' to development decisions and activities affecting indigenous peoples lands and resources. FPIC is recognized by the United Nations Declaration of the Rights of Indigenous Peoples (UNDRIP 2007), which Canada endorsed in 2010.

Under FPIC, consent must be given without coercion or manipulation and before plans have been approved by governments. To be ''informed'' consent indigenous people must receive adequate information in order to fully understand the positive and negative consequences of pending decisions such as proposed mining developments. Communities must be able to make decisions following their own processes and traditions. Under FPIC indigenous property rights should be secured in domestic law and consensual and transparent consultation and decision-making processes should be used.

Though Canada has endorsed the United Nations Declaration on the Rights of Indigenous Peoples, neither the federal government nor the provincial governments have established clear mechanisms to ensure that the obligations within the Declaration are being met. Industry and the provincial, territorial and federal governments continue to emphasize the more vague concepts of consultation and accommodation over consent. This does not ensure communities the right to say 'yes' or 'no' to development decisions and activities in their territory.

The only substantial areas of Canada where consent is required unambiguously are areas covered under some land claim agreements where indigenous land title is recognized. These are specific to each of the negotiated and signed agreements. For example in Nunatsiavut Inuit title to lands and mineral resources has been recognised, providing the Inuit with decision making authority over these lands. The Nunatsiavut Inuit have developed their own mineral exploration standards that include consent for all exploration activities on their lands.

In the Northwest Territories mining companies are encouraged to inform indigenous peoples in areas that land claims have been settled in order to stake claims. This is different from FPIC, in that despite land claim agreements indigenous consent is not always sought.

As much of Canada is not covered by land claim agreements and lacks clear regulations for adequate consultation, many indigenous groups have developed their own protocols for engaging with the mining industry and protecting their lands. Examples include the Taku River Tlingit First Nation and the Kitchenuhmaykoosib Inninuwug. These are not officially recognised by provincial or federal governments, though a court case has provided support for their relevance in consultation processes.

Established legal requirements to consult, accommodate Indigenous peoples have lead many companies to enter into agreements with Indigenous peoples during the exploration and development phases. Natural Resources Canada has compiled a listing of these agreements but not conducted a serious review of their contents, successes or failures.

Exploration agreements may include communication and consultation protocols; capacity funding to engage with a company and conduct independent review of a project; support for training community members to increase their employability in the project; commitments to employee community members; and financial contributions to the community. Pitfalls in such agreements have included loose language around financial commitments, requirements for no interference in the project by all members of the community, the implicit assumption or promotion of exploration agreements as endorsing later phases of the project and the creation of conflict, division and suspicion within communities when decision making processes around the agreements are not transparent.

(e) Review process of specific projects before approval

Most new mines in Canada will be subject to some degree of environmental assessment before going into operation. In some regions, particularly the northern territories (Yukon, Northwest Territories and Nunavut), exploration activities may also trigger an assessment if an initial screening finds concerns about the potential impacts of the activities.

In these provinces, the re-written Canadian Environmental Assessment Act of 2012 (''CEAA 2012'') applies to most major mining projects, though the new act provides opportunities for provincial review processes to substitute for the federal process.

In the Yukon, Northwest Territories and Nunavut federal environmental assessments have by-in large been replaced by regional review process that were developed as part of land claim processes with the indigenous peoples of each territory. In Nunavut there is the Nunavut Impact Review Board, though CEAA 2012 may apply in to some projects in Nunavut where there are trans-boundary impacts or ''national interests'', in which case a joint process is undertaken. In the Northwest Territories, the Mackenzie Valley Review Board is responsible for assessments in most of the territory but CEAA 2012 applies within the Inuvialuit (Inuit) Territory and as in Nunavut, if there are trans-boundary issues or national interests. In the Yukon the CEAA 2012 process has been replaced with the Yukon Environmental Assessment Board.

A CEAA 2012 assessment requires the proponent to explain potential environmental effects related to narrow areas of federal jurisdiction such as Aboriginal peoples, inter-provincial impacts, fisheries and migratory birds. Projects will undergo an initial screening after which they may or may not be subject of a full review. Projects may be rejected if the review finds a proposed project will have significant negative effects, though a project could be approved if the effects were found to be ''justifiable under the circumstances''.

Project proponents are responsible for conducting and compiling the technical research and consultation for the environmental impact statement that is made available for review and comment. In some cases an independent review panel may be created to review the environmental impact statement and conduct hearings on the project. A review panel assessment is generally considered to be more rigorous and provide a greater degree of public participation. The criteria for a project being reviewed by a panel are the potential for significant environmental effects and / or a high degree of public concern.

One of the purposes of CEAA 2012 is to promote sustainable development, however there is a poor track record of including serious analysis of the sustainability of projects in most assessments. Relatively rigorous sustainability assessments were applied to the Voisey's Bay Nickel, Kemess North Gold-Copper, Whites Point Basalt, and MacKenzie Gas projects. Whites Point, and Kemess North, along with a recent decision to reject the proposed Prosperity Gold-Copper mine are the few occasions where a federal environmental assessment has rejected a project.

An important aspect of CEAA 2012 has been the allocation of participant funding and indigenous funding that helps groups with an interest in the project to participate effectively in the review process. The new process under CEAA 2012 includes participant funding but those following the changes in law and practice are concerned about very constrained timelines, restrictions on who may participate and decreasing amounts of funding allocated for public and Aboriginal participation.

Provincial environmental assessment processes vary across the country. All the provinces except Ontario automatically review major mining projects (but not exploration activities). Provincial processes have been criticized for their susceptibility to political influence, lack of transparency, lack of respect for indigenous rights, and poor public participation processes. Criticisms of British Columbia's review of the proposed 'Prosperity Project' provide an example of all these concerns.

Though often fraught with frustration, indigenous peoples are usually active participants in federal, territorial and provincial environmental assessment processes. These reviews represent an important opportunity for them to understand and document potential impacts on their rights and Canadian case law requires good-faith participation of indigenous people in consultation processes like environmental assessment. On their own, however, environmental assessments are not adequate to address and resolve issues of indigenous rights and title. This is especially the case, as indigenous peoples mainly participate in those processes as stakeholders as opposed to as 'rights' holders.

In addition to approval of the environmental assessment, mining projects must obtain a number of separate specific authorizations for use of lands and water, camp construction, mine closure etc. Such authorizations may result in minor changes to a project but seldom result in any profound changes and are even less likely than an environmental assessment to stop a project from proceeding.

(f) Environment considerations

Mining can have a range of environmental impacts from the exploration phase through to the development and operation of a mine. These impacts may be localised or, as in the case of water pollution, quite extensive.

Most provincial, Yukon and Federal Mining Acts do relatively little to protect the environment during exploration and operation; instead environmental controls typically come from other laws such as environmental protection, fish and water-related laws. Some of these laws have federal and provincial versions, though they are often harmonised to reflect similar standards.

In theory the provisions of most environmental protection laws apply to mineral exploration but because exploration activities typically occur in remote regions there is little government oversight and enforcement is very difficult.

The Nunatsiavut (Inuit of Labrador) Government has developed a comprehensive exploration regulation. In addition to their provisions for consent, the regulation has provisions for baseline data collection, protection of wildlife and site clean-up.

The Prospectors and Developers Association of Canada, an industry organization has developed ''E3 Plus'' a set of standards and best practices for exploration. While these standards represent a reasonable guide they are entirely voluntary in application and are often not respected in the field.

One of the most important federal environmental laws that relates to mining activities is also one of Canada's oldest – the Fisheries Act of 1868. Along with the Environmental Assessment Act of 2012, the Fisheries Act of 1868 has undergone significant changes of great concern to Indigenous peoples, environmental advocates, research scientists and public-interest law organizations. The Fisheries Act of 1868 still prevents putting substances harmful to fish into fish-bearing waters but habitat protections are limited to commercial, recreational and Aboriginal fisheries and to more drastic damages. The changes also increase what was already a substantial discretion for the government to get around protections by passing regulations.

The mining industry has just such a regulation; the Metal Mining Effluent Regulations were promulgated in 2002 and allow the disposal of mine effluents into surface water so long as the standards for 9 parameters are met. The law also requires toxicity testing of mine effluent and biological monitoring of effects downstream of the mine. This monitoring has shown that, despite relatively consistent compliance with the regulations, mine effluents are having negative effects on down-stream aquatic communities. The Metal Mining Effluent Regulations also allow natural fishbearing water bodies to be re-classified as ''Tailings Impoundment Areas'', so they can be used to dispose mine wastes.

The Canadian Environmental Protection Act of 1999 includes provisions for the safe transport, storage and disposal of fuels and toxic substances. It also includes reporting requirements for emission of toxic substances, and mine sites are required to submit data on the toxics in waste rock, tailings, effluents and air emissions. These data are publicly available in the ''National Pollutant Release Inventory''. For many years the mining industry was exempt from reporting the toxic substances in waste rock and tailings. MiningWatch Canada successfully fought the exemption in Federal Court and the data is now being made available. In a 2011 review of enforcement of the Canadian Environmental Protection Act of 1999 the Commissioner on the Environment and Sustainable Development found considerable fault with Environment Canada's enforcement of the Canadian Environmental Protection Act of 1999.

The provinces and territories each have different regulations for the discharge of mine effluents, management of solid waste, air emissions and noise. Monitoring and reporting on compliance is largely dependent on the companies themselves. In Ontario, half of the 20 operating metal mines reported exceedances in effluent requirements in 2010. Many of these were relatively minor but several mines had repeated and serious issues including effluent that was acutely lethal to trout and the zooplankton Daphnia magna. Most of the exceedances were not penalized with charges or fines but only required operators to develop action plans to improve the situation.

(g) Distributed of mining profits between corporations, national / regional governments, indigenous nations and local communities

Mining royalties and mineral taxes are levied on mine production by provincial, territorial or federal governments whichever has jurisdiction. Each province, the Yukon, and the Northwest Territories and Nunavut have distinct laws that govern the royalty rate. Resource royalties are by in large dependent on 'defined mining profits' rather than a gross value of production.

As of 2010 in Nunavut and the Northwest Territories royalties are applied on a sliding scale. If the value of the mine's output is up to CAD\$5 million dollars, then the royalty rate is 5%. With an output of CAD\$5-10 million the royalty rate increases to 6%, with an increase of 1% per each additional CAD\$ million of output. This increases to a maximum of 14%. Other jurisdictions apply royalties from 5 (Ontario mining tax on remote mines) to 17% (Manitoba mining tax). Because royalties are based on profits, and companies are able to apply considerable deductions in the calculation of profits, the value of mineral production that is retained in royalties is much lower than the tax rates suggest and averages less than 4% of the value of production.

In addition to royalties that are meant to compensate for the taking of a public resource, mining companies must pay provincial corporate income taxes that range from 8.25% to 15% and federal income tax of 15% As with royalties, the ability to write off significant costs of production and exploration means that mining companies can substantially reduce the taxes they pay and may avoid paying any income tax at all.

Malcolm Taggart examined the average annual mining fees, royalties, and administration costs in Canada's territorial north between 1992-97 for the Canadian Arctic Resource Committee. He concluded that during that period the fees and royalties levied on the mineral industry did not cover the costs of administering, subsidizing, and promoting the industry. Taggart also suggests that territorial governments gain the most in terms of resource revenues, due to the amounts of income tax levied from personal income tax on mine workers wages. Similar findings came from a joint study by MiningWatch and Pembina Institute published in 2002.

The signing of some land claim agreements has led to revenue sharing for mining projects with Indigenous peoples that are signatories of the agreement. The Nunavut Land Claim Agreement requires the federal government to pay a percentage of the royalties received (50% of the first US\$2,000,000 and 5% of any additional royalty) into a trust for the Inuit and gives the Inuit the right to directly receive the full royalty payments on lands where they own the mineral rights. The Nunavut Land Claim Agreement also requires signing of an Inuit Impact Benefit Agreement between one of three regional Inuit organizations and a mining company. The Inuit Impact Benefit Agreement will detail other potential benefits to be provided to the Inuit in recognition of and as compensation for potential impacts of a project. Employment, training, business opportunities, environmental protection and monitoring, protection of cultural sites and practices, housing, and health and safety may be considered within an Inuit Impact Benefit Agreement.

Though Nunavut is one of the few jurisdictions in Canada where an Impact Benefit Agreement (''IBA'') is legally required, there are many examples where such agreements have been signed by companies as a means of accommodating impacts on indigenous peoples and of gaining and demonstrating the social acceptability of a project (even though the duty to consult technically lies with provincial, territorial and federal governments). The IBA Community Toolkit is an excellent resource developed by the Gordon Foundation that explains some of the complexities of negotiating IBAs.

Because most IBAs are negotiated outside of legal requirements revenue sharing and other benefits are left to community and company negotiators to agree on. They may include payment of fixed amounts, a percentage of profits, equity in the company or a combination of these. In addition to monetary payments IBAs typically include provisions for training and hiring targets for members of the signatory community. An emerging best practice in IBAs is the inclusion of provisions for robust and independent monitoring of the companies operations, and mechanisms for ongoing dialogue and dispute resolution.

(h) Decommissioning and restoration

The legacy of Canada's long mining history includes destroyed landscapes, polluted waterways and physical hazards left in the wake of mining operations. Fortunately, since the 1980s regulations have been put in place across Canada to require mining companies to rehabilitate mine sites once they have finished with them. Concerns remain, however, about whether the laws are truly adequate to deal with worst-case scenarios, the extent to which mine sites can be rehabilitated and the need for long-term or ''perpetual'' care of closed mining sites.

The key aspects of the preventative regulations are requirements for an operator to develop a closure plan and provide financial assurances so that if it goes bankrupt or abandons the site, the government has access to funds to pay for the necessary rehabilitation. The specifics of laws and policies requiring closure plans and financial assurances vary across Canada and are reviewed extensively in a 2006 report by Joseph Castrilli for the National Orphaned and Abandoned Mining Initative.

One area of concern is the fact that amounts and types of assurances that companies provide are not always disclosed to public scrutiny. Reviews in the US have repeatedly shown that assurances posted by operators for mine rehabilitation are below independently assessed costs. The Faro Zinc Gold Mine in the Yukon, Cantung Mine in Northwest Territories and Jericho Diamond Mine in Nunavut are recent Canadian examples of mines that have gone bankrupt without sufficient financial assurances.

Typically, financial assurances are a bond or letter of credit though some jurisdictions, such as Ontario, also allow ''self-assurance''. The latter approach assumes that if a company has a good enough credit rating they can be relied on to make the necessary funds available when it comes time to rehabilitate a site. A credit rating is not, however a sensitive indicator of a company's solvency and self-assurance does nothing to protect the public from a company walking away from a site.

A mine closure plan and its successful implementation will not return a mine site to a predisturbance state and the extent of post mining changes to the landscape varies considerably depending on the mine. For all mines, rehabilitation will include removal buildings and equipment and securing any potential physical hazards such as open shafts, and minimizing ongoing environmental risks.

Smaller underground mines that put wastes into the mined out areas (backfilling) may leave a relatively small physical footprint. Larger underground and open pit mines, however, will physically alter the landscape in dramatic ways. Rehabilitation will entail sculpting waste piles to increase stability, possibly capping them with engineered covers and re-vegetating them. Native species are commonly used for revegetation but the original vegetation community is rarely established during the closure phase. For protection of engineered covers it may even be important to try and prevent the re-establishment of native vegetation with potential to grow deep roots that could break up the upper layers of an engineered soil barrier.

Once the activities in a closure plan have been completed most Canadian jurisdictions allow for the return of mining lands to government control and authority, potentially absolving the company of future liability. Though possible, few provincial jurisdictions outside of Quebec and Saskatchewan have taken back mining lands into government hands, in large part due to the lack of clear policy guidance and financial mechanisms. When Manitoba took back closed mine sites the province found there were significant unanticipated additional costs for maintaining the sites. Ontario refused Barrick Gold's application to relinquish the Renabie Mine, a site that has ongoing problems including cyanide leaching from the tailings.

Long-term water management is the most serious issue at closed mine sites. While waste areas may be re-sculpted and the surfaces replanted with impressive meadows of green grasses – what is really important is how the wastes may react to water flowing under the surface. Where wastes are stored under water to reduce risks of acid mine drainage and metal leaching, the impoundments walls, the water supply spillways and other engineered features must be monitored and maintained in perpetuity. This presents a substantial legal, financial and ethical challenge for the industry, regulators and affected communities. Where active water treatment is likely to be required, long-term costs and management requirements must be considered ahead of project approval.

PART IX

THE COMPANY, THE BOARD AND THE SENIOR MANAGERS

The Directors are responsible for the overall management and control of the Company and there are no other persons who manage the investments of the Company. The Directors will review the operations of the Company at regular meetings and it is currently intended that, the Board will meet at least four times a year.

The Directors have provided the Company with the necessary combination, at this stage of its development, of both specialist market sector and corporate and acquisition experience that will be key to the successful execution of the Company's strategy. The Board will be reviewed to ensure that it remains appropriate for the Company such that the constitution of the Board at that time will reflect the profile of the Company and prevailing corporate governance standards.

Directors:

Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board (age 50)

Gati Al-Jebouri, who was born in Bulgaria in 1969, graduated from the University of Bristol with a Civil Engineering degree in 1990 and from the Institute of Chartered Accountants as a chartered accountant in 1994 qualifying with KPMG in London. In 2001, Mr Al-Jebouri was appointed Deputy Minister of Energy of Bulgaria and in 2002 Bulgaria's First Deputy Minister of Finance. His varied career has included working for the accountancy firm KPMG in London and Bulgaria until being recruited to LUKOIL, where he soon became Director of Investment and Finance in the London office. In 2003, Mr Al-Jebouri became Chief Financial Officer of LITASCO SA (LUKOIL International Trading and Supply Company), where he rose to Chief Executive Officer two years later. In 2010, Mr Al-Jebouri became Executive Director for Finance and Marketing of LUKOIL Mid East Ltd and in 2017 was promoted to Managing Director of the Company and Vice President of PAO LUKOIL responsible for Upstream Middle East. He continues to be advisor to LUKOIL on Middle East matters and serves on the Board of Directors of LITASCO.

Francis (Frank) Ralph McAllister, Non-Executive Director (age 77)

With over 50 years' industry experience, Frank McAllister has held various senior and board positions in a number of metals and mining companies.

He worked with ASARCO LLC for 33 years during which he became chief financial officer in 1982 and then executive vice president of Copper operations in 1993. Eventually became ASARCO LLC's president and chief operating officer before becoming chairman and chief executive officer in 1999.

In 1996 he became an independent director of Cliffs Natural Resources, Inc. and its lead director from 2004 to 2013. From 2001 to 2013, Mr McAllister was chairman and chief executive officer of Stillwater Mining Company. Mr McAllister also served as president of the National Mining Association between 2012 and 2013.

Mr McAllister holds an MBA from New York University, Bachelor of Science in Finance from the University of Utah and attended the Advanced Management Program at Harvard Business School.

Guy Roger Le Bel, Non-Executive Director (age 61)

Guy Le Bel brings more than 30 years of international experience in business development, strategic and financial planning to the Pembridge Board. He is currently chief executive officer and chief financial officer of Golden Queen Mining Ltd. He was previously vice president, evaluations for Capstone and vice president, business development for Quadra/FNX Mining Ltd. Mr Le Bel also held business advisory, strategy and planning, business valuation, and financial planning management roles at BHP Billiton Base Metals, Rio Algom Ltd, and Cambior Inc., together with independent consultation mandates across the industry. He provides extensive experience across precious and base metals industries in the America. Mr Le Bel has held board positions in a numerous junior exploration and mining companies.

Mr Le Bel holds an MBA Finance from Ecole des Hautes Etudes Commerciales (Montreal), a Master Applied Sciences, Mining Engineering from University of British Columbia and a B.Sc. Mining Engineering from Universite Laval. He is a professional engineer (O.I.Q.).

Senior Managers:

Paul Fenby, Chief Financial Officer (age 54)

Paul Fenby has over 25 years' experience in natural resources, most recently as Group CFO of Main Market listed Asia Resource Minerals plc between 2013 and 2015. There he was responsible for both the London and Jakarta listed entities of the Indonesia focussed coal mining company. Immediately prior to joining Pembridge he was the Interim CFO at Smiths Detection, a division of Smiths Group Plc. After qualifying in 1990 as an accountant in public practice he joined ExxonMobil Corp. where he held roles in finance, strategic planning, sales & marketing and external affairs. He then held senior international finance roles at BG Plc and Petrofac Plc, and has lived and worked in Egypt, Kazakhstan, Malaysia and Indonesia. Paul holds a degree from the University of Leicester, and is a Fellow of the Institute of Chartered Accountants in England and Wales.

Thomas Horton, Vice President, Corporate Development (age 34)

Thomas Horton is a mining professional with a range of work experience across Canada, Middle East, Europe and the UK. He joined Pembridge from Private Equity firm Duke Street Capital Ltd, where he was involved in deal execution and origination, following the completion of his MBA. Prior to this, Thomas was business development manager for MineARC Systems Ltd, where he successfully expanded the business across Europe and Middle East. Before MineARC Systems (Pty) Ltd, Thomas was at RFC Ambrian Ltd where he worked with a number of London and ASX listed mining and oil & gas clients in a corporate broking and capital markets capacity. Prior to RFC Ambrian, Thomas was a project engineer in the Canadian mining industry working for AMEC Foster Wheeler plc and Fluor Corp., where he worked on Vale's Long Harbour nickel processing plant construction, Freeport McMoran's El Abra SX EW plant expansion, and the feasibility studies for BHP Billiton Ltd's Jansen project and Agrium Inc.'s Vanscoy expansion project. Thomas holds a Masters in Business Administration (MBA) from London Business School, and has a Master's degree (MEng) in Mechanical Engineering from the University of Manchester. Thomas is also Co-Chairman and Secretary for the Association of Mining Analysts.

The Company is managed by the Board and there is no separate investment manager.

Management Equity Incentives

The Board believes that the ongoing success of the Company depends to a high degree on retaining and incentivising the performance of Executive Directors and other members of the senior management team with awards of options under the Pembridge share option plan with nonemployee sub-plan and US sub-plan as adopted on 17 November 2016 and subsequently amended on 21 September 2018 (the ''Share Option Plan''). Key terms of awards will be determined by the remuneration committee of the Board (the ''Remuneration Committee''). The key terms of the Share Option Plan are summarised in paragraph 9 of Part XVI — Additional Information of this document.

Currently a total of 2,205,000 options have been granted under the Share Option Plan to current and former Directors, executives and to certain consultants. All of these options have exercise prices of between 20 pence and 80 pence per Existing Ordinary Share. These options are all time vesting resulting in three equal tranches as described in paragraph 8.4 of Part XVI — Additional Information of this document.

In recognition of the work of the executive management team and in order to reflect the nature of the business following the Minto Acquisition, the Remuneration Committee made the following recommendations to the Board which have been adopted by the Board conditional on Admission:

Bonus Ordinary Share awards

The following current and former members of the executive management team and certain former staff members and former consultants will receive Ordinary Shares by way of bonus as set out below. The bonus Ordinary Share awards are conditional on Admission, and are calculated on the basis of the gross cash equivalent of the bonus payable in Ordinary Shares at the Placing Price:

Name	Equivalent gross cash amount in US\$	Number of Ordinary Shares at the Placing Price
Gati Al-Jebouri	500,000	3,078,581
David Linsley (former Chief Executive Officer)	500,000	3,078,581
Paul Fenby	260,000	1,600,862
Thomas Horton	155,000	954,360
Other former staff members	75,000	461,787

The amounts noted above are subject to statutory deductions for Tax and National Insurance, and so the actual amount of shares issued to each individual may be reduced, depending on their personal tax position.

All of the Placing Shares issued to the current executive management team are subject to a 12 month lock-up arrangement with an orderly market restriction for a further six months, details of which are set out in paragraph 11.3 of Part XVI – Additional Information of this document.

In addition, Guy Le Bel, who was responsible for the identification and negotiation of the Minto Acquisition has been awarded a bonus of 1,539,290 Ordinary Shares, which equates to \$250,000 divided by the Placing Price, conditional on Admission and such Ordinary Shares are subject to a 12 month lock-up arrangement with an orderly market restriction for a further six months, details of which are set out in paragraph 11.3 of Part XVI – Additional Information of this document.

Salary reviews

The non-executive directors agreed that no fees would be taken until Admission. Gati Al-Jebouri, as an executive director, receives a salary of £240,000 per annum rising to £360,000 on Admission, which for the first 12 months of his tenure will be paid 50% in Ordinary Shares, and 50% in cash.

Share option awards

The Remuneration Committee also made the following recommendations to the Board which have been adopted by the Board conditional on the completion of the Minto Acquisition and Admission with respect to the grant of options under the Share Option Plan. The number of Ordinary Shares and options shown is the maximum available if the performance conditions are met and are split into three equal tranches. The performance conditions are based on business fundamentals linked to:

• (i) objective and measurable progress being made to extend life of the Minto Mine by at least four years;
• (ii) the first shipment of concentrate from Minto; and
• (iii) achieving production of 60% of the Minto Mine's mill's design capacity of 120,000 tonnes of mill throughput per month.

The Remuneration Committee will determine the extent to which (if any) the performance conditions have been made and attribution to individual option holders. Once the vesting conditions have been satisfied the options may be exercised for a period of five years from the vesting date, after which they will lapse. Further details of the achievement of the performance targets will be set out in the Company's annual report for the financial year ended 31 December 2019. The options will be awarded at 12.5 pence per Ordinary Share. There will be no retesting of these awards after the financial year ended 2020, but the Remuneration Committee will have discretion to carry an award forward to reward future performance falling to be assessed up to 31 December 2020. No consideration has been paid for the grant of the awards:

Name	Number of options
Gati Al-Jebouri	2,880,000
Paul Fenby	1,440,000
Thomas Horton	864,000
Frank McAllister	400,000
Guy Le Bel	400,000
Other staff members	235,000

Corporate Governance

The Directors recognise the importance of sound corporate governance and the Company will comply with Quoted Companies Alliance (''QCA'') Corporate Governance Code, as published by the QCA, to the extent they consider appropriate in light of the Company's size, stage of development and resources.

The Company will hold Board meetings periodically as issues arise which require the attention of the Board. The Board will be responsible for the management of the business of the Company, setting the strategic direction of the Company, establishing the policies of the Company and appraising the making of all material investments. It will be the Board's responsibility to oversee the financial position of the Company and monitor the business and affairs of the Company on behalf of the Shareholders, to whom the Directors are accountable. The primary duty of the Board will be to act in the best interests of the Company at all times. The Board will also address issues relating to internal control and the Company's approach to risk management. The Company has also established a Remuneration Committee, an audit committee of the Board (the ''Audit Committee'') and a Nomination Committee of the Board (the ''Nomination Committee'') with formally delegated duties and responsibilities.

The Remuneration Committee, which will comprise Guy Le Bel as chair and Frank McAllister, will meet not less than twice each year. The Remuneration Committee will be responsible for the review and recommendation of the scale and structure of remuneration for Directors and senior management, including any bonus arrangements or the award of share options with due regard to the interests of the Shareholders and other stakeholders.

The Audit Committee, which will comprise Guy Le Bel as chair and Frank McAllister will meet not less than twice a year. The Audit Committee will be responsible for making recommendations to the Board on the appointment of auditors and the audit fee and for ensuring that the financial performance of the Company is properly monitored and reported. In addition, the Audit Committee will receive and review reports from management and the auditors relating to the interim report, the annual report and accounts and the internal control systems of the Company.

The Nomination Committee, which will comprise Frank McAllister as chair, Gati Al-Jebouri and Guy Le Bel, and will meet normally not less than twice each year. The Nomination Committee is responsible for reviewing succession plans for the Directors and the Senior Managers.

The Company has adopted and will operate a share dealing code governing the share dealings of the Directors of the Company and applicable employees with a view to ensuring compliance with the Market Abuse Regulation.

The Company has adopted, a share dealing policy regulating trading in the Company's shares for the Directors and other persons discharging managerial responsibilities (and their persons closely associated) which contains provisions appropriate for a company whose shares are admitted to trading on the Official List (particularly relating to dealing during closed periods which will be in line with the Market Abuse Regulation). The Company will take all reasonable steps to ensure compliance by the Directors and any relevant employees with the terms of that share dealing policy.

PART X

UNAUDITED PRO FORMA FINANCIAL INFORMATION FOR THE ENLARGED GROUP

Section A: Unaudited pro forma financial information

The unaudited consolidated pro forma statement of net assets and income statement of the Enlarged Group set out below in this section of this Part X – Unaudited Pro Forma Financial Information For The Enlarged Group of this document have been prepared in a manner consistent with the accounting policies to be adopted by the Company in preparing the Group's audited consolidated financial statements for the period ended 31 December 2019 on the basis set out in the notes to the Pro Forma Financial Information in accordance with Annex 20 of the Prospectus Regulation. The adjustments in the unaudited pro forma financial information are expected to have a continuing impact on the Enlarged Group, unless stated otherwise.

The unaudited pro forma statement of net assets has been prepared based on the net assets of the Group as at 31 December 2018 and has been prepared to illustrate the impact the Minto Acquisition, which completed on 3 June 2019 on the net assets of the Group as if it had been completed on 1 January 2018.

The unaudited pro forma income statement has been prepared based on the consolidated income statement of the Group for the year ended 31 December 2018. The unaudited pro forma income statement has been prepared to illustrate the impact of the Minto Acquisition on the consolidated income statement of the Group as if it had been completed on 1 January 2018.

The unaudited pro forma financial information has been prepared on the basis that the Acquisitions will be accounted for under the acquisition method pursuant to IFRS 3 ''Business Combinations''. Under the acquisition method, assets and liabilities are recorded at their fair values on the date of purchase and any excess of the fair value of the total purchase price over the fair values of the tangible and intangible assets acquired and liabilities assumed is recorded as goodwill. As of the date of this document, the valuation studies necessary to finalise the fair values of the purchase price, the assets acquired and the liabilities assumed have not been finalised. Management has made an initial estimate of the fair values of certain items, but these may be subject to material change once the valuation studies have been finalised.

Accordingly, the unaudited pro forma statement of net assets and income statement do not reflect the final fair value adjustments to the acquired assets and liabilities. A final determination of these fair values will reflect, inter alia, consideration of the final purchase price, as well as the final valuation based on the actual net tangible and intangible assets, if any, that exist as of the closing of the Acquisitions. Any adjustments will change the allocation of the purchase price, which will affect the fair value assigned to the assets and liabilities and could result in a material change to the figures shown in the unaudited pro forma statement of net assets and the unaudited pro forma income statement.

The unaudited pro forma financial information has been prepared for illustrative purposes only and, by its nature, addresses a hypothetical situation and, therefore, does not represent the Group's or the Enlarged Group's actual financial position or results.

The unaudited pro forma financial information does not constitute financial statements within the meaning of Section 434 of the Companies Act. Shareholders should read the whole of this document and not rely solely on the summarised financial information in this Part X – Unaudited Pro Forma Financial Information for the Enlarged Group of this document. PKF Littlejohn LLP's report on the unaudited pro forma financial information is set out in Section B of this Part X – Unaudited Pro Forma Financial Information for the Enlarged Group of this document.

The unaudited pro forma financial information does not purport to represent what the Group's financial position and results of operations actually would have been if the Minto Acquisition, had been completed on the date indicated nor does it purport to represent the results of operations for any future period or the financial condition at any future date.

1. Unaudited pro forma statement of net assets

	Pembridge as at 31 December 2018	Minto as at 31 December 2018	Minto Acquisition	Issue of Placing Shares net of costs	Enlarged Group at 31December 2018
	US\$'000 (note 1)	US\$'000 (note 2)	US\$'000 (note 3)	US\$'000 (note 4)	US\$'000
ASSETS Non-current assets: Goodwill and other
intangibles Mineral properties, plant and equipment	— 15	— 32,982	7,109 —	— —	7,109 32,997
Intangible assets Long term deposits Derivative asset	148 — —	— 2,338 —	— — —	— — —	148 2,338 —
NON-CURRENT ASSETS	163	35,320	7,109	—	42,592
Current assets: Cash and cash equivalents Receivables Inventories Prepaids	151 240 — —	3,814 11,305 7,963 114	5,774 (11,305) (5,712) —	2,491,750 — — —	2,501,489 240 2,250 114
CURRENT ASSETS	391	23,196	(11,243)	2,491,750	2,504,093
TOTAL ASSETS	554	58,516	(4,134)	2,491,750	2,546,685
LIABILITIES Current liabilities: Trade and other payables Borrowings	(1,831) (279)	(7,184) —	5,838 —	— —	(3,177) (279)
CURRENT LIABILITIES	(2,110)	(7,184)	5,838	—	(3,456)
Non-current liabilities: Deferred revenue Deferred income tax	—	(10,054)	—	—	(10,054)
liabilities	—	(1,681)	—	—	(1,681)
Asset retirement obligations Deferred consideration Borrowings	— — (103)	(23,600) — —	— (10,000) (10,000)	— — —	(23,600) (10,000) (10,103)
NON-CURRENT LIABILITIES	(103)	(35,335)	(20,000)	—	(55,438)
TOTAL LIABILITIES	(2,213)	(42,519)	(14,162)	—	(58,894)
NET ASSETS (LIABILITIES)	(1,659)	15,997	(18,296)	2,491,750	2,487,792

Notes

^1. Pembridge financial information as at 31 December 2018 has been extracted from the Company's audited financial statements for the year ended 31 December 2018 incorporated by reference in Part XX — Historical Financial Information of the Company of this document.

^2. Minto financial information as at 31 December 2018 has been extracted from Minto's audited financial statements for the year ended 31 December 2018. The financial information has been translated from CAD\$ to US\$ due to Pembridge having adopted US dollars as its presentational currency.

^3. Minto Acquisition: A pro forma adjustment has been made to reflect the initial accounting for the Minto Acquisition by Pembridge, being the elimination of the investment in Minto against the non-monetary assets acquired and recognition of goodwill. Pembridge has made an initial estimate of the fair value of certain assets and liabilities acquired, but will need to fully determine the fair value of the net assets acquired pursuant to the Minto Acquisition within 12 months of the acquisition date in

accordance with IFRS 3. This process, known as a purchase price allocation exercise may result in changes to the amounts shown above for assets, liabilities and goodwill, which may be material. The purchase price allocation process will require a valuation of identifiable intangible assets acquired. An adjustment has been made to reduce the receivables by US\$11.305 million and to reduce payables by US\$7.184 million, as the settlement of these items remains with Capstone. A reduction of US\$5.712 million has been made to inventory, as an initial management estimate, which is subject to change, of the reduction in net realisable value of purchased inventory.

The US\$10 million payable under the Investor Consortium Financing Agreement is shown as a non-current US\$10 million liability. Accrued interest of US\$0.584 million has been included in current liabilities as the amount of interest due under the Investor Consortium Financing Agreement falling due within 12 months, at the agreed interest rate of 8%, less tax relief at 27%. Consideration payable to Capstone of US\$10 million has been shown in deferred consideration (being US\$5 million payable on the recommencement of milling operations and US\$5 million payable if the average London Metal Exchange copper bid price is above US\$3.00/lb for two consecutive calendar quarters after milling operations recommence) No accrual has been made for a consideration payment of US\$10 million payable to Capstone if the average London Metal Exchange copper bid price is above US\$3.50/lb for two consecutive months after milling operations recommence, on the basis that the Directors consider, such that based on the forward copper price curve, such possibility is very unlikely.

Transaction costs incurred after 31 December 2018 of \$0.762 million (including VAT at 20%) have been included in accrued liabilities.

1. The US\$2.5 million adjustment represents the Net Placing Proceeds, represented by a receipt of £2.6 million, being the issue of 20.8 million Placing Shares at £0.125 per share, conditional on Admission, less associated costs of Admission totalling £0.1 million. This has been converted into US dollars using the exchange rate of GBP£1:US\$1.2993.

	Minto as at 31December 2018	Minto as at 31December 2018
	CAD\$'000 (note 5(a))	US\$'000 (note 5(b))
ASSETS
Non-current assets:
Mineral properties, plant and equipment Long term deposits	44,996 3,190	32,982 2,338
	48,186	35,320
Current assets:
Cash and cash equivalents	5,203	3,814
Receivables	15,423	11,305
Inventories	10,864	7,963
Prepaids	156	114
TOTAL ASSETS	79,832	58,516
LIABILITIES
Current liabilities:
Trade and other payables	9,801	7,184
Income tax payable	—	—
	9,801	7,184
Non-current liabilities:
Deferred revenue	13,716	10,054
Deferred tax	2,294	1,681
Asset retirement obligations	32,197	23,600
TOTAL LIABILITES	58,008	42,519
NET ASSETS (note 6)	21,824	15,997

⁵⁽a): This is the historical statement of net assets for Minto as at 31 December 2018 as extracted from Minto's audited financial statements for the year ended 31 December 2018, which is included in Part XXI – Historical Financial Information on Minto of this document.

^6: The unaudited pro forma statement of net assets has been prepared on the basis that the Acquisition will be treated as an acquisition of a business in accordance with IFRS 3 Business Combinations. The pro forma statement of net assets does not reflect the final fair value adjustments to the acquired assets and liabilities as the fair value measurement of these items are still being finalised. For the purposes of the pro forma statement of net assets, the excess purchase consideration over the carrying amount of the net assets acquired has been attributed to intangible assets (goodwill), adjusted for Pembridge management estimates on the value of certain assets and liabilities.

	Minto

Consideration Less carrying value of net assets acquired	(US\$m) 10.0 2.9
Goodwill	7.1

⁵⁽b): Minto's statement of net assets has been translated from CAD\$ to US\$ using the exchange rate on 31 December 2018 of CAD\$1:US\$0.733.

2. Unaudited pro forma income statement

	Pembridge year to 31 December 2018 (note 1) US\$'000	Minto year to 31 December 2018 (note 2) US\$'000	Minto Acquisition adjustments (note 3) US\$'000	Transaction costs (note 4) US\$'000	Enlarged Group US\$'000
Revenue Operating costs	—	66,451	—	—	66,451
Production costs Royalties Depletion and	— —	(85,687) (707)	— —	— —	(85,687) (707)
amortisation Administration costs	— (3,829)	(1,911) —	— —	— (762)	(1,911) (4,591)
Earnings (loss) from mining operations	(3,829)	(21,854)	—	(762)	(26,445)
Related party management fees and insurance expense Care and maintenance Restructuring expense	— — —	(1,569) (3,103) (4,565)	— — —	— — —	(1,569) (3,103) (4,565)
Earnings from operations	(3,829)	(31,091)	—	(762)	(35,682)
Other (expense) income Foreign exchange (loss) gain (Loss) gain on derivatives Gain on disposal of equipment Other income (expense)	— — — —	536 (3,594) 87 37	— — — —	— — — —	536 (3,594) 87 37
Earnings (loss) before finance costs and income taxes	(3,829)	(34,025)	—	(762)	(38,616)
Interest on surety bond Other interest expense	— —	(699) (1,462)	— (800)	— —	(699) (2,262)
Earnings (loss) before income taxes Income tax (expense) recovery	(3,829) —	(36,185) (727)	(800) 216	(762) —	(41,577) (511)
Net income (loss) and comprehensive income (loss) attributable to	(3,829)	(36,912)	(584)	(762)	(42,088)
Owner of the parent Non-controlling interest	(3,829) —	(36,912) —	24,802 (24,997)	(762) —	(16,701) (24,997)

1: This is the historical consolidated income statement for Pembridge for the period ended 31 December 2018 as extracted from the Company's audited financial statements for the year ended 31 December 2018.

2: Minto financial information as at 31 December 2018 has been extracted, without material adjustment, from the audited financial statements for the period ended 31 December 2018, in Part XXI – Historical Financial Information on Minto of this document. Minto's income statement has been translated from CAD\$ to US\$ using the average exchange rate over the 12 month period to 31 December 2018 of CAD\$1:US\$0.769.

3: These adjustments are to reflect the Minto Acquisition as if it took place on 1 January 2018. The adjustment of US\$0.800 million reflects the 12 months interest expense due under the Investor Consortium Financing Agreement, on the basis of an agreed interest rate of 8%. The tax effect of the adjustments is calculated at Minto's effective tax rate of 27%.

An adjustment of US\$24.608 million has been made to attribute a share of the loss for the year to The Investor Consortium who are entitled to two thirds of the economic result of Minto, with the balance of US\$12.306 million attributable to the parent. The Directors consider that these adjustments will have a continuing impact on the Enlarged Group.

• 4: For the purposes of the unaudited pro forma income statement, transaction costs incurred subsequent to 31 December 2018 of US\$0.762 million incurred by the Group in respect of the Minto Acquisition have been reflected as an expense. The Directors consider that these costs are not expected to be incurred on an ongoing basis in the Enlarged Group.
• 5: No additional depreciation and amortisation charge has been applied to reflect the impact of any fair value adjustments that might arise under IFRS 3 ''Business Combinations'' in relation to intangible assets and property, plant and equipment, for the Minto Acquisition as it is considered impractical to do so given the fair value adjustments are still being calculated.
• 6: No adjustment has been made to reflect the financial results of Pembridge or Minto since 31 December 2018.

	12 months to 31 December 2018 (CAD\$'000) (note 7(a))	12 months to 31 December 2018 (US\$'000) (note 7(b))
Revenue Operating costs	86,412	66,451
Production costs	(111,427)	(85,687)
Royalties	(919)	(707)
Depletion and amortization	(2,485)	(1,911)
(Loss) earnings from mining operations	(28,419)	(21,854)
Related party management fees and insurance expense	(2,040)	(1,569)
Care and maintenance	(4,035)	(3,103)
Restructuring expenses	(5,936)	(4,565)
(Loss) from operations	(40,430)	(31,091)
Other (expense) income
Foreign exchange (loss) gain	697	536
(Loss) gain on derivatives	(4,673)	(3,594)
Gain on disposal of equipment	113	87
Other income (expense)	48	37
(Loss) before finance costs and income taxes	(44,245)	(34,025)
Interest on surety bond	(909)	(699)
Other interest expense	(1,901)	(1,462)
(Loss) before income taxes	(47,055)	(36,185)
Income tax (expense) recovery	(945)	(727)
Net (loss) and comprehensive (loss)	(48,000)	(36,912)

7(a): This is the historical income statement for Minto for the year ended 31 December 2018 as extracted from Minto's audited financial statements for the period ended 31 December 2018, which is set out in Part XXI – Historical Financial Information on Minto of this document.

7(b): Minto's income statements has been translated from CAD\$ to US\$ using the average exchange rate over the 12 month period to 31 December 2018 of CAD\$1:US\$0.769.

Section B: Accountant's report on the Unaudited Pro Forma Financial Information for the Enlarged Group

PKF Littlejohn LLP

The Directors Pembridge Resources plc Suite A, 6 Honduras Street London EC1Y 0TH United Kingdom

11 December 2019

Dear Sirs

Pembridge Resources plc (the ''Company'')

We report on the pro forma financial information (the ''Pro Forma Financial Information'') set out in section A of Part X – Unaudited Pro Forma Financial Information for The Enlarged Group of the Company's prospectus dated 11 December 2019 (the ''Prospectus'') which has been prepared on the basis described in the notes to the Pro Forma Financial Information, for illustrative purposes only, to provide information about how the acquisition of the entire issued capital of Minto Explorations Limited might have affected the financial information presented on the basis of the accounting policies to be adopted by the Company in preparing the financial statements for the year ended 31 December 2019. This report is required by Annex 1, Section 18, Item 18.4.1 of Commission Delegated Regulation (EU) 2019/980 and is given for the purpose of complying with that Prospectus Regulation Rules and for no other purpose.

Responsibilities

It is the responsibility of the Directors of the Company to prepare the Pro Forma Financial Information in accordance with Annex 1, Section 18, Item 18.4.1 of Commission Delegated Regulation (EU) 2019/980.

It is our responsibility to form an opinion, as required by Annex 1, Section 18, Item 18.4.1 of Commission Delegated Regulation (EU) 2019/980 as to the proper compilation of the Pro Forma Financial Information and to report our opinion to you. In providing this opinion we are not updating or refreshing any reports or opinions previously made by us on any financial information used in the compilation of the Pro Forma Financial Information, nor do we accept responsibility for such reports or opinions beyond that owed to those to whom those reports or opinions were addressed by us at the dates of their issue.

Save for any responsibility which we may have to those persons to whom this report is expressly addressed and for any responsibility arising under item 5.5.3R(2)(f) of the Prospectus Regulation Rules to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Annex 1, Section 1, Item 1.3 of Commission Delegated Regulation (EU) 2019/980, consenting to its inclusion in the Prospectus.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. The work that we performed for the purpose of making this report, which involved no independent examination of any of the underlying financial

Tel: +44 (0)20 7516 2200 * www.pkf-littlejohn.com

PKF Littlejohn LLP * 15 Westferry Circus * Canary Wharf * London E14 4HD

PKF Littlejohn LLP, Chartered Accountants. A list of members' names is available at the above address. PKF Littlejohn LLP is a limited liability partnership registered in England and Wales No. OC342572. Registered office as above. PKF Littlejohn LLP is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.

information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Pro Forma Financial Information with the directors of the Company.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Pro Forma Financial Information has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the Company.

Opinion

In our opinion:

• a) the Pro Forma Financial Information has been properly compiled on the basis stated; and
• b) such basis is consistent with the accounting policies of the Company.

Declaration

For the purposes of Prospectus Regulation Rule 5.5.3 R(2)(f), we are responsible for this report as part of the Prospectus and we declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with Annex 1, Section 1, Item 1.2 of Commission Delegated Regulation (EU) 2019/980.

Yours faithfully

PKF Littlejohn LLP Chartered Accountants

Tel: +44 (0)20 7516 2200 * www.pkf-littlejohn.com

PKF Littlejohn LLP * 15 Westferry Circus * Canary Wharf * London E14 4HD

PKF Littlejohn LLP, Chartered Accountants. A list of members' names is available at the above address. PKF Littlejohn LLP is a limited liability partnership registered in England and Wales No. OC342572. Registered office as above. PKF Littlejohn LLP is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.

PART XI

SELECTED HISTORICAL FINANCIAL INFORMATION ON THE COMPANY

The tables below set out the summary audited historical financial information of the Company as derived from the financial information of the Company as at 31 December 2018, 2017 and 2016, and unaudited historical financial information of the Company for the six month periods ended 30 June 2019 and 30 June 2018:

Statement of comprehensive income

	6 months ended 30 June 2019 US\$'000 (unaudited)	6 months ended 30 June 2019 US\$'000 (unaudited)	Year ended 31 December 2018 US\$'000	Year ended 31 December 2017 US\$'000	Year ended 31 December 2016 US\$'000
Administration expenses Impairment of investment in and amounts due from subsidiary	(2,885)	(2,231)	(3,829)	(1,768)	(744)
undertaking Loss on disposal of investments	— —	— —	— —	— (157)	(3,263)
Other income	—	31	—	—	192
Operating loss Finance income	(2,885) —	(2,200) —	(3,829) —	(1,925) —	(3,815) —
Finance costs	—	—	—	—	—
Loss before income tax Income tax	(2,885) —	(2,200) —	(3,829) —	(1,925) —	(3,815) —
Loss for the period	(2,885)	(2,200)	(3,829)	(1,925)	(3,815)
Other comprehensive income currency translation differences	(101)	—	—	—	—
Total comprehensive income for the year	(2,986)	(2,200)	(3,829)	(1,925)	(3,815)
Loss attributable to non-controlling interest Loss attributable to equity holders of the parent	(567)	—	—	—	—
	(2,318)	(2,200)	(3,829)	(1,925)	(3,815)
Total comprehensive income attributable to non-controlling interest Total comprehensive income attributable to equity holders of the company	(567)	—	—	—	—
	(2,419)	(2,200)	(3,829)	(1,925)	(3,815)

	6 months ended 30 June 2019 US\$'000 (unaudited)	6 months ended 30 June 2019 US\$'000 (unaudited)	Year ended 31 December 2018	Year ended 31 December 2017	Year ended 31 December 2016
Earnings per share expressed in US cents Basic and diluted loss per share attributable to the equity holders of the Company	(1.04)	(0.98)	(1.71)	(1.4)	(14.9)

Statement of financial position

	At 30 June 2019 US\$'000 (unaudited)	At 30 June 2018 US\$'000 (unaudited)	31December 2018 US\$'000	31December 2017 US\$'000	31December 2016 US\$'000
Assets Non-current assets
Property, plant and equipment	12,287	16	15	2	3
Goodwill Mining assets	7,109 24,091	— —	— 148	— —	— —
Long term deposit	2,454	—	—	—	—
Total non-current assets	45,941	16	163	2	3
Current assets
Trade and other receivables	405	737	240	354	38
Inventory	2,387	—	—	—	—
Prepayments Cash and cash equivalents	193 9,787	— 119	— 151	— 2,027	— 1,163
Total current assets	12,772	856	391	2,381	1,201
Total assets Non-current liabilities	58,713	872	554	2,383	1,204
Acquisition liability	(10,000)	—	—	—	—
Borrowings	(103)	—	(103)	—	—
Deferred tax liability Deferred revenue	(1,658) (11,496)	— —	— —	— —	— —
Asset retirement obligation	(24,774)	—	—	—	—
Total non-current liabilities Current liabilities	(48,031)	—	(103)	—	—
Trade and other payables	(5,445)	(902)	(1,831)	(213)	(184)
Borrowings	(8,312)	—	(279)	—	—
Total current liabilities	(13,757)	(902)	(2,110)	(213)	(184)
Total liabilities	(61,788)	(902)	(2,213)	(213)	(184)
Net (liabilities) assets	(3,075)	(30)	(1,659)	2,170	1,020
Equity
Share capital (Note – 4)	295	1,306	295	1,306	1,048
Non-controlling interest Share premium	1,003 2,902	— 2,902	— 2,902	— 2,902	— 138
Other reserve	66	165	66	165	112
Capital redemption reserve	1,011	—	1,011	—	—
Retained deficit Foreign currency translation reserve	(8,251) (101)	(4,403) —	(5,933) —	(2,203) —	(278) —
Equity attributable to shareholders of the parent company	(3,075)	(30)	(1,659)	2,170	1,020

Statement of cash flows

	6 months ended 30 June 2019 US\$'000 (unaudited)	6 months ended 30 June 2018 US\$'000 (unaudited)	Year ended 31 December 2018 US\$'000	Year ended 31 December 2017 US\$'000	Year ended 31 December 2016 US\$'000
Cash flows from operating activities Loss for the year Adjusted by:	(2,885)	(2,200)	(3,829)	(1,925)	(3,815)
Depreciation Share based payments Impairment of investment in	3 —	2 —	5 —	1 47	— 199
subsidiary Loss on disposal of investments	— —	— —	— —	— 157	3,063 —
Movements in working capital (Increase)/decrease in trade and	(2,882)	(2,198)	(3,824)	(1,720)	(553)
other receivables	(358)	(384)	(344)	(316)	(21)
Increase/(decrease) in trade and other payables	3,348	690	1,928	29	116
Net cash used in operating activities	108	(1,892)	(2,240)	(2,007)	(458)
Cash flows used in investing activities Purchase of property, plant and equipment Purchase of available-for-sale financial assets Proceeds from sale of available-for sale financial assets Cash acquired from subsidiary	— — — 1	(16) — — —	(18) — — —	— (199) 269 —	(3) — — —
Net cash generated from/(used in) investment activities	1	(16)	(18)	70	(3)
Cash flows used in financing activities Proceeds from borrowings Repayment of borrowings Proceeds from issuance of shares Direct cost of share issue	7,957 — 1,570 —	— — — —	382 — — —	— — 2,954 (153)	— (200) 1,259 (80)
Net cash generated from financing activities	9,527	—	382	2,801	979
Increase/(Decrease) in cash and cash equivalents	9,636	(1,908)	(1,876)	864	518
Reconciliation to net cash Opening cash balance Increase/(Decrease) in cash	151 9,636	2,027 (1,908)	2,027 (1,876)	1,163 864	645 518
Cash and cash equivalents at year end	9,787	119	151	2,027	1,163

Set out below are details of the significant change in the financial condition, operating results and trading position of the Company for the period since 30 June 2019:

* the execution of the Convertible Loan Agreement on 24 October 2019 between Gati Al-Jebouri and the Company, which provides for a committed term loan in Pounds Sterling in an aggregate amount equal to £1,000,000 and an uncommitted term loan in Pounds Sterling in an aggregate amount equal to £700,000 to be made available to the Company, which is to be repaid in full, together with any accrued and unpaid interest, on the date falling two years after the date of the Convertible Loan Agreement, being 23 October 2021 and carries interest at an annual rate of 8%. At any time prior to 23 October 2021, Mr. Al-Jebouri may elect to convert all or part of the monies loaned and drawn into Ordinary Shares, to be issued at Placing Price, provided that such election would not place his shareholding above 29.9% of the total issued share capital of the Company. The Company may elect to repay any portion of the monies loaned and drawn at any point prior to 23 October 2021, provided always that Mr. Al-Jebouri will have the option to have such repayment made in Ordinary Shares, to be issued at a fixed conversion price, which is the Placing Price.

Save as disclosed above, there has been no significant change in the financial condition and operating results of the Company during or subsequent to the periods covered by the selected historical financial information of the Company, set out in this Part XI—Selected Historical Financial Information on the Company.

PART XII

SELECTED HISTORICAL FINANCIAL INFORMATION ON MINTO

The tables below set out the summary audited financial information of Minto as at 31 December 2018, 2017 and 2016, and the summary unaudited financial information of Minto as at 30 June 2019 and 30 June 2018:

Statements of income (loss) and comprehensive income (loss) (expressed in thousands of CAD\$)

	6 months ended 30 June 2019 (unaudited)	6 months ended 30 June 2019 (unaudited)	31 December 2018	31 December 2017	31 December 2016
Revenue	—	35,151	86,412	140,037	199,576
Operating costs Production costs Royalties	— —	(40,367) —	(111,427) (919)	(106,893) (2,327)	(96,440) (2,384)
Depletion and amortization	—	(1,121)	(2,485)	(20,585)	(65,454)
Earnings (loss) from mining operations	—	(6,337)	(28,419)	10,232	35,298
Related party management fees and insurance expense Care and maintenance Restructuring expense Impairment reversal (expense)	— (3,604) —	(738) — —	(2,040) (4,035) (5,936)	(2,089) — —	(1,598) — —
on mineral properties	—	—	—	25,730	—
Earnings (loss) from operations	(3,604)	(7,075)	(40,430)	33,873	33,700
Other (expense) income Foreign exchange (loss) gain (Loss) gain on derivatives (Loss) gain on disposal of	(15,988) —	1,295 1,644	697 (4,673)	(5,206) (5,257)	(283) 297
equipment Related party insurance claims	677	90	113	(1,303)	149
income	—	—	—	2,814	—
Royalties Other income (expense)	— (31)	649 (505)	— 48	— 2,176	— (2,132)
Earnings (loss) before finance costs and income taxes	(18,946)	(3,902)	(44,245)	27,097	31,731
Interest on surety bond Other interest expense Related party interest expense	— (112) —	(564) (619) —	(909) (1,901) —	(1,194) (709) —	(1,110) (689) (973)
Earnings (loss) before income taxes	(19,058)	(5,085)	(47,055)	25,194	28,959
Income tax (expense) recovery	—	(1,509)	(945)	(15,754)	(2,537)
Net income (loss) and comprehensive income (loss)	(19,058)	(6,594)	(48,000)	9,440	26,422
Earnings (loss) per share – basic and diluted	(0.21)	(0.08)	(0.60)	0.12	0.33
Weighted average number of shares – basic and diluted	238,506,300	79,502,100	79,502,100	79,502,100	79,502,100

Statement of financial position (expressed in thousands of CAD\$)

	30 June	30 June
	2019	2018	31December	31December	31December
	(unaudited)	(unaudited)	2018	2017	2016
ASSETS
Current
Cash and cash
equivalents	12,239	9,647	5,203	26,525	56,700
Receivable from
Capstone	—	—	12,985	14,724	—
Receivables	—	2,414	2,438	2,050	15,421
Inventories	3,133	55,511	10,864	37,641	31,336
Prepaids	238	1,594	156	1,057	1,189
	15,610	69,166	31,646	81,997	104,646
Mineral properties, plant and
Total assets	66,581	118,904	79,832	123,333	132,744
LIABILITIES Current
Accounts payable and
accrued liabilities	1,107	12,195	9,801	8,593	11,758
Payable to Capstone	—	—	—	—	2,521
					13,675
liabilities	2,176	1,787	2,294	2,541	—
Asset retirement obligation	32,516	28,354	32,197	28,044	30,645
Borrowings	10,412	—	—	—	—
Total liabilities	61,728	55,674	58,008	40,835	59,686
Total equity	4,853	63,230	21,824	82,498	73,058
Total liabilities and equity	66,581	118,904	79,832	123,333	132,744
equipment Long term deposits Derivative asset Deferred income taxes Income taxes payable Current finance lease obligation Deferred revenue Deferred income tax EQUITY Share capital Deficit	47,776 3,195 — — 428 — 1,535 15,089 212,618 (207,765)	40,560 3,148 6,030 — — — 12,195 13,338 210,531 (147,301)	44,996 3,190 — — — — 9,801 13,716 210,531 (188,707)	34,080 3,104 4,152 — 1,342 — 9,935 315 210,531 (128,033)	17,254 3,106 — 7,738 129 28,083 958 210,531 (137,473)

Statement of cash flows (expressed in thousands of CAD\$)

	6 months ended 30 June 2019 (unaudited)	6 months ended 30 June 2018 (unaudited)	Year ended 31December 2018	Year ended 31December 2017	Year ended 31December 2016
Cash provided by (used in):
Operating activities Net income (loss)	(19,058)	(6,594)	(48,000)	9,440	26,422
Adjustments for:
Depletion and amortization Income tax expense (recovery)	— —	— —	2,485 945	20,585 15,754	65,454 2,537
Inventory write-down	—	—	16,195	681	2,718
Impairment (reversal) on mineral properties, plant
& equipment	—	—	—	(25,730)	—
Net finance costs Restructuring provision	319 —	310 —	2,762 5,936	1,903 —	2,772 —
Unrealized loss (gain) on foreign exchange	—	—	(872)	3,276	(886)
Loss (gain) on derivatives	—	—	4,673	5,257	(297)
Loss (gain) on disposal of equipment Amortization of deferred revenue	— 1,373	— 13,023	(113) (1,808)	1,303 (643)	(149) (2,428)
Interest received	—	—	48	—	25
Income taxes paid	(118)	(754)	(4,285)	(16,413)	(247)
Payments on reclamation and closure cost obligations	—	—	—	(5,754)	(4,934)
Changes in non-cash working capital	14,806	(14,461)	8,961	3,754	(46,368)
	(2,678)	(8,476)	(13,073)	13,413	44,619
Investing activities Mineral properties, plant and equipment additions	(2,780)	(6,480)	(9,380)	(3,456)	(8,988)
Proceeds on disposal of equipment	—	—	113	204	350
Long term deposit	(5)	(44)	(86)	(29)	108
Derivative asset	—	(1,878)	—	—	—
	(2,785)	(8,402)	(9,353)	(3,281)	(8,530)
Financing activities
Repayments to Capstone	—	—	(70,341)	(67,903)	—
Proceeds from Capstone Interest paid on Capstone advances	— —	— —	72,490 —	38,271 —	— (973)
Interest paid on surety bond	—	—	(1,045)	(1,194)	(1,110)
Payments on settlement of derivatives	—	—	—	—	1,975
Purchase of derivatives	—	—	—	(9,351)	—
Repayment of finance lease obligations Proceeds from issuance of share capital	— 2,087	— —	— —	(130) —	(684) —
Proceeds from borrowings	10,412	—	—	—	—
	12,499	—	1,104	(40,307)	(792)
(Decrease) increase in cash	7,036	(16,878)	(21,322)	(30,175)	35,297
Cash – beginning of year	5,203	26,525	26,525	56,700	21,403
Cash – end of year	12,239	9,647	5,203	26,525	56,700

Since 30 June 2019 Minto has been preparing to restart mining operations, including hiring staff, obtaining equipment, and recommissioning equipment. During this period Minto has had no income, and so the cash balance will be materially lower than disclosed above. As at 30 September the cash balance was US\$2.6 million.

Set out below are details of a significant change in the financial condition, operating results and trading position of Minto since 30 June 2019;

* the execution of the Amendment Agreement to the Wheaton Purchase Agreement on 8 November 2019 between, among others, Minto and Wheaton, which provides for a modified price to be payable by Sumitomo Canada to Minto for gold produced at the Minto Mine for a limited period.

Save as disclosed above, there has been no significant change in the financial condition and operating results of Minto during or subsequent to the periods covered by the selected historical financial information of Minto set out in this Part XII—Selected Historical Financial Information on Minto.

PART XIII

OPERATING AND FINANCIAL REVIEW (INCLUDING LIQUIDITY AND CAPITAL RESOURCES AND CAPITALISATION AND INDEBTEDNESS)

SECTION A – THE COMPANY

The following operating and financial review contains financial information that has been extracted or derived without material adjustment from the Company's financial information for the year ended 31 December 2018, incorporated by reference in Part XX – Historical Financial Information on the Company of this document prepared in accordance with IFRS, and from unaudited financial information derived from the Company's financial information for the period 1 January 2019 to 30 June 2019, and as at 31 December 2018.

This discussion contains forward-looking statements, which, although based on assumptions that the Directors consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to differ materially from those expressed or implied by the forward-looking statements. Investors should read the notice in relation to forward-looking statements contained on pages 30 and 31.

The key risks and uncertainties, include, but are not limited to those described in Part II – Risk Factors of this document on pages 8 to 23.

Overview

The Company was incorporated on 20 August 2010 and was admitted to trading on the AIM market on 1 August 2011. The initial purpose of the Company was to exploit a mining project in the Republic of Namibia.

The Company was originally incorporated in August 2010 to exploit a mining project in the Republic of Namibia and listed on AIM on 1 August 2011. In January 2017, the Company disposed of all of its operating assets by way of a special in-specie dividend to shareholders and at the same time raised £1 million to support the making of acquisitions in the mining sector becoming an AIM Rule 15 cash shell. On 21 August 2017, the Company raised £2.27 million and was admitted to a Standard Listing as an acquisition company focused on the making of acquisitions and investments in projects and businesses involved in base and precious metals in the Americas, sub-Saharan Africa and Europe. On 15 February 2018, the Standard Listing of the Existing Issued Share Capital was suspended on announcement of the conditional acquisition of Minto from Capstone.

The Company published its audited financial results for the year ended 31 December 2018 on 30 April 2019, which shows cash balances of US\$151,000. Since January 2017, the Company's operations have been limited to investigating potential acquisition targets and progressing the acquisition of Minto. The reduction in cash balance reflects expenditure on operating costs. The Company has no material liabilities other than in respect of trade creditors.

Capital resources

The Company's capital resources comprise its share capital and reserves.

In the year ended 31 December 2018, being the period covered by the most recently published audited financial information, cash outflow from operations totalled US\$1,876,000. Cash inflows from financing activities amounted to US\$382,000. No dividends on Ordinary Shares or other cash flows arose during either period.

Subject to receipt of the Net Placing Proceeds and the sums available under the Convertible Loan Agreement, the Company does not forecast any restrictions on its ability to meet financial commitments as they fall due.

Capitalisation and indebtedness

The following table shows the Company's indebtedness (distinguishing between guaranteed and unguaranteed, secured and unsecured indebtedness) as at 31 October 2019 and the Company's capitalisation as at 30 June 2019. The Company's capitalisation has been extracted without material adjustment from the unaudited interim results of the Company for the 6 month period ended 30 June 2019.

	As at 30 June 2019
	US\$'000
Total current debt	379
Guaranteed	—
Secured	—
Unguaranteed/unsecured	379
Total non-current debt (excluding current portion of non-current debt)	103
Guaranteed	—
Secured	—
Unguaranteed/unsecured	103
Shareholders' equity
Share capital	4,208
Legal reserve	66
Other reserves	—
Total capitalisation	482

As more fully disclosed in paragraph 11.8 in Part XVI – Additional Information of this document, on 24 October 2019 the Company entered into the Convertible Loan Agreement. As of the date of this document, £1,000,000 has been drawn down by the Company under the terms of the Convertible Loan Agreement.

Save as disclosed above, as at 10 December 2019, being the latest practicable date prior to the publication of this document, there has been no material change in the capitalisation of the Company since 30 June 2019.

The following table shows the Company's net indebtedness as at 31 October 2019.

	As at 31 October 2019
	US\$'000
Cash	913
Liquidity	932
Current financial debt	(304)
Net current financial indebtedness	628
Non-current financial indebtedness	(1,117)
Net financial indebtedness	(489)

The Company had no indirect or contingent indebtedness at 31 October 2019.

The cash balance as at 31 October 2019 was US\$912,684 and there were borrowings as at that date of US\$1,421,030.

Hedging arrangements and risk management

The Company may use forward contracts, options, swaps, caps, collars and floors or other strategies or forms of derivative instruments to limit its exposure to changes in the relative values of investments that may result from market developments, including changes in prevailing interest rates and currency exchange rates, as previously described. It is expected that the extent of risk management activities by the Company will vary based on the level of exposure and consideration of risk across the business.

The success of any hedging or other derivative transaction generally will depend on the Company's ability to correctly predict market changes. As a result, while the Company may enter into such a transaction to reduce exposure to market risks, unanticipated market changes may result in poorer overall investment performance than if the transaction had not been executed. In addition, the degree of correlation between price movements of the instruments used in connection with hedging activities and price movements in a position being hedged may vary. Moreover, for a variety of reasons, the Company may not seek, or be successful in establishing, an exact correlation between the instruments used in a hedging or other derivative transactions and the position being hedged and could create new risks of loss. In addition, it may not be possible to fully or perfectly limit the Company's exposure against all changes in the values of its assets, because the values of its assets are likely to fluctuate as a result of a number of factors, some of which will be beyond the Company's control.

SECTION B – MINTO

The following operating and financial review contains financial information that has been extracted or derived, without material adjustment from the audited financial statements of Minto for the years ended 31 December 2018, 2017 and 2016, which are set out in Part XXI – Historical Financial Information on Minto of this document prepared in accordance with IFRS and expressed in CAD\$ (unless otherwise stated). Additionally, the section on pages F-21 – F-49 contains financial information that has been extracted or derived without material adjustment from the Capstone Financial Statements and Management Discussion and Analysis for the years ending 31 December 2018, 2017 and 2016 and the six months ended 30 June 2019 as published on the website www.capstonemining.com, together with additional commentary provided by Capstone.

The discussion contains forward-looking statements, which, although based on assumptions that the Directors consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to differ materially from those expressed or implied by the forward-looking statements. Investors should read the notice in relation to forward-looking statements contained on pages 30 and 31.

The key risks and uncertainties include, but are not limited to, those described in Part II – Risk Factors of this document on pages 8 to 23.

Overview

Minto is a Canadian Mining company engaged in the production of and exploration for base metals in the Yukon region of Canada, with a focus on copper.

Minto's revenue breakdown by metal is as follows:

		Year ended (in CAD\$'000)
	31 December	31 December	31 December
	2018	2017	2016
Copper	91,331	141,056	197,938
Silver	255	953	1,670
Gold	5,328	12,717	25,039
Total gross revenue	96,914	154,726	224,647
Less: treatment and selling costs	(10,502)	(14,689)	(25,071)
Revenue	86,412	140,037	199,576

Sales from the Minto Mine are to four customers as per agreements for the sale of metal bearing concentrates.

Customer details are as follows:

	Year ended (in CAD\$'000)
	31 December 2018	31 December 2017	31 December 2016
Customer #1	—	5,059	198,007
Customer #2	5,583	13,503	26,640
Customer #3	91,331	103,822	—
Customer #4	—	32,342	—
Total gross revenue	96,914	154,726	224,647

Capital resources

Minto's capital consists of the items included in shareholders' equity and cash. Minto manages the capital structure and makes adjustments in light of changes in economic conditions and the risk characteristics of Minto's assets.

To effectively manage its capital requirements, Minto has in place a planning and budgeting process to help determine the funds required to ensure Minto has the appropriate liquidity to meet its operating and growth objectives. Minto ensures that there are sufficient capital to minimize liquidity risk, taking into account its anticipated operational cash flows and its cash.

Minto's share capital is not subject to any external restrictions and Minto did not change its approach to capital management during the year.

Capitalisation and indebtedness

The following table shows Minto's capitalisation as at 30 June 2019 and Minto's indebtedness (distinguishing between guaranteed and unguaranteed, secured and unsecured indebtedness) as at 30 September 2019. Minto's capitalisation has been extracted without material adjustment from the unaudited interim results of Minto for the 6 month period ended 30 June 2019.

	As at 30 June 2019
	CAD\$'000
Total current debt	—
Guaranteed	—
Secured	—
Unguaranteed/unsecured	—
Total non-current debt (excluding current portion of non-current debt)	10,412
Guaranteed	—
Secured	10,412
Unguaranteed/unsecured	—
Shareholders' equity	—
Share capital	212,618
Legal reserve	—
Other reserves	—
Total capitalisation	225,818

As more fully disclosed in Section 8(c) of Part VII – The Minto Acquisition and the Group of this document, on 3 June 2019 Minto borrowed CAD\$13.2 million (equivalent to US\$10 million) pursuant to the Investor Consortium Financing Agreement to finance the re-start of mining operations at the Minto Mine. When discounted for presentational purposes in the interim results of Minto, as required by IFRS, this amount equates to the CAD\$10.412 million shown in the table above.

Save as disclosed above, as at 10 December 2019, being the latest practicable date prior to the publication of this document, there has been no material change in the capitalisation of Minto since 30 June 2019.

The following table shows Minto's net indebtedness as at 30 September 2019.

	As at 30 September 2019
	CAD\$'000
Cash	3,479
Liquidity	3,479
Current financial debt	—
Net current financial indebtedness	(3,479)
Non-current financial indebtedness	13,200
Net financial indebtedness	9,721

Minto had no indirect or contingent indebtedness at 30 September 2019.

The cash balance as at 30 September 2019 was CAD\$3,479,161 and there were borrowings as at that date of CAD\$13,200,000.

Hedging arrangements and risk management

Commodity price risk

Minto is exposed to commodity price risk as its revenues are derived from the sale of metals, the prices for which have been historically volatile. It sometimes manages this risk by entering into forward sale agreements with various counterparties to mitigate price risk when management believes it a prudent decision.

Derivative contracts

During 2017, Minto amended its agreement with Wheaton, and in exchange for US\$7.5 million (CAD\$9.4 million) in shares of Capstone, Minto will receive additional gold revenues if copper prices are lower than US\$2.50/pound. This contract is a long-term embedded derivative asset which is marked-to-market each reporting period. The value of this derivative asset at December 31, 2018 is CAD\$Nil million (2017 – CAD\$4.2 million, 2016 – CAD\$Nil) and an unrealized loss of CAD\$4.7 million (2017 – CAD\$5.3 million, 2016 – CAD\$Nil) on this derivative asset was recognized in the statement of income (loss) in the year.

Minto also had previously entered into a series of forward and put and call contracts that matured at 31 December 2017 (see below), which were derivative instruments and were marked-to-market at the end of each reporting period with the adjustment recorded as a gain or loss on commodity derivatives in the statement of income (loss). Minto did not applied hedge accounting to these derivative instruments.

Details are as follows:

	2017
	CAD\$'000
Put and call contracts
2016 zero cost collar
Unrealized loss	(799)
Reversal of unrealized loss from prior period	799
Net gain on commodity derivatives	—

Breakdown of total (loss) on derivatives and gain on commodity derivatives is as follows:

		Year ended
	31 December 2018	31 December 2017	31 December 2016
	CAD\$'000	CAD\$'000	CAD\$'000
Net gain (loss) on commodity derivatives Unrealized loss on long-term derivative asset	— (4,673)	— (5,257)	297 —
Total loss on derivatives	(4,673)	(5,257)	297

Credit risk

Minto is exposed to credit risk through its trade receivables on concentrate sales with various counterparties under the terms of off-take agreements for the sale of metal bearing concentrates. Minto manages this risk by requiring provisional payments of at least 90% of the value of the concentrate shipped. Taxes receivable are not considered to be subject to significant credit risk as these balances are receivable from government authorities.

The credit risk on cash is limited because the funds are held with banks with high credit ratings as assigned by international credit rating agencies. The credit risk on the receivable from Capstone is not considered significant.

As at 31 December 2018, Minto's maximum exposure to credit risk is the carrying value of its cash and receivables.

Foreign exchange risk

Minto is exposed to foreign exchange risk as Minto's operating costs will be primarily in Canadian dollars, while revenues are received in US dollars. Hence, any fluctuation of the US dollar in relation to these currencies may affect the profitability of Minto and the value of Minto's assets and liabilities. Minto currently does not enter into foreign exchange hedging arrangements.

As at 31 December 2018, Minto was exposed to foreign exchange risk through the following financial assets and liabilities denominated in currencies other than the functional currency:

	US\$'000
Cash Receivable from Capstone Deposits and other long-term assets	2,316 9,520 477
Total assets	12,313
Accounts payable and accrued liabilities	(1,314)
Total liabilities	(1,314)
Net assets	10,999

Based on the above net exposures at 31 December 2018, a 10% appreciation in the US dollar against the Canadian dollar would result in a US\$1.1 million increase to Minto's earnings before income taxes.

Liquidity risk

Minto has in place a planning and budgeting process to help determine the funds required to ensure Minto has the appropriate liquidity to meet its operating and growth objectives. Minto maintains adequate cash balances and credit facilities to meet short and long term business requirements, after taking into account cash flows from operations and believes that these sources will be sufficient to cover the likely short and long term cash requirements. Minto's cash is held in business accounts with US and Canadian Tier 1 Banks with a Standard & Poor's rating of A or better. The cash is available on demand for Minto's programs.

As of 31 December 2018, Minto's liabilities that have contractual maturities are as follows:

	Total	2019	2020	2021	2022	After 2023
	CAD\$'000	CAD\$'000	CAD\$'000	CAD\$'000	CAD\$'000	CAD\$'000
Accounts payable and accrued
liabilities*	9,801	9,801	—	—	—	—
	9,801	9,801	—	—	—	—

* Amounts above do not include payments related to Minto's reclamation and closure cost obligations.

Interest rate risk

Interest risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in the market interest rates. Minto is exposed to interest rate risk with respect to the interest it earns on its cash balances.

Impact of application of IFRS 15 Revenue from Contracts with Customers

In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers. IFRS 15 establishes a single five-step framework for determining the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. The standard is effective for annual periods beginning on or after 1 January 2018.

Effective 1 January 2018, Minto has adopted IFRS 15 using the modified retrospective method which applies the standard retrospectively to only the most current period presented. Minto has recognized the cumulative effect of initially applying IFRS 15 as an adjustment to the opening balance of retained deficit at the date of initial application.

Minto has analyzed its contracts with customers for the application of IFRS 15. Minto's streaming arrangement has been affected by the adoption of IFRS 15 as (i) a significant financing component has been identified which increases finance costs and (ii) the application of the variable consideration constraint is expected to slow the rate at which deferred revenue is amortized to the statement of (loss) income. Under IAS 18, deferred revenue was amortized to income using the reserves in the current Minto Mine plan as the denominator. Under IFRS 15, deferred revenue is amortized to income using both reserves in the current Minto Mine plan and additional reserves and resources not included in the Minto Mine plan. As a result, upon transition, Minto's deferred revenue balance increased by CAD\$13.9 million, deferred tax liabilities decreased by CAD\$1.2 million, and retained deficit increased by CAD\$12.7 million.

The cumulative effect of the changes made to the January 1, 2018 statement of financial position for the adoption of IFRS 15 is as follows:

	Balance at December 31, 2017 (as reported)	Minto Deferred Revenue	Balances at January 1, 2018
	CAD\$'000	CAD\$'000	CAD\$'000
Liabilities
Deferred revenue	315	13,927	14,242
Deferred income tax liabilities	2,541	(1,253)	1,288
Equity
Retained deficit	(128,033)	(12,674)	(140,707)

Impairment of long lived assets

At each reporting date, Minto reviews the carrying amounts of its assets to determine whether there are any indicators of impairment. If any such indicator exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any.

Due to improvements in the outlook for copper prices during 2017, management updated its mine plan for Minto, bringing a number of previously impaired deposits back into the mine plan. This results in an extension of operations from 2017 to 2021 and was considered to be an indicator of impairment reversal. The carrying value of the net assets included in the Minto cash generating unit was compared to the recoverable amount, resulting in the reversal of CAD\$25.7 million of the previous impairment charge during the year ended December 31, 2017. The carrying value of the Minto cash generating unit after the reversal of the impairment was CAD\$4.4 million.

Deferred revenue

During 2008, Minto sold all of its gold and silver production from the Minto Mine over the life of mine to Wheaton in consideration for an upfront payment of USD\$37.5 million and a further payment of the lesser of US\$300 per ounce of gold and US\$3.90 per ounce of silver (subject to a 1% inflationary adjustment after three years and each year thereafter) and the prevailing market price for each ounce delivered. If production from the Minto Mine exceeded 30,000 ounces of gold per year, Wheaton was entitled to purchase only 50% of the amount in excess of that threshold. Minto recorded the proceeds received from the upfront payment as deferred revenue and is recognizing this amount as an adjustment to revenue as ounces are delivered. The precious metal purchase agreement was modified during 2017 so that Minto receives increased gold revenues if copper prices are lower than \$2.50/pound. During the year ended December 31, 2018, Minto delivered concentrate containing 7,949 ounces of gold (2017 – 24,638 ounces) and 48,677 ounces of silver (2017 – 160,994 ounces) to Wheaton.

Details of changes in the balance of deferred revenue are as follows:

	US\$'000
Balance, January 1, 2018 (as reported)	315
Adjustment on initital application of IFRS 15	13,927
Balance, January 1, 2018	14,242
Accretion	1,282
Recognized as revenue on delivery of gold and silver	(1,808)
Balance, December 31, 2018	13,716
Balance, January 1, 2017	958
Recognized as revenue on delivery of gold and silver	(643)
Balance, December 31, 2017	315

Operating Statistics⁵

	Year ended 31December 2018	Year ended 31December 2017
Production (contained metal)1 Copper (000s pounds) Gold (ounces)2 Silver (000s ounces)	22,974 9,251 98	36,005 25,205 171
Mining – Open Pit Waste (000s tonnes) Ore (000s tonnes) Total (000s tonnes)	1,315 547 1,862	7,890 941 8,831
Mining – Underground Ore (000s tonnes)	284	328
Milling Milled (000s tonnes) Tonnes per day Copper grade (%)3 Gold grade (g/t)2,3 Silver grade (g/t)2,3	907 2,983 1.31 0.44 4.3	1,439 3,943 1.37 0.79 4.8
Recoveries3 Copper (%) Gold (%)2 Silver (%)	87.5 61.1 77.3	82.6 59.3 77.6
Concentrate Production Copper (dmt) Copper (%) Gold (g/t)2 Silver (g/t)	27,371 38.1 8.8 111	37,372 43.7 18.0 142
Site operating costs (US\$/t milled)1,4 Payable copper produced (000s pounds) Copper C1 cash costs (US\$/lb produced)1,4 All-in sustaining cost (US\$/lb produced)1,4	69.79 22,228 3.12 3.44	61.11 34,833 2.60 2.75

¹ Adjustments made on final settlements will be made in future quarters.

² Gold is not assayed on site resulting in a significant time lag in receiving this data. As such the 2018 figure is estimated. 3 Grade and recoveries are estimated based on concentrate production and may be impacted by settlements from prior production periods.

⁴ Operating costs are adjusted to exclude the cost of mining ore and waste which is not related to concentrate produced in the quarter; those costs are capitalised or included in inventory, and then expensed when the associated ore is processed.

⁵ All figures shown above are taken from Capstone Q4 2018 Financial Statements and MD&A available on its website.

Operations review

During Q1, production was lower than planned primarily due to mining delays in the underground operations and lower than expected grades coming from Area 2 Stage 4 pushback, resulting in lower grade mill feed. During Q2 production was lower than planned as a number of modifications to the mine plan were made.

During Q4, the Minto Mine was placed into care and maintenance and milling operations ceased. C1 cash cost of US\$3.12 per pound of payable copper produced in 2018 was higher than 2017 primarily due to lower production.

Capital spending at Minto totalled US\$7.2 million in 2018 primarily for underground infrastructure development.

At Minto from January to April 2018, mining was made up of open pit ore from Area 2 Stage 4 and underground ore from Area 2. May and June consisted of underground development and production ore from Minto East. Open pit mining ceased following the completion of mining in Area 2 Stage 4 and a decision was taken not to pursue mining of the Ridgetop open pits due to the mining contractor raising rates and environmental considerations which caused the project not to meet applicable hurdle rates of return.

Mill ore feed production in the first half of the financial year of 2018 consisted of three ore sources: Area 2 Stage 4 open pit, Area 2 underground, and stockpiled sulphide and partially oxidised material. Decreased underground production resulted in higher utilisation of partially oxidised material and lower grade stockpiled ore, impacting overall grade and recovery.

Mining operations ceased, and the Minto Mine was placed into care-and-maintenance, during October 2018. Mining equipment and small number of staff remained at site to facilitate a re-start of mining operations.

Financial Review (unaudited)

Minto recorded a net loss of CAD\$19.1 million in the six months to 30 June 2019 versus CAD\$6.6 million in the six months to 30 June 2018.

Net loss for the period ended 30 June 2018		(6.6)
Revenue	(35.2)
Royalty	—
Production costs	40.4
Depletion and amortisation	1.1
Related party management fees and insurance	0.7
Care and maintenance	(3.6)
2019 differentials on earnings from mining operations		3.4
Foreign exchange loss	(14.7)
Other	(1.5)
Income tax expense	1.5
2019 differentials on other items		(15.9)
Net loss for the period ended 30 June 2019		(19.1)

The Minto Mine was placed onto care and maintenance during October 2018, which resulted in lower revenue and production costs for the six months to 30 June 2019 versus the six months to 30 June 2018.

Discussion of financial performance (2018 – 2017)

Minto recorded a net loss of CAD\$48.0 million in 2018 versus net income of CAD\$9.4 million in 2017.

(all figures CAD\$ millions)

Net income for the year ended 31 December 2017 2018 differentials on earnings from mining operations		9.4
Revenue	(53.6)
Production costs	(4.5)
Royalties	1.4
Depletion and amortisation	18.1	(38.6)
2018 differentials on other items
Mineral property write down reversal	(25.7)
Care and maintenance	(4.0)
Restructuring costs	(5.9)
Other	1.9
Income tax expense	14.9	(18.8)
Net (loss) for the year ended 31 December 2018		(48.0)

Revenues

Revenue decreased CAD\$53.6 million year-over-year due to lower sales volumes due primarily to the mine being placed on care and maintenance, partially offset by an increase in realised copper price of US\$2.91/lb vs US\$2.77/lb in 2017.

In Q1 2018, copper production decreased verses Q1 2017, driven primarily by reduced grades from the processing of low grade stockpile (1.16% vs 1.68%) and lower recoveries (82.9% vs 89.3%). The decrease in recovery was the result of processing a greater portion of partially oxidised ore, whereas in Q1 2017 the mill fee was primarily higher grade Minto North ore.

