Red Canyon Resources Ltd. — Proxy Solicitation & Information Statement 2025

Jul 9, 2025

Suite 1210 – 1130 West Pender Street

Vancouver, BC, V6E 4A4 Canada

T (604) 681-9100

F (604) 681-9101

info@redcanyonresources.com

REDCANYON

RESOURCES

INFORMATION CIRCULAR

as at June 23, 2025, except as otherwise indicated

This Information Circular is furnished in connection with the solicitation of proxies by the management of Red Canyon Resources Ltd. (the “Company”) for use at the annual general meeting (the “Meeting”) of the Company’s shareholders to be held on July 29, 2025 at the time and place and for the purposes set forth in the accompanying notice of the Meeting.

In this Information Circular, references to “the Company”, “we”, and “our” refer to Red Canyon Resources Ltd. “Common Shares” means common shares without par value in the capital of the Company. “Beneficial Shareholders” means shareholders who do not hold Common Shares in their own name, and “intermediaries” refers to brokers, investment firms, clearing houses, and similar entities that own securities on behalf of Beneficial Shareholders.

GENERAL PROXY INFORMATION

Solicitation of Proxies

The solicitation of proxies will be primarily by mail, but proxies may be solicited personally or by telephone by directors, officers and regular employees of the Company. The Company will bear all costs of this solicitation. The Company has arranged for intermediaries to forward the meeting materials to beneficial owners of Common Shares held as of record by those intermediaries and may reimburse the intermediaries for their reasonable fees and disbursements in that regard.

Appointment of Proxyholders

The individuals named in the accompanying form of proxy (the “Proxy”) are officers and/or directors of the Company. If you are a shareholder entitled to vote at the Meeting, you have the right to appoint a person or company other than either of the persons designated in the Proxy, who need not be a shareholder, to attend and act for you and on your behalf at the Meeting. You may do so either by inserting the name of that other person in the blank space provided in the Proxy or by completing and delivering another suitable form of proxy.

Voting by Proxyholder

The persons named in the Proxy will vote or withhold from voting the Common Shares represented thereby in accordance with your instructions on any ballot that may be called for. If you specify a choice with respect to any matter to be acted upon, your Common Shares will be voted accordingly. The Proxy confers discretionary authority on persons named therein with respect to:

(a) each matter or group of matters identified therein for which a choice is not specified, other than the appointment of an auditor and the election of directors;

(b) any amendment to or variation of any matter identified therein; and

(c) any other matter that properly comes before the Meeting.

In respect of a matter for which a choice is not specified in the Proxy, the persons named in the Proxy will vote the Common Shares represented by the Proxy for the approval of such matter.

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Registered Shareholders

Registered Shareholders may wish to vote by proxy whether or not they are able to attend the Meeting in person. Registered Shareholders who choose to submit a proxy may do so by one of the following methods:

(a) complete, date and sign the enclosed form of Proxy and return it to the Company's transfer agent, Endeavor Trust Corporation. (“Endeavor”), by fax to 604-559-8908, by email to proxy@endeavortrust.com, by mail or by hand to Suite 702, 777 Hornby Street, Vancouver, British Columbia, Canada, V6Z 1S4; or

(b) log onto the internet website of Endeavor at www.eProxy.ca. Registered Shareholders must follow the instructions provided and refer to the enclosed Proxy form for the holder's control number and password.

Registered Shareholders must ensure the Proxy is received at least 48 hours (excluding Saturdays, Sundays and holidays) before the Meeting or any adjournment thereof.

Beneficial Shareholders (Unregistered Shareholders)

The following information is of significant importance to shareholders who do not hold Common Shares in their own name. Beneficial Shareholders should note that the only proxies that can be recognized and acted upon at the Meeting are those deposited by Registered Shareholders (those whose names appear on the records of the Company as the registered holders of Common Shares) or as set out in the following disclosure.

If Common Shares are listed in an account statement provided to a shareholder by a broker, then in almost all cases those Common Shares will not be registered in the shareholder's name on the records of the Company. Such Common Shares will more likely be registered under the names of the shareholder's broker or an agent of that broker. In Canada the vast majority of such Common Shares are registered under the name of CDS & Co. (the registration name for The Canadian Depository for Securities Limited, which acts as nominee for many Canadian brokerage firms), and in the United States (the "U.S."), under the name of Cede & Co. as nominee for The Depository Trust Company (which acts as depositary for many U.S. brokerage firms and custodian banks).

Intermediaries are required to seek voting instructions from Beneficial Shareholders in advance of shareholder meetings. Every intermediary has its own mailing procedures and provides its own return instructions to clients.

You should carefully follow the instructions of your broker or intermediary in order to ensure that your Common Shares are voted at the Meeting.

The form of proxy supplied to you by your broker will be similar to the Proxy provided to Registered Shareholders by the Company. However, its purpose is limited to instructing the intermediary on how to vote your Common Shares on your behalf. Most brokers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. (“Broadridge”) in Canada and in the United States. Broadridge mails a voting instruction form (a “VIF”) in lieu of a Proxy provided by the Company. The VIF will name the same persons as the Company’s Proxy to represent your Common Shares at the Meeting. You have the right to appoint a person (who need not be a Beneficial Shareholder of the Company), other than any of the persons designated in the VIF to represent your Common Shares at the Meeting and that person may be you. To exercise this right, insert the name of the desired representative (which may be you), in the blank space provided in the VIF. The completed VIF must then be returned to Broadridge by mail or facsimile or given to Broadridge by phone or over the internet, in accordance with Broadridge’s instructions. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting voting of Common Shares to be represented at the Meeting. If you receive a VIF from Broadridge, the VIF must be completed and returned to Broadridge, in accordance with Broadridge’s instructions, well in advance of the Meeting in order to have the Common Shares voted at the Meeting, or to have an alternate representative duly appointed to attend the Meeting and vote your Common Shares.

This information circular and related material is being sent to both registered and non-registered owners of the securities of the Company. If you are a non-registered owner, and the Company or its agent has sent these materials directly to you, your name and address and information about your holdings of securities, have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding on your behalf.

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Management of the Company does not intend to pay for intermediaries to forward to objecting beneficial owners (“OBOs”) under NI 54-101 the proxy-related materials and Form 54-101F7 – Request for Voting Instructions Made by Intermediary, and, in the case of an OBO, the OBO will not receive the materials unless the OBO’s intermediary assumes the cost of delivery.

Notice to Shareholders in the United States

The solicitation of proxies involves securities of an issuer located in Canada and is being effected in accordance with the corporate laws of the Province of British Columbia, Canada and securities laws of the provinces of Canada. The proxy solicitation rules under the United States Securities Exchange Act of 1934, as amended, are not applicable to the Company or this solicitation, and this solicitation has been prepared in accordance with the disclosure requirements of the securities laws of the provinces of Canada. Shareholders should be aware that disclosure requirements under the securities laws of the provinces of Canada differ from the disclosure requirements under United States securities laws.

