CONSOLIDATED FINANCIAL STATEMENTS OF … · Proceeds on sale and redemption of marketable...

CONSOLIDATED FINANCIAL STATEMENTS OF

EASTMAIN RESOURCES INC.

FOR THE YEARS ENDED OCTOBER 31, 2017 AND 2016

(EXPRESSED IN CANADIAN DOLLARS)

Eastmain Resources Inc.Consolidated Statements of Financial Position(Expressed in Canadian Dollars)

As at October 31, 2017 2016

ASSETS

Current assetsCash and cash equivalents (note 5) $ 7,005,320 $ 16,442,540Prepaid and sundry receivables (note 7) 901,912 563,583

Total current assets 7,907,232 17,006,123

Non-current assetsMarketable securities (note 6) 378,788 421,817Property and equipment (note 8) 40,000 56,801Exploration and evaluation (note 9) 76,062,242 60,709,890

Total non-current assets 76,481,030 61,188,508

Total assets $ 84,388,262 $ 78,194,631

LIABILITIES AND EQUITY

Current liabilitiesAmounts payable and accrued liabilities (notes 10 and 18) $ 1,993,834 $ 1,847,089Flow-through share premium liability (note 11) 914,377 3,215,384

Total current liabilities 2,908,211 5,062,473

Non-current liabilitiesDeferred income taxes (note 19) 6,735,115 3,814,739

Total liabilities 9,643,326 8,877,212

EquityShare capital (note 12(a)) 95,009,260 88,556,715Warrants (note 13) 1,495,300 1,495,300Contributed surplus 12,966,895 12,386,746Deficit (34,726,519) (33,121,342)

Total equity 74,744,936 69,317,419

Total liabilities and equity $ 84,388,262 $ 78,194,631

The accompanying notes are an integral part of these consolidated financial statements.

Nature of operations and going concern (note 1)Contingencies (note 20)Subsequent events (note 21)

Approved on behalf of the Board"Laurence Curtis" , Director"Blair Schultz" , Director

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Eastmain Resources Inc.Consolidated Statements of Loss and Comprehensive Loss(Expressed in Canadian Dollars)

Year endedOctober 31,

2017 2016

Operating expensesGeneral and administrative expenses (note 17) $ 3,322,666 $ 5,428,403Impairment of exploration and evaluation assets (notes 4 and 9) 132,482 2,476,563

Operating loss before the following (3,455,148) (7,904,966)Interest and other income 275,679 68,070Realized loss on marketable securities - (82,570)Unrealized (loss) gain on marketable securities (43,029) 481,866Premium on flow-through shares (note 11) 4,537,697 149,600

Income (loss) before income taxes 1,315,199 (7,288,000)Deferred income tax (expense) recovery (note 19) (2,920,376) 946,387

Loss and comprehensive loss for the year $ (1,605,177) $ (6,341,613)

Basic and diluted loss per share (note 14) $ (0.01) $ (0.04)

Weighted average number of common shares outstanding - basic and diluted 182,428,010 151,601,431


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Eastmain Resources Inc.Consolidated Statements of Cash Flows(Expressed in Canadian Dollars)

Year ended October 31, 2017 2016

Operating activities:Comprehensive net loss for the year $ (1,605,177) $ (6,341,613)Adjustments for:

Depreciation 17,110 17,874Impairment of exploration and evaluation assets 132,482 2,476,563Loss (gain) on marketable securities 43,029 (399,296)Premium on flow-through shares (4,537,697) (149,600)Deferred income taxes expense (recovery) 2,920,376 (946,387)Share-based compensation 625,541 585,836Prepaid and sundry receivables (316,414) 835,745Amounts payable and accrued liabilities 146,745 772,480

Net cash used in operating activities (2,574,005) (3,148,398)

Financing activities:Proceeds on issue of common shares 9,155,760 22,709,624Exercise of options 9,500 334,500Share issue expenses (521,417) (1,206,172)