In Q2 copper production decreased versus Q2 2017, driven primarily by reduced throughput (3,170 tpd vs 4,163 tpd) and lower grades from the processing of low grade stockpile (1.23% vs 1.43%), partially offset by higher recoveries (86.8% vs. 81.5%).

In Q3, copper production decreased versus Q2 2017, driven primarily by reduced throughput (2,313 tpd vs 3,720 tpd), partially offset by higher grades (1.43% vs 1.31%) and higher recoveries (92.3% vs 76.0%).

In Q4 copper production was lower than Q4 2017, as processing ceased in October 2018, which was partially offset by higher grades (2.70% vs 1.06%) and higher recoveries (94.9% vs 81.1%).

Costs

In Q1 2018, C1 cash costs increased to CAD\$3.45/lb of payable copper from CAD\$2.05 in Q1 2017 due to lower production and lower by-product credits. By-product credits were higher in 2017 primarily as stockpiled material containing Minto North ore, which had higher precious metal grades, was processed in 2017.

In Q2 2018, all-in sustaining costs increased to CAD\$3.46/lb of payable copper from CAD\$1.95 in Q2 2017 primarily due to lower production and higher capital expenditures in 2018.

In Q3 2018, C1 cash costs of CAD\$2.66/lb of payable copper produced in Q3 2018 was higher than Q3 2017 primarily due to lower production.

In Q4 2018, C1 cash costs of CAD\$2.69/lb of payable copper produced in Q4 2018 has lower than Q4 2017 primarily due to higher grade and recovery.

C1 cash costs for the year ended 31 December 2018 of CAD\$3.12/lb of payable copper were higher than costs for the year ended 31 December 2017 of CAD\$2.60 primarily due to lower production.

Restructuring costs in 2018 include CAD\$1.5 million for severance costs and CAD\$4.4 million for demobilization of equipment.

Cash Flow

(all figures CAD\$ thousands)	2018	2017
Cash provided by (used in):
Operating activities
Net (loss) income	(48,000)	9,440
Adjustments for:
Depletion and amortization	2,485	20,585
Income tax expense (Note 9)	945	15,754
Inventory write-down (Note 6)	16,195	681
Impairment reversal on mineral properties, plant & equipment	—	(25,730)
Restructuring provision	5,936	—
Net finance costs	2,762	1,903
Unrealized (gain) loss on foreign exchange	(872)	3,276
Loss on derivatives	4,673	5,257
(Gain) loss on disposal of equipment	(113)	1,303
Amortization of deferred revenue (Note 8)	(1,808)	(643)
Interest received	48	—
Income taxes paid	(4,285)	(16,413)
Payment on reclamation and closure cost obligations (Note 10)	—	(5,754)
Changes in non-cash working capital (Note 15)	8,961	3,754
	(13,073)	13,413
Investing activities
Mineral properties, plant and equipment additions	(9,380)	(3,456)
Proceeds on disposal of equipment	113	204
Long term deposit	(86)	(29)
	(9,353)	(3,281)
Financing activities
Repayments to Capstone Mining Corp.	(70,341)	(67,903)
Proceeds from Capstone Mining Corp.	72,490	38,271
Interest paid on surety bond	(1,045)	(1,194)
Purchase of derivatives	—	(9,351)
Repayment of finance lease obligations	—	(130)
	1,104	(40,307)
Decrease in cash	(21,322)	(30,175)
Cash – beginning of year	26,525	56,700
Cash – end of year	5,203	26,525

During 2017 cash flow from operating activities, before changes in non-cash working capital of CAD\$13.2 million, was CAD\$(26.3) million, a decrease of CAD\$(35.9) million versus CAD\$9.6 million in 2017, largely due to lower copper production (2018 – 23.0 million pounds vs 2017 – 36.0 million pounds) and higher unit operating costs in 2017 vs 2016, partially offset by higher copper prices year-over-year.

Discussion of Financial Performance (2017 – 2016)

Minto Mine recorded net income of CAD\$7.8 million in 2017 versus net income of CAD\$26.4 million in 2016.

(all figures CAD\$ millions)	Minto Mine
Net income for the year ended December 31, 2016		26.4
2017 differentials on earnings from mining operations
Revenue	(60.0)
Production costs	(10.4)
Inventory write-down	—
Depletion and amortization	44.9	(25.5)
2017 differentials on other items
Mineral property write-down reversal	25.7
Other	(5.6)
Income tax expense	(13.2)	6.9
Net income for the year ended December 31, 2017		7.8

Revenues

Minto Mine revenue decreased year-over-year due to lower sales volumes (17,788 tonnes of copper vs. 29,481 tonnes of copper) on the completion of mining of the high-grade Minto North pit in 2016. However, this was partially offset by higher realised copper prices (US\$2.77/lb vs. US\$2.29/lb). Additionally, gold revenue was lower in 2017 compared to 2016 due to lower gold grade in the ore being processed in 2017.

Copper production in 2017 decreased versus 2016, driven primarily by lower grades due to processing a blend of partially oxidized ore, underground sulphide ore and low grade stockpile (1.37% vs. 2.21%), lower recoveries (82.6% vs. 95.2%) and by a decrease in mill throughput (3,943 tpd vs. 4,074 tpd). The decrease in recoveries was the result was the result of processing a greater portion of partially oxidized ore, whereas in 2016 the mill feed was primarily higher grade sulphide ore (from the high-grade Minto North open pit).

Costs

Production costs increased year-over-year as stripping and most development costs were expensed in 2017 due to the shorter life of the deposits. Whereas, stripping costs associated with Minto North were capitalized in 2016.

C1 cash costs of CAD\$3.35 per pound of payable copper produced in 2017 increased from CAD\$1.38 in 2016. This is due to lower head grade, recovery, and mill throughput upon completion of the high-grade Minto North pit in 2016.

The unit costs in 2017 were higher than in 2016 primarily as a result of lower production, related to lower grades and processing a higher proportion of partially oxidized ore. In addition, there were higher costs as a result of significant development and stripping costs incurred in the second half of 2017 as part of the mine life extension.

At the start of 2017, it was Capstone's intention to place the Minto Mine on care and maintenance at the end of 2017. Stripping and development costs are expensed (and therefore included within C1 cash cost per pound of payable copper produced) when the ore release from a deposit is expected to be less than 12 months. However, as a result of rising copper prices and the downside protection provided by the renegotiation of the precious metals stream in 2017, Capstone made the decision to continue operations until at least mid-2021. All-in costs for 2017 included CAD\$3.5 million of capital expenditures associated with the mine life extension, in line with guidance.

Depletion and amortization decreased year-over-year. The decrease was driven by the unit noncash costs decreasing due to the mine life extension and lower sales volumes.

There was a mineral property impairment reversal of CAD\$25.7 million in 2017 due to the mine life extension.

Other expenses increased year-over-year. The difference relates primarily to the precious metals embedded derivative.

Taxes

Income tax expense increased from the prior year, primarily due to the 2016 tax expense being offset by the recognition of CAD\$7.7 million in deferred income tax recoveries associated with the recognition of previously unrecognized tax assets. Minto pays an annual YQMA Royalty to Yukon under the Quartz Mining Act of 2003 (Yukon) (the ''YQMA Royalty''), which is accounted for as an income tax as it is based on a measure of profit. All income taxes payable in 2017 at Minto relate to YQMA Royalty.

Cash Flows

(all figures CAD\$ thousands)	2017	2016
Cash provided by (Used in) Operating Activities
Net Income (Loss)	9,440	26,422
Adjustments for:
Depletion and amortisation	20,585	65,454
Deferred income tax	10,279	(10,058)
Income and mining tax expense	5,475	12,595
Inventory write-down	681	2,718
Impairment (reversal) on mineral properties, plant & equipment	(25,730)	—
Net finance costs	1,903	2,772
Unrealised loss (gain) on foreign exchange	3,276	(886)
Loss (gain) on derivatives	5,257	(297)
Loss (gain) on disposal of equipment	1,303	(149)
Amortisation of deferred of equipment	(643)	(2,428)
Interest received	—	25
Income taxes paid	(16,413)	(247)
Payment on reclamation and closure cost obligations	(5,754)	(4,934)
Change in non-cash working capital	3,754	(46,368)
	13,413	44,619
Investing Activities
Mineral properties, plant and equipment additions	(3,456)	(8,988)
Proceeds on disposal of equipment	204	350
Long term deposit	(29)	108
	(3,281)	(8,530)
Financing Activities
Repayments to Capstone	(67,903)	—
Proceeeds from Capstone	38,271	—
Interest paid on Capstone advances	—	(973)
Interest paid on surety bond	(1,194)	(1,110)
Payments on settlements of derivatives	—	1,975
Purchase of derivatives	(9,351)	—
Repayment of finance lease obligations	(130)	(684)
	(40,307)	(792)
(Decrease) increase in cash	(30,175)	35,297
Cash – Beginning of year	56,700	21,403
Cash – End of year	26,525	56,700

During 2017 cashflow from operating activities, before changes in non-cash working capital of CAD\$3.8 million, was CAD\$9.6 million a decrease of 89% versus CAD\$91.0 million in 2016, largely due to lower copper production (2017 – 16,322 tonnes vs. 2016 – 31,426 tonnes) and higher unit operating costs in 2017 vs. 2016, partially offset by higher copper prices year over year. Changes in non-cash working capital in 2016 of CAD\$46.4 million relates primarily to payments to Capstone mainly related to intercompany management fees and expenses paid on behalf on Minto in the normal course of operations.

Income and mining tax expenses were CAD\$5.5 million (2016 – CAD\$12.6 million) reflecting lower taxable income at Minto versus 2016. The YQMA Royalty is accounted for as an income tax as it is based on a measure of profit.

Income taxes paid were CAD\$16.4 million (2016 – CAD\$0.2 million), reflecting timing of payments related to generating taxable income in 2016 and paying amounts in 2017 versus 2016.

Payments were made for reclamation and closure cost obligations totalling CAD\$5.7 million (2016 – CAD\$4.9 million).

Mineral properties, plant and equipment additions totalled CAD\$3.5 million, mainly in respect of capital expenditures associated with the life-of-mine extension at the Minto Mine.

During 2017 payments to Capstone in respect of financing transactions were paid totalling CAD\$67.9 million (2016 – nil). These related to the repayment of inter-company balances. There were also receipts from Capstone in respect of financing transactions totalling CAD\$38.3 million (2016 – CAD\$nil). These related to funding received from Capstone.

Purchase of Derivative: During 2017, Minto paid CAD\$9.4 million in return for the amendment to the Wheaton Precious Metals stream agreement whereby Minto would receive additional gold revenues if copper prices were lower than US\$2.50/lb. This modification was considered an embedded derivative for financial reporting purposes.

Interest was paid on a surety bond of CAD\$1.2 million (2016 – CAD\$1.1 million) related to the CAD\$72.1 million reclamation bond securing reclamation obligations at the Minto Mine.

Discussion of Financial Performance (2016 – 2015)

Minto Mine recorded net income of CAD\$26.4 million in 2016 versus net loss of CAD\$90.0 million in 2015.

(all figures CAD\$ millions)	Minto Mine
Net income for the year ended December 31, 2015		(90.0)
2016 differentials on earnings from mining operations
Revenue	105.2
Production costs	(30.6)
Inventory write-down	12.1
YQMA Royalty	(1.1)
Depletion and amortization	(19.3)	66.3
2016 differentials on other items
Mineral property write-down reversal	60.9
Other	(7.8)
Income tax expense	(3.0)	50.1
Net income for the year ended December 31, 2016		26.4

Revenues

The increase in revenue year-over-year was due primarily to higher volumes of copper produced as the Minto Mine accessed the high grade Minto North open pit deposit. As a result sales were 29,481 tonnes vs. 14,990 tonnes a year previously. However, this was offset by a lower realized copper price of US\$2.29/lb (2015 – US\$2.40/lb).

During 2016, the mine exceeded the production threshold of 30,000 ounces of gold under the Precious Metal Streaming agreement with Silver Wheaton. This is where the Minto Mine receives market rates for 50% of gold produced in excess of 30,000 ounces. 39,506 ounces of gold contained in concentrate was produced over the twelve-month period, therefore 5,100 ounces of gold was sold at market rates. This had a positive impact on year-over-year revenue.

Costs

Production costs increased year-over-year due to the increased volumes produced and sold, partially offset by higher grade of 2.21% (2015 – 1.38%). However, on a C1 cash cost basis, costs were CAD\$1.38 per pound of payable copper produced (2015 – CAD\$3.25/lb produced), which included CAD\$0.04 per pound of cost allocated from stockpile (2015 – CAD\$0.31 per pound) that was spent in prior periods, bringing the actual cash expended during 2016 to CAD\$1.34 per pound of payable copper produced (2015 – CAD\$2.94 per pound produced) and all-in cost of CAD\$1.50 per payable pound of copper produced (2015 – CAD\$4.16 per pound produced).

The inventory write-down decreased year-over-year as a result of the lower per unit cost of ending inventory at 31 December 2016.

YQMA Royalty expense increased year-over-year as a result of increased revenue.

Depletion and amortization increased year-over-year as a result of higher sales volumes. There was no mineral property write-down in 2016 compared to a write-down of CAD\$60.9 million in 2015.

Other expenses increased year-over-year. The difference relates primarily to foreign exchange. A foreign exchange loss of CAD\$0.3 million was recorded in 2016 (2015 – CAD\$2.1 million gain). The gain in 2015 was due to the strengthening of the US\$ compared with the CAD\$, and the impact on Minto's US\$ denominated assets. In contrast, the US\$ weakened slightly against the CAD\$ during 2016, causing a small foreign exchange loss.

Taxes

Income tax expense increased year-over-year due to higher taxable income as a result of higher revenue. The YQMA Royalty is accounted for as an income tax as it is based on a measure of profit. All income taxes payable in 2016 at Minto relate to the YQMA Royalty. This was partially offset by the recognition of CAD\$5.6 million in deferred income tax assets.

Cashflows

(all figures CAD\$ thousands)	2016	2015
Cash provided by (Used in)
Operating Activities Net Income (Loss)	26,422	(90,018)
Adjustments for:
Depletion and amortisation	65,454	46,126
Deferred income tax	(10,058)	(205)
Income and mining tax expense	12,595	(277)
Inventory write-down	2,718	9,909
impairment (reversal) on mineral properties, plant & equipment	—	60,923
Net finance costs	2,772	2,068
Unrealised loss (gain) on foreign exchange	(886)	1,880
Loss (gain) on derivatives	(297)	(4,188)
Loss (gain) on disposal of equipment	(149)	17
Amortisation of deferred of equipment	(2,428)	(2,013)
Interest received	25	85
Income taxes paid	(247)	—
Payment on reclamation and closure cost obligations	(4,934)	(559)
Change in non-cash working capital	(46,368)	26,810
	44,619	50,558
Investing Activities
Mineral properties, plant and equipment additions	(8,988)	(26,576)
Proceeds on disposal of equipment	350	—
Long term deposit	108	(32)
	(8,530)	(26,608)
Financing Activities
Repayments to Capstone Mining Corp	—	(11,835)
Proceeeds from Capstone Mining Corp.	—	—
Interest paid on Capstone Advances	(973)	(577)
Interest paid on surety bond	(1,110)	(729)
Payments on settlements of derivatives	1,975	1,326
Purchase of derivatives	—	(558)
Repayment of finance lease obligations	(684)	(1,156)
	(792)	(13,529)
(Decrease) increase in cash	35,297	10,421
Cash – Beginning of year	21,403	10,982
Cash – End of year	56,700	21,403

During 2016 cashflow from operating activities, before changes in non-cash working capital of CAD\$(46.4) million, was CAD\$91.0 million an increase 282% versus CAD\$23.8 million in 2015, largely due to higher copper production (2016 – 31,426 tonnes vs. 2015 – 16,515 tonnes), higher gold production (2016 – 39,506 oz's vs. 2015 – 16,114 oz's), lower unit operating costs in 2016 vs. 2015 and higher copper prices year over year. Changes in non-cash working capital in 2016 and 2015 related primarily to payments to and receipts from Capstone.

Income and mining tax expenses were CAD\$12.6 million (2015 – CAD\$-0.3 million) reflecting higher taxable income as a result of higher revenue.

Cash income tax payments were CAD\$0.2 million (2015 – CAD\$0.0 million), impacted by the timing of tax payments.

Payments were made for reclamation and closure cost obligations totalling CAD\$4.9 million, an increase on 2015 (CAD\$0.6 million) primarily due to a portion of the waste removed as a part of the Minto North stripping being used for progressive reclamation activities.

Mineral properties, plant and equipment additions totalled CAD\$9.0 million, mainly in respect of capitalized stripping costs for the Minto North deposit.

During 2016 interest of CAD\$1.0 million was paid on Capstone advances in respect of interest expense due on balances outstanding between Minto and Capstone throughout the year.

Interest was paid on a surety bond of CAD\$1.1 million (2016 – CAD\$0.7 million) related to the CAD\$72.1 million reclamation bond securing reclamation obligations at the Minto Mine.

PART XIV

TAXATION

Certain UK tax considerations

General

The following statements are intended only as a general guide to certain UK tax considerations and do not purport to be a complete analysis of all potential UK tax consequences of acquiring, holding or disposing of the Ordinary Shares. They are based on current UK tax legislation and what is understood to be the current published practice of HMRC (which may not be binding on HMRC) as at the date of this document, both of which may change at any time, possibly with retrospective effect. They are written on the basis that the Company is and remains solely resident in the UK for tax purposes and that the Company does not (and will not) derive 75% or more of its gross asset value from UK land. They apply only to Shareholders who are resident and, in the case of individuals, domiciled or deemed domiciled, for UK tax purposes in (and only in) the UK (except insofar as express reference is made to the treatment of non-UK residents) who hold their Ordinary Shares as an investment (other than in an individual savings account or a Self-Invested Personal Pension) and who are the absolute legal and beneficial owners of both the Ordinary Shares and any dividends paid in respect of them. The tax position of certain categories of Shareholders who are subject to special rules (such as trustees, persons acquiring their Ordinary Shares in connection with employment, dealers in securities, investment managers, insurance companies, charities or tax-exempt organisations and collective investment schemes) is not considered.

These paragraphs summarise the current position and are intended as a general guide only. They do not describe all of the circumstances in which holders of Ordinary Shares may benefit from an exemption or relief from UK taxation. Prospective investors who are in any doubt as to their tax position or who may be subject to tax in a jurisdiction other than the UK are strongly recommended to consult their own professional advisers.

Taxation of dividends

The Company is not required to withhold UK tax from dividend payments it makes. Liability to income tax on dividends will depend upon the individual circumstances of a Shareholder.

UK resident individual Shareholders

An individual Shareholder who is resident for tax purposes in the UK and who receives a cash dividend from the Company will generally not pay income tax on the first £2,000 of dividend income in the 2019/2020 tax year (the ''nil rate band''). An individual UK resident Shareholder who is subject to income tax at a rate or rates not exceeding the basic rate will (subject to the availability of any income tax personal allowance) be liable to income tax on the dividend in excess of the nil rate band at the rate of 7.5%. An individual UK resident Shareholder who is subject to income tax at the higher rate or the additional rate will (subject to the availability of any income tax personal allowance) be liable to tax on the dividend in excess of the nil rate band at the rate of 32.5% or 38.1% respectively to the extent that such sum, when treated as the top slice of that Shareholder's income, falls above the threshold for higher rate or additional rate income tax.

UK resident corporate Shareholders

It is likely that most dividends paid in respect of the Ordinary Shares to UK resident corporate Shareholders would fall within one or more of the classes of dividend qualifying for exemption from corporation tax. However, it should be noted that the exemptions are not comprehensive and are also subject to anti-avoidance rules. If the conditions for exemption are not, or cease to be, satisfied, or such a Shareholder elects for an otherwise exempt dividend to be taxable, the Shareholder will be subject to UK corporation tax on dividends received from the Company at the rate of 19%.

Non-UK resident Shareholders

A Shareholder resident outside the UK may be subject to non-UK taxation on dividend income under local law. A Shareholder who is not resident for tax purposes in the UK should not be chargeable to UK income tax or UK corporation tax on dividends received from the Company unless he, she or it carries on (whether solely or in partnership) any trade, profession, or vocation in the UK through a branch or agency (or, in the case of a corporate Shareholder, a permanent establishment) to which the Ordinary Shares are attributable (subject to certain exceptions in respect of individual Shareholders for trading through independent agents, such as some brokers and investment managers). A Shareholder who is resident outside the UK for tax purposes should consult his own tax adviser concerning his tax position on dividends received from the Company.

Taxation of disposals

A disposal or deemed disposal of Ordinary Shares by a Shareholder who is resident in the UK for tax purposes may, depending upon the Shareholder's circumstances and subject to any available exemption or relief (such as the annual exempt amount for individuals and (in respect of assets acquired prior to 1 January 2018) indexation for corporate shareholders), give rise to a chargeable gain or an allowable loss for the purposes of UK taxation of capital gains.

For an individual Shareholder within the charge to UK capital gains tax, capital gains tax is charged on gains on the disposal of Ordinary Shares to the extent that the gain exceeds any applicable annual exemption. The current rate is 10% for individuals who are subject to income tax at the basic rate, save to the extent that any capital gains when aggregated the Shareholder's other taxable income and gains in the relevant tax year exceeds the upper limit of the income tax basic rate band, in which case the excess will be taxed at a rate of 20%. The current rate for all trustees and personal representatives, and individuals who are subject to income tax at the higher or additional rates is 20%. For a corporate Shareholder within the charge to UK corporation tax, corporation tax is charged on chargeable gains at the current rate of 19%.

Non-UK resident Shareholders

Shareholders who are not resident in the UK will not generally be subject to UK taxation of capital gains on the disposal or deemed disposal of Ordinary Shares unless they are carrying on a trade, profession or vocation in the UK through a branch or agency (or, in the case of a corporate Shareholder, a permanent establishment) in connection with which the Ordinary Shares are used, held or acquired. Non-UK tax resident Shareholders may be subject to non-UK taxation on any gain under local law.

An individual Shareholder who has ceased to be resident in the UK for tax purposes, or is treated as resident outside the UK for the purposes of a double tax treaty, and who disposes of all or part of their Ordinary Shares during that period may be liable to capital gains tax on his return to the UK if the temporary non-residence rules are met, subject to any available exemptions or reliefs.

Stamp duty and SDRT

The statements in this section apply to any holders of Ordinary Shares irrespective of their residence, summarise the current position and are intended as a general guide only. Special rules apply to agreements made by, amongst others, intermediaries, brokers and dealers.

Issue of Ordinary Shares

No UK stamp duty or Stamp Duty Reserve Tax (''SDRT'') is payable on the issue of the Ordinary Shares.

Transfers of certificated Ordinary Shares

Stamp duty at the rate of 0.5% (rounded up to the next multiple of £5) of the amount or value of the consideration given is generally payable on an instrument transferring Ordinary Shares. An exemption from stamp duty is available on an instrument transferring Ordinary Shares where the amount or value of the consideration is £1,000 or less, and it is certificated on the instrument that the transaction effected by the instrument does not form part of a larger transaction or series of transactions for which the aggregate consideration exceeds £1,000. A charge to SDRT will also arise on an unconditional agreement to transfer Ordinary Shares (at the rate of 0.5% of the amount or value of the consideration payable). However, if within six years of the date of the agreement becoming unconditional an instrument of transfer is executed pursuant to the agreement, and stamp duty is paid on that instrument, or the instrument is otherwise exempt, any SDRT already paid will be refunded (generally, but not necessarily, with interest) provided that a claim for repayment is made, and any outstanding liability to SDRT will be cancelled. The liability to pay stamp duty or SDRT is generally satisfied by the purchaser or transferee.

Ordinary Shares transferred through paperless means including CREST

Paperless transfers of Ordinary Shares, such as those occurring within CREST, are generally liable to SDRT rather than stamp duty, at the rate of 0.5% of the amount or value of the consideration. CREST is obliged to collect SDRT on relevant transactions settled within the system and to pay this to HMRC. The charge is generally borne by the purchaser. Under CREST, no stamp duty or SDRT will arise on a transfer of Ordinary Shares into the system unless such a transfer is made for consideration in money or money's worth, in which case a liability to SDRT (usually at a rate of 0.5%) will arise.

Ordinary Shares held through Clearance Systems or Depositary Receipt Arrangements

Special rules apply where Ordinary Shares are issued or transferred to, or to a nominee or agent for, either a person whose business is or includes issuing depositary receipts within Section 67 or Section 93 of the Finance Act 1986 or a person providing a clearance service within Section 70 or Section 96 of the Finance Act 1986, under which SDRT or stamp duty may be charged at a rate of 1.5%. Following litigation, HMRC confirmed that they will no longer seek to apply the 1.5%. SDRT charge on an issue of shares into a clearance service or depositary receipt system on the basis that the charge is not compatible with EU law. It was announced in the Autumn Budget on 22 November 2017 that the government will not seek to reintroduce this charge following the departure of the UK from the EU. HMRC's view is that the 1.5%. SDRT or stamp duty charge will continue to apply to transfers of shares into a clearance service or depositary receipt arrangement unless they are an integral part of an issue of share capital. Any liability for stamp duty or SDRT in respect of such a transfer will strictly be accountable by the clearance service or depositary receipt system operator or their nominee, as the case may be, but will, in practice, be payable by the participants in the clearance service or depositary receipt system.

Where a clearance service has made and maintained an election under section 97A of the Finance Act 1986, the 1.5% charge will not apply. Rather, stamp duty or SDRT will be charged at the normal rate of 0.5% on the transfer of existing shares into and within the clearance service.

Transfers of Ordinary Shares within a depositary receipt system or clearance service that has not made and maintained an election under section 97A of the Finance Act 1986 will be exempt from SDRT and, provided no instrument of transfer is entered into, will not be subject to stamp duty.

Accordingly, specific professional advice should be sought before incurring a 1.5% stamp duty or SDRT charge in any circumstances.

Inheritance tax

The Ordinary Shares will be assets situated in the UK for the purposes of UK inheritance tax. A gift of such assets by, or the death of, an individual holder of such assets may (subject to certain exemptions and reliefs) give rise to a liability to UK inheritance tax even if the holder is neither domiciled in the UK nor deemed to be domiciled there under certain rules relating to long residence or previous domicile. For inheritance tax purposes, a transfer of assets at less than full market value may be treated as a gift and particular rules apply to gifts where the donor reserves or retains some benefit.

Special rules also apply to close companies and to trustees of settlements who hold Ordinary Shares, bringing them within the charge to inheritance tax. Shareholders should consult an appropriate tax adviser if they make a gift or transfer at less than market value or intend to hold any Ordinary Shares through trust arrangements. They should also seek professional advice in a situation where there is potential for a double charge to UK inheritance tax and an equivalent tax in another country or if they are in any doubt about their UK inheritance tax position.

Certain Canadian Federal income tax considerations

General

The following is a general summary, as of the date hereof, of the principal Canadian federal income tax considerations under the Income Tax Act of 1985 (Canada) and regulations thereunder the (''Tax Act''), generally applicable to a holder who acquires, as beneficial owner, the Ordinary Shares, and who, for purposes of the Tax Act and at all relevant times, holds the Ordinary Shares as capital property and deals at arm's length with the Company, the Underwriters and any subsequent purchaser of such securities. This summary only addresses holders who meet all of the foregoing requirements (''Holder''). The Ordinary Shares will generally be considered to be capital property to a Holder unless they are held in the course of carrying on a business or were acquired in one or more transactions considered to be an adventure or concern in the nature of trade.

This summary is not applicable to a Holder (i) that is a ''financial institution'', as defined in the Tax Act for purposes of the mark-to-market rules in the Tax Act, (ii) that is a ''specified financial institution'', as defined in the Tax Act, (iii) an interest in which is a ''tax shelter investment'' as defined in the Tax Act, (iv) that has elected to report its Canadian tax results in a currency other than the Canadian currency, or (v) that has entered into or will enter into a ''derivative forward agreement'', a ''synthetic equity arrangement'', a ''synthetic disposition arrangement'' (as those terms are defined in the Tax Act) or a similar arrangement, with respect to the Ordinary Shares. Any such Holders should consult their own tax advisors.

Additional considerations, not discussed herein, may be applicable to a Holder that is a corporation resident in Canada and is, or becomes (or does not deal at arm's length for purposes of the Tax Act with a corporation resident in Canada that is or becomes), as part of a transaction or series of transactions or events that includes the acquisition of the Ordinary Shares, controlled by a nonresident corporation for purposes of the ''foreign affiliate dumping'' rules in section 212.3 of the Tax Act. Such Holders should consult their own tax advisors with respect to the consequences of acquiring the Ordinary Shares.

This summary is based on the provisions of the Tax Act in force as of the date hereof, all specific proposals to amend the Tax Act that have been publicly and officially announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the ''Proposed Amendments'') other than as noted below, and our understanding of the current administrative and assessing policies and practices of the Canada Revenue Agency (the ''CRA'') published in writing prior to the date hereof. This summary assumes the Proposed Amendments will be enacted in the form proposed. However, no assurance can be given that the Proposed Amendments will be enacted in their current form, or at all. This summary does not take into account the consultation paper released on 18 July 2017 by the Minister of Finance (Canada) proposing that the tax treatment of passive investment income (such as interest, dividends and capital gains) earned through a private corporation be changed, or related follow-up announcements or legislative proposals (including those contained in the 2018 federal Budget), and affected holders should consult with their own tax advisors in this regard. This summary is not exhaustive of all possible Canadian federal income tax considerations and, except for the Proposed Amendments, does not take into account or anticipate any changes in the law or any changes in the CRA's administrative and assessing policies or practices, whether by legislative, governmental or judicial action or decision, nor does it take into account or anticipate any other federal or any provincial, territorial or foreign tax considerations, which may differ significantly from those discussed herein. Any particular Holder should consult their own tax advisors with respect to provincial, territorial or foreign tax considerations. This summary is not intended to be, nor should it be construed to be, legal or tax advice to any particular holder, and no representations with respect to the income tax consequences to any Holder are made. Consequently, holders should consult their own tax advisors with respect to the tax consequences applicable to them, having regard to their own particular circumstances. The discussion below is qualified accordingly.

Currency conversion

In general, for purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of the Ordinary Shares must be converted into CAD\$ based on the daily noon rate as quoted by the Bank of Canada for the applicable day or such other rate of exchange that is acceptable to the CRA.

Taxation of Resident Holders

The following portion of this summary applies to Holders (as defined above) who, for the purposes of the Tax Act, are or are deemed to be resident in Canada at all relevant times (herein, ''Resident Holders'') and this portion of the summary only addresses such Resident Holders. Certain Resident Holders who might not otherwise be considered to hold their Ordinary Shares as capital property may be entitled, in certain circumstances, to treat their Ordinary Shares, and every other ''Canadian security'' as defined for this purpose in the Tax Act, as capital property by making an irrevocable election under subsection 39(4) of the Tax Act. A Resident Holder should consult its own tax advisor with respect to whether the election is available and advisable in its particular circumstances.

Taxation of dividends

A Resident Holder will be required to include in computing income for a taxation year any dividends received, or deemed to be received, in the year by the Resident Holder on the New Ordinary Shares. In the case of a Resident Holder that is an individual (other than certain trusts), such dividends will be subject to the gross-up and dividend tax credit rules normally applicable under the Tax Act to taxable dividends received from taxable Canadian corporations, including the enhanced gross-up and dividend tax credit provisions where the Company designates the dividend as an ''eligible dividend'' in accordance with the provisions of the Tax Act. There may be restrictions on the ability of the Company to designate any dividend as an ''eligible dividend'', and the Company has made no commitments in this regard.

A dividend received or deemed to be received by a Resident Holder that is a corporation must be included in computing its income but will generally be deductible in computing the corporation's taxable income, subject to all of the rules and restrictions under the Tax Act in that regard. In certain circumstances, subsection 55(2) of the Tax Act will treat a taxable dividend received by a Resident Holder that is a corporation as proceeds of disposition or a capital gain. A corporation that is a ''private corporation'' (as defined in the Tax Act) or any other corporation controlled (whether because of a beneficial interest in one or more trusts or otherwise) by or for the benefit of an individual (other than a trust) or a related group of individuals (other than trusts), generally will be liable to pay an additional tax (refundable under certain circumstances) under Part IV of the Tax Act on dividends received or deemed to be received on the Ordinary Shares in a year to the extent such dividends are deductible in computing taxable income for the year.

Disposition of the Ordinary Shares

A Resident Holder who disposes, or is deemed to dispose of, a Ordinary Share, generally will realize a capital gain (or capital loss) equal to the amount, if any, by which the proceeds of disposition, net of any reasonable costs of disposition, are greater (or are less) than the adjusted cost base to the Resident Holder of such Ordinary Shares immediately before the disposition or deemed disposition. The taxation of capital gains and losses is generally described below under the heading ''Capital Gains and Capital Losses''.

Capital gains and capital losses

Generally, a Resident Holder is required to include in computing income for a taxation year onehalf of the amount of any capital gain (a ''taxable capital gain'') realized by the Resident Holder in such taxation year. Subject to and in accordance with the rules contained in the Tax Act, a Resident Holder is required to deduct one-half of the amount of any capital loss (an ''allowable capital loss'') realized in a particular taxation year against taxable capital gains realized by the Resident Holder in the year. Allowable capital losses not so deductible in a particular taxation year may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year against net taxable capital gains realized in such years, to the extent and under the circumstances described in the Tax Act.

The amount of any capital loss realized by a Resident Holder that is a corporation on the disposition or deemed disposition of a Ordinary Share may be reduced by the amount of any dividends received or deemed to have been received by such Resident Holder on such Ordinary Shares, to the extent and under the circumstances described in the Tax Act. Similar rules apply where a corporation is a member of a partnership or a beneficiary of a trust that owns the Ordinary Shares, directly or indirectly. Corporations to whom these rules may be relevant should consult their own tax advisors.

A Resident Holder that is throughout the relevant taxation year a ''Canadian-controlled private corporation'' (as defined in the Tax Act) may be liable to pay an additional tax (refundable in certain circumstances) on certain investment income, including taxable capital gains. Such Resident Holders should consult their own tax advisors.

Alternative minimum tax

Capital gains realized and dividends received or deemed to be received by a Resident Holder that is an individual or a trust, other than certain specified trusts, may give rise to alternative minimum tax under the Tax Act. Resident Holders should consult their own tax advisors in this regard.

Taxation of Non-Resident Holders

The following portion of this summary is generally applicable to Holders (as defined above) who, for the purposes of the Tax Act and at all relevant times: (i) are not resident or deemed to be resident in Canada, and (ii) do not use or hold the Ordinary Shares in carrying on a business in Canada. This portion of the summary only addresses non-resident holders who meet all of the foregoing requirements (''Non-Resident Holders''). Special rules, which are not discussed in this summary, may apply to a Non-Resident Holder that is an insurer carrying on business in Canada and elsewhere. Such Non-Resident Holders should consult their own tax advisors.

Receipt of dividends

Dividends paid or credited or deemed to be paid or credited to a Non-Resident Holder by the Company are subject to Canadian withholding tax at the rate of 25% of the gross amount of the dividend unless reduced by the terns of an applicable tax treaty between Canada and the Non-Resident Holder's jurisdiction of residence. Under the convention Between Canada and the United States of America with respect to taxes on income and on capital, signed September 26, 1980 (the ''Canada-US Tax Convention''), the rate of withholding tax on dividends paid or credited to a Non-Resident Holder that is a resident in the US for purposes of the Canada-U.S. Tax Convention and that is entitled to benefits under the Canada-US Tax Convention (a ''US Holder'') is generally limited to 15% of the gross amount of the dividend (or 5% in the case of a US Holder that is a company beneficially owning at least 10% of the Corporation's voting shares). Non-Resident Holders should consult their own tax advisors in this regard.

Disposition of Ordinary Shares

A Non-Resident Holder generally will not be subject to tax under the Tax Act in respect of a capital gain realized on the disposition or deemed disposition of a Ordinary Share unless it constitutes ''taxable Canadian property'' (as defined in the Tax Act) to the Non-Resident Holder at the time of disposition and the gain is not exempt from tax pursuant to the terms of an applicable tax treaty between Canada and the Non-Resident Holder's jurisdiction of residence.

Provided the Ordinary Shares are listed on a ''designated stock exchange'', as defined in the Tax Act (which currently includes the London Stock Exchange) at the time of disposition, the Ordinary Shares will generally not constitute taxable Canadian property of a Non-Resident Holder at that time, unless at any time during the 60-month period immediately preceding the disposition the following two conditions are satisfied: (i) (a) the Non-Resident Holder; (b) persons with whom the Non-Resident Holder did not deal at arm's length; (c) partnerships in which the Non-Resident Holder or a person described in (b) holds a membership interest directly or indirectly through one or more partnerships; or (d) any combination of the persons and partnerships described in (a) through (c), owned 25% or more of the issued shares of any class or series of shares of the Company; and (ii) more than 50% of the fair market value of the Ordinary Shares, as applicable, was derived directly or indirectly from one or any combination of real or immovable property situated in Canada, ''Canadian resource properties'', ''timber resource properties'' (each as defined in the Tax Act), and options in respect of, or interests in or for civil law rights in, such properties.

A Non-Resident Holder's capital gain (or capital loss) in respect of the Ordinary Shares that constitute or are deemed to constitute taxable Canadian property (and are not ''treaty-protected property'', as defined in the Tax Act) will generally be computed in the manner described above under the subheading ''Taxation of Resident Holders – Disposition of the Ordinary Shares''.

Non-Resident Holders who may hold the Ordinary Shares as taxable Canadian property should consult their own tax advisors.

THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL CANADIAN TAX CONSIDERATIONS APPLICABLE TO HOLDERS WITH RESPECT TO THE OWNERSHIP, EXERCISE OR DISPOSITION OF THE ORDINARY SHARES. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.

PART XV

CONSEQUENCES OF A STANDARD LISTING

As the Minto Acquisition constituted a Reverse Takeover, upon completion of the Minto Acquisition, the Standard Listing of the Existing Issued Share Capital will be cancelled and an application will be required to be made for the immediate admission of the Enlarged Issued Share Capital to a Standard Listing (pursuant to Chapter 14 of the Listing Rules) and to trading on the Main Market of the London Stock Exchange. The Company intends to comply with the Listing Principles set out in Chapter 7 of the Listing Rules at Listing Rule 7.2.1 which apply to all companies with their securities admitted to the Official List. In addition, the Company also intends to comply with the Listing Principles at Listing Rule 7.2.1A notwithstanding that they only apply to companies which obtain a Premium Listing. With regard to the Listing Principles at 7.2.1A, the Company is not, however, formally subject to such Listing Principles and will not be required to comply with them by the FCA.

While the Company has a Standard Listing, it is not required to comply with the provisions of, inter alia:

• * Chapter 8 of the Listing Rules regarding the appointment of a sponsor to guide the Company in understanding and meeting its responsibilities under the Listing Rules in connection with certain matters. The Company has not and does not intend to appoint such a sponsor in connection with Admission;
• * Chapter 9 of the Listing Rules relating to the ongoing obligations of companies with a Premium Listing and therefore does not apply to the Company;
• * Chapter 10 of the Listing Rules relating to significant transactions. It should be noted therefore that the Minto Acquisition did not require Shareholder consent;
• * Chapter 11 of the Listing Rules regarding related party transactions. Nevertheless, the Company will not enter into any transaction which would constitute a ''related party transaction'' as defined in Chapter 11 of the Listing Rules without the specific prior approval of the Directors;
• * Chapter 12 of the Listing Rules regarding purchases by the Company of its Ordinary Shares. In particular, the Company has not adopted a policy consistent with the provisions of Listing Rules 12.4.1 and 12.4.2; and
• * Chapter 13 of the Listing Rules regarding the form and content of circulars to be sent to Shareholders.

It should be noted that the FCA will not have the authority to (and will not) monitor the Company's compliance with any of the Listing Rules which the Company has indicated herein that it intends to comply with on a voluntary basis, nor to impose sanctions in respect of any failure by the Company so to comply. However, the FCA would be able to impose sanctions for non-compliance where the statements regarding compliance in this document are themselves misleading, false or deceptive.

PART XVI

ADDITIONAL INFORMATION

1. Responsibility statements

The Company and the Directors, whose names appear on page 34 of this document, accept responsibility for all the information contained in this document. To the best of the knowledge of the Company and the Directors the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.

2. Incorporation and registration

• 2.1 The Company was incorporated and registered in England and Wales on 20 August 2010 under the Companies Act, as a public limited company with the name China Africa Resources plc and registered number 07352056. On 7 April 2017, the Company changed its name to Pembridge Resources plc.
• 2.2 The registered office of the Company and its principal place of business is Suite A, 6 Honduras Street, London EC1Y 0TH, United Kingdom. The telephone number of the Company's principal place of business is 0207 917 2968.
• 2.3 The Company is not regulated by the FCA or any financial services or other regulator. The Company is subject to the Listing Rules and the Disclosure Guidance and Transparency Rules (and the resulting jurisdiction of the FCA), to the extent such rules apply to companies with a Standard Listing pursuant to Chapter 14 of the Listing Rules.
• 2.4 The principal legislation under which the Company operates, and pursuant to which the Ordinary Shares have been created, is the Companies Act and the regulations made thereunder. The Company operates in conformity with its constitution.
• 2.5 The business of the Company and its principal activity is to act as an investing company focused on the natural resource sector.

3. Group structure

As at the date of this document, the Company currently has four wholly-owned subsidiaries: Minotaur, an entity incorporated under the laws of the Province of British Columbia, which was incorporated for the purpose of making the Minto Acquisition, but which is now dormant; Yukon, 536445 Inc., and Yukon 536545 Inc., companies incorporated under the laws of the Yukon territory that own a number of mineral claims in the Yukon but are otherwise dormant; and Minto Explorations Limited, a company incorporated under the laws of British Columbia.

4. Share capital

4.1 The issued and fully paid up share capital of the Company, as at the date of this document and as it is expected to be immediately following Admission, is as follows:

	As at the date of this document		Immediately following Admission
Class of shares	Number of Ordinary Shares	Nominal value/£	Number of Ordinary Shares	Nominal value/£
Ordinary shares issued and fully paid	22,384,925	£0.01	68,720,947	£0.01

4.2 Save as disclosed in this document:

• (A) no share or loan capital of the Company has been issued or is proposed to be issued;
• (B) no person has any preferential subscription rights for any shares of the Company;
• (C) no share or loan capital of the Company is unconditionally to be put under option; or
• (D) no commissions, discounts, brokerages or other special terms have been granted by the Company since its incorporation in connection with the issue or sale of any share or loan capital of the Company.
• 4.3 All Ordinary Shares in the capital of the Company are in registered form.
• 4.4 The Ordinary Shares will have a Standard Listing on the Official List and will be traded on the Main Market of the London Stock Exchange. The Ordinary Shares are not listed or traded on, and no application has been or is being made for the admission of the Ordinary Shares to listing or trading on any other stock exchange or securities market.
• 4.5 The Articles do not contain any limit on the number of Ordinary Shares which the Company may issue. However, the ability of the Company to issue shares is subject to the terms of any resolution passed by Shareholders.
• 4.6 At the date of incorporation, the issued share capital of the Company was £50,000 divided into 5,000,000 ordinary shares of nominal value 1 pence each and issued, for nil consideration, to the subscribers to the Company's memorandum of association.

The following changes have occurred in the issued share capital of the Company since 20 August 2010, being the date of its incorporation:

• (A) on 27 October 2010, the 5,000,000 ordinary shares of nominal value 1 pence issued on the incorporation of the Company were transferred by MoFo Nominees Limited to Weatherly International plc;
• (B) on 11 January 2011, 3,250,000 ordinary shares of nominal value 1 pence held by Weatherly International plc were transferred to a subsidiary of Hong Kong East China Non-Ferrous Mineral Resources Co. Ltd. pursuant to an implementation agreement and the payment of £100,000 to the Company by the subsidiary of Hong Kong East China Non-Ferrous Mineral Resources Co. Ltd.;
• (C) on 1 August 2011, the Company allotted:
  • (i) 11,750,000 ordinary shares of nominal value 1 pence pursuant to a subscription agreement at a price of 40 pence per share; and
  • (ii) 6,326,924 ordinary shares of nominal value 1 pence pursuant to an acquisition agreement at a price equivalent to 40 pence per share;
• (D) on 28 September 2016, the Company completed a capital reduction by cancelling the balance standing to the credit of the share premium account to zero and applying the same to extinguish a deficit on it retained earnings account and to create distributable reserves;
• (E) on 14 December 2016, the Company issued 52,762,672 ordinary shares of nominal value 1 pence at a price of 2.17 pence per share to, inter alia, new investors;
• (F) on 1 February 2017, the Company issued 2,996,266 ordinary shares of nominal value 1 pence at a price of 3 pence per share to satisfy a cash obligation of AU\$150,000 pursuant to an agreement relating to an investment in Global Exploration Technologies (Pty) Ltd;
• (G) on 8 February 2017, the Company issued 4,164,000 ordinary shares of nominal value 1 pence at a price of 3.25 pence per share to satisfy a cash obligation of AU\$225,000 pursuant to an agreement relating to an investment in US Lithium (Pty) Ltd;
• (H) on 18 August 2017, the Company issued 142,006,062 Existing Ordinary Shares of nominal value 0.1 pence each at a price of 1.6 pence per share. Each share was issued with a warrant attached, entitling the holder to subscribe for a further Existing Ordinary Share at a price of 3.2 pence per share at any time up to and including 20 August 2019. The Company also issued a total of 2,221,275 warrants to SI Capital on similar terms;
• (I) on 21 August 2017, each of the 81,843,195 ordinary shares of nominal value 1 pence each in the Company were sub-divided into an ordinary share of 0.1 pence each and a deferred share of 0.9 pence;
• (J) on 16 July 2018, every 10 existing ordinary shares of nominal value 0.1 pence each were consolidated in one Ordinary Share of nominal value 1 pence;
• (K) on 16 July 2018 all of the Deferred Shares were repurchased by the Company by way of the proceeds of the issue of one Ordinary Share;
• (L) between 22 April 2019 and 11 June 2019, the Company entered into subscription letters with various non-Director/Senior Manager investors, whereby such investors subscribed for, in aggregate, 5,372,500 Ordinary Shares at 16 pence per Ordinary Share, equating to an investment, in aggregate, of £859,600 in immediately available funds for use by the Company for working capital purposes. The Company will issue a further 1,504,300 Ordinary Shares in aggregate to these investors to reflect the difference between the subscription price of 16 pence per Ordinary Share and the Placing Price. The allotment and issuance of the further 1,504,300 Ordinary Shares shall be conditional upon Admission;
• (M) as more fully described in Section 8.20 of Part XVI Additional Information of this document, on 17 June 2019 the Company agreed to pay consideration to Guy Le Bel under the terms of the Consultancy Agreement of US\$250,000 in commission for services rendered, settled by way of an issuance of 1,539,290 Ordinary Shares at the Placing Price at Admission;
• (N) as more fully described in ''Bonus Ordinary Share awards'' in Part IX The Company, The Board and Senior Managers of this document the Company has agreed to award certain Directors, former Directors and Senior Managers bonuses, amounting, in aggregate, to US\$1,490,000, to be settled by the issuance of 9,174,171 Ordinary Shares at the Placing Price at Admission;
• (O) between May and September 2019, the Company agreed to pay consideration to and settle invoices to a value of US\$114,581 with sundry vendors and others in connection with services rendered, to be settled by the issuance of 705,496 Ordinary Shares at the Placing Price at Admission;
• (P) the Company entered into a settlement agreement with its former Chief Executive Officer, David Linsley, dated 23 September 2019, pursuant to which the Company agreed to pay Mr. Linsley amounts contractually due to him comprising £71,000 in cash, 2,427,806 Ordinary Shares (to be issued to Mr. Linsley as soon as practicable following Admission), together with a further cash payment of £23,702 in respect of an accrued tax liability and a £16,000 contribution towards his associated legal fees;
• (Q) during September and October 2019, the Company agreed to settle certain cash liabilities amounting to £222,600 with current and former staff by the issue of 1,780,800 Ordinary Shares at the Placing Price in lieu of cash; and
• (R) as more fully described in Section 8.19 (a)-(e) in Part XVI Additional Information of this document, the Company will repay certain convertible loans from its Directors by way of an issuance of 3,031,658 Ordinary Shares at the Placing Price at Admission.

The Ordinary Shares referred to in sub-paragraphs (L)-(R) of paragraph 4.6 above, amounting in aggregate to 25,536,021 Ordinary Shares, are collectively referred to as the ''Other Subscription Shares''.

• 4.7 By resolution passed at the Company's annual general meeting on 28 June 2019, the Shareholders granted the following powers and authorities to the Directors to issue ordinary shares:
• (A) in accordance with section 551 of the UK Companies Act 2006 (the ''Act''), the Directors were generally and unconditionally authorised to allot shares in the Company, or to grant rights to subscribe for or to convert any security into shares in the Company (''Rights''):
  • (i) up to an aggregate nominal amount of £700,000; and
  • (ii) comprising equity securities (as defined in section 560 of the Companies Act) up to an aggregate nominal amount of £700,000 (such amount to be reduced by the aggregate nominal amount of any allotments or grants made under paragraph (i) of this resolution (A)) in connection with:
    • (a) any offer of equity securities in connection with the Minto Acquisition and the Placing; and/or
    • (b) any offer by way of rights issue (or substantially on a pre-emptive basis):
      • (1) to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and

(2) to holders of other equity securities as required by the rights of those securities or, subject to such rights, as the Directors otherwise consider necessary,

and so that, in the case of paragraph (ii)(b) only, the Directors may impose any limits or restrictions and make any arrangements which they consider necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of any territory or any other matter,

in all cases, such authorities to expire at the conclusion of the Company's next annual general meeting after this resolution (A) is passed or, if earlier, at the close of business 15 months after the passing of this resolution (A), but, in each case, so that the Company may make offers or agreements before the authority expires which would or might require shares to be allotted or Rights to be granted after the authority expires, and so that the Directors may allot shares or grant Rights in pursuance of any such offer or agreement notwithstanding that the authority conferred by this resolution (A) has expired.

• (B) in accordance with sections 570 and 573 of the Companies Act, the Directors were generally empowered to allot equity securities (as defined in section 560 of the Companies Act) for cash pursuant to the authorities granted by resolution (A) above and/or sell Ordinary Shares held by the Company as if section 561 of the Companies Act did not apply to any such allotment or sale provided that this power shall be limited:
  • (iii) to the allotment of equity securities in connection with an offer of equity securities pursuant to paragraph (ii)(a) of resolution (A) above in connection with the Minto Acquisition and the Placing;
  • (iv) to the allotment of equity securities in connection with an offer of equity securities (but in the case of an allotment pursuant to the authority granted under paragraph (ii)(b) of resolution (A) above, such power shall be limited to the allotment of equity securities in connection with an offer by way of rights issue (or substantially on a pre-emptive basis) only):
    • (a) to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and
    • (b) to holders of other equity securities, as required by the rights of those securities or, subject to such rights, as the Directors otherwise consider necessary,

and so that the Directors may impose any limits or restrictions and make any arrangements which they consider necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of any territory or any other matter; and

(v) to the allotment (otherwise than in the circumstances set out in paragraphs (i) and (ii) of this resolution (B)) of equity securities or sale of treasury shares pursuant to the authority granted by paragraph (i) and (ii) of resolution (A) above up to an aggregate nominal amount of £700,000,

in all cases, such power to expire at the conclusion of the Company's next annual general meeting after this resolution (B) is passed or, if earlier, at the close of business 15 months after the passing of this resolution (B), but so that the Company may make offers or agreements before the power expires which would or might require equity securities to be allotted (and/or treasury shares to be sold) after the power expires and so that the Directors may allot equity securities (and/or sell treasury shares) in pursuance of any such offer or agreement notwithstanding that the power conferred by this authority has expired.

4.8 The provisions of section 551 of the Companies Act, which confers on shareholders rights of pre-emption in respect of the allotment of equity securities which are, or are to be, paid up fully in cash, other than by way of allotment to employees under an employee share scheme (as defined in section 1166 of the Companies Act) will apply to the ordinary share capital of the Company, to the extent that such rights are not disapplied by special resolution by the shareholders pursuant to section 570 of the Companies Act in accordance with paragraph 4.7 above or otherwise.

• 4.9 The Placing Shares will have the rights and be subject to the restrictions referred to in paragraph 5.1 (A) of this Part XVI — Additional Information of this document.
• 4.10 The Ordinary Shares comprising the Enlarged Issued Share Capital will, on Admission, be credited as fully paid and will rank pari passu in all respects with the Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of this document.
• 4.11 Save as disclosed in this document, no commission, discounts, brokerages or other specific terms have been granted by the Company in connection with the issue or sale of any its share or loan capital.
• 4.12 During the period between the incorporation of the Company and Admission, no more than 10% of the issued share capital of the Company has been paid for by assets other than cash.
• 4.13 The Company does not have in issue any shares not representing share capital.
• 4.14 None of the share capital of the Company is held by or on behalf of the Company or by any subsidiary of the Company.
• 4.15 Save as set out below the Company does not have any convertible securities, exchangeable securities or securities with warrants currently in issue.
  • (A) On 14 December 2016, a total 47,082,948 warrants were issued to new investors and to placing agents. The warrants were exercisable at a price of 4.34 pence per share and were exercisable at any time up to 15 December 2018 (this equated to 4,708,294 warrants exercisable at 43.4 pence per Ordinary Share following the Share Consolidation). None of these warrants were exercised and have all since expired.
  • (B) On 18 August 2017, a total of 146,060,843 warrants were issued to new investors and advisers. The warrants are exercisable at a price of 3.2 pence per share and are exercisable at any time up to 20 August 2019 (rebased as 14,606,084 warrants exercisable at 32 pence per Ordinary Share following the Share Consolidation). The exercise date of these warrants has been extended to 31 December 2019.
  • (C) Save in respect of the options and warrants set out, there are no acquisition rights and/or obligations over the unissued share capital of the Company and the Company has not given any undertaking to increase its share capital.
  • (D) A total of 22,050,000 share options are outstanding under the Share Option Plan all are exercisable at the current time at an exercise price of between 2 pence and 8 pence per Ordinary Share (rebased as 2,205,000 options over Ordinary Shares exercisable at prices between 20 pence and 80 pence per Ordinary Share following the Share Consolidation).
  • (E) A total of a further 6,219,000 options to acquire Ordinary Shares at a price of 12.5 pence per Ordinary Share have been granted under the Share Option Plan, conditional upon Admission.
  • (F) A total of 300,800 Bookrunner Warrants will be issued to Brandon Hill, conditional on Admission, exercisable at a price of 15.625 pence per Ordinary Share (being the Placing Price plus a 25% premium at any time up to 36 months from the date of Admission) in connection with the Placing.
  • (G) A total of Director's loans plus accrued interest may be converted to Ordinary Shares at the discretion of the Company which, if converted, equates to 3,031,658 Ordinary Shares. Full details are disclosed in section 8.20 in Part XVI – Additional Information of this document.
  • (H) As more fully described in paragraph 11.8 in Part XVI Additional Information of this document, on 24 October 2019 the Company entered into a Convertible Loan Agreement with Gati Al-Jebouri in the sum of up to £1,700,000 which may, if drawn and due, at Mr Al-Jebouri's option be converted into up to 13.6 million Ordinary Shares at the Placing Price, subject to the conversion limit that Mr. Al-Jebouri (and any person acting in concert with him within the meaning set out in the Takeover Code) shall hold no more than 29.9% of the Company's issued share capital.

(I) In October 2019, Gati Al-Jebouri agreed to provide a personal guarantee in respect of the Company's obligation to pay certain outstanding professional fees. In the event that Mr. Al-Jebouri is required to make payments under such personal guarantee, the Company has agreed to repay such amount to him which repayment may be satisfied in cash or by the allotment and issue to him of Ordinary Shares at the Placing Price of £0.125 (at his election). If the number of Ordinary Shares to be allotted and issued to Mr. Al-Jebouri would increase his holding (together with the holding of any person with whom he is acting in concert within the meaning set out in the Takeover Code) above 29.9% of the total voting rights in the Company, the maximum number of Ordinary Shares that may be allotted and issued to him under this agreement would be such number as would take Mr. Al-Jebouri's holding of voting rights in the Company (together with those holdings of any persons acting in concert with him) to 29.9% of the voting rights in the Company.

Further details of the Share Option Plan and its operation is set out in paragraph 9 below.

• 4.16 Save as disclosed in this document:
  • (A) no share or loan capital of the Company (or any of its subsidiaries) is under option or is the subject of an agreement, conditional or unconditional, to be put under option and there is no current intention to issue any Ordinary Shares; and
  • (B) there are no arrangements currently in force for involving the employees in the capital of the Company other than the Share Option Plan.
• 4.17 None of the Directors, the Senior Managers nor members of their families have a related financial product referenced to the Ordinary Shares.
• 4.18 The Ordinary Shares will be registered with the ISIN GB00BG107324.
• 4.19 The Ordinary Shares are in registered form and, following Admission, will be capable of being held in uncertificated form, enabled through CREST. Definitive share certificates for Shareholders not settling through CREST are planned to be dispatched on or about 2 January 2020. No temporary documents of title will be issued.

5. Articles

5.1 The Articles contain no specific restrictions on the Company's objectives and therefore, by virtue of section 31(1) of the Companies Act, the Company's objects are unrestricted.

The Articles (as adopted by the Company on 4 July 2011) contain, inter alia, provisions to the following effect (whose summary is qualified in its entirety by the full contents of the Articles):

• (A) Rights attaching to ordinary shares in the capital of the Company
  • (1) Voting rights of members

Subject to disenfranchisement in the event of any non-compliance with any statutory notice requiring disclosure of the beneficial ownership of any shares as mentioned in (4) below, and subject to any special rights or restrictions as to voting for the time being attached to any shares (as to which there will be none immediately following Admission), on a show of hands every member who, being an individual, is present in person or being a corporation, is present by a duly authorised representative shall have one vote and on a poll each member present in person or by proxy or authorised representative shall have one vote for every share of which he is a holder. In the case of joint holders, the vote of the person whose name stands first in the register of members is accepted to the exclusion of any votes tendered by any other joint holders.

(2) Dividends

Subject to the rights attached to any shares issued on any special terms and conditions (as to which there will be none immediately following Admission), dividends shall be declared and paid according to the amounts paid up on the shares on which the dividend is paid, but no amount paid up on a share in advance of a call shall be regarded as paid up on the share. The Board may pay fixed dividends on any class of shares carrying a fixed dividend expressed to be payable on fixed dates on the half-yearly, or other, dates prescribed for the payment thereof and may also, from time to time, pay interim dividends on shares of any class of such amounts and on such dates and in respect of such periods as it thinks fit. None of the shares in issue immediately following admission will carry the right to a fixed dividend.

(3) Restrictions on shareholders

If a member or any other person appearing to be interested in shares, has been given notice under section 793 of the Companies Act and has failed to give information of their interest in any shares (the ''Default Shares'') within a prescribed time, not being less than 14 days, the Board may impose sanctions on such member to the effect that the member shall not be entitled in respect of the Default Shares to attend or vote either personally or by proxy at a general meeting of the Company or a meeting of the holders of any class of shares or to exercise any other right in relation to general meetings of the Company or meeting of the holders of any class of its shares.

Where the Default Shares represent 0.25% or more (in nominal value or number) of the issued shares of a class, then the Company shall be entitled to withhold any dividend (or part thereof), any right to receive shares instead of a dividend or other money which would otherwise be payable in respect of the Default Shares and the Directors may refuse to register any transfer of the Default Shares other than to a bona fide unconnected third party.

(4) Transfer of shares

A member may transfer all or any of his uncertificated shares and the Company shall register the transfer of any uncertificated shares in accordance with any applicable statutory provision. The Directors may refuse to register the transfer of an uncertificated share or any renounceable right of allotment of a share which is a participating security held in uncertificated form in accordance with the CREST Regulations to the extent that the Company is permitted to do so by the CREST Regulations, provided that where the uncertificated shares are admitted to trading on a securities market, such a refusal would not prevent dealings in the shares of that class taking place on an open and proper basis. If the Directors refuse to register a transfer of an uncertificated share it shall, within two months of the date on which the operator instruction relating to such a transfer was received by the Company, send to the transferee notice of the refusal.

A member may transfer all or any of his certificated shares by an instrument of transfer in any usual common form, or in any other form which the Directors may approve. The instrument of transfer of a partly paid share shall be executed by or on behalf of the transferee. The Directors may, in their absolute discretion and without giving any reason therefore except as required by law, refuse to register the transfer of any share which is not fully paid up or on which the Company has a lien provided that, where any such shares are admitted to the Official List or to AIM, such a refusal would not prevent dealings in the shares of that class taking place on an open and proper basis. The Directors may also refuse to register a transfer of a certificated share, whether or not fully paid, unless the instrument of transfer is lodged, duly stamped or adjudged or certified as not chargeable to stamp duty, at the transfer office, or such other place as the Directors may appoint and is accompanied by the certificate(s) for the share(s) to which it relates (except where the shares are registered in the name of a market nominee and no certificate has been issued for them) and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer or the person renouncing to effect the renunciation. If the Directors refuse to register a transfer of a certificated share they shall, by such time as is the earlier of the period required by the rules of the London Stock Exchange or the FCA in force for the time being and in any event, within two months after the date on which the transfer was lodged with the Company, send to the transferee notice of the refusal.

The Directors may refuse to register any transfer of a certificated share unless the instrument of transfer is in respect of only one class of share and may refuse to register the transfer of any share in favour of not more than four transferees.

(5) Changes in capital

The Company may by ordinary resolution:

• (a) consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares;
• (b) sub-divide its shares, or any of them, into shares of a smaller amount than its existing shares; and
• (c) cancel shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person.

Subject to the provisions of the Companies Act and to the rights attaching to its existing shares, the Company may:

• (a) by special resolution purchase, or enter into a contract under which it will or may purchase, its own shares; and
• (b) by special resolution reduce its share capital, any capital redemption reserve share premium account or other undistributable reserve in any manner.
• (6) Variation of rights

Subject to the provisions of the Companies Act, the rights attached to any class of shares for the time being issued may from time to time be varied or abrogated with the consent in writing of the holders of not less than three-quarters in nominal value of the issued shares of that class or with the sanction of an special resolution passed at a separate general meeting of the holders of the shares of that class. At any separate general meeting, the necessary quorum shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of the class in question or, at any adjourned meeting of such holders, shall be one person holding shares of the class in question in person or by proxy whatever his or their holding. Every holder of the shares of the class present in person or by proxy shall, on a show of hands have one vote, or on a poll, have one vote in respect of every share of the class held by them respectively and a poll may be demanded in writing by any holder of shares of the class present in person or by proxy.

(7) Allotment of shares and pre-emption rights

Subject to the Companies Act and to any rights attached to existing shares, any share may be issued with or have attached to it such rights and restrictions as the Company may by ordinary resolution determine, or if no ordinary resolution has been passed or so far as the resolution does not make specific provision, as the Directors may determine (including shares which are to be redeemed, or are liable to be redeemed at the option of the Company or the holder of such shares). In accordance with section 551 of the Companies Act, the Directors may be generally and unconditionally authorised to exercise all the powers of the Company to allot shares up to an aggregate nominal amount equal to the amount stated in the relevant ordinary resolution authorising such allotment.

The provisions of section 561 of the Companies Act (which confer on shareholders rights of pre-emption in respect of the allotment of equity securities which are paid up in cash) apply to the Company except to the extent disapplied by special resolution of the Company.

(8) Alteration of share capital

The Company may by ordinary resolution consolidate or divide all of its share capital into shares of larger nominal value than its existing shares, or cancel any shares which, at the date of the ordinary resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the nominal amount of shares so cancelled or sub-divide its shares, or any of them, into shares of smaller nominal value.

The Company may, in accordance with the Companies Act, reduce or cancel its share capital or any capital redemption reserve or share premium account in any manner and with and subject to any conditions, authorities and consents required by law.

• (B) Directors
  • (1) The number of Directors (other than alternate directors) shall not be less than two. There shall be no more than 10 Directors.
  • (2) A Director shall not be required to hold any shares of the Company by way of qualification.
  • (3) There shall be no age limit for Directors.
  • (4) At each annual general meeting at least one-third of the Directors for the time being shall retire from office by rotation. The Directors to retire by rotation shall include, firstly, any Director who wishes to retire at the meeting and not offer himself for re-election and, secondly, those Directors who have been longest in office since their last appointment or reappointment, provided always that each Director shall be required to retire and offer himself for re-election at least every three years. A retiring Director shall, if willing to act, be deemed to have been reappointed, unless at the general meeting it is resolved not to fill the vacancy or a resolution for the reappointment of the Director is put to the meeting and not passed.
  • (5) The Directors (other than alternate directors) shall be entitled to such remuneration by way of fees for their services in the office of a director as the Directors may determine (not exceeding £250,000 in aggregate per annum or such greater sum as the Company may, by ordinary resolution, decide). Such fee shall be divided between the Directors as they agree or, failing agreement, equally. The fees shall be distinct from any salary, remuneration or other amount payable to a Director in respect of any executive office held by him or other work performed by him which is beyond the scope of his office as a Director.
  • (6) The Directors may also be paid all reasonable travelling, hotel and other expenses properly incurred by them in connection with their attendance at meetings of the Directors or of committees of the Directors or general meetings or separate meetings of the holders of any class of shares or of debentures of the Company.
  • (7) The Directors may provide benefits, whether by the payment of gratuities or pensions or by purchasing and maintaining insurance or otherwise, for the benefit of any persons who are or were at any time Directors or the holders of any executive or comparable office of employment with the Company or any other company or undertaking which is or has been (a) a subsidiary of the Company or (b) otherwise allied to or associated with the company or a subsidiary of the Company or (c) a predecessor in business of the Company or of any such subsidiary, or (d) for any member of his family (including a spouse and a former spouse) or any person who is or was dependent on him, and may (as well before or after he ceases to hold such office or employment) establish, maintain, subscribe and contribute to any fund and pay premiums for the purchase or provision of any such benefit.
  • (8) Subject to the provisions of the Companies Act, a Director may be a party to or otherwise interested in any contract, transaction, arrangement or proposal with the Company or in which the Company is otherwise interested either in regard to his tenure of any office or place or profit or as vendor, purchaser or otherwise. A Director may hold any other office or place of profit with the Company (except that of auditor or auditor of a subsidiary of the Company) in conjunction with the office of director on such terms as to remuneration and otherwise as the Directors may arrange. Any remuneration shall be in addition to any remuneration provided for by any other article.
• (9) A Director who to his knowledge is in any way (directly or indirectly) interested in a contract, transaction, arrangement or proposal with the Company shall declare the nature of his interest at the meeting of the Directors at which the question of entering into such contract, transaction, arrangement or proposal is first taken into consideration if he knows his interest then exists or in any other case at the first meeting of the Directors after he knows that he is or has become so interested or by means of a notice to the other Directors complying with section 184 of the Companies Act, given as soon as practicable after the interest arises or, as the case may be, the Director knows that he is or has become so interested.
• (10) A Director shall not vote or be counted in the quorum on any resolution of the Directors concerning his own appointment (including the fixing and varying of terms of appointment) as the holder of any office or place of profit with the Company or any other company in which the Company is interested. Where proposals are under consideration concerning the appointment (including the fixing or varying of terms of appointment) of two or more Directors to offices or employment with the Company or any body corporate in which the Company is interested (other then one in which the Director and any persons connected with him have such an interest as is mentioned in (11)(d) below) the proposals may be divided and considered in relation to each Director separately and (provided he is not under the Articles or for any other reason precluded from voting) each of the Directors concerned shall be entitled to vote and be counted in the quorum in respect of each resolution except that concerning his own appointment.
• (11) A Director shall not vote or count in the quorum in relation to a resolution or meeting of the Directors in respect of any contract or arrangement or any other proposals whatsoever in which he has an interest which (together with any interest of a connected person) to his knowledge is a material interest. Notwithstanding the above, a Director shall be entitled to vote (and be counted in the quorum) on:
  • (a) any transaction in which he is interested by virtue of his interest in shares or debentures or other securities of or otherwise in or through the Company;
  • (b) the giving of any guarantee, security or indemnity to him in respect of money lent or obligations undertaken by him or by any other person at the request of, or for the benefit of, the Company or any of its subsidiary undertakings; or the giving of any guarantee, security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiary undertakings for which he himself has assumed responsibility in whole or in part and whether alone or jointly with others under a guarantee or indemnity or by the giving of security;
  • (c) any transaction relating to an offer of shares, debentures or other securities of or by the Company or any of its subsidiary undertakings issued or to be issued pursuant to any offer or invitation to Shareholders or debenture holders of the Company or any class thereof or to the public or any section thereof in which offer the Director is or may be entitled to participate as a holder of such securities or in the underwriting or sub-underwriting of which the Director is entitled to participate;
  • (d) any transaction to which the Company is or is to be a party relating to another company, including any subsidiary undertaking of the Company, in which he and any persons connected with him do not to his knowledge hold an interest in shares (as that term is used in Part 22 of the Companies Act) whether as an officer, shareholder, creditor or otherwise representing one% or more of any class of the equity share capital, or the voting rights, in that company or of any other company through which his interest is derived;
  • (e) any contract, transaction, arrangement or proposal for the benefit of employees of the Company or any of its subsidiary undertakings (including in relation to a pension fund, retirement, death or disability benefits scheme

or personal pension plan) which does not award him any privilege or advantage not generally awarded to the employees to whom the arrangement relates;

• (f) any contract, transaction, arrangement or proposal concerning insurance which the Company proposes to maintain or purchase for the benefit of Directors or for the benefit of persons including Directors; and
• (g) (save in relation to any matter concerning or affecting his own participation therein) any transaction involving the adoption or modification of any share option or share incentive scheme of the Company.
• (12) The provisions of the Articles relating to the permitted interests of the directors and their ability to vote thereon may be suspended or relaxed and a transaction not duly authorised thereby may be ratified, in each case by ordinary resolution.
• (13) Without prejudice to any of such provisions of the Articles the Directors have power, in accordance with the Companies Act, to authorise any interest of a Director which conflicts, or may conflict, with the interests of the Company, not being in relation to a contract or arrangement between the Director and the Company itself.
• (C) Borrowing powers

The Board may exercise all the powers of the Company to borrow money and to mortgage or charge all or any part of its undertaking, property and assets (both present and future) and uncalled capital of the Company and to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party. The Board shall restrict the borrowings of the Company and exercise all voting and other rights or powers of control exercisable by the Company in relation to its subsidiary undertakings (if any) so as to secure (as regards subsidiary undertakings only so far as by such exercise it can secure) that the aggregate principal amount outstanding at any time in respect of all borrowings by the Company (exclusive of any borrowings which are owed by one group company to another group company) will not, without the previous sanction of an ordinary resolution of the Company, exceed an amount equal to three times the adjusted capital and reserves (as defined in the Articles).

(D) Shareholders meetings

Subject to the provisions of the Companies Act, an annual general meeting shall be called by at least 21 clear days' notice, and all other general meetings shall be called by at least 14 clear days' notice. The notice shall specify the place, the date and the time of meeting and the general or special nature of business to be transacted. A general meeting shall, notwithstanding that it has been called by shorter notice than that specified above, be deemed to have been duly called if it is so agreed in the case of an annual general meeting, by all the members entitled to attend and vote at the meeting; and in the case of any other general meeting, by a majority in number of the members having a right to attend and vote at that meeting, being a majority together holding not less than 95%. in nominal value of the shares giving that right. The Board may, whenever it thinks fit, and in accordance with the Companies Act, convene a general meeting other than an annual general meeting. At general meetings the quorum shall be two Shareholders present in person or by proxy and entitled to vote. In the case of adjourned meetings a quorum shall be one Shareholder present in person or by proxy or authorised representative.

(E) Unclaimed dividends

Any dividend which has remained unclaimed for 12 years from the date when it became due for payment shall, if the directors so resolve, be forfeited, revert to and cease to remain owing by the Company.

5.2 Requirement to disclose interests in voting shares

Shareholders are obliged to comply with the shareholding notification and disclosure requirements set out in Chapter 5 of the DTRs. A Shareholder is required pursuant to Rule 5 of the DTRs to notify the Company if, as a result of an acquisition or disposal of shares or financial instruments, the Shareholder's percentage of voting rights of the Company reaches, exceeds or falls below, 3% of the nominal value of the Company's share capital or any 1% threshold above that.

The DTRs can be accessed and downloaded from the FCA's website at http:// fshandbook.info/FS/html/FCA/DTR.

Under provisions contained in Part 22 of the Companies Act the Company may serve a notice on any person who it believes has, or may in the previous three years have had, an interest in its voting shares requiring them to give particulars of their interest, or, if no interest is then held, of any person to whom any previous interest was transferred. The Company must exercise its right to serve such a notice if required to do so by holders of at least 10% of its paid up voting shares. Failure to comply with a notice is a criminal offence and the Company may impose sanctions against the shareholder concerned under its Articles including disenfranchisement, withholding of dividends and restrictions on transfer. ''Interest'' is widely defined and includes an interest of any kind in the shares, subject to certain specific exclusions, but ''interest'' includes, inter alia, an agreement to purchase shares or the right to do so by virtue of an option and a person is interested in shares held by companies which he controls or by his spouse, civil partner or children and where a person is party to an agreement between two or more persons that includes provisions for the acquisition by any one or more of them of interests in shares of the Company which imposes obligations or restrictions on any one or more of the parties with respect to their use, retention or disposal of such interests and such interests are acquired in pursuance of any agreement, each party to the agreement is regarded as interested in the shares held by each other such party.

Shareholders are urged to consider their notification and disclosure obligations carefully as a failure to make a required disclosure to the Company may result in disenfranchisement.

6. Squeeze-out rules, sell-out rules and takeover bids

6.1 Squeeze-out

Under the Companies Act, if an offeror makes a takeover offer for the Company and successfully acquired (or unconditionally contracted to acquire) 90% in value of the shares to which the offer relates and not less than 90% of the voting rights carried by those shares, it could then compulsorily acquire the remaining shares. It would do so by sending a notice to outstanding shareholders, within three months of the last day of which the offer can be accepted, telling them that it will compulsorily acquire their shares and then, six weeks later, it would execute a transfer of the outstanding shares in its favour and pay the consideration to the Company, which would hold the consideration on trust for outstanding shareholders. The consideration offered to the shareholders whose shares are compulsorily acquired under the Companies Act must, in general, be the same as the consideration that was available under the takeover offer.

6.2 Sell-out

The Companies Act also gives minority Shareholders a right to be bought out in certain circumstances by an offeror who had made a takeover offer. If a takeover offer related to all the shares in the Company and at any time before the end of the period within which the offer could be accepted the offeror held or had agreed to acquire not less than 90% in value of all voting shares in the Company, which carry not less than 90% of the voting rights, any holder of shares to which the offer related who had not accepted the offer could by a written communication to the offeror require it to acquire those shares.

The offeror would be required to give any Shareholder notice of his right to be bought out within one month of that right arising. The offeror may impose a time limit on the rights of minority Shareholders to be bought out, but that period cannot end less than three months after the end of the acceptance period. If a Shareholder exercises his/her rights, the offeror is bound to acquire those shares on the terms of the offer or on such other terms as may be agreed.

There have been no public takeover bids by third parties in respect of the Company's equity in the current financial year or the previous financial year.

7. Terms and conditions of the warrants

• 7.1 The Company entered into a warrant instrument dated 14 December 2016 executed as a deed poll pursuant to which the Company created and issued 47,082,948 warrants each entitling the holder to acquire one Ordinary Share at a price of 4.34 pence during the period ending on 15 December 2018. These warrants were not exercised and have since expired.
• 7.2 The Company entered into a warrant instrument dated 20 July 2017 executed as a deed poll pursuant to which the Company created and issued a total of 146,060,844 warrants each entitling the holder to acquire one Ordinary Share at a price of 3.2 pence during the period commencing ending on 20 August 2019. The number of warrants and/or the exercise price is subject to adjustment in the event that the Company undertakes certain events comprising a reorganisation of its share capital. Subject to the Share Consolidation these warrants will have reduced in number to 14,606,084 warrants and the exercise price has rebased to 32 pence per Ordinary Share, and their exercise date has been extended to 31 December 2019.
• 7.3 The Company entered into a warrant instrument on the date of this document executed as a deed poll pursuant to which the Company created and will issue, subject to Admission, a total of 300,800 Bookrunner Warrants to Brandon Hill, each entitling the holder to acquire one Ordinary Share at a 25% premium to the Placing Price at any time up to 36 months from the date of Admission. The number of warrants and/or the exercise price is subject to adjustment in the event that the Company undertakes certain events comprising a reorganisation of its share capital.

8. Directors' and Senior Managers' and other relevant interests in the share capital of the Company

• 8.1 The Directors and Senior Managers, their functions within the Company and their biographies are set out in Part IX – The Company, The Board and Senior Managers of this document.
• 8.2 The business address of each of the Directors and Senior Managers is at the registered office of the Company, being Suite A, 6 Honduras Street, London EC1Y 0TH, United Kingdom.
• 8.3 As at 10 December 2019, being the latest practicable date prior to the publication of this document, insofar as known to the Company, the interests of the Directors and Senior Managers, their immediate families and those of any connected person (within the meaning of the provisions of the Disclosure Guidance and Transparency Rules), the existence of which is known to, or could with reasonable diligence be ascertained by, that Director or Senior Manager whether or not held through another party, in the share capital of the Company in respect of such capital were and are expected to be immediately following Admission as follows:

	As at the date of this document		Immediately following Admission
Name	Number of Existing Ordinary Shares held	Percentage of the Existing Issued Share Capital held	Number of Ordinary Shares held	Percentage of the Enlarged Issued Share Capital held
Frank McAllister	468,750	2.09%	3,451,419	5.0%
Guy Le Bel	46,875	0.20%	2,823,545	4.1%
Gati Al-Jebouri	1,250,000	5.58%	12,795.790	18.6%
Thomas Horton	—	0.00%	954,360	1.4%
Paul Fenby	—	0.00%	1,600,862	2.3%

8.4 The Directors and Senior Managers also hold the following options to subscribe for Ordinary Shares:

Name	No. of options	Exercise price	Grant date	Expiry date
Guy Le Bel	135,000*	20p-80p	31/10/17	30/10/27
Guy Le Bel	400,000**	12.5p	14/10/19	14/10/29
Frank McAllister	135,000*	20p-80p	31/10/17	30/10/27
Frank McAllister	400,000**	12.5p	14/10/19	14/10/29
Gati Al-Jebouri	135,000*	20p-80p	31/10/17	30/10/27
Gati Al-Jebouri	2,880,000**	12.5p	14/10/19	14/10/29
Thomas Horton	864,000**	12.5p	14/10/19	14/10/29
Paul Fenby	1,440,000**	12.5p	14/10/19	14/10/29

* All of these options have a 10 year life and each award vests as to 33.33% on the first, second and third anniversaries of the date of grant. The exercise price for each award is set at 20 pence per Ordinary Share in respect of the one third vesting on the first anniversary of the grant date; 40 pence per Ordinary Share in respect of the third vesting on the second anniversary of date of grant; and 80 pence per Ordinary Share in respect of the third vesting on the third anniversary of date of grant.

** All of these options have been granted with a 10 year life. The options are split into three equal tranches exercisable at a price of 12.5 pence per Ordinary Share. Vesting of these awards is subject to satisfaction of performance conditions (as explained on page 66 of this document) and will be subject to review by the Remuneration Committee.

• 8.5 Save as disclosed above, and with regards to options in paragraph 8.4 of this Part XVI Additional Information of this document, none of the Directors, the Senior Managers nor any member of his immediate family or any person connected with him holds or is beneficially or non-beneficially interested directly or indirectly, in any shares or options to subscribe for, or securities convertible into, shares in the capital of the Company.
• 8.6 In respect of the Directors or the Senior Managers, there are no conflicts of interest between any duties they have to the Company and their private interests and/or other duties they may have.
• 8.7 There are no arrangements or understandings with major Shareholders, customers, suppliers or others, pursuant to which any Directors were selected as member(s) of the Board.
• 8.8 There are no outstanding loans granted by the Company to the Directors or Senior Managers or any guarantees provided by the Company for the benefit of the Directors or Senior Managers.
• 8.9 No Director or Senior Manager has or has had any interest in any transaction which is or was unusual in its nature or conditions or which is or was significant to the business of the Company and which was effected by the Company during the current or immediately preceding financial year, or which was effected during an earlier financial year and remains in any respect outstanding or unperformed.
• 8.10 The terms of the Directors service arrangements are summarised below:
  • (a) Gati Al-Jebouri

Mr. Al-Jebouri and the Company are parties to a service agreement dated 16 October 2019 pursuant to which Mr. Al-Jebouri was appointed as Chief Executive Officer of the Company, effective from 19 September 2019. The service agreement may be terminated by either party giving to the other not less than 12 months written notice. The service agreement contains provisions for early termination in the event, inter alia, of a breach of a material term of the service agreement by the director and, where such breach is capable of remedy, Mr. Al-Jebouri fails to remedy the breach within 30 days of notice provided by the Board or where Mr. Al-Jebouri ceases to be a Director of the Company for any reason. The basic annual salary payable to Mr. Al-Jebouri is currently £240,000, rising to £360,000 at the date of Admission, per annum with a bonus awarded at the absolute discretion of the Remuneration Committee of up to 300% of annual base salary. The service agreement provides for a bonus payment on Admission of US\$500,000. The service agreement provides for a payment of up to two years annual salary and two times the average of the cash bonus paid in the two proceeding years and two times the value of his other contractual benefits, in the event of a change of control, which is defined as (i) the acquisition by any person or persons acting in concert of more than 50% of the issued share capital of the Company, (ii) the day to day control of the Company, (iii) the business of the Company or (iv) all or substantially all of the Company's assets. The service agreement contains restrictive covenants for a period of 12 months following termination of his employment. Mr. Al-Jebouri will receive statutory pension benefits, life insurance and the provision of medical insurance for himself and his spouse. Mr. Al-Jebouri will receive tax advice to the value of £5,000 exclusive of VAT in relation to his personal tax affairs. There is no right to any further benefits. The service agreement provides that at the option of the Company, Mr. Al-Jebouri may receive his salary 50% in cash and 50% in the issue of new Ordinary Shares for a period of 12 months following the date of his appointment.

(b) Frank McAllister

Mr. McAllister and the Company are parties to a letter of appointment dated 20 July 2017 whereby Mr McAllister was appointed as a Non-Executive Director. The agreement may be terminated by either party serving at least three months' written notice on the other. The agreement contains provisions for early termination in the event, inter alia, of a breach of a material term of the agreement by Mr. McAllister and, where such breach is capable of remedy, the Director fails to remedy the breach within 30 days of notice provided by the Board or where Mr. McAllister ceases to be a Director of the Company for any reason. The basic annual fee payable to Mr. McAllister is £25,000 per annum to be reviewed annually (without any obligation to increase the same). There is no right to any further benefits.