The enforcement by Shareholders of civil liabilities under United States federal securities laws may be affected adversely by the fact that the Company is incorporated under the Business Corporations Act (British Columbia) (the “BCA”), as amended, certain of its directors and its executive officers are residents of Canada and a substantial portion of its assets and the assets of such persons are located outside the United States. Shareholders may not be able to sue a foreign company or its officers or directors in a foreign court for violations of United States federal securities laws. It may be difficult to compel a foreign company and its officers and directors to subject themselves to a judgment by a United States court.

Notice-and-Access

The Company is not sending the meeting materials to shareholders using “notice-and-access”, as defined under NI 54-101.

Revocation of Proxies

In addition to revocation in any other manner permitted by law, a registered Shareholder who has given a proxy may revoke it by:

(a) executing a proxy bearing a later date or by executing a valid notice of revocation, either of the foregoing to be executed by the Registered Shareholder or the Registered Shareholder’s authorized attorney in writing, or, if the Registered Shareholder is a corporation, under its corporate seal by an officer or attorney duly authorized, and by delivering the proxy bearing a later date to Endeavor or at the address of the registered office of the Company at 1210 – 1130 West Pender Street, Vancouver, British Columbia, V6E 4A4, at any time up to and including the last business day that precedes the day of the Meeting or, if the Meeting is adjourned, the last business day that precedes any reconvening thereof, or to the chairman of the Meeting on the day of the Meeting or any reconvening thereof, or in any other manner provided by law, or

(b) personally attending the Meeting and voting the Registered Shareholder’s Common Shares.

A revocation of a proxy will not affect a matter on which a vote is taken before the revocation.

INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON

No director or executive officer of the Company, nor any person who has held such a position since the beginning of the last completed financial year of the Company, nor any nominee for election as a director of the Company, nor any associate or affiliate of the foregoing persons, has any substantial or material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted on at the Meeting other than the election of directors, and the approval of the stock option plan, as described herein.

VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES

The board of directors (the “Board”) of the Company has fixed June 23, 2025 as the record date (the “Record Date”) for determination of persons entitled to receive notice of the Meeting. Only shareholders of record at the close of business on the Record Date who either attend the Meeting personally or complete, sign and deliver

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a form of proxy in the manner and subject to the provisions described above will be entitled to vote or to have their Common Shares voted at the Meeting.

The Company is authorized to issue an unlimited number of Common Shares. As of the Record Date, there were 55,129,937 Common Shares issued and outstanding, each carrying the right to one vote. No group of shareholders has the right to elect a specified number of directors and there are no cumulative or similar voting rights attached to the Common Shares.

To the knowledge of the directors and executive officers of the Company, no persons or corporations beneficially owned, directly or indirectly, or exercised control or direction over, Common Shares carrying more than 10% of the voting rights attached to all outstanding Common Shares of the Company as at the Record Date, other than as set forth below:

Name of Shareholder	Number of Shares	Percentage of Issued Shares
Crescat Portfolio Management LLC	6,768,263	12.28%^{(1)}
NewQuest Capital Inc.	9,280,000	16.83%^{(2)}

(1) Crescat Portfolio Management LLC holds 2,130,500 share purchase warrants that if exercised would give it total ownership of 8,898,763 common shares representing 15.54% of the issued and outstanding common shares of the Company on a partially diluted basis.

(2) NewQuest Capital Inc. ("NewQuest") holds 181,250 share purchase warrants that if exercised would give it total ownership of 9,461,250 common shares representing 17.11% of the issued and outstanding common shares of the Company on a partially diluted basis.

VOTES NECESSARY TO PASS RESOLUTIONS

A simple majority of affirmative votes cast at the Meeting is required to pass the resolutions described herein. If there are more nominees for election as directors or appointment of the Company's auditor than there are vacancies to fill, those nominees receiving the greatest number of votes will be elected or appointed, as the case may be, until all such vacancies have been filled. If the number of nominees for election or appointment is equal to the number of vacancies to be filled, all such nominees will be declared elected or appointed by acclamation.

ELECTION OF DIRECTORS

Pursuant to the Company's Articles, the Board has determined that five (5) directors are to be elected to the Board at the Meeting. Shareholder approval will be sought to fix the number of Directors of the Company at five (5).

The term of office of each of the current directors will end at the conclusion of the Meeting. Unless the director's office is vacated earlier in accordance with the provisions of the BCA, each director elected will hold office until the conclusion of the next annual general meeting of the Company, or if no director is then elected, until a successor is elected.

The following table sets out the names of management's nominees for election as directors, all major offices and positions with the Company and any of its significant affiliates each now holds, each nominee's principal occupation, business or employment (for the five preceding years for each new director nominee), the period of time during which each has been a director of the Company and the number of Common Shares of the Company beneficially owned by each, directly or indirectly, or over which each exercised control or direction, as of June 23, 2025.

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Name of Nominee; Current Position with the Company, Province and Country of Residence	Occupation, Business or Employment	Period as a Director of the Company	Common Shares Beneficially Owned or Controlled(1)
WENDELL ZERB(2)
British Columbia, Canada
Chairman, President, Chief Executive Officer and Director	Geologist and Businessman. Chairman and Director of Inflection Resources Ltd. from March 2019 to present. Director of Headwater Gold Inc. from July 2020 to present.	Since October 2, 2020	3,618,500(3)
6.56%(4)
ALISTAIR WADDELL
British Columbia, Canada
Director	Geologist and director and officer of several mining and mineral exploration companies. Co-founder of NewQuest Capital Inc., a discovery-driven investment group. President and CEO of Inflection Resources Ltd. from February 2018 to present; Chairman and Director of Headwater Gold Inc. from January 2019 to present; CEO of Headwater Gold Inc. from September 2019 to March 2021. Director of FinEx Metals Ltd. from March 2021 to present; Precipitate Gold Corp. from March 2016 to present; Palamina Corp. from November 2017 to present; and North Stawell Minerals from July 2020 to present. Director of Winshear Gold Corp. from September 2019 to September 2022.	Since October 2, 2020	1,362,500(5)
3.04%(6)
CALEB STROUP
Nevada, United States
Director	Geologist and Businessman. President and Director of Headwater Gold Inc. from May 2019 to present; CEO of Headwater Gold Inc. from March 2021 to present.	Since October 2, 2020	1,587,500(7)
3.54%(8)
CECIL R. BOND(2)
British Columbia, Canada
Director	Chartered Professional Accountant (CPA, CA) and Businessman. Director and Executive Vice President, Finance of Rugby Resources Ltd. from March 2018 to present. Director of Inflection Resources Ltd. from March 2019 to present. Director of QuestEx Gold & Copper Ltd. from April 2018 to June 2022.	Since July 13, 2021	400,000
0.89%(9)
LAUREN ROBERTS(2)
Washington, United States
Director	Professional Mining Engineer and Businessman. Director of Galiano Gold Inc. from January 2025 to present. Senior Vice President and Chief Operating Officer of Hecla Mining Company from August 2019 to December 2023.	Since June 1, 2023	700,000
1.56%(10)