Net cash provided by financing activities 8,643,843 21,837,952

Investing activities:Exploration and evaluation expenditures (15,506,749) (6,916,572)Government exploration tax credits - 1,020,600Purchase of property and equipment (309) (20,549)Proceeds on sale and redemption of marketable securities - 2,078,718

Net cash used in financing activities (15,507,058) (3,837,803)

Net change in cash and cash equivalents (9,437,220) 14,851,751Cash and cash equivalents, beginning of year 16,442,540 1,590,789

Cash and cash equivalents, end of year (note 5) $ 7,005,320 $ 16,442,540


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Eastmain Resources Inc.Consolidated Statements of Changes in Shareholders' Equity(Expressed in Canadian Dollars)

Equity attributable to shareholders

Share Capital Warrants Contributed# # Surplus Deficit Total

Balance at October 31, 2015 133,039,815 $ 71,364,347 - $ - $ 11,986,810 $(26,779,729) $ 56,571,428Private placements 41,279,999 22,709,624 - - - - 22,709,624Share issue expenses - (1,206,172) - - - - (1,206,172)Premium on issue of flow-though shares - (3,364,984) - - - - (3,364,984)Shares issued for acquisition of claims 60,000 28,800 - - - - 28,800Share-based compensation issued - - - - 585,836 - 585,836Share-based compensation exercised 1,025,000 520,400 - - (185,900) - 334,500Warrants issued - (1,495,300) 6,899,999 1,495,300 - - -Comprehensive loss for the year - - - - - (6,341,613) (6,341,613)

Balance, October 31, 2016 175,404,814 88,556,715 6,899,999 1,495,300 12,386,746 (33,121,342) 69,317,419Private placement 17,582,000 9,155,760 - - - - 9,155,760Share issue expenses - (521,417) - - - - (521,417)Premium on issue of flow-through shares - (2,236,690) - - - - (2,236,690)Restricted shares vested and converted

to common shares 113,332 39,667 - - (39,667) - -Share-based compensation issued - - - - 625,541 - 625,541Share-based compensation exercised 25,000 15,225 - - (5,725) - 9,500Comprehensive loss for the year - - - - - (1,605,177) (1,605,177)

Balance, October 31, 2017 193,125,146 $ 95,009,260 6,899,999 $ 1,495,300 $ 12,966,895 $(34,726,519) $ 74,744,936


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Eastmain Resources Inc.Notes to Consolidated Financial StatementsOctober 31, 2017 and 2016(Expressed in Canadian Dollars)

1. Nature of operations and going concern

Eastmain Resources Inc. (the "Company" or “Eastmain”) and its wholly-owned subsidiary, Eastmain Mines Inc., areengaged in the acquisition and exploration of resource properties within Canada. The Company is a publicly-heldcompany incorporated under the Business Corporations Act (Ontario) and its common shares are listed on the TorontoStock Exchange under the symbol “ER”. The Company’s registered office address is The Canadian Venture Building,82 Richmond Street East, Suite 201, Toronto, Ontario, Canada, M5C 1P1.

The Company is in the exploration stage and has not yet determined whether its exploration and evaluation assetscontain resources that are economically recoverable. The continued operations of the Company and the recoverabilityof amounts shown for its exploration and evaluation assets are dependent upon the ability of the Company to obtainfinancing to complete the exploration and development of its exploration and evaluation assets, the existence ofeconomically recoverable reserves and future profitable production, or alternatively, upon the Company’s ability torecover its costs through a disposition of its exploration and evaluation assets. The carrying cost for exploration andevaluation assets does not necessarily represent the present or future value of the projects. Changes in futureconditions could require a material change in the amount recorded for the exploration and evaluation assets.