(c) Guy Le Bel

Mr. Le Bel and the Company are parties to a letter of appointment dated 20 July 2017 whereby Mr. Le Bel was appointed as a Non-Executive Director. The agreement may be terminated by either party serving at least three months' written notice on the other. The agreement contains provisions for early termination in the event, inter alia, of a breach of a material term of the agreement by Mr. Le Bel and, where such breach is capable of remedy, the Director fails to remedy the breach within 30 days of notice provided by the Board or where Mr. Le Bel ceases to be a Director of the Company for any reason. The basic annual fee payable to Mr. Le Bel is £25,000 per annum to be reviewed annually (without any obligation to increase the same). There is no right to any further benefits.

• 8.11 Save as set out in paragraphs 8.10 and 8.20, there are no service contracts or consultancy agreements between any of the Directors and the Company or any of its subsidiaries and no such contract has been entered into or amended or replaced within the six months preceding the date of this document and no such contracts are proposed.
• 8.12 Save as set out in paragraphs 8.4 and 8.20, the Directors receive no shares or options over shares in lieu of remuneration or as any form of compensation.
• 8.13 Save as set out in paragraphs 8.10 and 8.20, the Company is not party to any service contract with any of the Directors which provides for benefits on the termination of any such contract.
• 8.14 No Director has any accrued pension or retirement benefits. No other material benefits accrue to the Directors in connection with their appointment.
• 8.15 There is no arrangement under which any Director has waived or agreed to waive future emoluments.
• 8.16 In the year ended 31 December 2018, the total aggregate remuneration paid, and benefitsin-kind granted, to the Directors and Senior Managers was £711,000. The amounts payable to the Directors and Senior Managers by the Company under the arrangements in force at the date of this document in respect of the year ended 31 December 2019 are estimated to be £1,558,000.

8.17 The Directors and Senior Managers have not held any directorships of any company (other than the Company and its subsidiaries) or partnerships within the last five years, except as set forth below:

Gati Al-Jebouri Current Alexander Partners Limited LITASCO S.A.	Past LUKOIL Mid East Limited LUKOIL Europe Holdings Limited
Frank McAllister Current America Tailings Inc. Aviano Financial Group LLC Orbital Micro Systems Inc. National Mining Hall of Fame & Museum	Past Cliffs Natural Resources Inc. National Mining Association Stillwater Mining Company Inc. ASARCO Inc. Southern Peru Copper Corporation
Guy Le Bel Current 9386-0096 Quebec Inc.	Past BC Gold Corp. Cabia Goldhills Inc. Mammoth Resources Corp. RedQuest Capital Corp. Golden Queen Mining Limited Westbourne Resources Ltd.
Thomas Horton Current GMS Capital Limited	Past —
Paul Fenby Current Quayside Management Company (Wales) Limited	Past Berau Coal Energy TBK

• 8.18 None of the Directors or Senior Managers:
  • (A) has received any convictions in relation to fraudulent offences at any time in the previous five years;
  • (B) has been declared bankrupt or entered into any individual voluntary arrangement at any time in the previous five years;
  • (C) has, at any time in the previous five years, been a director with an executive function of any company at the time of, or within 12 months preceding, any receivership, compulsory liquidation, creditors' voluntary liquidation, administration, company voluntary arrangement or any composition or arrangement with that company's creditors generally or with any class of its creditors;
  • (D) has, at any time in the previous five years, been a partner in a partnership at the time of, or within 12 months preceding, any compulsory liquidation, administration or partnership voluntary arrangement of such partnership;
  • (E) has, at any time in the previous five years, had any of his assets the subject of any receivership or has been a partner of a partnership at the time of, or within 12 months preceding, any assets thereof being the subject of a receivership; or
  • (F) has, at any time in the previous five years, been subject to any public incrimination and/or sanctions by any statutory or regulatory authorities (including any designated professional bodies) or has ever been disqualified by a court from acting as a director or member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company.
• 8.19 The Company has entered into the following related party transactions with its Directors in order to fund working capital:
  • a) on 28 August 2018, the Company borrowed £200,000 from Frank McAllister. The loan has no fixed term, but is due to be repaid within 30 days of Admission, provided the Placing raises at least US\$1 million. The loan carries an interest rate of 10% per annum, payable semi-annually in arrears. If the Placing raises at least US\$1 million, the Company may elect to repay the loan (including accrued interest for a minimum period of six months) in new Ordinary Shares, calculated utilising the Placing Price as a denominator;
  • b) on 6 December 2018, the Company borrowed £40,000 from Frank McAllister. The loan has a two year term. The loan carries an interest rate of 20% per annum, payable semi-annually in arrears. If the Placing raises at least US\$1 million, the Company may elect to repay the loan (including accrued interest for a minimum period of one year) in new Ordinary Shares, calculated utilising the Placing Price as a denominator;
  • c) on 20 December 2018, the Company borrowed £40,000 from Guy Le Bel. The loan has a two year term. The loan carries an interest rate of 20% per annum, payable semi-annually in arrears. If the Placing raises at least US\$1 million, the Company may elect to repay the loan (including accrued interest for a minimum period of one year) in new Ordinary Shares, calculated utilising the Placing Price as a denominator;
  • d) on 25 February 2019, the Company borrowed £40,000 from Gati Al-Jebouri. The loan has a two year term. The loan carries an interest rate of 20% per annum, payable semi-annually in arrears. If the Placing raises at least US\$1 million, the Company may elect to repay the loan (including accrued interest for a minimum period of one year) in new Ordinary Shares, calculated utilising the Placing Price as a denominator;
  • e) on 11 June 2019, the Company entered into a subscription letter with Guy Le Bel, whereby he subscribed for 43,438 Ordinary Shares at a subscription price of 16 pence per Ordinary Share, equating to an investment of £6,950, in immediately available funds for use by the Company for working capital purposes. The allotment and issuance of the 55,600 Ordinary Shares (being the initial subscription amount adjusted to the Placing Price) shall be conditional upon Admission; and
  • f) on 24 October 2019, the Company entered into the Convertible Loan Agreement with Gati Al-Jebouri whereby £1,000,000 was provided in immediately available funds and a further £700,000 made available by way of an uncommitted term loan for use by the Company for working capital purposes.
• 8.20 a) On 17 June 2019, the Company entered into a consultancy agreement with 9386-0096 Quebec Inc. (the ''Consultant''), an entity wholly-owned by Guy Le Bel (the ''Consultancy Agreement''). Under the Consultancy Agreement, which had an effective date of 1 November 2018, the Consultant agreed to co-ordinate discussions on arm's length terms between, inter alios, the Company, Minto and Capstone relating to the proposed Minto Acquisition, and subject to the entry into the Minto Acquisition Agreement and conditional upon the completion of the Placing and Admission, the Company agreed to pay consideration to the Consultant in the form of US\$250,000 in commission for services rendered, settled by way of an issuance by the Company to the Consultant of 1,539,290 Ordinary Shares at the Placing Price.
  • b) 9386-0096 Quebec Inc. also provides consultancy services to Minto pursuant to an agreement dated 6 August 2019. As at the date of this document, Minto had paid CAD\$97,701 to 9386-0096 Quebec Inc. The agreement may be terminated by either party or by giving 10 Business Days notice.

9. Company's Share Option Plan

The main features of the Share Option Plan are summarised below.

Eligibility

All executive Directors and employees of the Company and any of its subsidiaries are eligible to participate in the Share Option Plan. A non-employee sub-plan under the Share Option Plan permits option grants to individuals who provide advisory or consultancy services to the Company and to non-executive Directors. A US sub-plan under the Share Option Plan permits option grants, including potentially tax efficient incentive stock options, to US residents and taxpayers employed by, or providing services to, the Company. The Remuneration Committee selects the individuals to whom options are to be granted from time to time.

Grant of options

Options may be granted during any period of 42 days immediately following a closed period or during any other period in which the Remuneration Committee has decided to grant options due to exceptional circumstances which justify such a decision.

Exercise price and adjustments to options

The exercise price per Ordinary Share will be the amount specified by the Remuneration Committee. If the Ordinary Shares are newly issued the exercise price may not be less than the nominal value of an Ordinary Share. In the event of any variation in the share capital of the Company the exercise price and/or the number of Ordinary Shares comprised in each option may be adjusted as the Remuneration Committee determines. No adjustment may be made which will reduce the exercise price below the nominal value of an Ordinary Share.

Rights and restrictions

An option granted under the Share Option Plan is not transferable. The option certificate will specify when the option will lapse and such date may not be later than the tenth anniversary of its date of grant.

Save as otherwise set out in the option certificate, if the participant ceases to be employed by the Company, his option may be exercised within 12 months after such cessation or transfer. In the event of the death of a participant, the personal representatives of a participant may exercise his option within 12 months after the date of death. The extent to which an option may be exercised in these circumstances will be determined by reference to any exercise conditions and time vesting provisions set out in the option certificate unless the Remuneration Committee decides otherwise and is satisfied that any waiver of such provisions does not constitute a reward for failure.

Corporate events

Options, to the extent not already exercisable, will become exercisable immediately prior to a change in control of the Company, in the event of a takeover of the Company, in the event that an offeror becomes entitled or bound to acquire ordinary shares or in the event that the court sanctions a compromise or arrangement for the reconstruction of the Company or its amalgamation with any other company. In such event, all options may be exercised for a limited period and will lapse to the extent not exercised. Options, to the extent not already exercisable, will become exercisable in the event that the Company is proposed to be voluntarily wound up and all options may be exercised within a limited period in connection with the winding up, failing which they will lapse. In such circumstances and where exercise is permitted, the extent to which an option may be exercised will be determined by reference to any exercise conditions set out in the option certificate unless the Remuneration Committee decides otherwise and is satisfied that any waiver of such provisions does not constitute a reward for failure.

Any exercise of an option will be subject to the terms of the Share Dealing Policy.

Performance conditions

The exercise of options may be subject to the satisfaction of such performance conditions, if any, as may be specified and subsequently varied and/or waived by the remuneration committee.

Issuance of Ordinary Shares

The ordinary shares issued upon the exercise of options granted under the Share Option Plan will rank pari passu with the Company's issued Ordinary Shares on the date of exercise, save as regards any rights arising by reference to a record date prior to the date of such exercise.

Plan limit

Options may not be granted under the Share Option Plan if such grant would result in the total number of ''Dilutive Shares'' exceeding 15% of the issued share capital of the Company from time to time. ''Dilutive Shares'' means, on any date, all shares of the Company which: (a) have been issued, or transferred out of treasury, on the exercise of options granted, or in satisfaction of any other awards made, under any share incentive scheme (including the Share Option Plan) in the 10 years ending on (and including) that date; and (b) remain capable of issue, or transfer out of treasury, under any subsisting options granted by the Company.

The number of Ordinary Shares which may be subject to options granted under the US sub-plan is 7,100,303.

Alternative settlement on exercise

Instead of delivering the number of Ordinary Shares specified in the exercise notice, the Remuneration Committee may make a cash payment with the option holder's consent or deliver ordinary shares equal to the value of the Ordinary Shares over which the option is exercised less the relevant exercise price, or may deliver a combination of the two.

Alteration

The Remuneration Committee may alter the Share Option Plan except that (apart from minor amendments to benefit the administration of the Share Option Plan, to correct typographical or other errors, to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for participants or the Company) no alteration to the advantage of participants or to the Share Option Plan limit described above can be made without the prior approval of Shareholders in general meeting.

No amendment may have a materially adverse effect on options granted before the amendment without the relevant option holder's consent.

Termination and Share Option Plan period

The Remuneration Committee may terminate or suspend the operation of the Share Option Plan at any time, whereupon no further options shall be granted but in all other respects the provisions of the Share Option Plan shall remain in force. In any event, no options may be granted after the date which is 10 years after the date the Share Option Plan was adopted, being 17 November 2016.

10. Placing arrangements

The Company and the Bookrunner entered into a placing agreement on the date of this document (the ''Placing Agreement'') pursuant to the terms of which the Bookrunner agreed to use its reasonable endeavours to procure placees for all of the Placing Shares at the Placing Price, as the Company's agent. The Placing Agreement contains certain warranties and indemnities from the Company and the Directors in favour of the Bookrunner and is conditional, inter alia, on:

• (a) the Placing Agreement becoming wholly unconditional (save as to Admission) and not having been terminated in accordance with its terms prior to Admission; and
• (b) Admission occurring by not later than 8:00 a.m. on 16 December 2019 (or such other time and/or date as the Bookrunner and the Company may agree being not later than 4:30 p.m. on 16 December 2019).

If Admission does not proceed, the Placing will not proceed and all monies paid will be refunded to subscribers.

The Placing Shares will, upon issue, rank pari passu with the Ordinary Shares.

The Bookrunner, as the Company's agent, has procurred irrevocable commitments to subscribe for the full amount of Placing Shares from subscribers in the Placing, and there are no conditions attached to such irrevocable commitments other than Admission.

The Bookrunner may terminate the agreement in certain circumstances prior to Admission including, inter alia, if there shall have been a material adverse change or if any of the Directors or the Company fail to comply in any material respect with any of their respective obligations under the Placing Agreement.

The Placing Agreement provides for the Bookrunner to receive, conditional upon Admission total commission of £68,250.

The Placing is subject to the satisfaction of conditions contained in the Placing Agreement, which are summarised above, and which will be satisfied prior to Admission, and the Placing Agreement not having been terminated. In the event that the Placing does not complete, Admission will not take place. The Company will pay the costs and expenses associated with the Placing, irrespective of whether Admission takes place. VAT will be payable where appropriate.

In accordance with Listing Rule 14.2.2, at the time of Admission at least 25% of the Ordinary Shares will be in public hands (as defined in the Listing Rules).

11. Material contracts

The following contracts, not being contracts entered into in the ordinary course of business, have been entered into by the Company in the two years prior to the date of this document and are or may be material:

11.1 SI Capital Broker Agreement

The Company entered into a broker agreement with SI Capital dated 28 January 2019 (the ''SI Capital Broker Agreement'') pursuant to which SI Capital agreed to act as the Company's joint corporate broker on a continuing basis until terminated by either party on 90 Business Days' written notice, only to be given on or after the first anniversary of the SI Capital Broker Agreement. The Company will pay SI Capital a broking retainer fee of £20,000 per annum (plus applicable VAT) pursuant to the terms of the SI Capital Broker Agreement, which may be increased once per calendar year following the first anniversary of the SI Capital Broker Agreement. The Company will also pay SI Capital an additional success fee of £25,000, subject to SI Capital raising £1,000,000, and pro-rated for lower amounts raised, and a commission of 5% of all funds raised by SI Capital in connection with any placing of securities and 1% on all other capital raising where SI Capital is engaged in the administration. A separate fee will be payable for any work undertaken by SI Capital which is beyond the scope of the services described above. The Company provides an indemnity in favour of SI Capital in relation to any loss arising from the performance of the services under the SI Capital Broker Agreement by SI Capital except to the extent that such loss arises from the fraud, negligence or breach of the SI Capital Broker Agreement by SI Capital.

11.2 Brandon Hill Broker Agreement

The Company entered into a broker agreement with Brandon Hill dated 3 March 2019 (the ''Brandon Hill Broker Agreement'') pursuant to which Brandon Hill agreed to act as the Company's joint broker on a continuing basis until terminated by either party on 3 months' written notice, only to be given on or after the first anniversary of the Brandon Hill Broker Agreement. The Company will pay Brandon Hill a broking retainer fee of £40,000 per annum (plus applicable VAT) pursuant to the terms of the Brandon Hill Broker Agreement, provided that such fee will be reduced to £30,000 in the event that funds raised by Brandon Hill in connection with any placing of securities are between £1,000,000 and £3,000,000, and further reduced to £20,000 in the event that funds raised by Brandon Hill are less than £1,000,000. The Company will also pay Brandon Hill a commission of 5% of all funds raised by Brandon Hill in connection with any placing of securities, provided that if Brandon Hill raise more than £3,000,000 then amounts raised in excess of £3,000,000 will attract a commission of 6%. The Company will also issue warrants to Brandon Hill, exercisable at the Placing Price plus a premium of 25%, to the value of 5% of all funds raised by Brandon Hill in connection with any placing of securities, provided that if Brandon Hill raise more than £3,000,000 then amounts raised in excess of £3,000,000 will attract warrants at a rate of 6%. The Company will also pay Brandon Hill an advisory fee of £70,000 in connection with the placing, such fee to be reduced to £45,000 in the event that funds raised by Brandon Hill in connection with any placing of securities are between £1,000,000 and £3,000,000, and further reduced to £30,000 in the event that funds raised by Brandon Hill are less than £1,000,000. The Company provides an indemnity in favour of Brandon Hill in relation to any loss arising from the performance of the services under the Brandon Hill Broker Agreement by Brandon Hill except to the extent that such loss arises from the fraud, negligence, or breach of the Brandon Hill Broker Agreement by Brandon Hill.

11.3 Lock-up and orderly market agreements

(A) The Directors and Senior Managers

Each Director and Senior Manager has entered into a lock-up and orderly market agreement with the Company pursuant to which he has agreed that he will not offer, sell, contract to sell, pledge or otherwise dispose of any Ordinary Shares which he holds directly or indirectly in the Company, for a period of at least 12 months following the date of Admission, save in certain limited circumstances (set out in the paragraph below) and to sell any Ordinary Shares through the Bookrunner acting in accordance with generally accepted orderly market principles for a futher six months thereafter.

The restrictions on the ability of the Directors and Senior Managers to transfer his Ordinary Shares are subject to certain usual and customary exceptions including: transfers pursuant to the acceptance of, or provision of an irrevocable undertaking to accept, a general offer made to all Shareholders on equal terms, transfers pursuant to an offer by or an agreement with the Company to purchase Ordinary Shares made on identical terms to all Shareholders or transfers as required by an order made by a court with competent jurisdiction or competent judicial body.

11.4 Off-Take Agreement

The Company and Sumitomo Canada entered into the Off-Take Agreement on 22 July 2019, whereby Sumitomo Canada committed to purchase all of the copper concentrate produced from the Minto Mine up to a maximum of 55,000 DMT or 31 December 2021 (whichever is the later) as exclusive off-taker of copper concentrate produced. The delivery method under the Off-Take Agreement is CIF Intercoms 2010, main Japanese Port. Pricing is based on 97.5% of copper content, 90% of silver content and 95% of gold content, all by reference to standard market index pricing quotations, subject to a refining deduction (which is subject to benchmark pricing) and initially set at US\$0.40 per ounce for silver and US\$5.00 per ounce for gold. The quotational period for copper is set at the third calendar month following the arrival at dispatch port and Minto is entitled to provisional invoicing in the sum of up to 90% and advance payment of up to 50% (rising to 90% in 2019) (at a cost of 1 month LIBOR plus 1.5%). Off specification material is subject to good faith negotiation in accordance with market practice and the specific grading issue, but could result in pricing penalties in the event of increased processing costs. Termination is available on insolvency of either party, a material breach of more than 10 Business Days' duration or mutual agreement. Additionally, the Company and Sumitomo Canada shall discuss and negotiate whether Sumitomo shall make a prepayment for concentrates sold under the Off-Take Agreement. In the event that no agreement is reached, the Company may terminate the Off-Take Agreement. Each party remains responsible for their respective payment or delivery obligations with regard to obligations incurred before termination. Neither party is liable for indirect, consequential, punitive or other special damages not based on direct economic losses. The Off-Take Agreement is governed by the laws of British Columbia, Canada.

11.5 Investor Consortium Financing Agreement

The Company and Copper Holdings, LLC, a New York based private equity group and Cedro Holdings I, LLC, an entity managed by Lion Point Capital, L.P. (together, the ''Investor Consortium'') entered into the Investor Consortium Financing Agreement on 3 June 2019, pursuant to which the Investor Consortium will advance \$10 million to Minto to finance the recommencement of operations. The Investor Consortium shall be entitled to be repaid from all free cash-flows and realisations arising from Minto until the holders of the loan note (i.e., the Investment Consortium, their assignors and successors) have received US\$10,000,000 plus interest at a rate of 8% per annum.

The Investor Consortium shall have an interest equal to two-thirds of the economic value of Minto including two-thirds of all free cash-flows and realisations from Minto, and the Company shall be entitled to one-third of the economic value of Minto including the Company Cash-flow Entitlement. An acquisition, sale of Minto shares, assets, merger, lease, transfer, exclusive licence or other disposition of all or substantially all of the assets of Minto will be treated as a liquidation event, thereby triggering payment of the outstanding balance of the Principal Repayment Amount unless the holders of more than 50% of the then outstanding loan note elect otherwise.

Each of the Investor Consortium or the Company may at any time approach the other if wishing to sell their interest, and the two parties will enter into discussions in good faith with regard to value. In the event of a higher offer being obtained from a third-party, then the other original co-venturer, the Investor Consortium or the Company (as applicable), will have a right to match that offer on a pre-emptive basis. Minto's credit agreements with any offtake partner will be structured to ensure that the Investor Consortium are in a senior secured position alongside the off-take partner on all Minto assets other than concentrate/ inventory.

In the event that the Minto Joint Advisory Committee, in its reasonable opinion makes a decision to make a funding request, Pembridge will fund the first US\$3 million requested as an ''Additional Pembridge Amount''. Such funding request will be made with at least 90 days' notice.

Should the Additional Pembridge Amount be paid by Pembridge in response to a funding request within the Notice Period, the Additional Pembridge Amount of US\$3 million will be repayable to Pembridge together with 8% annualised interest out of all free cash-flows and realizations from Minto after the Principal Repayment Amount has been repaid to the Investor Consortium. Should Pembridge be unable to provide the Additional Pembridge Amount in response to a funding request within the Notice Period, then the Company's share of the free cash-flows and economic interest will be immediately reduced pro rata to 11% from one-third prior to any new funds provided by the Investor Consortium or other third parties (i.e., Pembridge will forego 22.3% of the economic value of Minto including 22.3% of all free cash-flows from Minto) for not providing the Additional Pembridge Amount and will be further diluted by any new funds if not matched pro rata by the parties in response to further such funding requests. Any additional funds that are provided by the Investor Consortium will be added to the Principal Repayment Amount and will receive priority repayment from Minto free cash flows until repaid with interest at a rate of 8% per annum. Such loan will carry an annual interest rate of 8% per annum until repaid. Repayments will be made from free cash flows arising at Minto. In return for providing the finance, the Investor Consortium will be entitled to two-thirds of the economic value of Minto, with the other one third accruing to the Company. In the event that Minto requires further equity finance beyond US\$3 million, Pembridge and the Investor Consortium shall provide such finance in the proportions of their respective economic interests in Minto and if either party shall fail to fund the other shall be entitled to fund all or some of the other party's share but with a corresponding adjustment to their respective economic interests based on the then market value of Minto.

Following 90 days from the completion of the Minto Acquisition, Pembridge will contribute CAD\$1 million per quarter in restricted cash until the Recommencement of Commercial Production, after which Minto will contribute CAD\$1 million until a total of CAD\$10 million of surety bond collateral has been achieved. The first such CAD \$1 million contribution was made by Pembridge on 4 September 2019. Once CAD\$10 million of surety bond collateral has been achieved Minto will repay CAD\$1 million quarterly back to Pembridge until Minto has returned the money Pembridge funded in restricted cash prior to the Recommencement of Commercial Production, together with 8% annualized interest.

For the avoidance of doubt, the Investor Consortium does not have and will not be entitled to any voting rights in Minto pursuant to the Investor Consortium Financing Agreement.

The governing law of the Investor Consortium Financing Agreement is that of the State of New York, US.

11.6 The Company announced on 15 February 2018 it had signed a definitive share purchase agreement relating to the Minto Acquisition on 14 February 2018 with Capstone to acquire 100% of Minto and the Company subsequently announced on 4 June 2019 that on 3 June it entered into a replacement to that agreement, the Minto Acquisition Agreement, on 3 June 2019.

The Purchase Price payable under the Minto Acquisition Agreement of up to US\$20 million will be payable out of free cash-flows and realisations from Minto as follows:

• * US\$5 million within 60 days following the earlier of: (i) any period of 60 consecutive production days during which ore has been processed through the Minto Mine mill facilities at a rate of production of not less than 2,400 tonnes per day; or (ii) 31 January 2021, which is the Recommencement of Commercial Production;
• * US\$5 million, or the Deferred Balance, within ninety (90) days following the last day of two consecutive standard calendar quarters following the Recommencement of Commercial Production in which the average London Metals Exchange Cash Copper bid price during each of such consecutive quarters is greater than US\$3.00 per pound, or the US\$3.00 Two Quarter Threshold; and
• * the balance of the Purchase Price, being US\$10 million, or the Further Deferred Balance, to Capstone in immediately available funds within ninety (90) days following the last day of two consecutive standard calendar quarters following the Recommencement of Commercial Production in which the average London Metals Exchange Cash Copper bid price during each of such consecutive quarters is greater than US\$3.50 per pound, or the US\$3.50 Two Quarter Threshold.

The Company's obligation to pay the Deferred Balance and the Further Deferred Balance is conditional on the US\$3.00 Two Quarter Threshold and US\$3.50 Two Quarter Threshold, respectively, having been met or exceeded within the three-year period immediately following the Recommencement of Commercial Production.

The Minto Acquisition Agreement contains customary warranties and representations relating to Capstone's interests in Minto, which were given to the Company by Capstone on the one hand, and by the Company to Capstone on the other hand, as at the date of signing of the Minto Acquisition Agreement; each such representation and warranty was repeated on the date of completion of the Minto Acquisition Agreement, as a condition of closing.

Claims under the Minto Acquisition Agreement are subject to certain financial, time and other limitations customary in agreements of this type. The threshold to be exceeded in respect of the aggregate amount of all warranty claims is US\$1,000,000, in which case Capstone shall be liable for the whole amount claimed, providing the indemnifiable amount from a single claim exceeds US\$100,000. The limitation period in respect of warranty and indemnity claims under the Minto Acquisition Agreement expires 24 months following completion of the Minto Acquisition in respect of the general warranties and 90 days after the date the relevant governmental authority is no longer entitled to assess or reassess Capstone, in the case of the tax warranties or tax covenant. The overall cap and aggregate liability of Capstone in respect of claims under the Minto Acquisition Agreement will not exceed 12.5% of the purchase price.

Pursuant to the terms of the Minto Acquisition Agreement, once Recommencement of Commercial Production has been achieved the Company agrees to indemnify Capstone against any losses in respect of claims against the surety bond posted by Capstone with the Government of Yukon in respect of environmental reclamation obligations at the Minto Mine.

The Minto Acquisition Agreement is governed by the laws in force in the Province of British Columbia and the federal laws of Canada applicable therein; the parties irrevocably submitted to the non-exclusive jurisdiction of the courts of the Province of British Columbia in relation to any action or proceeding relating in any way to the Minto Acquisition Agreement.

• 11.7 The Placing Agreement described in paragraph 10 above.
• 11.8 Convertible Loan Agreement

On 24 October 2019, the Company and Gati Al-Jebouri (the ''Lender'') entered into the Convertible Loan Agreement, which provides for a committed term loan in Pounds Sterling in an aggregate amount equal to £1,000,000 (''Facility A'') to be made available to the Company for the purpose of general working capital purposes. The Convertible Loan Agreement provides that the Company may request a further facility in the form of an uncommitted term loan in Pounds Sterling in an aggregate amount equal to £700,000 (''Facility B'') provided that the Lender will have full and absolute discretion over the granting of such request. The sum of the principal amount outstanding under Facility A and the principal amount outstanding of Facility B (together, the ''Convertible Loan'') is to be repaid in full, together with any accrued and unpaid interest, on the date falling two years after the date of the Convertible Loan Agreement, being 23 October 2021 (the ''Termination Date'') and carries interest at an annual rate of 8% of the Convertible Loan, to be paid in arrears on the last day of each month. The Company shall pay the Lender an arrangement fee in the amount of 6% of the amounts drawn under the Convertible Loan. As at 31 October 2019, facility A had been drawn down in full by the Company.

At any time prior to the Termination Date the Lender may elect to convert all or part of the Convertible Loan into Ordinary Shares, to be issued at Placing Price (the ''Conversion Price''), provided that such election would not place the Lender's shareholding (together with the shareholding of any persons acting in and any person acting in concert with the Lender within the meaning set out in the Takeover Code) above 29.9% of the total issued share capital of the Company. The Company may elect to repay any portion of the Convertible Loan at any point prior to the Termination Date, provided always that the Lender will have the option to have such repayment made in Ordinary Shares, to be issued at the Conversion Price.

The Convertible Loan Agreement requires that the Company give a number of customary representations during the term of the Convertible Loan. These representations relate to the Company's status as a limited liability corporation, its power and capacity to enter into the Convertible Loan Agreement, the nature of any existing security over the Company and its assets, the Company's issued share capital and the Company's compliance with applicable anti-corruption laws. The Company undertakes to comply with anti-corruption laws, to comply with any laws generally which if failure to do to so has or is reasonably likely to have a material adverse effect, to maintain its assets in good working order and to take certain actions following an election by the Lender to convert the Convertible Loan into Ordinary Shares to cause those new Ordinary Shares to be properly and validly allotted and issued. Further, the Company undertakes to transact on an arms-length basis (other than as provided by the Convertible Loan Agreement), to procure that no substantial change is made to the nature of the Company's business and undertakes not to create or permit any security to be created over its assets other than in accordance with the terms of the Convertible Loan Agreement.

Under the Convertible Loan Agreement, the Lender may cancel the Convertible Loan and declare any amounts outstanding thereunder (together with any accrued interest) to be immediately repayable following the occurrence of an event of default which is continuing. Events of default include non-payment of any sum due and payable under the Convertible Loan Agreement, breach of the Convertible Loan Agreement (other than non-payment) where such breach is not remedied within 20 Business Days of the Lender notifying the Company of the breach, misrepresentation by the Company, insolvency of the Company or the commencement by a material creditor of any creditor's process which is not discharged within 21 business days, change of control of the Company, expropriation in relation to any of the Company's assets or any member of its group, any revocation, withholding or material modification of any license, authorisation or consent which enables the Company to fulfil its obligations under the Convertible Loan Agreement or enables the Company or any member of its group to carry on its business in the normal course, any litigation which if successful is or is reasonably likely to have a material adverse effect on the Company and any material adverse change to the Company.

The governing law of the Convertible Loan Agreement is English law.

The following contracts, not being contracts entered into in the ordinary course of business, by Minto are or may be material:

11.9 Co-operation Agreement

Minto and Selkirk entered into the Co-operation Agreement concerning the Minto Mine dated 16 September 1997, as amended by amendment agreement dated 15 October 2009. The Co-operation Agreement is governed by the laws applicable within Yukon Territory.

Pursuant to the Co-operation Agreement, Minto pledges to ensure to the best of its ability that the development and operation of the Minto Project (as defined therein) provide meaningful benefits to Selkirk and its beneficiaries. In turn, Selkirk pledges to co-operate and assist in the development and operation of the Minto Project, including providing access, assisting in identification, recruitment and training of candidates for employment, and providing goods and services, among others.

The Co-operation Agreement requires Minto to meet all standards and requirements and comply with all practices, procedures, terms and conditions for the use or protection of the natural environment, which are provided under federal and Yukon laws of general application (''Public Regulatory Requirements'') and by Selkirk as the owner of Category A Settlement Land or in the exercise of its authorities as a government. In the event of any inconsistency or conflict between a Public Regulatory Requirement and a requirement by Selkirk as the owner of Category A Settlement Land, then, to the extent of Minto's existing mineral rights and any paramount federal or Yukon law of general application, the Public Regulatory Requirement shall prevail to the extent of the inconsistency or conflict.

Each of Minto and Selkirk agree to use best efforts to give the other timely and adequate prior notice: (a) concerning any report, plan or proposal related to the Minto Project and any Minto proposal or intended proposal to seek a new or amended public regulatory authorization relating to the Minto Project; and (b) of any scheduled meeting with any public regulatory authority or officials thereof convened by Minto, Selkirk or a public regulatory authority or their officials concerning any matter described in (a). Each of Minto and Selkirk shall invite the other to any meeting convened by either of them and use reasonable best efforts to ensure that the other party is invited to any meeting convened by a public regulatory authority or its officials.

Minto shall not sell, transfer, assign or otherwise dispose of ore from the Minto Project or custom mill ore or any other substance from a source other than the Minto Project, unless Selkirk and Minto first have amended the Co-operation Agreement as required to address the circumstance, including a determination of the amount to be paid to Selkirk as a royalty in respect thereof.

If Minto has commenced permanent closure of the Minto Project (the ''Closure Event''), then Minto's then outstanding obligations with respect to certain payments including the advance of YQMA Royalty (as defined below) arising on a date after the date of the Closure Event, shall terminate and Minto will have no further obligation or liability to Selkirk in those respects as of the date of the Closure Event.

Minto will pay a net smelter return royalty that is incremented based on copper price and ranges from 0.5% to 1.5% of net smelter returns. In addition, Selkirk has a preferential right and opportunity to negotiate with Minto for contracts to provide certain goods or services, or to perform certain activities, related to the Minto Project. The Company is aware that certain suppliers to Minto have entered into agreements directly with an affiliate of Selkirk which provides for certain payments to be made by such suppliers to such affiliate of Selkirk in connection with these arrangements. These fees are reflected in the overall fees payable by Minto to such suppliers. In circumstances where Selkirk or a Selkirk business is not selected as a supplier for certain Minto Project requirements, Minto must use commercially reasonable efforts to encourage any supplier to support meaningful participation by Selkirk or a Selkirk business in such supply.

Minto will give priority in recruitment, training, retention and advancement to available Selkirk citizens and Pelly Crossing residents, and to offer similar opportunities to other Northern Tutchone persons. Selkirk and Minto will support Selkirk citizens, Pelly Crossing residents and other Northern Tutchone persons hired by Minto to retain ongoing employment and achieve promotion or other employment advances over time, including measures to obtain training or experience, pursue apprenticeships or upgrade skills to progress in their responsibility or seniority.

Minto pays an annual YQMA Royalty to Yukon. The Co-operation Agreement acknowledges that Yukon in turn pays the YQMA Royalty to Selkirk. Pursuant to the Co-operation Agreement, to assist Selkirk to achieve a more timely cash flow on account of the YQMA Royalty, each calendar quarter during commercial production, Minto shall advance to Selkirk within 50 days of the calendar quarter end 50% of Minto's estimated YQMA Royalty payable for that calendar quarter (the ''YQMA Royalty Advance''), such amount to be adjustable each quarter so as to yield cumulatively 50% of the YQMA Royalty which Minto, acting reasonably, estimates to be payable for that calendar quarter and any prior calendar quarter in that year. Within five days of Selkirk's receipt of the actual YQMA Royalty payment from Yukon for a year, Selkirk shall pay Minto the aggregate value of Minto's YQMA Royalty Advance for that year, without interest. If Selkirk does not make such payment when due, Minto's obligation to make any further YQMA Royalty Advances shall be suspended until all outstanding YQMA Royalty Advances have been repaid to Minto.

Disputes under the Co-operation Agreement will, if the parties are unable to come to a resolution, be resolved by (a) non-binding arbitration under the Arbitration Act of 2002 (Yukon); or (b) proceedings in a court of competent jurisdiction.

11.10 Wheaton Purchase Agreement, as amended by the Amendment Agreement, as described in paragraph 8 of Part VII – The Minto Acquisition and the Group of this document.

12. Related party transactions

Save as set out in paragraph 8 of this Part XVI – Additional Information of this document or as referred to in the financial statements referenced in Part II – Risk Factors of this document, there are no related party transactions that were entered into by the Company during the period covered by the financial information referenced in Part III – Important Information of this document and up to the date of this document.

13. Employees

The total number of employees (including Directors) employed by the Company as at 10 December 2019 being the last practicable date prior to publication of this document was six (6).

14. Major Shareholders

As at 10 December 2019 (being the latest practicable date prior to publication of this document), the Company is aware of the following persons who, directly or indirectly, have or will following Admission have an interest in 3% or more of the Company's issued share capital:

	As at the date of this document		Immediately following Admission
Name	Number of Existing Ordinary Shares held	Percentage of Existing Issued Share Capital held	Number of Ordinary Shares held	Percentage of Enlarged Issued Share Capital held
Mark Lancaster	1,881,365	8.4%	1,881,365	2.7%
East China Exploration	1,500,000	6.7%	1,500,000	2.2%
Gati Al-Jebouri	1,250,000	5.6%	12,795,790	18.6%
Hargreaves Lansdown Asset
Management	1,138,416	5.1%	1,138,416	1.7%
Darren Hazelwood	967,028	4.3%	967,028	1.4%
Grant Stevens	703,216	3.1%	703,216	1.0%
Frank McAllister	468,750	2.1%	3,451,419	5.0%
Guy Le Bel	46,875	0.2%	2,823,545	4.1%
Jonathan Armstrong	—	—	4,800,000	7.0%

As at 10 December 2019 (being the latest practicable date prior to the publication of this document), the Company was not aware of any person or persons who, directly or indirectly, jointly or severally, exercise or could exercise control over the Company nor is it aware of any arrangements, the operation of which may at a subsequent date result in a change in control of the Company.

Those interested, directly or indirectly, in 3% or more of the Company's issued share capital (as set out above) do not now, and following the Placing and Admission, will not, have different voting rights from other holders of Ordinary Shares.

15. Litigation and arbitration proceedings

There are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) at any time during the 12 months preceding this document which may have, or have had a significant effect on the financial position or profitability of the Company or any of its subsidiaries.

There are no governmental, legal or arbitration proceedings (including any proceedings which are pending or threatened of which the Company is aware) at any time during the 12 months preceding this document which may have, or have had a significant effect on the financial position or profitability of Minto.

16. Working capital

The Company is of the opinion that, taking into account existing cash balances, the Net Placing Proceeds, the sums available under the Convertible Loan Agreement and the Investor Consortium Financing Agreement, the Enlarged Group has sufficient working capital for its present requirements, that is, for at least 12 months following the date of this document.

17. No significant change

Since 30 June 2019, the following significant changes in the financial position and financial performance of the Group have occurred:

• * on 24 October 2019, the Company entered into the Convertible Loan Agreement by which up to £1,700,000 was made available to the Company for working capital purposes; and
• * the execution of the Amendment Agreement to the Wheaton Purchase Agreement on 8 November 2019 between, among others, Minto and Wheaton, which provides for a Modified Gold Price to be payable by Sumitomo Canada to Minto for Payable Gold produced at the Minto Mine for the Modified Price Period.

Save as disclosed above, there has been no significant change in the financial performance or financial position of the Group since 30 June 2019, being the end of the period for which the last audited financial statements of the Group were published.

Save as disclosed above, there has been no significant change in the financial performance or financial position of Minto since 30 June 2019, being the end of the period for which the last audited financial statements of Minto were published.

18. Dividend policy

The Company currently intends to retain earnings, if any, for use in its future business operations and expansion. The Company will only pay dividends to the extent that to do so is in accordance with the Companies Act and all other applicable laws. There can be no assurance that the Company will declare and pay, or have the ability to declare and pay, any dividends in the future.

19. Investments in progress

The Company has no investments in progress other than the Minto Acquisition.

20. Net Placing Proceeds and costs of the Minto Acquisition

The total costs and expenses relating to the Placing which are payable by the Company are estimated to amount to £108,250 (excluding any applicable VAT) and, accordingly, the Net Placing Proceeds which the Company is expected to raise by the Placing are £2,491,750. The costs associated with the Minto Acquisition and the arrangements with Sumitomo Canada are estimated to amount to £618,264 (excluding any applicable VAT).

21. Consents

• 21.1 Brandon Hill Capital Limited has given and has not withdrawn its written consent to the inclusion in this document of its name and reference thereto in the forms and contexts in which it appears.
• 21.2 SI Capital Limited has given and not withdrawn its written consent to the inclusion in this document of its name and reference thereto in the forms and contexts in which it appears.
• 21.3 PKF Littlejohn LLP has given and has not withdrawn its written consent to the inclusion in this document of its name and reference thereto in the forms and contexts in which it appears. PKF Littlejohn LLP has given and not withdrawn its written consent to the inclusion of its report in Section B of Part X – Unaudited Pro Forma Financial Information for the Enlarged Group of this document and/or extracts therefrom and references thereto and to the inclusion of its name and references to it in the form and context in which they are included and has authorized the contents of those parts of this document which comprise its report for the purposes of Rule 5.3.2R(2)(f) of the Prospectus Regulation Rules.
• 21.4 Mr. Carl Schulze of Aurora Geosciences Limited has given and not withdrawn his written consent to the inclusion of his report in Part XIX – Competent Person's Report of this document and/or extracts therefrom and references thereto and to the inclusion of his name and references to it in the form and context in which they are included and has authorized the contents of those parts of this document which comprise its report for the purposes of Rule 5.3.2R(2)(f) of the Prospectus Regulation Rules.

22. CREST

• 22.1 Any shares in the Company may be issued, held, registered, converted, transferred or otherwise dealt with in an uncertificated form in accordance with the CREST Regulations and practices instituted by the operator of the relevant system. Any provisions of the Articles shall not apply to any uncertificated shares to the extent that such provisions are inconsistent with:
  • (A) the holding of shares in uncertificated form;
  • (B) the transfer of the title of shares by means of relevant system; or
  • (C) any provision of the CREST Regulations.
• 22.2 Subject to the CREST Regulations and facilities and requirements of the relevant system, the Board may, in its absolute discretion, determine the manner in which conversion of certificated shares into uncertificated shares may be made.
• 22.3 The Articles contain other provisions in respect of transactions with the shares in the Company in uncertificated form and generally provide for the modifications of certain provisions of the Articles so that they can be applied to transactions with shares in the Company in uncertificated form.

23. Auditors

PKF Littlejohn LLP, a member of the Institute of Chartered Accountants in England and Wales, is the auditor of the Company.

24. General

• 24.1 The information in this document which has sourced from third parties has been accurately reproduced and so far as the Company is aware and is able to ascertain from information published by such third parties, no facts have been omitted which would render the reproduced information inaccurate or misleading.
• 24.2 Save as set out in this document, there are no patents or licences, industrial, commercial or financial contracts or new manufacturing processes which are material to the Company's business or profitability.
• 24.3 There have been no interruptions in the business of the Company, which may have or have had in the 12 months preceding the publication of this document a significant effect on the financial position of the Company or which are likely to have a material effect on the prospects of the Company for the next 12 months.
• 24.4 The Directors are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Company's prospects in the current financial year other than the price of copper, in respect of which a summary of recent trends is set out in paragraph 7 of Part VII – The Minto Acquisition and the Group of this document.
• 24.5 The Placing Price represents a premium of 11.5 pence over the nominal value of 1 pence per Placing Share. The premium arising on the Placing amounts to £2,392,000 in aggregate.
• 24.6 Save as disclosed in this document, there have been no payments by the Company to promoters in the two years prior to the date of this document and no fees have been paid in the 12 months preceding the date of this document (other than to trade suppliers) in the sum of £10,000 or more in cash or in kind.
• 24.7 This document does not constitute an offer to sell, or the solicitation of an offer to acquire, Ordinary Shares in any jurisdiction where such an offer or solicitation is unlawful and is not for distribution in any jurisdiction in which such distribution is unlawful. The Ordinary Shares have not been, and will not be, registered under the US Securities Act or under the applicable securities laws of any state of the United States, any province or territory of the Restricted Jurisdictions and may not be sold, directly or indirectly, within the United States or the Restricted Jurisdictions or to any citizen, national or resident of the United States or the Restricted Jurisdictions.

The Company confirms that the Competent Person's Report in Part XIX – Competent Person's Report of this document is dated within six months of the date of this document and that no material changes have occurred since the date of the Competent Person's Report the omission of which would make the Competent Person's Report misleading.

The total expenses incurred (or to be incurred) by the Company in connection with Admission are anticipated to be approximately £332,750.

25. Third party sources

The Company and Directors confirm that information sourced from third parties has been accurately reproduced and, as far as they are aware and are able to ascertain from information published by those third parties, no facts have been omitted which would render the reproduced information inaccurate or misleading.

26. No incorporation of information by reference

The contents of the websites of the Company (including any materials which are hyperlinked to such websites) do not form part of this prospectus and prospective investors should not rely on them.

27. Availability of documents

• 27.1 Copies of the following documents may be inspected at the registered office of the Company at Cooley (UK) LLP, Dashwood, 69 Old Broad Street, London EC2M 1QS, United Kingdom during usual business hours on any day (except Saturdays, Sundays and public holidays) from the date of this document until Admission and completion of the Placing:
  • (A) the Memorandum and Articles; and
  • (B) the consent letters referred to in ''Consents'' in paragraph 21 of this Part XVI Additional Information of this document;
  • (C) the report of PKF Littlejohn LLP, which is set out in Section B of Part X Unaudited Pro Forma Financial Information for the Enlarged Group of this document; and
  • (D) this document.
• 27.2 In addition, this document will be published in electronic form and be available on the Company's website at www.pembridgeresources.com subject to certain access restrictions applicable to persons located or resident outside the United Kingdom.

Dated 11 December 2019

PART XVII

DEFINITIONS

The following definitions apply throughout this document, unless the context requires otherwise:

''2017 Fundraise''	the fundraise in August 2017 which was conducted in conjunction with the Company's move to a Standard Listing and which raised £2.27 million before expenses to pursue the Company's acquisition strategy.
''Admission''	the admission of the Enlarged Ordinary Share Capital to Standard Listing and to trading on the Main Market of the London Stock Exchange.
''Advanced Payment''	a provisional payment made by Sumitomo to Minto on a monthly basis for 90% of the estimated value of concentrate produced at the Minto Mine that month under the terms of the Off-Take Agreement.
''AIM''	AIM, the market operated by the London Stock Exchange.
''Amendment Agreement''	the amendment agreement dated 8 November 2019 to the Wheaton Purchase Agreement.
''Articles''	the articles of association of the Company in force from time to time.
''Audit Committee''	a committee of directors of the Company, details of which appear in Part IX – The Company, The Board and Senior Managers of this document.
''Aurora Geoscience''	Aurora Geoscience Limited.
''Australian Corporations Act''	Australian Corporations Act 2001 (Cth).
''Berg Aukas''	an underground zinc, lead and vanadium mine located approximately 19 kilometres east of the town of Grootfontein in northern Namibia.
''Board''	the board of Directors, from time to time.
''Bookrunner''	Brandon Hill.
''Bookrunner Warrants''	300,800 warrants each entitling the holder to acquire one Ordinary Share at a 25% premium to the Placing Price at any time up to 36 months from the date of Admission, issued to Brandon Hill, conditional upon Admission, in connection with the Placing.
''Brandon Hill''	Brandon Hill Capital Limited.
''Brandon Hill Broker Agreement''	the broker agreement between the Company and Brandon Hill dated 3 March 2019.
''Business Day''	a day other than a Saturday, Sunday or public holiday in England.
''Canada-US Tax Convention''	convention between Canada and the United States with respect to taxes on income and on capital, signed 26 September 1980.
''Capstone''	Capstone Mining Corporation, a company incorporated in Canada and the seller of Minto.
''CAR Namibia''	China Africa Resources (Pty) Limited.
''CEAA 2012''	Canadian Environmental Assessment Act of 2012.
''certificated'' or ''in certificated form''	in relation to a share, warrant or other security, a share, warrant or other security, title to which is recorded in the relevant register of the share, warrant or other security concerned as being held in certificated form (that is, not in CREST).
''CIM''	Canadian Institute of Mining, Metallurgy and Petroleum.

''Companies Act''	UK Companies Act 2006.
''Company'' or ''Pembridge''	Pembridge Resources plc.
''Company Secretary''	the company secretary of the Company from time to time.
''Company Cash-flow Entitlement''	the proportion of free-cashflows from Minto to which the Company is entitled from time to time.
''Competent Person's Report''	the competent person's report prepared by Mr. Carl Schulze of Aurora Geoscience, as set out in Part XIX – Competent Person's Report of this document.
''Consultant''	9386-0096 Quebec Inc. an entity wholly-owned by Guy Le Bel.
''Conversion Price''	the Placing Price.
''Convertible Loan''	the sum of the principal amount outstanding under Facility A and the principal amount outstanding of Facility B under the Convertible Loan Agreement.
''Convertible Loan Agreement''	the loan agreement between the Company and the Lender dated 24 October 2019.
''Co-operation Agreement''	the co-operation agreement dated 16 September 1997 between Selkirk and Minto, as amended by an amendment agreement dated 15 October 2009.
''CRA''	Canada Revenue Agency.
''CREST''	the paperless settlement system operated by Euroclear enabling securities to be evidenced otherwise than by certificates and transferred otherwise than by written instruments.
''CREST Regulations''	Uncertificated Securities Regulations 2001 (SI 2001 No. 3755).
''Dawson Syndicate''	Silver Standard Mines Ltd. and Asarco Inc.
''Default Shares''	shares held by a Shareholder that has been given notice under section 793 of the Companies Act and has failed to give information of their interest in any shares.
''Deferred Balance''	US\$5 million within 90 days following the last day of two consecutive standard calendar quarters following the Recommencement of Commercial Production in which the average London Metals Cash Copper bid price during each consecutive quarters is greater than US\$3.00 per pound.
''Deferred Shares''	the deferred shares of nominal value 0.9 pence each in the capital of the Company.
''Directors''	the directors of the Company, from time to time.
''Disclosure Guidance and Transparency Rules'' or ''DTRs''	the disclosure guidance and transparancy rules of the FCA made in accordance with section 73A of the FSMA.
''document''	this document comprises a prospectus prepared in accordance with the Prospectus Regulation Rules.
''EEA''	the EU, Iceland, Norway and Liechtenstein.
''EEA Member States''	member states of the EEA.
''Enlarged Group''	the Group following the completion of the Minto Acquisition and Admission.
''Enlarged Issued Share Capital''	the Existing Ordinary Shares, the Placing Shares, and the Other Subscription Shares.
''EU''	the European Union.
''Euroclear''	Euroclear UK & Ireland Limited.
''Existing Issued Share Capital''	the Existing Ordinary Shares in issue as at the date of this document.

''Existing Ordinary Shares''	22,384,925 Ordinary Shares in on a post-Share Consolidation basis issue as at the date of this document.
''Facility A''	a committed term loan in Pounds Sterling in an aggregate amount equal to £1,000,000 under the Convertible Loan Agreement.
''Facility B''	an uncommitted term loan in Pounds Sterling in an aggregate amount equal to £700,000 under the Convertible Loan Agreement.
''FCA''	the United Kingdom Financial Conduct Authority.
''FIEA''	Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948).
''Financial Promotions Order''	Financial Services Markets Act 2000 (Financial Promotion) Order 2005.
''FPIC''	free prior informed consent.
''First Delivery''	the date that Payable Gold or Payable Silver is first delivered (or required to be delivered) to Wheaton under the terms of the Wheaton Purchase Agreement, as amended by the Amendment Agreement.
''First Nation''	the predominant indigenous peoples in Canada, south of the Arctic Circle.
''FSMA''	Financial Services and Markets Act 2000.
''Further Deferred Balance''	the final element of the balance of the purchase price for the Minto Acquisition, being US\$10 million.
''Group''	the Company and its subsidiaries and subsidiary undertakings, from time to time.
''HMRC''	HM Revenue & Customs.
''Holder''	a ''holder'' for the purposes of the Tax Act.
''IASB''	International Accounting Standards Board.
''IBA''	Impact Benefit Agreement.
''IFRS''	International Financial Reporting Standards, as adopted in the EU.
''ISIN''	International Securities Identification Number.
''Investor Consortium''	Copper Holdings, LLC, a New York based private equity group and Cedro Holdings I, LLC, an entity managed by Lion Point Capital, L.P., a New York based asset manager.
''Investor Consortium Financing Agreement''	the agreement between the Investor Consortium and the Company in respect of a loan of US\$10 million to Minto.
''Joint Brokers''	the Company's corporate brokers, SI Capital and Brandon Hill.
''Lease Agreements''	the Minto lease agreements for the airport area, mill site and camp, overburden dump and explosives plant/magazine, tailings disposal area and waste dump – open pit.
''LEI''	legal entity identifier.
''Lender''	Gati Al-Jebouri, as lender in the context of the Convertible Loan Agreement.
''LIBOR''	London Interbank Offered Rate.
''Listing Rules''	the listing rules of the FCA made in accordance with section 73A of FSMA.
''Loan Note''	the advance of US\$10 million to Minto by the Investor Consortium.
''London Stock Exchange''	London Stock Exchange plc.
''Main Market''	the main market for listed securities.

''Market Abuse Regulation''	Regulation 596/2014 of the European Parliament and of the Council which came into force in the United Kingdom on 3 July 2016.
''Market Price''	prevailing price for a given metal quoted by the London Bullion Market Association from time to time.
''Member States''	the member states of the EEA.
''Memorandum''	the memorandum of association of the Company in force from time to time.
''Minotaur''	Minotaur Acquisition Limited.
''Minto''	Minto Explorations Limited.
''Minto Acquisition''	the acquisition of Minto by the Company pursuant to the Minto Acquisition Agreement.
''Minto Acquisition Agreement''	the conditional agreement between the Company and Capstone dated 14 February 2018, as replaced on 3 June 2019, for the sale and purchase of Minto, further details of which are set out in paragraph 11.7 of Part XVI – Additional Information of this document.
''Minto Joint Advisory Committee''	the committee consisting of five individuals responsible for advising on the operations of the Minto Mine as established by the joint operating agreement entered into between the Company and the Investor Consortium on 3 June 2019.
''Minto Mine''	the mining operations now carried on by Minto in the Yukon territory of Canada.
''Modified Gold Price''	the gold price during the Modified Price Period under the terms of the Wheaton Purchase Agreement, as amended by the Amendment Agreement.
''Modified Price Period''	the limited period from the time of First Production, ending on the earlier of (i) 12 calendar months from First Production plus 60 days; and (ii) any time at which 11,000 ounces of Payable Gold have been (or were required to be) delivered to Wheaton under the terms of the Wheaton Purchase Agreement, as amended by the Amendment Agreement.
''Net Placing Proceeds''	the funds received by the Company less any expenses paid or payable in connection with Admission and the Placing.
''Nomination Committee''	a nomination committee of Directors, details of which appear in Part IX – The Company, the Board and the Senior Managers of this document.
''Non-Resident Holders''	non-resident Holders for the purposes of the Tax Act.
''Northwest Territories''	the second largest of the three territories in Northern Canada, bordered by Yukon and Nunavut.
''Nunavut''	the largest and northernmost territory of Canada.
''Official List''	the Official List of the FCA.
''Off-take Agreement''	the agreement between Minto and Sumitomo Canada dated 22 July 2019, pursuant to which Sumitomo Canada has agreed to purchase 55,000 DMT of Copper contracts from the Minto Mine, further details of which are given in paragraph 8(c) of Part VII – The Minto Acquisition and the Group of this document.
''Ordinary Shares''	ordinary shares of nominal value 1 pence each in the issued share capital of the Company.
''Other Subscription Shares''	the aggregate 25,536,021 Ordinary Shares referred to in sub paragraphs (L)-(R) of paragraph 4.6 of Part XVI – Additional Information of this document.

''Payable Gold''	gold produced by Minto delivered under the Wheaton Purchase Agreement.
''Payable Silver''	silver produced by Minto delivered under the Wheaton Purchase Agreement.
''Placing''	the conditional placing by the Bookrunner of the Placing Shares with investors on the terms and conditions of the Placing Agreement.
''Placing Agreement''	the agreement dated the date of this document and made between, inter alia, the Company and the Bookrunner relating to the Placing, further details of which are set out in paragraph 10 of Part XVI – Additional Information of this document.
''Placing Price''	12.5 pence per Placing Share.
''Placing Shares''	20,800,000 Ordinary Shares to be allotted and issued in connection with the Placing.
''Premium Listing''	a listing on the premium segment of the Official List under Chapter 6 of the Listing Rules.
''Principal Repayment Amount''	US\$10 million plus interest at a rate of 8% per annum owing to the Investor Consortium.
''Proposed Amendments''	all specific proposals to amend the Tax Act that have been publicly and officially announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof.
''Prospectus Regulation''	Regulation (EU) 2017/1129.
''Prospectus Regulation Rules''	the prospectus regulation rules of the FCA made in accordance with section 73A of FSMA.
''Public Regulatory Requirements''	the standards and requirements Minto is required to meet for the use or protection of the natural environment, which are provided under federal and Yukon laws of general application.
''Purchase Price''	the consideration payable under the Minto Acquisition Agreement comprising of three elements, totalling up to US\$20 million, dependent on production milestones and future copper prices.
''QCA''	Quoted Companies Alliance.
''Qualified Investors''	persons who are ''qualified investors'' within the meaning of Article 2(e) of the Prospectus Regulation.
''RCP''	the Minto Mine Reclamation and Closure Plan.
''Received Gold Price''	received price for Payable Gold under the Wheaton Purchase Agreement.
''Received Silver Price''	received price for Payable Silver under the Wheaton Purchase Agreement.
''Recommencement of Commercial Production''	the first day following the earlier of: (i) any period of 60 consecutive production days during which ore has been processed through the Minto Mine mill facilities at a rate of production of not less than 2,400 tonnes per day; or (ii) 31 January 2021.
''Registrar''	Link Asset Services or any other registrar appointed by the Company from time to time.
''Registrar Agreement''	the registrar agreement dated 29 March 2018, as amended on 13 July 2018, between the Company and the Registrar.
''Regulation S''	Regulation S promulgated under the US Securities Act.
''Remuneration Committee''	a remuneration committee of directors of the Company, details of which appear in Part IX – The Company, the Board and the Senior Managers of this document.

''Resident Holders''	Holders, who for the purposes of the Tax Act are, or are deemed to be, resident in Canada at all relevant times.
''Restricted Jurisdiction''	United States, Australia, Canada, Japan, South Africa or any other jurisdiction where such offer or sale would violate the relevant securities laws of such jurisdiction.
''Reverse Takeover''	a reverse takeover as defined in the Listing Rules.
''RIS''	a service provided by the London Stock Exchange for the distribution to the public of announcements and included within the list maintained at the London Stock Exchange's website.
''SDRT''	Stamp Duty Reserve Tax.
''SEDOL''	Stock Exchange Daily Official List.
''Selkirk''	the Selkirk First Nation.
''Senior Managers''	those members of the management bodies of the Company and its subsidiaries who are relevant to establishing that the Company has the appropriate expertise for the management of its business, from time to time.
''Share Consolidation''	the consolidation of every 10 existing ordinary shares of nominal value 0.1 pence each into one Ordinary Share of nominal value 1 pence each, which was announced on 16 July 2018 and will take effect immediately prior to Admission.
''Share Dealing Code''	the Company's policy on Directors', Senior Managers' and employees' dealings in securities.
''Shareholder''	a person who is a registered as holder of the Ordinary Shares from time to time.
''Share Option Plan''	the Share Option Plan summarised in paragraph 9 of Part XVI – Additional Information of this document.
''Sherwood''	Sherwood Mining Corporation.
''SI Capital''	SI Capital Limited.
''SI Capital Broker Agreement''	the broker agreement between the Company and SI Capital dated 29 January 2019.
''Standard Listing''	a listing on the standard segment of the Official List under Chapter 14 of the Listing Rules.
''Sumitomo Canada''	Sumitomo Canada Limited, a subsidiary of Sumitomo Corporation, a major Japanese trading house.
''Takeover Code''	the City Code on Takeovers and Mergers.
''Takeover Panel''	the UK Panel on Takeovers and Mergers.
''Tax Act''	Income Tax Act of 1985 (Canada).
''Termination Date''	the date falling two years after the date of the Convertible Loan Agreement, being 23 October 2021.
''TIDM''	Tradeable Instrument Display Mnemonic.
''UKHM''	United Keno Hill Explorations.
''uncertificated'' or ''uncertificated form''	in relation to a share or other security, a share or other security, title to which is recorded in the relevant register of the share or other security concerned as being held in uncertificated form (that is, in CREST) and title to which may be transferred by using CREST.
''United Kingdom'' or ''UK''	the United Kingdom of Great Britain and Northern Ireland.
''United States'' or ''US''	the United States of America.
''US Exchange Act''	US Securities Exchange Act of 1934.

''US\$3.00 Two Quarter Threshold''	the ninety (90) days following the last day of two consecutive standard calendar quarters following the Recommencement of Commercial Production in which the average London Metals Exchange Cash Copper bid price during each of such consecutive quarters is greater than US\$3.00 per pound.
''US\$3.50 Two Quarter Threshold''	the ninety (90) days following the last day of two consecutive standard calendar quarters following the Recommencement of Commercial Production in which the average London Metals Exchange Cash Copper bid price during each of such consecutive quarters is greater than US\$3.50 per pound.
''VAT''	(i) within the EU, any tax imposed by any Member State in conformity with the Directive of the Council of the European Union on the common system of value added tax (2006/112/EC), and (ii) outside the EU, any tax corresponding to, or substantially similar to, the common system of value added tax referred to in paragraph (i) of this definition.
''Wheaton''	Wheaton Precious Metals Corp. (formerly Minto Silverstone Resources Corp.).
''Wheaton Purchase Agreement''	the precious metals purchase agreement between Wheaton, Capstone, Kutcho Copper Corp. and Sherwood Copper Corporation (which was, in 2008, the owner of Minto and Kutcho Copper Corp.), as subsequently amended by a letter agreement dated 11 March 2009, an amendment agreement dated 13 October 2017 and the Amendment Agreement on 8 November 2019.
''YQMA Royalty''	the annual royalty paid by Minto to Yukon under the Quartz Mining Act of 2003 (Yukon).
''YQMA Royalty Advance''	Minto's obligation under the Co-operation Agreement to advance Selkirk within 50 days of the calendar quarter, such amount to be adjustable each quarter so as to yield cumulatively 50% of Minto's estimated YQMA Royalty payable for that calendar quarter.
''Yukon-Tanana Composite Terrain''	the easternmost and largest of the pericratonic terrains accreted to the Paleozoic north-western margin of North America.

References to a ''company'' in this document shall be construed so as to include any company, corporation or other body corporate, wherever and however incorporated or established.

All references to legislation in this document are to the legislation of England and Wales unless the contrary is indicated. Any reference to any provision of any legislation shall include any amendment, modification, re-enactment or extension thereof. Words importing the singular shall include the plural and vice versa, and words importing the masculine gender shall include the feminine or neutral gender.

For the purpose of this document, ''subsidiary'' and ''subsidiary undertaking'' have the meanings given by the Companies Act.

PART XVIII

GLOSSARY

The following table provides an explanation of certain technical terms and abbreviations used in this document. The terms and their assigned meanings may not correspond to standard industry meaning or usage of these terms.

''ADT''	articulated dump truck.
''Ag''	silver.
''all-in sustaining costs''	all-in sustaining cost per pound of payable copper produced is C1 cash cost plus NSR and production royalties, non-cash deferred revenue, all sustaining capital expenditures (including cash portion of production-phase capitalised stripping), accretion of reclamation obligations, amortization of reclamation assets, corporate general and administrative and the cash portion of pre-production capitalised stripping.
''argilaceous''	a metamorphic rock, intermediate between shale and slate, that does not possess true slaty cleavage.
''artisanal''	made in a traditional or non-mechanised way.
''Au''	gold.
''Bt''	billion tonnes.
''Cu''	copper.
''C1 cash cost''	by-product credits less production costs (mining, milling/ processing), transportation costs, inventory write downs, supplies obsolescence, working capital adjustments, site general and administrative, treatment and refining costs, and selling costs.
''DFS''	definitive feasibility study.
''DMS''	dense media separation.
''DMT''	dry metric tonne.
''EPC''	engineering, procurement and construction.
''felsic''	relating to an igneous rock that contains a group of light-coloured silicate minerals, including feldspar, feldspathoid, quartz, and muscovite.
''foliation''	foliation in geology refers to repetitive layering in metamorphic rocks. Each layer may be as thin as a sheet of paper, or over a metre in thickness. The word comes from the Latin folium, meaning ''leaf'', and refers to the sheet-like planar structure.
''granitoid''	a rock mass consisting essentially of granite.
''greenstone belt''	zones of variably metamorphosed mafic to ultramafic volcanic sequences with associated sedimentary rocks that occur within Archaean and Proterozoic cratons between granite and gneiss bodies. The name comes from the green hue imparted by the colour of the metamorphic minerals within the mafic rocks.
''g/t''	grammes per tonne.
''IOCG''	iron-oxide copper gold.
''km2 ''	square kilometres.
''kt''	thousands of tonnes.
''long-hole stoping retreat mining''	a highly selective and productive method of mining which can cater for varying ore thicknesses and dips (0 – 90 degrees). It differs from manual methods such as timbered and shrinkage as once the stope has begun blasting phase it cannot be accessed by personnel. For this reason the blasted rock is removed with

remote control scoop / load, haul, dump machine.

''Mineral Reserves''	resources known to be economically feasible for extraction.
''Mineral Resources''	a concentration or occurrence of solid material of economic interest in or on the Earth's crust in such form, grade (or quality), and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade (or quality), continuity and other geological characteristics of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. Mineral resources are sub-divided, in order of increasing geological confidence, into inferred, indicated and measured categories.
''mm''	millimetres.
''Modifying Factors''	considerations used to convert mineral resources to ore reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.
''Moz''	million ounces.
''Mt''	million tonnes.
''Mtpa''	million tonnes per annum.
''mt'' or ''tonne''	metric tonne.
''NSR''	net smelter return.
''ore''	the economically mineable part of a measured and/or indicated mineral resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at pre-feasibility or feasibility level as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified.
''oxidation''	a chemical reaction in which substances combine with oxygen.
''oz''	troy ounces.
''RAB drilling''	rotary air blast drilling.
''RC''	reverse circulation.
''regolith''	a general term used in reference to unconsolidated rock, alluvium or soil material on top of the bedrock.
''ROM''	run-of-mine.
''room and pillar mining''	room and pillar is a mining system in which the mined material is extracted across a horizontal plane, creating horizontal arrays of rooms and pillars. The ore is extracted, leaving ''pillars'' of untouched material to support the roof overburden and the open areas or ''rooms'' are extracted underground. In the case of the Minto Mine, the rooms are extracted via a long-hole open stoping method. Contrary to a traditional room and pillar approach, the pillars are subsequently not removed.
''schist''	a medium-grade metamorphic rock with medium to large, flat, sheet-like grains in a preferred orientation (nearby grains are roughly parallel).
''supergene''	processes or enrichment of ore that occur relatively near the surface.
''tpa''	metric tonnes per annum.
''tph''	metric tonnes per hour.

PART XI X

COMPETENT PERSON'S REPORT

The Minto Acquisition constitutes a Reverse Takeover. Consequently, the Company is required to produce a prospectus in connection with Admission and by paragraphs 131 to 133 of the European Securities and Markets Authority (ESMA) update of the Committee of European Securities Regulators (CESR) recommendations in relation to prospectuses to include an independent mineral expert report in this document on the licence interests of the Group along with a glossary of the technical terms used in the mineral expert's report.

The Company commissioned Mr. Carl Schulze of Aurora Geoscience to prepare the independent expert report (referred to as the Competent Person's Report), which is set out in full below.

Competent Person's Report...............................................................................................................T-2

NORTHERN GEOLOGICAL AND GEOPHYSICAL CONSULTANTS

11 December 2019

The Directors Pembridge Resources plc Suite A, Honduras Street London EC1Y 0TH United Kingdom

Dear Sirs,

Re: Competent Person's Report, Minto Mine, Yukon Territory, Canada

In accordance with your instructions, Mr. Carl Schulze (the "Competent Person") of Aurora Geosciences Ltd. ("Aurora") has prepared a Competent Person's Report ("CPR") for Pembridge Resources plc ("Pembridge") in accordance with European Securities and Market Authority Recommendations for Mineral Companies ("ESMA Recommendations"), as set out in paragraphs 131 to 133 and Appendix I and III of the ESMA Recommendations. Accordingly, the Competent Person reviewed the Mineral Resources and Reserves comprising the Minto mine and property (the "Minto Mine"), in which Pembridge acquired a 100% interest by way of the acquisition of Minto Explorations Limited ("Minto") on 3 June 2019, a former wholly-owned subsidiary of Capstone Mining Corporation. The Resources and Reserves in this CPR have been calculated using an effective date of 23 June 2019 and are based on data made available up until that date. The Competent Person is not aware of any material change in the status of the Pembridge assets since 23 June 2019. This is the first CPR that has been conducted on the Minto Mine.

The Competent Person has carried out this work using the generally accepted Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards. Nomenclature that may be used in this letter and the enclosed CPR is summarised in Sections 2.2 and Section 9. The Competent Person understands that this CPR has been prepared for the purposes of being included, in its entirety, in the prospectus prepared by Pembridge in relation to the admission of the entire issued share capital of Pembridge to listing on the standard segment of the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of London Stock Exchange plc, and hereby consents to the inclusion of this CPR in that document and also to using references to the CPR in any other applicable disclosure document, provided that no portion be used out of context or in such a manner as to convey a meaning which differs from that set out in the whole. This CPR may not be used for any other purpose without the prior written approval of the Competent Person.

Confirmations and Professional Qualifications

The work has been supervised by Mr. Carl Schulze as the Competent Person, a Professional Geoscientist, who has 34 years' experience in mineral exploration, and preparation of assessment reports, and of technical reports in accordance with Canada's National Instrument 43-101 since its

Aurora Geosciences Ltd.

3506 McDonald Drive, Yellowknife, Northwest Territories, Canada, X1A 2H1; Tel: 867.920.2729, Fax: 867.920.2739 34A Laberge Road, Whitehorse, Yukon, Canada, Y1A 5Y9; Tel: 867.668.7672, Fax: 867.393.3577 Unit B-1, 1901 Davis Street, Juneau, Alaska, USA, 99801; Tel 907.789.7672 Fax:907.789.7009 www.aurorageosciences.com

inception in 2000. Mr. Garth Kirkham, of Kirkham Geosystems Ltd. compiled the Reserve and Resource estimates included in the CPR and is the author of Section 9: "Mineral Resource and Reserve Estimation". Mr. Sebastien Tolgyesi is the author of Section 10: "Mine Engineering and Infrastructure"; and Mr. John Folinsbee of "Heads Ore Tails" Metallurgical Consulting Inc. is the author of Section 11: "Mineral Processing".

Messrs. Carl Schulze, Garth Kirkham, Sebastien Tolgyesi and John Folinsbee, as well as Aurora were during the preparation of the CPR and as at its effective date of 23 June 2019, independent of Pembridge, its directors, senior management and its other advisers and have no economic or beneficial interest (present or contingent) in Pembridge or in any of the mineral assets evaluated and is not remunerated by way of a fee that is linked to the admission or value of Pembridge. Mr. Sebastien Tolgyesi was subsequently employed by Minto as general manager of the Minto Mine, effective on 30 July 2019, for which he is paid a salary only.

For the purposes of Prospectus Regulation Rule 5.3.2R (2)(f), the Competent Person accepts responsibility for the information contained in this section of the Prospectus and those sections of the Prospectus which include references to the information in this section. The Competent Person declares that, to the best of his knowledge and belief, having taken all reasonable care to ensure that such is the case, the information contained in this letter and the enclosed CPR is in accordance with the facts and does not omit anything likely to affect the import of such information.

Yours faithfully,

Carl Schulze

Carl Schulze Project Manager, Aurora Geosciences Ltd.

COMPETENT PERSON'S REPORT MINTO MINE – YUKON TERRITORY, CANADA 62°37'05" N, 137°14'56" W, Whitehorse Mining District

Effective Date, June 23, 2019

Prepared for: PEMBRIDGE RESOURCES PLC 180 Piccadilly London, United Kingdom W1J 9HF

Prepared by Carl Schulze, B.Sc., P.Geo., (CP), as Competent Person, of AURORA GEOSCIENCES LTD 34A Laberge Rd. Whitehorse, Yukon Y1A 5T6

Minto Property Competent Person's Report i | P a g e

1. EXECUTIVE SUMMARY 1
1.1 Property Description and Location 1
1.2 History 3
1.2.1 Production History 6
1.2.2 Co-operation Agreement with the Selkirk First Nation 9
1.2.3 Share Purchase Agreement, June 3 2019 9
1.3 Geological Setting and Mineralization 10
1.3.1 Geological Setting 10
1.3.2 Mineralization 11
1.4 Deposit Types 12
1.5 Mineral Resources and Reserves 13
1.5.1 Mineral Resources 13
1.5.2 Mineral Reserves 15
1.6 Mine Engineering and Infrastructure 17
1.6.1. Orebody Geometry 18
1.7 Mineral Processing 19
1.8 Environmental Studies, Permitting and Social and Community Impacts 20
1.8.1. Current Licences 20
1.8.2 2017 Reclamation and Closure Plan 21
1.8.3 First Nation Consultation and Community Engagement 21
1.9 Discussion and Conclusions 22
2. Introduction 23
2.1 Terms of Reference 23
2.2 Terms, Definitions and Units 23
2.3 Sources of Information 25
2.4 Involvement of Competent Person 25
3. Reliance on Other Experts 26
4. Property Description and Location 26
4.1 Description and Location 26
4.1.1 Minto block 26
4.1.3 BOND Block 34

Pembridge Resources plc.	Aurora Geosciences Ltd.
4.1.4 MEL Block 36
4.2 Co-Operation Agreement with the Selkirk First Nation 43
4.3 Acquisition Agreement, June 3, 2019 44
5. Accessibility, Climate, Local Resources, Infrastructure and Physiography 46
6. History 47
6.1 Exploration History 47
6.1.1 History of BOND, MEL and DEL blocks 52
6.2 Minto Production History 53
6.2.1 Precious Metals Purchase Agreement, Silverstone Resources Corporation 61
7. Geological Setting and Mineralization 61
7.1 Regional Geology 61
7.2 Property Geology 62
7.2.1 Property Geology 62
7.2.2 Structure 66
7.3 Mineralization 67
7.3.1 Mineralization 67
7.3.2 Alteration, Weathering and Oxidation 69
7.4 Additional Exploration Targets (as of January, 2012) 71
7.4.1 Fireweed Target (Minto East 2) 71
7.4.2 Inferno Target (Minto North 2) 72
7.4.3 MSD Gap target 72
7.5 Property Geology, BOND, MEL and DEL Blocks 72
7.5.1 BOND property 72
7.5.2 MEL Property 72
7.5.3 DEL Property 72
8. Deposit Types 73
8.1 Deposit Models to 2018 73
8.2 2018 Thesis: Porphyry Deposit Model 76
9. Mineral Resource and Reserve Estimation 77
9.1 Mineral Resources 77
9.1.1 Introduction 77
9.1.2 Mineral Resource Block Models 78
9.1.3 Resource Database 79

Aurora Geosciences Ltd.

9.1.4 Geology, Mineralized Zone and Domain Solids 81
9.1.5 Mineral Resource Block Model Parameters and Methods 83
MSD – Copper Keel 84
9.1.6 Resource Classification 86
9.1.7 Mineral Resource Reporting 87
9.1.8 Competent Person Statement 90
9.2 Mineral Reserves 91
9.2.1 Mineral Reserves Model 91
9.3 Reconciliation of Mineral Resource Block Model 93
9.3.1 Block-Model-to-Mine Reconciliation: Area 2 – Stage 3 Open Pit 93
9.3.2 Block-Model-to-Mine Reconciliation: Area 2 Underground 94
9.3.3 Total Block-Model-to-Mill Reconciliation 95
10. Mine Engineering and Infrastructure 97
10.1 Introduction 97
10.1.1 Background 97
10.2 Operations Overview 98
10.2.1 M-Zone Underground (completed) 99
10.2.2 Area 118 Underground (completed) 99
10.2.3 Area 2 Underground (completed) 99
10.2.4 Minto East Underground (uncompleted) 99
10.2.5 Copper Keel Underground 99
10.2.6 Minto East 2 Underground 99
10.2.7 Minto North Underground 99
10.2.8 Ore Production and Underground Scheduling 107
10.3 Underground Mine Development and Design 107
10.3.1 Mining Method 107
10.3.2 Access 108
10.3.3 Stope Layout 108
10.4 Underground Mine Operation 109
10.4.1 Material Handling 109
10.5 Geotechnical Assessment 109
10.5.1 Orebody Geometry 109
10.5.2 Hydrogeological Assessment 110

10.5.3 Excavation Dimensions 110
10.5.4 Rock Mass Characterization 110
10.5.5 Stability Analyses 115
10.5.6 Ground Support Requirements 121
10.5.7 Monitoring 124
10.6 Ventilation, Ancillary Infrastructure, and Dewatering 124
10.6.1 Infrastructure 124
10.6.2 Ventilation Circuit 125
10.6.3 Compressed Air 128
10.6.4 Underground Electrical Power 128
10.6.5 Water 128
10.6.6 Explosive Storage and Handling 129
10.6.7 Fuel Storage and Distribution 130
10.7 Mine Safety 130
10.7.1 General Mine Safety 130
10.7.2 Emergency Response 130
10.7.3 Fire Suppression 131
10.7.4 Industrial Hygiene and Fatigue Management Programs 131
10.7.5 First Line Supervisory Training 131
10.7.6 Diesel Equipment 131
10.7.7 Shotcrete 131
10.7.8 YWCHSB Reporting 131
10.8 Open Pit Mining 132
10.8.1 Ore Quantities 132
10.8.2 Slope Stability and Geotechnical Assessments 132
10.9 Design and Construction 134
10.9.1 Site Preparation 134
10.9.2 Construction QA/QC 134
10.9.3 Stability Analyses 134
10.9.4 Construction Schedule 134
10.9.5 Material Release Schedule 135
10.9.6 Ore Handling Procedures 135
10.10 Associated Mine Services and Infrastructure 136

10.10.1 Ancillary Infrastructure 136
10.10.2 Waste Management 136
10.10.3 Tailing Management 137
10.10.4 Industrial Complex 137
10.10.5 Fuel Storage 138
10.11 Mine Design and Methods 140
10.11.1 Volume 140
10.11.2 Access 140
10.11.3 Wall Design and Overburden Stability 140
10.11.4 Ground Movement Monitoring 140
10.11.5 Blasting and Wall Control 142
10.11.6 Explosives 142
10.11.7 Typical Wall Design Parameters 142
10.11.8 Haul Roads 143
11. Mineral Processing 144
11.1 Crushing 145
11.2 Grinding 145
11.3 Flotation 145
11.4 Precious Metals 146
11.5 Reagents and Services 146
11.6 Process Control 148
11.7 Laboratories 148
11.8 Mill Operations 148
12. Environmental Studies, Permitting and Social and Community Impacts 151
12.1 Environmental Assessment and Licensing 151
12.1.1 Current Licences 152
12.1.2 Regulatory Requirements 153
12.2 Stop Work Order, Area 2 and Minto East 155
13. Reclamation and Closure Planning 156
13.1 History 156
13.2 2017 Reclamation and Closure Plan 156
13.2.1 Areas of Material Non-Compliance 158
13.2.2 Facilities of Material Significance 158

13.2.3 Mine Camp and Related Infrastructure 159
13.2.4 Mill Buildings and Related Infrastructure 159
13.2.5 Fuel Farm Area 160
13.2.6 Sewage Treatment Plant 160
13.2.7 Water Treatment Plant 160
13.2.8 Explosives Plant Site 160
13.2.9 Mobile Equipment 160
13.3 First Nation Consultation and Community Engagement 160
13.3.1 Engagement with Selkirk First Nation 161
13.3.2 Tri-Partite Socio-economic Working Group 163
13.3.3 Tri-Partite Reclamation and Closure Working Group 163
13.3.4 Other Stakeholders 163
13.4 Special Factors 163
14. Discussion and Conclusions 164
14.1 Discussion 164
14.2 Conclusion 165
15. References 167

LIST OF FIGURES

Minto Property Competent Person's Report vii | P a g e

Pembridge Resources plc.	Aurora Geosciences Ltd.
--------------------------	-------------------------

Figure 19: As-built main access ramp 101
Figure 20: As-built Area 118 Development 102
Figure 21: As-built Area 2 development 103
Figure 22: Plan View of all existing development and stoping: Area 118 shown in red and green; Area 2
stopes are shown in grey and blue; and M-Zone stopes are shown in pink 104
Figure 23: Perspective view of all existing development and stoping: Area 118 stopes are shown in red
and green; Area 2 stopes are shown in grey and blue; and M-Zone stopes are shown in pink 105
Figure 24: Plan view of underground development and ore zones 106
Figure 25: Perspective view of the Minto East stope design looking southwest 108
Figure 26: Stereonet of rock structure in Area 118 underground 111
Figure 27: Stereonet of Rock Structure in Area 2 Underground 112
Figure 28: Stereonet of Rock Structure in Area 2 Open Pit 113
Figure 29: Area 2 Stability Graph Analysis (Golder, 2015b) 116
Figure 30: Minto East Stability Graph Analysis (Golder, 2016) 117
Figure 31: Empirical analysis results for Area 2 upper lens (650 level) 118
Figure 32: Empirical analysis results for Area 2 lower lens (630 level) 118
Figure 33: Empirical analysis results for Minto East 119
Figure 34: Critical Span Design Curve (Ouchi, 2004) 120
Figure 35: 3DEC/DFN Model used for Room Span Analysis (Itaska, 2014) 121
Figure 36: Portal to Minto East and Copper Keel deposits, June, 2019. Portal is ventilated and electrified.
125
Figure 37: Cross-section through fresh air supply path to Minto South Underground 127
Figure 38: Geotechnical design sectors relative to the Phase V/VI design 133
Figure 39: Material release by month executed by Pelly Construction 135
Figure 40: Waste Dumps for Area 2 Stage 3 Pit 139
Figure 41: Area 2 Stage 3 Pit Expansion 141
Figure 42: Design constraints for wall shots - both 12.0m and 6.0m. 143
Figure 43: Minto Process Flow Diagram 147
Figure 44: Catchment areas, Minto and McGinty creeks (diagram by Access Consulting Group) 155
Figure 45: Reclamation Measures for Mill and Ancillary Facilities (produced by Alexco Environmental
Group) 162

LIST OF TABLES

Table 1: Mineral Reserve Estimates as of January, 2012 (Mercer and Sagman, 2012) 5
Table 2: Operating Results, 2007 - 2011 (Mercer and Sagman, 2012) 6
Table 3: Mineral Resource estimate for the Fireweed Extension Deposit (2012 MD&A report, Mar 13,
2013) 6
Table 4: Mineral Resource estimate for the Inferno North Extension deposit (2012 MD&A report, Mar
13, 2013) 7
Table 5: Operating Statistics, 2012 - 2018 (based on Capstone MD&A reports) 8
Table 6: Mineral Resources by deposit as May 31, 2019 14
Table 7: Total mineral resources as at May 31, 2019 15
Table 8: Minto Mineral Reserves by deposit as at May 31, 2019 17

Minto Property Competent Person's Report viii | P a g e

Pembridge Resources plc.	Aurora Geosciences Ltd.

