SHARE CAPITAL

Authorized

Unlimited common shares without par value.

Share issuances

During the year ended May 31, 2016:

a)	On September 1, 2015, the Company closed a non-brokered private placement equity financing and issued 4,255,320 common shares at a price of $0.47 per share for gross proceeds of $2,000,000. In connection with the financing, the Company paid an additional $8,380 in share issuance costs.

b)	On November 18, 2015, the Company issued 25,000 common shares in connection with the lease on the Mayflower property (note 6d)(ii)(1), with a fair value of $11,250. In connection with the issuance, the Company paid an additional $5,021 in share issuance costs.

On March 11, 2016, the Company closed a non-brokered private placement equity financing and issued 4,900,000 common shares at a price of $0.70 per share for gross proceeds of $3,430,000. In connection with the financing, the Company paid an additional $12,483 in share issuance costs.

An aggregate of 245,334 shares were issued on exercise of 245,334 stock options for gross proceeds of $122,667.

During the year ended May 31, 2015:

On August 27, 2014, the Company closed a non-brokered public equity financing and issued 5,150,000 common shares at a price of $1.20 per share for gross proceeds of $6,180,000. In connection with the financing, the Company paid $190,167 in share issuance costs. The offering was registered under the United States Securities Act of 1933, as amended, pursuant to a Form S-1 registration statement filed with the United States Securities and Exchange Commission and qualified in certain Canadian provinces pursuant to a prospectus filed with the relevant Canadian regulatory authorities.

On February 27, 2015, the Company closed a non-brokered private placement equity financing and issued 4,500,000 common shares at a price of $1.00 per share for gross proceeds of $4,500,000. In connection with the financing, the Company paid an additional $17,810 in share issuance costs.

An aggregate of 18,900 shares were issued on exercise of 18,900 stock options for gross proceeds of $9,450.

On April 8, 2015, the Company issued 85,000 common shares in connection with the lease on the Mayflower property (note 6d)(ii)(1), with a fair value of $64,600.

Stock options

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

The Company has adopted an incentive stock option plan (the “2010 Plan”). The essential elements of the 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 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 shares of the Company at the time of the granting of the options. Options granted under the 2010 Plan will have a maximum term of ten years. The exercise price of options granted under the 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 5 day volume weighted average price for the 5 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 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 May 31, 2016, and 2015, and changes during the years are presented below:

	2016				2015
	Number of Options		Weighted Average Exercise Price		Number of Options		Weighted Average Exercise Price

Balance, beginning of the year		7,396,334	$	0.94		6,175,234	$	0.84
Granted		1,650,000		0.48		1,575,000		1.34
Exercised		(245,334)		(0.50)		(18,900)		(0.50)
Forfeited		(820,000)		(0.94)		-		-
Expired		-		-		(335,000)		(1.00)

Balance, end of the year		7,981,000	$	0.85		7,396,334	$	0.94

The weighted average remaining contractual life of options outstanding at May 31, 2016 was 2.42 years (2015 – 2.85 years).

Stock options outstanding are as follows:

	2016						2015
Expiry Date	Exercise Price		Number of Options		Exercisable at Year- End		Exercise Price		Number of Options		Exercisable at Year- End

July 29, 2016 (Note 14a))	$	0.50		219,100		219,100	$	0.50		464,434		464,434
November 17, 2016	$	0.67		210,000		210,000	$	0.67		210,000		210,000
January 23, 2017	$	1.10		50,000		50,000	$	1.10		50,000		25,000
May 1, 2017	$	0.73		50,000		50,000	$	0.73		50,000		25,000
May 29, 2017	$	0.92		300,000		300,000	$	0.92		300,000		300,000
September 19, 2017	$	0.96		2,016,900		2,016,900	$	0.96		2,436,900		2,436,900
October 29, 2017	$	0.96		100,000		100,000	$	0.96		100,000		100,000
August 16, 2018	$	0.76		2,120,000		2,120,000	$	0.76		2,420,000		1,611,720
September 8, 2019	$	1.40		1,265,000		842,490	$	1.40		1,365,000		454,545
September 9, 2020	$	0.46		640,000		213,120	$	-		-		-
November 13, 2020	$	0.49		1,010,000		336,330	$	-		-		-

				7,981,000		6,457,940				7,396,334		5,627,599

The Company uses the fair value method for determining stock-based compensation for all options granted during the years. The fair value of options granted was $420,866 (2015 - $1,109,011), determined using the Black-Scholes option pricing model based on the following weighted average assumptions:

For the year ended May 31,	2016			2015

Risk-free interest rate		0.88	%		1.50	%
Expected life of options		5 years			4.62 years
Annualized volatility		72.33	%		69.21	%
Dividend yield		0	%		0.0	%
Exercise price	$	0.48		$	1.34

Fair value per share	$	0.26		$	0.70

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 year ended May 31,	2016		2015

Consulting fees	$	415,360	$	570,913
Exploration expenditures – Geological/geophysical		18,468		36,820
Investor relations		96,309		208,336
Professional fees		16,678		48,841
Wages and benefits		279,106		620,785

	$	825,921	$	1,485,695