(1) The number of Common Shares beneficially owned by the above nominees for directors, directly or indirectly, is based on information furnished by the nominees themselves.
(2) Member of the Audit Committee.
(3) Held directly. In addition, Mr. Zerb is a director of and holds a 21.05% interest in NewQuest, which owns 9,280,000 common shares and 181,250 share purchase warrants.
(4) Holds 225,000 share purchase warrants and 425,000 stock options that if exercised would give total ownership of 4,268,500 common shares representing 7.65% of the issued and outstanding common shares of the Company on a partially diluted basis.
(5) Held by Waddell Consulting Inc., a private British Columbia company owned by Mr. Waddell. In addition, Mr. Waddell holds a 25.53% interest in NewQuest, which owns 9,280,000 common shares and 181,250 share purchase warrants.
(6) Holds 325,000 stock options that if exercised would give total ownership of 1,687,500 common shares representing 3.04% of the issued and outstanding common shares of the Company on a partially diluted basis.
(7) Held directly. In addition, Mr. Stroup is a director of and holds a 21.05% interest in NewQuest, which owns 9,280,000 common shares and 181,250 share purchase warrants.
(8) Holds 12,500 share purchase warrants and 400,000 stock options that if exercised would give total ownership of 2,000,000 common shares representing 3.60% of the issued and outstanding common shares of the Company on a partially diluted basis.

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(9) Holds 325,000 stock options that if exercised would give total ownership of 725,000 common shares representing 1.31% of the issued and outstanding common shares of the Company on a partially diluted basis.

(10) Holds 250,000 stock options that if exercised would give total ownership of 950,000 common shares representing 1.72% of the issued and outstanding common shares of the Company on a partially diluted basis.

None of the proposed nominees for election as a director of the Company are proposed for election pursuant to any arrangement or understanding between the nominee and any other person, except the directors and senior officers of the Company acting solely in such capacity.

Cease Trade Orders and Bankruptcies

No proposed director is, as at the date of this Information Circular, or has been, within ten (10) years before the date of this Information Circular, a director, chief executive officer or chief financial officer of any company (including the Company in respect of which the Information Circular is being prepared) that:

(i) was subject to a cease trade or similar order that was issued while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer; or

(ii) was subject to a cease trade or similar order that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

No proposed director is, as at the date of this Information Circular, or has been within ten (10) years before the date of this Information Circular, a director or executive officer of any company (including the Company in respect of which the Information Circular is being prepared) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager of trustee appointed to hold its assets.

No proposed director has, within the past ten (10) years, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement, or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director.

Penalties and Sanctions

No proposed director of the Company has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or has been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed director.

APPOINTMENT OF AUDITOR

Baker Tilly WM LLP, Chartered Professional Accountants, of 900 – 400 Burrard Street, Vancouver, British Columbia, V6C 3B7 will be nominated at the Meeting for appointment as auditor of the Company.

AUDIT COMMITTEE AND RELATIONSHIP WITH AUDITOR

National Instrument 52-110 of the Canadian Securities Administrators (“NI 52-110”) requires the Company, as a venture issuer, to disclose annually in its Information Circular certain information concerning the constitution of its audit committee and its relationship with its independent auditor, as set forth below.

The Audit Committee’s Charter

The audit committee meets at least quarterly to review quarterly financial statements and management’s discussion and analysis and meets at least once annually with the Company’s external auditor. The audit committee discusses, among other things, the annual audit, the adequacy and effectiveness of the Company’s internal control and management information systems and management’s discussion and analysis and reviews the annual financial statements with the external auditor.

The audit committee has a charter. A copy of the Audit Committee Charter is attached as Schedule “A”.

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Composition of the Audit Committee

The Audit Committee is presently comprised of Cecil R. Bond (Chair), Lauren Roberts and Wendell Zerb. Each of Messrs. Bond and Roberts are independent directors as defined in National Instrument 52-110. Mr. Zerb is not independent by reason of being the Chairman, President and CEO of the Company. All of the Audit Committee members are “financially literate”, as defined in National Instrument 52-110, as all have the industry experience necessary to understand and analyze financial statements of the Company, as well as the understanding of internal controls and procedures necessary for financial reporting. The members of the Audit Committee are elected by the Board of Directors at its first meeting following each annual shareholders’ meeting to serve one-year terms and are permitted to serve an unlimited number of consecutive terms.

Relevant Education and Experience

Each member of the Company's present Audit Committee has adequate education and experience that is relevant to their performance as an Audit Committee member and, in particular, the requisite education and experience that have provided the member with:

(a) an understanding of the accounting principles used by the Company to prepare its financial statements and the ability to assess the general application of those principles in connection with estimates, accruals and reserves;

(b) the ability to assess the general application of such accounting principles in connection with the accounting for estimates, accruals and provisions;

(c) experience analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements or experience actively supervising individuals engaged in such activities; and

(d) an understanding of internal controls and procedures for financial reporting.

Cecil R. Bond: Mr. Bond is a Chartered Professional Accountant (CPA, CA). He is a director and officer of several public companies, in addition to serving as a member of the audit committee of several reporting issuers, and is familiar with the financial reporting requirements applicable to public companies in Canada.

Lauren Roberts: Mr. Roberts is a professional mining engineer with over three decades of experience in the global mining industry. He has served in executive management roles as Senior Vice President and Chief Operating Officer for Hecla Mining Company and Chief Operating Officer for Kinross Gold Corporation. He is familiar with the financial reporting requirements applicable to public companies in Canada.

Wendell Zerb: Mr. Zerb is a professional geologist with over 30 years experience, including 17 years in Capital Markets where a component of his work was the financial analysis of public companies. He has also served in executive management roles, as a director, and officer of several public companies. He is familiar with the financial reporting requirements applicable to public companies in Canada.

Audit Committee Oversight

The Audit Committee was established on June 1, 2023 and will, among other things, make recommendations to the Board of Directors to nominate or compensate an external auditor. The Audit Committee has recommended that Baker Tilly WM LLP, Chartered Professional Accountants, be appointed as the auditor of the Company for the ensuing year.

Reliance on Certain Exemptions

The Company is a “venture issuer” as defined in NI 52-110 and is relying upon the exemption in section 6.1 of NI 52-110 in respect of the composition of its Audit Committee and in respect of its reporting obligations under NI 52-110.

Pre-Approval Policies and Procedures

The Committee has adopted specific policies and procedures for the engagement of non-audit services as described above under the heading “External Auditors”.

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External Auditor Service Fees (By Category)

In the following table, “audit fees” are fees billed by the Company’s external auditor for services provided in auditing the Company’s annual consolidated financial statements for the subject year. “Audit-related fees” are fees not included in audit fees that are billed by the auditor for assurance and related services that are reasonably related to the performance of the audit review of the Company’s consolidated financial statements. “Tax fees” are fees billed by the auditor for professional services rendered for tax compliance, tax advice and tax planning. “All other fees” are fees billed by the auditor for products and services not included in the foregoing categories.