Table 9: Minto Mineral Reserve Totals as at May 31, 2019 17
Table 10: Summary of Orebody Geometry of Reserves 18
Table 11: Claim Status as of June 19, 2019 26
Table 12: DEL Property claim status, as of June 19, 2019 31
Table 13: Claim Status, BOND property 34
Table 14: Claim Status, MEL claims 36
Table 15: Historical resources and reserves, Minto Project (after Mercer and Sagman, 2012). 50
Table 16: Mineral Reserve Estimates as of January, 2012 (Mercer and Sagman, 2012) 51
Table 17: Operating Results 2007 - 2011 (Mercer and Sagman, January, 2012) 53
Table 18: Mineral Resource estimate for the Fireweed Extension Deposit (2012 MD&A report, Mar 13,
2013) 54
Table 19: Mineral resource estimate for the Inferno North Extension deposit (2012 MD&A report, Mar
13, 2013) 54
Table 20: Operating statistics, 2012 - 2018 (based on Capstone MD&A reports) 56
Table 21: Operating statistics, Q1 - Q3, 2018 (based on 2018 Capstone MD&A reports) 59
Table 22: Block Models supplied by Capstone and Effective Dates 79
Table 23: Exploration Data within the Modelled Deposits 80
Table 24: Summary of Block Model Parameters and Methods 84
Table 25: Mineral resources by deposit as at May 31, 2019 89
Table 26: Total Mineral Resources as at May 31, 2019 90
Table 27: Mineral Reserves by Deposit as at May 31, 2019 92
Table 28: Minto Mineral Reserve Totals as at May 31, 2019 92
Table 29: Area 2 Stage 3 resource block-model-to-mine reconciliations 93
Table 30: Variance of mineral resource reconciliation to mine production 94
Table 31: Underground block-model-to-mine reconciliation 95
Table 32: Block model-to-mill reconciliation 96
Table 33: Variation between block model and reconciled mill throughput 96
Table 34: Summary of Orebody Geometry 109
Table 35: Summary of Excavation Dimensions 110
Table 36: Summary of Rock Mass Quality 110
Table 37: Summary of Intact Rock Strength 111
Table 38: Summary of Major Joint Sets 114
Table 39: Summary of Major Structures 115
Table 40: Ground Support Elements 122
Table 41: Minimum Ground Support for Development and Production Openings 123
Table 42: Summary of Ground Control Monitoring 124
Table 43: Surface fan specifications 124
Table 44: Ventilation requirements for the Minto South Underground 126
Table 45: Explosives Magazines 129
Table 46: Open-pit reserves for the Area 2 Stage 3 pit expansion 132
Table 47: Rock Mass Parameters 133
Table 48: Pit Slope Design Parameters 134
Table 49: Start and completion dates for the expansion of the Area 2 Stage 3 open-pit mining 134
Table 50: Classification of ore by copper grade 135

		Aurora Geosciences Ltd.
--	--	-------------------------	--

Pembridge Resources plc.	Aurora Geosciences Ltd.

Table 51: Fuel Storage Capacity 138
Table 52: Haul road design parameters 143
Table 53: Open-pit equipment fleet for Phase V/VI mining 144
Table 54: Gold in Knelson Concentrate, 2016 and 2017 150
Table 55: Environmental Assessment Activities, 1996 - 2010 (after Mercer and Sagman, 2012) 152
Table 56: Project Schedule (taken from Minto Mine Reclamation and Closure Plan, Minto Explorations
Ltd.) 158

APPENDICES

APPENDIX 1: CERTIFICATE OF QUALIFICATIONS, CONSENT, DATE AND SIGNATURES

1. EXECUTIVE SUMMARY

In November of 2017, Carl Schulze, B.Sc., P.Geo., (CP), as competent person (the "Competent Person"), of Aurora Geosciences Ltd. of Whitehorse, Yukon, was commissioned by Pembridge Resources plc of London, United Kingdom, to prepare a Competent Person's Report on the Minto Mine and property located in central Yukon Territory, Canada.

Pembridge has closed its acquisition of Capstone's 100% owned subsidiary, Minto Exploration Ltd, which controls 100% of the Minto copper-gold-silver mine. In mid-2017 Pembridge Resources plc (Pembridge) and Capstone Mining Corporation (Capstone) entered into a Confidentiality Agreement allowing Pembridge access to data on the Minto mine. On November 1 2017, a non-binding Letter of Intent was entered into by Pembridge and Capstone, establishing an exclusivity period and setting out the terms for potential acquisition of 100% of the Minto copper-gold mine and associated assets. On February 14, 2018 Pembridge and Capstone entered into a Purchase and Sale Agreement of MintoEx, the company that controlled the Minto mine assets. On October 11, 2018 Capstone commenced placement of the mine on care and maintenance, and its agreement with Pembridge was terminated and the exclusivity period ended.

On June 3, 2019 Pembridge entered into a definitive "Share purchase Agreement" (SPA) with Capstone and closed the acquisition of 100% of Minto Explorations Ltd (Minto). The SPA replaces the Purchase and Sale Agreement of February 14th, 2018. The SPA stipulates that Pembridge must pay Capstone an aggregate of US\$20 million in three staged payments, the timing of which are linked to production levels at Minto and future copper prices.

This report has been prepared to the standards of the United Kingdom Listing Authority ("UKLA") and the European Securities and Markets Authority ("ESMA"), and to support a listing on the London Stock Exchange ("LSE"). It has been produced by the Competent Person. Contributing authors comprise Ms. Nikolett Kovacs who provided Section 8, "Deposit Types", Mr. Garth Kirkham of Kirkham Geosystems Ltd. who wrote Section 9: "Mineral Resource and Reserve Estimation"; Mr. Sebastien Tolgyesi who wrote Section 10: "Mine Engineering and Infrastructure"; and Mr. John Folinsbee of "Heads Ore Tails" Metallurgical Consulting Inc. who wrote Section 11: "Mineral Processing".

1.1 Property Description and Location

The Minto Property comprises 164 Yukon quartz mining claims covering 2,760 hectares (6,817 acres), centered at 62°37'05" N Latitude, 137°14'56" W Longitude within the Whitehorse Mining District. All claims are held by Minto Explorations Ltd., the status of which was verified in June 2019.

The Minto Project also includes three other properties, the BOND 1-70 claims located 39 km to the NNW of the Minto property and centered at 62^o 46' 26" N Latitude, 137^o 56' 02" W; the MEL claims, roughly 5 km NNW of Minto and centered at 62^o 39' 32" N Latitude, 137^o 18' 11" W Longitude; and the DEL 1-113 claims, centered at 62^o 27' 07" N Latitude, 136^o 44' 52" W Longitude, roughly 32 km SE of Minto. All were acquired by Northern Tiger Resources Inc. in 2008 and subject to short surface exploration programs in 2008 and an airborne magnetic-radiometric survey in 2009.

The Minto property is located within a package of Category A settlement land held by the Selkirk First Nation ("SFN"), and within the traditional territory of the SFN. There is a Co-operation Agreement (CA) between MintoEx and the SFN, with a Net Smelter Return (NSR) royalty payable to the SFN. A notice to renew the lease agreements for the Airport Area, Mill Site and Camp, Overburden Dump and Explosives Plant/Magazine, Tailings Disposal Area and Waste Dump – Open Pit (together, the "Lease Agreements") was submitted to the Chief of the SFN on March 23, 2006. There are no known back-in rights, payments, other agreements or encumbrances to which the property is subject to, other than the lease payments to the SFN. A notice to renew the lease agreements for the Airport Area, Mill Site and Camp, Overburden Dump and Explosives Plant/Magazine, Tailings Disposal Area and Waste Dump – Open Pit (together, the "Lease Agreements") was submitted to the Chief of the SFN on March 23, 2006. This specifies a renewal for a further 10 years, under the same terms and conditions in the original applicable Lease Agreement. In 2016, MintoEx exercised its renewal of the CA for a further 10 years.

MintoEx is subject to the environmental regulations, covered under the Yukon Environmental and Socioeconomic Act, required to operate a mine in the Yukon Territory, and is liable for reclamation of the site as outlined in the most recent closure plan. On August 1, 2017, MintoEx received approval for its Operation Plan of its Quartz Mining Licence (QML-0001), allowing for continuing operations in Area 2 Stage 1 and 2, and Area 118, the Minto North and Ridgetop North and South Open Pits, and Minto East, Copper Keel and Wildfire underground areas.

The property is located west of the Yukon River, about 20 km WNW of Minto Landing, the latter on the east side of the river. The property is accessible by Yukon Highway 2 (the North Klondike Highway) to Minto Landing. In summer months, MintoEx operates a barge connecting the landing with an all-weather gravel road extending 27 km from the west bank to the mine site. In winter, the crossing is accessed by an ice bridge. There is typically a 6 to 8-week period associated with freeze-up and break-up, where access across the river is not possible. During freeze-up and break-up, access is provided by chartered air services from Whitehorse to an airstrip on the property.

The climate is continental sub-arctic, with short warm summers and long, very cold winters, with fairly light precipitation, falling mainly as rain in summer months. The field season for surface exploration work extends from late May to late September, although drilling may occur during early and late winter, depending on weather conditions. Mining activities continue year-round, although surface operations may be temporarily suspended during periods of extreme cold.

The property lies towards the eastern limit of the Dawson Range, with gentle to moderate terrain, with no accessibility issues, or avalanche risk. South facing slopes are normally stable and suitable for building and infrastructure construction while north-facing slopes are typically permafrost-bearing. Bedrock exposure is fairly abundant along ridgelines and hilltops and scarce elsewhere. Vegetation consists of typical northern boreal forest, which has undergone several episodes of burning, the most recent in 2010. There is sufficient water on the property to supply mining and milling operations, including accommodations and drilling.

The property is serviced by a spur of the main Yukon electrical grid. Basic fuel and grocery services, and an available work force are located at the village of Pelly Crossing, the only community of the Selkirk First Nation, located along the North Klondike Highway about 35 km northeast of Minto Landing. Somewhat more comprehensive supplies and services are available at the Village of Carmacks along the North Klondike Highway roughly 70 kilometres south of the Minto Mine access road. The property is located approximately 250 road-kilometres north of the City of Whitehorse, a full-service community of about 29,000, the location of the Whitehorse Mining Recorder, and the Capital of Yukon.

1.2 History

The present Minto property was first staked in 1971 as the Minto 1-16 claims, by the Dawson Syndicate (Silver Standard Mines Ltd and Asarco Inc.). Exploration by the Syndicate included core drilling programs in 1971 and 1972.

In 1973, United Keno Hill Explorations ("UKHM") discovered mineralization on the adjoining DEF claims, leading to the formation of a joint venture with the holders of the DEF claims. This joint venture completed a 7,887-metre core drilling program targeting the "North Zone" along the northern Minto property boundary. In 1974, a winter road was constructed to the airstrip, and another core drilling program of 11,228 metres in 58 holes was completed. In 1977, UKHM released a reserve estimate at the Main Zone of 6,550,778 tonnes grading 1.86% copper (Cu), 0.51 gold (Au) grams/tonne (g/t), and 6.86 silver (Ag) g/t, with 41% of the deposit located on the DEF claims. This is a historical reserve estimate and does not distinguish between proven and probable reserves or other resource categories, and is not compliant with modern resource and reserve standards in Canadian National Instrument 43-101. As such, the reserve estimate has not been verified and cannot be relied upon.

In 1984, Silver Standard transferred its interest to a subsidiary, Western Copper Holdings Ltd, which in 1989 transferred its interest in most of the claim block to Teck Corp (Teck). In 1993, Teck and Asarco sold their interests in the Minto claims to Minto Explorations Inc. (MintoEx), incorporated specifically to acquire the MINTO and DEF claims. The two blocks were consolidated into the Minto Property.

In 1994 MintoEx released a "geological reserve" estimate of 8,818,000 tonnes grading 1.72% Cu, 0.48 Au g/t and 7.5 Ag g/t, at a cut-off grade of 0.5% copper. This is a historical reserve estimate, is not compliant with modern resource and reserve standards in National Instrument 43-101, has not been independently verified by this author, and should not be relied upon.

In 1996, MintoEx completed a feasibility study and arranged project funding, followed by an announcement that it had entered into a joint venture with Asarco to take the project to production. Asarco gained a 70% interest by providing funding up to US\$25 million, with MintoEx retaining the other 30% and operatorship. In 1996 and 1997, MintoEx completed an upgrade of the access road and moved two grinding mills to site. In April 1997, a final screening report on the Environmental Assessment of the proposed project was released by the Department of Indian and Northern Affairs (DIAND), followed in 1998 by issuance of a Type A water use licence. Also in 1997, a Co-operation Agreement (CA) with the Selkirk First Nation towards development and operations of the Minto Project was signed.

In March 2005, the Sherwood Mining Corporation (Sherwood) initiated a takeover offer for Minto Explorations Ltd. The offer closed in June of 2005, resulting in Sherwood acquiring ownership of the Minto Project. MintoEx continued as the operator as a 100% owned subsidiary of Sherwood.

In July 2005, Sherwood released an NI 43-101 compliant resource estimate for the Main Zone, comprising 8,340,000 tonnes grading 1.83% Cu, 0.55 Au g/t and 7.95 Ag g/t, in the Measured and Indicated categories, and an additional Inferred Resource of 700 000 tonnes grading 1.41% Cu, 0.45 Au g/t and 6.0 Ag g/t. In September, Sherwood changed its name to the Sherwood Copper Corporation (Sherwood Copper) and obtained a 10-year extension on its Type A water licence.

In June of 2006, Sherwood Copper received a 10-year extension of its quartz mining licence, valid until June 30, 2016. In 2006, they completed 24,252 metres of core drilling in 119 holes, included infill drilling at the Main Zone and exploratory drilling to the north and west of it, and on "Area 2", 300-metres southeast of the Main Zone. Sherwood Copper also began mill construction and pre-stripping of the Main Zone.

In 2007, a 23,292-metre core drilling program resulted in discovery of significant copper-gold mineralization at the Area 118, Copper Keel, Airstrip and Ridgetop zones. In February 2007, Sherwood Copper released a resource estimate for the Area 2 deposit, comprising a Measured and Indicated resource base of 7.6 million tonnes grading 1.26% Cu and 0.48 Au g/t at a 0.5% Cu cut-off. Also in that year, Sherwood Copper produced their first copper-gold concentrates and expanded the mill to handle 2,400 tonnes per day (tpd). In July, Sherwood delivered its first concentrate shipment to the Skagway, Alaska port, and announced it had reached commercial production on October 1, 2007.

In September 2008, Sherwood Copper entered into an agreement with the Capstone Mining Corporation to create a mid-tier copper producer retaining the name of Capstone Mining Corp (Capstone). The merger was completed on November 24, 2008. The following day, Capstone and Yukon Energy announced the mine was officially connected to Yukon Energy's electrical grid.

In November 2008, Sherwood, MintoEx and Kutcho Copper Corp. entered into an agreement with Silverstone Resources Corp. whereby MintoEx would sell to Silverstone all payable gold and silver mined, extracted, produced or otherwise recovered from the Minto Mine. Silverstone purchased the stated amount for US\$37.5 million, in return for future purchases of gold and silver at the lesser of US\$3.90 per ounce of payable silver and US\$300.00 per ounce of payable gold or the prevailing market prices for these metals, subject to a 1% annual upward inflation adjustment after three years and annually thereafter. Silverstone was purchased by Silver Wheaton Corporation, now Wheaton Precious Metals Corp. in May 2009.

In 2009, MintoEx completed a core drilling program focusing on infilling of the Ridgetop and Area 2 deposits, and testing of other targets, leading to discovery of the Minto North and Minto East zones, and provided upgraded resource and reserve figures for the Main, Ridgetop, Area 2/Area 118 deposits.

In 2010, the Minto East Deposit was defined, the copper-gold resources for the Area 2/ Area 118 were expanded, and drilling led to discovery of the Wildfire and Inferno prospects. A preliminary resource estimate for the Minto East deposit was provided. In 2011, the Copper Keel and Wildfire resource subdomains were defined and incorporated into the larger Minto South Deposit (MSD), and upgraded resource calculations were provided. Core drilling led to discovery of the Fireweed Prospect down-dip and to the north of the MSD.

Table 1 below lists mineral reserve estimates as of January, 2012.

Deposit	Mineral	Tonnes		Diluted grade		Contained metal
	Reserve Class	(Kt)	Cu (%)	Au (g/t)	Ag (g/t)	Cu (Mlbs)	Au (koz)	Ag (koz)
Open Pit Reserves
Minto North	Proven	1,596	2.26	1.21	8.12	79	62	417
	Probable	9	1.68	0.58	6.92	0	0	2
	Sub-total	1,604	2.26	1.21	8.12	80	62	419
Ridgetop	Proven	1,073	1.02	0.25	2.12	24	9	73
	Probable	1,020	1.00	0.28	2.97	22	9	97
	Sub-total	2,093	1.01	0.26	2.54	46	18	171
MSD-118	Proven	-	-	-	-	-	-	-
	Probable	483	1.28	0.10	1.81	14	2	28
	Sub-total	483	1.28	0.10	1.81	14	2	28
MSD-Area 2	Proven	3,306	1.44	0.54	4.99	105	57	530
	Probable	1,694	1.00	0.27	3.20	37	15	174
	Sub-total	5,000	1.29	0.45	4.38	142	72	704
Open Pit	Proven	5,974	1.58	0.67	5.31	208	128	1,020
Subtotal	Probable	3,204	1.04	0.25	2.92	74	25	301
	Sub-total	9,179	1.39	0.52	4.48	282	153	1,321
Underground Reserves
Minto East	Proven	-	-	-	-	-	-	-
	Probable	709	2.28	1.04	6.15	36	24	140
	Sub-total	709	2.28	1.04	6.15	36	24	140
MSD – Area	Proven	-	-	-	-	-	-	-
2/ 118	Probable	1,731	1.76	0.74	7.19	67	41	400
	Sub-total	1,731	1.76	0.74	7.19	67	41	400
MSD –	Proven	106	1.74	0.61	6.3	4	2	22
Copper Keel	Probable	1,455	1.81	0.65	6.7	58	30	313
	Sub-total	1,561	1.81	0.64	6.67	62	32	335
MSD	Proven	301	1.8	0.77	6.06	12	7	59
Wildfire	Probable	59	1.59	1.00	7.85	2	2	15
	Sub-total	360	1.76	0.80	6.35	14	9	73
Underground	Proven	407	1.78	0.73	6.12	16	9	81
Subtotal	Probable	3,954	1.87	0.76	6.83	163	97	868
	Sub-total	4,361	1.86	0.76	6.77	179	106	948
Stockpiles	Proven	852	1.23	0.41	3.71	23	11	102
	Probable	-	-	-	-	-	-	-
	Sub-total	852	1.23	0.41	3.71	23	11	102
Total
Total	Proven	7,233	1.55	0.64	5.17	247	148	1,203
Reserves	Probable	7,158	1.50	0.53	5.08	237	122	1,169
	Sub-total	14,392	1.53	0.58	5.12	484	270	2,371

Table 1: Mineral Reserve Estimates as of January, 2012 (Mercer and Sagman, 2012)

Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

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1.2.1 Production History

Following the official announcement of production on Oct 1, 2007, production and recovery rates increased through 2008 and 2009. In 2010, operations were cut back due to constraints in the tailings filtration facility. Positive processing results were due largely through the amenability of the ore to flotation at a coarse primary grind size.

Table 2 below lists the operating results from 2007 to 2011.

Parameter	Unit	2007	2008	2009	2010	2011
Waste mining	Mt	9.26	8.37	11.13	7.97	11.7
Ore mining	Mt	0.75	0.83	1.15	1.49	0.73
Total material mined	Mt	10.01	9.53	12.28	9.47	12.43
Tonnes processed	Tonnes	238,446	809,426	1,031,190	915,051	1,258,308
Mill head copper grade	%	2.16	2.91	2.59	2.22	1.61
Mill head gold grade	g/t	n/a	1.28	1.14	0.93	0.68
Mill head silver grade	g/t	7.7	11.8	11.0	8.7	5.93
Copper recovery	%	85.1	91.9	92.6	90.3	87.9
Gold recovery	%	n/a	77.7	75.3	81.1	75.8
Silver recovery	%	77.5	84.6	81.9	80.6	78.6
Concentrate produced	Dmt	12,630	53,148	59,863	47,065	49,159
Concentrate grade - Cu	%	34.7	40.7	41.4	39.0	36.32
Concentrate grade - Au	g/t	n/a	15.9	14.9	14.7	12.00
Concentrate grade - Ag	g/t	113	152	155.8	137	124.08
Copper in concentrate	M lb	9.66	47.69	54.63	40.50	37.12
Gold in concentrate	Oz	n/a	27,202	18,828	22,284	18,439
Silver in concentrate	Oz	45,885	217,489	299,767	206,838	196,098

Table 2: Operating Results, 2007 - 2011 (Mercer and Sagman, 2012)

In 2012, mining and stripping of the Area 2 pit was ongoing, with a slight decrease in production. In October, an amendment to Minto's Water Use Licence (WUL) was approved, and development of the underground ramp to access future underground workings at Area 2 commenced.

Two mineral resource estimates, on the Fireweed and Inferno discoveries respectively, were completed in 2012. The "Fireweed Extension" is an extension of the Minto East deposit, and the "Inferno North Extension" is located north of the Main Zone pit. Combined mineral resource estimates provided an additional 101 million pounds of copper in the Measured and Indicated categories, and a further 86 million pounds in the Inferred category. Resource estimates are listed in Tables 3 and 4 below.

Table 3: Mineral Resource estimate for the Fireweed Extension Deposit (2012 MD&A report, Mar 13, 2013)

Category	Tonnes (000's)*	Copper (%)	Gold (g/t)	Silver (g/t)	Contained Cu (000's lbs) *	Contained Au (000's oz) *	Contained Ag (000's oz.) *
Indicated (l)	2,152	2.14	1.0	8.9	101,528	69.7	618.7
Inferred	1,506	1.64	0.66	5.4	54,536	31.9	262.5

Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

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Category	Tonnes	Copper	Gold	Silver	Contained Cu	Contained Au	Contained Ag
	(000's)*	(%)	(g/t)	(g/t)	(000's lbs) *	(000's oz.) *	(000's oz.) *
Inferred	688	2.06	0.82	6.5	31,277	18.1	143.9

Table 4: Mineral Resource estimate for the Inferno North Extension deposit (2012 MD&A report, Mar 13, 2013)

Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

Mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for mining ability, selectivity, mining loss and dilution. These mineral resource estimates include Inferred mineral resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is also no certainty that these Inferred mineral resources will be converted to Measured and Indicated categories through further drilling, or into mineral reserves, once economic considerations are applied.

Exploration from 2012 onwards was limited to delineation core drilling and related activities, and no significant surface or underground exploration occurred from 2013 through 2018.

In 2013, development of the underground access ramp continued until Q4 when it was suspended following the decision to defer development and production of the "Area 118 underground" for one year. Production increased somewhat in 2013, offsetting a slight reduction of grade. Capital spending increased substantially to CAD\$50.1 million, including CAD\$33.0 million for underground development. In July, 2013 Capstone submitted to the Yukon Environmental and Socioeconomic Assessment Board (YESAB) an operating plan for all remaining mineral reserves as identified in the 2012 Phase V/VI Pre-Feasibility Study (PFS).

In 2014, Capstone completed mining of the Area 2 pit, then moved on to mining the M-Zone and the Area 118 open pit. Mining of both of these was completed, and underground operation of the Area 118 deposit commenced. The mine plan was changed towards a blend of higher-grade underground ore and lower grade stockpiled ore. Capital spending in 2014 stood at CAD\$14.8 million.

In 2015, operations focused on underground mining in Area 118, as well as stockpiles, while awaiting issuance of the Water Use Licence (WUL) for open pit mining of the Minto North deposit. The WUL, granted in early August, completed the final phase of permitting for all mineral reserves identified in the 2012 Phase VI Pre-Feasibility Study. Stripping then commenced on the Minto North deposit, and ore began to be extracted in December.

Copper production in 2015 decreased due to lower throughput and lower recoveries resulting from an increase in partially oxidized ore (POX) in the mill feed. Cash costs increased to \$2.54 per pound of payable copper, while copper prices continued on a downward trend.

In 2016, mill throughput, head grades and recoveries exceeded expectations, roughly doubling production of copper, gold and silver from 2015. The increase in recoveries resulted from a greater proportion of sulphide ore, rather than oxide ore, in the mill feed.

At the end of 2016, Capstone reported it had an approximate 3-year mine life remaining post-2017 at the Minto Mine. However, in early 2017, due to low commodity prices, Capstone began planning to curtail actual mining operations, with plans to place the mine on care and maintenance in November, 2017. Improved copper prices caused Capstone to decide to continue operations until at least mid-2021, and also to continue extraction through incorporation of several previously impaired ore bodies. Significant development and stripping costs in H2 of 2017 were incurred, to facilitate mine life extension and to benefit future periods.

To facilitate the mine life extension, Capstone issued 6.8 million shares valued at \$7.5 million to Wheaton Precious Metals Corp on October 13, 2017, in exchange for a modification in the precious metal purchase agreement whereby Capstone would receive increased gold revenues if copper prices fall below USD\$2.50/lb. In addition to the base price of US\$300 per oz of payable gold (subject to the annual inflation clause explained in Section 6.2.1), there is an additional "Gold Top Up Payment" based on the following formula:

\$900 x (Ceiling Price - Actual Price) (Ceiling Price - Floor Price)

whereby the Ceiling Price is set at US\$2.50/lb copper, and the Floor Price is set at US\$1.75/lb copper. This represents a simple sliding scale of payments ranging from a maximum of \$1,200 at US\$1.75/lb copper, to a minimum of US\$318/oz at US\$2.50/oz copper (both numbers subject to the annual inflation). The Gold Top Up Payment is capped at the greater of (i) the market price per ounce of gold less US\$300 plus the annual inflation, and (ii) nil.

Table 5 lists annual operating results from 2012 to 2018.

Parameter	Unit	2012	2013	2014	2015	2016	2017	2018
Waste mining (Open pit)	(000s t)	9,805	9,696	2,858	5,044	5,585	7,890	1,315
Ore mining (Open pit)	(000s t)	943	2,013	517	383	1,506	941	547
Total material mined (OP)	(000s t)	10,748	11,709	3,376	5,428	7,091	8,831	1,862
Ore (Underground)	(000s t)	-	-	301	457	246	328	284
Tonnes processed	(000s t)	1,341	1,402	1,439	1,388	1,491	1,439	907
Mill head copper grade	%	1.34	1.31	1.37	1.38	2.21	1.37	1.31
Mill head gold grade	g/t	0.58	0.52	0.56	0.49	1.23	0.79	0.37
Mill head silver grade	g/t	5.1	4.6	4.7	4.7	8.0	4.8	4.33
Copper recovery	%	90.5	92.3	93.2	86.2	95.2	82.6	86.5
Gold recovery	%	74.0	78.4	77.5	73.6	67.0	59.3	61.5
Silver recovery	%	84.1	78.5	78.5	76.9	87.8	77.6	76.5
Concentrate produced	Dmt	43,423	46,303	50,246	45,703	70,348	37,372	27,383
Concentrate grade - Cu	%	37.5	36.5	36.6	36.1	44.7	43.7	38.0
Production: Copper (contained metal)	(000's lbs)	35,928	37,238	40,506	36,400	69,157	35,900	22,968
Gold (contained metal)	Oz	18,599	18,361	19,909	16,114	39,506	21,672	6,636

Table 5: Operating Statistics, 2012 - 2018 (based on Capstone MD&A reports)

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Silver (contained	(000's Oz)	184	162	171	161	337	171	97
metal)

Capital spending in 2017 totaled CAD\$2.7 million, including CAD\$2.4 million in Q4, mainly for underground infrastructure development to support the extended mine life. The CAPEX expenditures to October 31, 2018 were CAD\$9.5 million, with an AISC of US\$3.13/lb.

Open pit mining stopped in April 2018. Ore development of the Minto East deposit started in April, and underground production blasting commenced towards the end of June, 2018. Starting in May, 2018, milling began operating on a two-week on, two-week off basis. Underground mining ceased on October 11, 2018, and milling operations stopped on October 19. Preparation for the mine to enter care and maintenance commenced in mid-October, 2018. Upon entering full care and maintenance status, the Minto mine site was staffed by an eight-person crew at all times. The crews conduct regular checks on surface and underground workings and infrastructure. On June 3, 2019 following closure of acquisition of MintoEx by Pembridge, the care and maintenance period ended and the restart process commenced.

1.2.2 Co-operation Agreement with the Selkirk First Nation

In September 1997, MintoEx entered into a Co-operation Agreement (CA) with the Selkirk First Nation (SFN) towards development and operations of the Minto Project. The agreement stated that the project would provide meaningful benefits to the SFN and its beneficiaries. In turn, Selkirk would co-operate and assist in development and operation of the project by providing access, goods and services, assisting in training and recruitment of candidates for employment, among others. The agreement included provision of an NSR royalty of 0.500%, to be paid directly to the SFN rather than the Federal Government.

An amended CA was signed in October, 2009 between Capstone and the SFN, whereby 600,000 Capstone shares would to be paid out on the effective date of the Agreement and an additional 100,000 shares would be paid on each of the next six anniversary dates. The CA also called for a sliding scale of NSR payments consisting of a 0.5% NSR when benchmark copper prices on the London Metals Exchange (LME) do not exceed US\$1.80/lb, a 1.0% NSR for prices from US\$1.80 to \$2.50; a 1.25% NSR for prices from \$US2.50 to US\$3.00/lb, and a 1.5% NSR for prices exceeding US\$3.00/lb. The agreement also states that any "New Reserves" exceeding 5.0M tonnes grading 1.5% copper may not be developed until MintoEx and the SFN have reached a new or amended CA agreement. Also, the SFN shall have a preferential right and opportunity to be awarded any project contractor requirements treated as "Preferred Opportunities".

1.2.3 Share Purchase Agreement, June 3 2019

On June 3, 2019 Pembridge entered into a definitive "Share purchase Agreement" (SPA) with Capstone and closed the acquisition of 100% of Minto Explorations Ltd (Minto). The SPA replaces the Purchase and Sale Agreement of February 14th, 2018. The SPA stipulates that Pembridge must pay Capstone an aggregate of US\$20 million in three staged payments, the timing of which are linked to production levels at Minto and future copper prices.

The staged payments are as follows:

An initial payment of US\$5 million from Minto to Capstone to be provided within 60 days of production reaching a steady state of 60% of mill capacity;

• A second payment of US\$5 million due within 90 days from when production has attained 60% of mill capacity, and the price of copper has averaged US\$3.00/lb (US\$6,615/t) or more for two consecutive quarters, and;
• A final payment of US\$10 million due within 90 days from when the copper price has averaged US\$3.50/lb (US\$7,717t) for two consecutive quarters.

In addition, financing of US\$10 million to fund recommencement has been secured from Copper Holdings LLC (Copper Holdings) and Cedro Holdings I, LLC (Cedro), an entity managed by Lion Point Capital, L.P. (Lion Point). This is pursuant to a financing agreement between Pembridge, Copper Holdings and Lion Point dated June 3, 2019, referred to as the "Shareholder and Financing Agreement".

Pembridge Resources has co-signed, alongside Capstone, on the CAD\$72 million surety bond to cover potential future reclamation liabilities. Pembridge is obligated to post CAD\$10 million in cash collateral over time against the bond and conduct prescribed progressive reclamation activities to reduce the overall future closure cost. While this surety bond is outstanding, Capstone will act as an indemnitor to the surety bond provider and Pembridge will indemnify Capstone for environmental liabilities at the Mine.

1.3 Geological Setting and Mineralization

1.3.1 Geological Setting

The Minto property is located within the Minto Copper belt (formerly known as the Carmacks Copper belt) (Kovacs, 2018), a 42 km long, NW-trending series of copper-gold deposits and occurrences in central Yukon. These deposits are hosted within deformed and metamorphosed inliers engulfed by the intrusions of the Late Triassic to Early Jurassic Minto pluton (204-195 Ma) (Colpron et al., 2015).

The Minto property area is underlain by the southern margin of the 204 – 195 million year old (Ma) Minto pluton. The Minto pluton consists of medium to coarse grained granite, biotite-hornblende granite to granodiorite and quartz monzonite

The Minto pluton lies in east-west trending normal fault contact with the mafic to intermediate volcanic rocks of the Late Cretaceous Carmacks Group to the south. The Povoas Formation forms an extensive northwest trending belt and consists of variably deformed and metamorphosed greenschist and amphibolite facies, augite phyric basalt, volcaniclastic rocks, and hornblende gabbro (Hart and Radloff, 1990).

Hypogene copper sulphide mineralization is hosted within Late Triassic variably deformed, metamorphosed, and migmatized rocks that are engulfed by the undeformed and unmineralized felsic intrusive phases of the Minto pluton (Kovacs, 2018).

Copper sulphide mineralization is restricted to the metamorphic rocks and occurs in three distinct forms: disseminated chalcopyrite ± pyrite, foliaform chalcopyrite, and net-textured bornite-chalcopyrite ± digenite (Kovacs, 2018). Contacts between foliated and massive phases are typically very sharp and lack chilled margins. Oxidation and alteration of primary mineralization indicates near-surface extensions of mineralized zones. Drill intercepts of copper-mineralized cobbles indicate "Minto-style" mineralization was exposed, eroded and re-deposited in sedimentary strata by the Cretaceous period.

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Both brittle and ductile deformation occur in the Minto Mine vicinity. Amphibolite facies ductile deformation affected the metamorphic rocks and it is evident by the alignment of hornblende and biotite grains forming foliation, and by the segregation of quartz and feldspar grains forming gneissic texture in areas of higher strain. Deformation zones occur as sub-horizontal horizons traceable for more than 1,000 metres and are commonly stacked in parallel to sub-parallel sequences. The felsic intrusive rocks are generally undeformed, although moderate to strong foliation is locally developed near the contact with the metamorphic inliers (Kovacs, 2018).

Late faulting and brittle fracturing occurring throughout the property significantly affect the economic potential. The Minto Creek fault (MC Fault), a steeply north-east dipping fault roughly bisects the Minto Main deposit into north and south blocks. The north block has moved upwards and to the left of the south block, although displacement appears minimal. To the north, the roughly east-west striking, northnorthwest dipping DEF fault marks the northern limit of the Minto Main deposit. The sense of movement may be similar to the MC Fault, with a significant inferred displacement. Finding this displacement would help significantly in locating the offset extension of the Minto Main deposit. Elsewhere, the boundary between the Area 2 and Area 118 deposits is a NW-SE striking, northeast-dipping fault, showing significant displacement.

Pervasive potassic (biotite ± magnetite) alteration of the metamorphic host rocks is associated with hypogene copper mineralization (Kovacs, 2018). Chloritic and/or hematitic fracturing in some areas locally host visible gold, suggesting this late structural/hydrothermal event may be economically significant. There are no veins associated with hypogene copper mineralization; however, a few late chlorite-hematite-carbonate veinlets are locally present indicating post-mineral hydrothermal alteration.

1.3.2 Mineralization

Four major deposits have been delineated and/or undergone mineral extraction: the Minto Main, Minto East, Minto North and Minto South deposits. The Area 2, Area 118, Copper Keel and Wildfire resource sub-domains are now considered to be continuous, comprising the Minto South deposit. A northnorthwest trend is evident from the alignment of the known deposits that also includes the more recently discovered Fireweed (Minto East 2), Airstrip and Inferno (Minto North 2) prospects. This north-northwest trend is also evident regionally (over 42 km), as the Carmacks Copper Cu-Au-Ag deposit and the Stu prospect are also in a north-northwest alignment with the Minto mine as well as with the entire trend of the Minto Copper belt. Copper grades increase progressively towards the north within the trend.

The primary hypogene minerals are chalcopyrite, bornite, chalcocite, and minor pyrite. Copper sulphide minerals occur mainly as disseminated grains, foliaform stringers, and net-textured domains. Sulphide mineral content tends to increase with ductile deformation. Native gold, electrum, and gold telluride mainly occur as inclusions in bornite. Coarse free gold is locally found along late chloritic fractures, likely resulting from secondary enrichment from a hydrothermal event. Hypogene sulphide mineralization is almost always associated with biotite alteration and magnetite.

A crude zonation occurs from west to east at the Minto Main deposit, with bornite predominating in the west, transitioning to a thicker, lower grade chalcopyrite-bearing zone in the east. Both the Minto North and Minto East deposits show a similar zonation.

At the Area 2, Area 118 and Copper Keel resource subdomains of the Minto South deposit, ductile deformation appears to be more developed and mineralization is characterized by disseminated grains and minor foliaform stringers. The assemblage consists mainly of chalcopyrite-bornite-magnetite and minor pyrite. Mineralization is more homogenous and consistent than at the Minto Main and Minto North deposits, where mineralization is dominated by net-textured domains of bornite-chalcopyrite. At both the Ridgetop deposit and the Wildfire resource sub-domain, mineralization is subdivided into a nearsurface horizon of supergene mineralization, and a lower zone of sulphide mineralization. The lower zone comprises chalcopyrite-bornite - magnetite ± pyrite.

The predominant alteration assemblage associated with hypogene copper mineralization in the Minto mine area is a pervasive, potassic alteration, characterized by elevated biotite and magnetite content, within the horizontal mineralized zones, present in all Minto deposits. The late, post-mineralization alteration assemblage includes replacement of mafic minerals by chlorite, epidote and sericite in both ore and waste rock. Hematite alteration, likely of supergene origin, is most pervasive along the DEF fault at the Minto Main deposit, and is mainly fracture controlled within narrow alteration selvages in the other deposits. Pervasive silicification tends to coincide with areas of higher grade mineralization.

Copper oxide mineralization resulting from supergene alteration processes represents either the erosional remnants of foliated horizons above the deposits, or the vertical remobilization of copper along late brittle faults and fracture zones from underlying copper sulphide zones. The oxide mineral assemblage consists of chalcocite, malachite, minor chrysocolla and azurite and rare native copper. Mineralization occurs as fracture-fill and joint coatings and, to a lesser extent, interstitially to rock-forming silicate minerals. Oxidation is also manifested as pervasive limonite, earthy hematite and clay alteration of feldspars. Oxidation is related directly to the depth of the water table, mainly less than 30 metres and is minimal at the Minto Main zone, due to its depth.

1.4 Deposit Types

The Minto deposit has been modified by deformation, amphibolite facies metamorphism, and localized metamorphic anatexis (Kovacs, 2018). Since its discovery, several hypotheses have been presented to explain the genesis of the deposit. Previous studies attempted to look through the metamorphism and suggested a variety of deposit types, including: copper mineralization in digested Triassic volcanic rocks (A. Archer, pers. comm., in Sinclair, 1974), metasedimentary red-bed copper (Kirkham, 1974), deformed and metamorphosed porphyry copper-gold (Pearson and Clark, 1979), iron oxide copper gold (IOCG) (Capstone Mining Corp., 2008), deep 'aborted' porphyry Cu-Au that formed during the early stage of porphyry Cu-Au mineralization (Tafti, 2005), and shear-hosted hydrothermal mineralization generated in the ductile root zones of porphyry systems (Hood et al., 2008; in Kovacs, 2018).

Recent studies of the setting and mineralization of the Minto deposits by Kovacs (2018) have resulted in the plausibility that mineralization may be hosted by 215-212 Ma Late-Triassic Povoas Formation volcanic rocks subsequently engulfed into the 198 Ma Minto pluton. The Carmacks Copper deposit is located 42 km southeast of the Minto mine. The Minto and Carmacks Copper deposits are metallogenically related, given their spatial relation and deformed, metamorphosed, and partially oxidized nature. A recent study (Kovacs, 2018) integrated the two deposits into a single genetic model and proposed that the Minto deposit is the more highly migmatized analogue of the Carmacks Copper deposit (Kovacs, 2018). The same study also concluded that the two deposits together represent Late Triassic porphyry deposits hosted within Late Triassic volcanic rocks of the Stikine terrane (Stikinia) that have undergone amphibolite facies metamorphism, deformation, and partial melting (anatexis) (Kovacs, 2018).

All deposits at the Minto Mine property share the same style of mineralization, comprising copper sulphide mineralization associated with sub-horizontal and subparallel deformed and metamorphosed migmatitic host rocks engulfed within the undeformed and unmineralized intrusive phases of the Minto pluton. The host rock at the Minto mine is interpreted to be a migmatite formed from the partial melting of the Late Triassic volcanic rocks of the Povoas Formation, Stikinia, during the emplacement of the Minto pluton in the Early Jurassic (Kovacs, 2018).

1.5 Mineral Resources and Reserves

1.5.1 Mineral Resources

Updated mineral resource and reserve estimates were provided by Kirkham Geosystems Ltd. on the Minto South Deposit (MSD) including the Copper Keel zone, as well as the Ridgetop, Minto North, Minto East, Minto North 2 and, Minto East 2 deposits. A summary of mineral resources is provided in Table 6 below.

Classification	Tonnes	Cu Grade	Ag Grade	Au Grade	Cu Metal	Ag Metal	Au Metal
	(kt)	(%)	(g/t)	(g/t)	(kt)	(koz)	(koz)
Stockpiles
Stockpiles (Measured)	412	1.12	3.05	0.25		5 40	3
Minto South Deposit (MSD) includes Copper Keel
Measured	1,632	1.49	4.6	0.57	24		30
Indicated	4,041	1.72	6.0	0.67	70	776	87
Total M&I	5,673	1.66	5.6	0.64	94	1,021	117
Inferred	2,338	1.54	6.1	0.56	36	458	42
Minto North 2
Measured	-	-	-	-	-	-	-
Indicated	-	-	-	-	-	-	-
Total M&I	-	-	-	-	-	-	-
Inferred	1,419	1.42	4.7	0.51	20	214	23
Minto East 2
Measured	-	-	-	-	-	-	-
Indicated	2,778	1.72	7.0	0.80	48	629	72
Total M&I	2,778	1.72	7.0	0.80	48	629	72
Inferred	1,889	1.38	4.1	0.50	26	247	30
Ridgetop
Measured	1,531	0.96	2.1	0.25	15	105	12
Indicated	3,534	0.87	2.9	0.30	31	326	34
Total M&I	5,065	0.90	2.6	0.28	45	431	46
Inferred	318	0.75	1.6	0.13		2 16	1
Minto North
Measured	221	0.94	2.9	0.21		2 20	1
Indicated	257	1.00	5.6	0.61		3 46	5
Total M&I	477	0.97	4.4	0.42		5 67	7
Inferred	28	0.70	3.4	0.32		0	3 0
Minto East
Measured	-	-	-	-	-	-	-
Indicated	632	2.13	6.08	0.89	13	124	18
Total M&I	632	2.13	6.08	0.89	13	124	18
Inferred	109	1.44	4.76	0.60		2 17	2

Table 6: Mineral Resources by deposit as May 31, 2019

Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

Table 7 below shows the total mineral resources.

Classification	Tonnes	Cu Grade	Ag Grade	Au Grade	Cu Metal	Ag Metal	Au Metal
	(kt)	(%)	(g/t)	(g/t)	(kt)	(koz)	(koz)
Measured	3,795	1.20	3.35	0.38	46	409	47
Indicated	11,242	1.46	5.26	0.60	164	1,901	21
Total M&I	15,037	1.40	4.78	0.54	210	2,310	263
Inferred	6,100	1.42	4.79	0.51	86	939	100

Table 7: Total mineral resources as at May 31, 2019

Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

It is the opinion of the Competent Person that the current exploration and structural information is sufficiently reliable to confidently interpret the mineralized boundaries and that the assay data are sufficiently reliable to support the estimation of mineral resources.

1.5.2 Mineral Reserves

Although mineral resources are not mineral reserves and do not have demonstrated economic viability, it is the opinion of the Competent Person, that the deposits, as classified, have a reasonable expectation of eventual economic extraction.

Mineral resources are inclusive of mineral reserves. The May 31, 2019 mineral reserve calculations involve price assumptions of US\$3.00 for copper, US\$16.00 for silver and USD\$1,300 for gold. Operating costs are CAD\$3.12 per tonne (USD\$2.40/t, assuming 1.3:1 CAD\$:US\$ exchange rate) mined for open pit operation, and CAD \$36.00 (US\$27.69) per tonne mined for underground. The processing cost is CAD \$16.50 (US\$ 12.69) per tonne milled, and General and Administrative (G&A) costs are CAD \$11.9 (USD\$9.15) per tonne. In addition, there exists a royalty of 1.5% NSR.

Metallurgical recoveries of 91% for copper, 78% for silver and 70% for gold have been used. Open-pit mineral reserves consider 5% mining dilution, 90% mining recovery, and are reported above a 0.5% Cu cut-off grade. Underground mineral reserves consider 4% dilution and 97.5% mining recovery and are reported above a 1.2% copper cut-off grade.

Mine production for 2018 came primarily from the Area 2 Stage 3 open pit. It was supplemented by underground production from the Area 2 lower lens as well as underground production from the Minto East deposit. Mineral reserves were exhausted from the Area 2 Stage 3 open pit and from the lower lens of the Area 2 Underground in 2018.

As at May 31, 2019, there are no open-pit mineral reserves at the Minto Mine. Also, the Ridgetop deposit was shown not to contain any mineral reserves.

The mineral reserves listed by deposit as of May 31, 2019 are listed in Table 8, and the total mineral reserves are listed in Table 9.

Block-Model-to-Mine reconciliation for the Area 2 – Stage 3 open pit revealed that mining of this achieved 109 kt (-21%) less tonnage and 1.3 kt (-24%) less total copper metal than expected from the resource model, due to an overprediction of resources when dealing with narrow ore lenses that become heavily diluted during mining of 6m benches. More sulphides were mined than anticipated; the Area 2 – Stage 3 pit produced 57 kt (13%) more tonnage and 0.4 kt (10%) more copper metal than predicted, when only sulphide tonnage is considered.

Block-Model-to-Mine Reconciliation for Area 2 Underground indicates that 115 kt of ore was mined from the Area 2 lower lens in 2018, which compares favorably to the planned reserve of 120 kt. However, the recorded grade was 28% lower than planned (1.93% Cu achieved vs 2.47% Cu planned). Combined 2017- 2018 production on the Area 2 lower lens realized 11% more Cu metal than planned (10 kt Cu metal extracted vs 9 kt Cu metal in reserve), due to over-achievement at the Area 2 Lower Lens in 2017.

At Minto East, a total of 174 kt of ore was mined versus the plan of 240 kt according to the long term block model. However, reported metal production (5 kt Cu metal) compares favorably to the reported block model depletion of 5 kt Cu metal because the actual ore grade was 26% higher than predicted. This translates to a recovered Cu metal difference of 2% less than predicted by the resource model.

As of May 31, 2019, a total of 192 kt of material (3 kt Cu metal) from the Stage 3 pit resides in stockpiles that the mill has not been able to process to date. Approximately 29 kt of stockpiled high-grade waste averaging 0.34% Cu and 13 kt of low-grade partially oxidized (Pox) stockpiled ore averaging 0.78% Cu were sent as mill feed.

The comparison of total mine production to the mill shows tonnage, grade, and contained copper to be 3%, 3%, and 6% respectively higher than realized by the mill. This is similar to what was recorded in the 2017 year-end report where 7% more copper metal was reported by mine production than realized in the mill.

The overall (adjusted) block model performance with respect to the mine and the mill was poor in 2018. All mining areas within the MSD performed poorly. Going forward, the stated reserve for the Minto East deposit includes results from test-hole data and performance to the model will undoubtedly improve.

In the opinion of the Competent Person, the block model resource estimates and resource classification reported are a reasonable and accurate representation of the mineral resources and reserves at the MSD, Ridgetop, Minto North, Minto North 2, Minto East and Minto East 2 deposits.

Classification				Tonnes Cu Grade Ag Grade Au Grade Cu Metal Ag Metal Au Metal
	(kt)	(%)	(g/t)	(g/t)	(kt)	(koz)	(koz)
Reserves Summary - Stockpiles
Stockpiles (Proven)	412	1.12	3.1	0.25		5 40	3
Reserves - Minto South Deposit
(MSD) Copper Keel Underground
Proven	-	-	-	-	-	-	-
Probable	1,616	1.73		6 0.63	28	315	33
TOTAL	1,616	1.73		6 0.63	28	315	33
Reserves - Minto East Underground
Proven	-	-	-	-	-	-	-
Probable	335	2.11		6 0.88		7 63	10
TOTAL	335	2.11		6 0.88		7 63	10

Table 8: Minto Mineral Reserves by deposit as at May 31, 2019

Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

Table 9: Minto Mineral Reserve Totals as at May 31, 2019

Classification	Tonnes	Cu Grade	Ag Grade	Au Grade	Cu Metal	Ag Metal	Au Metal
	(kt)	(%)	(g/t)	(g/t)	(kt)	(koz)	(koz)
Reserves Summary Total
Proven	412	1.12	3.1	0.25		5 40	3
Probable	1,951	1.79		6 0.67	35	380	42
TOTAL	2,363	1.68		6 0.6	40	420	45

Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

1.6 Mine Engineering and Infrastructure

Operations consisted solely of open pit mining from 2007 until 2012, when development of the Minto South Underground deposit commenced and continued through early 2013. In January, 2014 MintoEx was given approval to change the mining sequence so that the "M-zone" could be brought ahead in the schedule and accessed from a portal at the bottom of the completed Area 2 Stage 2 pit. The M-zone underground operations were completed in October 2014, at which time mining commenced in the Area 118 zone. This zone was completed in April 2016 and mining then transitioned to the Area 2 Underground zone. Mining of Area 2 was completed in H1 of 2018.

In October 2016, Minto Exploration Ltd. (MintoEx) submitted an updated Mine Development and Operation Plan (MDOP) showing a revised Area 2 Stage 3 design that would mine a substantially smaller volume than the original Phase V/VI pit presented in 2014. The October 2016 redesign considered additional in-fill exploration and geotechnical drilling, as well as a degree of conservatism in the economic assumptions.

As of April 30 2018, extraction of the Minto East Underground reserve was started. The Copper Keel Underground zone was scheduled to be mined between H2 of 2018 and H2 of 2021. The Minto East 2 Underground and Minto North zones are not currently permitted under the existing Quartz Mining Licence. Minto East 2 was scheduled for mining from Q1 2019 and Q3 2021; Minto North was scheduled for Q3 of 2020 to Q3 of 2021.

All underground development and production were executed by Dumas Mining Contracting Ltd. (Dumas). Engineering and planning were completed internally with Minto personnel.

The M-zone, Area 118 and Area 2 zones were all mined using a retreat longhole open stoping method, and the Minto East zone is planned to be mined in the same manner. All of these ore zones can be described as lenses of variably foliated and migmatized metamorphic rocks bounded at their hanging wall and footwall contacts by an undeformed and unmineralized equigranular granodiorite (eG). The metamorphic zones are typically 5-30m thick, dipping from 20° to 35°. Significant variability in copper grades occurs within each ore zone; therefore, supplemental infill drilling was carried out from each sill. In the Area 118 and Area 2 zones, additional core drilling was also done from the underground workings.

The mining method requires a series of parallel sill drifts to be developed along the strike of the deposit, following the footwall contact. Backfill was not used during mining; however, small quantities of development waste are sometimes placed in completed stopes to reduce haulage requirements.

Following the placement of mining and milling facilities on care and maintenance, reagents, explosives and other hazardous materials (Hazmats) were removed from site. Pumps utilized for dewatering, and the ventilation system, continued to be maintained.

A comprehensive description of the mine infrastructure is provided in Section 10.

1.6.1. Orebody Geometry

Table 10 below states the geometry of ore reserves.

Parameter	M-Zone	Area 118	Area 2 650 Level	Area 2 630 Level	Minto East
Depth (m)	25-110	150-200	110-145	90-225	270-330
Area (m)	120 x 100	235 x 190	135 x 35	220 x 115	220 x 150
Dip (degrees)	10-15	18-45	10-30	10-30	10-30
Vertical Thickness (m)	8-23	5-35	5-21	5-31	5-26

Table 10: Summary of Orebody Geometry of Reserves

The SRK Phase V Feasibility Study described several issues with these ore reserves:

The mineralized zones bifurcate; therefore, a mineralized zone can contain a significant amount of waste, or that thinner ore zones can merge with larger zones, complicating geological modelling and potentially increasing internal dilution.

• The width and dip of mineralized zones are locally variable, appearing to pinch-and-swell. Changes in thickness may vary by up to an order of magnitude over less than 30 m of horizontal distance.
• Some of the irregularity in the geometry and thickness of the mineralized zones is due to smallscale and large-scale structural displacements. At least two faults occur in Area 2, and three possible faults displace the modelled zones in Area 118. Similar structures may be present throughout the deposit, each with displacements of up to a few metres.

1.7 Mineral Processing

The processing plant at the Minto Mine was constructed in 2006-2007 and commercial production was declared in October 2007 after a four-month commissioning period. The processing plant was placed on care and maintenance on October 19, 2018. The mills were jacked up and the liners and ball charges were removed. Pumps utilized for water supply and mill process were opened and cleaned.

The Minto crushing plant, with a 4,200 tpd capacity, accepts run-of-mine ore, and size reduction to mill feed is accomplished by a jaw crusher followed by two cone crushers operating in series followed by a "triple deck screen". Run-of-mine ore is reduced to a product size of 115 mm P80. The crushed product is then transported to a conical coarse ore stockpile with an 1,800-tonne capacity.

Since mid-2016 crushing has been accomplished by a local contractor, NuWay Crushing Ltd. of Whitehorse, Yukon. Their equipment comprises a jaw crusher, followed by primary and secondary cone crushers, to produce sized mill feed with a P80 of 19 mm. The contract crusher provides a blend of POX (partially oxidized ore) and sulphide ore to the crushing plant. POX ore tends to reduce copper recoveries; therefore a blend is maintained to limit the negative impact of POX material on mill copper recoveries.

The coarse ore is transported from the stockpile to the grinding circuit by means of a conveyor belt. Initial grinding is carried out in a 16.5' diameter by 5' long Semi-Autogenous Grinding (SAG) grinding mill. SAG mill discharge is transported to a bank of hydrocyclones. Secondary grinding is carried out in two 12.5' diameter by 10' long overflow type ball mills, each operating in closed circuit with a bank of three 15-inch hydrocyclones. The grinding circuit produces a flotation circuit feed with a product size of 250 um P80.

During the flotation phase, "rougher flotation" is achieved using three 1,400 cubic foot tank cells. The rougher tailing is treated further in a bank of four 500-cubic foot flotation cells. The rougher-scavenger tailing, the final tailing from the flotation plant, is thickened to about 50 % solids by weight before being pumped from the plant to the Area 2 pit tailings storage area.

A portion of the gold and silver in the mill feed is also recovered to the Knelson gravity concentrator. A total of 11,500 oz. gold in 2016 and 3,587 oz. in 2017 were recovered to gravity concentrate. These concentrates are bagged in 1-tonne "supersacks" and transported in a secure "seacan" to Skagway, Alaska, roughly an eight-hour drive from the mine site.

Copper concentrates are also hauled by truck to merchant vessel loading facilities in Skagway. The copper concentrate is marketed by Capstone and sold to metal traders, rather than to a particular smelter. The treatment and refining charges and deductions are comparable to standard international smelter charges, with a cost discount provided due to the premium quality of the concentrate. No deleterious penalty elements are included in the concentrate.

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1.8 Environmental Studies, Permitting and Social and Community Impacts

In order to continue ongoing work, MintoEx requires a variety of permits. The major instruments or authorizations permitting and governing operations include: a "Type A Water Use Licence" (WUL), issued by the Yukon Water Board; and a "Quartz Mining Licence" (QML) issued by the Ministry of Energy Mines and Resources (EM&R), Yukon Government.

The Minto Project was originally submitted to the Department of Indian Affairs and Northern Development (DIAND, now Indigenous and Northern Affairs Canada, or INAC) in 1994, and a "positive determination" was made under the Environmental Assessment Review Process Guidelines Order (EARPGO). In January 1995 EARPGO was replaced by the Canadian Environmental Assessment Act (CEAA). In April 2003 the Yukon Territorial Government (YTG) took over management of resources in Yukon, and, as of November, 2005, YTG conducted assessments under the Yukon Environmental and Socio-Economic Act (YESAA), administered by the Yukon Environmental and Socio-Economic Board (YESAB).

1.8.1. Current Licences

The major licences, instruments and authorizations are listed below.

Type A Water Use Licence

In April 1998 MintoEx received its Type A Water Licence (Lic. #QZ96-006) with an original expiry date of June 30, 2006, then extended until 2016. In 2015, the water licence, allowing for usage of 1,000 m³ /day, was renewed until either 2040 or the date that Minto Exploration's rights or interests in the Settlement land parcel expire. In accordance with the Class A Water Use Licence in place, Capstone has placed a surety bond of approximately CAD\$72 million with the appropriate regulatory agencies.

Type B Water Use Licence

In August 1995 MintoEx submitted its application for a Type B Water Use Licence for construction of the Yukon River barge landing sites, the Big Creek Bridge and various culvert installations along the access road. Following a CEAA screening, MintoEx was granted a Type B Water Use Licence (# MS95-013) and a Land and Quarry Permit (# YA5F045).

Yukon Quartz Mining Licence

In October 1999, DIAND issued Yukon Quartz Mining Licence QML-0001 to MintoEx, with an expiry date of June 30, 2006. This was subsequently extended until June 30, 2016, and further extended until 2030. In 2008, following a project proposal by MintoEx, Quartz Mining Licence QML-0001 was amended to increase the milling rate to 3,200 tonnes per day (tpd). On August 1, 2017 MintoEx received approval for the "Mine Development and Operations Plan, Area 2 Stage 3 Pit Design Change, 2017-01".

In addition to the major licences, numerous activities at the Minto Mine are monitored by several government agencies and the Selkirk First Nation, including the Selkirk First Nations Co-operation Agreement, fish collection permits and various waste treatment permits, dump permits and air emissions permits. MintoEx has also submitted various plans, including operating plans, spill contingency, wildlife protection and emergency response plans, and a Reclamation and Closure Plan.

In August 2017, a "Stop-Work Order" was issued for development of the Minto East Underground deposit, pending completion of a second egress to function as an escapeway for personnel during emergency situations. A variance was granted, subject to a list of conditions ensuring safety of Minto personnel. The solution was to construct a second egress consisting of a 2-metre diameter escapeway raise. The variance was lifted in December upon completion of the egress. However, on December 26, 2017 the escapeway had become compromised. A second variance was granted on January 5, dependant on the same list of conditions as the first variance. Upon completion of the escapeway, with infrastructure, the variance was lifted in April 2018.

1.8.2 2017 Reclamation and Closure Plan

In February 2017 MintoEx submitted its seventh revision to its Minto Mine Reclamation and Closure Plan (RCP), which addresses the long-term physical and chemical stability of the site, and includes reclamation of surface disturbances.

Specifically, it addresses temporary (up to 5 years) closure activities, followed by final closure plans, the latter with an estimated active closure period of three years. A temporary closure period would result from unsuitable economics expected to improve. It would commence with the cessation of mining of known ore deposits and milling of stockpiles and resume when economic conditions permit. Some fulltime site personnel would ensure the site is actively cared for.

Final closure will commence when known ore deposits are depleted or the long-term economic conditions are unfavourable for continued mining. Upon commencement, the mill and other facilities will be decommissioned, closure water conveyance will be constructed, and disturbed areas and waste facilities will be contoured, covered and revegetated. Personnel requirements will vary depending on particular activities, but will decline once the major decommissioning and reclamation tasks are completed. Estimated closure costs for "Year 0" (2017) and the End of Mine (EOM) stand at CAD \$61.1M and \$44.0M, respectively. The difference is due to progressive reclamation being carried out while operations continue.

Final closure plans as of February 2017 are categorized into three periods: the Active Closure (AC; 2019- 2021); Post Closure I (PCI; 2022-2026); and Post Closure II (PCII; 2027-2036). Commencement of active closure has been delayed until 2021 due to improved project economics. However, as of October 2018, the mine was placed on care and maintenance.

The Active Closure period comprises the implementation of the majority of the closure measures and is expected to last for three years. The PCI I period is intended as an intermediary period allowing closure measures to be established and assessed. This period is expected to last for about five years; however, water quality must meet the "Water Quality Objective attainment criteria" for three consecutive years prior to advancement to PCII. The PCII period will be the "confirmatory period" where performance of closure measures will be monitored, with maintenance activities taking place as required. This is expected to last for ten years, followed by a visit once every ten years for the following ninety years, with expenses paid for by MintoEx.

1.8.3 First Nation Consultation and Community Engagement

The Minto Mine is located within a block of Category A land (SFN R-6A) held by the Selkirk First Nation (SFN). Although the claims were staked long before designation of this block, MintoEx has pursued consultation and community engagement with the SFN. Terms of the original 1997 Co-operation Agreement and the revised 2009 agreement are described in Section 1.2.2 above, and in detail in Section 4.2. Several initiatives have been developed since 2009, including regular mandated meetings between Capstone leadership and the SFN chief and council and SFN leadership representatives. These include a bi-lateral working group (BTWG), comprised of MintoEx and SFN representatives, to specifically address geotechnical and water quality issues, consultation and closure and reclamation.

Several tri-partite working groups have also been established. The Tri-partite Socio-economic Working Group, comprising the SFN, YG and MintoEx, is responsible for a monitoring program of socio-economic effects. The Tri-Partite Reclamation and Closure Working Group, also comprising SFN, YG and MintoEx representatives, was developed in order for MintoEx to update YG and the SFN on progress of the reclamation and planning processes.

MintoEx has also involved other stakeholders throughout the reclamation and closure process, through technical working groups, site tours, updates, regulator meetings and reports. The groups frequently involved are: the YWB, YG, EMR, YG Water Resources, the YG Water Board and Environment Canada.

1.9 Discussion and Conclusions

On Jun3 3, 2019, Pembridge closed its acquisition of Capstone's 100% owned subsidiary, Minto Exploration Ltd, which controls 100% of the Minto copper-gold-silver mine.

The Minto property was first explored in the early 1970s, and continued to be explored steadily until, and following commencement of, actual production in 2007. Exploration continued through 2011, became more limited in 2012, and has been negligible since then.

The mill infrastructure, described in detail in this report, is a conventional 4,200 tpd crushing, grinding and flotation facility, which has been well maintained throughout its history with no major negative environmental occurrences known to this author. Although slightly below estimates, actual overall block model performance in 2017 is within mine operational expectations.

The Minto Mine 2017 Strategic Business Plan provided for mining on a go-forward basis originally from 2017 until 2021 when milling operations would cease. The mine and mill facilities were placed on care and maintenance on October 11, 2018, delaying final closure. As of May 31, 2019 , remaining reserves are comprised of the Minto East and Copper Keel underground sources. Total reserves in the proven and probable categories stand at 40,000 t Cu, 420,000 oz. Ag and 45,000 oz. Au. The restart process of underground mine and mill facilities commenced on June 3, 2019.

Although actual milling operations underperformed somewhat, monitoring of operations indicate a high standard of mine and mill management, as well as high standards of environmental and community stewardship. Capstone has also put in place comprehensive reclamation and closure plans, including site monitoring up to 15 years post-closure.

Since late 2016, metal prices have recovered significantly, and meet or somewhat exceed prices utilized in the updated resource calculation. Viability is also dependent on CAD\$:US\$ exchange rates, currently favourable. Fuel requirements remain significant; therefore continued low fuel prices will enhance viability. In October 2018, the mine was placed on care and maintenance.

The primary objective of Pembridge is to extend the mine life beyond its original forecast closure date of 2021, now extended proportionately to the care and maintenance and restart time span. To do so, two objectives must be met: upgrading of existing mineral resources to mineral reserve status, if possible; and delineation of new ore reserves. The former can be enhanced by efficient mining and milling operations, and will be influenced by metal prices, CAD\$:US\$ ratios and fuel prices, as well as availability of a work force. A lack of exploration since 2012 has resulted in a dearth of additional known deposits for future development and extraction. A comprehensive study of the geological, structural, alteration and

Minto Property Competent Person's Report 22 | P a g e

mineralogical settings will be required to improve the understanding of the setting and applicable deposit model, followed by intensive exploration, of the Minto property.

It is the opinion of the Competent Person that information within this report, including that provided by the contributing authors, provides a reasonable representation of the applicable aspects of the Minto mine. Unless otherwise stated, the information and conclusions may be relied upon.

2. Introduction

Mr. Carl Schulze, P.Geo, as Competent Person, of Aurora Geosciences Ltd. ("Aurora") of Whitehorse, Yukon was commissioned by Pembridge Resources plc ("Pembridge") to prepare a Competent Person's Report ("CPR") on the material assets of the Minto property. The CPR focuses on the Minto Mine, held by the Capstone Mining Corporation (Capstone) of Vancouver, British Columbia, Canada. The Minto coppergold-silver mine is located in west-central Yukon Territory, Canada. This CPR has been prepared by the Competent Person.

This CPR process was initiated by the recent proposed acquisition of 100% of the Minto Mine and its assets by Pembridge from Minto Explorations Ltd. ("MintoEx"), a wholly owned subsidiary of Capstone.

The author is an Independent Qualified Person and a Professional Geoscientist in good standing with the Association of Professional Geoscientists of British Columbia ("APEGBC" or "EGBC") in Canada, under the terms and definitions of a Competent Person's Report.

2.1 Terms of Reference

The author has been requested to write this report using the following terms of reference:

a) To review and compile all available data obtained by Pembridge Resources plc pertaining to the Minto Mine and surrounding claim blocks.

b) To provide a Competent Person's Report to the standards of the United Kingdom Listing Authority (UKLA) and the European Securities and Markets Authority (ESMA) to support a listing on the London Stock Exchange (LSE).

c) To support technical disclosures by Pembridge Resources plc.

2.2 Terms, Definitions and Units

"CPR" stands for Competent Person's Report. "UKLA" stands for United Kingdom Listing Authority, "ESMA" stands for European Securities and Markets Authority. "LSE" stands for the London Stock Exchange, and "LME" stands for the London Metals Exchange.

"YG" stands for Yukon Government, and YTG stands for the Yukon Territorial Government; these acronyms are used interchangeably. "EM&R" is short for the Department of Energy, Mines and Resources, of the Yukon Government. "YWB" stands for Yukon Water Board. "DIAND" is short for Department of Indian and Northern Affairs, updated to Indigenous and Northern Affairs Canada, or "INAC". "CIM" is short for the Canadian Institute of Mining, Metallurgy and Petroleum. "YESAA" stands for the Yukon Environmental and Socio-economic Act" and YESAB stands for the Yukon Environmental and Socioeconomic Board. "DO" stands for Designated Office (of YESAB). "UFA" is an acronym for Umbrella Final Agreement. YGS is an acronym for "Yukon Geological Survey".

Minto Property Competent Person's Report 23 | P a g e

"EARPGO" stands for the Environmental Assessment Review Process Guidelines Order. "CEAA" is short for the Canadian Environmental Assessment Act. "YWA" stands for the Yukon Waters Act, and "YWB" is short for the Yukon Water Board. "MMER" stands for Metal Mining Effluent Regulations. "WUL" stands for Water Use Licence. "QMA" stands for "Quartz Mining Act; "QML" stands for "Quartz Mining Licence".

"DDRP" stands for Detailed Decommissioning and Reclamation Plan. "RCP" is short for "Reclamation and Closure Plan. "EOM" is short for "End of Mine", "PCI" stands for Post Closure I, and "PCII" stands for Post Closure II. "M & I" is short for "Measured and Indicated" mineral resources, and "tpd" stands for tonnes per day. "Dmt" is short for dry metric tonne. Q1, Q2, Q3 and Q4, stand for Quarter 1 through 4 respectively, referring to quarters of calendar years. H1 and H2 stand for Half 1 and Half 2, or the first and second halves of a year, respectively. "RCF" stands for Revolving Credit Facility.

The term "NP/AP" stands for "Neutralizing Potential/ Acidifying Potential". POX is short for "partially oxidized (ore). "ASCu" refers to "acid-soluble copper". "BM" stands for "Block model".

"CA" stands for Co-operation Agreement. "SFN" is an acronym for Selkirk First Nation. "MSD" stands for Minto South Deposit. "SPA" is short for "Share Purchase Agreement".

All costs contained in this report are in Canadian dollars (CAD\$), unless stated otherwise. The terms "kt" and "koz" stands for kiloton and kilo-troy oz ('000 oz.) respectively. Distances are reported in millimetres (mm) centimetres (cm), metres (m) and km (kilometres). "UTM" stands for "Universal Transverse Mercator", "NAD 83" stands for North American Datum – 1983, and "NTS" is short for "National Topographic System, for Canada. The term "GPS" refers to "Global Positioning System" with co-ordinates reported in UTM NAD 83 projection, Zone 7. "Minfile Occurrence" refers to documented mineral occurrences on file with the Yukon Minfile, Department of Energy, Mines and Resources, Government of Yukon.

"PEC" stands for Priority Exploration Corridor. "IP" is short for "Induced Polarization" electromagnetic geophysical surveying. "VLF" stands for "Very Low Frequency electromagnetic surveying, and "MT" stands for Magnetotelluric surveying.

The term "ppm" refers to parts per million, which is equivalent to grams per metric tonne (g/t); the term "ppb" refers to parts per billion. Some historic grades are reported in "oz/ton" which is troy ounces per short ton. A Metric Tonne (Mt) is 1,000 kg or 2,204.6 lbs. A Short Ton is 2,000 lbs. The terms "Ma" and m.y. refer to million years. The symbol "%" refers to weight percent unless otherwise stated, and the symbol "‰" stands for "per mil", or parts per thousand. "QA/QC" refers to "Quality Assurance/ Quality Control". The term "gpm" stands for "gallons/minute", and "cfm" stands for "cubic feet/minute". The term "Kbar" represents kilobars of pressure (1 bar = 1 atmosphere). The symbol δ³⁴S Sulphide stands for Sulphur isotopic composition within sulphide (δ = delta notation). "D2" represents a second phase of deformation within rocks. Other terms are explained at point of first use.

Elemental abbreviations used in this report are:

Au: gold Ag: silver Cu: copper Fe: Iron Ti: Titanium Pb: lead Zn: Zinc

¹⁸⁷Re/ ¹⁸⁷Os represents the ration of the particular isotopes of rhenium and osmium.

The mineral resources presented herein have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards. Mineral resources are not mineral reserves and do not have demonstrated economic viability.

2.3 Sources of Information

The majority of the information provided in this report was provided by Minto Exploration (MintoEx). This includes information on the legal status of the project, geological setting, past resource and reserve estimates, capital and operating costs, production statistics, reclamation plans, and technical reports. The technical reports provided by Minto Exploration are in compliance with National Instrument 43-101, the standard for technical reports throughout Canada.

Information on water use licensing was provided by the Yukon "Waterline" website at https://apps.gov.yk.ca/waterline. Information on reclamation and closure planning, including some First Nation and Community Engagement, was captured from a document titled "Minto Mine, Reclamation and Closure Plan, 2017-01", and filed with the Department of Energy, Mines and Resources, Yukon Government, at http://www.emr.gov.yk.ca/mining/minto.html.

Information on claim tenure, including adjacent properties, and regional geology was accessed through the "Yukon Mapmaker Online" website of the Yukon Geological Survey at http://mapservices.gov.yk.ca/YGS/Load.htm. Information on regional geology was accessed through the "Yukon Bedrock Geology" website and by the "YGS Mapmaker Online" website. Both of these websites are available at http://www.geology.gov.yk.ca/Web_map_gallery.html. Information on adjacent properties was accessed through the Yukon Minfile website at http://yukon2.maps.arcgis.com/apps/Solutions.

2.4 Involvement of Competent Person

Carl Schulze, P.Geo, as Competent Person, of Aurora Geosciences Ltd. is the author on this report. He last visited the property on June 20, 2019 and was provided a comprehensive tour of underground mine infrastructure, open pit workings, the mill and other ancillary surface facilities, and core logging facilities. At the core shack, he was shown various styles of mineralization and alteration in core, as well as unmineralized core intervals. Mr. Schulze was also on site for a single day in 2009 and collected specimens from the Minto Main pit, which provided some visual petrographic descriptions in this report.

In 2008 Carl Schulze, then a freelance consulting geologist under contract to Northern Tiger Resources Inc. was the Qualified Person for surface exploration programs on the BOND, MEL and DEL properties. He personally worked on each property in July to August, 2008, and prepared and signed off on assessment reports for each property, describing the activities for the 2008 programs.

3. Reliance on Other Experts

Carl Schulze, the Competent Person for the purposes of this report, is acting as Project Manager for its production and content. Three independent contributing authors and one non-independent contributing author have provided significant content for the report, as follows:

• John Folinsbee of "Heads Ore Tails": Sections on Metallurgy and Mineral Processing
• Garth Kirkham of "Kirkham Geosystems Ltd.": Section 9, Updated Resources and Reserves
• Sebastien Tolgyesi: Sections on Mine Infrastructure
• Nikolett Kovacs: Section on Deposit Types and much of "Geological Setting and Mineralization"

4. Property Description and Location

4.1 Description and Location

4.1.1 Minto block

The Minto Property comprises 164 Yukon quartz mining claims covering 2,760 hectares (6,817 acres) (Mercer and Sagman, 2012). The mine site is centered at approximately 62°37'05" N Latitude, 137°14'56" W Longitude (UTM NAD 83 co-ordinates 384625 E, 6945045 N, Zone 8) on NTS sheet 115I11, in the Whitehorse Mining District. All claims are 100% held by Minto Explorations Ltd. ("MintoEx"), a wholly owned subsidiary of Capstone.

Table 11 below lists the status of claims comprising the Minto property.

Table 11: Claim Status as of June 19, 2019

Grant	Claim	Claim	Claim owner	Recording	Expiry Date	Lease
No.	name	No.		Date
Y 61620	MINTO	1	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00001
Y 61621	MINTO	2	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00002
Y 61622	MINTO	3	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00003
Y 61623	MINTO	4	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00004
Y 61624	MINTO	5	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00005
Y 61625	MINTO	6	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00006
Y 61626	MINTO	7	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00007
Y 61627	MINTO	8	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00008
Y 61628	MINTO	9	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00009
Y 61629	MINTO	10	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00010
Y 61630	MINTO	11	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00011
Y 61631	MINTO	12	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00012
Y 61632	MINTO	13	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00013
Y 61633	MINTO	14	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00014
Y 61634	MINTO	15	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00015
Y 61635	MINTO	16	Minto Explorations Ltd. - 100%	1971-08-09	2039-05-13	OW00016
Y 61693	DEF	1	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00230
Y 61694	DEF	2	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00231

Minto Property Competent Person's Report 26 | P a g e

Y 61695	DEF	3	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00232
Y 61696	DEF	4	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00233
Y 61697	DEF	5	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00234
Y 61698	DEF	6	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00235
Y 61699	DEF	7	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00236
Y 61700	DEF	8	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00237
Y 61701	DEF	9	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00238
Y 61702	DEF	10	Minto Explorations Ltd. - 100%	1971-08-23	2020-03-01	-
Y 61703	DEF	11	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00239
Y 61704	DEF	12	Minto Explorations Ltd. - 100%	1971-08-23	2020-03-01	-
Y 61705	DEF	13	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00240
Y 61706	DEF	14	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00241
Y 61707	DEF	15	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00242
Y 61708	DEF	16	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00243
Y 61709	DEF	17	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00244
Y 61710	DEF	18	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00245
Y 61711	DEF	19	Minto Explorations Ltd. - 100%	1971-08-23	2020-03-01	-
Y 61712	DEF	20	Minto Explorations Ltd. - 100%	1971-08-23	2020-03-01	-
Y 61713	DEF	21	Minto Explorations Ltd. - 100%	1971-08-23	2020-03-01	-
Y 61714	DEF	22	Minto Explorations Ltd. - 100%	1971-08-23	2020-03-01	-
Y 61715	DEF	23	Minto Explorations Ltd. - 100%	1971-08-23	2020-03-01	-
Y 61716	DEF	24	Minto Explorations Ltd. - 100%	1971-08-23	2020-03-01	-
Y 61717	DEF	25	Minto Explorations Ltd. - 100%	1971-08-23	2020-03-01	-
Y 61718	DEF	26	Minto Explorations Ltd. - 100%	1971-08-23	2020-03-01	-
Y 61719	DEF	27	Minto Explorations Ltd. - 100%	1971-08-23	2020-03-01	-
Y 61720	DEF	28	Minto Explorations Ltd. - 100%	1971-08-23	2020-03-01	-
Y 61721	DEF	29	Minto Explorations Ltd. - 100%	1971-08-23	2020-03-01	-
Y 61722	DEF	30	Minto Explorations Ltd. - 100%	1971-08-23	2020-03-01	-
Y 61723	DEF	31	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00246
Y 61724	DEF	32	Minto Explorations Ltd. - 100%	1971-08-23	2028-10-07	OW00247
Y 61904	MINTO	17	Minto Explorations Ltd. - 100%	1971-08-31	2039-05-13	OW00017
Y 61905	MINTO	18	Minto Explorations Ltd. - 100%	1971-08-31	2039-05-13	OW00018
Y 61906	MINTO	19	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61907	MINTO	20	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61908	MINTO	35	Minto Explorations Ltd. - 100%	1971-08-31	2039-05-13	OW00021
Y 61909	MINTO	36	Minto Explorations Ltd. - 100%	1971-08-31	2039-05-13	OW00022
Y 61910	MINTO	37	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61911	MINTO	38	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61914	MINTO	23	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61915	MINTO	24	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61916	MINTO	25	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61917	MINTO	26	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61918	MINTO	27	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-

Y 61919	MINTO	28	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61920	MINTO	31	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61921	MINTO	32	Minto Explorations Ltd. - 100%	1971-08-31	2039-05-13	OW00019
Y 61922	MINTO	33	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61923	MINTO	34	Minto Explorations Ltd. - 100%	1971-08-31	2039-05-13	OW00020
Y 61926	MINTO	41	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61927	MINTO	42	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61928	MINTO	43	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61929	MINTO	44	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61930	MINTO	45	Minto Explorations Ltd. - 100%	1971-08-31	2039-05-13	OW00023
Y 61931	MINTO	46	Minto Explorations Ltd. - 100%	1971-08-31	2039-05-13	OW00024
Y 61932	MINTO	29	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61933	MINTO	30	Minto Explorations Ltd. - 100%	1971-08-31	2020-03-01	-
Y 61934	MINTO	47	Minto Explorations Ltd. - 100%	1971-08-31	2039-05-13	OW00025
Y 61935	MINTO	48	Minto Explorations Ltd. - 100%	1971-08-31	2039-05-13	OW00026
Y 61936	MINTO	49	Minto Explorations Ltd. - 100%	1971-08-31	2039-05-13	OW00027
Y 61937	MINTO	50	Minto Explorations Ltd. - 100%	1971-08-31	2039-05-13	OW00028
Y 61938	MINTO	51	Minto Explorations Ltd. - 100%	1971-08-31	2039-05-13	OW00029
Y 61939	MINTO	52	Minto Explorations Ltd. - 100%	1971-08-31	2039-05-13	OW00030
Y 61978	DEF	33	Minto Explorations Ltd. - 100%	1971-09-08	2028-10-07	OW00248
Y 61979	DEF	34	Minto Explorations Ltd. - 100%	1971-09-08	2028-10-07	OW00249
Y 61980	DEF	35	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61981	DEF	36	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61982	DEF	37	Minto Explorations Ltd. - 100%	1971-09-08	2028-10-07	OW00250
Y 61983	DEF	38	Minto Explorations Ltd. - 100%	1971-09-08	2028-10-07	OW00251
Y 61984	DEF	39	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61985	DEF	40	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61986	DEF	41	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61987	DEF	42	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61988	DEF	43	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61989	DEF	44	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61990	DEF	45	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61991	DEF	46	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61992	DEF	47	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61993	DEF	48	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61994	DEF	49	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61995	DEF	50	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61996	DEF	51	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61997	DEF	52	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61998	DEF	53	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 61999	DEF	54	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62000	DEF	55	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62001	DEF	56	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-

Y 62002	DEF	57	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62003	DEF	58	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62004	DEF	59	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62005	DEF	60	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62006	DEF	61	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62007	DEF	62	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62008	DEF	63	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62009	DEF	64	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62010	DEF	65	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62011	DEF	66	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62012	DEF	67	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62013	DEF	68	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62014	DEF	69	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62015	DEF	70	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62016	DEF	71	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62017	DEF	72	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62018	DEF	73	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62019	DEF	74	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62020	DEF	75	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62021	DEF	76	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62022	DEF	77	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62023	DEF	78	Minto Explorations Ltd. - 100%	1971-09-08	2020-03-01	-
Y 62296	MINTO	65	Minto Explorations Ltd. - 100%	1971-09-22	2039-05-13	OW00031
Y 62297	MINTO	66	Minto Explorations Ltd. - 100%	1971-09-22	2039-05-13	OW00032
Y 62298	MINTO	67	Minto Explorations Ltd. - 100%	1971-09-22	2039-05-13	OW00033
Y 62299	MINTO	68	Minto Explorations Ltd. - 100%	1971-09-22	2039-05-13	OW00034
Y 62300	MINTO	69	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62301	MINTO	70	Minto Explorations Ltd. - 100%	1971-09-22	2039-05-13	OW00035
Y 62302	MINTO	71	Minto Explorations Ltd. - 100%	1971-09-22	2039-05-13	OW00036
Y 62303	MINTO	72	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62304	MINTO	73	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62305	MINTO	75	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62306	MINTO	76	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62307	MINTO	77	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62308	MINTO	78	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62309	MINTO	79	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62310	MINTO	80	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62311	MINTO	81	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62312	MINTO	82	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62313	MINTO	83	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62314	MINTO	84	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62315	MINTO	85	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62316	MINTO	86	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-

Y 62317	MINTO	87	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62318	MINTO	88	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 62319	MINTO	89	Minto Explorations Ltd. - 100%	1971-09-22	2020-03-01	-
Y 66779	DEF	79	Minto Explorations Ltd. - 100%	1972-07-11	2028-10-07	OW00252
Y 66780	DEF	80	Minto Explorations Ltd. - 100%	1972-07-11	2028-10-07	OW00253
Y 66781	DEF	81	Minto Explorations Ltd. - 100%	1972-07-11	2028-10-07	OW00254
Y 66782	DEF	82	Minto Explorations Ltd. - 100%	1972-07-11	2028-10-07	OW00255
Y 66783	DEF	83	Minto Explorations Ltd. - 100%	1972-07-11	2028-10-07	OW00256
Y 66784	DEF	84	Minto Explorations Ltd. - 100%	1972-07-11	2028-10-07	OW00257
Y 76953	DEF	1379	Minto Explorations Ltd. - 100%	1973-08-31	2028-10-07	OW00258
Y 76954	DEF	85	Minto Explorations Ltd. - 100%	1973-08-31	2020-03-01	-
Y 76955	DEF	86	Minto Explorations Ltd. - 100%	1973-08-31	2020-03-01	-
Y 76956	DEF	87	Minto Explorations Ltd. - 100%	1973-08-31	2020-03-01	-
Y 77310	MINTO	94	Minto Explorations Ltd. - 100%	1973-10-01	2020-03-01	-
Y 77311	MINTO	95	Minto Explorations Ltd. - 100%	1973-10-01	2020-03-01	-
Y 78024	MINTO	96	Minto Explorations Ltd. - 100%	1973-11-13	2020-03-01	-
Y 78025	MINTO	97	Minto Explorations Ltd. - 100%	1973-11-13	2020-03-01	-

The status of the claims was verified through the Whitehorse Mining Recorder (online) on June 19, 2019. Yukon quartz mining leases have been surveyed by an authorized Canada Lands Surveyor, in accordance with instructions from the Surveyor General. Quartz mining claims have not been legally surveyed.

The Minto property is located within a package of Category A settlement land held by the Selkirk First Nation (SFN R-6A), and within the traditional territory of the SFN. All claims were originally staked, and 65 were brought to lease, prior to finalization of the settlement land package. Subsequently, any Yukon First Nation government which has completed selection of its Category A settlement lands retains the surface and subsurface rights to the land. First Nations settlement lands prohibit any further staking or exploration without a formal agreement between the proponent and the First Nation.