These consolidated financial statements are prepared on the basis that the Company will continue as a going concern,which assumes that the Company will be able to continue operating for the foreseeable future and will be able torealize its assets and discharge its liabilities and commitments in the normal course of operations. As an exploration-stage company, Eastmain does not have any sources of revenue and historically has incurred recurring operatinglosses. As at October 31, 2017, the Company had working capital of $4,999,021 (October 31, 2016 - $11,943,650) andshareholders’ equity of $74,744,936 (October 31, 2016 - $69,317,419). Management has assessed that this workingcapital is sufficient for the Company to continue as a going concern beyond one year. If the going concern assumptionwas not appropriate for these consolidated financial statements it would be necessary to restate the Company’s assetsand liabilities on a liquidation basis.

2. Basis of presentation

Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial ReportingStandards ("IFRS") as issued by the International Accounting Standards Board (“IASB”) and interpretations of theInternational Financial Reporting Interpretations Committee (“IFRIC”).

The consolidated financial statements for the years ended October 31, 2017 and 2016 were reviewed and authorizedfor issue by the Board of Directors on January 18, 2018.

Basis of measurement

These consolidated financial statements have been prepared on the historical-cost basis except for financialinstruments classified as fair value through profit or loss ("FVTPL"), which are stated at their fair value.

The consolidated financial statements are presented in Canadian dollars, which is also the Company’s functionalcurrency.

The preparation of consolidated financial statements in compliance with IFRS requires management to make certaincritical accounting estimates. It also requires management to exercise judgement in applying the Company’saccounting policies. The areas involving a higher degree of judgement or complexity, or areas where estimates andassumptions are significant to the consolidated financial statements, are disclosed in Note 4.

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3. Significant accounting policies and future accounting changes

Principles of consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaryEastmain Mines Inc. All significant inter-company transactions and balances have been eliminated.

Financial instruments

Financial assetsAll financial assets are recognized and derecognized on the trade date, whereby the purchase or sale of a financialasset is under a contract, for which terms require delivery of the financial asset within a time frame established by themarket concerned. Financial assets are initially measured at fair value plus transaction costs, except for those financialassets classified as FVTPL, in which case, the directly attributable transaction costs are expensed in the period inwhich they are incurred.

Financial assets are classified into the following categories: financial assets at FVTPL; held-to-maturity investments;available-for-sale financial assets; and loans and receivables. Classification depends on the nature and the purpose ofthe financial assets and is determined at the time of initial recognition.

Financial liabilities Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.

Other financial liabilitiesOther financial liabilities, including borrowings, are measured at fair value net of transaction costs and subsequently atamortized cost using the effective-interest method, with the interest being recognized on the effective-yield basis. Theeffective-interest method is a method of calculating the amortized cost of a financial liability and allocating interestcosts over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cashpayments over the expected life of the financial liability or, where appropriate, to the net carrying amount on initialrecognition.

Derecognition of financial liabilitiesThe Company derecognizes financial liabilities when the obligations are discharged, cancelled or expired.

The Company has designated each of its significant categories of financial instruments as follows:Cash and cash equivalents FVTPLMarketable securities FVTPLOther receivables Loans and receivablesAccounts payable and accrued liabilities Other financial liabilitiesFlow-through share premium liability Other financial liabilities

Impairment of financial assetsFinancial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets areconsidered to be impaired when there is objective evidence that, as a result of one or more events that occurred afterthe initial recognition of the financial asset, the estimated future cash flows of the investment has been negativelyimpacted. Evidence of impairment could include: significant financial difficulty of the issuer or counterparty; default ordelinquency in interest or principal payments; or the likelihood that the borrower will enter bankruptcy or financialreorganization.

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3. Significant accounting policies and future accounting changes (continued)

Financial instruments (continued)

Impairment of financial assets (continued)The carrying amount of financial assets is reduced by any impairment loss directly for all financial assets, with theexception of accounts or loans receivable, where the carrying amount is reduced through the use of an allowanceaccount. When an account or loan receivable is considered uncollectible, it is written off against the allowance account.Subsequent recoveries of amounts previously written off are credited to the allowance account. Changes in thecarrying amount of the allowance account are recognized in profit or loss. If, in a subsequent period, the amount of theimpairment loss decreases and that decrease can be objectively related to an event occurring after the impairmentrecognition, the previously recognized impairment loss is reversed through profit and loss, to the extent that therestated carrying amount does not exceed the amortized cost that would have existed, had the impairment not beenrecognized.