The aggregate fees billed by the Company’s external auditor in the financial years ended December 31, 2024 and December 31, 2023 with respect to the Company, by category, are as follows:

Financial Year Ended	Audit Fees	Audit Related Fees	Tax Fees	All Other Fees
December 31, 2023	$36,432	nil	$7,854	nil
December 31, 2024	$42,644	nil	$6,000	nil

CORPORATE GOVERNANCE

General

Corporate governance relates to the activities of the Board, the members of which are elected by and are accountable to the shareholders, and takes into account the role of the individual members of management who are appointed by the Board and who are charged with day-to-day management of the Company. National Instrument 58-201 Corporate Governance Guidelines establishes corporate governance guidelines to be used by issuers in developing their own corporate governance practices. The Board is committed to sound corporate governance practices, which are both in the interest of its shareholders and contribute to effective and efficient decision making.

In accordance with National Instrument 58-101 Disclosure of Corporate Governance Practices (“NI 58-101”) the Company’s corporate governance practices are summarized below. The Board will continue to monitor such practices on an ongoing basis and when necessary, implement such additional practices as it deems appropriate.

Board of Directors

The Board is currently composed of five directors – Wendell Zerb, Alistair Waddell, Caleb Stroup, Cecil R. Bond and Lauren Roberts. The Board facilitates its exercise of independent supervision over management by ensuring sufficient representation by directors independent of management.

NI 58-101 suggests that the board of directors of a public company should be constituted with a majority of individuals who qualify as “independent” directors. An “independent” director is a director who is independent of management and is free from any interest and any business or other relationship which could, or could reasonably be perceived to materially interfere with the director’s ability to act with a view to the best interests of the Company, other than interests and relationships arising from shareholding. In addition, where a company has a significant shareholder, NI 58-101 suggests that the board of directors should include a number of directors who do not have interests in either the company or the significant shareholder. The independent directors would exercise their responsibilities for independent oversight of management and meet independently of management whenever deemed necessary. Each of Cecil R. Bond and Lauren Roberts can be considered to be “independent” within the meaning of NI 58-101. Wendell Zerb, by reason of being Chairman, President and CEO of the Company and a director and shareholder of NewQuest, the Company’s controlling shareholder, Caleb Stroup, by reason of being a director and shareholder of NewQuest, and Alistair Waddell, by reason of being a director and shareholder of NewQuest, are non-independent members of the Board of Directors.

The independent directors will meet separately from the non-independent directors, as determined necessary from time to time, in order to facilitate open and candid discussion among the independent directors. No separate meetings of the independent directors have been held to date. Wendell Zerb acts as the chairman with

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respect to the conduct of Board meetings. Given the Company's relatively small size and start-up nature, the Board is satisfied as to the extent of independence of its members. The Board is satisfied that it is not constrained in its access to information, in its deliberations, or in its ability to satisfy the mandate established by law to supervise the business and affairs of the Company, and that there are sufficient systems and procedures in place to allow the Board to have a reasonable degree of independence from day-to-day management.

Board Mandate

The Board does not presently have a written mandate describing how the Board delineates its role and responsibilities. The size of the Company is such that all of its operations are conducted by a small management team which is also represented on the Board. The Board considers that management is effectively supervised by the independent directors on an informal basis as the independent directors have regular and full access to management. Further supervision is performed through the Company's Audit Committee which is composed of a majority of independent directors who meet with the Company's auditors without management being in attendance when considered necessary.

Position Descriptions

The Board has not developed written position descriptions for the chairman with respect to the conduct of Board meetings, or for the chair of any committees. The chairman's role and responsibilities in each instance include reviewing notices of meetings, overseeing meeting agendas, conducting and chairing meetings in accordance with good practices, and reviewing minutes of meetings.

The duties and responsibilities for the Company's CEO are described in his employment contract. The CEO's general roles and responsibilities are commensurate with the position of CEO of a resource company comparable in size to the Company include overseeing all operations of the Company, and developing and devising the means to implement general strategies for the direction and growth of the Company as instructed by the Board.

Other Reporting Issuer Experience

The following table sets out the directors of the Company who are currently directors of other reporting issuers in any Canadian or foreign jurisdiction:

Name	Reporting Issuer	Exchange or Market and Trading Symbol
Cecil R. Bond	Inflection Resources Ltd.
Rugby Resources Ltd.	CSE: AUCU
TSX.V: RUG
Lauren Roberts	Galiano Gold Inc.	TSE: GAU
NYSE: GAU
Caleb Stroup	Headwater Gold Inc.	CSE: HWG
Alistair Waddell	FinEx Metals Ltd.
Headwater Gold Inc.
Inflection Resources Ltd.
North Stawell Minerals
Palamina Corp.
Precipitate Gold Corp.	TSX.V: FINX
CSE: HWG
CSE: AUCU
ASX: NSM
TSX.V: PA
TSX.V: PRG
Wendell Zerb	Headwater Gold Inc.
Inflection Resources Ltd.	CSE: HWG
CSE: AUCU

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Orientation and Continuing Education

Board members are encouraged to communicate with management and auditors, to keep themselves current with industry trends and developments, and to attend related industry seminars. Board members have full access to the Company's records and management provide regular updates to the Board members on financial, technical and other information as relevant.

Ethical Business Conduct

While the Company has not adopted a written code of business conduct and ethics, the Board will from time to time discuss and emphasize the importance of matters relating to conflicts of interest, protection and proper use of corporate assets and opportunities, confidentiality of corporate information, compliance with laws and the reporting of any illegal or unethical behavior.

Nomination of Directors

The Company's management is continually in contact with individuals involved with public sector issuers. From these sources, management has made numerous contacts and, in the event that the Company requires any new directors, such individuals will be brought to the attention of the Board of Directors. The Company conducts due diligence, reference and background checks on any suitable candidate. New nominees must have a track record in general business management, special expertise in an area of strategic interest to the Company, the ability to devote the time required, integrity of character and a willingness to serve.

Compensation

The entire Board of Directors acts as a de facto compensation committee to monitor and review the salary and benefits of its executive officers. The Board will periodically review the Company's general compensation structure, policies and programs in consideration of industry standards and the Company's financial situation until a compensation committee is formed.

Other Board Committees

At present, the only committee the Company has is an Audit Committee. The Company may create other committees in the future.

Assessments

Neither the Company nor the Board has determined formal means or methods to regularly assess the Board, its committees or the individual directors with respect to their effectiveness and contributions. Effectiveness is subjectively measured by comparing actual corporate results with stated objectives. The contributions of an individual director are informally monitored by the other Board members, having in mind the business and other strengths of the individual and the purpose of originally nominating the individual to the Board.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The only equity compensation plan which the Company has in place is a Stock Option Plan dated for reference November 15, 2021 (the "Option Plan"). The Option Plan is a "rolling plan," under which the total number of Common Shares issuable from time to time, together with all of the Company's other previously established or proposed share compensation arrangements, may not exceed 10% of the total number of issued and outstanding Common Shares from time to time.

Equity Compensation Plan Information

As at December 31, 2024, the number of issued and outstanding Common Shares was 44,877,187 and therefore there were 4,487,718 Common Shares available to be reserved for issuance upon exercise of options under the Option Plan.