There is a Co-operation Agreement (CA) between MintoEx and the SFN, with a Net Smelter Return (NSR) royalty payable to the SFN. A notice to renew the lease agreements for the Airport Area, Mill Site and Camp, Overburden Dump and Explosives Plant/Magazine, Tailings Disposal Area and Waste Dump – Open Pit (together, the "Lease Agreements") was submitted to the Chief of the SFN in June, 2006. There are no known back-in rights, payments, other agreements or encumbrances to which the property is subject to, other than the lease payments to the SFN. A notice to renew the lease agreements for the Airport Area, Mill Site and Camp, Overburden Dump and Explosives Plant/Magazine, Tailings Disposal Area and Waste Dump – Open Pit (together, the "Lease Agreements") was submitted to the Chief of the SFN on March 23, 2016. This specifies a renewal for a further 10 years, under the same terms and conditions in the original applicable Lease Agreement. In 2016, MintoEx exercised its renewal of the CA for a further 10 years.

MintoEx is subject to the environmental regulations, covered under the Yukon Environmental and Socioeconomic Act, which are required to operate a mine in the Yukon Territory. MintoEx is liable for reclamation of the site as outlined in the most recent closure plan dated February, 2017. The current Quartz Mining land use licence (QML) requires MintoEx to submit updated closure plans at regular intervals, typically every two years. On August 1, 2017, MintoEx received approval for its Operation Plan of its Quartz Mining Licence (QML-0001) from the Ministry of Energy, Mines and Resources. The license allows for continuing operations in Area 2 Stage 1, 2 and 3, and Area 118, as outlined in its Phase IV Reclamation and Closure Plan – Revision 5.1; and the Minto North and Ridgetop North and South Open Pits, and Minto East, Copper Keel and Wildfire underground areas as outlined in the Phase V/VI Reclamation and Closure Plan – Revision 5.1. The license approval also allows MintoEx to continue operations at its camp, industrial complex, mill and ancillary facilities, open pit and underground mining operations, waste rock and overburden management and tailings management, as well as access onto the property.

4.1.2 DEL Block

Also included as the Minto property are the DEL 1-113 claims comprising the DEL claim block, covering 2,150.6 hectares (5,312 acres) centered at 62^o 27' 07" N Latitude, 136^o 44' 52" W Long (UTM NAD 83: 409820, 6925759, Zone 8), and located about 32 km southeast of the centre of the main Minto block (Figures 2, 6). Table 12 lists the claim status as of June 19, 2019. All claims are 100% held by Minto Explorations Ltd.

Grant	Claim	Claim	Claim Owner	Recording Date	Expiry Date
No.	Name	No.
YC83114	DEL	88	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83115	DEL	89	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83116	DEL	90	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83117	DEL	91	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83118	DEL	92	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83119	DEL	93	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83120	DEL	94	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83121	DEL	95	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83122	DEL	96	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83123	DEL	97	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83124	DEL	98	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83125	DEL	99	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83126	DEL	100	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83127	DEL	101	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83128	DEL	102	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83129	DEL	103	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83130	DEL	104	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83131	DEL	105	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83132	DEL	106	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83133	DEL	107	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83134	DEL	108	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83135	DEL	109	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83136	DEL	110	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83137	DEL	111	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03

Table 12: DEL Property claim status, as of June 19, 2019

YC83138	DEL	112	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC83139	DEL	113	Minto Explorations Ltd. - 100%	2008-09-03	2019-09-03
YC65413	DEL	1	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65414	DEL	2	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65415	DEL	3	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65416	DEL	4	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65417	DEL	5	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65418	DEL	6	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65419	DEL	7	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65420	DEL	8	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65421	DEL	9	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65422	DEL	10	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65423	DEL	11	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65424	DEL	12	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65425	DEL	13	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65426	DEL	14	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65427	DEL	15	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65428	DEL	16	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65429	DEL	17	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65430	DEL	18	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65431	DEL	19	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65432	DEL	20	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65433	DEL	21	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65434	DEL	22	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65435	DEL	23	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65436	DEL	24	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65437	DEL	25	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65438	DEL	26	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65439	DEL	27	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65440	DEL	28	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65441	DEL	29	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65442	DEL	30	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65443	DEL	31	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65444	DEL	32	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65445	DEL	33	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65446	DEL	34	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65447	DEL	35	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65448	DEL	36	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65449	DEL	37	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65450	DEL	38	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65451	DEL	39	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65452	DEL	40	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65453	DEL	41	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03

YC65454	DEL	42	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65455	DEL	43	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65456	DEL	44	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65457	DEL	45	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65458	DEL	46	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65459	DEL	47	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65460	DEL	48	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65461	DEL	49	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65462	DEL	50	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65463	DEL	51	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65464	DEL	52	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65465	DEL	53	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65466	DEL	54	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65467	DEL	55	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65468	DEL	56	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65469	DEL	57	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65470	DEL	58	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65471	DEL	59	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65472	DEL	60	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65473	DEL	61	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65474	DEL	62	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65475	DEL	63	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65476	DEL	64	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65477	DEL	65	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65478	DEL	66	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65479	DEL	67	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65480	DEL	68	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65481	DEL	69	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65482	DEL	70	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65483	DEL	71	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65484	DEL	72	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65485	DEL	73	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65486	DEL	74	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65487	DEL	75	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65488	DEL	76	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65489	DEL	77	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65490	DEL	78	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65491	DEL	79	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65492	DEL	80	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65493	DEL	81	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65494	DEL	82	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65495	DEL	83	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65496	DEL	84	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03

YC65497	DEL	85	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65498	DEL	86	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03
YC65499	DEL	87	Minto Explorations Ltd. - 100%	2007-08-06	2019-09-03

The status of the claims was verified through the Whitehorse Mining Recorder (online) on June 19, 2019. No claims have undergone a legal survey. All claims are located on Crown Land, within an overlap area of the traditional territories of the Selkirk First Nation and the Little Salmon – Carmacks First Nation (LSCFN).

4.1.3 BOND Block

The BOND claim block comprises 70 Yukon quartz mining claims covering 1,461.6 hectares (3.610 acres) located along the south shore of the Yukon River and centered at 62^o 46' 26" N Latitude, 137^o 56' 02" W Long (UTM NAD 83: 350280, 6963835, Zone 8). The claims are located about 39 km WNW of the centre of the MINTO/DEF block (Figures 2, 4). All claims are 100% held by Minto Explorations Ltd.

Grant	Claim	Claim	Owner	Recording	Expiry Date
No.	Name	No.		Date
YC66307	BOND	1	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66308	BOND	2	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66309	BOND	3	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66310	BOND	4	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66311	BOND	5	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66312	BOND	6	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66313	BOND	7	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66314	BOND	8	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66315	BOND	9	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66316	BOND	10	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66317	BOND	11	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66318	BOND	12	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66319	BOND	13	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66320	BOND	14	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66321	BOND	15	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66322	BOND	16	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66329	BOND	23	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66330	BOND	24	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66331	BOND	25	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66332	BOND	26	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66321	BOND	15	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66322	BOND	16	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66329	BOND	23	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66330	BOND	24	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66331	BOND	25	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66332	BOND	26	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66333	BOND	27	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18

YC66334	BOND	28	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66335	BOND	29	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66336	BOND	30	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66337	BOND	31	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66338	BOND	32	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66339	BOND	33	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66340	BOND	34	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66341	BOND	35	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66342	BOND	36	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66343	BOND	37	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66344	BOND	38	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66345	BOND	39	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66346	BOND	40	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66347	BOND	41	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66348	BOND	42	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66349	BOND	43	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66350	BOND	44	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66351	BOND	45	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66352	BOND	46	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66353	BOND	47	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66354	BOND	48	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66355	BOND	49	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66356	BOND	50	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66357	BOND	51	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66358	BOND	52	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66359	BOND	53	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66360	BOND	54	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66361	BOND	55	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66362	BOND	56	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66363	BOND	57	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66364	BOND	58	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66365	BOND	59	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66366	BOND	60	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66367	BOND	61	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66368	BOND	62	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66369	BOND	63	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66370	BOND	64	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66371	BOND	65	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66372	BOND	66	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66373	BOND	67	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66374	BOND	68	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66375	BOND	69	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18
YC66376	BOND	70	Minto Explorations Ltd. - 100%	2007-10-18	2019-10-18

The status of the claims was verified through the Whitehorse Mining Recorder (online) on June 19, 2019. No claims have undergone a legal survey. All claims are located on Crown Land, within the traditional territory of the Selkirk First Nation.

4.1.4 MEL Block

The MEL claim block comprises two small non-contiguous claim blocks: the MEL 33-38 block, and the block comprising the MEL 8, 58, 60, 61, 97, 99-102, 104 and 106 claims. The MEL 33-38 claims are centered at 62^o 40' 37" N Latitude, 137^o 18' 48" W Long (UTM NAD 83: 381550, 6951720, Zone 8), about 7 km NNW of the centre of the MINTO/DEF block (Figures 2, 5). The claims cover 125.3 Ha (309.4 acres)

The other MEL block is centered at 62^o 39' 32" N Latitude, 137^o 18' 11" W Longitude (UTM NAD 83: 382010, 6949710, Zone 8), about 5 km NNW of the centre of the MINTO/DEF block (Figure 5). The claims cover 208.8 Ha (515.7 acres) for a total of both blocks of 334.1 Ha (825.2 Ha).

Table 14 lists the claims comprising the MEL block. All claims are 100% held by Minto Explorations Ltd.

Grant No.	Claim Name	Claim No.	Owner	Recording Date	Expiry Date
YC41194	MEL	8	Minto Explorations Ltd. - 100%	2006-02-23	2020-02-23
YC41244	MEL	58	Minto Explorations Ltd. - 100%	2006-02-23	2020-02-23
YC41246	MEL	60	Minto Explorations Ltd. - 100%	2006-02-23	2020-02-23
YC41247	MEL	61	Minto Explorations Ltd. - 100%	2006-02-23	2020-02-23
YC41283	MEL	97	Minto Explorations Ltd. - 100%	2006-02-23	2020-02-23
YC41285	MEL	99	Minto Explorations Ltd. - 100%	2006-02-23	2020-02-23
YC41286	MEL	100	Minto Explorations Ltd. - 100%	2006-02-23	2020-02-23
YC41287	MEL	101	Minto Explorations Ltd. - 100%	2006-02-23	2020-02-23
YC41288	MEL	102	Minto Explorations Ltd. - 100%	2006-02-23	2020-02-23
YC41290	MEL	104	Minto Explorations Ltd. - 100%	2006-02-23	2020-02-23
YC41292	MEL	106	Minto Explorations Ltd. - 100%	2006-02-23	2020-02-23
YC47256	MEL	33	Minto Explorations Ltd. - 100%	2006-07-17	2020-02-23
YC47257	MEL	34	Minto Explorations Ltd. - 100%	2006-07-17	2020-02-23
YC47258	MEL	35	Minto Explorations Ltd. - 100%	2006-07-17	2020-02-23
YC47259	MEL	36	Minto Explorations Ltd. - 100%	2006-07-17	2020-02-23
YC47260	MEL	37	Minto Explorations Ltd. - 100%	2006-07-17	2020-02-23
YC47261	MEL	38	Minto Explorations Ltd. - 100%	2006-07-17	2020-02-23

Table 14: Claim Status, MEL claims

The status of the claims was verified through the Whitehorse Mining Recorder (online) on June 19, 2019. No claims have undergone a legal survey. All claims are located on Crown Land, within the traditional territory of the Selkirk First Nation.

Figure 1: Location Map

Minto Property Competent Person's Report 37 | P a g e

Figure 2: Regional claim map, BOND, MEL, MINTO/DEF and DEL properties

Minto Property Competent Person's Report 38 | P a g e

Figure 3: Claim Map, MINTO/DEF property

Minto Property Competent Person's Report 39 | P a g e

Figure 4: Claim Map, BOND property

Minto Property Competent Person's Report 40 | P a g e

Figure 5: Claim map, MEL property

Minto Property Competent Person's Report 41 | P a g e

Figure 6: Claim map, DEL Property

Minto Property Competent Person's Report 42 | P a g e

4.2 Co-Operation Agreement with the Selkirk First Nation

In September 1997, MintoEx entered into a Co-operation Agreement (CA) with the Selkirk First Nation (SFN) towards development and operations of the Minto Project. The agreement called for co-operation between the two parties, stating that MintoEx pledges that the project would provide meaningful benefits to the SFN and its beneficiaries. In turn, Selkirk would co-operate and assist in development and operation of the project by providing access, goods and services, assisting in training and recruitment of candidates for employment, participating in environmental and social assessment activities, and supporting Minto's application for a Type A Water Licence. Minto agrees to prepare and carry out an effective program of progressive reclamation, temporary closure, final reclamation and long-term monitoring. Minto would also investigate, together with the SFN, the establishment of a trust to establish funding for closure, final reclamation and post-closure monitoring.

The original 1997 Agreement also included the following financial considerations:

• a. \$35,000 within ten days of signing of the Agreement
• b. \$35,000 within ten days of issuance of a Type A Water Licence
• c. \$35,000 within 30 days of the commissioning of a mill
• d. a Net Smelter Return (NSR) royalty of 0.500%

In 1997, Minto estimated the project would generate NSR royalties of approximately CAD\$4 million to the federal government. Minto will pay the aforementioned royalty to the SFN instead, and "Minto shall not be made liable to pay royalties to both Government and Selkirk" (1997 Co-operation Agreement Concerning the Minto Project).

On October 1, 1997 the SFN, and all other Yukon First Nations with completed land claim agreements, acquired ownership of their Category A and B settlement lands, including Settlement Land Parcel R-6A. These land claim agreements provide fee simple title to minerals therein and thereunder, except for those held by holders of pre-existing claims. The Sherwood Mining Corporation (Sherwood) took over ownership of MintoEx in 2005. On December 31, 2008, Capstone Mining Corp. (Capstone) became the owner of all issued and outstanding shares held by Capstone Mining North Ltd. and Sherwood Copper Corporation. Following this acquisition, a new Co-operation Agreement (CA) was completed in October, 2009. This agreement called for issuance by Capstone to the SFN of 1,200,000 common shares of Capstone, with 600,000 shares to be paid out on the effective date of the Agreement and 100,000 shares to be paid out on each of the next six anniversary dates of the effective date of the Agreement.

The 2009 CA also stated a revised policy for provision of NSR royalty payments to the SFN as follows:

a. 0.5% of the NSR for each Quarter Shipment, on or after April 1, 2009, where the Benchmark Quarter Price of the London Metals Exchange (LME) does not exceed US\$1.80/lb

b. 1.0% of the NSR for each Quarter Shipment where the Benchmark Quarter Price is greater than US\$1.80/lb, up to and including US\$2.50/lb.

Minto Property Competent Person's Report 43 | P a g e

c. 1.25% of the NSR for each Quarter Shipment where the Benchmark Quarter Price exceeds US\$2.50/lb, up to and including US\$3.00/lb; and

d. 1.5% of the NSR for each Quarter Shipment where the Benchmark Copper Price exceeds US\$3.00/lb.

The NSR for a Quarter shall be the amount equal to the Product Value of all Quarter Shipments in that Quarter less eligible deductions for all Quarter Shipments during that Quarter.

Should MintoEx identify any "New Reserves" (calculated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), beyond a Threshold Amount of 5 million tonnes grading 1.5% copper, MintoEx may not develop or otherwise exploit these reserves until Minto and the SFN have reached a new or amended agreement. The new agreement will establish a new NSR royalty and other financial participation, or benefits, in favour of the SFN.

MintoEx shall also advance to Selkirk a "QMA Royalty Advance" (where QMA stands for Quartz Mining Act) of 50% of Minto's estimated QMA royalty for that calendar quarter, within 50 days of the end of that calendar quarter.

Other financial considerations of the revised CA are as follows:

For the purpose of finding "Eligible Projects", MintoEx was obligated to contribute a total of \$5,000,000 by June 10, 2010. An "Eligible Project" is any project or program which has been approved by the Selkirk Council where Selkirk is the sponsor, alone or with others. The project must result in tangible, ongoing benefits to the SFN, the community of Pelly Crossing or a Selkirk community at Minto Landing.

As per Business Opportunities, where a Designated Affiliate, designated by the SFN, has indicated that it wishes a "Project Requirement" to be treated as a "Preferred Opportunity", a Selkirk Affiliate or Selkirk business shall have the preferential right and opportunity to negotiate and potentially be awarded a contract to supply that Project Requirement. If the Designated Affiliate does not wish a particular project requirement to be treated as a Preferred Opportunity or is not awarded a contract for this, Minto shall acquire the same required goods or services by means of a Competitive Bid Process, unless it elects to do so on a "Self-Supply Basis" or by means of a "Sole Source Supplier".

Regarding employment opportunities, Minto agrees to provide priority in recruitment, training, retention and advancement of potential employees to available SFN citizens and residents of Pelly Crossing, and to offer similar opportunities to other Northern Tutchone persons. The SFN will identify available candidates for employment. Minto, in consultation with the representative of the SFN, will determine which candidates are suitable for employment, either by existing job qualifications or are deemed suitable for training to meet these qualifications. This is in preference to other potential candidates.

4.3 Acquisition Agreement, June 3, 2019

On June 3, 2019 Pembridge and Capstone signed a Definitive Share Purchase Agreement (SPA) which closed Pembridge's acquisition of 100% of Minto from Capstone. The SPA replaces the original agreement signed between the parties and first announced on February 15, 2018.

The consideration for the acquisition comprises up to US\$20 Million in payments to Capstone payable from future cash flow and realizations from the Minto mine. The payments are based on certain thresholds linked to production levels and future copper prices. The financing agreement allowed Pembridge to commence the re-commissioning process at the Minto mine.

The staged payments are as follows:

• An initial payment of US\$5 million from Minto to Capstone to be provided within 60 days of production reaching a steady state of 60% of mill capacity;
• A second payment of US\$5 million due within 90 days from when production has attained 60% of mill capacity, and the price of copper has averaged US\$3.00/lb (US\$6,615/t) or more for two consecutive quarters, and;
• A final payment of US\$10 million due within 90 days from when the copper price has averaged US\$3.50/lb (US\$7,717/t) for two consecutive quarters (Pembridge News Release, June 3, 2019).

In addition, financing of US\$10 million to fund recommencement has been secured from Copper Holdings LLC (Copper Holdings) and Cedro Holdings I, LLC (Cedro), an entity managed by Lion Point Capital, L.P. (Lion Point). This is pursuant to a financing agreement between Pembridge, Copper Holdings and Lion Point dated June 3, 2019, referred to as the "Shareholder and Financing Agreement". Terms of this agreement include:

• Copper Holdings and Lion Point will provide, in aggregate, US\$10 million to Minto with an 8% coupon rate (the "Debt");
• Copper Holdings and Lion Point will acquire non-voting B shares in Minto which will represent a one-third economic interest for each in Minto once the Debt has been repaid;
• Pembridge has right of first refusal to buy out the respective interests of Copper Holdings' and Lion Point's in Minto;
• Copper Holdings and Lion Point have no voting rights in Pembridge (Pembridge News Release, June 3, 2019).

Also concurrent with signing of the SPA, £400,000 of working capital for Pembridge has been raised at 16 pence per ordinary share at a nominal value of 1 pence each in the capital of the Company (Pembridge, June 3, 2019 News Release).

Pembridge Resources has co-signed, alongside Capstone, on the CAD\$72 million surety bond to cover potential future reclamation liabilities. Pembridge is obligated to post CAD\$10 million in cash collateral over time (CAD\$1 million per quarter, starting with the first payment made 90 days from completion of the acquisition) against the bond and conduct prescribed progressive reclamation activities to reduce the overall future closure cost. Pembridge is required to use all commercially reasonable efforts to replace the bond in due course. In the meantime, while this surety bond is outstanding, Capstone will act as an indemnitor to the surety bond provider and Pembridge will indemnify Capstone for environmental liabilities at the Mine (Capstone News Release, June 3, 2019).

5. Accessibility, Climate, Local Resources, Infrastructure and Physiography

The property is located west of the Yukon River about 240 kilometres north of Whitehorse, Yukon, and about 20 km WNW of Minto Landing, the latter on the east side of the river. The property is accessible by Yukon Highway 2 (the North Klondike Highway) to Minto Landing. In summer months, MintoEx operates a barge across the Yukon River (250m in width) connecting the landing with an all-weather gravel road extending 27 km from the west bank to the mine site. In winter, the crossing is accessed by an ice bridge as ice conditions permit. There is typically a 6 to 8-week period associated with freeze-up and break-up, where access across the river is impossible. West of the river, the access road crosses one major tributary, Big Creek, by means of a single-span bridge with reinforced concrete abutments and deck. During times of suitable river crossing, the access roads and river crossing allow for heavy vehicle traffic. When river access is available, personnel are transported by commercial bus from Whitehorse. During freeze-up and break-up, access is provided by chartered air services from Whitehorse to a 1,300-metre airstrip on the property (Mercer and Sagman, 2012).

Employees of MintoEx work on a two-week rotational basis, whereby 14 days of work are immediately followed by a 14-day break. The schedules of contracting firms vary from this.

Figure 7: Minto barge crossing, Yukon River (Mercer and Sagman, after SRK, 2009)

In 2018, the ferry ceased operations at the end of October, with the barge and tug hauled out of the water at that time. A winter ice road crossing was in operation from January to March, 2019.

The climate is continental sub-arctic, with short warm summers and long, very cold winters. Average January high and low temperatures are -22.2^oC to -32.8^oC, respectively, with a daily mean temperature of -27.5^o . The average July high and low temperatures are 22.6^oC and 8.3^oC, respectively, with a daily mean of 15.5^oC. Average precipitation is 310.3 mm (12.2"), occurring mainly as rain in the summer months (Wikipedia, 2017, after Environment Canada). The field season for surface exploration work extends from late May to late September. Drilling may continue later into the season and can begin in late winter, provided water lines can be kept from freezing. Mining activities continue year-round, although surface operations may be temporarily suspended during periods of extreme cold.

The Minto mine is located in Yukon, Canada. The property lies towards the eastern limit of the Dawson Range which is typified by rolling hills and gentle to moderate topography, with elevations ranging from 640 m (2,100') to 975 m (3,200') ASL. The fairly gentle slopes do not result in accessibility problems, or avalanche risk. South facing slopes are normally stable and suitable for building and infrastructure construction while north-facing slopes are typically permafrost-bearing. Overburden consists mainly of colluvium, comprised of sand originating from weathering of granitic bedrock underlying the area. Overburden depth is typically fairly thin, although may exceed 50 m locally. Bedrock exposure is fairly abundant along ridgelines and hilltops and scarce elsewhere. The Minto mine site occurs somewhat east of the western limit of the Reid glacial advance, occurring from 120 to 60 Ma (Yukon Geological Survey). Vegetation consists of typical northern boreal forest, which has undergone several episodes of burning, the most recent in 2010.

The property is serviced by a spur of the main electrical grid servicing Whitehorse, Haines Junction, Faro and Dawson. The property size and moderate terrain have proven sufficient to accommodate mining facilities, potential mill processing sites, heap leach pads, and waste disposal sites. There is sufficient room for expansion of these facilities. There is sufficient water on the property to supply mining and milling operations, including accommodations and drilling.

Limited fuel and grocery services, and an available work force for some activities, are located at Pelly Crossing (population 291, 2008 estimate), the only community of the Selkirk First Nation. Pelly Crossing is located along the North Klondike Highway about 35 road-km northeast of Minto Landing. Somewhat more comprehensive grocery, fuel, hardware services and accommodations, and a limited work force, are available at the Village of Carmacks (pop. 491, 2016 Census), located at the junction of the North Klondike and Robert Service highways, which is roughly 70 kilometres south of the access road extending from the North Klondike highway to the mine site.

The property is located approximately 250 road-kilometres north of the City of Whitehorse, a full-service community of about 29,000 including surrounding communities. Whitehorse has excellent accommodations, groceries, hardware, camp supplies, bulk fuel and expediting services. The Mining Recorder's Office for the Whitehorse Mining District is located in Whitehorse, as are territorial and some federal government services. Whitehorse, the capital city of Yukon, has a substantial skilled labour force, including professional geoscientists and tradespeople. The mining operation at Minto includes staff from outside Yukon.

6. History

6.1 Exploration History

The following section pertaining to history up to 2011 is taken from the Yukon Minfile, by the Yukon Geological Survey.

The present Minto property was first staked in 1971 as the Minto 1-16 claims, by the Dawson Syndicate (Silver Standard Mines Ltd and Asarco Inc.), covering a target identified from a regional stream sediment program. Later in 1971, the Dawson Syndicate conducted soil sampling, Induced Polarization (IP) surveying, hand pitting, and a 1,158-metre core drilling program in 7 holes. In 1972, the Syndicate followed up with detailed geological mapping, airstrip construction, extensive bulldozer trenching and an 1,871 metre core drill program in 12 holes.

In June of 1973, United Keno Hill Explorations discovered mineralization on the adjoining DEF claims. This led to the formation of a joint venture with the holders of the DEF claims to conduct a 7,887-metre core drilling program in 62 holes targeting the "North Zone" along the northern Minto property boundary, as well as the staking of four fractional claims. In early 1974, a winter road was constructed to the airstrip, and another core drilling program of 11,228 metres in 58 holes was completed.

In 1977, United Keno Hill Mines (UKHM) released results of a joint feasibility study, reporting reserves at the Main Zone of 6,550,778 tonnes grading 1.86% copper (Cu), 0.51 gold (Au) g/t, and 6.86 silver (Ag) g/t, of which 41% of the deposit was located on the DEF claims. This is a historical reserve estimate and does not distinguish between proven and probable reserves or other resource categories, and is not compliant with modern resource and reserve standards in National Instrument 43-101. As such, the reserve estimate has not been verified and cannot be relied upon.

In 1984, Silver Standard changed its name to Consolidated Silver Standard Mines Ltd. It transferred its interest to a subsidiary, Western Copper Holdings Ltd, which in 1989 transferred its interest in most of the claim block to Teck Corp (Teck). Teck conducted a magnetometer/VLF survey in 1991.

In 1993, Teck and Asarco sold their interests in the Minto claims to Minto Explorations Inc. (MintoEx), a newly formed company incorporated specifically to acquire the MINTO and DEF claims. The two blocks were consolidated into the Minto Property. Later that year, MintoEx conducted an airborne radiometric survey and a 984-metre core drilling program comprising 8 delineation holes for infilling and metallurgical studies.

In 1994, MintoEx conducted another core drilling program comprising 2,084 metres in 16 holes and tested exploration targets outside of existing deposits. They also performed engineering and geotechnical studies including standard acid-base accounting, tests on tailings solids and effluent, and overburden and waste characterization. MintoEx also released a "geological reserve" estimate of 8,818,000 tonnes grading 1.72% Cu, 0.48 Au g/t and 7.5 Ag g/t, at a cut-off grade of 0.5% copper. This is a historical reserve estimate, is not compliant with modern resource and reserve standards in National Instrument 43-101, has not been independently verified by this author, and should not be relied upon. MintoEx did not distinguish the portion located within the DEF claims.

In 1995, MintoEx completed a 425-metre core drilling program in 5 holes targeting four aeromagnetic anomalies identified from the 1993 airborne survey. MintoEx continued to focus on engineering, geotechnical and environmental studies to support permit applications. They also drilled a single "condemnation hole" comprising 147 metres, north of the proposed mill location.

In January of 1996, MintoEx completed a feasibility study and arranged project funding in May. This was followed by an announcement in July that it had entered into a joint venture with Asarco to take the project to production. Asarco gained a 70% interest by providing funding up to US\$25 million, with MintoEx retaining the other 30% and operatorship.

In 1996, MintoEx upgraded 17 km of the access road and installed a 40-metre single span bridge across Big Creek. The remaining 12.8 km of access road was upgraded in 1997, and two grinding mills were moved to site. MintoEx also completed geotechnical programs, conducted some core drilling along the deposit margins, and continued environmental reviews and working through mine permitting hearings. In April 1997, a final screening report on the Environmental Assessment of the proposed project was released by DIAND, followed in 1998 by issuance of a Type A water use licence.

Minto Property Competent Person's Report 48 | P a g e

In October 2004, MintoEx completed an agreement with Asarco and Falconbridge to engage Roman Friedrich and Company Ltd. to solicit bids for the sale of all shares of Minto Exploration Ltd. Falconbridge agreed not to exercise its DEF claim repurchase right, provided that MintoEx purchases the right for a cash amount equivalent to 42.5% of the total of any takeover consideration.

In March 2005, the Sherwood Mining Corporation (Sherwood) initiated a takeover offer for Minto Explorations Ltd. The offer closed in June of 2005, resulting in Sherwood acquiring ownership of the Minto Project.

In July 2005, Sherwood released a National Instrument (NI) 43-101 compliant resource estimate for the Main Zone. The resource estimate comprised 8,340,000 tonnes grading 1.83% Cu, 0.55 Au g/t and 7.95 Ag g/t, in the Measured and Indicated categories, and an additional Inferred Resource of 700 000 tonnes grading 1.41% Cu, 0.45 Au g/t and 6.0 Ag g/t. This estimate has not been independently verified by this author. Later in 2005, Sherwood conducted a 6,772-metre core drilling program focusing on confirmation and upgrading of the resource base. In September, Sherwood changed its name to the Sherwood Copper Corporation (Sherwood Copper) and obtained a 10-year extension on its Type A water licence.

In June of 2006, Sherwood Copper received a 10-year extension of its quartz mining licence, valid until June 30, 2016. In 2006, they completed 24,252 metres of core drilling in 119 holes. This work program included infill drilling at the Main Zone and exploratory drilling to the north and west of it, and on "Area 2", 300-metres southeast of the Main Zone. Sherwood Copper also began mill construction and prestripping of the Main Zone.

In 2007, a core drilling program comprising 23,292 metres, in 91 exploration and 10 geotechnical/ metallurgical holes was completed. This resulted in discovery of significant copper-gold mineralization at Area 118, Copper Keel, Airstrip and Ridgetop zones, as well as in areas between the Main and Area 2 zones. In February 2007, Sherwood Copper released a resource estimate for the Area 2 deposit, comprising a Measured and Indicated resource base of 7.6 million tonnes grading 1.26% Cu and 0.48 Au g/t at a 0.5% Cu cut-off.

Also in 2007, Sherwood Copper completed the mill and pre-stripping of the Main Zone. On May 1, they produced their first copper-gold concentrates and expanded the mill to handle 2,400 tonnes per day (tpd). On July 16, Sherwood Copper delivered its first concentrate shipment to the Skagway, Alaska port, and announced it had reached commercial production on October 1.

In 2008, Sherwood Copper conducted a core drilling program of 23,840 metres in 118 holes, focusing on expanding and upgrading the resource base at the Area 2, Area 118 and Ridgetop deposits. This drilling allowed for the preparation of a pre-feasibility study for expanded mining and milling rates. The mill expansion was completed, meeting or exceeding its design capacity of 2,400 tpd.

In September 2008, Sherwood Copper entered into an agreement with the Capstone Mining Corporation to create a mid-tier copper producer retaining the name of Capstone Mining Corp (Capstone). The merger was completed on November 24, 2008. The following day, Capstone and Yukon Energy announced the mine was officially connected to Yukon Energy's electrical grid.

Exploration in 2009 consisted of Titan-24 DC Induced Polarization (IP) and Magnetotelluric (Mt) geophysical surveys across the property. Minto Exploration completed a core drilling program, comprising 31,479 metres in 201 holes, focusing on infilling of the Ridgetop and Area 2 deposits, and testing of other

Minto Property Competent Person's Report 49 | P a g e

targets. This led to the discovery of the Minto North and Minto East zones, and provided upgraded resource and reserve figures for the Main, Ridgetop, Area 2/Area 118 deposits (Yukon Minfile, 2014).

The following section is based on a January, 2012 Technical report titled "Minto Phase VI, Preliminary Feasibility Study Technical Report", by B. Mercer and J. Sagman.

In 2010, the Minto East Deposit was defined, the copper-gold resources for the Area 2/ Area 118 were expanded, and drilling led to discovery of the Wildfire and Inferno prospects. A preliminary resource estimate for the Minto East deposit was provided in August, and was updated later in 2010. Also, the Titan 24 survey was expanded to cover 85% of the Minto property (Mercer and Sagman, 2012).

In 2011, the Copper Keel and Wildfire resource sub-domains were defined and incorporated into the larger Minto South Deposit (MSD), and upgraded resource calculations were provided in May and again in December of that year. Core drilling led to discovery of the Fireweed Prospect down-dip and to the north of the MSD.

Table 15 below lists historical resource and reserve estimates on the Minto Project inclusive of 1994.

Year	Source*	Cut-off	Short	Cu	Au	Ag	Comments
		(% Cu)	Tons	(%)	(oz./ton)	(oz./ton)
1976	R. T. Heard,	Unknown	8,219,370	2.04
	UKHM
1976	L.A.	Unknown	8,210,219	2.03
	Wigglesworth,
	Falconbridge
1975	R.J. Previdi,	0.6	8,441,941	1.74
	ASARCO
1976	R.J. Previdi,	Unknown	7,220,900	1.86
	ASARCO
1980	D.M. Fletcher,	2.00	2,968,600	3.24	0.027	0.411
	ASARCO
1989	J. Proc & H.L	0.8	6,368,000	2.11	0.016	0.33	Open Pit and Underground
	Klingmann,						recovery at 75% and 5%
	Minto						dilution
	Explorations
1990	SRK/Falconbridge	Unknown	7,592,318	1.88	0.016		Includes Lower Zone
1992	J. Proc & H.L	Unknown	6,071,000	2.21	0.018	0.28	Open Pit and Underground,
	Klingmann,						= 1,600,000 ton @ 3.73%
	Minto						Cu, 0.038 Au oz./t, 0.49 Ag
	Explorations						oz./t
1994	G. Giroux	0.5	8,780,000	1.76	0.015	0.223	Pre-43-101 "proven and
	Montgomery						probable"
	Consultants

Table 15: Historical resources and reserves, Minto Project (after Mercer and Sagman, 2012).

NB. These are historical resource and reserve estimates, do not distinguish between proven and probable reserves or other resource categories, are not compliant with modern resource and reserve standards in National Instrument 43-101, have not been independently verified by this author, and should not be relied on.

Mineral reserve estimates as of 2012 are listed in Table 16 below (Mercer and Sagman, 2012):

Deposit	Mineral	Tonnes	Diluted grade			Contained metal
	Reserve Class	(Kt)	Cu (%) Au (g/t) Ag (g/t)		Cu (Mlbs)	Au (koz)	Ag (koz)
Open Pit Reserves
Minto North	Proven	1,596	2.26	1.21	8.12	79	62	417
	Probable	9	1.68	0.58	6.92	0	0	2
	Sub-total	1,604	2.26	1.21	8.12	80	62	419
Ridgetop	Proven	1,073	1.02	0.25	2.12	24	9	73
	Probable	1,020	1.00	0.28	2.97	22	9	97
	Sub-total	2,093	1.01	0.26	2.54	46	18	171
MSD-118	Proven	-	-	-	-	-	-	-
	Probable	483	1.28	0.10	1.81	14	2	28
	Sub-total	483	1.28	0.10	1.81	14	2	28
MSD-Area 2	Proven	3,306	1.44	0.54	4.99	105	57	530
	Probable	1,694	1.00	0.27	3.20	37	15	174
	Sub-total	5,000	1.29	0.45	4.38	142	72	704
Open Pit	Proven	5,974	1.58	0.67	5.31	208	128	1,020
Subtotal	Probable	3,204	1.04	0.25	2.92	74	25	301
	Sub-total	9,179	1.39	0.52	4.48	282	153	1,321
Underground Reserves
Minto East	Proven	-	-	-	-	-	-	-
	Probable	709	2.28	1.04	6.15	36	24	140
	Sub-total	709	2.28	1.04	6.15	36	24	140
MSD – Area	Proven	-	-	-	-	-	-	-
2/ 118	Probable	1,731	1.76	0.74	7.19	67	41	400
	Sub-total	1,731	1.76	0.74	7.19	67	41	400
MSD –	Proven	106	1.74	0.61	6.3	4	2	22
Copper Keel	Probable	1,455	1.81	0.65	6.7	58	30	313
	Sub-total	1,561	1.81	0.64	6.67	62	32	335
MSD	Proven	301	1.8	0.77	6.06	12	7	59
Wildfire	Probable	59	1.59	1.00	7.85	2	2	15
	Sub-total	360	1.76	0.80	6.35	14	9	73
	Proven	407	1.78	0.73	6.12	16	9	81

Table 16: Mineral Reserve Estimates as of January, 2012 (Mercer and Sagman, 2012)

Minto Property Competent Person's Report 51 | P a g e

Underground	Probable	3,954	1.87	0.76	6.83	163	97	868
Subtotal	Sub-total	4,361	1.86	0.76	6.77	179	106	948
Stockpiles	Proven	852	1.23	0.41	3.71	23	11	102
	Probable	-	-	-	-	-	-	-
	Sub-total	852	1.23	0.41	3.71	23	11	102
Total
Total	Proven	7,233	1.55	0.64	5.17	247	148	1,203
Reserves	Probable	7,158	1.50	0.53	5.08	237	122	1,169
	Sub-total	14,392	1.53	0.58	5.12	484	270	2,371

Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

6.1.1 History of BOND, MEL and DEL blocks

The BOND, MEL and DEL claims were staked by Minto Explorations Ltd. to cover ground prospective for "Minto-style" copper-gold mineralization. Specifically, the DEL 1-87 claims were staked in August, 2007, and the DEL 88-113 claims were staked in September, 2008. The MEL 8, 58, 60, 61, 97, 99-102, 104 and 106 claims were staked in February, 2006, and the MEL 33-38 claims were staked in July, 2007. All BOND claims were staked in October, 2007.

The BOND property was staked in 1972 as the TUF 1-40 claims by United Keno Explorations, which identified two occurrences of chalcopyrite and minor galena within siliceous gneiss spaced about 30 metres apart. Three hand trenches exposed chalcopyrite, bornite, azurite, malachite and galena, with the best result being 0.93% Cu in a grab sample.

The MEL property area underwent multiple phases of exploration resulting from the discovery of significant copper mineralization at the MINTO/DEF property to the south.

The DEL property was first staked as the DEL 1-84 claims in March 1974 by United Keno Hill Mines Ltd. (UKHM) to cover a copper-silver occurrence revealed during construction of an access road from Carmacks to the DEF claim block. The considerable size of the block was selected due to proximity to the Williams Creek (now Carmacks Copper) deposit and mineral potential of the area. In 1974 geological mapping and soil sampling revealed minor chalcopyrite and malachite occurrences along the access road, and within a dioritic intrusion or proximal mafic and siliceous dykes. No further work was recommended, and the claims were allowed to lapse by UKHM (Schulze, 2008). The claims were re-staked as the DEL 1-113 block by MintoEx in 2007.

In June of 2008 Sherwood Copper signed a Memoranda of Understanding with Northern Tiger Resources Inc whereby Northern Tiger would obtain a 100% interest in the MEL, BOND, DEL and two other claim blocks and an extensive historical exploration database from Sherwood Copper. Sherwood Copper and Northern Tiger also entered into a Regional Exploration Alliance Agreement whereby the companies would plan and execute exploration projects on the property and prepare a long-term strategy for the area. Sherwood Copper retained back-in rights to acquire a 65% interest in any of Northern Tiger's projects located within a 50 km radius of Sherwood Copper's Minto Mine facilities. Short exploration programs, consisting of soil sampling along claim lines, stream sediment sampling, first-pass geological mapping and rock sampling were conducted across all properties in July to early August of 2008. Northern Tiger also flew low-level combined magnetic-radiometric airborne geophysical survey across all three properties in 2009. Following this, the majority of the MEL claims were allowed to lapse.

No records of subsequent exploration are available. The three claim blocks were returned to Minto Explorations Ltd. after 2009.

6.2 Minto Production History

Sherwood Copper produced its first copper-gold concentrates on May 1, 2007 and expanded the mill to handle up to 2,400 tpd of copper-gold ore. The first concentrate was delivered to port facilities in Skagway, Alaska on July 16, 2007, and Sherwood Copper officially announced it had reached commercial production on Oct 1, 2007, after a 4-month commissioning period.

Production and recovery rates increased through 2008 and 2009, as the mill expansion plans were implemented and mill facility optimization plans carried out. In 2010, operations were cut back for an extended period due to constraints in the tailings filtration facility. Positive processing results were due largely through the amenability of the ore to flotation at a coarse primary grind size (Mercer and Sagman).

Table 17 below lists the operating results from 2007 to 2011.

Parameter	Unit	2007	2008	2009	2010	2011
Waste mining	Mt	9.26	8.37	11.13	7.97	11.7
Ore mining	Mt	0.75	0.83	1.15	1.49	0.73
Total material mined	Mt	10.01	9.53	12.28	9.47	12.43
Tonnes processed	Tonnes	238,446	809,426	1,031,190	915,051	1,258,308
Mill head copper grade	%	2.16	2.91	2.59	2.22	1.61
Mill head gold grade	g/t	n/a	1.28	1.14	0.93	0.68
Mill head silver grade	g/t	7.7	11.8	11.0	8.7	5.93
Copper recovery	%	85.1	91.9	92.6	90.3	87.9
Gold recovery	%	n/a	77.7	75.3	81.1	75.8
Silver recovery	%	77.5	84.6	81.9	80.6	78.6
Concentrate produced	Dmt	12,630	53,148	59,863	47,065	49,159
Concentrate grade - Cu	%	34.7	40.7	41.4	39.0	36.32
Concentrate grade - Au	g/t	n/a	15.9	14.9	14.7	12.00
Concentrate grade - Ag	g/t	113	152	155.8	137	124.08
Copper in concentrate	M lb	9.66	47.69	54.63	40.50	37.12
Gold in concentrate	Oz	n/a	27,202	18,828	22,284	18,439
Silver in concentrate	Oz	45,885	217,489	299,767	206,838	196,098

Table 17: Operating Results 2007 - 2011 (Mercer and Sagman, January, 2012)

The following section is based on operating statistics and operational updates in Capstone's annual Management Discussion and Analysis (MD&A) documents filed on the SEDAR website.

In 2012, mining and stripping of the Area 2 pit was ongoing, with the first ore release occurring in the second quarter. Ore release continued as planned until Q4, when pit wall stability issues were encountered, resulting in reduction of higher-grade material from the pit wall, and replacement of this with lower grade stockpiled material. This resulted in a slight decrease in production.

In October, an amendment to Minto's Water Use Licence (WUL) was approved, and MintoEx began placing Area 2 tailings in the mined-out Main Pit. Also, development of the underground ramp to access underground workings at Area 2 commenced in Q3.

Two mineral resource estimates, on the Fireweed and Inferno discoveries respectively, were completed in 2012. The "Fireweed Extension" is an extension of the Minto East deposit, and the "Inferno North Extension" is located north of the Main Zone pit. Mineral resource estimates utilizing a 1.2% copper cutoff grade (Cu COG) for both are listed in Tables 18 and 19 below. Combined, they provide an additional 101 million pounds of copper in the Measured and Indicated categories, and a further 86 million pounds in the Inferred category.

Table 18: Mineral Resource estimate for the Fireweed Extension Deposit (2012 MD&A report, Mar 13, 2013)

Category	Tonnes (000's)*	Copper (%)	Gold (g/t)	Silver (g/t)	Contained Cu (000's lbs) *	Contained Au (000's oz) *	Contained Ag (000's oz.) *
Indicated (l)	2,152	2.14	1.0	8.9	101,528	69.7	618.7
Inferred	1,506	1.64	0.66	5.4	54,536	31.9	262.5

* Rounded to nearest thousand; totals may not sum exactly, due to rounding

Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

Table 19: Mineral resource estimate for the Inferno North Extension deposit (2012 MD&A report, Mar 13, 2013)

Category	Tonnes	Copper	Gold	Silver	Contained Cu	Contained Au	Contained Ag
	(000's)*	(%)	(g/t)	(g/t)	(000's lbs) *	(000's oz.) *	(000's oz.) *
Inferred	688	2.06	0.82	6.5	31,277	18.1	143.9

* Rounded to nearest thousand; totals may not sum exactly, due to rounding

Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

Mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for mining ability, selectivity, mining loss and dilution. These mineral resource estimates include Inferred mineral resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is also no certainty that these Inferred mineral resources will be converted to Measured and Indicated categories through further drilling, or into mineral reserves, once economic considerations are applied (MD&A report, Capstone Mining Corp, Mar 13, 2013).

Exploration in 2012 consisted of core drilling and related activities, with total expenditures of CAD\$5.7 million. Capital expenditures stood at \$20.3 million, with activities focusing on surface infrastructure and underground development, purchasing of mining equipment and supplies for underground operations, Phase V and VI environmental and socio-economic assessment and permitting, and a water treatment plant module and other environmental and geotechnical services.

In 2013, pit instability issues along the highwall of the Area 2 pit delayed release of high-grade ore until Q4, which accounted for 40% of the 2013 production. However, overall throughput and metal recoveries were strong. Development of the underground access ramp continued until Q4 when it was suspended following the decision to defer development and production of the "Area 118 underground" for one year. Production increased somewhat in 2013, offsetting a slight reduction of grade. Capital spending increased substantially to CAD\$50.1 million, including \$33.0 million for underground development, \$7.1 million for camp improvement, \$4.0 million for underground mobile equipment and \$2.5 million for further permitting initiatives.

In July, 2013 Capstone submitted to YESAB an Environmental and Socio-Economic Assessment report for an operating plan for all remaining mineral reserves as identified in the 2012 Phase V/VI Pre-Feasibility Study (PFS). In December the proposal was deemed adequate and was advanced to the evaluation stage. The process for renewal of the Class A Yukon Water Licence commenced following approval by YESAB.

In 2014, Capstone completed mining of the Area 2 pit, then moved on to underground mining of the M-Zone, accessed from the pit bottom, and the Area 118 open pit. Mining of both of these was completed, and underground operation of the Area 118 deposit commenced to compensate for delays in the permitting process for the Minto North pit. Copper production increased somewhat, partly due to increased grades, although these decreased later in the year as Area 2 became mined out. The mine plan changed towards a blend of higher grade underground ore and lower grade stockpiled ore. Capital spending in 2014 stood at CAD\$14.8 million, mainly on underground development, camp improvement, permitting and a new blasthole drill.

In 2015, operations focused on underground mining in Area 118, where realized ore grades exceeded budget. In early February, the Yukon Water Board requested additional information, resulting in processing ore from the Area 118 underground and stockpiles, while awaiting issuance of the Water Use Licence (WUL) to facilitate open pit mining of the Minto North deposit. The WUL, granted in early August, completed the final phase of permitting for all mineral reserves identified in the 2012 Phase VI Pre-Feasibility Study. Following this, stripping commenced on the Minto North deposit, and ore began to be extracted in December.

Copper production in 2015 decreased due to lower throughput and lower recoveries resulting from an increase in partially oxidized ore in the mill feed. Cash costs increased to CAD\$2.54 per pound of payable copper, while copper prices continued on a downward trend. Capital spending, excluding stripping, totaled CAD\$7.6 million, the majority on underground development and a ventilation system for Area 118. Stripping costs for Minto North stood at CAD\$15.6 million.

In 2016, mill throughput, head grades and recoveries, mainly from the Minto North deposit, all exceeded expectations, roughly doubling production of copper, gold and silver from 2015. In Q4 the mill also processed stockpiled ore. The increase in recoveries resulted from a greater proportion of sulphide ore, rather than oxide ore, in the mill feed.

Capital spending on stripping totaled CAD\$6.6 million, only 60% of forecast expenditures. This was partly due to utilization of some stripping waste for progressive reclamation, resulting in an offsetting of \$3.5 million in stripping costs as reclamation activities. Capital spending excluding stripping stood at \$0.6 million.

As of the end of Q4, 2016, Capstone reported it had an approximate 3-year mine life remaining post-2017 at the Minto Mine. Continued production would depend largely on the copper price outlook in the second half of 2017.

By early 2017 Capstone began planning to curtail actual mining operations, focusing on processing of stockpiled ore, with plans to place the mine on care and maintenance in November, 2017. Improvement in copper prices caused Capstone to decide to continue operations until at least mid-2021, and also in a decision by the Company to continue extraction through incorporation of several previously impaired ore bodies into the mine plan. Significant development and stripping costs in H2 of 2017 were incurred, to facilitate mine life extension and to benefit future periods.

To facilitate the mine life extension, Capstone issued 6.8 million shares valued at \$7.5 million to Wheaton Precious Metals Corp on October 13, 2017, in exchange for a modification in the precious metal purchase agreement whereby Capstone would receive increased gold revenues if copper prices fall below USD\$2.50/lb. In addition to the base price of US\$300 per oz of payable gold (subject to the annual inflation clause explained in Section 6.2.1), there is an additional "Gold Top Up Payment" based on the following formula:

\$900 x (Ceiling Price - Actual Price) (Ceiling Price - Floor Price)

whereby the Ceiling Price is set at US\$2.50/lb copper, and the Floor Price is set at US\$1.75/lb copper. This represents a simple sliding scale of payments ranging from a maximum of \$1,200 at US\$1.75/lb copper, to a minimum of US\$318/oz at US\$2.50/oz copper (both numbers subject to the annual inflation). The Gold Top Up Payment is capped at the greater of (i) the market price per ounce of gold less US\$300 plus the annual inflation, and (ii) nil.

Production by underground mining was disrupted due to changes in sequencing of mining and ore processing. Decreased underground production resulted in higher utilization of POX and lower grade stockpiled ore, impacting overall grade and recovery. Underground mining was also disrupted by upgrading of the emergency response capacity in the areas of current stoping while development of Area 2 continued. In Q3, the mill feed was supplemented with POX from the Area 2, Stage 3 open pit, as well as from stockpiles, resulting in lower head grades and recoveries.

Capital spending in 2017 totaled CAD\$2.7 million, including CAD\$2.4 million in Q4, mainly for underground infrastructure development to support the extended mine life. This includes the installation of a second egress at Minto East Underground.

Table 20 lists annual operating results from 2012 to 2018.

Table 20: Operating statistics, 2012 - 2018 (based on Capstone MD&A reports)

Parameter	Unit	2012	2013	2014	2015	2016	2017	2018
Waste mining	(000s t)	9,805	9,696	2,858	5,044	5,585	7,890	1,315
(Open pit)
Ore mining	(000s t)	943	2,013	517	383	1,506	941	547
(Open pit)
Total material	(000s t)	10,748	11,709	3,376	5,428	7,091	8,831	1,862
mined (OP)

Ore	(000s t)	-	-	301	457	246	328	284
(Underground)
Tonnes	(000s t)	1,341	1,402	1,439	1,388	1,491	1,439	907
processed
Mill head	%	1.34	1.31	1.37	1.38	2.21	1.37	1.31
copper grade
Mill head gold	g/t	0.58	0.52	0.56	0.49	1.23	0.79	0.37
grade
Mill head	g/t	5.1	4.6	4.7	4.7	8.0	4.8	4.33
silver grade
Copper	%	90.5	92.3	93.2	86.2	95.2	82.6	86.5
recovery
Gold recovery	%	74.0	78.4	77.5	73.6	67.0	59.3	61.5
Silver recovery	%	84.1	78.5	78.5	76.9	87.8	77.6	76.5
Concentrate	Dmt	43,423	46,303	50,246	45,703	70,348	37,372	27,383
produced
Concentrate	%	37.5	36.5	36.6	36.1	44.7	43.7	38.0
grade - Cu
Production:	(000's lbs)	35,928	37,238	40,506	36,400	69,157	35,900	22,968
Copper
(contained
metal)
Gold	Oz	18,599	18,361	19,909	16,114	39,506	21,672	6,636
(contained
metal)
Silver	(000's Oz)	184	162	171	161	337	171	97
(contained
metal)

All-in sustaining costs (AISC) for 2017 at the mine were CAD\$2.75/lb of payable copper.

The CAPEX expenditures to October 31, 2018 were CAD\$9.5 million, with an AISC of US\$3.13/lb.

From April to June 2018, infill core drilling was conducted at the Copper Keel West lens and the Copper Keel Main Lens. At Copper Keel West, ten holes for a total of 1,725m were drilled, and at Copper Keel Main, three holes for 917m were drilled. The Copper Keel Main holes were drilled to obtain geomechanical information to be utilized for mine design. Although additional holes were planned for the Copper Keel West and North lenses, these programs were not approved prior to the October 11th decision to place Minto under care and maintenance (McIlveen et al, 2018).

In late 2017, infill core drilling was conducted at the Minto East and Ridgetop deposits, in order to close any gaps to a 40-metre spacing to satisfy requirements to upgrade resources to the Indicated category and to confirm the geological interpretation in advance of mine planning activities (McIlveen et al, after BD Resource Consulting, 2015). A total of 4 holes for 1,526m were drilled at Minto East, and 35 holes for 3.361m were drilled at the Ridgetop deposit.

In early 2018, SRK Canada undertook a mineral resource update for the north part of the Ridgetop deposit. The resource model was utilized for planning of the Ridgetop North pit, but excluded results from the Ridgetop South zone, as results were still pending at the time. Although a preliminary pit for Ridgetop North was investigated, the deposit economics did not justify proceeding with the project. The resource estimate for Ridgetop was partially updated in 2018, but was found to contain no mineral reserves at current copper prices (McIlveen et al, 2018).

In 2018, mining was completed on the Area 2 Stage 3 open pit and the Area 2 underground lower "P" lens. Conclusion of mining at the Area 2 open pit represents the termination of open pit mining at Minto (McIlveen et al, 2018).

Copper production during the period Q1 through Q3, 2018, at 3,179 tpd, was lower than that for 2017 YTD, at 3,991 tpd, mainly due to lower throughput and lower grades from processing of low grade stockpiles averaging 1.25% versus 1.47% Cu. Site operating costs for the nine-month period averaged US\$68.02. The copper C1 cash cost for Q1 through Q3 stands at US\$3.17/lb of payable copper produced, although this represents a decrease from US\$3.46 for Q1 to US\$2.66 for Q3. All-in sustaining costs stand at US\$3.49/lb of payable copper produced, again representing a steady decrease from US\$3.77/lb for Q1 to US\$3.15/lb for Q3.

On October 11, 2018, Capstone made the decision to immediately place the Minto mine on care and maintenance, following the decision by Capstone and Pembridge to terminate the agreement for the sale of the Minto Mine. Pembridge was unable to complete the necessary financing to complete the transaction, due to unfavourable equity market conditions. All mining operations ceased immediately, and mineral processing activities ceased on October 19. Care and maintenance expenditures were estimated at US\$5 million for each of 2018 and 2019, and US\$4 million per annum thereafter. Approximately 200 employees and contractors were affected, although a core team of no less than 8 employees were retained during the care and maintenance phase to oversee the site and ensure environmental monitoring and legal requirements were met.

Table 21 below lists the operating statistics for Q1 through Q3, 2018. Some underground production occurred from Oct 1 through 11, 2018, and processing of stockpiles ceased on October 19, 2018. At the end of October, 2018, a total of 192 kt of stockpiled material, containing 3 kt of Cu metal, from the Stage 3 pit remained unprocessed. To mitigate this mill feed shortfall, about 29 kt of stockpiled high-grade waste ("HGW") averaging 0.34% Cu, and 13 kt of low-grade POx, averaging 0.78% Cu from the "Top-of-the-World ("TOTW") stockpile, were sent as mill feed.

Parameter	Unit	2018
Waste mining (Open pit)	(000s t)	1,315
Ore mining (Open pit)	(000s t)	547
Total material mined (OP)	(000s t)	1,862
Ore (Underground)	(000s t)	284
Tonnes processed	(000s t)	907
Mill head copper grade	%	1.31
Mill head gold grade	g/t	0.37
Mill head silver grade	g/t	4.33
Copper recovery	%	86.5
Gold recovery	%	61.5
Silver recovery	%	76.5
Concentrate produced	Dmt	27,383
Concentrate grade - Cu	%	38.0
Production: Copper	(000's lbs)	22,968
(contained metal)
Gold (contained metal)	Oz	6,636
Silver (contained metal)	(000s Oz)	97

Table 21: Operating statistics, Q1 - Q3, 2018 (based on 2018 Capstone MD&A reports)

Upon resumption of operations, all-in sustaining costs are estimated at US\$2.78/lb for 2019, decreasing to US\$2.33/lb at the end of the mine life (McIlveen et al, 2018).

Figure 8: Minto Mine deposits as of January, 2012 (Mercer and Sagman, Capstone Mining Corp. 2012)

Minto Property Competent Person's Report 60 | P a g e

6.2.1 Precious Metals Purchase Agreement, Silverstone Resources Corporation

On November 20, 2008, Silverstone Resources Corp (Silverstone), Sherwood Copper Corporation (Sherwood Copper), Minto Explorations Ltd. (Minto) and Kutcho Copper Corp. (Kutcho) entered into an Agreement whereby Sherwood agreed to cause Minto to sell to Silverstone all payable gold and silver mined, extracted, produced or otherwise recovered from the Minto Mine. The Agreement became operative on December 1, 2008. If production of gold exceeded 50,000 oz. during either of the first two consecutive 12-month periods commencing December 1, 2008, and exceeds 30,000 oz. for any successive 12-month period commencing December 1, 2010 (the excess amount), Silverstone is entitled to purchase only 50% of the excess amount.

In consideration of this, Silverstone purchased the stated amount for an initial cash payment of US\$37.5 million, and future purchases of the lesser of US\$3.90 per ounce of payable silver and the prevailing market price, and the lesser of US\$300.00 per ounce of payable gold and the prevailing market price. Both gold and silver purchase prices are subject to a 1% annual upward inflation adjustment after three years and annually thereafter. As of November 2008, the amounts of contained precious metals within proven and probable reserves stood at 216,900 oz. gold and 2,267,000 oz. silver (Technical Report, MintoEx, June, 2008). The term of the Agreement was for the shorter of 99 years or the life of mine. Silverstone was purchased by the Silver Wheaton Corporation by the end of 2009. As of September, 2017, the Agreement became held between Capstone and Wheaton Precious Metals Corporation, the successor to Silver Wheaton.

Total amounts of gold and silver delivered to Silver Wheaton from 2009 through Q3, 2017 stand at 209,496 oz. gold and 1,470,000 oz. silver. Full-year 2017 amounts delivered to Wheaton Precious Metals are 24,638 oz gold and 160,994 oz. silver. In November, 2012, the threshold prices for gold and silver were raised to \$306/oz. and \$3.98/oz. respectively due to the upward inflation adjustment. In 2018 the threshold prices for gold and silver are US\$324 and US\$4.22 respectively. In 2019 the threshold prices for gold and silver will be US\$327 and US\$4.26 respectively.

On October 13, 2017, Capstone and Wheaton Precious Metals Corporation (WPM) agreed to settle a dispute related to the difference between prevailing market rates for gold and silver, and actual payable rates for gold and silver under Offtake Agreements. To resolve this, Capstone agreed to issue WPM 635,289 common shares of Capstone, referred to as the "Settlement Shares", having an agreed value of CAD\$872,760, converted to US\$700,000. In addition, Capstone and Wheaton entered into the top-up agreement as explained in Section 6.2.

7. Geological Setting and Mineralization

7.1 Regional Geology

Sections 7.1 through 7.4 are based partly on a 2018 MSc thesis titled "Genesis and Post-ore Modification of the Migmatized Carmacks Copper Cu-Au-Ag Porphyry Deposit, Yukon, Canada" by N. Kovacs.

The Minto property is located within the northwest-trending Minto Copper belt, central Yukon, in the northernmost apical junction of the Stikine and Yukon Tanana terranes. The Minto Copper belt hosts the Minto Cu-Au mine, the Carmacks Copper deposit, and several other Cu-Au occurrences. Mineralization is hosted by Late Triassic, variably deformed and metamorphosed rafts or xenoliths of volcanic rocks (Kovacs, 2018) that are engulfed by intrusions of the Late Triassic to Early Jurassic Minto plutonic suite.

The Minto pluton intrudes the contact between mid-Paleozoic rocks of the Yukon-Tanana terrane and Late Triassic rocks of the Stikine terrane. Aluminium in - hornblende geobarometry of the Early Jurassic Minto suite of the Granite Mountain batholith indicates a minimum 15 km depth of mid-crustal emplacement (Tafti, 2005). Southwest of the Minto pluton, the Yukon-Tanana terrane is represented mainly by orthogneiss of the Mississippian Simpson Range plutonic suite (Mortensen, 1992). The Stikine terrane in Yukon is composed of volcanic and sedimentary rocks and local subvolcanic intrusions of the Late Triassic Povoas Formation of the Lewes River Group (Hart, 1997). The Minto pluton is in east-west trending normal fault contact with Late Cretaceous Carmacks Group (73 – 68 Ma) stratigraphy that consists of mafic to intermediate volcanic rocks to the south. To the east, the pluton is in fault contact with the northwest-trending belt of the Late Triassic Povoas Formation (229 – 217 Ma), of the Lewes River Group. The Povoas Formation here is characterized by variably deformed, greenschist to amphibolite facies augite-phyric andesitic to basaltic volcanic flows and hornblende gabbro (Hart and Radloff, 1990).

7.2 Property Geology

Sections 7.2 and 7.3 are based partly on Sections 7.2 to 7.7 of the 2012 Technical Report titled "Minto Phase VI Preliminary Feasibility Study Technical Report", by Mercer and Sagman. These sections have been modified by Kovacs, 2018.

7.2.1 Property Geology

Hypogene copper sulphide mineralization is hosted within Late Triassic deformed and metamorphosed volcanic rocks of Stikinia (Kovacs, 2018) that occur as rafts within the Late Triassic-Early Jurassic Minto pluton (204-195 Ma). The felsic intrusive rocks of the Minto pluton are dominantly undeformed, but locally exhibit weak tectonic foliation near their contacts with the metamorphic inliers. Folded and boudined dykes of the youngest intrusive phase commonly cross-cut the metamorphic host rocks, which indicates that D2 deformation outlasted the emplacement and crystallization of the pluton during the Early Jurassic (Kovacs, 2018). Three distinct intrusive phases of the pluton are identified: K-feldspar megacrystic granodiorite to quartz diorite, diorite to monzonite, and quartz granodiorite to granitic pegmatite (Tafti, 2005; Hood, 2008; Kovacs 2018). Late quartz-feldspar pegmatite and aplite dykes are locally present. Contacts between foliated metamorphic rocks and massive intrusive phases are typically very sharp and lack chilled margins.

Recent studies on the metamorphic rocks revealed that the protolith to the mineralized rafts are Late Triassic (ca. 217 Ma; Kovacs et al., 2018) metavolcanic rocks of Stikinia (Povoas Formation, Lewes River Group), that were mineralized in the Late Triassic (from 187Re/187Os molybdenite; Kovacs, 2018) and subsequently partially melted during emplacement of the Granite Mountain Batholith (GMB) at ca. 205- 195 Ma (~800°C at 5.5-6.5 kbar; Kovacs, 2018; Tafti, 2005). The metavolcanic xenoliths were variably migmatized and copper mineralization was remobilized as an immiscible sulphide melt. This melt crystallized in the migmatite as coarse, net-textured bornite and chalcopyrite, coeval with crystallization of the GMB (ca. 198 Ma from ¹⁸⁷Re/¹⁸⁷Os molybdenite) (Kovacs, 2018).

Cretaceous conglomerates and volcanic flows have been identified in drill core. Drilling has revealed foliated and copper-mineralized cobbles, indicating that "Minto-style" mineralization was exposed, eroded and re-deposited in sedimentary strata by the Cretaceous period (Mercer and Sagman, 2012). Some volcanic rocks in the southwestern part of the property have been identified as part of the Late Cretaceous Carmacks Group (Hood, 2008).

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Figure 9: Yukon Geological Terranes (Kovacs, 2018)

Figure 10: Regional Geology, west-central Yukon (Yukon MapMaker Online, Yukon Geological Survey))

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Figure 11: Local Geology, Minto Mine area (Kovacs, 2018)

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7.2.2 Structure

Both brittle and ductile deformation occur in the Minto Mine vicinity. Foliation (ductile deformation) is defined in areas of weak to moderate strain by the alignment of biotite and hornblende grains in the metamorphic rocks, and by the segregation of quartz and feldspar grains, resulting in a gneissic texture in areas of higher strain. Deformation zones occur as sub-horizontal horizons traceable through drill core logging for more than 1,000 metres, and are commonly stacked in parallel to sub-parallel sequences.

The orientation of foliation is highly variable within individual deformation zones, and exhibits small-scale ductile folding. Foliation in the Area 2 region shows tight to isoclinal folding with a wavelength of about 30 metres (Hood et al., 2008). The folds trend roughly NW – SE, and mimic regional structural trends (Templeman-Kluit, 1984). There are local gentle folds with north-south trending axial traces. The orebearing zones also show folding locally, with a wavelength of several hundred metres; e.g., at the Ridgetop zone the fold wavelength is about 280 metres.

Late faulting and brittle fracturing occur throughout the Granite Mountain batholith, the Minto pluton and the property itself, and in some cases it significantly affects the economic potential. The Minto Creek fault (MC Fault), modeled as a steeply north-east dipping fault with a left lateral reverse displacement, roughly bisects the Minto Main deposit into north and south blocks (Figure 12). The north block has moved upwards and to the left of the south block, although displacement appears to be minimal. To the north, the roughly east-west striking, north-northwest dipping DEF fault marks the northern limit of the Minto Main deposit. The sense of movement may be similar to the MC Fault, with significant inferred displacement. Finding the magnitude of the displacement could be helpful in locating the extension of the Minto Main deposit along the north side of the DEF fault. The west margin of the deposit is marked by a zone of pervasive fracturing, interpreted as a north-south trending fault which forms part of a late conjugate set. The southern limit of the deposit is a paleochannel that extends along another east-west striking fault, where erosion has removed material below the elevation of mineralization. The east side of the property has no apparent structural constraints.

Figure 12: N-S cross-section through Minto Main Deposit (looking east)

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The boundary between the Area 2 and Area 118 resource sub-domains is a NW-SE striking, northeastdipping fault, showing significant displacement. In Area 118, at least two other parallel structures have been identified. In this area, the "N" zone has undergone a vertical displacement up to 66 metres. Other zones exhibit variable thicknesses and orientations, suggesting block rotation. Another NW-SE striking fault with unknown dip has been interpreted to define the northeast boundary of the Ridgetop deposit and the southwest limit of the Wildfire mineralized area.

Pervasive hematite-chlorite fractures occur within all mineralized horizons, and likely post-date the main copper-silver mineralizing event. However, coarse grained visible gold occurs locally along, and within, the chloritic fractures, suggesting that a hydrothermal event may be associated with structural remobilization of gold mineralization.

Veins in the deposit area are rare; where present they post-date mineralization. Most veins occur either as thin calcite, epidote-hematite, carbonate and rare gypsum stringers. Quartz veins are absent at the Minto deposit.

7.3 Mineralization

7.3.1 Mineralization

Four major deposits have undergone mineral extraction: the Minto Main, Minto East, Minto North and Minto South deposits (Figure 13). The Area 2, Area 118, Copper Keel and Wildfire resource sub-domains are now considered to be continuous, comprising the Minto South deposit. The deposits at the Minto mine, including the Fireweed, Airstrip and Inferno prospects, form a northwest trend that aligns with the regional trend of the Minto Copper belt. History of exploration and extraction are described in Section 6: History.

The primary hypogene minerals are chalcopyrite, bornite, chalcocite, and minor pyrite. Covellite locally occurs rimming bornite. Copper sulphide minerals occur mainly as disseminations, foliaform stringers and as net-textured copper sulphides. The intensity of copper sulphides increases with ductile deformation. The highest-grade mineralization occurs as semi-massive net-textured intergrowths of bornitechalcopyrite. Hessite, a gold telluride, native gold, and electrum occur as inclusions in bornite, accounting for high gold recoveries in copper concentrate. Coarse free gold has also been identified in late chlorite fractures, which may be the result of secondary hydrothermal enrichment. Copper sulphide mineralization is almost always associated with elevated biotite and magnetite.

A crude zonation occurs from west to east at the Minto Main deposit, with bornite predominating in the west, transitioning to a thicker, lower grade chalcopyrite-bearing zone in the east. The bornite zone consists of an assemblage of bornite-chalcopyrite-magnetite, characterized by stringers and massive chalcopyrite lenses with variable bornite content. This area also contains massive sulphide lenses exceeding 0.5 metres in thickness, and semi-massive lenses up to several metres thick, with textures resembling magmatic sulphide mineralization where sulphide minerals are net-textured, and occur interstitially to rock-forming silicate minerals. This comprises the higher-grade portion of the Minto Main deposit, with elevated precious metal grades caused by gold and electrum inclusions in bornite. The lower grade chalcopyrite zone is composed of chalcopyrite-pyrite ± minor bornite and magnetite. The highest bornite concentrations are associated with locally coarse grained and disseminated magnetite.

Figure 13: Detailed Location of Minto mine deposits and prospects (Kovacs, 2019 )

Both the Minto North and Minto East deposits show a similar zonation to the Minto Main deposit, with a bornite-dominant assemblage in the west transitioning to a chalcopyrite-dominant assemblage in the east. Bornite occurs as disseminated grains, foliaform stringers, and net-textured domains to massive lenses up to 2 metres thick. Precious metal grades are elevated, and rare visible gold also occurs. To the east, chalcopyrite concentrations are typically 1-2%, but are locally up to 10%.

Mineralization occurs mainly as disseminated and foliaform grains, whereas the net-textured domains are absent. At the Area 2, Area 118 and Copper Keel resource subdomains of the Minto South deposit, the assemblage consists mainly of chalcopyrite-bornite-magnetite and minor pyrite, with increased bornite in the higher-grade northern part of the deposit. Mineralization is more homogenous and consistent than at the Minto Main and Minto North deposits.

At both the Ridgetop deposit and the Wildfire resource sub-domain, mineralization is subdivided into a near-surface horizon of supergene oxide, and a lower zone of more typical sulphide mineralization. The lower zone is marked by an assemblage of chalcopyrite-magnetite and minor pyrite. Bornite occurs in minor amounts only. Chalcopyrite occurs as disseminations and foliaform stringers. Magnetite is present as disseminated grains, local stringers and bands up to 0.3 metres in thickness.

Copper grades increase progressively northwards from the lower grade material found at the Ridgetop and Minto South deposits towards the highest grade Minto North deposit (Mercer and Sagman, 2012).

7.3.2 Alteration, Weathering and Oxidation

The predominant alteration assemblage in the Minto mine area is pervasive, strong potassic (biotite ± magnetite) alteration within the horizontal mineralized zones. The assemblage also includes replacement of mafic minerals by chlorite, epidote and sericite in both ore and waste rock, occurring interstitially or proximally to veins and fractures. Feldspar grains also display variable degrees of hematization. Locally pervasive sericite-muscovite alteration occurs associated with post-mineral brittle faults, most commonly in the Area 2/Area 118 sub-domains.

Hematite alteration, interpreted to be of supergene origin, is most pervasive along the DEF fault at the Minto Main deposit, and is mainly fracture controlled within narrow alteration selvages in the other deposits. Secondary biotite is locally associated with minor carbonate alteration. Contacts between altered and unaltered rocks are sharp, as are contacts between mineralized and unmineralized rock.

Silicification in the Minto deposit area is variable, but generally it is associated with high-grade mineralization. Sporadic silicification occurs in the western bornite-rich zones of the Minto Main, Minto East and Minto North deposits, but is lacking in the eastern chalcopyrite-dominated zones. Silicifcation is absent in the Wildfire and Ridgetop areas.

Copper oxide mineralization resulted from supergene alteration processes, and represents either the erosional remnants of foliated horizons above the deposits, or the vertical remobilization of copper along late brittle faults and fracture zones upwards from underlying copper sulphide zones. The oxide mineral assemblage consists mainly of chalcocite, with malachite, minor chrysocolla and azurite, and rare native copper. Mineralization occurs as fracture-fill, joint coatings and, to a lesser extent, interstitially to rockforming silicate minerals. At the Ridgetop deposit, chalcocite, although a sulphide, is the dominant oxidefacies mineral, resulting from secondary supergene enrichment caused either by a paleo-water table or from ground water circulating from nearby faults. These near-surface zones also host minor malachite, azurite, remnant chalcopyrite-bornite and native copper. Chalcocite-rich mineralization present in cobble and pebble-sized clasts within Cretaceous conglomerates near the mine area indicates that the upper portions of the Minto mineralizing system were near surface by the Late Cretaceous.

Other oxide minerals include pervasive limonite, earthy hematite, and clay alteration of feldspars. Oxidation, which results in a reduction in bulk density, is minimal at the Minto Main zone, due to its depth, except along the south boundary where it is exposed directly beneath overburden. Minor oxide mineralization locally occurs within late brittle faults.

Figure 14 Net-textured bornite-chalcopyrite mineralization in migmatite, Minto Main deposit

Figure 15: Net-textured bornite-chalcopyrite in migmatite, Minto Main deposit

7.4 Additional Exploration Targets (as of January, 2012)

The Ridgetop Southwest, Airstrip, MSD GAP and Fireweed (Minto East 2) prospects are all located within a 2 km by 2 km area south of the DEF fault. In addition, numerous other copper-in-soil geochemical anomalies throughout the property remain untested.

7.4.1 Fireweed Target (Minto East 2)

The Fireweed target spans an area from 200 to 700 metres east of the Minto East deposit, and was identified by drill testing of a Titan-24 geophysical anomaly correlating with an interpreted northern down-dip extension of the Minto South deposit model. The target is divided into two areas called Fireweed-A and Fireweed-B. The Fireweed-A target comprises a 180m by 180m chargeability anomaly, although most of the Fireweed B anomaly does not have any anomalous geophysical signatures. Three core drill holes completed in 2011 intersected two mineralized horizons: a shallow zone of low to moderate grade mineralization and a zone at moderate depth of medium to high grade mineralization. Follow-up drilling also intersected higher-grade mineralization at depth, with the most important intercepts returned from a hole targeting the Fireweed-B anomaly.

Systematic drilling across the Fireweed target indicates this target is intersected by numerous faults that may be related to splays of the Minto Creek fault.

In 2011, 26 holes for 10,826 metres were drilled on the Fireweed target, the results of which indicate a system of stacked mineralized zones, with the highest grades at moderate to deep depths. At Fireweed-A, shallow mineralization comprises chalcopyrite with lesser bornite, chalcocite and trace malachite. Both the Fireweed A and Fireweed B zones comprise typical Minto-style hypogene chalcopyrite and bornite mineralization.

7.4.2 Inferno Target (Minto North 2)

The Inferno target, identified from the 2009 Titan-24 geophysical survey, is located directly north of the DEF fault. Following initial unsuccessful drilling and re-evaluation of the Titan-24 results, the centre of the anomaly was found to have been offset 150 metres northeast. Drilling in 2010 identified the target as comprised of a shallow, moderate-grade zone underlain by a more narrow, higher grade zone with dimensions of 40 by 40 metres.

7.4.3 MSD Gap target

The MSD (Minto South Deposit) Gap target is located in the gap between the Minto South and Ridgetop deposits. A combination of historic drilling and that by Minto Explorations identified prospective mineralization at shallow to moderate depths.

7.5 Property Geology, BOND, MEL and DEL Blocks

The BOND, MEL and DEL blocks were all staked to cover areas of similar geological settings to that of the Minto Mine. The DEL and BOND showings also cover previously identified copper occurrences.

7.5.1 BOND property

The 2008 exploration program indicated that the BOND 1-70 claims are underlain almost entirely by Minto Suite biotite granite to granodioritic gneiss that is particularly hornblende-enriched in the western and central areas. The majority of the intrusive rocks are moderately foliated, with stronger foliation evident near the Yukon River in northwestern areas. Biotite enrichment, including secondary biotite, also occurs in more strongly foliated areas along the Yukon River, likely identifying structural features (Schulze, 2008).

Year-2008 soil sampling revealed no significantly elevated copper values across the property. A gold value of 0.040 g/t was returned from the extreme northwestern corner directly south of the Yukon River. Silt geochemical sampling returned coincident weakly elevated copper and gold values along a stream in the south-central area. No significant metal values were returned from rock sampling (Schulze, 2008).

7.5.2 MEL Property

The MEL property is underlain by hornblende granodiorite, probably part of the Minto plutonic suite. The property has a similar regional airborne Total Magnetic Intensity (TMI) signature to the Minto mine area. The felsic intrusions of the MEL property consist of medium to coarse grained biotite granite, which are potassic feldspar-porphyritic to megacrystic in northwestern areas. Some of the granodiorites are commonly foliated, with narrow, centimetre-scale biotitic zones, particularly in northwestern property areas.

The 2008 soil geochemical sampling program revealed a weakly elevated copper-gold anomaly within the MEL 99 claim. No other significant geochemical anomalies were identified within the boundaries of the MEL property.

7.5.3 DEL Property

The present DEL property was staked partly on the basis of a strong TMI "high" signature, similar to that of the actual Minto mine site. Based on the data of the Yukon Geological Survey (YGS), the property is underlain by a northwest-southeast trending assemblage of Povoas Formation, Lewes River Group andesitic to basaltic flows, tuffs and local tuff breccia. The western boundary of this assemblage is in a strike-slip fault contact with the northwestern portion of the Granite Mountain Batholith. Mapping in 2008 revealed that the majority of the property is underlain by mafic to intermediate volcanic rocks, with a small region in the southwestern property area underlain by Minto Suite biotite granite with minor calcsilicate alteration. The southeastern area of the property, paralleling the Yukon River is also underlain by Minto Suite granodioritic rocks (Schulze, 2008).

Rock geochemical sampling in 2008 returned an anomalous copper value and an anomalous gold value from separate samples in country rock adjacent to the Minto Suite intrusion in the southwestern area. Silt sampling returned one strongly anomalous gold value of 0.239 g/t directly upstream of a confluence in the northwestern property area. Several elevated gold values were returned farther upstream, towards the intrusive contact. Soil geochemical sampling revealed several moderately anomalous copper values in the eastern property area, including areas previously mapped as underlain by the granodioritic unit near the Yukon River. Scattered elevated gold values were returned, including one of 0.113 Au g/t along the northern property boundary.

8. Deposit Types

Although working models of deposit settings were successfully utilized for mine engineering and mineral extraction to 2018, the deposit setting of the Minto Mine area remained enigmatic. In 2018 a MSc thesis titled "Genesis and Post-ore Modification of the Migmatized Carmacks Copper Cu-Au-Ag Porphyry Deposit, Yukon, Canada" by N. Kovacs included a revised model of formation and deposit setting of the Minto ore deposits. This model is described in Section 8.2

8.1 Deposit Models to 2018

Since its discovery, various workers have postulated Porphyry Copper, Volcanogenic Massive Sulphide (VMS), Redbed Copper, Magnetite Skarn, and Iron Oxide Copper Gold ("IOCG") deposit model settings (Capstone Mining Corp., 2008), (Mercer and Sagman, 2012). The VMS setting was ruled out, due to the lack of lead-zinc mineralization and undersea hydrothermal vents. Mafic (Cyprus-type) and maficsiliciclastic (Besshi-type) VMS deposits tend to be rich in Cu and poor in Zn and Pb, and as such could produce a similar metal tenor to Minto. However, the host rocks to these VMS deposits tend to be primitive, tholeiitic basalts (Childe et al., 1994), making them distinct from the protolith of the volcanic rocks at Minto, which have been demonstrated to be calc-alkaline to shoshonitic volcanic island arc sequences of Stikinia (Kovacs, 2018). The Redbed Copper setting was also rejected due to a lack of a sedimentary depositional environment. Although porphyry copper-gold deposits typically are centered on felsic intrusions, the typical fabric of these, combined with the fairly shallow emplacement depths, are distinct from the Minto Mine setting.

The two remaining potential settings remaining viable were the magnetite skarn and IOCG types. The former is unlikely, as the mineralized horizons lack a typical calc-silicate alteration assemblage, as well as the spatial location along or somewhat outbound of an intrusive margin typical of skarn deposits. Therefore, the IOCG model remained the most applicable.

The term "IOCG" is still fairly loosely described and has been used to capture a wide variety of settings of similar mineralogy. The deposits typically form at moderate depths, towards the margins of large intrusive bodies, such as batholiths, and proximal to large crustal-scale structures, up to several hundred kilometres in length (Jackson, 2017). Although this setting includes some of the world's largest deposits, such as the Olympic Dam deposit in southern Australia, and the Carajas deposit in Brazil, they vary greatly in size, and also include small deposits of a few million tonnes. IOCG deposits are normally Mesoproterozoic to Neoproterozoic in age, with age ranges varying from 1.1 to 1.8 billion years (Jackson, 2017), to 1.6 to 0.85 Billion years (Wikipedia, 2018). However, much younger IOCG deposits are known, although less common, to a minimum age of 15 Ma. Copper grades are typically less than 1.0%, although higher grade intercepts exceeding 1.5% are known.

IOCG deposits typically occur as cone-like systems within the margins of granitic bodies, or as aerially extensive narrow mineralized zones within structural features. IOCGs are associated with hematite and, in particular, magnetite, as well as sodic-calcic alteration (albite-epidote), and/or potassic alteration of feldspar. The overall mineralogy is fairly simple, consisting of iron oxide minerals (magnetite and hematite), copper sulphides (chalcopyrite and bornite), and commonly with anomalous gold, cobalt, uranium and rare earths and, to a lesser extent, silver, molybdenum, silver and nickel. The mineralizing mechanism consists of the mixing of magmatic or deep meteoric fluids with cooler, more shallow oxidizing meteoric water, resulting in the reduction of sulphates combined with the oxidation of iron (Hanes et al, 1995) and the deposition of sulphide minerals. The paleo-water table plays an important factor in the types of sulphides deposited. Below the water table chalcopyrite and pyrite are deposited, whereas above it the assemblage consists of bornite and chalcocite (Jackson, 2017), and lesser chalcopyrite. Figure 16 below show a model of the Olympic Dam deposit, regarded as one of the archetypical IOCG systems.

Figure 16: Deposit setting cartoon, Olympic Dam deposit setting (Haynes et al, 1995)

The Minto Mine deposit setting shares many of the main characteristics of the IOCG model. Most notable are: the deposit morphology, consisting of sub-horizontal narrow zones of copper sulphides associated with iron oxide minerals; the alteration assemblage, consisting of potassic alteration manifested as biotite and potassic alteration of feldspars, and the setting along the margin of a large intrusion (the Minto pluton, part of the Granite Mountain batholith). Another factor is the typical association of IOCG deposits to deep-seated crustal structures. The Minto deposits are proximal to the northern limit of the Teslin Suture, which extends south-east to the Yukon-British Columbia border and parallels the Tintina Fault Zone to the northeast.

The Upper Triassic to Lower Jurassic age, and small deposit size, are atypical of IOCG deposits; however, they fall within the age and size ranges of this deposit style.

The variances of the Minto deposit model from the "standard" IOCG model suggest that this may represent a newly recognized IOCG variety. Mercer and Sagman (2012) stated that, as of 2012, the Minto deposit may also represent an unrecognized deposit type.

8.2 2018 Thesis: Porphyry Deposit Model

This section was provided from a 2018 MSc thesis titled "Genesis and Post-ore Modification of the Migmatized Carmacks Copper Cu-Au-Ag Porphyry Deposit, Yukon, Canada" by N. Kovacs.

