SHARE CAPITAL

Authorized

Unlimited common shares without par value.

Share issuances

During the period ended

February 28, 2019:

June 7, 2018,

the Company closed a private placement equity financing and issued

1,730,770

common shares at a price of

$2.60

per common share for gross proceeds of

$4,500,002.

The Company paid an additional

$14,605

in share issuance costs.

November 26, 2018,

the Company issued

25,000

common shares in connection with the lease on the Mayflower property (note

)(ii)(

)), with a fair value of

$59,500.

The Company paid

$6,212

in share issuance costs.

November 2018,

the Company issued

4,036,900

common shares on the exercise of

4,036,900

stock options at an exercise price of

$0.86

per stock option for net proceeds of

$3,453,924.

December 20, 2018,

the Company closed a private placement equity financing and issued

800,000

common shares at a price of

$2.60

per common share for gross proceeds of

$2,080,000.

The Company paid an additional

$10,242

in share issuance costs.

Stock options

Stock options awarded to employees and non-employees by the Company are measured and recognized in the Condensed Interim Consolidated Statement of Operations and Comprehensive Loss over the vesting period.

The Company has adopted an incentive stock option plan,

first

adopted in

2010

and then amended in

2013

(the “Amended

2010

Plan”). The essential elements of the Amended

2010

Plan provide that the aggregate number of common shares of the Company’s share capital that

may

be made issuable pursuant to options granted under the Amended

2010

Plan (together with any other shares which

may

be issued under other share compensation plans of the Company)

may

not

exceed

10%

of the number of issued common shares of the Company at the time of the granting of the options. Options granted under the Amended

2010

Plan will have a maximum term of

ten

years. The exercise price of options granted under the Amended

2010

Plan will

not

be less than the greater of the market price of the common shares (as defined by TSX, currently defined as the

five

day volume weighted average price for the

trading days immediately preceding the date of grant) or the closing market price of the Company’s common shares for the trading day immediately preceding the date of grant, or such other price as

may

be agreed to by the Company and accepted by the TSX. Options granted under the Amended

2010

Plan vest immediately, unless otherwise determined by the directors at the date of grant.

A summary of the status of the stock option plan as of

February 28, 2019,

and

May 31, 2018,

and changes during the periods are presented below:

	Nine months ended February 28, 2019						Year ended May 31, 2018
	Number of Options			Weighted Average Exercise Price			Number of Options			Weighted Average Exercise Price

Balance, beginning of the period		9,861,900		$	0.85			8,846,900		$	0.87
Granted		4,520,000			2.06			1,840,000			0.77
Exercised		(4,036,900	)		(0.86	)		(256,660	)		(0.66	)
Forfeited		(30,000	)		(0.96	)		(568,340	)		(0.93	)

Balance, end of the period		10,315,000		$	1.38			9,861,900		$	0.85

The weighted average remaining contractual life of options outstanding at

February 28, 2019

was

3.27

years (

May 31, 2018 -

1.74

years).

Stock options outstanding are as follows:

	February 28, 2019						May 31, 2018
Expiry Date	Exercise Price		Number of Options		Exercisable at Period- End		Exercise Price		Number of Options		Exercisable at Year- End

September 19, 2017*	$	0.96		—		—	$	0.96		1,966,900		1,966,900
August 16, 2018*	$	0.76		—		—	$	0.76		2,095,000		2,095,000
September 8, 2019	$	1.40		1,250,000		1,250,000	$	1.40		1,250,000		1,250,000
September 9, 2020	$	0.46		620,000		620,000	$	0.46		625,000		625,000
November 13, 2020	$	0.49		1,000,000		1,000,000	$	0.49		1,000,000		1,000,000
September 15, 2021	$	0.91		1,085,000		1,085,000	$	0.91		1,085,000		722,610
July 31, 2022	$	0.77		1,840,000		612,720	$	0.77		1,840,000		—
November 19, 2023	$	2.06		4,520,000		—	$	—		—		—

				10,315,000		4,567,720				9,861,900		7,659,510

*The Company’s share trading policy (the “Policy”) requires that all restricted persons and others who are subject to the Policy refrain from conducting any transactions involving the purchase or sale of the Company’s securities, during the period in any quarter commencing

days prior to the scheduled issuance of the next quarter or year-end public disclosure of the financial results as well as when there is material data on hand. In accordance with the terms of the Amended

2010

Plan, if stock options are set to expire during a restricted period and are

not

exercised prior to any such restriction, they will

not

expire but instead will be available for exercise for

ten

days after such restrictions are lifted.

The Company uses the fair value method for determining stock-based compensation for all options granted during the periods. The fair value of options granted was

$6,939,946

(

2018

$951,067

), determined using the Black-Scholes option pricing model based on the following weighted average assumptions:

For the nine months ended Feburary 28,	2019			2018

Risk-free interest rate		2.28	%		1.65	%
Expected life of options (in years)		5			5
Annualized volatility		73.69	%		79.14	%
Dividend yield		0	%		0	%
Exercise price	$	2.06		$	0.77

Fair value per share	$	1.54		$	0.52

Annualized volatility was determined by reference to historic volatility of the Company.

Stock-based compensation has been allocated to the same expenses as cash compensation paid to the same employees or consultants, as follows:

For the nine months ended Feburary 28,	2019		2018

Consulting fees	$	423,134	$	231,065
Exploration expenditures - Geological/geophysical		85,090		41,166
Investor relations		130,676		69,817
Professional fees		7,533		5,511
Wages and benefits		315,715		161,306

	$	962,148	$	508,865