The following table sets out equity compensation plan information as at the December 31, 2024 fiscal year end:

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Equity Compensation Plan Information
	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights ($)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Plan Category	(a)	(b)	(c)
Equity compensation plans approved by securityholders – the Option Plan.	4,465,000	$0.16	22,718
Equity compensation plans not approved by securityholders	Nil	Nil	Nil
Total	4,465,000		22,718

STATEMENT OF EXECUTIVE COMPENSATION

Named Executive Officers

In this section “Named Executive Officer” means the Chief Executive Officer, the Chief Financial Officer and each of the three most highly compensated executive officers, other than the Chief Executive Officer and the Chief Financial Officer, who were serving as executive officers at the end of the most recently completed fiscal year and whose total compensation was more than $150,000 as well as any additional individuals for whom disclosure would have been provided except that the individual was not serving as an officer of the Company at the end of the most recently completed financial year.

Director and NEO Compensation

The following compensation table, excluding options and compensation securities, provides a summary of the compensation paid by the Company to NEOs and members of the Board for the two most recently completed financial years ended December 31, 2024 and December 31, 2023. Options and compensation securities are disclosed under the heading “Stock Options and Other Compensation Securities” below.

During the financial year ended December 31, 2024, the Company had two individuals who were Named Executive Officers, namely (i) Wendell Zerb, who was appointed Chairman, Chief Executive Officer and President of the Company on October 2, 2020; (ii) and Sandra Wong, who was appointed Chief Financial Officer and Corporate Secretary of the Company on October 2, 2020.

Director and NEO Compensation, Excluding Compensation Securities

The following table sets forth all annual and long-term compensation for services paid to or earned by the Company’s Named Executive Officers and directors, excluding compensation securities, during the financial years ended December 31, 2024 and December 31, 2023:

Table of compensation excluding compensation securities
Name and position	Year	Salary, consulting fee, retainer, commission ($)	Bonus ($)	Committee or meeting fees ($)	Value of perquisites ($)	Value of all other compensation ($)	Total compensation ($)
Wendell Zerb^{1}	2024	133,500	nil	nil	nil	nil	133,500
Chairman, CEO, President, Director & Director of Subsidiary	2023	129,600	nil	nil	nil	nil	129,600
Sandra Wong^{2}	2024	82,800	nil	nil	nil	nil	82,800
CFO, Corporate Secretary	2023	59,400	nil	nil	nil	nil	59,400

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Table of compensation excluding compensation securities
Name and position	Year	Salary, consulting fee, retainer, commission ($)	Bonus ($)	Committee or meeting fees ($)	Value of perquisites ($)	Value of all other compensation ($)	Total compensation ($)
Alistair Waddell^{3}	2024	12,000	nil	nil	nil	nil	12,000
Director	2023	4,000	nil	nil	nil	nil	4,000
Caleb Stroup^{4}	2024	12,000	nil	nil	nil	nil	12,000
Director & President & Director of Subsidiary	2023	4,000	nil	nil	nil	nil	4,000
Cecil R. Bond^{5}	2024	24,000	nil	nil	nil	nil	24,000
Director	2023	8,000	nil	nil	nil	nil	8,000
Lauren Roberts^{6}	2024	12,000	nil	nil	nil	nil	12,000
Director	2023	4,000	nil	nil	nil	nil	4,000
Tero Kosonen^{7}	2024	nil	nil	nil	nil	nil	nil
Former Director	2023	nil	nil	nil	nil	nil	nil

1. Wendell Zerb was appointed Chairman, Chief Executive Officer, President and a Director on October 2, 2020. Mr. Zerb was appointed a Director of RC Metals Inc. on October 27, 2020. During the most recently completed financial year, $133,500 in salary was paid to Mr. Zerb.
2. Sandra Wong was appointed Chief Financial Officer and Corporate Secretary on October 2, 2020. Ms. Wong was appointed as Secretary and Treasurer of RC Metals Inc. on October 27, 2020. During the most recently completed financial year, $82,800 in salary was paid to Ms. Wong.
3. Alistair Waddell was appointed a Director on October 2, 2020. During the most recently completed financial year, $12,000 in director's fees were paid to Waddell Consulting Inc., a company beneficially owned by Mr. Waddell.
4. Caleb Stroup was appointed a Director on October 2, 2020. Mr. Stroup was appointed President and a Director of RC Metals Inc. on October 27, 2020. During the most recently completed financial year, $12,000 in director's fees were paid to Hunter Gold LLC, a company beneficially owned by Mr. Stroup.
5. Cecil R. Bond was appointed a Director on July 13, 2021. During the most recently completed financial year, $24,000 in director's fees were paid to Mr. Bond.
6. Lauren Roberts was appointed a Director on June 1, 2023. During the most recently completed financial year, $12,000 in director's fees were paid to Roberts Engineering and Development, PLLC, a company beneficially owned by Mr. Roberts.
7. Tero Kosonen was appointed a Director on October 2, 2020 and resigned on June 1, 2023.

External Management Companies

None of the NEOs or directors of the Company have been retained or employed by an external management company which has entered into an understanding, arrangement or agreement with the Company to provide executive management services to the Company, directly or indirectly.

Stock Options and Other Compensation Securities

During the financial year ended December 31, 2024, 1,150,000 stock options were granted to NEOs and directors of the Company. The following table discloses all compensation securities granted or issued to each Named Executive Officer and director by the Company in the financial year ended December 31, 2024:

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Compensation Securities
Name and position	Type of compensation security	Number of compensation securities, number of underlying securities, and percentage of class	Date of issue or grant m/d/y	Issue, conversion or exercise price ($)	Closing price of security or underlying security on date of grant ($)	Closing price of security or underlying security at year end ($)	Expiry date m/d/y
Wendell Zerb^{1}
Chairman, CEO, President & Director and Director of Subsidiary	stock options	275,000	08/30/24	$0.20	$0.19	$0.145	08/30/29
Sandra Wong^{2}
CFO, Corporate Secretary	stock options	175,000	08/30/24	$0.20	$0.19	$0.145	08/30/29
Alistair Waddell^{3}
Director	stock options	175,000	08/30/24	$0.20	$0.19	$0.145	08/30/29
Caleb Stroup^{4}
Director and President & Director of Subsidiary	stock options	250,000	08/30/24	$0.20	$0.19	$0.145	08/30/29
Cecil R. Bond^{5}
Director	stock options	175,000	08/30/24	$0.20	$0.19	$0.145	08/30/29
Lauren Roberts^{6}
Director	stock options	100,000	08/30/24	$0.20	$0.19	$0.145	08/30/29
Tero Kosonen^{7}
Former Director	stock options	nil	n/a	n/a	n/a	$0.145	n/a

1. At December 31, 2024, Mr. Zerb held a total of 425,000 stock options to purchase 425,000 common shares, all of which are fully vested.
2. At December 31, 2024, Ms. Wong held a total of 325,000 stock options to purchase 325,000 common shares, all of which are fully vested.
3. At December 31, 2024, Mr. Waddell held a total of 325,000 stock options to purchase 325,000 common shares, all of which are fully vested.
4. At December 31, 2024, Mr. Stroup held a total of 400,000 stock options to purchase 400,000 common shares, all of which are fully vested.
5. At December 31, 2024, Mr. Bond held a total of 325,000 stock options to purchase 325,000 common shares, all of which are fully vested.
6. At December 31, 2024, Mr. Roberts held a total of 250,000 stock options to purchase 250,000 common shares, all of which are fully vested.
7. At December 31, 2024, Mr. Kosonen held a total of 150,000 stock options to purchase 150,000 common shares, all of which are fully vested.