Financial instruments recorded at fair valueFinancial instruments recorded at fair value on the consolidated statements of financial position are classified using afair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair-valuehierarchy has the following levels: Level 1 – valuation based on unadjusted quoted prices in active markets for identicalassets or liabilities; Level 2 – valuation techniques based on inputs, other than quoted prices included in Level 1, thatare either directly (i.e. as prices) or indirectly (i.e. derived from prices) observable for the asset or liability; and Level 3– valuation techniques using inputs for the asset or liability that are not based on observable market data(unobservable inputs). As at October 31, 2017 and October 31, 2016, cash and cash equivalents and marketablesecurities were classified as Level 1 on the consolidated financial statements.

Impairment of non-financial assetsAt the end of each reporting period, Management reviews the carrying amounts of its non-financial assets with finitelives to determine whether there is any indication that those assets have suffered an impairment loss. Where such anindication exists, the recoverable amount is adjusted to the higher of the asset’s fair value less cost to sell, or its valuein use. In addition, long-lived assets that are not amortized are subject to an annual impairment assessment.Management has assessed its non-financial assets and has determined that impairment existed on some of itsexploration and evaluation assets (Note 4(b)).

Exploration and evaluation

Recognition and measurementExploration and evaluation assets, including the costs of acquiring licenses and directly attributable general andadministrative costs, are initially capitalized as exploration and evaluation. These costs are accumulated by property,pending the determination of technical feasibility and commercial viability. Pre-license costs are expensed as incurred.Pre-exploration costs are expensed unless it is considered probable that they will generate future economic benefits.

The recoverability of amounts shown for exploration and evaluation is dependent upon the ability of the Company toobtain financing to complete the exploration and development of its mineral resource properties, the existence ofeconomically recoverable reserves and future profitable production, or alternatively, upon the Company’s ability torecover its costs through a disposition of its mineral resource properties. The amounts shown for exploration andevaluation do not necessarily represent present or future value. Changes in future conditions could require a materialchange in the amount recorded for exploration and evaluation.

The technical feasibility and commercial viability of extracting a mineral resource from a property is considered to bedeterminable when proven and/or probable reserves are concluded to exist and all necessary permits have beenreceived to commence production. A review of each property is carried out at least annually. Upon determination oftechnical feasibility and commercial viability, exploration and evaluation is first tested for impairment and thenreclassified to property and equipment or expensed to the consolidated statement of loss and comprehensive loss tothe extent of any impairment.

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Exploration and evaluation (continued)

TitleOwnership in a mineral property involves certain risk due to the difficulties in determining the validity of certain claimsas well as the potential for problems arising from the frequently ambiguous conveyance history, characteristic of manymineral interests. The Company has investigated the ownership of its mineral properties and, to the best of itsknowledge, ownership of its interests are in good standing.

ImpairmentExploration and evaluation assets are assessed for impairment if: (i) sufficient data exists to determine technicalfeasibility and commercial viability; and (ii) facts and circumstances suggest that the carrying amount exceeds therecoverable amount. An impairment loss is recognized in the consolidated statement of loss and comprehensive loss ifthe carrying amount of a property exceeds its estimated recoverable amount. The recoverable amount of propertyused in the assessment of impairment of exploration and evaluation assets is the greater of its value in use (“VIU”) andits fair value less costs to sell (“FVLCTS”). VIU is determined by estimating the present value of the future net cashflows at a pre-tax discount rate that reflects current market assessment of the time value of money and the risksspecific to the property. FVLCTS refers to the amount obtainable from the sale of a property in an arm’s-lengthtransaction between knowledgeable, willing parties, less costs of disposal. For a property that does not generatelargely independent cash flows, the recoverable amount is determined for the cash generating unit to which theproperty belongs. Impairment losses previously recognized are assessed at each reporting date for any indications thatthe loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimatesused to determine the recoverable amount, only to the extent that the property's carrying amount does not exceed thecarrying amount that would have been determined if no impairment loss had been recognized.

