9.	*Derivative Liability*

On July 25, 2016, the Company issued a total of 6,317,700 share purchase warrants with an exercise price of C$2.00. In accordance with the guidance in ASC 815-40-15, the share purchase warrants met the criteria of a derivative instrument liability because they were exercisable in a currency other than the functional currency of the Company and thus did not meet the “fixed-for-fixed” criteria of that guidance. As a result, the Company was required to separately account for the share purchase warrants as derivative instrument liabilities recorded at fair value and marked-to-market each period with the changes in the fair value each period charged or credited to income.

As at September 30, 2016, the Company had re-measured the share purchase warrants and determined the fair value of the derivative liability to be $2,165,550 using the Black-Scholes option pricing model with the following assumptions:

	September 30, 2016
Risk-free interest rate		0.51	%
Expected life of derivative liability in years		2.82
Expected volatility		84.29	%
Dividend rate		0.00	%

As of September 30, 2016, the changes of derivative liability for share purchase warrants are as follows:

	September 30, 2016
Fair value at inception	$	-
Fair value of warrants granted		2,701,288
Change in fair value of warrants		(535,738)
Balance, end of the period	$	2,165,550