The Company does not provide any retirement benefits for its directors or officers; nor does it have any long-term incentive plans.

Exercise of Compensation Securities by NEOs and Directors

None of the NEOs or directors of the Company exercised any compensation securities during the two most recently completed financial years.

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Stock Option Plan and Other Incentive Plans

The Company has a Stock Option Plan dated for reference November 15, 2021 (the “Option Plan”). The Option Plan is a rolling plan under which options totaling a maximum of 10% of the Common Shares outstanding from time to time are available for grant.

The Option Plan was effective immediately upon the approval of the Board on November 15, 2021, when the Company was a non-reporting issuer. The Company became listed on the Canadian Securities Exchange effective October 25, 2023 and the Option Plan was approved by the shareholders of the Company on August 1, 2024. Under the policies of the CSE, the Issuer must obtain shareholder approval of the Option Plan within three years after institution and within every three years thereafter.

As at June 23, 2025 there were 55,129,937 Common Shares issued and outstanding. Accordingly, under the Option Plan the Company has the authority to grant options to purchase up to a total of 5,512,993 Common Shares. As at the date of this Information Circular, options to purchase an aggregate of 4,465,000 Common Shares are granted and outstanding under the Option Plan, representing approximately 8.10% of the outstanding Common Shares in the capital of the Company.

Employment, Consulting and Management Agreements

The Company has entered into a Management Agreement with Wendell Zerb, the Chairman, President and Chief Executive Officer effective January 1, 2022 for no fixed term. As compensation for the services to be provided, the CEO will receive a monthly fee of $10,800 (increased to $11,450 effective July 1, 2024) with provisions for severance of (i) three months of compensation in the event the Company terminates the agreement without cause within twelve months of the effective date; (ii) six months of compensation plus an additional one month for each completed year of service up to a maximum of twelve months in the event the Company terminates the agreement without cause after twelve months of the effective date; (iii) twelve times the monthly compensation in the event the CEO resigns for good cause during the first two years of the agreement; (iv) eighteen times the monthly compensation if the CEO resigns for good cause during the third or any subsequent year of the agreement; and (v) eighteen months of compensation in the event the Company terminates the agreement with or without cause, or the CEO resigns with or without good cause, within twelve months following a change of control of the Company. In the event the CEO participates in activities that lead to (i) the sale of any of the Company’s exploration properties or the creation of a new or spin-off company, he will be awarded a special bonus in the amount of 0.5% of the sale of any of the Company’s exploration properties or the creation of a new or spin-off company; and (ii) a corporate transaction involving a sale of the Company or more than 50% of the Company’s issued and outstanding common shares, he will be awarded a special bonus of 0.2% of the consideration up to $50 million of consideration received, and 0.1% of additional value beyond that $50 million level.

The Company has entered into an employment agreement with Sandra Wong, the Chief Financial Officer and Corporate Secretary effective June 1, 2023 for no fixed term. As compensation for the services to be provided, the CFO will receive a monthly salary of $6,700 (increased to $7,100 effective July 1, 2024) with provisions for severance of (i) three months of compensation in the event the Company terminates the agreement without cause; (ii) three months of compensation in the event the CFO resigns for good cause; and (iii) eighteen months of compensation in the event the Company terminates the agreement with or without cause, or the CFO resigns with or without good cause, within twelve months following a change of control of the Company.

The Company has approved the payment of a director’s fee of $1,000 per month to Messrs. Roberts, Stroup and Waddell and $2,000 per month to Mr. Bond who serves as chair of the Audit Committee, effective September 1, 2023.

Oversight and Description of Director and Named Executive Officer Compensation

Elements of the Compensation Program

The responsibilities relating to executive and director compensation, including reviewing and recommending compensation of the Company’s officers and employees and overseeing the Company’s base compensation structure and equity-based compensation program is performed by the Board as a whole. The Board also assumes responsibility for reviewing and monitoring the long-range compensation strategy for the Company’s senior management. The Board generally reviews the compensation of senior management on an annual basis

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taking into account compensation paid by other issuers of similar size and activity and the performance of officers generally and in light of the Company's goals and objectives.

The Company is a small junior resource company with limited resources. The compensation for senior management of the Company is designed to ensure that the level and form of compensation achieves certain objectives, including: (a) attracting and retaining talented, qualified and effective executives; (b) motivating the short and long-term performance of executives; and (c) better aligning the interests of executive officers with those of the Company's shareholders. In the Board's view, paying salaries which are competitive in the markets in which the Company operates is a first step to attracting and retaining talented, qualified and effective executives. Competitive salary information on comparable companies is compiled from a variety of sources, including national and international publications.

The Board determines the compensation for the CEO. The compensation of the Company's executives is determined by the Board after the recommendation of the CEO. In each case, the Board takes into consideration the prior experience of the executive, industry standards, competitive salary information on comparable companies of similar size and stage of development, the degree of responsibility and participation of the executive in the day-to-day affairs of the Company, and the Company's available cash resources.

In the Board's view, to attract and retain qualified and effective executives, the Company must pay base salaries which are reasonable in relation to the level of service expected while remaining competitive in the markets in which the Company operates.

The Board has assessed the Company's compensation plans and programs for its executive officers to ensure alignment with the Company's business plan and to evaluate the potential risks associated with those plans and programs. The Board has concluded that the compensation policies and practices do not create any risks that are reasonably likely to have a material adverse effect on the Company. The Board considers the risks associated with executive compensation and corporate incentive plans when designing and reviewing such plans and programs.

The Company has not adopted a policy restricting its executive officers or directors from purchasing financial instruments that are designated to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by its executive officers or directors. To the knowledge of the Company, none of the executive officers or directors has purchased such financial instruments.

Executive Compensation

Except for the grant of incentive stock options to the NEOs and any compensation payable pursuant to an executive compensation agreement between the CEO or CFO and the Company, there are no arrangements under which NEOs were compensated by the Company during the two most recently completed financial years for their services in their capacity as NEOs, directors or consultants.

Director Compensation

The Company has instituted a Board compensation program to pay cash compensation to the directors for acting in their capacity as directors of the Company.

The Company has agreed to pay the following director's fees on a monthly basis effective September 1, 2023: (i) $2,000 to Cecil R. Bond for his services as a director and Chair of the Audit Committee; and (ii) $1,000 to each of Alistair Waddell, Caleb Stroup and Lauren Roberts for their services as directors. This Board compensation will be reviewed on an annual basis or more frequently, from time to time as required, depending on the Company's financial position and ability to pay the director's fees.