All deposits at the Minto Mine property share the same style of mineralization, comprising copper sulphide mineralization associated with sub-horizontal and subparallel deformed and metamorphosed migmatitic host rocks that are engulfed within the undeformed and unmineralized intrusive phases of the Minto pluton. The host rock at the Minto mine is interpreted to be a migmatite formed from the partial melting of the Late Triassic volcanic rocks of the Povoas Formation, Stikinia, during the emplacement of the Minto pluton in the Early Jurassic (Kovacs, 2018).

The deposit genesis of the Minto mine is enigmatic, as primary geological features have been modified by ductile formation, amphibolite facies metamorphism, and metamorphic anatexisIn addition to deposit settings mentioned in Section 8.1, other settings include: deep 'aborted' porphyry Cu-Au that formed during the early stage of porphyry Cu-Au mineralization (Tafti, 2005), shear-hosted hydrothermal mineralization generated in the ductile root zones of porphyry systems (Hood et al., 2008), and migmatized porphyry Cu-Au deposit hosted within Late Triassic volcanic rocks (Kovacs, 2018)

The Iron Oxide Copper Gold (IOCG) model was among those most investigated at the Minto site. IOCG deposits are typically characterized by large extents of associated hydrothermal alteration, abundant brecciation, abundant low Ti-Fe oxides (magnetite and hematite) and Fe-silicates, and metal grades consistently between 0.7 and 1.5 % Cu and <0.5 to >10 g/t Au (Groves et al., 2010).

The following observations have been used in the past to explain the IOCG origin of Minto: (1) deep emplacement of the Minto pluton (Tafti and Mortensen, 2003), (2) moderately oxidized magma of the Granite Mountain batholith (GMB)/Minto pluton (Tafti, 2005), (3) widespread presence of magnetite in hypogene ore, (4) local presence of hematite in the oxide ore, and (5) structurally controlled distribution of ore (i.e., offset of ore zones by late faulting) (Capstone Mining Corp., 2008 in Kovacs, 2018).

However, recent studies (Tafti, 2005; Hood, 2008; Kovacs, 2018) have demonstrated that these observations have been misinterpreted. Deep emplacement of the GMB/Minto pluton cannot be used as a proxy for the emplacement depth of mineralization at the Minto mine, as the emplacement of the Minto pluton postdates mineralization by >10 m.y. Similarly, the oxidation state of the GMB and the widespread presence of alteration hematite (Tafti, 2005; Hood et al., 2008) is irrelevant to the deposit that formed >10 m.y. prior to the emplacement of the GMB. Lastly, the structurally controlled distribution of ore is also not a demonstrably primary feature of either of the deposits, as ore was melted and remobilized during the emplacement of the Minto pluton. In addition, the intensity and extent of alteration that is common in IOCG deposits is not well-developed at Minto and ore zones are not breccia hosted. As such the IOCG deposit model is not considered viable for Minto deposit (Kovacs, 2018).

The Minto and Carmacks Copper deposits have been previously related to Cu-Au ± Ag porphyry mineralization that is well documented throughout Stikinia and Quesnellia terranes in British Columbia (Logan and Mihalynuk, 2014). Calc-alkalic and alkalic porphyry mineralization was emplaced from ca. 227 to 178 Ma (Bath et al., 2014), but was especially prolific between ca. 208 and 202 Ma (Logan and Mihalynuk, 2014). The ore mineral assemblages, metal tenors, and the Cu/Au ratios of the Carmacks Copper and Minto deposits resemble those of porphyry Cu-Au deposits. The sulphur isotopic composition (δ³⁴S Sulphide) for sulphides in both deposits are also within the range of porphyry deposits (δ³⁴Ssulphide = 2 and -4‰) (Wilson et al., 2007; Rollinson, 2014). Hypogene mineralization is associated with the development of pervasive biotite alteration and high magnetite content at Minto. The deposits have low pyrite content and lack any clay or phyllic alteration. Alteration is quartz-absent, which may reflect the silica-undersaturated nature of the mineralizing fluids, similar to their parent magma, although silicaundersatured alkalic intrusions coeval with mineralization are not present in the area. These observations at Minto and Carmacks Copper suggest that porphyry mineralization is a viable deposit model for these deposits, prior to their metamorphism, deformation, and migmatization (Kovacs, 2018).

9. Mineral Resource and Reserve Estimation

The following section was provided verbatim, with minor edits, from Garth Kirkham of Kirkham Geosystems Ltd.

9.1 Mineral Resources

9.1.1 Introduction

A primary objective of Kirkham Geosystems Ltd.'s work was to produce a section of the Competent Person's Report for the mineral resources at Minto, specifically for the MSD (Minto South Deposit), Ridgetop, Minto North, Minto East, Minto North 2 and Minto East 2 deposits. These were based on the previous studies and 3D block models from August, 2010 (Ridgetop), December, 2009 (Minto North), October, 2012 (Minto East 2 and Minto North 2), June, 2016 (Minto East). In addition, the Minto South Deposit has been variously studied and revised, with the most recent being in 2016 for the Area 2 underground "P" and updated Copper Keel in March 2017.

The resource estimate for the MSD and Ridgetop deposits was completed by Dr. Wayne Barnett, Ph.D., Pr.Sci.Nat., of SRK, while the Minto North, Minto North 2, and Minto East 2 deposit resource estimates were completed by Garth Kirkham, P.Geo., of Kirkham Geosystems and the author of this section of the Competent Person's Report. The Minto East resources and reserves were estimated in separate block models completed by Jeremy Vincent, P.Geo. and Stuart Harris of Capstone Mining Corp., respectively. The current block models were delivered to the author or were in the author's possession.

This section describes the methods and results used by Capstone Mining Corporation (Capstone), SRK Consulting (Canada) Inc. (SRK) and Kirkham Geosystems, including key assumptions and parameters used to prepare the mineral resource models for MSD, Ridgetop, Minto North, Minto North 2, Minto East and Minto East 2 deposits, together with appropriate commentary regarding the merits and possible limitations of such assumptions.

In the opinion of the Competent Person, the block model resource estimates and resource classification reported herein are a reasonable and accurate representation of the mineral resources and reserves at the MSD, Ridgetop, Minto North, Minto North 2, Minto East and Minto East 2 deposits at the current level of sampling. The mineral resources presented herein have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards. Mineral resources are not mineral reserves and do not have demonstrated economic viability.

9.1.2 Mineral Resource Block Models

The following experts were responsible for the estimation of the original mineral resources at the Minto Mine:

• Dr. Wayne Barnett, P.Geo., of SRK Consulting (Canada) Inc. ("SRK"): MSD and Ridgetop deposits (SRK, 2015, 2016 and 2017).
• Garth Kirkham, P.Geo., FGC, of Kirkham Geosystems Ltd.: Minto East, Minto East 2, Minto North and Minto North 2 deposits (Kirkham, 2015). Minto East 2 and Minto North 2 were originally named the Fireweed and Inferno deposits, respectively.

Subsequently, Jeremy Vincent, P.Geo., of Capstone Mining Corp. created the latest resource estimate for the Minto East deposit (Capstone, 2016) while Stuart Harris created the Minto East reserve block model (Capstone, 2018). In addition, Capstone and Minto Mine personnel have used the resource block models to derive the resource estimates that have a 'reasonable expectation of eventual economic extraction' and subsequently estimated the mineable reserves based on modifying factors in order to convert resources to reserves. The block models and the resources and reserves reported herein have been validated and verified by Mr. Kirkham.

In 2017, a mineral resource update was undertaken for the Copper Keel Lens of the Minto South deposit ("MSD") by SRK (2017). This model supersedes the portion of the model representing Copper Keel in the MSD completed in 2015 by SRK. The motivation for the revision and re-estimation of Copper Keel was based on improving the mineralization domaining process to reflect the higher mining selectivity in an underground scenario.

Infill core drilling was conducted late in 2017, targeting the Minto East deposit with 4 holes (1,526 m) and the Ridgetop deposits with 35 holes (3,361 m). The goal was to close gaps in drilling to 40 m to satisfy requirements for Indicated resources and to confirm the geological interpretation ahead of mine planning activities (BD Resource Consulting, 2015). Infill core drilling was also conducted from April through June of 2018, targeting the Copper Keel West and Main lenses.

Core processing was ongoing into September 2018 and, consequently, the models were not updated in time for the year-end resource statement. These models were updated in Q1 2018, following release of resource estimates for the Ridgetop and Minto East deposits. Ten holes were drilled, for a total of 1,725m, targeting the Copper Keel West lens and three holes, for a total of 917m, were drilled targeting the Copper Keel Main lens.

The mineral resource block model reconciliation is presented in Table 22.

Property	Minto
Deposit	MSD	Ridgetop	Minto North	Minto East	Minto East	Minto East 2	Minto North 2 (formerly Inferno North)
Resources Block Model Name	MSD2011 with partial updates: updated Area 2, underground "p" Sept 2016, updated Cu-Keel Mar-2017			Minto East Reserve Model	Minto East Reserve Model
Resources Block Model Effective	MSD2011 2011-09-13 MSD2015 2015-05-31 CuKeel Mar-2017 2016-12	30-Aug-10	01-Dec 09	June, 2016	Sept, 2018	25-Oct 12	25-Oct-12
Reserves Model QP Block Model Location	SRK-Wayne Barnett	SRK Wayne Barnett	Garth Kirkham	Jeremy Vincent	Stuart Harris	Garth Kirkham	Garth Kirkham
(on Server)

Table 22: Block Models supplied by Capstone and Effective Dates

9.1.3 Resource Database

The database used to estimate the MSD and Ridgetop deposits was prepared by Minto personnel and verified by SRK. The Minto North and Minto East database was also prepared by Minto and verified by the Qualified Person. The mineralized domains of the deposits were modelled using Gemcom software based on lithological and structural interpretations.

It is the opinion of the Competent Person that the current exploration and structural information is sufficiently reliable to confidently interpret the mineralized boundaries and that the assay data are sufficiently reliable to support the estimation of mineral resources.

Table 23 provides a summary of the samples included in the Area 2/118, Ridgetop, Minto East and Minto North deposits database. Note that the actual number of samples within the modelled geology domains was lower.

Deposit	Year	DD	Number of Drill	Drill Total
		Drill holes	Samples	(m)
	2015	20	2,157	4,069
	2014	19	1,869	3,026
	2010	22	2,662	3,868
	2009	22	2,650	3,675
	2008	48	5,459	6,719
Area 2/118	2007	40	5,695	7,522
	2006	80	9,364	14,752
	Historical	23	622	1,735
	TOTAL	235 26,452		38,270
	2009	71	5,067	7,330
	2008	46	4,177	5,604
Ridgetop	2007	25	1,993	2,704
	Historical	21	840	2,068
	TOTAL	163	12,077	17,708
	2007	1	168	380
	2008	1	103	385
Minto East	2009	4	575	1,410
	2010	27	3,772	8,892
	Total	33	4,618	11,067
	2009	87	4,651	11,263
Minto North	Total	87	4,651	11,263
	2011-2012	34	3,180	4,373
Minto East 2	Total	34	3,180	4,373
	2012	9	135	152
Minto North 2	Total	9	135	152

Table 23: Exploration Data within the Modelled Deposits

In 2017, a mineral resource update was undertaken for the Copper Keel Lens of the Minto South deposit ("MSD") by SRK (2017). This model supersedes the portion of the model representing Copper Keel in the MSD completed in 2015 by SRK. The motivation for the revision and re-estimation of Copper Keel was based on improving the mineralization domaining process to reflect the higher mining selectivity in an underground scenario.

Infill core drilling was conducted from April through June of 2018, targeting the Copper Keel West and Main lenses. Ten holes were drilled, for a total of 1,725m, targeting the Copper Keel West lens and three holes, for a total of 917m, were drilled targeting the Copper Keel Main lens. The latter holes were drilled to obtain geo-mechanical information for use in mine design. Additional holes were planned for the Copper Keel West and North lenses; however, the programs were not approved prior to Minto being placed on care and maintenance. The resource block model (MSD) was not updated with the results from drilling conducted in 2018.

Infill core drilling was also conducted late in 2017, targeting the Minto East deposit with 4 holes (1,526 m) and the Ridgetop deposit with 35 holes (3,361 m). The goal was to close gaps in drilling to 40 m to satisfy requirements for Indicated resources and to confirm the geological interpretation ahead of mine planning activities (BD Resource Consulting, 2015).

9.1.4 Geology, Mineralized Zone and Domain Solids

The updated Area 2/118 resource model was created using a commercial three-dimensional block modelling and mine planning software, GEMS version 6.2 (Gemcom®). The models were created in metric units using the mine's local co-ordinate system (UTM NAD83 zone 8). The mineralized zone solids were considered hard boundaries where grades were not allowed into blocks outside of these solids.

The mineralized zone solids were built using top and bottom Laplacian grid surfaces that pass through the vertices representing the top and bottom drill hole intersecting contacts. The interpretation was initially done using vertical sectional interpretations provided by Minto geologists as references. These sections are spaced on 25 m intervals. SRK reviewed, adjusted and resolved the interpretations where necessary.

The contacts for a specific contact surface are made active by snapping polylines to the drill hole vertices, such that the polyline vertices are then used by GEMS as controls on the surface gridding. The grid triangulation vertices are then exported and re-imported as points. The final contact surface is then created from the imported grid points and the original polyline vertices using a regular surface creation technique.

This final surface has the surface triangulation vertices snapped precisely to both the grid points and the polyline vertices. The result is a contact surface that looks like a smoothed Laplacian grid but actually snaps to the drill hole intersections. The surfaces are then used to clip out or "carve-off" the mineralized zone domains and waste domains from an original solid wireframe representing the entire resource extents.

Up to 9 primary mineralized zones were assigned the following domain codes historically used by Minto geologists; J, K, L, M, N, O, P, Q, and R. Note that additional zones were modelled as bifurcations of the primary zones. These bifurcations are closely associated with the primary zones and for the purpose of the interpolation were considered part of the primary zone.

The Ridgetop deposit consists of seven mineralized foliated metamorphic zones. The Ridgetop resource model was created using a commercial three-dimensional block modelling and mine planning software, GEMS version 6.2 (Gemcom®). The model was created in metric units using the mine's local co-ordinate system (UTM NAD83 zone 8). The solids were considered hard boundaries where grades were not allowed into blocks outside of these solids.

The seven mineralized horizons were assigned the following domain codes based on those codes historically used by mine geologists; 80, 90, 100, 110, 120, 140 and 160. The process of identifying and naming the zones was done by importing and reviewing the sectional interpretation provided by Minto geologists. Minor modifications to contacts and zone orientations allowed simplification and enhanced continuity of the zones in places. There are therefore fewer interpreted and modelled zones than identified during the exploration program.

A solid model of the 700 ore zone within the Minto East Deposit was created from sections and based on a combination of lithology, copper grades and site knowledge. Although there are a number of mineralized layers intersected within the drillholes, the grades are not sufficient at this time to warrant estimation of the upper zones and the estimation was limited to the 700 zone only. The ore zone solid was used to constrain grade interpolation.

A series of solid models were created for the 115, 120 and 130 ore zones within the Minto North Deposit. The ore zone solids were used for constraining the interpolation procedure. In addition, a large crosscutting dyke that transects the deposit and the zones was also modelled using sectional interpretations and subsequently utilized to mask out the estimated tonnage related to this barren unit.

A solid model of the 100, 300, 500, 700, 800 and 900 ore zones within the Minto East 2 deposit and a single ore zone within the Minto North 2 deposit was created from sections.

Every intersection was inspected, and the solids were then manually adjusted to match exactly the interval intercepts. Once the solids models were created, they were used to code the drill hole assays and composites for subsequent geostatistical analysis. For the purpose of the resource model, the solid zone was utilized to constrain the block model by matching assays to those within the zones in a process called geologic matching so that only composites that lie within a particular zone are used to only interpolate the blocks within that zone. The orientation and ranges (distances) utilized for search ellipsoids used in the estimation process were derived from the strike and dip of the mineralized zone, site knowledge and on-site observations by Minto's geological staff.

In 2018, a mineral resource update was undertaken for the north portion of the Ridgetop deposit by SRK (2018). The model was used for planning of the Ridgetop North pit and did not include holes that were drilled in Ridgetop South, as results were pending at the time. A preliminary pit was investigated for Ridgetop North but the economics did not justify progressing with the project at this time. The resource statement for Ridgetop did not change for 2018, as the model still needs to be updated for the Ridgetop South drilling.

The Minto East block model was not updated to include the results from the 2017 drill campaign. However, a production block model was created by Stuart Harris, under the guidance of Doug McIlveen, P. Geo., that incorporates test-hole data from the production drills. Test-holes were drilled every 10m in each of the excavated production drifts (except A heading) and cuttings from each 6' drill rod run were assayed for Cu grade. This information has been used in all underground development to determine the H/W contact for stope planning. In the case of Minto East, the test-hole results and all as-built mapped ore contacts were imported into Leapfrog™ software to create an updated geological model. This geological model was used as the constraining envelope in the creation of the production block model. The variance between the long-term model and the production model, in the central portion of the deposit, is recorded as a block model update. This amounted to a loss of 19 kt of Indicated resources with an average grade of 3.73% Cu (-1 kt of Cu Metal).

9.1.5 Mineral Resource Block Model Parameters and Methods

The block models and the estimation plan for each deposit were unique and varied depending upon specific geological and mineralization characteristics, grade distributions, location and orientation. In addition, as the deposits were estimated by a number of different qualified professionals, there invariably will be a degree of subjectivity to the methods and procedures employed. However, it is the opinion of the Competent Person that all methods, procedures and results adhere to CIM Best Practices for Mineral Resource and Mineral Reserve Estimation and that the work was performed using accepted industry standards and quality. In all cases the following steps were employed:

• Mineralized zone code and percentage of modelled mineralization in each block;
• Estimated bulk specific gravity based on an inverse distance squared method;
• A cutting or grade limiting strategy was developed and employed in order to address outlier grades;
• Estimated block Cu, Au, and Ag grades by kriging or inverse distance to the second power, using one or more estimation passes for the mineralized zone.

Table 24 details the parameters and methods employed for each of the current models for each of the deposits.

Data						Minto North 2 (formerly Inferno
	MSD	Ridgetop	Minto North	Minto East	Minto East 2	North)
Composite
length (m)	1.5	1.5	1.5	3	1.5	1.5
	MSD2011 uncapped; search
	restriction
	MSD2015 capped within each
	domain		uncapped; search
	CuKeel Mar-2017 Main capped	uncapped;	restriction > 11%
Capping	at 9%, West capped at 5%, North	search	Zone 115; Zone	Top cut 5.0%
limit (Cu %)	capped at 4.5%	restriction	120 = 1.2%	Cu		Top cut of 5.2% Cu
	MSD2011 uncapped; search
	restriction
	MSD2015 capped within each
	domain		uncapped; search
	CuKeel Mar-2017 Main capped	uncapped;	restriction > 50 g/t
Capping limit (Ag g/t)	at 38gpt, West capped at 30gpt, North capped at 30gpt	search restriction	Zone 115; Zone 120 = 15 g/t	Top cut 14 ppm Ag		25 g/t; search restriction to 25 m
	MSD2011 uncapped; search
	restriction
	MSD2015 capped within each
	domain		uncapped; search
	CuKeel Mar-2017 Main capped	uncapped;	restriction > 5 g/t
Capping	at 6 gpt, West capped at 2.8gpt,	search	Zone 115; Zone	Top cut 3.2		2.5 g/t; search
limit (Au g/t)	North capped at 4gpt	restriction	120 = 2 g/t	ppm Au		restriction to 25 m
		10mE x		20mE x		10mE x 10mN x
X,Y,Z, block		10mN x	10mE x 10mN x	20mN x		3mElev; reblocked
size (m)	10mE x 10mN x 3mElev	3mElev	3mElev	3mElev		to 5x5x5
Sub				Yes, sub
blocking		No, percent	No, percent	blocked
(y/n)	No, percent model	model	model	(Vulcan)		No, percent model
	MSD2011 used OK - Cu, Au;
	Inverse Distance squared - Ag
	MSD2015 updates used OK -	OK - Cu, Ag;
Grade	Cu,Au; Inverse Distance squared	Inverse
interpolation	- Ag.	Distance				Inverse Distance
method	CuKeel Mar-2017 updates used	squared- Ag	OK	OK		squared

Table 24: Summary of Block Model Parameters and Methods

MSD – Copper Keel

There are three individual block models for MSD and Copper Keel, named the MSD2011, MSD2015 and CuKeel March 2017. Wayne Barnett of SRK also authored the MSD2011 and MSD2015 resource models and estimates with effective dates September 13, 2011 and May 31, 2015, respectively. Copper Keel was initially modelled and estimated in December 2016 and subsequently updated in March 2017.

The resource estimate for the Copper Keel Lens was updated, for potential underground development in the upper ("O") and lower ("P") lenses. The block model was updated using the updated geological solids provided by Minto Geology. Grades were re-estimated using similar parameters used in the June 2015 iteration.

Outlier restriction varies by model with MSD2011 being uncapped; however, it employs a search restriction for outliers for Cu, Ag and Au. The MSD2015 was capped within each domain for each of copper, gold and silver. For the Copper Keel deposit, the grade restriction strategy was employed by area where copper, silver and gold grades where capped to 9%, 5%, 4.5%; 38gpt, 30gpt, 30gpt; 6gpt, 2.8gpt, 4gpt for the Main, West and North areas, respectively.

All block models use a 10m E X 10m N X 3m L block size and 1.5m composite length. The interpolation methods used for the MSD2011, MSD2015model and CuKeel Mar-2017 were ordinary kriging for Cu, Au grades, and Inverse Distance Squared for Ag grades.

Volumes and tonnages are derived using partials percentages based on the mineralized solids models.

Specific gravity is assigned within the MSD2011 and 2015 models with a value of 2.4 being the lower cap; 3.2 the upper cap; and the estimated average being 2.67. For the CuKeel Mar-2017 model, bulk density is separated into grade bins according to the Minto designed criteria.

Ridgetop

Wayne Barnett of SRK also authored the Ridgetop resource model and estimate with an effective date of August 30, 2010.

Outlier restriction varies by model, with MSD2011 being uncapped; however, it employs a search restriction for outliers for Cu, Ag and Au.

The block model also uses a 10m E X 10m N X 3m L block size and 1.5m composite length. The interpolation methods used is ordinary kriging for Cu, Au grades and Inverse Distance Squared for Ag grades.

Volumes and tonnages are derived using partials percentages based on the mineralized solids models.

Specific gravity is assigned within the block model with an estimated average being 2.66.

In 2018, a mineral resource update was undertaken for the north portion of the Ridgetop deposit by SRK (2018). The model was used for planning of the Ridgetop North pit and did not include holes that were drilled in Ridgetop South, as results were pending at the time. A preliminary pit was investigated for Ridgetop North but the economics did not justify progressing with the project at this time. The resource statement for Ridgetop did not change for 2018, as the model still needs to be updated for the Ridgetop South drilling.

Minto East

The block model for Minto East was originally authored by Kirkham Geosystems, the author of this section of the report, and subsequently updated using current drilling data by Capstone personnel (Jeremy Vincent) in June 2016.

Outlier restriction uses a top cut for outliers above 5.0%, 14 g/t and 3.2 g/t for Cu, Ag and Au, respectively.

The block model also uses a 20m E X 20m N X 3m L block size and 3m composite length. The interpolation methods used is ordinary kriging for Cu, Au grades and Ag grades.

The model was sub-blocked to define ore boundaries and retain block grades.

Specific gravity is assigned within the block model by separating into grade bins which was based on a mine study of the Minto North ores.

The Minto East resource block model was not updated to include the results from the 2017 drill campaign as stated above.

Minto East 2

The block model for Minto East 2 (formerly Fireweed) deposit model was authored by Kirkham Geosystems, the author of this section of this report and subsequently updated on October 25, 2012.

Outlier restriction employs a search restriction of 25 meters for outliers above 13 g/t and 3 g/t for Ag and Au, respectively. In addition, Cu grades above 5.2% are top cut.

The block model also uses a 10m E X 10m N X 3m L block size and 1.5m composite length. The interpolation methods used is inverse distance squared for Cu, Au and Ag grades.

Volumes and tonnages are derived using partials percentages based on the mineralized solids models.

Specific gravity is assigned within the block model by inverse distance squared estimation using density measurements within the drillhole database.

Minto North

The block model for Minto North deposit model was authored by Kirkham Geosystems, the author of this section of the report, with an effective date of December 1, 2009.

Outlier restriction employs a search restriction of 25 meters for outliers within the 115 zone above 11%, 50 g/t and 5 g/t for Cu, Ag and Au, respectively. In addition, outliers within the 120 zone above 1.2%, 15 g/t and 2 g/t for Cu, Ag and Au, respectively were limited to 25 meters of influence.

The block model also uses a 10m E X 10m N X 3m L block size and 1.5m composite length. The interpolation method used is inverse distance squared for Cu, Au and Ag grades.

Volumes and tonnages are derived using partials percentages based on the mineralized solids models.

Specific gravity is assigned within the block model by inverse distance squared estimation using density measurements within the drillhole database.

Minto North 2

The block model for the Minto North 2 (formerly Inferno) deposit model was authored by Kirkham Geosystems, the author of this section of the report, and subsequently updated on October 25, 2012.

Outlier restriction employs a search restriction of 25 meters for outliers above 25 g/t and 2.5 g/t for Ag and Au, respectively. In addition, Cu grades above 5.2% are top cut.

The block model also uses a 5m E X 5m N X 5m L block size and 1.5m composite length. The interpolation method used is inverse distance squared for Cu, Au and Ag grades.

Volumes and tonnages are derived using partials percentages based on the mineralized solids models.

Specific gravity is assigned within the block model by inverse distance squared estimation using density measurements within the drillhole database.

9.1.6 Resource Classification

Mineral resources were estimated in conformity with generally accepted CIM "Estimation of Mineral Resource and Mineral Reserve Best Practices" Guidelines. Mineral resources are not mineral reserves and do not have demonstrated economic viability.

The mineral resources may be impacted by further infill and exploration drilling that may result in increase or decrease in future resource evaluations. The mineral resources may also be affected by subsequent assessment of mining, environmental, processing, permitting, taxation, socio-economic and other factors. There is insufficient information in this early stage of study to assess the extent to which the mineral resources will be affected by these factors that are more suitably assessed in a conceptual study.

Mineral Resources for the Minto deposits were classified according to the CIM Definition Standards for Mineral Resources and Mineral Reserves (May 2014).

Drill hole spacing is sufficient for preliminary geostatistical analysis and evaluating spatial grade variability. The Competent Person is therefore of the opinion that the amount of sample data is adequate to demonstrate very good confidence of the grade estimates in the deposit.

The estimated blocks were classified according to:

• Confidence in interpretation of the mineralized zones;
• Number of data points used to estimate a block;
• Number of composites allowed per drill hole;
• Distance to nearest composite used to estimate a block;
• Average distance to the composites used to estimate a block.

The classification of resources was based primarily upon distance to nearest composite; however, all of the quantitative measures, as listed above, were inspected and taken into consideration. In addition, the classification of resources for each zone was considered individually by virtue of their relative depth from surface and the ability to derive meaningful geostatistical results.

Each of the deposits has slightly differing characteristics which are quantifiable and objectively derived, such as distance to nearest composite or average of composite distances. However, another factor that has a significant influence on the selection of classification is confidence which is qualitative and can be highly subjective depending upon the practitioner and author.

For the MSD and Ridgetop, blocks were classified as Measured if they had an average distance of not more than 35 m whilst Indicated was between 35m and 60m and Inferred was greater than 60m to a maximum of 100 m. At Minto North, blocks were classified as Indicated if they had an average distance of not more than 30 m whilst Inferred was between 30m to a maximum of 50m. For Minto East, Minto East 2 and Minto North 2, blocks were classified as Indicated if they had an average distance of not more than 40 m whilst Inferred was between 40m to a maximum of 60m.

To ensure continuity, the boundary between the Measured, Indicated and Inferred categories were contoured and smoothed eliminating outliers and orphan blocks.

9.1.7 Mineral Resource Reporting

CIM Definition Standards for Mineral Resources and Mineral Reserves (December 2014) defines a mineral resource as:

"[A] concentration or occurrence of solid material of economic interest in or on the Earth's crust in such form, grade or quantity and quantity that there are reasonable prospects for eventual economic extraction.

The location, quantity, grade or quality and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling."

The "reasonable prospects for eventual economic extraction" requirement generally implies that the quantity and grade estimates meet certain economic thresholds and that the mineral resources are reported at an appropriate cut-off grade, taking into account the likely extraction scenarios and process metal recoveries. It is the opinion of the Competent Person that the deposit, as classified, has a reasonable expectation of eventual economic extraction.

Before 2016, all Minto MSD mineral resources were reported within an economic shell defining the limits of potential economic extraction above a 0.5% Cu cut-off grade. With the completion of mining of the Main, Area 2, and Area 118 pits, underground mining below these pits, and the deposition of tailings in the Area 2 pit, the economic shell defining the limits of potential economic extraction was re-run ahead of the 2016 year-end reporting process by SRK. The updated economic shell was significantly smaller. The mineralization situated outside of the economic shell was then evaluated above a 1% Cu cut-off grade to demonstrate potential economic extraction in an underground mining scenario (defined by the Minto mine Technical Services Department).

In 2017, SRK re-ran the economic shell used to report mineral resources to factor continued mining of the Area 2 – Stage 3 pit as well as mining of the Area 2 underground lenses. The optimization parameters remained unchanged and the resulting economic shell was further reduced in size (capturing fewer resources at depth). The mineralization previously captured by the 2016 pit shell, but not captured in the 2017 pit shell, was evaluated for continuity above a 1% Cu cut-off for potential economic extraction in an underground mining scenario. Blocks that demonstrated continuity in a potentially mineable shape were retained as resources in 2017, while isolated, discontinuous blocks were removed.

The Area 2 Stage 3 open pit and the Area 2 underground lower "P" lens were mined out during 2018. Both zones are incorporated in the MSD block model. Minto East resources were partially depleted in 2018.

Depletion of the block model is determined by reporting the resource blocks between the as-built mine surfaces as at January 1, 2018 and October 31, 2018 above a 0.5% Cu cut-off grade for open-pit mining, and above a 1.0% Cu for underground mining. The depletion of underground areas, both Area 2 UG and Minto East, includes the pillars being left behind for ground support, as there is no extraction plan for these pillars at this time.

Furthermore, open pit mining at Minto was terminated in April 2018 with the completion of the Area 2 Stage 3 extension. A 50m boundary pillar was constructed around the final pit shell using Maptek™ Vulcan™ software to avoid carrying resources close to the pit walls, as the Area 2 pits have been allowed to fill with water and tailings. The portion of the resource adjacent to the final Area 2 Stage 3 pit wall has been condemned.

In addition, the resources reflect current stockpile volumes as at May 31, 2019.

The May 31, 2019 resources by deposit are summarized in Table 25 and the cumulative total resources as of May 31, 2019 are listed in Table 26.

Table 25: Mineral resources by deposit as at May 31, 2019

Classification	Tonnes	Cu Grade	Ag Grade	Au Grade	Cu Metal	Ag Metal	Au Metal
	(kt)	(%)	(g/t)	(g/t)	(kt)	(koz)	(koz)
Stockpiles
Stockpiles (Measured)	412	1.12	3.05	0.25		5 40	3
Minto South Deposit (MSD) includes Copper Keel
Measured	1,632	1.49	4.6	0.57	24	243	30
Indicated	4,041	1.72	6.0	0.67	70	776	87
Total M&I	5,673	1.66	5.6	0.64	94	1,021	117
Inferred	2,338	1.54	6.1	0.56	36	458	42
Minto North 2
Measured	-	-	-	-	-	-	-
Indicated	-	-	-	-	-	-	-
Total M&I	-	-	-	-	-	-	-
Inferred	1,419	1.42	4.7	0.51	20	214	23
Minto East 2
Measured	-	-	-	-	-	-	-
Indicated	2,778	1.72	7.0	0.80	48	629	72
Total M&I	2,778	1.72	7.0	0.80	48	629	72
Inferred	1,889	1.38	4.1	0.50	26	247	30
Ridgetop
Measured	1,531	0.96	2.1	0.25	15	105	12
Indicated	3,534	0.87	2.9	0.30	31	326	34
Total M&I	5,065	0.90	2.6	0.28	45	431	46
Inferred	318	0.75	1.6	0.13		2 16	1
Minto North
Measured	221	0.94	2.9	0.21		2 20	1
Indicated	257	1.00	5.6	0.61		3 46	5
Total M&I	477	0.97	4.4	0.42		5 67	7
Inferred	28	0.70	3.4	0.32		0	3 0
Minto East
Measured	-	-	-	-	-	-	-
Indicated	632	2.13	6.08	0.89	13	124	18
Total M&I	632	2.13	6.08	0.89	13	124	18
Inferred	109	1.44	4.76	0.60		2 17	2

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• 1. Values may not tally due to rounding.
• 1. Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

Classification	Tonnes (kt)	Cu Grade (%)	Ag Grade (g/t)	Au Grade (g/t)	Cu Metal (kt)	Ag Metal (koz)	Au Metal (koz)
Measured	3,795	1.20	3.35	0.38	46	409	47
Indicated	11,242	1.46	5.26	0.60	164	1,901	21
Total M&I	15,037	1.40	4.78	0.54	210	2,310	263
Inferred	6,100	1.42	4.79	0.51	86	939	100

Table 26: Total Mineral Resources as at May 31, 2019

1. Values may not tally due to rounding.

2. Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

9.1.8 Competent Person Statement

Mr. Kirkham, contributing author of Section 9 of this report, has validated and verified the resources for the MSD and Ridgetop deposits by importing the related block models for each and reporting the resources within the 'reasonable prospects' definitions and the ore zone domains. Therefore, the resources for the MSD and Ridgetop deposits have been audited and reproduced. Mr. Kirkham did not calculate the resources from these two deposits from first principals but did validate and verify from first principals. These resource models were authored by professionals with whom Mr. Kirkham has firsthand knowledge of their work and is confident in the accuracy and quality of the results. In addition, reconciliation of the models against production data demonstrates excellent correlations.

Mr. Kirkham is the author of the Minto North, Minto North 2, Minto East and Minto East 2 deposit calculations.

Mr. Kirkham has visited the property twice for a total of two days in 2014. In addition, he visited the property on March 19th, 2018. Mr. Schulze, the Competent Person, has not independently verified Mr. Kirkham's calculations. However, he is not aware of any issues or evidence to render these as incorrect or misleading. Mr. Schulze visited the property in 2009 and again on June 20, 2019. Mr. Schulze is responsible for the disclosure of these resource calculations.

Mineral resources are reported inclusive of reserves.

9.2 Mineral Reserves

9.2.1 Mineral Reserves Model

The May 31, 2019 reserve estimates were derived from the resource block models listed in Tables 25 and 26.

Price assumptions utilized for reserves reporting are USD\$3.00 per pound copper, USD\$16 per ounce silver and USD\$1,300 per ounce gold. Operating costs are CAD\$3.12 per tonne mined for open pit, and CAD\$36 per tonne mined for underground. The processing cost is CAD\$16.50 per tonne milled, and G&A costs are CAD\$11.9 per tonne. In addition, there exists a royalty of 1.5% NSR. Underground mineral reserves consider 4% dilution and 97.5% mining recovery, and are reported above a 1.2% copper cut-off grade. Metallurgical recoveries of 91% copper, 78% silver and 70% gold have been used.

The 2018 year-end reserve statement for Minto East is a composite of the two block models as previously stated. Minto engineering personnel prepared planned 3D stopes, constrained by the updated geological model, for each of C, D, E, F, G and H panels. Remaining reserves for these panels were calculated using the short- term production model, as it provides a better reserve estimate for panels where there is test-hole drilling. The long-term model was used for A, B, I, J, and K panels, as well as for the remaining development in I, J and K headings. In 2018, the mineral reserves decreased by a total of 42 kt at an average grade of 2.07% Cu. The variance is attributable to the difference between the long term and short term (production) block models.

Mine production for 2018 came primarily from the Area 2 Stage 3 open pit. It was supplemented by underground production from the Area 2 lower lens as well as underground production from the Minto East deposit. Mineral reserves were exhausted from the Area 2 Stage 3 open pit and from the lower lens of the Area 2 Underground in 2018.

As at May 31, 2019, there are no open-pit mineral reserves at the Minto Mine.

Ridgetop does not contain any mineral reserves. The Ridgetop block model was partially updated in 2018, incorporating new drillholes infilling the north half of the model.

Optimization for Copper Keel was also in progress when the decision was made to put the operation on care and maintenance. Copper Keel reserves have therefore not been updated based on the 2018 drilling and are reported based on the estimates completed in 2015.

Table 27 shows the May 31, 2019 Mineral Reserves listed by deposit and by mining method, respectively. The Total Mineral Reserves declared at Minto for May 31, 2019 are listed in Table 28.

		Cu	Ag	Au	Cu	Ag
Classification	Tonnes	Grade	Grade	Grade	Metal	Metal	Au Metal
	(kt)	(%)	(g/t)	(g/t)	(kt)	(koz)	(koz)
Reserves Summary - Stockpiles
Stockpiles (Proven)	412	1.12	3.1	0.25	5	40	3
Reserves - Minto South Deposit (MSD) Copper Keel Underground
Proven	-	-	-	-	-	-	-
Probable	1,616	1.73	6	0.63	28	315	33
TOTAL	1,616	1.73	6	0.63	28	315	33
Reserves - Minto East Underground
Proven	-	-	-	-	-	-	-
Probable	335	2.11	6	0.88	7	63	10
TOTAL	335	2.11	6	0.88	7	63	10

Table 27: Mineral Reserves by Deposit as at May 31, 2019

1. Values may not tally due to rounding.

2. Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

	Table 28: Minto Mineral Reserve Totals as at May 31, 2019
--	-----------------------------------------------------------	--	--

Classification	Tonnes (kt)	Cu Grade (%)	Ag Grade (g/t)	Au Grade (g/t)	Cu Metal (kt)	Ag Metal (koz)	Au Metal (koz)
Reserves Summary Total
Proven	412	1.12	3.1	0.25	5	40	3
Probable	1,951	1.79	6	0.67	35	380	42
TOTAL	2,363	1.68	6	0.6	40	420	45

1. Values may not tally due to rounding.

2. Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

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9.3 Reconciliation of Mineral Resource Block Model

Reconciliation of the production against the resource block model shows good correlation and acts as further validation and verification of the source models.

Production in 2017 came from the Area 2 underground upper and lower lenses and the Area 2 – Stage 3 open pit. There was also minor development ore from the Minto East ore lens at the end of 2017. The resource-block-model-to-mine (BM-to-mine) reconciliation and total resource block-to-mill (TBM-to-mill) reconciliation. Production in 2018 came from the Area 2 underground lower lens, the Minto East underground lens and the Area 2 – Stage 3 open pit. The annual resource-block-model-to-mine (BM-tomine) reconciliation results are described below.

9.3.1 Block-Model-to-Mine Reconciliation: Area 2 – Stage 3 Open Pit

The open-pit reconciliation was completed by compiling truck counts of each blast by material type and reconciling that to the monthly solid generated by the onsite Technical Services department. The tonnage and grade of the block model is reported between two monthly surfaces. The ore-control polygon tonnage designed from the blast holes is compared to the mined tonnage as determined by the reconciled truck counts. Ore-control polygon grades are determined from the blasthole sampling. Reported grades to the mill (truck count grade) are diluted by adjacent material when an ore sector is over-mucked.

The mining of the Area 2 – Stage 3 pit (in-situ ore control polygons) achieved 109 kt (-21%) less tonnage and 1.3 kt (-24%) less total copper metal in comparison to the resource model (Table 29 and Table 30). Factors contributing to this are outlined as follows:

The reported production from truck counts for the Area 2 – Stage 3 pit produced 87 kt (-16%) less ore tonnage and 1.1 kt (-20%) less copper metal than predicted by the block model. The shortfall was due to overprediction of resources when dealing with narrow ore lenses that get heavily diluted when mining on 6m benches. One caveat is that more sulfides were mined than anticipated. The Area 2 – Stage 3 pit produced 57 kt (13%) more tonnage and 0.4 kt (10%) more copper metal than predicted by the block model, when looking at only the sulfide tonnes.

	Tonnes (kt)	Copper Grade (%)	Cu Metal (kt)
Resource Block Model (BM)	623	1.05	7
Ore Control Polygons (OC)	514	1.03	5
Mine Ops Truck Counts (TC)	537	1.02	5

Table 29: Area 2 Stage 3 resource block-model-to-mine reconciliations

1. Values may not tally due to rounding.

2. Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

	BM to OC1	BM to TC2	OC to TC3
Tonnes	21%	16%	-4%
TCu Grade	2%	3%	1%
Cu Metal	24%	20%	-3%

Table 30: Variance of mineral resource reconciliation to mine production

• 1. Values may not tally due to rounding.
• 1. Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

Table Notes:

• 1. BM to OC Variance= ∗ 100%
• 1. BM to TC Variance= ∗ 100%
• 1. OC to TC Variance = ∗ 100%

9.3.2 Block-Model-to-Mine Reconciliation: Area 2 Underground

Reported grade from the stopes is estimated using test-hole data provided by drill cuttings from test holes drilled every 10 m along the back of each development heading. Sections were cut through the test holes to create polygonal estimates of stope production for Area 2 lower lens. Reported grade from development headings is estimated using grab samples which are collected after each round is blasted and mucked.

A total of 115 kt of ore was mined from the Area 2 lower lens in 2018, which compares favorably to the planned reserve of 120 kt, however the recorded grade was 28% lower than planned (1.93% Cu achieved vs 2.47% Cu planned). It is worth noting that the Area 2 lower lens over-achieved in 2017. Combined 2017- 18 production on the Area 2 lower lens produced 11% more Cu metal than planned (10 kt Cu metal extracted vs 9 kt Cu metal in reserve). The poor results from 2018 are largely due to the remaining mining being adjacent to the 320 fault, which locally caused excessive dilution and ore loss.

Reported Minto East stope production differed from Area 2 lower lens reported production, in that a production block model was created for Minto East using the test-hole data. A total of 174 kt of ore was mined from the Minto East ore lens vs the plan of 240 kt according to the long term block model. The lower achieved tonnage is attributable to three factors:

• All sill drift development was designed to be in ore in the stated reserve however, due to the undulatory nature of the Minto ore zones, a portion of sill drift development was sent as waste.
• The western limit of the ore-body was shorter than predicted for C, D, E and F stopes, as shown in Figure 5-1.
• Sill drifts were originally designed to be slashed out to 10m wide during development; however, in practice, the drift walls were slashed with the stope blasts rather than during development to minimize dilution and avoid development delays. This results in fewer tonnes

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recovered but at higher grade.

Reported Minto East metal production (5 kt Cu metal) compares favorably to the reported block model depletion of 5 kt Cu metal because the actual ore grade was 26% higher than predicted by the long-term block model. This translates to a recovered Cu metal difference of 2% less (Table 31) than predicted by the resource model.

Table 31: Underground block-model-to-mine reconciliation

	Resource BM	Surveyed Production	Variance
Minto East
Tonnage (kt)	240	174	38%
Grade (%Cu)	2.06	2.78	-26%
Metal (kt)	5	5	2%
Area 2 Lower Lens
Tonnage (kt)	120	115	4%
Grade (%Cu)	2.47	1.93	28%
Metal (kt)	3	2	33%
Total – Underground
Tonnage (kt)	359	289	24%
Grade (%Cu)	2.20	2.44	-10%
Metal (kt)	8	7	12%

1. Values may not tally due to rounding.

2. Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

9.3.3 Total Block-Model-to-Mill Reconciliation

Block model performance was poor in 2018.

As of the end of 2018, a total of 192 kt of material (3 kt Cu metal) from the Stage 3 pit with high ASCu values resides in stockpiles that the mill has not been able to process to date. To make up the mill feed shortfall, approximately 29 kt of stockpiled high-grade waste ("HGW") and 13 kt of low-grade POx from the Top-of-the-World ("TOTW") stockpile were sent as mill feed. The grade of the material sent from both stockpiles was estimated to average 0.34% Cu and 0.78% Cu respectively (Table 32).

	Tonnes	Copper Grade	Cu Metal
	(kt)	(%)	(kt)
Total Block Model (OP+UG) (BM)	977	1.47	14
High Grade Waste (from stockpile)	29	0.34	0
TOTW POX (from stockpile)	13	0.78	0
Net Stockpile Depletion	65	0.12	0
Adjusted Block Model Total (Adj. BM)	1,085	1.35	15
Total Mine Production (Mine)	938	1.35	13
Mill	907	1.31	12

Table 32: Block model-to-mill reconciliation

Table Notes:

• 1. Values may not tally due to rounding.
• 1. Mineral resources have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines and are reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and using CIM Definition Standards.

The comparison of total mine production to the mill shows tonnage, grade, and contained copper to be 3%, 3%, and 6% higher than realized by the mill (Table 33). This is similar to what was recorded in the 2017 year-end report where 7% more copper metal was reported by mine production than realized in the Mill.

Table 33: Variation between block model and reconciled mill throughput

	Adj. BM to Mill1	Mine to Mill2	Mine to Adj. BM3
Tonnes	20%	3%	-14%
Cu Grade	3%	3%	0%
Cu Metal	23%	6%	-13%

Table Notes:

$$\textbf{1.} \quad \textbf{Adj. BMM to Mill} = \frac{\textit{Ad} \, \mathtt{j.} \, \mathtt{BM} - \mathtt{M} \, \mathtt{ill}}{\mathtt{M} \, \mathtt{ill}} \ast \textbf{1} 00 \, \%\, \mathtt{j.}$$

$$\text{2.} \quad \overset{\text{'}}{\text{Mine to } \text{Mil}} = \frac{^{\text{Mil}}}{^{\text{Mil}}} * 100\%$$

$$\textbf{3.} \quad \textbf{Mine to } \textbf{BM} = \frac{\textit{Mul}}{\textit{Ad}/\textit{BM}} * 100\%$$

.

In summary, the overall (adjusted) block model performance with respect to the mine and the mill was poor in 2018. All mining areas within the MSD performed poorly. Mining for the Area 2 Stage 3 pit, as well as for the Area 2 Underground deposits, is now complete. The Minto East deposit performed well on total

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Cu metal (2% less than BM), albeit with fewer ore tonnes at a higher grade. Going forward, the stated reserve for the Minto East deposit includes results from test-hole data where available and performance to the model will undoubtedly improve.

Figure 17: POX Stockpile, June, 2019

10. Mine Engineering and Infrastructure

The following section was provided verbatim by Sebastien Tolgyesi, as a contributing author to Pembridge Resources Inc.

10.1 Introduction

This s ec t io n de s cr i b es t h e m i n i n g m et h o d s u s e d i n b o t h open pit and underground operations at the Minto mine. The M – Zone, Area 118 and Area 2 zones, Copper Keel, Minto North Underground and the plans for the Minto East 2 Zone are covered in the underground section. The Area 2 Stage 3, and Ridgetop North and South deposits are covered in the open pit section. Please note that Minto East 2 and Minto North 2 are not yet authorized under the current Quartz Mining Licence (QML-0001). The targeted date for this permit was Q4 of 2018.

10.1.1 Background

The Minto mine has been in operation since 2007. Operations consisted solely of open pit mining from 2007 until 2012, at which time development of the Minto South Underground deposit commenced. Development continued through early 2013.

In January 2014, through continued consultation with the Department of Energy, Mines and Resources (EM&R), Government of Yukon (YG), Minto sought approval for changing the mining sequence such that the "M-zone," originally the final ore zone to be mined in the Phase IV plan, could be brought ahead in the schedule and accessed from a portal at the bottom of the completed Area 2 Stage 2 pit. Approval to proceed was granted on January 10, 2014.

The M-zone was planned for completion in October 2014, at which time mining commenced in the Area 118 zone. This zone was completed in April 2016 and mining then transitioned to the Area 2 zone. Openpit mining of Area 2 was completed in H1 of 2018.

In October 2016, Minto Exploration Ltd. (MintoEx) submitted an updated Mine Development and Operation Plan ( " MDOP") showing a revised Area 2 Stage 3 design that mined a substantially smaller volume than the original Phase V/VI pit presented in 2014. The October 2016 redesign considered additional in-fill exploration drilling and geotechnical drilling completed in 2015, as well as a degree of conservatism in the economic assumptions.

On October 11, 2018, Capstone placed the Minto mine on care and maintenance, following the termination of the Purchase and Sale Agreement of MintoEx, the company that controlled the Minto mine assets, between Capstone and Pembridge. The ball mills were jacked up and cleaned, and the ball charges were removed. Pumps servicing milling were opened and cleaned. A care and maintenance staff of eight were on site at all times, and performed regular checks on surface and underground operations. A Temporary Closure Notice was submitted on October 18, 2018.

On June 3, 2019 Pembridge closed its acquisition of Minto Explorations ltd. from Capstone, and initiated the restart process at the Minto minesite. The Minto minesite was taken off of care and maintenance status at that time.

10.2 Operations Overview

Figure 18 shows an aerial overview of the mine site as of September 2014, the most recent aerial orthophoto taken. Notable surface changes since then, not shown, include the following:

• Removal of M-zone infrastructure and commencement of tailings deposition to Area 2 pit in April 2015;
• Mining of the Minto North pit from August 2015 to September 2016;
• Dumping of waste rock from the Minto North pit to the Main Waste Dump Expansion and Mill Valley Fill Extension Stage 2 in 2015 and 2016;
• Re-sloping of the Southwest Dump, Mill Valley Fill Extension, Dry Stack Tailings Storage Facility, and Main Waste Dump Expansion, as part of progressive reclamation activities in 2017; and,
• Mining of the Area 2 Stage 3 pit, starting in January 2017, and completed in H1 of 2018.

All underground development and production were executed with the support of Dumas Mining Contracting Ltd. (Dumas). Engineering and planning were completed internally with Minto personnel.

The following sections describe the completed and in-progress underground areas. Figures 18 to 20 show as-built development, and Figures 21 to 22 show as-built stopes.

10.2.1 M-Zone Underground (completed)

The M-zone underground operation was completed in October 2014. Between January and May 2015, additional surface mining of the Area 2 pit was then undertaken, recovering remnant ore from the pillars between the pit and the adjacent M-zone underground workings. As remnant mining was retreating, backfilling of the Area 2 pit began, burying the portal and the breakthroughs between stopes and surface with tailings.

10.2.2 Area 118 Underground (completed)

Underground mining in the Area 118 zone was completed in April 2016. Stoping was retreated back to the three accesses at the 740, 710 and 690 levels. All are now barricaded and no longer accessible. Water from the zone is pumped from the 690 access to prevent overflow into the Area 2 ramp.

10.2.3 Area 2 Underground (completed)

Production in the Area 2 zone commenced in July 2016 and was completed by April, 2018. B y J a n u a r y , 2 0 1 8 , sill development was in progress on the 620 level; stoping was in progress on the 650 and 630 levels and was completed in H1 2018.

10.2.4 Minto East Underground (uncompleted)

This zone was reached in 2017, but sill development did not start until April, and production did not start until June 2018.

10.2.5 Copper Keel Underground

The Copper Keel zone is scheduled to be mined between H2 of 2019 and H2 of 2022, pending resumption of operations.

10.2.6 Minto East 2 Underground

The Minto East 2 zone is not currently permitted under the Quartz Mining License.

10.2.7 Minto North Underground

Minto North is not currently permitted under the Quartz Mining License. This zone may require another portal developed from the Minto North Open pit.

Figure 18: Site Overview

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Figure 19: As-built main access ramp

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Figure 20: As-built Area 118 Development

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Figure 21: As-built Area 2 development

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Figure 22: Plan View of all existing development and stoping: Area 118 shown in red and green; Area 2 stopes are shown in grey and blue; and M-Zone stopes are shown in pink

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Figure 23: Perspective view of all existing development and stoping: Area 118 stopes are shown in red and green; Area 2 stopes are shown in grey and blue; and M-Zone stopes are shown in pink

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Figure 24: Plan view of underground development and ore zones

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10.2.8 Ore Production and Underground Scheduling

As of May 31, 2019, the reserve statement included 1,616 kt of ore at the Minto South Deposit (MSD) Copper Keel Underground at an average grade of 1.73% Cu, and 335 kt of ore at an average grade of 2.21% Cu at Minto East underground.

The tonnages produced by the underground mine will change as detailed stope designs are prepared, taking into account the local ground conditions and optimization of the locations of stopes based on in-fill drilling.

The mining rate is currently planned at 1,400 tonnes per day of ore. With continuous mining the Minto East zone would have been completed in H1 2019.

10.3 Underground Mine Development and Design

10.3.1 Mining Method

The M-zone, Area 118 and Area 2 zones were all mined using a longhole open stoping method, and the Minto East zone is mined in the same manner. All of these ore zones can be described as lenses of foliated and variably migmatized metamorphic rocks bounded at their hanging wall and footwall contacts by equigranular, undeformed granodiorite (eG) host rock. The metamorphic zones are typically 5-30m thick, and the grade within them varies from 0% to approximately 6% copper. These zones typically dip at 20° to 35°.

The mining method requires a series of parallel sill drifts to be developed along the strike of the deposit, following the footwall contact. From these sill drifts, typically 6m wide and 4.5m high, a top-hammer longhole rig drills rings of 3" up-holes into the deposit above, stopping at the hanging-wall contact.

To provide adequate void space for blasted muck when starting a new stope, 1.8m x 1.8m inverse raises are drilled. These are composed of six 6-inch reamed holes, which are left unloaded, surrounded by a pattern of eleven 3½-inch blast holes. Generally, each stope is initiated with one or more rings of blast holes on either side of the inverse raise; subsequent blasts increase the number of rings fired simultaneously to take advantage of the void space in each block.

After drilling is completed, the rings are loaded, blasted, and then mucked out from the sill drift, which serves as a drawpoint. The average blast size is 3,000 tonnes. Mucking is via remote-controlled load-hauldump machines (LHDs); all stopes are non-entry so that no personnel are exposed to the open stope. Ore is trucked to surface along the main ramp through the Minto South portal.

For the Area 118 zone and M-zone, production drift centerlines were 15m apart. From each 6m-wide sill drift, drill holes fanned out to blast a 10m wide stope, and 5m-thick rib pillars separated each stope, supporting the hanging wall. For the Area 2 zone, production drift centerlines are 20m apart and stope and pillar widths are varied based on the ore thickness (stope and pillar height). Typical stope widths are 15m and pillar widths are 5m. For more details on the stope geometry see Section 10.5.

Significant variability in copper grade occurs within each ore zone; therefore, core drilling completed as part of earlier exploration is supplemented by infill drilling done from each sill using the production drilling equipment. In the Area 118 and Area 2 zones, additional core drilling was also done from the underground workings.

The mining method does not use backfill; however, small quantities of development waste are sometimes placed in completed stopes to reduce haulage requirements.

10.3.2 Access

The main ramp of the Minto South Underground measures 1,677m, extending to the currently active Area 2, 630 level. The first access to the Minto East zone is 2,440m in length. The upper ramp is 5.0m wide and 5.0m high; the ramp below t h e 690 l e v e l has been driven at d i m e n s i o n s o f 5.0m wide and 5.5m high to provide additional clearance between vent ducting and haul trucks. This access is used for all ore and waste haulage, personnel/equipment access, and services. It is also used as an exhaust airway.

Re-muck bays are typically developed every 150 m along the decline to improve the efficiency of the development cycle; they are designed to hold two rounds of development muck. The re-muck bays have the same dimensions as the decline and are generally 15 m in length. Once they are no longer needed for development, they are repurposed as equipment storage, pump stations, drill bays, service bays, etc.

Ground support generally comprises 2.4m-long fully grouted resin rebar bolts on a 1.5m x 1.5m pattern with a 1.8 m bolt in the center for the back and 1.8m bolts for the walls. Welded wire screen is installed to within 1.5 m from the floor. Additional support is installed at all drift intersections. More detail on ground support is presented in Section 10.5.6.

10.3.3 Stope Layout

Figure 25 shows a perspective view of the Minto East stope design. The zone is a single lens, and is developed from east to west, then is retreated in the opposite direction.

Figure 25: Perspective view of the Minto East stope design looking southwest

10.4 Underground Mine Operation

10.4.1 Material Handling

A combination of 7, 8 and 10-yard LHD units and 42 tonne trucks are used for ore and waste haulage. The broken ore from the stopes is mucked by LHDs to remuck bays, or loaded directly onto trucks, which carry ore from the mine to a small stockpile adjacent to the portal. The surface mining fleet then takes ore to open pit stockpiles or to the mine crusher on a daily basis.

Waste rock from development headings is either hauled to surface in the same manner, or trammed to a mined-out stope and dumped there. Development rounds are assayed and the waste is moved to the appropriate waste dump as outlined in the Waste Rock and Overburden Management Plan (WROMP). The protocols for segregation and placement of waste materials are consistent with the protocols for surface mining.

10.5 Geotechnical Assessment

Geotechnical characterization and design work, summarized in the following sections, were carried out by Golder Associates Ltd. and Minto's Mine Technical Department for the Area 2 and Minto East underground areas. The same methodology was used as for the Area 118 zone. A ground control management plan was developed and implemented in 2013 and has been used for all underground development to date. The plan is updated annually, the most recent update was in December, 2016.

10.5.1 Orebody Geometry

Parameter	M-Zone	Area 118	Area 2 650 Level	Area 2 630 Level	Minto East
Depth (m)	25-110	150-200	110-145	90-225	270-330
Area (m)	120 x 100	235 x 190	135 x 35	220 x 115	220 x 150
Dip (degrees)	10-15	18-45	10-30	10-30	10-30
Vertical Thickness (m)	8-23	5-35	5-21	5-31	5-26

Table 34: Summary of Orebody Geometry

The following points (italicized excerpts from the SRK Phase V Prefeasibility Study) summarize the general ore body conditions:

The (mineralized) zones bifurcate, which means that a mineralized zone can contain a significant amount of waste, or that thinner ore zones can merge with larger zones. A bifurcating geometry complicates geological modelling and may expect to increase internal dilution.

The width and dip of mineralized zones are locally variable. The zones therefore appear to pinchand-swell. The change in thickness might be as much as an order of magnitude over less than 30 m in horizontal distance.

At least some of the irregularity in the geometry and thickness of the mineralized zones is due to small-scale and large-scale structural displacements. No detailed structural model has been completed for either deposit, but at least two faults appear to be present in Area 2, and three possible faults displace the modelled zones in Area 118. Similar structures may be present throughout the deposit, each with displacements of a few metres or less.

10.5.2 Hydrogeological Assessment

A detailed hydrogeological assessment to define the potential inflows to the underground workings has not been completed. Inflows encountered to date in the Minto South Underground area have been associated with discrete water-bearing faults and with un-grouted core drillholes. No unmanageable inflows have been intersected and a standard sump and pump dewatering system has been used without any grouting work required. The average total discharge rate from the mine is currently 35 gallons per minute (gpm).

10.5.3 Excavation Dimensions

The following is a summary of the planned excavation and pillar dimensions.

Excavation/Pillar	Area 118	Area 2	Minto East 5.0 m (W) x 5.5 m (H)
Development drifts, ramps	5.0 m (W) x 5.5 m (H)	5.0 m (W) x 5.5 m (H)
Production drifts	6.0 m (W) x 4.5 m (H)	6.0 m (W) x 4.5 m (H)	6.0 m (W) x 4.5 m (H)
Longhole stope (non-entry)	10 m (W) x 9-25 m (H)	10-15 m (W) x 10-21 m (H)	10-15 m (W) x 10-26 m (H)
Longhole pillar (non-entry)	5 m (W) x 9-25 m (H)	5-10 m (W) x 10-21 m (H)	5-10 m (W) x 10-26 m (H)
Room (entry)	10 m (W) x 5-10 m (H) (5 m lifts with backfill)	10 m (W) x 5-10 m (H) (5 m lifts with backfill)	10 m (W) x 5-10 m (H) (5 m lifts with backfill)
Pillar (entry)	5 m (W) x 5-10 m (H)	5 m (W) x 5-10 m (H)	5 m (W) x 5-10 m (H)

Table 35: Summary of Excavation Dimensions

10.5.4 Rock Mass Characterization

Rock mass characterization is based on core logging and laboratory testing completed by SRK and underground mapping carried out by Minto. Summaries of rock mass quality and strength are contained in Tables 36 and 37.

Table 36: Summary of Rock Mass Quality

Area	Source	Rock Type	Total Length	RMR (76)			Q'
			Logged (m)	min	max	avg	min	max	avg
Area		Ore	1207	31	82	64	0.17	99	21.1
118	Core Logging (SRK)	Waste (HW)	433	31	82	65	0.24	100	21.4
	Underground	Ore	147	59	89	79	1.4	150	17.7
	Mapping	Waste	204	65	92	85	2.6	50	17.5
Area 2	(Minto)	Ore	211	31	82	65	0.05	99	19.4
	Core Logging (SRK)	Waste (HW)	89	45	79	64	2.07	93	21.7
Minto		Ore	350	24	84	68	0.11	50	15.1
East	Core Logging (SRK)	Waste (HW)	79	40	79	66	0.29	67	10.5

Area	Rock Type	Total Length Logged (m)	Avg. Logged Strength	Total Length Mapped (m)	Avg. Mapped Strength	Number of Point Load Tests	Avg. Point Load Strength (MPa)	Number of UCS Tests	Avg. UCS (MPa)
Area 118	Ore	1443	R4 (50- 100 MPa)	126	R5 (100- 250 MPa)	3	245	7	125
	Waste (HW)	527	R4 (50- 100 MPa)	60	R5 (100- 250 MPa)	1	163	8	135
Area 2	Ore	232	R4 (50- 100 MPa)	-	-	14	200	1	104
	Waste (HW)	92	R4 (50- 100 MPa)	-	-	9	185	2	126
Minto East	Ore	16	R4 (50- 100 MPa)	-	-	43	158	10	105
	Waste (HW)	15	R3 (25-50 MPa)	-	-	12	195	3	101

Table 37: Summary of Intact Rock Strength

Rock structure has been characterized using mapping in the underground development to date and in the open pits. Rock structure is summarized in Figures 26 through 28, and in Tables 38 and 39.

Figure 26: Stereonet of rock structure in Area 118 underground

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Symbol	ZONE					Quantity
+	A2UG					316
Color		Density Concentrations
			0.00	1.00
			1.00	2.00
			2.00	3.00
			3.00	4.00
			4.00	5.00
			5.00	6.00
			6.00	7.00
			7.00	8.00
			8.00 9.00	9.00	10.00
		Maximum Density	9.01%
		Contour Data	Pole Vectors
		Contour Distribution	Fisher
Counting Circle Size		1.0%
	Color	Dip	Dip Direction		Label
			Mean Set Planes
1W		73	54		8
2W		79	226		8b
3W		67	295		110
4W		16	106		19
5W		38	332		15
IW		45	54		J1
10w		79	340		16
11w		74	247		12
		Plot Mode	Pole Vectors
		Vector Count	316 (370 Entries)
		Terzaghi Weighting	Minimum Bias Angle 15°
		Hemisphere	Lower

Figure 27: Stereonet of Rock Structure in Area 2 Underground

Figure 28: Stereonet of Rock Structure in Area 2 Open Pit

Table 38: Summary of Major Joint Sets

Major Joint		Open Pit Mapped Orientation		Underground Mapped Orientation		Comments
Set	Average Dip	Average Dip Direction	Average Dip	Average Dip Direction
J1	54	045	-	-	 Area 2 Pit  Area 118 Pit  Minto North Pit  Area 118 UG  Area 2 UG	Major fault orientation in Area 2 Pit and A2 underground ("320 Fault"). Fault orientation in Area 118 underground but not indicated as a major joint set. Minor joint set in Area 2 UG
J2	-	-	84	256	 M-Zone UG  Area 118 UG  Area 2 UG	Slightly steeper set to J8 different orientation. Major ore joint set.
J3	58	137	67	134	 Area 2 Pit  M-Zone UG  Area 118 Pit  Area 118 UG  Minto North Pit	Major set in all areas.
J4	78	163	74	161	 Area 2 Pit  M-Zone UG  Area 118 UG	Major set in most areas. Not apparent in ore.
J5	40	322	-	-	 Area 2 Pit  Area 118 Pit  Minto North Pit  Area 2 UG	Minor set in open pits. Not observed in areas 118 and M-zone underground. Minor set observed in Area 2 UG
J6	73	350	79	340	 Area 2 Pit  M-Zone UG  Area 2 UG	Moderate set in open pits. Minor set in Area 2 UG waste. Not apparent in Area 2 UG ore. Observed as steeper dipping set in M-Zone underground.
J7	-	-	30	014	 M-Zone UG  118 UG	Major ore joint set.
J8	80	041	80	045	 Area 118 UG  Area 2 Pit  Area 118 Pit  Area 2 UG	Major set in Area 2 Pit. Major set in Area 118 underground. Major set in Area 2 UG ore – not apparent in Area 2 UG waste.
J8b	-	-	82	216	 Area 118UG  Area 2 UG	Major set in Area 2 UG. Minor set in Area 118 UG.
J9	-	-	10	106	 Area 118 UG  Area 2 UG	Minor set in Area 118 underground. Moderate set in Area 2 UG. Not apparent in ore.
J10			67	295	 Area 2 UG	Moderate set in Area 2 UG waste.

Table 39: Summary of Major Structures

Structure Description	Average Dip	Average Dip Direction	Comments
Fault	66 (65-76)	35 (15-40)	Major fault intersected throughout Area 118 underground waste and ore development. Zone of up to several meters of altered, weak rock. Often water bearing.
Fault	64-74	40-50	Major fault zone in Area 2 Pit ("320 Fault) and regional fault orientation. Up to 5m zone of gouge, altered fractured rock.
Fault	60	160	Gouge filled fault in M-Zone underground.
Fault	59	292	Minor fault in Area 118 underground waste rock.

10.5.5 Stability Analyses

10.5.5.1 Longhole Stoping

Stope spans for future mining areas were designed using a combination of empirical analysis, numerical modelling and experience in the Minto underground to date. Stability graphs for each deposit are shown in Figure 29 and Figure 30. Exposures plot in the stable or transition zone with less than 2m of equivalent linear overbreak/slough (ELOS).

To date, no unmanageable instability has been experienced in open stopes. Stope backs have performed well, typically breaking clean to a planar, discrete hanging wall contact. Only one stope in Area 118 experienced overbreak in the back, for an approximate 15m length in 710 E2. The overbreak was associated with pervasive structures and broke up to approximately 10m above the planned stope back. Typical overbreak in stope backs is less than 0.5m, and underbreak from the planned back is more common. Several trial stopes were mined in Area 118 to investigate the performance of wider spans. These included four areas in different parts of the deposit successfully mined at widths up to 20m, with little to no overbreak.

Instability in the stope walls has occurred in several places where fault zones result in weak, ravellingtype behaviour. Unplanned breakthroughs through pillars occurred in two places in Area 118. In the M-Zone, two pillars unravelled for approximately 30-40m length. In all cases, pillars were successfully re-established either by narrowing the subsequent stope blasts, or re-slotting to leave a mid-stope pillar. The mining method allows for flexibility to adapt to changing conditions by leaving wider pillars or midstope pillars where conditions require.

Figure 29: Area 2 Stability Graph Analysis (Golder, 2015b)

Figure 30: Minto East Stability Graph Analysis (Golder, 2016)

Empirical and numerical analyses were carried out by Golder Associates Ltd (Golder) to assess the Area 118, Area 2 and Minto East zones. Complete results are contained in the report titled: "Minto Mine Underground Reserve Update Geotechnical Input" (Golder, 2015). Permissible stope and pillar widths were estimated for the range of mining heights in each deposit, shown below for Area 2 and Minto East.

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Figure 31: Empirical analysis results for Area 2 upper lens (650 level)

Figure 32: Empirical analysis results for Area 2 lower lens (630 level)

Figure 33: Empirical analysis results for Minto East

10.5.5.2 Room and Pillar

Room and pillar mining are expected to make up a small percentage of the overall mine plan, however it has been assessed to allow flexibility where the geometry of the orebody is not suitable for longhole mining.

Planned mining geometry for room and pillar areas consists of 10m wide by 5m high rooms and crosscuts, and 5m square pillars. In some areas, a second 5m lift may be required in which case the lower lift will be backfilled with uncemented waste rock.

The room size has been assessed using both empirical and numerical methods. The critical span curve for main entry openings (Ouchi et al., 2004) is shown in Figure 34. Spans of 10 metres are predicted to be stable for both Area 2 and Minto East.

Figure 34: Critical Span Design Curve (Ouchi, 2004)

Numerical analyses using a combined discrete fracture network (DFN) and discrete element model were completed by the engineering firm "Itasca Consulting Group Inc." in 3DEC to further assess room spans, particularly in intersections where greater spans will be required. Complete results are contained in the presentation "Minto 118 Zone – 3DEC/DFN Analyses" (Itasca, 2014). The model used is shown in Figure 35.

Figure 35: 3DEC/DFN Model used for Room Span Analysis (Itaska, 2014)

The analyses were run considering the standard Type 1 ground support, including 2.4m long resin-rebar on 1.5 x 1.5m spacing with a 1.8m center resin-rebar to pin the mesh, as well as secondary intersection support consisting of 5m long Super Swellex (friction rock bolt) on a 1.8m x 1.8m spacing.

The analyses concluded that, with no ground support, the failure weight will be an average of 132 tonnes in the intersection roof, to a maximum depth of 3.7m into the roof. With ground support installed the roof was predicted to be stable.

Major structures such as faults or highly fractured zones were not considered in the analyses. Where major structures are identified during development mapping, spans will be limited or additional casespecific ground support will be designed.

10.5.6 Ground Support Requirements

Ground support requirements for underground development are contained in the Minto Underground Ground Control Plan, updated in December 2016. The following are summaries of ground support elements and requirements for development openings.

Table 40: Ground Support Elements

Support Element	Description	Minimum Breaking (tensile) Strength	Comment
Bolts	#6 (20mm) (3/4") threaded rebar bolt w/ full column resin	13 tonnes	-
	#6 (20mm) (3/4") forged head rebar bolt w/ full column resin	18 tonnes	Used for raise development.
	Super Swellex (36 mm)	24 tonnes	-
	Standard Swellex (27 mm)	12 tonnes	Used for face bolting.
Plates	Domed - 15 x 15 cm (6" x 6"), 6 mm (1/4")	-	-
Resin	30mm x 610mm cartridge 30 second (fast) 180 second (slow)	-	-
Mesh	6-gauge welded wire mesh	~ 2-3 tonnes bag Strength	Galvanized for permanent excavations. Bright for short- term
Straps	0-gauge welded wire mesh straps	-	eUsed for stope brow xcavations. support.

	Type	Span (m)	Primary Support (minimum)	Comment
1	Development Drifts (typical ground conditions)	5.0	2.4 m (8 ft.) rebar in back around perimeter of mesh sheets 1.8 m (6 ft.) rebar in back and walls to pin mesh at center 1.8 m (6 ft.) rebar in walls to 1.5 m above floor 1.5 x 1.5 m bolt spacing diamond pattern	Life of mine infrastructure in typical ground conditions.
2	Production Drifts (typical ground conditions)	6.0	2.4 m (8 ft.) rebar in back around perimeter of mesh sheets 1.8 m (6 ft.) rebar in back and walls to pin mesh at center 1.8 m (6 ft.) rebar in walls to 1.5 m above floor 1.5 x 1.5 m bolt spacing diamond pattern	Non-permanent development (e.g. stope/production room crosscuts) in typical ground conditions.
3	Poor ground – fault zones	≤6.0	2.4 m (8 ft.) rebar in back around perimeter of mesh sheets 3.6 m (12 ft.) Super Swellex to pin mesh at center 1.8 m (6 ft.) rebar in walls to 1.5 m above floor 1.5 x 1.5 m bolt spacing diamond pattern Bright/Galvanized welded wire mesh to 1.5 m above	Poor ground, typical in fault zones.
			floor
	Intersection Secondary Support
1,2,3	Intersections	≤9.5	To be installed in addition to primary support pattern outlined above: 3.6 m (12 ft.) Super Swellex in back and shoulders 1.8 x 1.8 m bolt spacing - Installed at least two rows past the intersection in each direction.	Intersection support to be installed prior to taking wall slash.

Table 41: Minimum Ground Support for Development and Production Openings

10.5.7 Monitoring

Monitoring is described in detail in the Minto Underground Ground Control Plan. The following table summarizes the primary elements of the monitoring programs.

Table 42: Summary of Ground Control Monitoring

Element	Description
Inspections	 Daily inspections of active production openings by Geotechnical Engineer/EIT, Minto supervision and/or Dumas supervision  Monthly inspections of fresh air raise/manway  Quarterly inspections by the Geotechnical Engineer of all development and production openings  Ground control log book maintained by underground shifters and checked by Geotechnical Engineer/EIT
Geotechnical mapping	Rock quality and structure mapping is carried out regularly by Geotechnical Engineers/Geologists to identify major structures and changing conditions for use in geotechnical analysis and mine design.
Cavity monitor surveys (CMS)	Carried out in open stopes after each blast.

10.6 Ventilation, Ancillary Infrastructure, and Dewatering

This section describes the ventilation configuration for the Minto South Underground.

10.6.1 Infrastructure

Air is supplied to the mine by a surface installation commissioned in March 2015. The fan specifications are as follows:

Table 43: Surface fan specifications

Rated power	344 hp
Motor control	Variable frequency drive
Max rotation speed	880 rpm at 60Hz
Fan specifications	101.5" diameter with adjustable blade pitch
Air heating system	Six propane burners in two modular burner houses
Max air heating capacity	32 million BTU/h

The variable frequency drive on the fan is currently run at 31Hz: with the existing mine layout, this is sufficient to deliver 240,000 cubic feet/minute (cfm). Testing the fan at full speed, airflow was measured at 350,000 cfm.

Air is heated to maintain above-freezing temperatures year-round. The system comprises six burners and their ancillary infrastructure (blower motors, CO and temperature sensors, electronic controls). Six 30,000-gallon propane tanks supply the burners with fuel.

10.6.2 Ventilation Circuit

The fan is currently installed on top of a 3m x 5m raise running from surface to the 760m elevation. This raise also serves as an emergency escapeway / egress. As part of Minto East mining, two additional raises will be developed, one 3m in diameter for ventilation and one 2m in diameter for an escapeway. The 344 hp fan and burners will then be moved to the Minto East raise, reversing the circuit so that air will exhaust through the current raise.

Figure 37 shows a section through the raise and stopes used to transfer air to the bottom level of the mine. On the 760m level, air flows through a 70m transfer drift, then down a short raise to a stope that is open down to the 710 level. Air then flows through another open stope down to the 690 level. By routing air through open stopes, air resistance is minimized.

The start of the Area 2 decline is a short distance upstream from where the intake air exits the 690 level open stope. A bulkhead was constructed on level 710 to force all of the airflow down through this path. From there, air is supplied to the Area 2 zone and Minto East ramp via twin 48" steel ducts with in-line 150hp booster fans.

The ventilation system remained in operation, with ongoing maintenance during the care and maintenance period. The Annual Report for the Air Emissions Permit, issued in March 2019 did not state any violations or adverse issues.

Figure 36: Portal to Minto East and Copper Keel deposits, June, 2019. Portal is ventilated and electrified.

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The air volume required for the fleet currently in use is shown in the table below. The surface fan is controlled by a variable frequency drive, allowing the airflow to be adjusted as requirements change.

Table 44: Ventilation requirements for the Minto South Underground

Make / Model	Equipment Type	Fleet	Engine Power (hp)	CFM Required
Atlas Copco ST8B	LHD	3	325	66,
Atlas Copco ST1520	LHD	3	400	81,
Sandvik LH410	LHD	2	295	17,
Atlas Copco MT42	Haul Truck	4	520	146
				,80
Sandvik Jumbo	Jumbo Drill	1	147	9,
Atlas Copco M2C Jumbo	Jumbo Drill	1	150	8,
Maclean MEM-928	Bolter	1	147	9,
Maclean MEM-946	Bolter	1	150	8,
Minecat UT100	Tractor w/ forklift, backhoe	2	99	14
Walden M-60	Scissor Lift	2	86	,0 15
Getman	Emulsion Loader	1	99	7,
Toyota Land Cruiser	Flatdeck, mancarrier	3	127	21,900
	Total at Peak Operation:			403,900 CFM

Figure 37: Cross-section through fresh air supply path to Minto South Underground

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10.6.3 Compressed Air

Minto currently has three compressors, all of which are installed along the main ramp at approximately the 720m elevation level:

• 2x Sullair 7509/A (350 cfm at 125 psi, 100hp)
• 1x Atlas Copco GA-315 (1811 cfm at 125 psi, 350hp)

All three compressors are tied into the network of 4" air lines that run throughout the mine. The larger Atlas Copco unit runs only when production drilling is active, as the longhole drills represent a substantial majority of the mine's compressed air requirement.

Mobile electric equipment such as jumbos and bolters are equipped with their own compressors. The central compressors are needed only for jackleg / stoper drilling, pneumatic dewatering pumps in development headings, and other minor uses.

10.6.4 Underground Electrical Power

In addition to fixed installations such as fans and compressors, production drilling equipment (jumbos and bolters) run on electric power while stationary.

The mine is supplied by a 4,160V cable that runs down the decline. This is reduced to 600V, the operating voltage of all mobile equipment, at several substations. The Atlas Copco GA-315 is directly connected to the 4,160V supply; all other fixed installations are supplied by the 600V three-phase AC. Refuge stations are supplied with single phase 120V power.

In March 2019 Capstone filed its report on the installation of the "Neutral Ground Resistor" (NGR).

10.6.5 Water 10.6.5.1 Water Supply

Inflow to the mine through faults and un-grouted core drill holes is generally sufficient to supply the mine with water for drilling and dust control. The mine currently recirculates water through a network of sumps.

10.6.5.2. Dewatering

Water currently collects into three sumps, from which pumps send water to the main dirty water sump at the 760L. This is a two-stage clean/dirty sump that removes most suspended solids before water is pumped to a final settling sump near the portal. This portal sump either discharges out to the permanent heat-traced line on surface and on to the Area 2 Pit Tailings Management Facility, or returns water underground to supply the mine feed storage tank.

Pump maintenance and dewatering continued throughout the care and maintenance period.

10.6.5.3 Mine Water Quality and Inflow Monitoring

Water Use Licence QZ14-031 – Amendment 1 (WUL) outlines the monitoring and surveillance of the underground operations at Minto. UG1 and UG4 has been assigned as station numbers and monitoring frequency as part of the license for the Minto South Portal and the Minto East Deposit. A representative sample of underground inflows is taken regularly. Results of the monitoring work are presented in the monthly WUL reports and summarized in the QML and WUL annual report.

10.6.5.4 Communications

Both refuge stations are equipped with telephones connected to the mine's internal communications network; external phone numbers are also reachable. These phones are connected via a fiber optic network that runs throughout the Minto South Underground.

An analog emergency communication system (Femco phone) is also installed inside and outside the refuge stations, the base of the fresh air raise at the 760 level, the surface muster station adjacent to the portal, the electrical cut-out adjacent to the 630 level access, and the Dumas shop on surface.

10.6.5.5 Blasting Procedure and Infrastructure

An electric central blasting system runs throughout the Minto South Underground operations; it is activated from a blasting box located at the portal muster station. This typically fires a single electric blasting cap, which is used to initiate the network of non-electric caps that time and fire each hole in a blast. The mine is completely cleared of personnel for both production and development blasting.

Prior to blasting, a locked gate is put into place at the portal, preventing entry to the Minto South Underground until the shift supervisor or a designate verifies that concentrations of post-blast gases have been diluted to safe levels.

10.6.6 Explosive Storage and Handling

Emulsion is used for both long hole production and development. A bulk emulsion product known as "Dyno Titan RU", formulated for underground use and having high viscosity, is used to load most blasts. This product is delivered via one of two dedicated mobile loading units – one for development rounds and a larger unit for longhole stope blasts.

To provide a backup in the event that the mobile loading unit is out of service, MintoEx stocks a product known as Dyno SL, which is a cartridge emulsion designed to be manually loaded using a portable pneumatic unit.

In development, a perimeter blasting product (Dynosplit D) is used to reduce over-break in the back, and Dyno AP (a cartridge emulsion) is used in wet lifter holes.

The following table lists the magazines on site:

Table 45: Explosives Magazines
--------------------------------	--

Licence	Location	Magazine Contents	Capacity
No. YT-535	Surface	Surface detonators	40,000 dets
YT-533	Surface	Surface explosives	30,000 kg
YT-541	Surface	Underground detonators	75,000 dets
YT-534	Surface	Underground explosives (perimeter control and boosters)	30,000 kg
YT-542	Surface	Surface explosives (pre-shear)	30,000 kg
YT-551	Surface	Underground explosives (packaged emulsion)	35,000 kg
YT-553	Underground	Underground detonators	4,000 dets
YT-550	Underground	Underground explosives	30,000 kg

The Minto South Underground has two magazines, one for detonators and one for bulk and packaged explosives. Both are equipped with concrete floors and lockable gates. The powder magazine is large enough to store and handle 1.5-tonne totes of emulsion used by the development loader. The larger longhole loading unit is parked on surface at Dyno Nobel's office / shop / silo complex.

Non-electric caps are used to time and sequence blast holes in both production and development blasts.

Explosives were removed from site in February 2019 following temporary closure of mining operations.

10.6.7 Fuel Storage and Distribution

Haul trucks, LHDs, and service vehicles are fueled at a 50,000-liter EnviroTank fuel station installed on surface. Bolters and jumbo drills are generally fueled by a service vehicle.

All underground personnel are trained in site-wide spill prevention and spill response protocols outlined in Minto Mine's Spill Contingency Plan (Minto, 2016a).

10.7 Mine Safety

10.7.1 General Mine Safety

Minto Mine and the development a n d p r o d u c t i o n contractor, Dumas, emphasize safety in all duties at the mine; this philosophy is shared by senior management and supervisors. Minto's safety program includes the following:

• Dumas Zero Harm Safety System and associated safety card, used and checked daily by supervisors.
• A central system for tracking incident reports and the corrective actions arising from them.
• Safe work procedures (SWPs) for routine tasks that present a risk of injury.
• Job hazard assessments (JHAs) for non-routine tasks; these are used as the basis for SWPs if a job becomes routine.
• Routine job observations and workplace inspections by supervisory and technical personnel.

10.7.2 Emergency Response

Two portable refuge stations are equipped with compressed oxygen cylinders, CO2 scrubbers, potable water, first aid equipment, emergency lighting, emergency food rations and chemical toilets. They are also equipped with a digital telephone line and a backup analog telephone (Femco). Each refuge station is equipped to supply oxygen to 18 people for 72 hours.

The fresh air raise from surface to 760 level is equipped with ladders and serves as the mine's main escape way. A sub-level escape way with ladders connects the Area 2 ramp and the 710 level. In order to mine Minto East, a raise with ladders was developed as a secondary escapeway, completed by April 2018.