Except for the grant of stock options and the aforementioned cash payments, there were no arrangements under which directors were compensated by the Company for their services in their capacity as directors during the two most recently completed financial years.

Option-Based Awards

The Company has a stock option plan in place, which was established to provide incentive to qualified parties to increase their proprietary interest in the Company and thereby encourage their continuing association with the Company. Management proposes stock option grants to the Board based on such criteria as performance,

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previous grants, and hiring incentives. The Board administers the Company's stock option plan and all option grants require Board approval. The Option Plan allows options to be issued to directors, officers, employees or consultants of the Company.

In compensating its senior management, the Company employs a combination of salary and equity participation. The Board is of the view that encouraging its executives and employees to hold shares of the Company is the best way to align their interests with those of the Company's shareholders. Equity participation is accomplished through the Company's stock option plan. See "Stock Options and Other Compensation Securities" above.

Stock options are granted to executives and employees taking into account a number of factors, including the amount and term of options previously granted, base salary and competitive factors. The amounts and terms of options granted are determined by the Board based on recommendations put forward by the CEO. Due to the Company's limited financial resources, option grants are an important part of executive compensation to assist in maintaining executive motivation.

Given the evolving nature of the Company's business, the Board continues to review and redesign the overall compensation plan for senior management so as to continue to address the objectives identified above.

Pension Plan

The Company does not have a pension plan for any of its Directors or NEOs.

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

No directors, proposed nominees for election as directors, executive officers or their respective associates or affiliates, or other management of the Company were indebted to the Company as of the date of completion of the two most recent fiscal years or as at the date thereof.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

To the knowledge of management of the Company, no informed person (a director, officer or holder of 10% or more of the Common Shares) or nominee for election as a director of the Company or any associate or affiliate of any informed person or proposed director had any interest in any transaction which has materially affected or could have materially affected the Company during the financial year ended December 31, 2024, or has any interest in any material transaction in the current year other than as set out under "Employment, Consulting and Management Agreements" above and herein below.

a) As at December 31, 2024, the Company owed $8,943 (2023: $1,491) for unpaid salaries and expenses to directors, officers and companies owned by directors and officers as set out in the following table:

Name	December 31, 2024 ($)
Wendell Zerb	1,447
Alistair Waddell / Waddell Consulting Inc.	Nil
Caleb Stroup	Nil
Cecil R. Bond	Nil
Lauren Roberts	Nil
Sandra Wong	Nil
NewQuest Capital Inc.	7,496
Total	8,943

b) On June 4, 2024, Wendell Zerb participated in a private placement to acquire 150,000 units priced at $0.22 for a total investment of $33,000. Each unit consists of one common share and one half of a share purchase warrant, with each whole warrant exercisable at $0.30 per share until June 4, 2026.

c) On June 4, 2024, Caleb Stroup participated in a private placement to acquire 25,000 units priced at $0.22 for a total investment of $5,500. Each unit consists of one common share and one half of a share purchase warrant, with each whole warrant exercisable at $0.30 per share until June 4, 2026.

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d) On June 4, 2024, NewQuest Capital Inc. participated in a private placement to acquire 100,000 units priced at $0.22 for a total investment of $22,000. Each unit consists of one common share and one half of a share purchase warrant, with each whole warrant exercisable at $0.30 per share until June 4, 2026.

MANAGEMENT CONTRACTS

There are no management functions of the Company which are to any substantial degree performed by a person or company other than the directors or senior officers of the Company.

ADDITIONAL INFORMATION

Additional information relating to the Company is available on www.sedarplus.ca. Financial information is provided in the Company's comparative financial statements and management discussion and analysis for its most recently completed financial year ended December 31, 2024. The Company will provide to any person or company, upon request to the Corporate Secretary of the Company at 1210 – 1130 West Pender Street, Vancouver, British Columbia, V6E 4A4, Telephone: (604) 681-9100, Fax: (604) 681-9101, one copy of the comparative financial statements of the Company filed with the applicable securities regulatory authorities for the Company the most recently completed financial year in respect for which such financial statements have been issued, together with the report of the auditor, related management’s discussion and analysis and any interim financial statements of the Company filed with the applicable securities regulatory authorities subsequent to the filing of the annual financial statements.

Copies of the above documents will be provided free of charge to security holders of the Company. The Company may require payment of a reasonable charge from any person or company who is not a security holder of the Company, who requests a copy of any such document. These documents are also available under the Company’s SEDAR+ profile at www.sedarplus.ca.

OTHER MATTERS

The Board is not aware of any other matters which it anticipates will come before the Meeting as of the date of mailing of this Information Circular.

The contents of this Information Circular and its distribution to shareholders have been approved by the Board.

DATED at Vancouver, British Columbia this 23rd day of June, 2025.

BY ORDER OF THE BOARD

“Wendell Zerb”

Wendell Zerb
Chairman, President and Chief Executive Officer

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SCHEDULE “A”

Audit Committee Charter
RED CANYON RESOURCES LTD.
(the “Corporation”)
AUDIT COMMITTEE CHARTER

1. Mandate

The audit committee will assist the board of directors of the Corporation (the “Board”) in fulfilling its financial oversight responsibilities. The audit committee will review and consider in consultation with the auditors the financial reporting process, the system of internal control and the audit process. In performing its duties, the audit committee will maintain effective working relationships with the Board, management, and the external auditors. To effectively perform his or her role, each audit committee member must obtain an understanding of the principal responsibilities of audit committee membership as well as the Corporation’s business, operations and risks.

1. Composition

The Board will appoint from among their membership an audit committee after each annual general meeting of the shareholders of the Corporation. The audit committee will consist of a minimum of three directors.

2.1 Independence

A majority of the members of the audit committee must not be officers, employees or control persons of the Corporation or of an affiliate of the Corporation.

2.2 Expertise of Committee Members

Each member of the audit committee must be financially literate or must become financially literate within a reasonable period of time after his or her appointment to the committee. At least one member of the audit committee must have accounting or related financial management expertise. The Board shall interpret the qualifications of financial literacy and financial management expertise in its business judgment and shall conclude whether a director meets these qualifications.

1. Meetings

The audit committee shall meet to review the Company’s annual financial statements, and with the Corporation’s Chief Financial Officer and external auditors in separate executive sessions, where considered necessary. The audit committee shall meet at other times that the committee may determine.

1. Roles and Responsibilities

The audit committee shall fulfill the following roles and discharge the following responsibilities:

4.1 External Audit

The audit committee shall be directly responsible for overseeing the work of the external auditors in preparing or issuing the auditor’s report, including the resolution of disagreements between management and the external auditors regarding financial reporting and audit scope or procedures. In carrying out this duty, the audit committee shall:

(a) recommend to the Board the external auditor to be nominated by the shareholders for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Corporation;

(b) review (by discussion and enquiry) the external auditors’ proposed audit scope and approach;

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(c) review the performance of the external auditors and recommend to the Board the appointment or discharge of the external auditors;
(d) review and recommend to the Board the compensation to be paid to the external auditors; and
(e) review and confirm the independence of the external auditors by reviewing the non-audit services provided and the external auditors’ assertion of their independence in accordance with professional standards.

4.2 Internal Control

The audit committee shall consider whether adequate controls are in place over annual and interim financial reporting as well as controls over assets, transactions and the creation of obligations, commitments and liabilities of the Corporation. In carrying out this duty, the audit committee shall:

(a) evaluate the adequacy and effectiveness of management’s system of internal controls over the accounting and financial reporting system within the Corporation; and
(b) ensure that the external auditors discuss with the audit committee any event or matter which suggests the possibility of fraud, illegal acts or deficiencies in internal controls.

4.3 Financial Reporting

The audit committee shall review the financial statements and financial information prior to its release to the public. In carrying out this duty, the audit committee shall:

General

(a) review significant accounting and financial reporting issues, especially complex, unusual and related party transactions; and
(b) review and ensure that the accounting principles selected by management in preparing financial statements are appropriate.

Annual Financial Statements

(a) review the draft annual financial statements and provide a recommendation to the Board with respect to the approval of the financial statements;
(b) meet with management and the external auditors to review the financial statements and the results of the audit, including any difficulties encountered; and
(c) review management’s discussion & analysis respecting the annual reporting period prior to its release to the public.

Interim Financial Statements

(a) review and approve the interim financial statements prior to their release to the public; and
(b) review management’s discussion & analysis respecting the interim reporting period prior to its release to the public.

Release of Financial Information

(a) where reasonably possible, review and approve all public disclosure, including news releases, containing financial information, prior to its release to the public.

4.4 Non-Audit Services

All non-audit services (being services other than services rendered for the audit and review of the financial statements or services that are normally provided by the external auditor in connection with statutory and

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regulatory filings or engagements) which are proposed to be provided by the external auditors to the Corporation or any subsidiary of the Corporation shall be subject to the prior approval of the audit committee.

Delegation of Authority

(a) The audit committee may delegate to one or more independent members of the audit committee the authority to approve non-audit services, provided any non-audit services (excluding tax compliance services) approved in this manner must be presented to the audit committee at its next scheduled meeting.

De-Minimis Non-Audit Services

The audit committee may satisfy the requirement for the pre-approval of non-audit services if:

(i) the aggregate amount of all non-audit services that were not pre-approved is reasonably expected to constitute no more than five per cent of the total amount of fees paid by the Corporation and its subsidiaries to the external auditor during the fiscal year in which the services are provided;

(ii) the Corporation and its subsidiaries did not recognize the services as non-audit services at the time of the engagement; and

(iii) the services are brought to the attention of the audit committee and approved, prior to the completion of the audit, by the audit committee or by one or more of its members to whom authority to grant such approvals has been delegated.

Pre-Approval Policies and Procedures

The audit committee may also satisfy the requirement for the pre-approval of non-audit services by adopting specific policies and procedures for the engagement of non-audit services, if:

(i) the pre-approval policies and procedures are detailed as to the particular service;

(ii) the audit committee is informed of each non-audit service; and

(iii) the procedures do not include delegation of the audit committee's responsibilities to management.

4.5 Other Responsibilities

The audit committee shall:

(a) establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, or auditing matters;

(b) establish procedures for the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters;

(c) ensure that significant findings and recommendations made by management and external auditor are received and discussed on a timely basis;

(d) review the policies and procedures in effect for considering officers' expenses and perquisites;

(e) perform other oversight functions as requested by the Board; and

(f) review and update this Charter and receive approval of changes to this Charter from the Board; and

(g) review and approve the Corporation's hiring policies regarding partners, employees and former partners and employees of the present and formal external auditor of the Corporation.

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4.6 Reporting Responsibilities

The audit committee shall regularly update the Board about audit committee activities and make appropriate recommendations.

5. Resources and Authority of the Audit Committee

The audit committee shall have the resources and the authority appropriate to discharge its responsibilities, including the authority to

• (a) engage independent counsel and other advisors as it determines necessary to carry out its duties;
• (b) set and pay the compensation for any advisors employed by the audit committee; and
• (c) communicate directly with the internal and external auditors.

6. Guidance – Roles & Responsibilities

The following guidance is intended to provide the audit committee members with additional guidance on fulfilment of their roles and responsibilities on the committee:

6.1 Internal Control

(a) evaluate whether management is setting the goal of high standards by communicating the importance of internal control and ensuring that all individuals possess an understanding of their roles and responsibilities;

(b) focus on the extent to which external auditors review computer systems and applications, the security of such systems and applications, and the contingency plan for processing financial information in the event of an IT systems breakdown; and

(c) gain an understanding of whether internal control recommendations made by external auditors have been implemented by management.

6.2 Financial Reporting

General

(a) review significant accounting and reporting issues, including recent professional and regulatory pronouncements, and understand their impact on the financial statements; and

(b) ask management and the external auditors about significant risks and exposures and the plans to minimize such risks; and

(c) understand industry best practices and the Corporation’s adoption of them.

Annual Financial Statements

(a) review the annual financial statements and determine whether they are complete and consistent with the information known to committee members, and assess whether the financial statements reflect appropriate accounting principles in light of the jurisdictions in which the Corporation reports or trades its shares;

(b) pay attention to complex and/or unusual transactions such as restructuring charges and derivative disclosures;

(c) focus on judgmental areas such as those involving valuation of assets and liabilities, including, for example, the accounting for and disclosure of loan losses; warranty, professional liability; litigation reserves; and other commitments and contingencies;

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(d) consider management’s handling of proposed audit adjustments identified by the external auditors; and

(e) ensure that the external auditors communicate all required matters to the committee.

Interim Financial Statements

(a) be briefed on how management develops and summarizes interim financial information, and the extent to which the external auditors review interim financial information where engaged to do so;

(b) meet with management and the auditors (where considered necessary), either telephonically or in person, to review the interim financial statements; and

(c) to gain insight into the fairness of the interim statements and disclosures, obtain explanations from management on whether:

(i) actual financial results for the quarter or interim period varied significantly from budgeted or projected results;

(ii) generally accepted accounting principles have been consistently applied;

(iii) there are any actual or proposed changes in accounting or financial reporting practices;

(iv) there are any significant or unusual events or transactions;

(v) the Corporation’s financial and operating controls are functioning effectively;

(vi) the Corporation has complied with the terms of loan agreements, security indentures or other financial position or results dependent agreement; and

(vii) the interim financial statements contain adequate and appropriate disclosures.

6.3 Compliance with Laws and Regulations

(a) periodically obtain updates from management regarding compliance with this policy and industry “best practices”;

(b) be satisfied that all regulatory compliance matters have been considered in the preparation of the financial statements; and

(c) review the findings of any examinations by securities regulatory authorities and stock exchanges.

6.4 Other Responsibilities

(a) review, with the Corporation’s counsel, any legal matters that could have a significant impact on the Corporation’s financial statements.