All underground personnel are required to carry Ocenco M-20 self-contained self-rescuer (SCSR) devices, which provide oxygen from a compressed gas cylinder for 15 to 20 minutes (up to 32 minutes if the user is resting). In addition to the personal devices, six devices with longer performance durations of 60 minutes are available in two caches located near active mining faces. These caches also contain first aid supplies, an oxygen therapy unit, water, food, flashlights, and blankets.

A mine-wide stench gas warning system is installed at the surface fan to alert underground workers in the event of an emergency.

Minto has an emergency response team trained in underground mine rescue techniques. Details are contained in Minto's Emergency Response Plan (Minto, 2016b).

10.7.3 Fire Suppression

Fire extinguishers are provided and maintained in accordance with regulations and best practices at electrical installations, pump stations, wash bays, and refuge stations. Every vehicle carries at least one fire extinguisher of adequate size and proper type. Heavy equipment is equipped with central fire suppression systems.

For the use of the mine's emergency response team, a trailer containing a foam sprayer, hoses, an inflatable bulkhead, and other firefighting supplies is parked near the fresh air raise.

10.7.4 Industrial Hygiene and Fatigue Management Programs

An industrial hygiene (IH) consultant, EHS Partnerships Ltd., was engaged to assist MintoEx in the development of an underground IH plan and a fatigue risk management programs (acceptable to YWCHSB) for, but not limited to, air quality, noise and fatigue. Regular testing has taken place since underground operations commenced, and results of this program were included in the recent application for an "hours of work" variance.

Testing has identified some tasks that could result in overexposure to noise and certain airborne contaminants. Testing results are regularly shared with all underground workers. Hearing protection and respirators are available to all underground personnel.

10.7.5 First Line Supervisory Training

The Contractor will comply with the Yukon Occupational Health and Safety (OH&S) regulation by obtaining First Line Supervisor's Provisional Certificates and working toward full certification during the development.

10.7.6 Diesel Equipment

All diesel equipment used in the underground operation is permitted and maintained to comply with section 15.58, 15.59, 15.61 and all related sections on the Yukon Occupational Health and Safety Regulation.

10.7.7 Shotcrete

Shotcrete is not routinely used at Minto.

10.7.8 YWCHSB Reporting

Annual Industrial Hygiene reports are provided to YWCHSB.

Any variances to defined engineering or administrative controls put in place and defined by the IH program will be reported to YWCHSB as soon as reasonable along with corrective actions that Minto will take toward elimination of further variances.

10.8 Open Pit Mining

10.8.1 Ore Quantities

The Area 2 Stage 3 pit shares a similar geological setting to the deposits previously mined at Minto. Copper mineralization is contained in a series of sub-horizontal stacked lenses of foliated migmatitic lenses. These lenses are characterized by sharp contacts with the surrounding host rock.

These variably deformed and migmatized metamorphic zones are highly variable in the content of their mineralization: copper grade ranges from undetectable to the highest recorded assay value of 39.6% over 1.0m of core.

The following table summarizes the Area 2 Stage 3 pit expansion ore reserves at the mine's cutoff grade of 0.50% Cu for sulphides and 0.80% Cu for partially oxidized material. It is important to note that the reserves as shown in Table 48 are in addition the October 2016 Area 2 Stage 3 pit design. The Area 2 Stage 3 pit was mined out in April, 2018.

All open pit mining development and production was executed with the support of Pelly Construction (Pelly) from Whitehorse. Engineering and planning were completed internally with Minto personnel.

Table 46: Open-pit reserves for the Area 2 Stage 3 pit expansion

Area 2 Stage 3 Expansion Pit	2017
Ore (Tonnes)	593,639
Cu Grade (%)	1.16
Au Grade (g/t)	0.27
Ag Grade (g/t)	0.95
Cu Mlb, undiluted	15.1

10.8.2 Slope Stability and Geotechnical Assessments

Slope angles for Minto's open pits were evaluated in 2009 as part of a report authored by SRK Consulting in support of the Phase IV Pre-Feasibility Study (SRK Consulting, 2009). A subsequent detailed geotechnical drilling, laboratory testing, geotechnical characterization and stability analysis program was completed in 2015 for Area 2 Stage 3, summarized in the report "Pit Slope Stability Evaluation, Minto Mine, Area 2 Pit – Stage 3" (SRK Consulting, 2015).

A relatively deep soil overburden horizon exists in the south portion of the Area 2 Stage 3 pit expansion, consisting primarily of transported silt and fine sand with occasional lenses of clay and coarse sand to gravel. The soil is high in organic content and contains permafrost. It is considered ice-poor and not anticipated to exhibit creep behavior. In April 2013, an inclinometer and a thermistor string were installed at the southeast corner of the proposed pit. The inclinometer has thus far shown no movement, indicating that the overburden layer around the pit is not affected by the creep movement of the nearby Dry Stack Tailings Storage Facility.

The rock mass was separated into three geotechnical units. Rock mass parameters resulting from the 2015 drilling and laboratory testing program are summarized in Table 47.

Table 47: Rock Mass Parameters

Geotechnical Unit	UCS (MPa)	GSI	mi	D	Unit Wt.	Phi	C (kPa)
					(kN/m3)
Overburden Soils	-	-	-	-	21.7	30	20
Weathered Rock	20	60	20	0.7	25.4	-	-
Fresh Rock	79	70	25	0.7	26.2	-	-

Based on the rock mass and rock structure characterization completed, three design sectors were delineated, shown in Figure 38.

Figure 38: Geotechnical design sectors relative to the Phase V/VI design

Stability analyses indicated the following factors of safety (FOS) for pit wall stability, and final pit slope design criteria summarized in Table 48.

• Stability of soil overburden slope FOS of 1.55;
• Stability of upper, weathered rock slope FOS of 2.76; and,
• Global wall stability; FOS of 2.65.

Pit Sector	Wall Dip Dir. (Az)		Interramp Slope Angle	Bench Face Angle	Bench Height (m)	Bench Width
	From	To
SW Wall	325°	100°	50°	68°	24	10.5
East Wall	100°	325°	53°	72°	24	10
Overburden	-	-	30°		-	-

Table 48: Pit Slope Design Parameters

10.9 Design and Construction

10.9.1 Site Preparation

The organic-rich topsoil layer from the Area 2 Stage 3 pit expansion was stripped using the mine's dozer fleet and stockpiled separately on existing dumps, including the Main Waste Dump Expansion, Southwest Waste Dump, Main Pit Dump and Mill Valley Fill Extension Stage 2. This approach, already employed for the topsoil stripped from the original Area 2 Stage 3 pit (October 2016), Minto North pit, and from the footprint of the Mill Valley Fill Extension Stage 2, placed topsoil near the location of its final use, minimizing reclamation costs.

The Area 2 Stage 3 pit expansion required re-routing of the south diversion ditch and haul road. The revised ditch design was submitted to the Department of Energy, Mines and Resources, YG in June, 2017 in the document "Area 2 Stage 3 Pit Expansion – Intake and Overflow Spillway – Final Design".

The Area 118 backfill dump will require a new access point with the additional material coming from the Area 2 Stage 3 pit expansion. The road alignment will be built using construction-grade rock.

10.9.2 Construction QA/QC

No new infrastructure is planned for the site as part of the continuation of Phase V/VI mining.

Geotechnical monitoring of pit highwalls is described in Section 10.8.2, and the monitoring and quality control of waste rock dispatching is described in the site's Waste Rock and Overburden Management Plan (WROMP).

10.9.3 Stability Analyses

No additional stability analyses were required in addition to the slope stability analysis and monitoring practices summarized in sections 1.2 and 4.1.4, respectively.

10.9.4 Construction Schedule

Mining of the Area 2 Stage 3 expansion commenced in mid-August 2017 and was completed in April of 2018. A mining rate of 12,000 Bank Cubic Meter (BCM)/day was planned for the first five months of operation, reducing to 5,600 BCM/day for the month of February, 2018.

Table 49: Start and completion dates for the expansion of the Area 2 Stage 3 open-pit mining

Mining area	Start date	End date	Duration
Area 2 Stage 3 Expansion	August 2017	March 2018	7 months

10.9.5 Material Release Schedule

The following figure shows the material releases for the life of the Area 2 Stage 3 expansion.

Figure 39: Material release by month executed by Pelly Construction

10.9.6 Ore Handling Procedures

Ore handling practices for sulphide minerals were unchanged from previous phases of mining. The POX grade range was changed to create a higher-grade partially oxidized ore stockpile. Ore was classified, based on copper grade, into the material types presented in the table below.

Table 50: Classification of ore by copper grade

Material Type	Copper Grade Range	Acid Soluble Copper
Blue Ore	0.50 – 1.00% Cu	<15.0%
Green Ore	1.00 – 2.00% Cu	<15.0%
Yellow Ore	2.00 – 4.00% Cu	<15.0%
Red Ore	>4.00% Cu	<15.0%
Partially Oxidized Ore (POX)	>1.50% Cu	>15.0%
Low-Grade Partially Oxidized Ore (POX)	0.80 – 1.50% Cu	>15.0%

Classification of material as one of the six types of ore (or as waste) was based on blasthole assays. The following is a description of the process:

• 1. Drill cuttings from every blast hole are sampled, tagged, and sent for assay at the on-site lab prior to blasting;
• 1. Representative samples of the cuttings are assayed using atomic absorption (AA) spectroscopy to

determine the copper, gold and silver content. A separate sample is acid-leached and assayed for copper grade, allowing for a determination of acid soluble copper;

• 1. The environmental assay lab tests representative samples for total sulphur and total inorganic carbon content, which are used to calculate a "Neutralizing Potential/ Acidifying Potential" NP/AP ratio;
• 1. The assay results are sent to the geology department for interpretation;
• 1. The geology department plots the results spatially, then draws polygons enclosing holes with similar assay results to identify regions of similar average grade (for ore) or similar waste class (for waste);
• 1. After blasting, the aforementioned polygons are laid out in the field by the mine surveyor working with the production geologist, using stakes and flags of various predefined colors;
• 1. Mine operations personnel, under the supervision of the pit foreman, excavate and haul the material to the destination designated for the material type. Destinations are communicated to foremen and operators by the production geologist.

Material containing more than 15% acid soluble copper content was classified as partially oxidized.

Waste rock having an NP/AP ratio greater than 3.0 was classified as bulk waste and deposited to one of several rock dumps, while material with a ratio less than 3.0 was deposited below the final flooded levels of the Area 2 or Main pits.

Stockpile inventory was drawn down until the Area 2 Stage 3 expansion started producing ore in December 2017. Stockpile volumes then increased from January to March 2018 with the completion of the Area 2 Stage 3 expansion. Stockpiles were drawn down over the next approximately 8 months until October 2018, supplemented by ongoing feed from underground operations.

10.10 Associated Mine Services and Infrastructure

10.10.1 Ancillary Infrastructure

The surface mining fleet will continue to be diesel-powered. No new electrical infrastructure will be created for the open pit mine.

Two-way VHF radios will continue to be used for communication with the mining fleet. Sixteen channels are available on site, with three available everywhere on the property: one channel dedicated to routine pit traffic, one for extended conversations or other uses, and the site emergency channel.

10.10.2 Waste Management

10.10.2.1 Overburden Management

A significant portion of the overburden released from mining of the Area 2 Stage 3 was dispatched to existing waste dumps, where it was used as soil cover as described in the mine's Reclamation and Closure Plan (RCP). The RCP specifies a minimum cover thickness of 0.50m. Mine Operations began grading the final cover surfaces on existing waste dumps in the summer of 2017.

The Area 2 Stage 3 pit expansion overburden release was 700,000 BCM, dispatched to the South West Dump, Main Pit Dump, Mill Valley Fill Extension and the Area 118 Backfill Dump. The South West Dump required an additional 50,000 BCM of soil cover, while the Main Pit Dump required 68,000 BCM of cover material. The upper lifts of the Mill Valley Fill Extension will be used to stockpile soil cover for the reclamation of areas remaining active until final closure. Overburden that does not meet cover specifications will be placed in the Area 118 Backfill Dump.

Mine Operations will continue to visually classify cover soil material at the dig face; acceptable soil cover material will be loaded and direct-hauled for bulk material placement, while unacceptable material will be deposited in the Area 118 Pit. Unacceptable cover material includes material which contains massive ice or does not otherwise meet the grading specifications.

10.10.2.2 Waste Rock Management

The waste rock, totaling 1,095,000BCM, was placed in the Main Pit Dump, the adjacent Area 2 Stage 2 pit (now referred to as the Area 2 Pit Tailings Management Facility) or used for reclamation of Main Waste Dump to reduce slope angles. The fraction of the waste rock projected to have an NP/AP ratio less than 3.0 was co-disposed with tailings in either the Area 2 Pit Tailings Management Facility or the Main Pit Tailings Management Facility.

The Main Pit Dump and Area 118 overburden dump designs, shown in Figure 40, have been modified to include additional waste released by the redesigned Area 2 Stage 3 pit expansion. No changes were made to the design parameters. As per the previous design, none of the rock currently on the Main Pit south wall buttress having an NP/AP<3 ratio was covered by the revised Main Pit Dump design.

Several lifts of waste rock have been designed around the toe of the Main Waste Dump, shown in Figure 41 to shallow the slope for reclamation. This reduced the potential for erosion of the slopes and improved the revegetative process.

10.10.3 Tailing Management

Tailing deposition started in 2007 in the Dry Stack Tailing Storage Facility (DSTSF). In November of 2012 deposition in DSTSF was stopped and deposition was transferred to the Main Pit Tailing Management Facility (MPTMF). In March 2015 deposition commenced in the Area 2 Pit Tailing Management Facility (A2PTMF). Currently MPTMF and A2PTMF are in operation and DSTSF was closed in 2012. Based on 96.3% mass (average from 2012 to 2016) and bathymetric survey results, the tailings production estimate for the total life of mine is 9,030,000 m³ or 12,070,000 tonnes. To this volume, a further 1,930,000 m³ will need to be added for storage of waste rock with a NP:AP ratio of less then 3,600,000 m³ of operational water and 1,000,000 m³of surge capacity, for a total of 12,560,000 m³ . Future deposition plans include those for Ridgetop North (not currently planned for development), and the filling of underground infrastructure. The total capacity of DSTSF, A2PTMF, MPTMF and Ridgetop North is 14,050,000m³which gives an excess capacity of 1,450,000 m³ .

10.10.4 Industrial Complex

Minto's site infrastructure consists of a primary crusher, secondary crusher, coarse ore stacker/conveyor, mill, concentrate storage shed, and tailings filtration building. In 2016 the primary crusher was bypassed. Nuway Crushing Ltd (Nuway) is now providing crushing services to the Minto mine. To feed the mill, Nuway has the capacity to crush at a rate of 6,000 tonnes per shift. Nuway also provides all crush material for the pit road maintenance and stemming material for blasting. The mill can maintain a rate of 4,200 tonnes per calendar day. The complex also includes a water treatment plant, propane tanks, warehouse, and laydown area. The camp is a complex comprising "Atco" trailers. Early in 2014 a new camp complex was commissioned. The current capacity of the camp is 220.

10.10.5 Fuel Storage

Diesel fuel is stored in a diesel storage facility located north of the processing plant. Six large diesel tanks have a combined storage capacity of approximately 3.2 million litres (L). These tanks were sized to store sufficient fuel for two months of operation, under generator power, during the Yukon River freeze and thaw periods when vehicle access to the site is not possible. The mine's connection to the electrical grid has resulted in reduced fuel usage, and the tanks, when filled, now represent a four-month fuel supply. A fuel tank inventory, including the product types and volumes, is presented in Table 51.

Table 51: Fuel Storage Capacity

Number of Storage Tanks (#)	Product Type	Volume (L)
6	Diesel	3,267,668
1	Gasoline	8,000
6	Propane	911,000

Figure 40: Waste Dumps for Area 2 Stage 3 Pit

Minto Property Competent Person's Report 139 | P a g e

10.11 Mine Design and Methods

10.11.1 Volume

The Area 2 Stage 3 pit expansion extended the Area 2 pit to the east, providing an additional 2.1M BCM of minable material. The first two stages of Area 2, for comparison, mined 12.0M BCM. Figure 41 shows the redesigned pit. No changes were made to the west wall of the pit or saddle area between the Stage 2 and Stage 3 pits.

Approximately 0.70M BCM of the material mined from the pit was overburden, sloped at an angle of 30°. The maximum height of the overburden slope is 48m.

10.11.2 Access

Approximately 25% of the material is contained within or above the 799m bench and was therefore accessed from an existing haul road encircling the pit. Approximately 50% of the pit's volume was accessed via the existing Area 2 Stage 3 ramp. This ramp was developed from the 757m elevation level to the final pit elevation of 715m, to access the remaining 25% of the Area 2 Stage 3 Expansion. This compares to the pit floor of 680m reached in Area 2 Stage 2.

10.11.3 Wall Design and Overburden Stability

Wall design and stability assessments are summarized in Section 10.1.2.

10.11.4 Ground Movement Monitoring

MintoEx uses a radar-based slope monitoring device manufactured and supported by GroundProbe. This provides continuous monitoring of highwalls with sub-millimeter accuracy. The device is limited to scanning the portions of the wall visible from its setup point; therefore, it is typically placed such that it monitors the highest or most critical wall under which personnel are actively working.

Figure 41: Area 2 Stage 3 Pit Expansion

In the event of a movement rate increase, the radar issues automated alarms to the mill control room operator, as this position is staffed continuously. The control room operator will communicate with the pit foreman, operation supervisor, and geotechnical engineer/EIT, as outlined in the Safe Work Practice, to address the alarm or cease work in the affected area.

All pit walls are inspected during weekly detailed inspections, performed by the Mine Technical Department. These inspections check all exposed walls for signs of instability or changing conditions such as raveling, crack formation, overhangs, and major or unfavorably oriented structures. The reports issue guidelines for safe work and can order corrective actions, if required. These can include:

• More frequent inspections;
• Rockfill berms at bench-level to arrest raveling material;
• Delineators at bench level restricting access to areas;
• Instrumentation such as prisms or survey hubs;
• Mandatory use of a spotter for work underneath certain areas;
• Completion of a Job Hazard Analysis (JHA) process prior to commencing work; and/or:
• Highwall redesign and blasting / excavation of structural units that present a risk of failure. An inspection by an external consulting geotechnical engineer is also performed annually.

10.11.5 Blasting and Wall Control

Wall control is achieved by means of "trim blasting" and "pre-shear" practices.

Trim blasting is the practice of firing dedicated wall control blasts along the perimeter of the pit, no more than five rows deep. This allows material to move freely away from the wall, minimizing the amount of energy transferred into the wall itself. Wall blasts are always fired independently of production blasts and are always shot to free faces; that is, all previously blasted material is mined out along the perimeter of a trim blast. To further minimize the amount of energy transferred into the wall, blasts are tied-in such that the direction of movement is parallel to the wall instead of perpendicular to it.

MintoEx continues to use pre-shear drilling to further enhance wall control. This is a technique in which closely-spaced small-diameter holes, drilled to follow the final contour of the wall, are loaded with decoupled charges. Groups of holes are fired simultaneously, encouraging the formation of a fracture plane between them. Much of the strain energy from production / buffer blastholes, upon meeting this discontinuity, will be reflected back, instead of continuing into the wall where it would result in "backbreak".

10.11.6 Explosives

For production blasts, the mine uses mini-prill ANFO (ammonium nitrate/ fuel oil) with a bulk density of 1,050 kg/m³as its default product; it is used wherever ground conditions are dry or holes can be dewatered and lined. Failing that, a water-resistant 70/30 emulsion/prill product is used. The decision to switch to an emulsion blend is at the blaster's discretion in the field.

Dry product is preferred; however, groundwater conditions are variable and, when high influx of water is encountered, emulsion use can increase to 100% of total bulk product.

10.11.7 Typical Wall Design Parameters

The following figure shows Minto's wall drilling standards for 6.0m and 12.0m benches. All of Minto's pit designs have catch benches at 24m intervals. Every fourth bench is therefore shot above a catch bench, and the standards are modified to prevent damage to the crest by eliminating subgrade material and laying out the holes such that they do not fall directly over the crest.

Figure 42: Design constraints for wall shots - both 12.0m and 6.0m.

10.11.8 Haul Roads

Haul roads at Minto are typically designed to accommodate Caterpillar 777 haul trucks in dual or single lane configurations. Road widths are based on the requirements of Yukon WCB regulation 15.43(1)(a):

• i. not less than three times the widest haulage vehicle used where dual lane traffic exists, or
• ii. not less than two times the widest haulage vehicle used where only single lane traffic exists.

Berms are designed to be 75% of the trucks' tire height, as per Yukon WCB regulation 15.43(1)(b).

Allowance is typically made for an approximately one-meter wide ditch on one side of the road, where conditions dictate.

These factors yield the following road design characteristics:

Table 52: Haul road design parameters

Parameter	Dual Lane Width	Single Lane Width
Truck width	6.5 m	6.5 m
Road surface width	19.5 m	13.0 m
Tire height	2.7 m	2.7 m
Berm height	2.0 m	2.0 m
Berm width	5.0 m	5.0 m
Total road width, against highwall (one berm, one ditch)	25.5 m	19.0 m
Total road width, two berms, one ditch	30.5 m	24 m

Design grade is 10%. Grade limits are applied to the inside corner of a turn.

A speed limit of 50 km/h is in effect on mine roads. Minto has a light-vehicle training and sign-off program intended to ensure that personnel are familiarized with the mine site prior to driving. All personnel and all types of vehicles are required to announce their presence at certain call points, which are marked with roadside signs: these are typically busy intersections or areas with limited visibility.

Minto's Safe Work Procedure for vehicle operation specifies the following priorities for right-of-way:

• 1. Emergency vehicles;
• 1. Explosive trucks;
• 1. Crew buses;
• 1. Loaded haul trucks;
• 1. Empty haul trucks;
• 1. Service equipment (fuel, water, and heavy maintenance trucks);
• 1. Light vehicles.

Passing of haul trucks is not permitted.

Minto's fleet is largely contractor owned and operated, except for a blasthole drill used for both production and pre- shear drilling. The following table summarizes the available equipment.

Equipment Type	No. of units
Hitachi EX2500 front shovel	1
Hydraulic Excavators, Hitachi EX1200 or similar	3
100-ton Haul Trucks, Cat 777	10
60-ton Haul Trucks, Cat 773	4
Front-end loaders, Cat 990 / Cat 992	2
Small Hydraulic Excavators, Cat 330 or similar	2
D11-class dozer	2
D10-class dozers	2
Graders, 16' blade	2
Contractor blast hole drills, 9 7/8" hole diameter	2
Contractor blast hole drills, 6 ¾" hole diameter	2
Minto blast hole drill, Sandvik DR560, 4 to 8" hole diameter	2

Table 53: Open-pit equipment fleet for Phase V/VI mining

11. Mineral Processing

The following section has been contributed by Mr. John Folinsbee of "Heads Ore Tails Metallurgical Consulting Ltd". It has been taken essentially as verbatim, with minor modifications by the Competent Person.

The processing plant at the Minto Mine was constructed in 2006-2007 and commercial production was declared in October 2007 after a four-month commissioning period. The processing plant was placed on care and maintenance on October 19, 2018, following discontinuation of mining operations on October 11. Recommissioning of milling facilities commenced on June 3, 2019, following closure of pembridge's acquisition of Minto Explorations Ltd. Descriptions of mineral processing in this report will remain in the present tense. A simplified mill process flow sheet is shown in Figure 38.

11.1 Crushing

The Minto crushing plant, on standby since mid-2016, accepts run-of-mine ore, and size reduction to mill feed is accomplished in two crushers operating in series. Initial run-of-mine ore is reduced in a Westpro 40"X50" jaw crusher powered by a 300 HP motor. The jaw crusher discharge is then fed to an Elrus (Sandvik) S4800 cone crusher powered by a 300 HP motor. Run-of-mine ore is reduced to a product size of 115 mm P80. The crushed product is then transported to a conical coarse ore stockpile with an 1,800 tonne live capacity.

Since mid-2016, a contract mobile crusher is used to produce sized mill feed with a P80 of 19 mm. The contract crushing circuit consists of Clemro mobile equipment. Initially, run-of-mine ore is crushed in a 1600 Clemro jaw crusher powered by a 200 HP motor. Jaw crusher product is further reduced in a Clemro 1600 primary cone crusher powered by a 400 HP motor. Primary cone crusher product is then treated in a secondary 1400 Clemro cone crusher powered by a 300 HP motor. The secondary cone crusher operates in closed circuit with a triple deck-vibrating screen to produce the 19 mm mill feed noted earlier. This material is transported to the coarse ore stockpile via a 36-inch wide belt conveyor with a length of 170 feet. A 50 HP motor powers the coarse ore stockpile feed conveyor.

The contract crusher provides blending of POx (partially oxidized ore) and sulphide ore to the crushing plant based on instructions from the owner. POx ore, described in more detail below, tends to reduce copper recoveries, and so the blend is maintained to limit the negative impact of POx material on mill copper recovery.

Ore is reclaimed from the bottom of the coarse ore stockpile via two 36-inch wide by 24-foot long apron feeders. The apron feeders are each powered by 15 HP variable frequency drive motors. The apron feeders discharge onto a 36-inch wide by 137-foot long belt conveyor powered by a 20 HP motor. This belt conveyor transports the coarse ore to the grinding circuit and the mill feed tonnage is measured by a weightometer installed on this conveyor.

11.2 Grinding

Initially, grinding is carried out in a 16.5-foot diameter by 5-foot long Semi-Autogenous Grinding (SAG) grinding mill powered by a 900 HP motor. SAG mill discharge reports to the SAG Mill discharge pump box and from there is transported to a bank of hydrocyclones by an 8" X 6" SAG mill discharge pump powered by a 60 HP Variable Frequency Drive. Secondary grinding is carried out in two 12.5' diameter by 10' long overflow type ball mills. Each ball mill operates in closed circuit with a bank of three 15-inch hydrocyclones. The ball mills are each powered by a 900 HP motor. The grinding circuit produces a flotation circuit feed with a product size of 250 um P80.

11.3 Flotation

Rougher flotation is achieved using three 1,400 cubic foot tank cells each powered by a 75 HP motor. The rougher tailing is further treated in a bank of four 500-cubic foot flotation cells, each powered by a 40 HP motor. The rougher-scavenger tailing is the final tailing from the flotation plant and it is thickened to about 50 % solids by weight before being pumped from the plant to the Area 2 pit tailings storage area using an 8" X 6" centrifugal pump powered by a 60 HP motor.

Both the rougher and rougher/scavenger concentrates are pumped to a bank of four 350-cubic foot cleaner cells each powered by a 25 HP motor. The cleaner concentrate is forwarded on to a bank of six 100-cubic foot re-cleaner cells, each with a 15 HP motor. The re-cleaner concentrate is the final concentrate from the plant. The final flotation concentrate is pumped to a 20 ft. diameter thickener to dewater the concentrate prior to filtration. A 5 HP motor powers the flotation concentrate thickener rake mechanism. Further dewatering of the final flotation concentrate is achieved in a 30 m²ceramic disc filter powered by a 40 HP drive motor. After filtration the concentrate is transported to a concentrate storage shed via a 24" by 38' long concentrate discharge conveyor powered by a 15 HP motor. The concentrate storage shed has a capacity for storing 15,000 tonnes of final flotation concentrate.

With the use of front-end loader, the concentrate is transferred to 25 or 50 tonne highway-style haulage trucks and is transported from the mine site to tidewater at Skagway, Alaska from which it is shipped to market.

11.4 Precious Metals

Gold and silver are recovered via two streams in the mill process. A portion of the gold and silver are recovered using a centrifugal gravity concentrator installed in the cyclone underflow in the grinding circuit. Precious metals are also recovered to the final copper concentrate. The contained gold and silver in the gravity and flotation concentrates are sold separately from each other.

11.5 Reagents and Services

The mill process includes support services for reagent mixing and delivery to the appropriate steps in the mill process. The key reagent mixing and distribution systems include those for the potassium amyl xanthate (PAX), the collector used to accomplish flotation of copper sulphides and precious metals. Methyl Isobutyl Carbinol (MIBC), used as the frothing agent in the flotation process, has a dedicated mixing and distribution system into the areas of the flotation circuit requiring it. A flocculant mixing and distribution system is provided to assist solids settling in the concentrate and dewatering circuits.

Reagents and other hazardous materials were removed from site in March, 2019 while the Minto facilities remained on care and maintenance.

Two high-pressure air compressors rated at 125 scfm at 110 p.s.i. are used to supply high-pressure air to the mill clutches, instrument air and general plant usage. A 40 HP motor powers each of the compressors.

Process water is reclaimed to a 15' diameter by 27' tall process water tank. Process water is distributed to the grinding and flotation circuits using a 6" x 4" centrifugal pump powered by a 100 HP motor. Reclaim water is also pumped to a 22' diameter by 22' high firewater tank. Both an electric and diesel firewater pump are available to pump firewater into the firewater distribution system as the need might arise. Both pumps are 6" X 5" centrifugal pumps and the electric pump is powered by a 125 HP electric motor.

Potable water in the mill is supplied from the main Minto camp. From camp the potable water is pumped into an 8'x 8' potable water storage tank. From there it is distributed in the mill potable water distribution system using 2" x 2" centrifugal pumps powered by a 7.5 HP motor.

Figure 43: Minto Process Flow Diagram

Minto Property Competent Person's Report 147 | P a g e

11.6 Process Control

The process plant control system is managed by the Wonderware Human Machine Interface (HMI). A key component of the control system is the ThermoFisher "in stream analyzer", a nitrogen cooled XRF unit. There is a total of three of the noted units analyzing a total of two streams each, for a total of five streams. The process streams that are analyzed include: the Cyclone Overflow, First Rougher Concentrate, Cleaner Tailing, Final Tailing and Final Concentrate. The assay results from these units are used to adjust conditions in the flotation process so as to optimize the overall copper recovery and copper grade to the final concentrate.

11.7 Laboratories

A fully equipped metallurgical laboratory is available within the mill building for running metallurgical tests, including those needed to optimize the grinding and flotation steps in the mill process.

Also included is an assay lab (stand-alone building) consisting of a sample prep room and wet lab. The sample preparation portion of the assay lab includes two large ovens (each with a sample capacity of about 50 samples). A rotap, two jaw crushers and two pulverizers are used to prepare the samples for assay. Samples are digested with the use of two hotplates and associated fumehoods. The prepared samples are then analyzed for copper content using two AA240 units. A GTA furnace coupled with an AA (Atomic Absorption) unit is used for analyzing water samples.

11.8 Mill Operations

An inspection of the mill operating data for the years 2007 through 2009 shows a steadily increasing mill throughput from 810,000 tonnes in 2008 to 1,032,000 tonnes in 2009. In 2009, the process plant achieved, on an annual basis, the average design daily throughput of 2,800 tonnes per day.

The copper feed grade to the mill, in those initial three years, ranged from 2.16% to 2.91%. Gold and silver are also present in commercial quantities in the mill feed. In 2008 and 2009 the gold grade in the mill feed was 1.28 g/t and 1.14 g/t respectively. Silver grades in the mill feed ranged from 7 to 11 g/t over the same period. It should be noted that gold grades during the period were estimated from smelter returns and gold was not assayed in the process streams at that time.

Copper recoveries, to final copper concentrates, were 85.1%, 91.9% and 92.6% for the years 2007, 2008 and 2009, respectively. A clear trend in improving copper recoveries can be observed over the initial years of plant operations. Copper grades in the final copper concentrate at Minto are relatively high, due to the presence of bornite in the feed, which has a higher proportion of copper. Copper grades in the final copper concentrate ranged from 35% to 41% over the first three years of operation.

Since start-up there have been ongoing exploration programs at the property with a number of new mining areas identified. This has resulted in the execution of several Preliminary Feasibility Studies and technical reports between 2009 and 2012 focused on reserve/resource delineation along with mining and processing evaluation of these new areas.

Mining and processing of the new ore sources have been detailed in the Minto Phase VI Preliminary Feasibility Study Technical Report issued by SRK Consulting with an effective date of January 2012. Assumptions listed in the report include a processing plant daily throughput rate of 3,750 tonnes per day. This processing rate is 1,000 tonnes per day greater than the processing rate in the original plant design constructed in 2006-07. A number of modifications to the existing process circuit, to allow for this higher processing rate, are identified in Section 17 of the noted report. Some of the more significant process changes include: crushing of the Semi-Autogenous grinding mill feed in closed screening, addition of new flotation capacity and addition of a new vertical regrind mill. The changes noted are reported as being in progress in 2012 and it is expected that the changes will increase the processing rate to 171 tonnes per hour that equates roughly to the upgraded capacity of 3,750 tonnes per day.

It is noted at the time of writing of the Phase VI report, noted above, that the Minto Mine would be moving from dry stacked tailing to in-pit tailing disposal once the initial open pits have been mined out. This has in fact occurred and the filtration plant is no longer used to produce dry stack tailings.

Production and operating cost data for the mill in the years 2013 to August 2017 (partial year) show that the plant has been operating at a process rate at or above the nominal throughput rate of 3,750 tonnes per day envisaged in the Phase VI report. Over the four-year period the average daily throughput per calendar day has been 3,927 tonnes per day and in 2016 the highest daily average of 4,085 tonnes per day was achieved.

The copper feed grade to the milling process has ranged from 1.31% to 2.20%, with the highest average recorded for 2016 at 2.20%. From 2013 to 2015 the feed grade was very consistent, varying between 1.31% and 1.41% percent copper. For 2017 the copper feed grade was 1.37%, about the same as for 2013- 2015 but a significant reduction from 2016.

Copper recoveries, to the final copper concentrate, have been somewhat variable over the period, ranging from 84 to 95 percent. Lower recoveries of 86.2 and 83.7 percent were recorded in 2015 and year-to-date 2017 respectively. The main cause of the lower copper recovery is explained due to the presence of "POx" in the mill feed. As the proportion of POx increases in the mill feed there is a corresponding decrease in copper recovery to the copper concentrate. It is noted that POx contains partially oxidized copper sulphide such as chalcopyrite and bornite, along with secondary and oxide copper minerals. Recently the proportion of POx in the feed has been higher than planned due to delays in production of some of the underground ore sources and it has been necessary to make up the shortfall by adding in more of the POx to the mill feed.

A portion of the gold and silver in the mill feed is also recovered to the Knelson concentrator (gravity concentrator). In 2016 and 2017, the portion of the feed gold recovered to this stream was 14% and 18%, respectively. The total weights of gravity concentrate produced in these years were 82 and 61 tonnes, respectively. The average gold content was 4,404 g/t (142 oz/t) in 2016 and 1,834 g/t (58 oz/t) in 2017. A total of 11,500 ounces of gold was recovered to gravity concentrate in 2016. The figure for 2017 was 3,587 ounces of gold.

The gravity concentrates are bagged in 1 tonne supersacks and loaded into a "seacan" trailer, with a capacity of 10 bags per trailer, which is then sealed and locked. The "seacans" are transported from the mine site south to tidewater at Skagway, Alaska. The carrier for both the Knelson concentrate and copper concentrate is Canadian Lynden Transport Ltd. The following table shows the amount of gold and silver in concentrate for 2016 and 2017.

		2016	2017
Gold in Knelson Concentrate	%	14.44	17.81
Mass - Net Dry	kg	81632.1325	60834.60
Assay Content - Ag	g/t	4404.492	1834.28
Assay Content - Au	g/t	530.463	241.36
Mass Content - Au	g	359548.08	111587.58
Mass Content - Ag	g	43302.79	14683.07

Table 54: Gold in Knelson Concentrate, 2016 and 2017

Copper concentrate is also transported by truck from the mine site to Skagway. Each truck unit consists of a truck and pup trailer, capable of transporting 2 x 20-tonne loads for a total of 40 tonnes per haul. Trucking of ore is ongoing during times of open water or safe ice road conditions across the Yukon River, but are suspended during the early winter freeze-up and early spring ice break-up, each lasting for 6-8 weeks.

The Skagway-based storage and ship loading facilities are leased by Minto Explorations Ltd. These consist of a covered storage facility with a capacity of 16,000 tonnes, and a conveyor system and ship-loading facility able to handle 1,000 tonnes of concentrate per hour. Truck washing facilities and other ancillary infrastructure and facilities are also located in Skagway. The concentrate is transported in approximately 10,000-tonne quantities per ship, typically with four shipments per year.

The concentrate is marketed by Capstone and sold to metal traders, rather than directly to a particular smelter. The treatment and refining charges and deductions are comparable to standard international smelter charges, with a cost discount provided due to the premium quality of the concentrate. No deleterious penalty elements are included in the concentrate.

In the years 2013 to 2015 gold grades in the flotation feed were in the range of 0.50 to 0.56 g/t. This translated to a gold grade of between 11 to 12 g/t in the final flotation concentrate. Gold recovery to the copper concentrate ranged from 74 to 78 percent. The gold feed grade, in 2016-17 has doubled to 1.0 to 1.2 g/t Au. Gold recoveries have dipped to between 59 to 67 percent with the higher feed grades. Gold grades in the final copper concentrate have, however, increased significantly to between 17 to 21 g/t. Gold does provide significant additional value to copper concentrate, with over a half ounce per tonne in 2016-17. There are also payable amounts of silver in the final copper concentrate and the average values per year from 2013 to 2017 ranged between 100 to 150 Ag g/t.

Another important mill metric is the cost of processing a tonne of mill feed. An inspection of this key performance indicator reveals that in 2013 the mill process cost was CAD\$16.28 per tonne milled. Since 2014 the average cost per tonne milled has been fairly consistent at between CAD\$18.18 and CAD\$19.74 tonne milled. The highest cost per tonne has been realized for the partial year 2017 at \$19.74 tonne milled. Some of the reasons that costs are reported to be higher in 2017 relate to increased contractor crushing costs and increased reagent costs with the processing of higher proportions of POX ores.

The Minto Mine 2017 Strategic Business Plan provides the mine plan on a go forward basis from 2017 until 2021 when, under the current plan, milling operations would cease. The target-case mine production schedule, included in the business plan, indicates the ore sources that will feed the mill from now until the cessation of milling in 2021. This cessation date has been delayed due to the time period of care and maintenance and restart processes. There are both open pit and underground ore sources that are noted and they include: the Area 2 - Stage 3 open pit sources, and the Minto East, Minto East 2, Copper Keel and Minto North underground sources. Mining of the Area 2 Stage 3 open pit was completed in April, 2018, and mining of the Area 2 underground lower "P" lens was also completed in 2018.

12. Environmental Studies, Permitting and Social and Community Impacts

12.1 Environmental Assessment and Licensing

The following section is based upon portions of "Section 20.1. Environmental Assessment and Licensing" within the 2012 Technical report titled "Minto Phase VI Preliminary Feasibility Study Technical Report" authored by Brad Mercer and John Sagman (principle authors).

In order to continue ongoing work on site, MintoEx requires a variety of permits. The major instruments or authorizations permitting and governing operations include: a Type A Water Use Licence, issued by the Yukon Water Board; and a Quartz Mining Licence issued by the Ministry of Energy Mines and Resources, Yukon Government.

The Minto Project was originally submitted to the Department of Indian Affairs and Northern Development (DIAND, now renamed as Indigenous and Northern Affairs Canada, or INAC) in December, 1994, and a "positive determination" was made under the Environmental Assessment Review Process Guidelines Order (EARPGO). In January 1995 EARPGO was replaced by the Canadian Environmental Assessment Act (CEAA). Project assessments related to the Type B Water Use Licence for construction of the Big Creek bridge, and a Land Use permit for access road construction were conducted.

In April 2003, under the Devolution Transfer Agreement with the federal government, the Yukon Territorial Government (YTG) took over management of resources in Yukon, including environmental assessment of development projects. Mirror environmental regulations were created and, as of November, 2005, YTG subsequently conducted assessments under the Yukon Environmental and Socio-Economic Act (YESAA), administered by the Yukon Environmental and Socio-Economic Board (YESAB). YESAA legislation was created under the Umbrella Final Land Claims Agreement (UFA). Any activities requiring environmental assessment are now conduced in accordance with legislation governing YESAA (website at http://www.yesab.ca).

The protocol for YESAB comprises review of a proposed project towards recommending whether the project may proceed, proceed with conditions, or not proceed. If recommended to proceed (typically with multiple conditions) the proposal will move to the Decision Body(s), which is the Department of Energy, Mines and Resources (EM&R) for a quartz mining licence or permit for surface exploration, and the YTG Minister of Executive Council Office for issuance of Type A or B Water Licences under the Yukon Waters Act (YWA).

Previous environmental assessments of the Minto project are summarized in Table 55 below.

Table 55: Environmental Assessment Activities, 1996 - 2010 (after Mercer and Sagman, 2012)

Activity	Period	Sources
Minto Explorations Ltd.	1996 -	Government and company reports, 1996. DIAND EARP
Minto Mine Development, Operations	1998	screening and Decision Report, Water Licence QZ96-006.
and Closure
Minto Explorations Ltd.	1999	Company report on Cumulative Effects, 1999.
Minto Mine Development, Operation		Quartz Mining Licence QLM-9902.
and Closure.
Cumulative Effects Assessment
Minto Explorations Ltd.	2004 -	Government and company reports, 2004.
Minto Mine Development, Operation	2005	YG AO Development Assessment Branch YEAA Screening
and Closure		Water Licence Amendment and Quartz Mining Licence
Licence Amendments – Expiry		QML-0001
Extensions and Temporary Closure
Modifications
Minto Explorations Ltd.	2008	Company Reports, 2008.
Mining and Milling Rate Increase,		YESAA DO Assessment
Minto Project		Quartz Mining Licence QML-0001 Amendment
Minto Explorations Ltd.	2009 -	Company Reports, 2009
Water Management and Milling Rate	2010	YESAA DO Assessment
Amendments, Minto Project
Minto Explorations Ltd.	2010 -	Company Reports, 2010, YESAB Project Proposal, August
Minto Mine Expansion- Phase IV	2012	2010

12.1.1 Current Licences

The major licences, instruments and authorizations are listed below.

Type A Water Use Licence

In April 1998 MintoEx received its Type A Water Licence (Lic. #QZ96-006) pursuant to the YWA, with an original expiry date of June 30, 2006. The Type A licence included terms and conditions to ensure mitigation methods identified during the environmental assessment are adhered to. The original licence was then extended until 2016, and subsequently re-extended until 2040.

As a result of unusually high precipitation in August, 2008, and freshet runoff following snowpack accumulations, MintoEx was able to secure approval for emergency discharge of water under WUL QZ96- 006. Approval for a further discharge was authorized in August, 2009, to empty the Minto Main pit.

In August, 2015, the water licence, allowing for usage of 1,000 m³ /day, was renewed until either June 12, 2040 or the date that Minto Exploration's rights or interests in the Settlement land parcel expire.

The Federal Metal Mining Effluent Regulations (MMER), under the Fisheries Act, applies to the Minto mine. As of January 2012, separate reporting from that of the YWA for monitoring of receiving water and effluent discharge is required by the Federal Department of Environment Canada.

Following placement of the Minto mine and facilities on care and maintenance on October 11, 2018, Capstone filed annual reports on its Type A water licence (Lic. #QZ96-006) and Type B Water Licence (# MS95-013). No violations or adverse comments from independent inspections resulted from independent inspections, and none were described in the Annual Report.

Type B Water Use Licence

In August 1995 MintoEx submitted its application for a Type B Water Use Licence with the YWB for construction of the Yukon River barge landing sites, the Big Creek Bridge and various culvert installations along the Minto Creek access road. Following a CEAA screening, MintoEx was granted a Type B Water Use Licence (# MS95-013) and a Land and Quarry Permit (# YA5F045).

Yukon Quartz Mining Licence

In June 1999 MintoEx filed an application for a Yukon Quartz Mining Licence, which included a cumulative effects assessment. In October 1999, DIAND issued Yukon Quartz Mining Licence QML-0001 to MintoEx, with an expiry date of June 30, 2006. This was subsequently extended until June 30, 2016.

On July 24, 2008, following a project proposal by MintoEx, Quartz Mining Licence QML-0001 was amended to increase the milling rate to 3,200 tpd.

In December, 2014, MintoEx received a further extension of QML-0001, valid until December 31, 2030. On July 8, 2017 MintoEx submitted a plan entitled "Mine Development and Operations Plan, Area 2 Stage 3 Pit Design Change, 2017-01" to the Director of EM&R. On August 1, 2017 MintoEx received approval for the Plan, allowing it to proceed with development.

Following placement of the Minto mine and facilities on care and maintenance on October 11, 2018, Capstone filed the annual report on its Quartz Mining Licence QML-0001. No violations or adverse comments from independent inspections or mine sampling, and none were described in this annual report. No violations or adverse comments pertaining to the Minto site were noted in the 2018 "National Pollution Release Inventory (NPRI) report by Environment Canada.

12.1.2 Regulatory Requirements

Activities at the Minto Mine are monitored by several government agencies and the Selkirk First Nation. The following relevant legal, regulatory and guideline-based instruments are taken directly from the RCP and include:

• Selkirk First Nations Co-operation Agreement
• Metal Mining Effluent Regulations (MMER) of the federal Fisheries Act, including guidance for Effluent Characterization and Environmental Effects Monitoring;
• Type A Water Use Licence QZ14-031 ("WUL QZ14-031"), issued in August 2015 and including subsequent amendments, valid until June 12, 2040;
• Type B Water Use Licence MS15-094 ("WUL-B") issued in July 2016, valid until June 30, 2041, the successor to Lic # MS95-013;
• Quartz Mining Licence QML-0001 ("QML-0001") issued in October 1999 with subsequent amendments and renewals, valid until December 31, 2030;
• Mining Land Use Permit
• Fish Collection permits
• Waste Management Facility Permits;
• Multi-Use Land Treatment Facility Permit;
• Special Waste Permit;
• Commercial Dump Permit; and
• Air Emissions Permit

Minto has submitted operational plans including, but not limited to, the following:

• General Site Plan;
• Site Characterization Plan;
• Mine Development and Operations Plan;
• Underground Mine Development and Operating Plan;
• Main Waste Rock Dump Design Plan;
• Southwest Waste Dump Deposit Plan;
• Reclamation Overburden Dump and Ice-Rich Overburden Dump Design Plans;
• Dry Stack Tailings Storage Facility Design and Management Plans;
• Engineering Plans and a Construction Quality Assurance Manual for the Water Storage Dam;
• Mill Water Pond Design;
• Waste Management Plans;
• Waste Rock and Overburden Management Plans;
• Tailings Management Plan;
• Spill Contingency Plan;
• Heritage Resource Protection Plan;
• Sediment and Erosion Protection Plan;
• Explosives Management Plan;
• Wildlife Protection Plan;
• Emergency Response Plan, and
• Decommissioning and Reclamation Plan

*Taken from the "Minto Mine Reclamation and Closure Plan, 2017-01", pp 5-7

In addition to the above, MintoEx has submitted Monitoring and Surveillance Plans for the following: a "Vegetation Metal Uptake Monitoring Plan" submitted in October, 2015; an Environmental Monitoring, Surveillance and Reporting Plan, submitted in July, 2016; an "Operations Adaptive Management Plan", submitted in February, 2017; a "Physical Monitoring Plan", submitted in December 2016; and a Groundwater Monitoring Plan Supplementary", submitted February 2017 (Website, Energy, Mines and Resources). MintoEx also received approval for its "Minto Mines Operations Adaptive Management Plan" and "Minto Mine Environmental Monitoring, Surveillance and Reporting Plan" on March 2, 2016.

Prior to mine construction, environmental conditions were compiled, assessed and referenced in earlier environmental assessments. Further assessments were deemed necessary for the Phase V and VI expansions, including assessments of the south branch of the McGinty Creek drainage north of Minto Creek, as the Minto North deposit is located just within its catchment area. The McGinty Creek drainage, particularly the south branch, has been the subject of biophysical studies since the 1970s, partly as a control to studies of Minto Creek. The drainage basins are shown in Figure 44 below.

The 1996 Type A Water Licence (WUL QZ96-006) was based on limited baseline information and project projections. Subsequent baseline and operational data showed that actual conditions were not adequately represented by these. In 2007 MintoEx instigated numerous progressively intensive measures to obtain compliance, and in 2010 was able to consistently meet effluent discharge standards at low discharge rates. MintoEx also revised the Water Management Plan to include a water treatment plant and the utilization of storm water diversions. The critical considerations for the Phase V/Phase VI planning are the storage of runoff water requiring settling treatment prior to discharge, and ensuring any effects from the Minto North deposit into the un-named south fork of McGinty Creek are minimized and fully mitigated. Waste management plans for waste rock, tailings and waste water have been integrated into the Phase V/VI plan.

Figure 44: Catchment areas, Minto and McGinty creeks (diagram by Access Consulting Group)

12.2 Stop Work Order, Area 2 and Minto East

In August 2017, a "Stop-Work Order" was issued for development of the Minto East Underground deposit, pending completion of a second egress to function as an escapeway for personnel during emergency situations. A variance was granted, subject to a list of conditions ensuring safety of Minto personnel. During this time, waste development would continue but ore development would be halted. Work was allowed to continue on the Area 2 underground deposit.

The solution at Minto East was determined to comprise construction of a second egress consisting of a 2 metre diameter escapeway raise. The variance was lifted in December upon completion of the egress. However, on December 26, 2017 Minto personnel noticed that the escapeway had become compromised.

A second variance was applied for on Jan 3rd, 2018, and granted on January 5, dependant on the same list of conditions as the first variance. Prior to commencement of boring of the new 2-metre diameter raise, areas of poor rock conditions were grouted. Upon completion of the escapeway, with infrastructure, the variance was lifted in April 2018.

13. Reclamation and Closure Planning

13.1 History

In 2001 a Decommissioning and Reclamation Plan was filed with the Yukon Water Board under WUL QZ96- 006. A review of this led to the preparation and filing of an Interim Care and Maintenance & Interim Closure Plan which addressed two scenarios: continuing care and maintenance of project infrastructure; and closure issues related to decommissioning of site developments, including reclamation of the site, including reclamation and security costs.

A detailed plan was also required under Section 14.1 of the QML-0001. The 2001 and 2003 plans formed the base of a Detailed Decommissioning and Reclamation Plan (DDRP), approved in June, 2007. This included plans for site management and monitoring both during and following completion of decommissioning and reclamation activities. Cost estimates were included, leading to provision of security to YG. Updates to the DDRP were provided in 2009, addressing long-term physical and chemical stability of the site, and the unexpected need for discharge of excess runoff in August 2008 and the spring freshet of 2009. A revised plan was submitted, and the security adjusted accordingly. A second update was provided in 2011, focusing on the Phase IV Expansion proposal; this was approved in September, 2011. Further Reclamation and Closure Plans (RCP's) were submitted in 2013, focusing on Phase IV, and in 2014, focusing on the Phase V/VI operating plans. In August 2016 another RCP was submitted, incorporating changes identified in the WUL and QML, as well as advancement of closure designs to the preliminary stage, updating of the water and load balance models, and a revised cost estimate.

The closure philosophy of MintoEx, as stated in the DDRP, is to work towards a passive closure, and eventually to a "walk-away" closure once long-term physical and chemical stability can be demonstrated. MintoEx will also continue to conduct progressive reclamation where possible during operations, including efforts to reduce erosion through slope stabilization and revegetation.

13.2 2017 Reclamation and Closure Plan

The following section is based on the "Reclamation and Closure Plan, 2017-01" submitted by Minto Explorations Ltd. in February, 2017.

In February 2017 Minto Explorations submitted its seventh revision to its Minto Mine Reclamation and Closure Plan (RCP), which addresses the long-term physical and chemical stability of the site, and includes reclamation of surface disturbances. It includes a program for site monitoring and management during closure implementation and after completion of decommissioning and reclamation. This RCP has been scoped to fulfill requirements in closure plan submissions for both the December, 2014 updated Quartz Mining Licence QML-0001, and updated Water Use Licence QZ14-031-1.

The RCP calls for a systematic approach to decommissioning and closure at the Minto mine site, and incorporates reassessment of progressive closure and reclamation activities where possible during site operations for use during final closure. Specifically, it addresses temporary (up to 5 years) closure activities, followed by final closure plans, the latter with an estimated active closure period of three years. The temporary closure period would be a result of unsuitable economics which are expected to improve. It would commence with the cessation of mining of known ore deposits and milling of stockpiles and resume when economic conditions permit. During this period some full-time site personnel would ensure the site is actively cared for.

Final closure will commence when known ore deposits are depleted or the long-term economic conditions are unfavourable for continued mining, resulting in cessation of mining and milling of stockpiles. As soon as permanent closure commences, the mill and other facilities will be decommissioned, closure water conveyance will be constructed, and disturbed areas and waste facilities will be contoured, covered and revegetated. Personnel requirements will vary with the nature of particular activities, but will decline once the major decommissioning and reclamation tasks are completed.

Cost estimates for the proposed closure measures form the basis of financial security requirements, on the estimates of each infrastructure units described in the RCP. Estimated closure costs for "Year 0" (2017) and the End of Mine (EOM) stand at CAD \$61.1M and \$44.0M, respectively. The difference is due to progressive reclamation being carried out while operations continue.

In accordance with the Class A Water Use Licence in place, Capstone has placed a surety bond of approximately CAD\$72 million with the appropriate regulatory agencies. Pembridge is obligated to post CAD\$10 million in cash collateral over time (CAD\$1 million per quarter, starting with the first payment made 90 days from completion of the acquisition of Minto) against the bond and conduct prescribed progressive reclamation activities to reduce the overall future closure cost. Pembridge is required to use all commercially reasonable efforts to replace the bond in due course. In the meantime, while this surety bond is outstanding, Capstone will act as an indemnitor to the surety bond provider and Pembridge Resources will indemnify Capstone for environmental liabilities at the Mine.

Final closure plans as of February 2017 are categorized into three periods: the Active Closure (AC; 2019- 2021); Post Closure I (PCI; 2022-2026); and Post Closure II (PCII; 2027-2036). Commencement of active closure has likely been delayed until 2021 due to improved project economics.

The Active Closure period comprises the implementation of the majority of the closure measures, including, but not limited to: closure water conveyance construction, recontouring, soil placement and revegetation, construction of passive water treatment facilities, partial decommissioning of the Water Storage Dam, demobilization and demolition. Operational water quality objectives and effluent standards will continue to apply, and water treatment would continue to consist of active treatment. This period is expected to last for three years, depending on speed of completion of closure measures.

The PCI period is intended as an intermediary period allowing closure measures to be established and assessed. As vegetation begins to establish, maintenance of soil cover will be ongoing, and water conveyance features will be commissioned, including the passive treatment system which is expected to take two years to complete. This will include a pump-back system extending from the passive treatment system to the water treatment plant to allow for active treatment in the initial stages, if necessary. Operational water quality and effluent standards will still apply, as the passive water treatment becomes the primary method, supplemented by active water treatment as required. A small staff contingent will be required for the five-month open water period per annum. The expected five-year span of the PCI period may vary depending on speed of closure activities. However, water quality must meet the "Water Quality Objective attainment criteria" for three consecutive years prior to advancement to PCII.

The PCII period will be the "confirmatory period" where performance of closure measures will be monitored, with maintenance activities taking place as required. The site will be monitored at least three times per year, and will be occupied once every five years for a two-week period by a small staff contingent. This two-week visit is intended to complete any maintenance as required. Closure water quality objectives will apply, and passive water treatment will be the main form of treatment.

The ten-year PCII period will be followed by a visit once every ten years for the following ninety years, with expenses paid for by MintoEx.

A summary of post-closure activities is shown in Table 56 in the Minto Mine Reclamation and Closure Plan, outlining the project schedule. The schedule has been modified to account for continued production until at least 2021.

Year	Summary of Main Project Activity
2016	Expected completion of the Minto North Pit, Mill Valley Fill Extension Stage 2 and Main Waste Dump Expansion. Underground mining continues in the Minto South Deposit. Stripping in Area 2 Stage 3 pit begins as the final benches of Minto North are mined out.
2017	Underground production continues from the Minto South underground portal. Open pit mining continues in Area 2 Stage 3 until the pit is completed in the second quarter of the year.
2018	Underground mining from the Minto East deposit and milling continue until the third quarter of the year. Active closure to begin.
2019 - 2021	Active closure period continues (total duration expected three years) with Post-Closure I beginning near the end of 2021.
2022 - 2026	Post-closure I period continues (total duration expected five years but will be performance based) with Post-Closure II beginning near the end of 2026
2027 - 2036	Post-closure II period continues (total duration of Post-Closure II is ten years) until near the end of 2036.

Table 56: Project Schedule (taken from Minto Mine Reclamation and Closure Plan, Minto Explorations Ltd.)

13.2.1 Areas of Material Non-Compliance

There are no known areas of material non-compliance as of June 23, 2019.

13.2.2 Facilities of Material Significance

Facilities of material significance include*:

• Mine camp and related infrastructure;
• Mill building and related infrastructure;
• Fuel farm area;
• Sewage treatment plant;
• Water treatment plant;
• Exploration sites and trails;
• Land treatment facility;
• Solid waste facility;
• Explosive plant site; and
• Mobile equipment

*Taken from the "Minto Mine Reclamation and Closure Plan, 2017-01", p 217.

Environmental concerns will focus on contamination of surrounding soil by chemicals, fuels and other wastes. Contaminated soils will be remediated at the site's approved land treatment facility, and any recyclables and special wastes will be removed.

A salvage program is in place to reduce the amount of scrap requiring disposal at landfill sites. Buried infrastructure such as wiring and pipes will remain buried, and concrete footings will be broken down to slightly below ground level. Culverts will be removed and natural drainage restored. Pertinent areas will be covered in 0.25 metres of overburden to facilitate revegetation.

All remaining buildings, equipment, furnishings and supplies will be categorized into one of three treatment categories:

• Salvage: reusable items valued as equal or higher than the cost of decommissioning;
• Recyclables: Items that can be disposed in recycling facilities at no cost to Minto, other than haulage costs; and
• Landfill: non-hazardous waste requiring a tipping fee, more practically disposed of at an on-site landfill.

All controlled substances and hazardous waste will be disposed of at licensed facilities.

The following is a brief description of facilities of potential material significance, as well as reclamation procedures:

13.2.3 Mine Camp and Related Infrastructure

This consists of trailers and related infrastructure that may be salvaged, recycled or landfilled. Following removal, the site will be scarified, recontoured and revegetated.

13.2.4 Mill Buildings and Related Infrastructure

The Mill Complex comprises several buildings and facilities, including:

• Mill building; *
• Process building;
• Filter Plant building;
• Concentrate storage shed;
• Crusher and crusher conveyor;
• Mill warehouse;
• Assay lab;
• Mechanics shop; and
• Electricians shop

*Taken from the "Minto Mine Reclamation and Closure Plan, 2017-01", p 218

Equipment will be removed and separated for salvage, recycling or landfill, and hazardous waste will be sent to a licensed facility. The buildings will be demolished and steel will either be recycled or landfilled, and other non-hazardous debris will be placed on the on-site landfill. Concrete foundations will be demolished to just below ground level, and the footprint will be covered with fill or overburden and revegetated.

13.2.5 Fuel Farm Area

The tanks will be drained of any residual fuel and removed for salvage or recycling. The liner will be pressure-washed, cut into manageable pieces and disposed of in the on-site landfill. Following a field sampling program, any soils with residual contamination will be taken to the Land Treatment Facility. The area will be re-contoured and revegetated.

13.2.6 Sewage Treatment Plant

The sewage treatment plant will be decommissioned, and tanks and piping flushed with clean water. Residual sludge and treated effluent will be disposed of in the Main Pit, and the plant will be removed for salvage.

13.2.7 Water Treatment Plant

The water treatment plant (WTP) will remain operational throughout Active Closure and PCI, until water quality objectives are achieved. Then the modules will be removed from site for salvage or recycling, with the demolition debris sent off-site to a permitted landfill, if the present permitted site landfill has been reclaimed by then.

13.2.8 Explosives Plant Site

The ANFO facility is located at the production plant and powder magazine storage area. At closure, all unused explosives, the explosives magazines and other unused equipment will be returned to the suppliers. The septic system will be dismantled and backfilled. Any fuel-contaminated soils will be transported to the Land Treatment Facility for remediation. The site will be scarified, recontoured and revegetated.

13.2.9 Mobile Equipment

This comprises vehicles, production equipment, compressors, light plants, mobile electricity generators and self-contained storage tanks, among others. Any equipment owned by contactors will be removed by their owners, and all remaining equipment will be removed for salvage or recycling. Storage tanks will be decommissioned and remaining fuel placed in suitable drums. Tanks will be removed for salvage or recycling, and the drums removed for salvage or disposal.

13.3 First Nation Consultation and Community Engagement

The following section is based on the document titled: "Minto Mine Reclamation and Closure Plan, 2017-01", pp 34-36.

The Minto Mine is located within a block of Category A land (SFN R-6A) held by the Selkirk First Nation (SFN). Although the claims were staked long before designation of this block, MintoEx has pursued consultation and community engagement with the SFN, as well as project regulators and other stakeholders.

13.3.1 Engagement with Selkirk First Nation

Pursuant to the original Co-operative Agreement (CA) with the Selkirk First Nation first entered into in 1997 and revised in 2009 (section 4.2), several initiatives have been developed since then. These include regular mandated meetings between Capstone leadership and the SFN chief and council, and with SFN leadership representatives. These include a bi-lateral working group (BTWG), comprised of MintoEx and SFN representatives to address technical issues pertaining to the Minto Mine, specifically geotechnical and water quality issues, consultation and closure and reclamation.

Figure 45: Reclamation Measures for Mill and Ancillary Facilities (produced by Alexco Environmental Group)

Minto Property Competent Person's Report 162 | P a g e

13.3.2 Tri-Partite Socio-economic Working Group

The tri-partite socio-economic working group, comprising the SFN, YG and MintoEx, is responsible for a monitoring program of socio-economic effects, as outlined in the Decision Document for Phase IV (YESAB project #2010-0198). The scope of this program was agreed upon in 2013.

The working group holds regular meetings to discuss data availability, responsibilities and reporting. The scope of this program was agreed upon in 2013 and amended in 2018. The first draft of the 2014 report was submitted to all parties for final review and published in 2016. A subsequent, amended version was published in 2018.

13.3.3 Tri-Partite Reclamation and Closure Working Group

This group, also comprising SFN, YG and MintoEx representatives, was developed in order for MintoEx to update YG and the SFN on progress of the reclamation and planning processes. Discussions to date included, among others, submission extension requests, scope of the 2017 Reclamation and Closure Plan, operations updates and engagement with the SFN. The most recent July 2016 meeting was held at the Minto Mine, and included a site tour focusing on proposed reclamation and closure measures.

13.3.4 Other Stakeholders

MintoEx has also involved other stakeholders throughout the reclamation and closure process, through technical working groups, site tours, updates, regulator meetings and reports. The groups frequently involved are: the YWB, YG EMR, YG Water Resources and Environment Canada.

The main forms of engagements held since 2011, essentially since the submission of the Phase V/VI Preliminary Feasibility Study Technical Report, include:

• Bilateral technical Working Group meetings*
• Community Sessions
• Meetings between SFN leadership and senior management of MintoEx;
• Bilateral meetings with regulators, and;
• Technical meetings involving multiple stakeholders

*Taken from the "Minto Mine Reclamation and Closure Plan, 2017-01", p 36

13.4 Special Factors

Although the Minto Mine is located at a northern latitude, affected by a subarctic continental climate, and subject to a short exploration season of about four months, actual operations and production occur yearround and are only modestly impacted by remote location or climatic conditions. The moderate terrain, road access, and connectivity to the main Yukon electrical grid enhance viability of operations.

The most significant negative factor affecting exploration and extraction is surface access, which is impossible during autumn freeze-up and spring break-up of the Yukon River, separating the mine site from the North Klondike Highway. Freeze-up and break-up each have a duration of 6-8 weeks, depending on specific weather conditions. This impairment is mitigated significantly by the availability of charter air service based in Whitehorse, and facilitated by an airstrip on the property.

One other special factor is the fairly remote location of the property. When access across the Yukon River is possible, crews are transported in commercial buses from Whitehorse. During freeze-up and break-up charter air service is required. This places some upward pressure on travel and transportation costs.

Operations are able to continue through the winter, except for periods of extreme cold, when temperatures may approach -50^oC, during which time surface operations may be temporarily suspended.

14. Discussion and Conclusions

14.1 Discussion

On June 3rd, 2019 Pembridge closed its acquisition of Capstone's 100% owned subsidiary, Minto Exploration Ltd, which controls 100% of the Minto copper-gold-silver mine. In mid-2017 Pembridge Resources plc (Pembridge) and Capstone Mining Corporation (Capstone) entered into a Confidentiality Agreement allowing Pembridge access to data on the Minto mine. On November 1 2017, a non-binding Letter of Intent was entered into by Pembridge and Capstone, establishing an exclusivity period and setting out the terms for potential acquisition of 100% of the Minto copper-gold mine and associated assets. On February 14, 2018 Pembridge and Capstone entered into a Purchase and Sale Agreement of MintoEx, the company that controlled the Minto mine assets. On October 11, 2018 Capstone commenced placement of the mine on care and maintenance, and its agreement with Pembridge was terminated and the exclusivity period ended.

The Minto property was first explored in the early 1970s, and advanced to a feasibility study by 1996. Mineral exploration continued within property boundaries prior to, and following commencement of, actual production in 2007. Exploration continued through 2011, followed by a more limited program in 2012, with little activity reported since then.

The deposit genesis remains enigmatic, warranting detailed study to determine categorization of the deposit system into known deposit models. The most plausible setting is a migmatized porphyry Cu-Au deposit hosted within Late Triassic metavolcanic rocks of the Povoas Formation, Stikinia that forms an extensive NW-trending belt in central Yukon. Migmatization occurred during the emplacement of the Granite Mountain batholith in the Early Jurassic. The mineralized Late Triassic volcanic rocks of Stikinia were partial melted, forming a migmatite during which copper sulphides and other metals entered into an immiscible sulphide melt and crystallized as net-textured copper sulphides within the migmatite (Kovacs, 2018). The ore mineral assemblage, Cu/Au ratios, and metal tenor resemble those of porphyry Cu-Au deposits. The sulphur isotopic composition (δ³⁴SSulphide) for sulphides in Minto is also within the range of porphyry deposits (δ³⁴Ssulphide= 2 and -4‰) (Wilson et al., 2007; Rollinson, 2014).

Mining to date has comprised a combination of open pit and underground extraction, with an overall transition from open pit to underground reserves. The mill infrastructure, described in detail in this report, comprises a conventional 4,200 tpd crushing, grinding and flotation facility, which has been well maintained throughout its history with no major negative environmental occurrences known to this author. Although slightly below estimates, actual overall block model performance in 2017 is within mine operational expectations. In 2017, mill production underperformed block model predictions by as much as 7% when mine to mill reconciliation of copper is considered. The comparison of total mine production to the mill shows tonnage, grade, and contained copper to be 3%, 3%, and 6% respectively higher than realized by the mill. This is similar to what was recorded in the 2017 year-end report where 7% more copper metal was reported by mine production than realized in the mill.

The overall (adjusted) block model performance with respect to the mine and the mill was poor in 2018. All mining areas within the MSD performed poorly. Going forward, the stated reserve for the Minto East deposit includes results from test-hole data and performance to the model will undoubtedly improve.

The Minto Mine 2017 Strategic Business Plan provides for mining on a go-forward basis from 2017 until 2021 when milling operations would cease. Remaining reserves comprise the Minto South Deposit (MSD) and the Minto East, Minto East 2, Minto South (Copper Keel and Area 2/118) and Minto North underground sources. Total reserves in the proven and probable categories stand at 40,000 t Cu, 420,000 oz. Ag and 45,000 oz. Au.

Although actual milling operations underperformed somewhat, monitoring of operations indicate a high standard of mine and mill management. Capstone and its predecessors also demonstrate a high degree of environmental and community stewardship, shown by establishment and continued renewal of its Co-Operation Agreement with the Selkirk First Nation. Capstone has also put in place comprehensive reclamation and closure plans, including site monitoring up to 15 years post-closure. In accordance with the Class A Water Use Licence in place, Capstone has placed a surety bond of approximately CAD\$72 million with the appropriate regulatory agencies.

The mine, initially profitable, has been marginally viable in the past few years, resulting in an expectation of impending temporary suspension of operations. The largest contributing factor was low metal prices, particularly copper, during this period. However, sound mining and milling management enabled operations to continue throughout this period. Since late 2016, metal prices have recovered significantly, and meet or somewhat exceed prices utilized in the updated resource calculation. Although electric power is provided by the main Yukon electrical grid, fuel demands remain significant; therefore, continued low fuel prices will enhance viability. A combination of these factors will significantly affect economic viability going forward.

In 2018, a decision was made not to proceed with development of the Ridgetop deposit, due to the lack of actual mineral reserves. The Area 2 Stage 3 open pit was mined out in 2018, representing the termination of open pit mining at Minto. The Area 2 underground lower "P" lens was mined out in 2018.

On October 11, 2018, Capstone announced that Capstone and Pembridge had elected to terminate the agreement for Pembridge to purchase the Minto mine. The mine was immediately placed on care and maintenance, with no further extraction, and mineral processing ceased on October 19, 2018. On June 3, 2019, following closure of Pembridge's purchase of Minto Explorations Ltd., the care and maintenance phase was ended, and the mine and mill restart process commenced.

14.2 Conclusion

Pembridge Resources plc has acquired the Minto Mine as the first of a proposed series of planned mineral property acquisitions in the surrounding area, and to potentially provide significant value. Existing infrastructure, mineral processing procedures, and the remaining mineral reserve and resource base have been confirmed by the various contributing authors of this report. Quality of mine infrastructure and sound management are also significant positive contributors to continued economic viability.

The primary objective of Pembridge is to extend the mine life beyond Capstone's previous forecast closure date of 2021. To do so, two objectives must be met: upgrading of existing mineral resources to mineral reserve status, if possible; and delineation of new ore reserves. The former can be enhanced by efficient mining and milling operations, and will be influenced by metal prices, CAD\$:US\$ ratios and fuel prices, as well as availability of a work force.

A lack of exploration since 2012 has resulted in a dearth of additional known deposits for future development and extraction, although the Minto East, Fireweed A and Inferno targets warrant further work. Sizable exploration programs, including core drilling, will be required to rapidly delineate further deposits, if any. A positive aspect is that exploration, when ongoing in the past, led to discovery and delineation of further mineral resources. A comprehensive study of the geological, structural, alteration and mineralogical settings will be required to improve the understanding of the setting and applicable deposit model of the Minto property.

It is the opinion of the Competent Person that information within this report, including that provided by the contributing authors, provides a reasonable representation of the applicable aspects of the Minto mine. Unless otherwise stated, the information and conclusion may be relied upon.

15. References

Bath, A.B., Cooke, D.R., Friedman, R.M., Faure, K., Kamenetsky, V.S., Tosdal, R.M. and Berry, R.F., 2014: Mineralization, U-Pb geochronology, and stable isotope geochemistry of the Lower Main zone of the Lorraine deposit, north-central British Columbia: A replacement-style alkalic Cu-Au porphyry. Economic Geology, 109(4): 979-1004.

BD Resource Consulting, Inc., (2015). Minto Fireweed Estimation Reliability by Drill Spacing. Issue Brief. Larkspur, CO: n.p. 2015.

Canadian Institute of Mining (2014). CIM Definition Standards.

Capstone Mining Corp. (2017). 2016 Year-End Reporting of Mineral Resources and Mineral Reserves. Vancouver: n.p., January 1, 2017.

Capstone Mining Corp. (2016). Minto East Mineral Resources Update, June 2016. Vancouver: n.p., July 15, 2016.

Colpron, M., Crowley, J.L., Gehrels, G., Long, D.G.F., Murphy, D.C., Beranek, L. and Bickerton, L., 2015. Birth of the northern Cordilleran orogen, as recorded by detrital zircons in Jurassic synorogenic strata and regional exhumation in Yukon. Lithosphere, 7(5): 541-562.

Golder Associates Ltd., 2015a. Geotechnical Characterization of Existing and Proposed Longhole Open Stope Mining Area. July 30, 2015.

Golder Associates Ltd., 2015b. Minto Mine Underground Reserve Update Geotechnical Input. July 31, 2015. Golder Associates Ltd., 2016. Minto East – Revised Longhole Open Stope Stability. January 8, 2016.

Gordey, S.P. and Ryan, J.J. 2005: "Geology, Stewart River area", Geological Survey of Canada, Open File 4970.

Hart, C.J.R., 1997: A Transect Across Northern Stikinia: Geology of the Northern Whitehorse Map Area, Southern Yukon Territory (105D/13-16). Indian & Northern Affairs Canada, Yukon Region, Exploration & Geological Services Division.

Hart, C.J.R. and Radloff, J., 1990a: Geology of Whitehorse, Alligator Lake, Fenwick Creek, Carcross and part of Robinson map areas (105D/11, 6, 3, 2, & 7). Indian and Northern Affairs Canada, Northern Affairs, Yukon Region.

Hart, C.J.R. and Radloff, J.K., 1990b: Geology of Whitehorse, Alligator Lake, Fenwick Creek, Carcross and Part of Robinson Map Areas (105D/11, 6, 3, 2, & 7) Canada Indian Northern Affairs Program Yukon Region Exploration Geological Services Division Yukon Territory, Canada/Yukon Subsidiary Agreement on Mineral Resources, Exploration and Geological Services Division.

Haynes, D., Cross, K.C., Bills, R.T., and Reed, M/H, 1995: "Olympic Dam ore genesis; a fluid-mixing model", Economic Geology (1995) 90(2), Society of Economic Geologists, pp. 281-307.

Minto Property Competent Person's Report 167 | P a g e

Hood, S. B., 2008: "Mid-crustal Cu-Au Mineralisation during Episodic Pluton Emplacement, Hydrothermal Fluid Flow, and Ductile Deformation at the Minto Deposit, YT, Canada", MSc Thesis, Faculty of Graduate Studies, University of British Columbia.

Kirkham Geosystems Ltd. (2015). Minto Mine Resource Update and Report, Minto East and Minto East 2. Vancouver: n.p., August 2015.

Kovacs, N., Allan, M.M., Zagorevski, A., Milton, J.E. and Hart, C.J.R., 2017. "New geological insights into the Carmacks Copper Cu-Au-Ag deposit, central Yukon (Yukon MINFILE 115I 008)". In: Yukon Exploration and Geology 2016, K.E. MacFarlane and L.H. Weston (eds.), Yukon Geological Survey, p. 117-140.

Kovacs, N., 2018: "Genesis and Post-ore modification of the migmatized Carmacks Copper Cu-Au-Ag porphyry deposit, Yukon, Canada". MSc Thesis, University of British Columbia, 2018.

Mercer, B., and Sagman, J., 2012: "Phase VI Preliminary Feasibility Report, Minto Mine, Minto Explorations Ltd", In-house report, Minto Explorations Ltd.

Mercer, B., and Sagman, J., 2012: "Preliminary Feasibility Study Technical Report, Minto Explorations Ltd.", In-house report, Minto Explorations Ltd.

Mihalynuk, M.G., Zagorevski, A., Joyce, N.L., and Creaser, R.A, 2016: Age of magmatism and mineralization at the Star (Sheslay, Copper Creek) copper porphyry prospect: Inception of the Late Triassic mineralized arc. Geological Fieldwork 2015, British Columbia Ministry of Energy and Mines, British Columbia Geological Survey Paper 2016-1, 1(2016): 65-75.

Minto Explorations Ltd. (2016) Mineral Resource and Reserve Self-Assessment Report. Report. Yukon: n.p., November 25, 2016.

Minto Mine, 2016. Underground Ground Control Plan. December 2016

Minto Mine, 2016a. Spill Contingency Plan. February 2016.

Minto Mine, 2017 Underground Mine Development and Operations Plan. January 2017

Minto Mine, Mine Development and Operations Plan Area 2 Stage 3 Pit Design change. January 2017

Minto Mine, 2016b. Emergency Response Plan. March 2016.

Minto Explorations Ltd. (2017). Annual QAQC Report, 2017.

Mortensen, J.K., 1992: Pre-mid-Mesozoic tectonic evolution of the Yukon-Tanana terrane, Yukon and Alaska. Tectonics, 11(4): 836-853.

Rollinson, H.R., 2014: Using geochemical data: evaluation, presentation, interpretation. Routledge. 384 pages.

Schulze, C, 2008: "Assessment Report, Geological and Geochemical Surveying on the DEL Claim Block, Northern Tiger Resources Inc." Assessment Report #095064, filed with the Whitehorse Mining Recorder, Dept. of Energy and Mines, Government of Yukon.

Schulze, C, 2008: "Assessment Report, Geological and Geochemical Surveying on the MEL Claim Block, Northern Tiger Resources Inc." Assessment Report #095063, filed with the Whitehorse Mining Recorder, Dept. of Energy and Mines, Government of Yukon.

Schulze, C., 2009: "Assessment Report, Geological and Geochemical Surveying on the BOND Claim Block, Northern Tiger Resources Inc." Filed with the Whitehorse Mining Recorder, Dept. of Energy and Mines, Government of Yukon.

SRK Consulting, 2009. Pre-feasibility Geotechnical Evaluation Phase IV. December, 2009.

SRK Consulting (Canada) Inc. (2015). Minto MSD Resource Update 2015. Technical memorandum. Vancouver: n.p., July 2, 2015.

SRK Consulting (Canada) Inc. (2016). Area 2 Deep Resource Estimation.

SRK Consulting (Canada) Inc. (2017). Copper Keel Underground Resource Estimation. Technical memorandum. Vancouver: 16 p., March 7, 2017.

Tafti, R. and Mortensen, J.K., 2003: Early Jurassic porphyry (?) copper (-gold) deposits at Minto and Williams Creek, Carmacks copper belt, western Yukon. Yukon Exploration and Geology: 289- 303.

Tempelman-Kluit, D., 1984: Geology, Laberge (105E) Carmacks (115I), Yukon Territory. Geological Survey of Canada, Open File 1101.

Wilson, A.J., Cooke, D.R., Harper, B.J., and Deyell, C.L., 2007: Sulfur isotope zonation in the Cadia district, southeastern Australia: exploration significance and implications for the genesis of alkali porphyry goldcopper deposits. Mineralium Deposita, 42(5): 465-487.

Yukon Geology Survey, 2018: YGSIDS, website at http://data.geology.gov.yk.ca/. Energy, Mines & Resources, Government of Yukon.

Yukon Geological Survey, 2018: Web map Gallery, website at http://www.geology.gov.yk.ca/Web_map_gallery.html. Energy, Mines & Resources, Government of Yukon.

Yukon Mining Recorder, 2018: Website at http://www.yukonminingrecorder.ca/. Energy, Mines & Resources, Government of Yukon.

APPENDIX 1

CERTIFICATE OF QUALIFICATIONS, CONSENT, DATE AND SIGNATURES

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PART XX

HISTORICAL FINANCIAL INFORMATION ON THE COMPANY

Pembridge's audited results for the years ending 31 December 2018, 31 December 2017 and 31 December 2016 are available on its website: www.pembridgeresources.com/investors/financial reports.

Shareholders or other recipients of this document may request a hard copy of the above information incorporated by reference from the Company at its registered office, Suite A, 6 Honduras Street, London EC1Y 0TH, United Kingdom or by telephoning 0207 917 2968. Such copy will be provided to the requester within 7 days. A hard copy of the information incorporated by reference will not be sent to Shareholders or other recipients of this document unless requested.

Information that is itself incorporated by reference or referred or cross-referenced to in these documents is not incorporated by reference into this document.

Consolidated financial statements of the Group

	Accounts for the period as at and ended
	31 December 2018	31 December 2017	31 December 2016
Consolidated income statements	—	Page 12	Page 13
Consolidated Statement of Financial Position	Page 23	Page 13	Page 15
Statement of Comprehensive Income	Page 22(1)	Page 14(2)	Page 14(3)
Principal accounting policies
Notes to the accounts	Pages 27-39	Pages 17-28	Pages 17-28
Independent auditors' report	Page 19-21	Pages 10-11	Pages 10-11

(1) Significant Accounting Policies can be found in Note 3 to the audited financial statements contained in the Pembridge 2018 Annual Report.

(2) Principal accounting policies can be found in Note 3 to the audited financial statements contained in the Pembridge 2017 Annual Report.

(3) Principal accounting policies can be found in Note 3 to the audited financial statements contained in the Pembridge 2016 Annual Report.

The tables below set out the summary audited historical financial information of the Company as derived from the financial information of the Company as at 31 December 2018, 2017 and 2016.

Statement of comprehensive income

	Group	Company	Company
	Year ended	Year ended	Year ended
	31December	31December	31December
	2018	2017	2016
	US\$'000	US\$'000	US\$'000
Administration expenses Impairment of investment in and amounts due from	(3,829)	(1,768)	(744)
subsidiary undertaking	—	—	(3,263)
Loss on disposal of investments	—	(157)	—
Other income	—	—	192
Operating loss	(3,829)	(1,925)	(3,815)
Finance income	—	—	—
Finance costs	—	—	—
Loss before income tax	(3,829)	(1,925)	(3,815)
Income tax	—	—	—
Loss for the year attributable to the equity holders of the company	(3,829)	(1,925)	(3,815)
Other comprehensive income	—	—	—
Total comprehensive income for the year	(3,829)	(1,925)	(3,815)
	Year ended	Year ended	Year ended
	31December	31December	31December
	2018	2017	2016

Earnings per share expressed in US cents Basic and diluted loss per share attributable to the equity holders of the Company (1.7) (1.4) (14.9)

Statement of financial position

	Group 31December 2018 US\$'000	Company 31December 2017 US\$'000	Company 31December 2016 US\$'000
Assets Non-current assets Property, plant and equipment Intangible assets	15 148	2 —	3 —
Total non-current assets	163	2	3
Current assets Trade and other receivables Cash and cash equivalents	240 151	354 2,027	38 1,163
Total assets	554	2,383	1,204
Liabilities Non-current liabilities Borrowings Current liabilities Trade and other payables Borrowings	(103) (1,831) (279)	— (213) —	— (184) —
Total liabilities	(2,213)	(213)	(184)
Net liabilities	(1,659)	2,170	1,020
Equity Share capital Share premium Other reserve Capital redemption reserve Retained deficit	295 2,902 66 1,011 (5,933)	1,306 2,902 165 — (2,203)	1,048 138 112 — (278)
Equity attributable to Shareholders of the Company	(1,659)	2,170	1,020

Statement of cash flows

	Group Year ended 31December 2018 US\$'000	Company Year ended 31December 2017 US\$'000	Company Year ended 31December 2016 US\$'000
Cash flows from operating activities Loss for the year Adjusted by:	(3,829)	(1,925)	(3,815)
Depreciation Share option charge Share based payments Impairment of investment in subsidiary	5 – — —	1 47 — —	— 15 184 3,063
Loss on disposal of investments	— (3,824)	157 (1,720)	— (553)
Movements in working capital (Increase)/decrease in trade and other receivables Increase/(decrease) in trade and other payables	(344) 1,928	(316) 29	(21) 116
Net cash used in operating activities	(2,240)	(2,007)	(458)
Cash flows used in investing activities Purchase of property, plant and equipment Purchase of available-for-sale financial assets Proceeds from sale of available-for-sale financial assets	(18) — —	— (199) 269	(3) — —
Net cash generated from/(used in) investment activities	(18)	70	(3)
Cash flows used in financing activities Proceeds from borrowings Repayment of borrowings Proceeds from issuance of shares Direct cost of share issue	382 — — —	— — 2,954 (153)	— (200) 1,259 (80)
Net cash generated from financing activities	382	2,801	979
Increase/(Decrease) in cash and cash equivalents	(1,876)	864	518
Reconciliation to net cash Opening cash balance Increase/(Decrease) in cash	2,027 (1,876)	1,163 864	645 518
Cash and cash equivalents at year end	151	2,027	1,163

Set out below are details of the significant changes in the financial condition, operating results and trading position of the Company for the period since 31 December 2018.

• * the execution of the original definitive sale and purchase agreement between the Company and Capstone relating to the Minto Acquisition on 14 February 2018, which resulted in the suspension of the Standard Listing of the Existing Issued Share Capital on the grounds that the Minto Acquisition constituted a Reverse Takeover;
• * the execution of the replacement definitive sale and purchase agreement between the Company and Capstone relating to the Minto Acquisition on 3 June 2019, the 'Minto Acquisition Agreement, which resulted in the continued suspension of the Standard Listing of the Existing Issued Share Capital pending publication of this document and Admission; and
• * the execution of the Convertible Loan Agreement on 24 October 2019 between Gati Al-Jebouri and the Company, which provides for a committed term loan in Pounds Sterling in an aggregate amount equal to £1,000,000 and an uncommitted term loan in Pounds Sterling in an aggregate amount equal to £700,000 to be made available to the Company, which is to be repaid in full, together with any accrued and unpaid interest, on the date falling two years after the date of the Convertible Loan Agreement, being 23 October 2021 and carries interest at an annual rate of 8%. At any time prior to 23 October 2021, Mr. Al-Jebouri may elect to convert all or part of the monies loaned and drawn into Ordinary Shares, to be issued at Placing Price, provided that such election would not place his shareholding above 29.9% of the total issued share capital of the Company. The Company may elect to repay any portion of the monies loaned and drawn at any point prior to 23 October 2021, provided always that Mr. Al-Jebouri will have the option to have such repayment made in Ordinary Shares, to be issued at a fixed conversion price, which is the Placing Price.

Notes to the condensed consolidated financial statements for the year to 31 December 2018

1. NATURE OF OPERATIONS AND GENERAL INFORMATION

The principal activity of the Company is to operate as a mining focussed holding company.

Pembridge Resources plc is incorporated and domiciled in England. The address of the Company's registered office is Suite A, 6 Honduras Street, London EC1Y 0TH. Pembridge Resources plc's shares are admitted to listing on the standard segment of the Official List of the UK Financial Conduct Authority and to trading on the main market for listed securities of London Stock Exchange plc.

The Group's and Company's Financial Statements are presented in United States dollars (US\$), which is also the functional currency of the Company, and rounded to the nearest thousand.

These Financial Statements were approved for issue by the Board of Directors on 30 April 2019.

2. STANDARDS, AMENDMENTS AND INTERPRETATIONS

2.1 New and amended standards adopted

There were no IFRSs or IFRIC interpretations relevant to the Group or Company that were effective for the first time for the financial year beginning 1 January 2018 that had a material impact on the Group or Company.

2.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early

At the date of authorisation of these Financial Statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group or Company.

Management anticipates that all of the pronouncements will be adopted in the Group's and Company's accounting policy for the first period beginning after the effective date of the pronouncement. The new standards and interpretations are not expected to have a material impact on the Group's and Company's Financial Statements.

• * IFRS 16 Leases (effective 1 January 2019)
• * IAS 19 Employee Benefits, amendments regarding plan amendments, curtailments or settlements (effective 1 January 2019)
• * IFRIC 23 Uncertainty over Income Tax Treatments (1 January 2019)
• * Annual Improvements Annual Improvements to IFRSs 2015 2018 Cycle (1 January 2019*)

*Subject to EU endorsement

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and IFRIC interpretations (IFRS IC) as adopted by the European Union, and with the Companies Act 2006 applicable to companies reporting under IFRS. The Financial Statements have been prepared under the historical cost convention.

The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. The areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are disclosed in Note 4.

Going concern

The Group and Company meets its working capital and investment requirements from its cash and cash equivalents. The Company raises finance for its activities in discrete tranches. The Group and Company did not generate revenues from operations during 2018. As such, the ability to continue to adopt the going concern assumptions will depend upon a number of matters including future successful capital raisings for necessary funding or loans from third parties.

The Group and Company does not have sufficient funds to meet its working capital needs for the next 12 months and further funding will be required either through equity raisings or other financial arrangements to fund working capital and costs associated with a potential acquisition. The Company will seek to raise funds for working capital purposes through a fundraise, and will seek to re-list on the London Stock Exchange, which is subject to shareholder and regulatory approvals. This cannot be guaranteed and there are no legally binding agreements in place at the date of approval of these Financial Statements relating to the raising of additional funds.

The Group and Company will only be able to meet its contracted and committed expenditure for at least the next 12 months with a further injection of funds. The Directors have a reasonable expectation that the Group and Company will be able to raise such funds, and therefore continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing these Financial Statements.

Property, plant and equipment

Property, plant and equipment are recorded at cost, net of accumulated depreciation and any provision for impairment. Depreciation is provided using the straight-line method to write off the cost of the asset less any residual value over its useful economic life as follows:

Furniture and office equipment - 3 years

Intangible assets

Mining Rights are shown at historic cost and are tested annually for impairment.

Foreign currency translation

In preparing the Financial Statements, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising, if any, are recognised in profit or loss.

Taxes

Income tax represents the sum of the tax currently payable or receivable and deferred tax.

Current tax is based on taxable result for the period. Taxable profit or loss differs from reported profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's and Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Tax relating to items recognised in other comprehensive income is recognised in other comprehensive income.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Financial instruments, assets and liabilities

The Group and Company uses financial instruments comprising cash and cash equivalents, trade and other receivables, trade and other payables and borrowings that arise from its operations.

Financial assets

The only financial assets currently held by the Company are classified as loans and receivables and cash and cash equivalents. These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Company will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable.

Loans and receivables comprise trade and other receivables and cash and cash equivalents in the statement of financial position.

Derecognition of financial assets

The Group and Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the asset and substantially all the risk and rewards of ownership of the asset to another entity.

Financial liabilities

Trade payables and other short-term monetary liabilities are all classified as other financial liabilities. At present, the Company does not have any liabilities classified as fair value through profit or loss.

Trade payables and other short-term monetary liabilities are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method. All interest and other borrowing costs incurred in connection with the above are expensed as incurred and reported as part of financing costs in the statement of comprehensive income.

Derecognition of Financial liabilities

The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or they expire.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand and deposits held at call with banks. Any interest earned is accrued monthly and classified as finance income. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above.

Investment in subsidiary

The Company recognises its previous investments in subsidiaries at cost, less any provision for impairment. The cost of acquisition includes directly attributable professional fees and other expenses incurred in connection with the acquisition.

Borrowings

Borrowings are initially recognised at fair value, and subsequently carried at amortised cost. Borrowing costs are recognised in profit or loss in the period in which they are incurred.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction from proceeds.

Share based payments

The fair value of services received from employees and third parties in exchange for the grant of share options and warrants is recognised as an expense, except for those granted in connection with the issue of new ordinary shares which are shown as a deduction in equity. A corresponding increase is recognised in other reserves in equity. The fair value of the share options and warrants is calculated using an appropriate valuation model. At each reporting period end the Company revises its estimate of the number of options that are expected to become exercisable. The proceeds received net of any attributable transaction costs are credited to share capital (nominal value) and share premium when exercised.

4. GROUP STRUCTURE

The parent entity of the Group is Pembridge Resources plc, incorporated in England, and the details of its subsidiaries are as follows:

		Ownership Interest
	Country of incorporation	Nature of business	As at 31December 2018	As at 31December 2017
Yukon 536545 Inc.	Canada	Mineral prospecting	100%	—
Yukon 536445 Inc.	Canada	Mineral prospecting Intermediate	100%	—
Minotaur Acquisition Ltd.	Canada	holding company	100%	—

Registered office addresses are as follows:

Yukon 536545 Inc. and Yukon 536445 Inc. – c/o MacDonald and Company, Suite 200, 204 Lambert Street, Whitehorse Y.T, Canada

Minotaur Acquisition Ltd. – c/o Edwards, Kenny and Bray LLP, 1900-1040 West Georgia Street, Vancouver B.C. Canada

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group's and Company's accounting policies, described in Note 3, the Directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Critical estimates in applying the Group's and Company's accounting policies

There are currently no critical estimates or judgements that the Directors have made in the process of applying the Group's and Company's accounting policies that have a significant effect on the amounts recognised in Financial Statements.

6. OPERATING SEGMENTS

Operating segments are reported in a manner consistent with the internal reporting provided to the Board, who are responsible for allocating resources and assessing performance of the operating segment.

The Company currently has one operating segment, being a holding Company, therefore all IFRS 8 disclosures are incorporated within other notes to the Financial Statements.

7. EXPENSES BY NATURE

	Group	Company	Company
	Year ended 31December 2018	Year ended 31December 2017	Year ended 31December 2016
	US\$'000	US\$'000	US\$'000
This is stated after charging:
Staff costs	1,187	416	44
Share options granted to Directors	—	19	15
Share based payments	—	9	184
Auditor's remuneration (note 8)	76	38	13
Management fee	—	—	126

8. AUDITOR'S REMUNERATION

	Group Year ended 31December 2018 US\$'000	Company Year ended 31December 2017 US\$'000	Company Year ended 31December 2016 US\$'000
Remuneration receivable by the Company's auditors for the audit of the Financial Statements Fees payable to the Company's auditor and its	18	14	13
associates for other services	58	24	—
Total remuneration	76	38	13

9. EMPLOYEES AND KEY MANAGEMENT

The total Directors' emoluments for the year, including share-based payments, were US\$419,000 (2017 – US\$351,000, 2016 – US\$110,000).

The average number of employees was 7 (2017 and 2016 – 2).

Key management personnel as defined under IAS 24 have been identified as only the Board of Directors.

	Group Year ended 31December 2018 US\$'000	Company Year ended 31December 2017 US\$'000	Company Year ended 31December 2016 US\$'000
Wages and salaries	1,038	366	38
Social security costs	136	51	6
Pension contributions	12	—	—
Total employee benefit expenses	1,186	417	44

10. RELATED PARTY TRANSACTIONS

The Company has entered into the following related party transactions with its Directors and Senior Managers in order to fund working capital:

• a) on 28 August 2018, the Company borrowed £200,000 from Frank McAllister. The unsecured loan has no fixed term, but is due to be repaid within 30 days of the Company being relisted. The loan carries an interest rate of 10% per annum, payable semi-annually in arrears;
• b) on 6 December 2018, the Company borrowed £40,000 from Frank McAllister. The unsecured loan has a two year term, and carries an interest rate of 20% per annum, payable semiannually in arrears; and
• c) on 20 December 2018, the Company borrowed £40,000 from Guy Le Bel. The unsecured loan has a two year term, and carries an interest rate of 20% per annum, payable semiannually in arrears.

11. INCOME TAX

	Group Year ended 31December 2018 US\$'000	Company Year ended 31December 2017 US\$'000	Company Year ended 31December 2016 US\$'000
Current tax: UK corporation tax on the result for the year	—	—	—
Total current taxation Deferred taxation	— —	— —	— —
Income tax	—	—	—
Differences explained below: Loss before tax	(3,829)	(1,925)	(3,815)
Loss before tax multiplied by the standard rate 19% (2017: 19.25%) (2016: 20%) Effect of:	(727)	(371)	(763)
Expenses not deductible for tax	—	102	665
Tax losses for which no deferred income tax asset was recognised	727	269	98
Tax for the year	—	—	—
Unrecognised deferred tax asset Tax losses UK – excess management expenses	1,134	412	299
	1,134	412	299

The deferred tax assets are currently unrecognised as the likelihood of sufficient future taxable profits does not yet meet the definition of ''probable''.

The unrecognised deferred tax asset has no expiry period.

12. EARNINGS PER SHARE

The calculation of basic and diluted loss per ordinary share is based on the following data:

	Group Year ended 31December 2018 US\$'000	Company Year ended 31December 2017 US\$'000	Company Year ended 31December 2016 US\$'000
Basic and diluted loss per share (US cents) Weighted average number of shares for basic and	(1.7c)	(1.4c)	(14.9c)
diluted loss per share	223,849,257	133,409,358	25,671,810

The basic and diluted loss per share have been calculated using the loss attributable to shareholders of the Group (2017:Company) of US\$3,829,000 (2017: US\$1,925,000) (2016: US\$3,815,000) as the numerator, i.e. no adjustment to loss was necessary. The basic and dilutive loss per share are the same as the effect of the exercise of share options and warrants would be anti-dilutive.

13. PROPERTY PLANT AND EQUIPMENT

	Group Furniture and office equipment US\$'000
Cost
At 1 January 2017 and 2018	3
Additions	18
At 31 December 2018	21
At 1 January 2017	—
Change for the year	(1)
Depreciation
At 1 January 2018	(1)
Charge for the year	(5)
At 31 December 2018	(6)
Net book value at 31 December 2018	15
Net book value at 31 December 2017	2

14. INTANGIBLE ASSETS

	Mining claims US\$'000
Cost At 1 January 2018	—
Additions	148
At 31 December 2018	148
Accumulated amortisation and impairment At 1 January 2018 and 31 December 2018	—
Net book value At 31 December 2018	148

15. AVAILABLE-FOR-SALE FINANCIAL ASSETS

	Group and Company 31December 2018 US\$'000	Company 31December 2017 US\$'000	Company 31December 2016 US\$'000
At 1 January	—	—	—
Additions	—	426	—
Disposals	—	(426)	—
At 31 December	—	—	—

16. TRADE AND OTHER RECEIVABLES

	Group 31December 2018	Company 31December 2017 US\$'000	Company 31December 2016 US\$'000
Other receivables	207	118	26
Prepayments	7	41	10
VAT recoverable	26	195	2
	240	354	38

17. CASH AND CASH EQUIVALENTS

	Group	Company 31December 2017 US\$'000	Company 31December 2016 US\$'000
	31December
	2018
	US\$'000
Cash and short-term deposits	151	2,027	1,163

18. TRADE AND OTHER PAYABLES

	Group 31December 2018 US\$'000	Company 31December 2017 US\$'000	Company 31December 2016 US\$'000
Trade payables	900	97	162
Other payables and accruals	931	116	22
	1,831	213	184

Trade and other payables are non-interest bearing and normally settled in the month following date of invoice.

19. BORROWINGS

	Group 31December 2018 US\$'000	Company 31December 2017 US\$'000	Company 31December 2016 US\$'000
Non-current Loans from related parties (note 10)	103	—	—
Current Loans from related parties (note 10) Other loans	279	—	—
	382	—	—

All borrowings are determined in Pounds Sterling. All borrowings are unsecured with no exposure to interest rate changes.

20. SHARE CAPITAL AND PREMIUM

	Number of ordinary shares	Number of deferred shares	Share Capital – ordinary shares US\$'000	Share Capital – deferred shares US\$'000	Share premium US\$'000	Total US\$'000
Allotted, called up and fully paid
At 1 January 2018 Repurchase of deferred	223,849,257	81,843,195	295	1,011	2,902	4,208
shares	1	(81,843,195)	—	(1,011)	—	—
At 31 December 2018	223,849,258	—	295	—	2,902	4,208

Ordinary shares have attached to them full voting, dividend and capital distribution rights (including on a winding up).

On 16 July 2018 the Company announced the consolidation of every 10 existing ordinary shares of nominal value 0.1 pence each into one ordinary share of nominal value, such consolidation to take place immediately before the shares are re-admitted to listing on the standard segment of the Official List of the UK Financial Conduct Authority and to trading on the main market for listed securities of London Stock Exchange plc. Also on 16 July 2018, all of the deferred shares were repurchased by the Company by way of the proceeds of the issue of one ordinary share, creating a capital redemption reserve for the same nominal value.

21. SHARE BASED PAYMENTS

Movements in the number of share options and warrants and their related weighted average exercise prices are as follows:

	2018		2017		2016
	Options and warrants Number	Average exercise price (pence)	Options and warrants Number	Average exercise price (pence)	Options and warrants Number	Average exercise price (pence)
At 1 January, Correction to balance brought	220,139,010	3.52	53,082,948	4.34	—	—
forward	4,054,781	3.20	—	—	—	—
Granted	—	—	167,056,062	3.26	53,082,948	4.34
Forfeited	(47,082,949)	4.34	—	—	—	—
At 31 December 2018	177,110,843	3.29	220,139,010	3.52	53,082,948	4.34

Out of the 177,110,843 (2017: 224,193,791 as adjusted) outstanding options and warrants, 162,410,843 (2017: 202,143,790) were exercisable at the year-end. 47,082,949 warrants were forfeited during the year as they had expired. No options or warrant were exercised during the year.

Share options and warrants outstanding at the end of year have the following expiry date and exercise prices:

Grant-Vest	Expiry date (pence)	Exercise price	2018 Number	2017 Number	2016 Number
2016	2018	4.34	—	47,082,949	47,082,948
2016	2021	4.34	6,000,000	6,000,000	6,000,000
2017	2019	3.20	146,060,083	146,060,083
2017	2022	4.34	3,000,000	3,000,000
2017-2018	2027	2.00	7,350,000	7,350,000
2017-2019	2027	4.00	7,350,000	7,350,000
2017-2020	2027	8.00	7,350,000	7,350,000

22. FINANCIAL INSTRUMENTS

Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument, are disclosed in note 3.

The only financial assets currently held by the Company are classified as loans and receivables and cash and cash equivalents.

Categories of financial instruments

The carrying amounts presented in the statement of financial position relate to the following categories of assets and liabilities.

	Group 31December 2018 US\$'000	Company 31December 2017 US\$'000	Company 31December 2016 US\$'000
Financial assets
Current
Loans and receivables Trade and other receivables	233	313	26
Cash and cash equivalents	151	2,027	1,163
	384	2,340	1,189
Financial liabilities
Amortised cost
Trade and other payables Borrowings	(1,831) (382)	(213) —	(184) —
	(2,213)	(213)	(184)

As at 31 December 2018, trade and other receivables are all considered to be recoverable.

The fair value is equivalent to book value for current assets and liabilities.

The main risks arising from the Group's and Company's financial instruments are liquidity risk, interest rate risk and foreign currency risk. The Directors review and agree policies for managing these risks and these are summarised below.

Liquidity risk

Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Directors are current assessing the Group's options in respect of raising additional finance for the business.

The Directors monitor cash flow on a daily basis and at quarterly Board meetings in the context of their expectations for the business, in order to ensure sufficient liquidity is available to meet foreseeable needs.

Interest rate risk

The interest rate profile of the Group's and Company's cash and cash equivalents as at 31 December was as follows:

As at 31 December 2018	US Dollars \$'000	Pound Sterling \$'000	Total \$'000
Cash at bank with no interest rate	—	151	151
	—	151	151
As at 31 December 2017	Dollars \$'000	Sterling \$'000	Total \$'000
Cash at bank with no interest rate	38	1,919	2,027
	38	1,919	2,027

The Company's cash at bank is held with an institution with an A+ credit rating (Fitch).

Foreign currency risk management

The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

	Group 31December 2018 US\$'000	Company 31December 2017 US\$'000	Company 31December 2016 US\$'000
Cash and cash equivalents Pound Sterling	151	1,989	1,162
	151	1,989	1,162

The following table details the Company's sensitivity to a 10% increase and decrease in the US dollar against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally and represents Management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year-end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit and equity where the US dollar strengthens 10% against the relevant currency. For a 10% weakening of the US dollar against the relevant currency, there would be an equal and opposite impact on the profit and equity, and the balances below would be negative.

As at 31 December 2016	US Dollars \$'000	Pound Sterling \$'000	Total \$'000
Cash at bank with no interest rate	1	1,162	1,163
	1	1,162	1,163

		British pound currency impact 31December 2018 US\$'000	British pound currency impact 31December 2017 US\$'000
Effect on loss	+10%	15	199
	-10%	15	199
Effect on equity	+10%	15	199
	-10%	15	199

23. CAPITAL MANAGEMENT POLICIES AND PROCEDURES

The Group and Company considers its capital to comprise its ordinary share capital, share premium and accumulated retained losses as well as loans and reserves (consisting of share based payments reserve).

The Group's and Company's objective when maintaining capital is to safeguard the entity's ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders.

The Group and Company meets its capital needs by equity financing and loans from related parties.

Capital for the reporting period under review is summarised as follows:

	31December	31December	31December
	2018	2017	2016
	US\$'000	US\$'000	US\$'000
Total equity	(1,659)	2,170	1,020

24. EVENTS SUBSEQUENT TO THE REPORTING DATE

The Company entered into a related party transaction with Gati Al-Jebouri on 25 February 2019, borrowing £40,000 in order to fund working capital. The unsecured loan has a two year term, and carries an interest rate of 20% per annum, payable semi-annually in arrears.

PART XXI

HISTORICAL FINANCIAL INFORMATION ON MINTO

Section A

FINANCIAL INFORMATION ON MINTO EXPLORATIONS LIMITED

For the purposes of this Part XXI the ''Company'' refers to the ''Minto Explorations Limited''. ACCOUNTANT'S REPORT ON THE SPECIAL PURPOSE HISTORICAL FINANCIAL INFORMATION OF MINTO EXPLORATIONS LIMITED

PKF Littlejohn LLP

The Directors Pembridge Resources plc Suite A, 6 Honduras Street London EC1Y 0TH United Kingdom

11 December 2019

Dear Sirs

Minto Explorations Limited

Introduction

We report on the historic financial information set out in Section B of Part XXI (the ''Financial Information'') relating to Minto Explorations Limited (the ''Company''). This information has been prepared for inclusion in the document dated 11 December 2019 (the ''Prospectus'') relating to the proposed admission to listing on the standard segment of the Official List of the FCA and to trading on the Main Market for listed securities of the London Stock Exchange plc of Pembridge Resources plc and on the basis of the accounting policies set out in note 2. This report is required by Annex 1, Section 18, Item 18.3.1 of Commission Delegated Regulation (EU) 2019/980 (the ''Prospectus Regulation'') and is given for the purpose of complying with that requirement and for no other purpose.

Responsibility

The Directors of Pembridge Resources plc are responsible for preparing the Financial Information on the basis of preparation set out in the notes to the Financial Information and in accordance with International Financial Reporting Standards (''IFRS'') as adopted by the European Union.

It is our responsibility to form an opinion on the Financial Information, and to report our opinion to you. Save for any responsibility arising under Annex 1, Section 1, Item 1.2 of Commission Delegated Regulation (EU) 2019/980 to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Annex 1, Section 1, Item 1.3 of Commission Delegated Regulation (EU) 2019/980 consenting to its inclusion in the Prospectus.

Tel: +44 (0)20 7516 2200 * www.pkf-littlejohn.com

PKF Littlejohn LLP * 15 Westferry Circus * Canary Wharf * London E14 4HD

PKF Littlejohn LLP, Chartered Accountants. A list of members' names is available at the above address. PKF Littlejohn LLP is a limited liability partnership registered in England and Wales No. OC342572. Registered office as above. PKF Littlejohn LLP is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the Financial Information. It also included an assessment of significant estimates and judgements made by those responsible for the preparation of the Financial Information and whether the accounting policies are appropriate to the Company and consistently applied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Financial Information is free from material misstatement whether caused by fraud or other irregularity or error.

Opinion

In our opinion, the Financial Information gives, for the purpose of the Prospectus dated 11 December 2019, a true and fair view of the state of affairs of the Company as at 31 December 2016, 2017 and 2018, and of its results, cash flows and changes in equity for the years then ended in accordance with the applicable financial reporting framework and has been prepared in a form that is consistent with the accounting policies adopted by the Company.

Declaration

For the purposes of Prospectus Regulation Rule 5.3.2R(2), we are responsible for this report as part of the Document and declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with Annex 1, Section 1, Item 1.2 of Commission Delegated Regulation (EU) 2019/980.

Yours faithfully

PKF Littlejohn LLP

Chartered Accountants

Tel: +44 (0)20 7516 2200 * www.pkf-littlejohn.com

PKF Littlejohn LLP * 15 Westferry Circus * Canary Wharf * London E14 4HD

PKF Littlejohn LLP, Chartered Accountants. A list of members' names is available at the above address. PKF Littlejohn LLP is a limited liability partnership registered in England and Wales No. OC342572. Registered office as above. PKF Littlejohn LLP is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.

PART XXI

Section B

FINANCIAL INFORMATION ON MINTO EXPLORATIONS LIMITED

Balance Sheets

As at December 31, 2018, 2017 and 2016 (expressed in thousands of CAD dollars)

ASSETS	2018	2017	2016
Current Cash Receivable from Capstone Mining Corp. (Note 13) Receivables (Note 5) Inventories (Note 6) Prepaids	5,203 12,985 2,438 10,864 156	26,525 14,724 2,050 37,641 1,057	56,700 — 15,421 31,336 1,189
Mineral properties, plant and equipment (Note 7) Long term deposits Derivative asset (Note 4) Deferred income taxes (Note 9)	31,646 44,996 3,190 — —	81,997 34,080 3,104 4,152 —	104,646 17,254 3,106 — 7,738
Total assets	79,832	123,333	132,744
LIABILITIES Current Accounts payable and accrued liabilities Payable to Capstone Mining Corp. (Note 13) Income taxes payable Current finance lease obligation	9,801 — — —	8,593 — 1,342 —	11,758 2,521 13,675 129
Deferred revenue (Note 8) Deferred income tax liabilities (Note 9) Asset retirement obligation (Note 10)	9,801 13,716 2,294 32,197	9,935 315 2,541 28,044	28,083 958 — 30,645
Total liabilities	58,008	40,835	59,686
EQUITY Share capital Deficit Total equity	210,531 (188,707) 21,824	210,531 (128,033) 82,498	210,531 (137,473) 73,058
Total liabilities and equity	79,832	123,333	132,744

See accompanying notes to this consolidated financial information.

Statements of Income (Loss) and Comprehensive Income (Loss)

Years Ended December 31, 2018, 2017 and 2016 (expressed in thousands of CAD dollars)

	2018	2017	2016
Revenue (Note 12)	86,412	140,037	199,576
Operating costs Production costs (Note 6) Royalties Depletion and amortization	(111,427) (919) (2,485)	(106,893) (2,327) (20,585)	(96,440) (2,384) (65,454)
Earnings (loss) from mining operations	(28,419)	10,232	35,298
Related party management fees and insurance expense (Note 13) Impairment reversal (expense) on mineral	(2,040)	(2,089)	(1,598)
properties (Note 7) Care and maintenance Restructuring expense (Note 16)	— (4,035) (5,936)	25,730 — —	— — —
Earnings (loss) from operations	(40,430)	33,873	33,700
Other (expense) income Foreign exchange (loss) gain (Loss) gain on derivatives (Note 4) (Loss) gain on disposal of equipment Related party insurance claims income (Note 13) Other income (expense)	697 (4,673) 113 — 48	(5,206) (5,257) (1,303) 2,814 2,176	(283) 297 149 — (2,132)
Earnings (loss) before finance costs and income taxes	(44,245)	27,097	31,731
Interest on surety bond (Note 10) Other interest expense Related party interest expense (Note 13)	(909) (1,901) —	(1,194) (709) —	(1,110) (689) (973)
Earnings (loss) before income taxes	(47,055)	25,194	28,959
Income tax (expense) recovery (Note 9)	(945)	(15,754)	(2,537)
Net income (loss) and comprehensive income (loss)	(48,000)	9,440	26,422
Earnings (loss) per share – basic and diluted	(0.60)	0.12	0.33
Weighted average number of shares – basic and diluted	79,502,100	79,502,100	79,502,100

See accompanying notes to this consolidated financial information.

Statements of Cash Flows

Years Ended December 31, 2018, 2017 and 2016 (expressed in thousands of CAD dollars)

	2018	2017	2016
Cash provided by (used in):
Operating activities
Net income (loss)	(48,000)	9,440	26,422
Adjustments for:
Depletion and amortization	2,485	20,585	65,454
Income tax expense (Note 9)	945	15,754	2,537
Inventory write-down (Note 6)	16,195	681	2,718
Impairment (reversal) on mineral properties, plant &
equipment	—	(25,730)	—
Restructuring expense	5,936	—	—
Net finance costs	2,762	1,903	2,772
Unrealized loss (gain) on foreign exchange	(872)	3,276	(886)
Loss (gain) on derivatives	4,673	5,257	(297)
Loss (gain) on disposal of equipment	(113)	1,303	(149)
Amortization of deferred revenue (Note 8)	(1,808)	(643)	(2,428)
Interest received	48	—	25
Income taxes paid	(4,285)	(16,413)	(247)
Payments on reclamation and closure
cost obligations (Note 10)	—	(5,754)	(4,934)
Changes in non-cash working capital (Note 15)	8,961	3,754	(46,368)
	(13,073)	13,413	44,619
Investing activities
Mineral properties, plant and equipment additions	(9,380)	(3,456)	(8,988)
Proceeds on disposal of equipment	113	204	350
Long term deposit	(86)	(29)	108
	(9,353)	(3,281)	(8,530)
Financing activities
Repayments to Capstone Mining Corp.	(70,341)	(67,903)	—
Proceeds from Capstone Mining Corp.	72,490	38,271	—
Interest paid on Capstone advances	—	—	(973)
Interest paid on surety bond	(1,045)	(1,194)	(1,110)
Payments on settlement of derivatives (Note 4)	—	—	1,975
Purchase of derivatives (Note 8)	—	(9,351)	—
Repayment of finance lease obligations	—	(130)	(684)
	1,104	(40,307)	(792)
(Decrease) increase in cash	(21,322)	(30,175)	35,297
Cash – beginning of year	26,525	56,700	21,403
Cash – end of year	5,203	26,525	56,700

Material non cash item

The Company adopted IFRS 15 for the year ended 31 December 2018 which resulted in the restatement of various balances more fully disclosed in note 3 to this financial information. Prior periods have not been adjusted.

Supplemental cash flow information (Note 14)

See accompanying notes to this financial information.

Statements of Changes in Equity

Years Ended December 31, 2018, 2017 and 2016 (expressed in thousands of CAD dollars)

	Note	Number of shares	Share capital	Deficit	Total equity
January 1, 2016		79,502,100	210,531	(163,895)	46,636
Net income		—	—	26,422	26,422
December 31, 2016		79,502,100	210,531	(137,473)	73,058
January 1, 2017 Net income (loss)		79,502,100 —	210,531 —	(137,473) 9,440	73,058 9,440
December 31, 2017		79,502,100	210,531	(128,033)	82,498
January 1, 2018 (as reported) Adjustment on initial application of IFRS 15	3	79,502,100 —	210,531 —	(128,033) (12,674)	82,498 (12,674)
January 1, 2018 Net income (loss)		79,502,100 —	210,531 —	(140,707) (48,000)	69,824 (48,000)
December 31, 2018		79,502,100	210,531	(188,707)	(21,824)

See accompanying notes to this financial information.

1. Nature of operations

Minto Explorations Ltd. (''Minto'' or the ''Company''), a Canadian mining company is engaged in the production of and exploration for base metals in Canada, with a focus on copper. Minto owns and operates the copper Minto Mine located in Yukon, Canada.

The head office, registered and records office and principal address of the Company are located at 510 West Georgia Street, Vancouver, British Columbia, Canada and the Company is incorporated in British Columbia.

2. Basis of presentation, significant accounting judgements and estimates, and significant accounting policies

a) Basis of preparation and consolidation

These financial statements have been prepared in accordance with International Financial Reporting Standards (''IFRS''). The financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial instruments which are measured at fair value.

These financial statements have been prepared in accordance with the accounting policies presented below and are based on IFRS and IFRS Interpretations Committee (''IFRIC'') interpretations issued and effective as of December 31, 2018. The policies set out below were consistently applied to all the periods presented unless otherwise noted. The policies set out below were consistently applied to all the periods, except for the application of IFRS 15 Revenue from Contracts with Customers (''IFRS 15'') and IFRS 9 Financial Instruments (''IFRS 9''), and are included in Note 2(c). The Company has adopted IFRS 15 and IFRS 9 effectively January 1, 2018.

The Minto mine has been placed on care and maintenance since October 2018. The Company is dependent on financial support from its parent company to fund cash flows during care and maintenance and bring the mine back into commercial production. This financial information is prepared on a going concern basis, which assumes that the Company will realise its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company's ability to continue as a going concern is dependent on its ability to obtain the necessary funding from its parent company and from commercial activities in order to meet its planned business objectives. However, there can be no assurance that the parent company will obtain additional funding either through equity raisings or other financial arrangements or that commercial production will generate positive cash flows. The parent company does not currently have legally binding agreements in place relating to the raising of additional funds. The fact that the funding is not guaranteed indicates the existence of a material uncertainty that casts significant doubt upon the Company's ability to continue as a going concern should support from the parent company not be forthcoming.

b) Use of estimates and judgments

The preparation of the financial statements requires management to select accounting policies and make estimates and judgments that may have a significant impact on the financial statements. Estimates are continuously evaluated, and are based on management's experience and expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates.

Critical judgments exercised in applying accounting policies, apart from those involving estimates, that have the most significant effect on the amounts recognized in the financial statements are as follows:

i. Economic recoverability and probability of future economic benefits of mineral exploration, evaluation and development costs

The Company has determined that exploratory drilling, evaluation, development, and related costs incurred, which were capitalized, have future economic benefits and are economically recoverable. In making this judgment, the Company has assessed various sources of information including, but not limited to, the geologic and metallurgic information, history of conversion of mineral deposits to proven and probable reserves, scoping and feasibility studies, proximity to existing ore bodies, existing permits, and life of mine plans.

ii. Functional currency

Determination of functional currency may involve certain judgments to determine the primary economic environment and the Company reconsiders if there is a change in events and conditions which determined the primary economic environment. The CAD dollar is Minto's functional currency.

iii. Financial instruments

Financial assets and liabilities are designated upon inception to various classifications. The designation determines the method by which the financial instruments are carried on the balance sheet subsequent to inception and how changes in value are recorded. The designation may require the Company to make certain judgments, taking into account management's intention of the use of the financial instruments.

Key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are:

i. Estimated reclamation and closure costs

The Company's provision for reclamation and closure cost obligations represents management's best estimate of the present value of the future cash outflows required to settle the liability. The provision reflects estimates of future costs directly attributable to remediating the liability, inflation, movements in foreign exchange rates and assumptions of risks associated with the future cash outflows, and the applicable risk-free interest rates for discounting future cash outflows. Changes in the factors above can result in a change to the provision recognized by the Company. To the extent the carrying value of the related mining property is not increased above its recoverable amount, changes to reclamation and closure cost obligations are recorded with a corresponding change to the carrying amounts of related mining properties.

ii. Income taxes

Deferred tax assets and liabilities are determined based on differences between the financial statement carrying values of assets and liabilities and their respective income tax bases (''temporary differences''), and losses carried forward.

The determination of the ability of the Company to utilize tax loss carry-forwards to offset deferred tax liabilities requires management to exercise judgment and make certain assumptions about the future performance of the Company. Management is required to assess whether it is probable that the Company will benefit from these prior losses and other deferred tax assets. The tax rates expected to be in effect when temporary differences reverse is 27%. The Company is subject to certain mining royalties which are referenced in Note 9. Changes in economic conditions, metal prices and other factors could result in revisions to the estimates of the benefits to be realized or the timing of utilizing the losses.

iii. Mineral reserve and resource estimates

The figures for mineral reserves and mineral resources are determined in accordance with National Instrument 43-101, ''Standards of Disclosure for Mineral Projects'', issued by the Canadian Securities Administrators. There are numerous uncertainties inherent in estimating mineral reserves and mineral resources, including many factors beyond the Company's control. Such estimation is a subjective process, and the accuracy of any mineral reserve or mineral resource estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation.

Differences between management's assumptions, including economic assumptions such as metal prices, and the market conditions could have a material effect in the future on the Company's financial position and results of operation.

iv. Estimated permitted reserves

The carrying amounts of the Company's producing mining properties are depleted based on permitted reserves. Changes to estimates of permitted reserves and depletable costs including changes resulting from revisions to the Company's mine plans and changes in metal price forecasts can result in a change to future depletion rates.

v. Depreciation and amortization rate for property, plant and equipment and depletion rates for mining interests

Depletion, depreciation, and amortization expenses are allocated based on estimated asset lives. Should the asset life, depletion rates, or depreciation rates differ from the initial estimate, an adjustment would be made in the statement of income (loss) on a prospective basis.

vi. Impairment of mineral properties, plant and equipment

Management considers both external and internal sources of information in assessing whether there are any indications that the Company's mineral properties, plant and equipment are impaired and whether previously recorded impairments should be reversed. External sources of information management considers include changes in the market, economic and legal environment in which the Company operates that are not within its control and affect the recoverable amount of its mineral properties, plant and equipment. Internal sources of information that management considers include the manner in which mineral properties, plant and equipment are being used or are expected to be used and indications of economic performance of the assets.

In determining the recoverable amounts of the Company's mineral properties, plant and equipment, management makes estimates of the future operating results and discounted net cash flows expected to be derived from the Company's mining properties, costs to sell the mining properties and the appropriate discount rate. Reductions in metal price forecasts, increases in estimated future costs of production, increases in estimated future nonexpansionary capital expenditures, reductions in the amount of recoverable mineral reserves, mineral resources, and exploration potential, and/or adverse current economics can result in a write-down of the carrying amounts of the Company's mineral properties, plant and equipment.

vii. Deferred stripping costs

In determining whether stripping costs incurred during the production phase of a mining property relate to mineral reserves and mineral resources that will be mined in a future period and therefore should be capitalized, the Company makes estimates of the proportion of stripping activity which relates to extracting ore in the current period versus the proportion which relates to obtaining access to ore reserves which will be mined in the future.

viii. Inventory valuation

Consumable parts and supplies, ore stockpiles and concentrates, are valued at the lower of cost and net realizable value. Estimates in the carrying values of inventories arise due to the nature of the valuation of ore stockpiles and concentrates based on an appropriate allocation of direct mining costs, direct labour and material costs, mine site overhead, and depletion and amortization.

ix. Valuation of financial instruments, including estimates used in provisional pricing calculations

Financial instrument estimates are based on either unadjusted quoted prices in active markets or direct or indirect observable inputs in accordance with the definitions of the financial instruments. Provisional pricing calculations are determined based on the change in the value of forward commodity prices of metals. To account for the change in metal prices from the total contract value to the 90% of the provisional value amount that has been received, estimates of the value of concentrates are used to determine the provisionally priced concentrate receivables at each period.

c) The most significant accounting policies of the Company are as follows:

i. Translation of foreign currencies

The functional currency and presentation currency of the Company is the CAD dollar. All amounts presented herein are in Canadian dollars except as otherwise indicated.

Transactions denominated in foreign currencies (currencies other than the functional currency of an entity) are translated at the exchange rates on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at reporting date exchange rates and any gain or loss on translation is recorded in the statement of income (loss) as a foreign exchange gain (loss).

ii. Cash

Cash is comprised of cash on hand which is subject to an insignificant risk of change in value.

iii. Inventories

Inventories for consumable parts and supplies, ore stockpiles and concentrates, are valued at the lower of cost and net realizable value. Costs allocated to consumable parts and supplies are based on average costs and include all costs of purchase, conversion and other costs in bringing these inventories to their existing location and condition. Costs allocated to ore stockpiles and concentrates are based on average costs, which include an appropriate share of direct mining costs, direct labour and material costs, mine site overhead, depletion and amortization. If carrying value exceeds net realizable amount, a write down is recognized. The write down may be reversed in a subsequent period if the circumstances which caused it no longer exist.

iv. Mineral properties, plant and equipment

Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing historical characteristic of many properties. The Company has investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its properties is in good standing.

v. Producing mineral properties

Producing mineral properties are recorded at cost less accumulated depletion and impairment charges. The costs associated with producing mineral properties include

acquired interests in production stage properties representing the fair value at the time they were acquired. Producing mineral properties also include additional capitalized costs after initial acquisition. Upon sale or abandonment of producing mineral properties, the carrying value is derecognized and any gains or losses thereon are included in the statement of income (loss).

vi. Deferred stripping

Stripping costs are accounted for as variable production costs and included in the costs of inventory produced during the period that the stripping costs are incurred. However, stripping costs are capitalized and recorded on the balance sheet as a component of mineral properties, plant and equipment when the stripping activity provides access to sources of mineral reserves that will be produced in future periods that would not have otherwise been accessible in the absence of this activity. The capitalized deferred stripping assets are amortized on a units of production basis over the mineral reserves that directly benefited from the stripping activity as those mineral reserves are actually mined.

vii. Mineral exploration and development properties

The carrying amount of mineral exploration and development properties comprise costs that are directly attributable to:

• * researching and analysing existing exploration data;
• * conducting geological studies, exploratory drilling and sampling;
• * examining and testing extraction and treatment methods; and
• * activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource.

The costs associated with mineral exploration and development properties include acquired interests in development and exploration stage properties representing the fair value at the time they were acquired. Mineral exploration and development properties related to greenfield properties, which are prospective in nature and not yet supported by an internal economic assessment, are expensed in the statement of income (loss), except for acquisition costs and mining interest rights. Exploration and development expenses related to brownfield mineral properties are capitalized provided that one of the following conditions is met:

• * Such costs are expected to be recouped in full through successful development and exploitation of the area of interest or alternatively, by its sale; or
• * Exploration and evaluation activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence of economically recoverable reserves, however active and significant operations in relation to the area are continuing, or planned for the future.

The carrying values of capitalized amounts of mineral exploration and development properties are reviewed when there are indicators of impairment at each reporting date. In the case of undeveloped projects, there may be only inferred mineral resources to allow management to form a basis for the impairment review. The review is based on the Company's intentions for development of such a project. If a project does not prove viable, all unrecoverable costs associated with the project are charged to the statement of income (loss) at the time the determination is made.

Once management has determined that the development potential of the property is economically viable and the necessary permits are in place for its development, and the criteria in Note 2(c)(vi) are met, the costs of the exploration asset are reclassified to producing mineral properties.

viii. Mill development costs

Mill development costs are recorded at cost less accumulated amortization and impairment losses. Mill development costs includes in its purchase price, any costs directly attributable to the development of the mill. Upon abandonment, the cost and related accumulated amortization and impairment losses, are written off and any gains or losses thereon are included in the statement of income (loss).

ix. Plant and equipment

Plant and equipment are recorded at cost less accumulated amortization and impairment losses. Plant and equipment includes in its purchase price, any costs directly attributable to bringing plant and equipment to the location and condition necessary for it to be capable of operating in the manner intended by management and the estimated close down and restoration costs associated with dismantling and removing the asset. Upon sale or abandonment of any plant and/or equipment, the cost and related accumulated amortization and impairment losses, are written off and any gains or losses thereon are included in the statement of income (loss).

x. Construction in progress

Mineral property development and plant and equipment construction commences when approved by management and/or the Board and the Company has obtained all regulatory permissions to proceed. Development and construction expenditures are capitalized and classified as construction in progress. Once completed, the costs associated with all applicable assets related to the development and construction are reclassified to the appropriate category within mineral properties or plant and equipment.

xi. Depletion and amortization of mineral properties, plant and equipment

The carrying amounts of mineral properties, plant and equipment are depleted or amortized to their estimated residual value over the estimated economic life of the specific assets to which they relate, using the depletion or amortization methods and rates as indicated below. Estimates of residual values and useful lives are reassessed annually and any change in

estimate is taken into account in the determination of the remaining amortization rate. Amortization commences on the date the asset is available for its use as intended by management.

Depletion and amortization is computed using the following rates:

Item	Methods	Rates
Producing mineral properties	Units of production	Estimated proven, probable and permitted mineral reserves
Deferred stripping costs	Units of production	Estimated proven and probable mineral reserves accessible due to stripping activity
Mill Units of development costs	Units of production	Estimated proven and probable mineral reserves
Plant & equipment	Straight line, units of production	4 – 10 years, Estimated proven and probable mineral reserves
Equipment and facilities under finance leases	Straight line	Lesser of lease term and estimated useful life (7 years)

xii. Impairment of long-lived assets

At each reporting date, the Company reviews the carrying amounts of its assets to determine whether there are any indicators of impairment. If any such indicator exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any.

Where the asset does not generate cash inflows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit (''CGU'') to which the asset belongs. The recoverable amount is determined as the higher of fair value less direct costs to sell and the asset or CGU's value in use. In assessing recoverable amount, the estimated future cash flows are discounted to their present value. Estimated future cash flows are calculated using estimated recoverable mineral reserves, estimated future commodity prices and the expected future operating and capital costs. The projected cash flows are affected by changes in assumptions about metal selling prices, future capital expenditures, production cost estimates, discount rates, and exchange rates. The discount rate applied to the estimated future cash flows reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. Determining the discount rate includes appropriate adjustments for the risk profile of the country in which the individual asset or CGU operates.

If the carrying amount of an asset or CGU exceeds its recoverable amount, the carrying amount of the asset or CGU is reduced to its recoverable amount and an impairment loss is recognized in the statement of income (loss). Assets that have been impaired are tested for possible reversal of the impairment whenever events or changes in circumstance indicate that the impairment may have reversed. Where an impairment subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, but only so that the increased carrying amount does not exceed the carrying amount that would have been determined (net of amortization or depletion) had no impairment loss been recognized for the asset or CGU in prior periods. A reversal of impairment is recognized in the statement of income (loss).

xiii. Income taxes

Current tax

Current tax for each taxable entity in the Company is based on the local taxable income at the local statutory tax rate enacted or substantively enacted at the reporting date, and includes adjustments to tax payable or recoverable in respect of previous periods.

Deferred tax

Deferred tax is accounted for using the balance sheet liability method, providing for the tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their respective tax bases.

Deferred income tax liabilities are recognized for all taxable temporary differences except where the deferred income tax liability arises from the initial recognition of goodwill, or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit or loss nor taxable profit or loss.

Deferred income tax assets are recognized for all deductible temporary differences, carryforward of unused tax losses and unused tax credits, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax losses and unused tax credits can be utilized, and except where the deferred income tax asset related to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit or loss nor taxable profit or loss.

The carrying amount of deferred income tax assets is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be utilized. To the extent that an asset not previously recognized fulfils the criteria for recognition, a deferred income tax asset is recorded.

Deferred tax is measured on an undiscounted basis using the tax rates that are expected to apply in the period when the liability is settled or the asset is realized, based on tax rates and tax laws enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Current and deferred taxes relating to items recognized directly in equity are recognized in equity and not in the statement of income (loss).

Mining taxes and royalties are treated and disclosed as current and deferred taxes if they have the characteristics of an income tax. This is considered to be the case as they are imposed under government authority and the amount payable is calculated by reference to revenue derived (net of any allowable deductions) after adjustment for items comprising temporary differences.

xiv. Taxes receivable

Taxes receivable are comprised of recoverable value added taxes in Canada.

xv. Embedded derivatives

Derivatives may be embedded in other financial instruments (the ''host instrument''). Embedded derivatives are treated as separate derivatives when their economic characteristics and risks are not clearly and closely related to those of the host instrument, the terms of the embedded derivative are the same as those of a stand-alone derivative, and the combined contract is not held for trading or designated at fair value. These embedded derivatives are measured at fair value with subsequent changes recognized in gains or losses on derivative instruments in the statement of income (loss).

xvi. Compound instruments

The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual agreement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar debt instruments. This amount is recorded as a liability on an amortized cost basis until extinguished upon conversion or at the instrument's maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured.

xvii. Financial instruments

On initial recognition, financial assets are recognized at fair value and are subsequently classified and measured at: (i) amortized cost; (ii) fair value through other comprehensive income (''FVOCI''); or (iii) fair value through profit or loss (''FVTPL). The classification of

financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. A financial asset is measured at fair value net of transaction costs that are directly attributable to its acquisition except for financial assets at FVTPL where transaction costs are expensed. All financial assets not classified and measured at amortized cost or FVOCI are measured at FVTPL. On initial recognition of an equity instrument that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment's fair value in OCI.

The classification determines the method by which the financial assets are carried on the statement of financial position subsequent to inception and how changes in value are recorded. Accounts receivable are measured at amortized cost with subsequent impairments recognized in the statement of (loss) income. Concentrate receivables and derivative assets are measured at FVTPL with subsequent changes recognized in the statement of (loss) income.

The mark-to-market adjustments for provisional pricing changes on concentrate receivables are based on forward commodity prices of metals and are included in revenues until final settlement.

Financial liabilities are designated as either: (i) fair value through profit or loss; or (ii) amortized cost. All financial liabilities are classified and subsequently measured at amortized costs expect for financial liabilities at FVTPL. The classification determines the method by which the financial liabilities are carried on the statement of financial position subsequent to inception and how changes in value are recorded. Accounts payable and accrued liabilities are classified as amortized cost and carried on the statement of financial position at amortized cost.

xviii. Impairment and uncollectibility of financial assets

An 'expected credit loss' impairment model applies which requires a loss allowance to be recognized based on expected credit losses. This applies to financial assets measured at amortized cost. The estimated present value of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated with the asset, discounted at the financial asset's original effective interest rate, either directly or through the use of an allowance account and the resulting loss is recognized in the statement of (loss) income for the period.

In a subsequent period, if the amount of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is reversed through the statement of (loss) income to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

xix. Deferred revenue

Deferred revenue consists of payments received by the Company in consideration for future commitments to deliver payable gold and silver contained in concentrate at contracted prices. For 2017 and 2016 deferred revenue has been amortized to income using the reserves in the current mine plan as the denominator. The Company has adopted IFRS 15 from January 1, 2018, and, due to the variable consideration constraint, deferred revenue will be amortized to income using both reserves in the current mine plan and additional reserves and resources not included in the mine plan. As there is a significant period of time between the receipt of the advance payment and the delivery of the concentrate a financing charge is applied to the deferred revenue balance on an annual basis, equivalent to the rate typically applied if the Company was to finance such a transaction on a standalone basis.

xx. Leases

Assets held under leases which result in the Company receiving substantially all the risks and rewards of ownership of the asset (finance leases) are capitalized at the lower of the fair value of the plant and equipment or the estimated present value of the minimum lease payments. The corresponding liability is recognized as a finance lease obligation. The interest element is allocated to accounting periods during the lease term to reflect the rate of interest

on the remaining balance of the obligation. Operating lease assets are not capitalized and operating lease payments are included in the statement of income (loss) on a straight-line basis over the lease term.

xxi. Reclamation and closure cost obligations

A reclamation and closure cost obligation is recognized for close down, restoration and environmental rehabilitation costs (which include the dismantling and demolition of infrastructure, removal of residual materials and remediation of disturbed areas) in the financial period when the related environmental disturbance occurs, based on the estimated future costs using information available at the balance sheet date. At the time of establishing the provision, a corresponding asset is capitalized, where it gives rise to a future benefit, and amortized over future production from the operations to which it relates. The provision is discounted using a current market-based pre-tax discount rate and the unwinding of the discount is included in the statement of income (loss) as interest expense from discounting reclamation and closure cost obligations.

The obligation is reviewed each reporting period for changes to obligations, legislation or discount rates that impact estimated costs or lives of operations. The cost of the related asset is adjusted for changes in the provision resulting from changes in the estimated cash flows or discount rate and the adjusted cost of the asset is amortized prospectively.

xxii. Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources that can be reliably estimated will be required to settle the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where the effect is material, the provision is discounted to net present value using an appropriate current market-based pre-tax discount rate and the unwinding of the discount is included in the statement of income (loss) as interest expense from discounting obligations.

xxiii. Revenue recognition

Sales are recognized and revenue is recorded at market prices following the transfer of title and risk of ownership, provided that collection is reasonably assured, the price is reasonably determinable, the Company has no significant continuing involvement, and the costs incurred or to be incurred in respect of the transaction can be measured readily. The Company's metal concentrates are sold under a pricing arrangement where final prices are determined by quoted market prices in a period subsequent to the date of sale. Until prices are final, revenues are recorded based on forward market prices for the expected period of final settlement. Subsequent variations in the final determination of the metal concentrate weight, assay and price are recognized as revenue adjustments as they occur until finalized.

xxiv. Earnings (loss) per share

Basic earnings (loss) per share is computed by dividing net earnings available (attributable) to common shareholders by the weighted average number of common shares outstanding during the period. The computation of diluted earnings (loss) per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on earnings (loss) per share.

The dilutive effect of convertible securities is reflected in diluted earnings (loss) per share by application of the ''if converted'' method.

3. Adoption of New and Revised IFRS and IFRS Not Yet Effective

Impact of application of IFRS 15 Revenue from Contracts with Customers

Effective January 1, 2018, the Company has adopted IFRS 15 using the modified retrospective method which applies the standard retrospectively to only the most current period presented. Minto has recognized the cumulative effect of initially applying IFRS 15 as an adjustment to the opening balance of retained deficit at the date of initial application.

The Company has analyzed its contracts with customers for the application of IFRS 15. Minto's streaming arrangement has been affected by the adoption of IFRS 15 as (i) a significant financing component has been identified which increases finance costs and (ii) the application of the variable consideration constraint is expected to slow the rate at which deferred revenue is amortized to the statement of (loss) income. Under IAS 18, deferred revenue was amortized to income using the reserves in the current mine plan as the denominator. Under IFRS 15, deferred revenue is amortized to income using both reserves in the current mine plan and additional reserves and resources not included in the mine plan. As a result, upon transition, the Company's deferred revenue balance increased by \$13.9 million, deferred tax liabilities decreased by \$1.2 million, and retained deficit increased by \$12.7 million.

The cumulative effect of the changes made to the January 1, 2018 statement of financial position for the adoption of IFRS 15 is as follows:

Liabilities	Balance at December 31, 2017 (as reported)	Minto Deferred Revenue	Balance at January 1, 2018
Deferred revenue	315	13,927	14,242
Deferred income tax liabilities	2,541	(1,253)	1,288
Equity Retained deficit	(128,033)	(12,674)	(140,707)

Impact of application of IFRS 9 Financial Instruments

Effective January 1, 2018, the Company has adopted IFRS 9 retrospectively. Prior periods were not restated and no material changes resulted from adopting this new standard. IFRS 9 introduced a revised model for classification and measurement, and while this has resulted in several financial instrument classification changes as presented in Note 4, there were no quantitative impacts from adoption.

The impairment model now focuses on expected losses rather than incurred losses. However, there is no impact on adoption. There are no transitional impacts regarding financial liabilities in regards to classification and measurement.

Adoption of IFRS 16 Leases

IFRS 16 was issued in January 2016 (effective January 1, 2019) and provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. The Company plans on adopting IFRS 16 using the modified retrospective application method, where the 2018 comparatives are not restated and a cumulative catch up adjustment is recorded on January 1, 2019 for any differences identified, including adjustments to opening retained deficit balance. In addition, Minto will apply the recognition exemptions in IFRS 16 for 'low value' leases and leases that end within 12 months of the date of initial application, and account for them as low value and short-term leases, respectively. Minto has also chosen to apply the practical expedient of accounting for non-lease components and lease components as a single lease component.

The Company has analyzed its contracts to identify whether they are or contain a lease arrangement for the application of IFRS 16. This analysis has resulted in no material impact to Company's right-of-use lease assets and lease liabilities.

4. Financial instruments

Overview

Commodity price risk

The Company is exposed to commodity price risk as its revenues are derived from the sale of metals, the prices for which have been historically volatile. It sometimes manages this risk by entering into forward sale agreements with various counterparties to mitigate price risk when management believes it a prudent decision. Additionally, it has sold forward to Wheaton Precious

Metals Corp. (''Wheaton Precious Metals'') the gold and silver production from the Minto Mine (Note 8).

Derivative contracts

During 2017, Minto amended its agreement with Wheaton Precious Metals, and in exchange for US\$7.5 million (CAD\$9.4 million) in shares of Capstone, the Company will receive additional gold revenues if copper prices are lower than US\$2.50/pound. This contract is a long-term embedded derivative asset which is marked-to-market each reporting period. The value of this derivative asset at December 31, 2018 is CAD\$Nil (2017 – CAD\$4.2 million, 2016 – CAD\$Nil) and an unrealized loss of CAD\$4.7 million (2017 – CAD\$5.3 million, 2016 – CAD\$Nil) on this derivative asset was recognized in the statement of income (loss) in the year.

The Company also had previously entered into a series of forward and put and call contracts (see below), which are derivative instruments and are marked-to-market at the end of each reporting period with the adjustment recorded as a gain or loss on commodity derivatives in the statement of income (loss). The Company has not applied hedge accounting to these derivative instruments.

Details are as follows:

2018 CAD\$'000	2017 CAD\$'000	2016 CAD\$'000
		(799)
		—
		—
		—
		(941)
—	—	2,037
—	—	297
	— — — — —	(799) 799 — — —

Put and Call contracts

On November 9, 2016 and May 5, 2015, the Company entered into zero cost collar commodity option transactions where it sold a series of call option contracts and purchased a series of put option contracts with equal and offsetting values at inception (the ''2016 zero cost collar'' and ''2015 zero cost collar'' respectively).

The 2016 zero cost collar related to contracts for 160 Metric Tonnes (MT) maturing in January 2017, 320 MT maturing in February 2017 and 640 MT per month maturing March through December 2017, for a total of 6,885 MT. There are no outstanding contracts as at December 31, 2018.

During 2016, the Company received cash proceeds of CAD\$3.0 million related to the settlement of 2015 zero cost collar put contracts for December 2015 through February 2016. The 2015 zero cost collar commodity option contracts expired during Q1 2017.

Credit risk

The Company is exposed to credit risk through its trade receivables on concentrate sales with various counterparties under the terms of off-take agreements. The Company manages this risk by requiring provisional payments of at least 90 percent of the value of the concentrate shipped. Taxes receivable are not considered to be subject to significant credit risk as these balances are receivable from government authorities.

The credit risk on cash is limited because the funds are held with banks with high credit ratings as assigned by international credit rating agencies. The credit risk on the receivable from Capstone is not considered significant.

As at December 31, 2018, the Company's maximum exposure to credit risk is the carrying value of its cash and receivables.

Notes to the Financial Information for the Years Ended December 31, 2018, 2017 and 2016

(expressed in thousands of CAD dollars)

Foreign exchange risk

The Company is exposed to foreign exchange risk as the Company's operating costs will be primarily in Canadian dollars, while revenues are received in US dollars. Hence, any fluctuation of the US dollar in relation to these currencies may affect the profitability of the Company and the value of the Company's assets and liabilities. The Company currently does not enter into foreign exchange hedging arrangements.

As at December 31, 2018, the Company is exposed to foreign exchange risk through the following financial assets and liabilities denominated in currencies other than the functional currency:

	US\$'000
Cash Receivables Receivable from Capstone Mining Corp. Deposits and other long-term assets	2,316 — 9,520 477
Total assets	12,313
Accounts payable and accrued liabilities	1,314
Total liabilities	1,314
Net assets	10,999

Based on the above net exposures at December 31, 2018, a 10% appreciation in the US dollar against the Canadian dollar would result in a US\$1.1 million increase to the Company's earnings before income taxes.

Liquidity risk

The Company has in place a planning and budgeting process to help determine the funds required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives. The Company maintains adequate cash balances and credit facilities to meet short and long term business requirements, after taking into account cash flows from operations and believes that these sources will be sufficient to cover the likely short and long term cash requirements. The Company's cash is held in business accounts with US and Canadian Tier 1 Banks with a Standard & Poor's rating of A or better. The cash is available on demand for the Company's programs.

As of December 31, 2018, the Company's liabilities that have contractual maturities are as follows:

	Total	2019	2020	2021	2022	After 2023
Accounts payable and accrued
liabilities*	9,801	9,801	—	—	—	—
	9,801	9,801	—	—	—	—

* Amounts above do not include payments related to the Company's reclamation and closure cost obligations ( Note 13) .

Interest rate risk

Interest risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in the market interest rates. The Company is exposed to interest rate risk with respect to the interest it earns on its cash balances.

Fair value of financial instruments

IFRS 13 establishes a fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value as follows:

• Level 1 Fair values measured using unadjusted quoted prices in active markets for identical instruments
• Level 2 Fair values measured using directly or indirectly observable inputs, other than those included in level 1
• Level 3 Fair values measured using inputs that are not based on observable market data

As of December 31, 2018 the Company's classification of financial instruments within the fair value hierarchy are summarized below (all figures CAD\$000s):

	Level 1	Level 2	Level 3	Total
Cash	—	5,203	—	5,203
	—	5,203	—	5,203

As of December 31, 2017 the Company's classification of financial instruments within the fair value hierarchy are summarized below (all figures CAD\$000s):

	Level 1	Level 2	Level 3	Total
Concentrate receivables	—	269	—	269
Cash	—	26,525	—	26,525
Derivative asset – long term	—	—	4,152	4,152
	—	26,794	4,152	30,946

As of December 31, 2016 the Company's classification of financial instruments within the fair value hierarchy are summarized below (all figures CAD\$000s):

	Level 1	Level 2	Level 3	Total
Concentrate receivables	—	11,514	—	11,514
	—	11,514	—	11,514

The Company's policy for determining when a transfer occurs between levels in the fair value hierarchy is to assess the impact at the date of the event or the change in circumstances that could result in a transfer. There were no transfers between Level 1 and Level 2 during the year ended December 31, 2018.

Set out below are the Company's financial assets by category (all figures CAD\$000s):

		December 31, 2018
	Fair value through profit or loss	Amortized cost	Total
Cash	—	5,203	5,203
Other receivables (Note 5)	—	2,438	2,438
	—	7,641	7,641

	December 31, 2017
	Fair value through profit or loss	Amortized cost	Total
Cash	—	26,525	26,525
Concentrate receivables (Note 5)	269	—	269
Other receivables (Note 5)	—	1,781	1,781
Derivative asset – long-term	4,152	—	4,152
	4,421	28,306	32,727

December 31, 2016

	Fair value through profit or loss	Loans and receivables	Total
Cash Concentrate receivables (Note 5)	— 11,514	56,700 —	56,700 11,514
	11,514	56,700	68,214

Set out below are the Company's financial liabilities by category (all figures CAD\$000s):

	December 31, 2018
	Fair value through profit or loss	Amortized cost	Total
Accounts payable and accrued liabilities	—	9,801	9,801
	—	9,801	9,801

	December 31, 2017
	Fair value through profit or loss	Amortized cost	Total
Accounts payable and accrued liabilities	—	8,593	8,593
	—	8,593	8,593

December 31, 2016

	Fair value through profit or loss	Amortized cost	Total
Accounts payable and accrued liabilities	—	11,758	11,758
Finance lease obligations	—	129	129
	—	11,887	11,887

There have been no changes during the year ended December 31, 2018 as to how the Company categorizes its financial assets and liabilities by FVTPL, FVOCI, and amortized cost.

The carrying value of cash, receivable from Capstone, receivables, derivative assets, and accounts payable and accrued liabilities approximate their fair values due to their immediate or short-term maturity.

Valuation methodologies for Level 2 financial instruments

The key inputs to the valuation of the concentrate receivable balance are payable metal and future metal prices. The Company's metal concentrate sales contracts are subject to provisional pricing with the selling price adjusted at the end of the quotational period based on final settlement weights and assays. At each reporting date, the Company's accounts receivable on these contracts are marked-to-market based on a quoted forward price for which there exists an active commodity market.

The Company's copper forward commodity derivatives are marked-to-market based on a quoted forward price for which there exists an active commodity market. The Company's zero cost collar commodity derivatives were marked-to-market at period year end using a Levy two moment valuation model which uses quoted observable inputs.

Valuation methodologies for Level 3 financial instruments

The valuation of the derivative asset as a result of the agreement with Wheaton Precious Metals is based on changes in the spot price and future prices of copper over the Minto mine life, changes in its expected production (based on the expectation of gold production), changes in discount rates due to both macro-economic changes and changes in the credit risk associated with the counterparty, as well as changes in relative gold or copper price.

5. Receivables

Details are as follows:

	December 31,	December 31,	December 31,
	2018	2017	2016
Concentrates	—	269	11,514
Value added taxes and other	2,438	1,781	3,907
Total receivables	2,438	2,050	15,421

6. Inventories

Details are as follows:

	December 31, 2018	December 31, 2017	December 31, 2016
Consumable parts and supplies	3,070	9,630	6,511
Ore stockpiles	—	6,963	7,457
Concentrates	7,794	21,048	17,368
Total inventories	10,864	37,641	31,336

During the year ended December 31, 2018, concentrate, including depletion and amortization, recognized as cost of sales amounted to CAD\$113.9 million (2017 – CAD\$127.5 million, 2016 – CAD\$161.9 million).

During the year ended December 31, 2018, the Company recorded total non-cash charges of CAD\$16.1 million (2017 – CAD\$0.7 million, 2016 – CAD\$2.7 million) in production costs related to a write-down for Minto's ore stockpiles, concentrates and supplies inventory to net realizable value.

7. Mineral properties, plant and equipment

Details are as follows:

	Mineral properties		Plant and equipment
	Depleteable	Non depleteable Subject to amortization
	Producing mineral properties	Mineral exploration and development properties	Mill development costs	Plant & equipment	Construction in progress	Total
At January 1, 2018, net	2,500	24,963	8	5,034	1,575	34,080
Additions	—	—	—	—	9,313	9,313
Rehabilitation provision adjustments
(Note 10)	3,534	—	—	—	—	3,534
Reclassifications	—	—	—	4,292	(4,292)	—
Depletion and amortization	(177)	—	(1)	(1,753)	—	(1,931)
At December 31, 2018, net	5,857	24,963	7	7,573	6,596	44,996
At December 31, 2018:
Cost	48,104	24,963	9,621	162,141	6,596	251,425
Accumulated amortization	(42,247)	—	(9,614)	(154,568)	—	(206,429)
Net carrying amount	5,857	24,963	7	7,573	6,596	44,996

Mineral properties
Depleteable	Non depleteable
Producing mineral properties	Mineral exploration and development properties	Mill development costs	Plant & equipment	Facilities & equipment under finance leases	Construction in progress	Total
3,109	—	240	12,839	456	610	17,254
—	1,005	—	—	—	2,451	3,456
—	—	—	—	—	(1,303)	(1,303)
2,442	—	—	—	—	—	2,442
(1,589)	—	—	1,824	(52)	(183)	—
						25,730
						(13,499)
2,500	24,963	8	5,023	11	1,575	34,080
						246,645
(50,137)	—	(9,613)	(142,026)	(10,789)	—	(212,565)
2,500	24,963	8	5,023	11	1,575	34,080
	1,772 (3,234) 52,637	23,958 — 24,963	— (232) 9,621	— (9,640) 147,049	Plant and equipment Subject to amortization — (393) 10,800	— — 1,575

	Mineral properties		Plant and equipment
	Depleteable	Non depleteable	Subject to amortization
	Producing mineral properties	Deferred stripping	Mineral exploration and development properties	Mill development costs	Plant & equipment	Facilities & equipment under finance leases	Construction in progress	Total
At January 1, 2016, net Additions	6,760 —	20,636 3,365	3,028 —	904 —	39,523 —	2,346 —	1,407 890	74,604 4,255
Disposals	—	—	—	—	(203)	(3)	—	(206)
Reclassifications Depletion and	4,189	—	(3,028)	—	642	(116)	(1,687)	—
amortization	(7,840)	(24,001)	—	(664)	(27,123)	(1,771)	—	(61,399)
At December 31, 2015, net	3,109	—	—	240	12,839	456	610	17,254
At December 31, 2016: Cost Accumulated	50,021	24,001	—	9,622	146,468	12,269	610	242,991
amortization	(46,912)	(24,001)	—	(9,382)	(133,629)	(11,813)	—	(225,737)
Net carrying amount	3,109	—	—	240	12,839	456	610	17,254

Construction in progress relates to capital costs incurred by the Minto mine which were not yet in use for all years presented.

Mineral property impairment reversal

Due to improvements in the outlook for copper prices during 2017, management updated its mine plan for Minto, bringing a number of previously impaired deposits back into the mine plan. This results in an extension of operations from 2017 to 2021 and was considered to be an indicator of impairment reversal.

The carrying value of the net assets included in the Minto cash generating unit was compared to the recoverable amount, resulting in the reversal of CAD\$25.7 million of the previous impairment charge during the year ended December 31, 2017. The net carrying value of the Minto CGU prior to the impairment reversal was (CAD\$21.4 million), and the recoverable amount was CAD\$12.9 million, a CAD\$34.3 million excess. However, the impairment reversal was limited to CAD\$25.7 million, with CAD\$8.6 million not being subject to impairment reversal as the amount of impairment reversal is limited to the carrying amount had no impairment been recognized in prior periods, net of depletion and amortization which would have been recognized.

The recoverable amount of CAD\$12.9 million was determined using a discounted cash flow model based on the most current operating mine plan, using management's best estimates, taking into account the forward markets or analyst consensus on metal prices and exchange rates. Management used an after-tax discount rate of 8%.

The copper and foreign exchange rate assumptions, used to determine the impairment reversal at December 31, 2017 were as follows:

Key assumptions	Q4 2017	FY 2018	FY 2019	FY 2020	Long-term
Copper (US\$/lb, real)	\$2.95	\$2.98	\$2.93	\$2.95	\$3.00
Canadian dollar/US dollar	1.24	1.21	1.21	1.20	1.20

The carrying value of the Minto CGU after the reversal of the impairment was CAD\$4.4 million.

In addition, CAD\$2.0 million of restructuring fees that were accrued as at December 31, 2016 in anticipation of the Minto mine closure were reversed during 2017 as a result of the extension of operations and is included in other income (expense) for the year.

8. Deferred revenue

During 2008, the Company sold all of its gold and silver production from the Minto Mine over the life of mine to Wheaton Precious Metals in consideration for an upfront payment of USD\$37.5 million and a further payment of the lesser of US\$300 per ounce of gold and US\$3.90 per ounce of silver (subject to a 1% inflationary adjustment after three years and each year thereafter) and the prevailing market price for each ounce delivered. If production from the Minto Mine exceeded 30,000 ounces of gold per year, Wheaton Precious Metals was entitled to purchase only 50% of the amount in excess of that threshold. The Company recorded the proceeds received from the upfront payment as deferred revenue and is recognizing this amount as an adjustment to revenue as ounces are delivered. The precious metal purchase agreement was modified during 2017 so that Minto receives increased gold revenues if copper prices are lower than US\$2.50/ pound (Note 4). During the year ended December 31, 2018, the Company delivered concentrate containing 7,949 ounces of gold (2017 – 24,638 ounces, 2016 – 40,970 ounces) and 48,677 ounces of silver (2017 – 160,984 ounces, 2016 – 268,651 ounces) to Wheaton Precious Metals. IFRS 15 has been adopted and applied, for 2018 only. The effect has been that the Company's deferred revenue balance has increased by CAD\$13.9 million as a result of adopting IFRS 15.

Details of changes in the balance of deferred revenue are as follows:

Balance, January 1, 2018 (as reported)	315
Adjustment on initial application of IFRS 15 (Note 3)	13,927
Recognized as revenue on delivery of gold and silver	(1,808)
Accretion	1,282
Balance, December 31, 2018	13,716
Balance, January 1, 2017	958
Recognized as revenue on delivery of gold and silver	(643)
Balance, December 31, 2017	315
Balance, January 1, 2016	3,386
Recognized as revenue on delivery of gold and silver	(2,428)
Balance, December 31, 2016	958

9. Income taxes

Details of the income tax expense are as follows:

	Year ended December 31,
	2018	2017	2016
Current income and mining tax
expense	(61)	5,475	12,595
Deferred income tax expense (recovery)	1,006	10,279	(10,058)
Income tax expense (recovery)	945	15,754	2,537

Income tax expense differs from the amount that would result from applying the Canadian federal and provincial income tax rates to earnings before income taxes.

These differences result from the following items:

	Year ended December 31,
	2018	2017	2016
Earnings (loss) before income taxes	(47,055)	25,194	28,959
Canadian federal and provincial income tax rates	27.00%	28.50%	30.00%
Income tax expense (recovery) based on the above	(12,705)	7,180	8,688
Increase (decrease) due to:
Non-deductible expenditures	1	3	2
Yukon mining taxes, net of income tax benefit Impact of losses for which no deferred tax assets	925	6,434	10,089
were recognized	12,763	1,694	(16,423)
Change in unrecognized deferred tax assets
Non-taxable portion of capital gains	(39)	443	181
Income tax (recovery) expense	945	15,754	2,537

Continuity of the changes in the Company's net deferred tax position is as follows:

	2018	2017	2016
Net deferred tax asset (liability), January 1	(2,541)	7,738	(2,320)
Deferred income tax (expense) recovery for the year Adjustment related to IFRS 15 (Note 3)	(1,006) 1,253	(10,279) —	10,058 —
Net deferred tax (liability) asset, December 31	(2,294)	(2,541)	7,738

The composition of the deferred tax assets and liabilities are as follows:

	December 31, 2018	December 31, 2017	December 31, 2016
Deferred income tax assets Income taxed in advance and other Mineral properties, plant and equipment	1,892 —	1,987 1,357	3,377 10,543
Deferred income tax assets	1,892	3,344	13,920
Deferred income tax liabilities Mineral properties, plant and equipment Inventories and other Derivatives	3,467 719 —	2,295 2,469 1,121	1,305 4,877 —
Deferred income tax liabilities	4,186	5,885	6,182
Net deferred income tax (liability) asset	(2,294)	(2,541)	7,738
Breakdown of net deferred income tax liability (asset) Asset (Note 10) Liability	— (2,294)	— (2,541)	7,738 —
	(2,294)	(2,541)	7,738

Deferred taxes are recorded on a net basis by legal entity where the right of offset exists (as shown in the table below) while the above table discloses the assets and liabilities on a gross basis.

IFRS 15 has been adopted and applied, for 2018 only. The effect has been that the Company's deferred income tax liability has decreased by CAD\$1.3 million.

The composition of the deferred tax (recovery) expense is as follows:

	Year ended
	December 31, 2018	December 31, 2017	December 31, 2016
Deferred income tax assets
Non-capital losses	—	—	2,079
Other	1,349	1,390	(107)
Mineral properties, plant and equipment	1,357	9,186	(10,535)
Deferred income tax liabilities
Mineral property, plant and equipment	1,171	990	(3,031)
Inventories and other	(1,750)	(2,408)	2,078
Derivative instruments	(1,121)	1,121	(542)
Deferred tax expense (recovery)	1,006	10,279	(10,058)

As at December 31, 2018 the Company had non-capital losses of CAD\$36.6 million (2017 – CAD\$Nil, 2016 – CAD\$Nil) within a tax benefit of CAD\$9.9 million (2017 – CAD\$Nil, 2016 – CAD\$Nil) that are not recognized as deferred tax assets. The Company recognizes the benefit of tax losses only to the extent that it anticipates future taxable income that can be reduced by the tax losses. The non-capital losses have no expiry date.

The summary of unrecognized deductible temporary differences is as follows:

	Year ended
	December 31,	December 31,	December 31,
	2018	2017	2016
Mineral, property, plant and equipment	83,862	82,889	102,784
Accounts payable and other	4,000	—	—
Unrealized foreign exchange losses	—	3,375	1,268
Investments	496	496	496
Deferred revenue	13,411	—	—
Reclamation and closure cost obligations	32,197	28,044	30,645
	133,966	114,804	135,193

As at December 31, 2018, the Company has CAD\$133.9 million (2017 – CAD\$116.0 million, 2016 – CAD\$135.2 million) of deductible temporary differences with a tax benefit of CAD\$36.1 million (2017 – CAD\$30.6 million, 2016 – CAD\$40.3 million) that are not recognized as deferred tax assets. It is not probable that future taxable income will be available against which the Company can utilize these benefits. The majority of these benefits do not have an expiry date.

As at December 31, 2018, the Company has CAD\$4.7 million (2017 – CAD\$1.2, 2016 – CAD\$Nil) of capital losses that are unrecognized and available to be utilized against future capital gains.

As at December 31, 2018, the Company had tax credits of CAD\$21.6 million (2017 – CAD\$21.3 million, 2016 – CAD20.8 million) that have not been recognized and expire between 2023 and 2037.

10. Asset retirement obligation

The reclamation and closure cost obligations relates to the operations Minto mines.

Details of the changes in the asset retirement obligation is as follows:

	2018	2017	2016
Balance, January 1	28,044	30,645	32,574
Change in estimates	3,534	2,442	2,302
Interest expense from discounting obligations	619	711	703
Payments during the year	—	(5,754)	(4,934)
Balance, December 31	32,197	28,044	30,645

The changes in estimates related to the reclamation and closure cost obligation of CAD\$3.5 million in 2018 (2017 – CAD\$2.4 million) were recorded as an increase to mineral properties in their respective years (Note 7). The change in estimate related to the reclamation and closure cost obligation of CAD\$2.3 million in 2016 was recorded as an increase in production costs in the statement of income (loss) in that year.

A reclamation and closure cost obligation has been recognized in respect of the mining operations of the Minto Mine, including associated infrastructure and buildings. The estimated undiscounted cash flows required to satisfy the Minto reclamation and closure cost obligation as at December 31, 2018 were CAD\$37.8 million (2017 – CAD\$32.1 million, 2016 – CAD\$33.9 million), which were adjusted for inflation and uncertainty of the cash flows and then discounted using current marketbased pre-tax discount rate of 2.51% (2017 – 2.21%, 2016 – 2.32%). An amount CAD\$72.1 million is secured by a Surety Bond from Zurich Insurance Company Ltd. in favour of the Government of Yukon. As at December 31, 2018, interest of CAD\$0.9 million (2017 – CAD\$1.2 million, 2016 – CAD\$1.1) was incurred in relation to the surety bond.

The Company expects that the cash outflows in respect to the balances accrued as at the financial statement dates will occur proximate to the dates these long term assets are retired.

In view of uncertainties concerning reclamation and closure cost obligations, the ultimate costs could be materially different from the amounts estimated. The estimate of future reclamation and closure cost obligations is also subject to change based on amendments to applicable laws and legislation. Future changes in reclamation and closure cost obligations, if any, could have a significant impact.

11. Share capital

As at December 31, 2018, 2017 and 2016, there were 79,502,100 number of shares issued and fully paid for consideration of CAD\$210.5 milion.

The Company did not have any share transactions during the years end December 31, 2018, 2017 and 2016.

The Company has no outstanding options or warrants as at December 31, 2018, 2017 and 2016.

12. Revenue

The Company's revenue breakdown by metal is as follows:

	Year ended
	December 31, 2018	December 31, 2017	December 31, 2016
Copper	91,331	141,056	197,938
Silver	255	953	1,670
Gold	5,328	12,717	25,039
Total gross revenue	96,914	154,726	224,647
Less: treatment and selling costs	(10,502)	(14,689)	(25,071)
Revenue	86,412	140,037	199,576

Sales from the Minto Mine are to four customers as per the agreements for the sale of metal bearing concentrates.

Customer details are as follows:

		Year ended
	December 31, 2018	December 31, 2017	December 31, 2016
Customer a1	(1)	5,059	198,007
Customer a2	5,583	13,503	26,640
Customer a3	91,331	103,822	—
Customer a4	—	32,342	—
Total gross revenue	96,913	154,726	224,647

13. Related party balances and transactions

The immediate parent and ultimate controlling party of the Company was Capstone Mining Corp. (incorporated in British Columbia, Canada) throughout the perod of this Financial Information (see Note 19).

Transactions between the Company and Capstone include: selling costs of CAD\$3.1 million (2017 – CAD\$4.7 million, 2016 – CAD\$6.4 million) as part of a Sales and Marketing Service Agreement, which have been recognized net against revenue; management fees and insurance expense from Capstone in the amount of CAD\$2.0 million (2017 – CAD\$2.1 million, 2016 – CAD\$1.6 million) in relation to Technical and Non- Technical Services Agreements and Insurance coverage; and interest on balances outstanding at various points throughout the year of CAD\$Nil (2017 – CAD\$Nil, 2016 – CAD\$1.0 million). The Company received CAD\$Nil million (2017 – CAD\$2.8, 2016 – CAD\$Nil) as related party insurance claim payouts from Capstone. The balance outstanding from Capstone as at December 31, 2018 was CAD\$13.0 million (2017 – CAD\$14.7 million, 2016 – CAD\$(2.5) million) which was fully settled subsequent to December 31, 2018.

These transactions are in in the normal course of operations are measured at the amount of consideration established and agreed to by the related parties. Any amounts due to/receivable from related parties are unsecured, interest bearing and have no specific repayment terms.

14. Supplemental cash flow information

In addition to the IFRS adjustment disclosed in note 3, other significant non-cash financing and investing transactions during the period are as follows:

	December 31, 2018	December 31, 2017	December 31, 2016
Mineral property, plant and equipment addition for change in estimate of reclamation and closure cost obligations (Note 10) Increase (Decrease) in accounts payable and accrued liabilities related to mineral property, plant and	(3,534)	(2,442)	(10,578)
equipment	—	—	8,930
Depreciation of mining equipment capitalized to deferred stripping assets (Note 7)	—	(13,499)	(5,849)

15. Changes in non-cash working capital

The changes in non-cash working capital items are comprised as follows:

	December 31, 2018	December 31, 2017	December 31, 2016
Receivables	2,616	11,778	(10,693)
Receivable from Capstone	(410)	9,075	(30,029)
Inventories	10,582	(14,276)	(8,156)
Prepaids	901	103	(96)
Accounts payable and accrued liabilities	(4,728)	(2,926)	2,606
Net change in non-cash working capital	8,961	3,754	(46,368)

16. Restructuring expense

		Year ended December 31,
	2018	2017
Severance	1,491	—
Demobilization of equipment	4,445	—
Restructuring Expense	5,936	—

17. Capital management

The Company's capital consists of the items included in shareholders' equity and cash. The Company manages the capital structure and makes adjustments in light of changes in economic conditions and the risk characteristics of the Company's assets.

To effectively manage its capital requirements, the Company has in place a planning and budgeting process to help determine the funds required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives. The Company ensures that there are sufficient capital to minimize liquidity risk, taking into account its anticipated operational cash flows and its cash.

The Company's share capital is not subject to any external restrictions and the Company did not change its approach to capital management during the year.

Notes to the Financial Information for the Years Ended December 31, 2018, 2017 and 2016

(expressed in thousands of CAD dollars)

18. Commitments

Agreements with the Selkirk First Nation

Under the terms of a revised co-operation agreement between Minto and the Selkirk First Nation (''Selkirk'') dated October 15, 2009, the Company has made various commitments to Selkirk to enhance Selkirk participation in the Minto Mine, including a variable net sales royalty on production from the Minto Mine that fluctuates from 1% to 1.5% depending on the variation of copper prices, as well as various commitments in respect of employment, contracting, training, and scholarship opportunities.

19. Segmented information

The Company is engaged in mining, exploration and development of mineral properties, and has an operating mine in Canada. The Company has one reportable segment identified by the mining operation of Minto. Segments are operations reviewed by the executive management who is consider to be the chief operating decision maker.

20. Subsequent event

On 3 June 2019, Capstone completed the sale of its Minto Mine to Pembridge Resources plc and an amendment agreement to the Wheaton Purchase Agreement was executed on 8 November 2019 between, among others, Minto and Wheaton, which provides for a modified price to be payable by Sumitomo Canada to Minto for gold produced at the Minto Mine for a limited period.