Impairment analyses are performed continually. Ongoing expenditures on impaired properties are written off asincurred, until such time as an estimated recovery in excess of the carrying value can be demonstrated.

Decommissioning liabilitiesThe Company’s activities give rise to dismantling, decommissioning and site disturbance remediation activities.Provision is made for the estimated cost of site restoration. Decommissioning obligations are measured at the presentvalue of management’s best estimate of expenditures required to settle the present obligation at the financial positiondate. The fair value of the estimated obligation is recorded as a liability with a corresponding increase in the carryingamount of the related asset. The obligation is subsequently adjusted at the end of each period to reflect the passage oftime and changes in the estimated future cash flows underlying the obligation. The increase in the provision due to thepassage of time is recognized as accretion costs, whereas increases or decreases due to changes in the estimatedfuture cash flows or changes in the discount rate are capitalized. Actual costs incurred upon settlement of thedecommissioning obligations are charged against the provision to the extent the provision was established. As atOctober 31, 2017 and October 31, 2016, the Company had no decommissioning liabilities.

Cash and cash equivalents

Cash equivalents consist of cash deposits in banks and include cash and short-term money-market instruments thatare readily convertible to cash with an original term of less than 90 days.

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Property and equipment

Upon initial acquisition, property and equipment are valued at cost, being the purchase price and the directlyattributable costs of acquisition or construction required to bring the assets to the location and in the conditionnecessary for these assets to be capable of operating in the manner intended by management.

In subsequent periods, property and equipment are stated at cost less accumulated depreciation and any impairmentin value, while land is stated at cost less any impairment in value and is not depreciated.

Each component or part of property and equipment with a cost that is significant in relation to the total cost of the itemwill be depreciated separately, unless there is no difference in depreciation on the respective components.

Depreciation is recorded on a declining-balance basis over the estimated useful life of the asset using the followingrates: Computer equipment – 30%; and Field equipment – 30%.

Proportionate cost-sharing ventures

Certain of the Company’s exploration and evaluation activities are conducted jointly with others. These consolidatedfinancial statements reflect only the Company’s interest in such activities. The Company holds certain interests inmineral properties through joint operating agreements.

Share-based payment transactions

The fair value of share options granted to employees and non-employees is recognized as an expense over thevesting period with a corresponding increase in equity. An individual is classified as a direct employee when theindividual is an employee for legal or tax purposes. Directors and officers are deemed to be employees for share-based compensation tax purposes.

The fair value of all stock options granted is measured at the grant date and recognized over the period during whichthe options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model,taking into consideration amounts believed to approximate the volatility of the trading price of the Company’s stock, theexpected life of the award of the share-based compensation, the share price at the close of trading on the dayimmediately preceding the grant, and the risk-free interest rate. The amount recognized as an expense is recognizedas either a charge to profit and loss or as an addition to mineral properties’ exploration and evaluation costs. Stockoption expense is added to the properties in a consistent manner in which exploration wages have been added to theproperties. Consideration received on the exercise of stock options is credited directly to share capital.

The fair value of share-based payment transactions to non-employees and other share-based payments, includingshares issued to acquire exploration and evaluation properties, are based on the fair value of the goods and servicesreceived. If the fair value cannot be estimated reliably, the share-based payment transaction is measured at the fairvalue of the equity instruments granted at the date the Company receives the goods or services. The fair value relatedto the issuance of broker warrants is also measured at the date that the Company receives the services.

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Flow-through share financing

Under Canadian tax legislation, a company is permitted to issue flow-through shares, whereby the Company agrees toincur qualifying exploration and evaluation expenditures and renounce the related income tax deductions to theinvestors. Proceeds from the issuance of these shares are allocated between share capital and the sale of the relatedtax benefit. The allocation is made based on the difference between the quoted price of the existing shares and theprice that the investor pays for the shares. A liability is recognized for the difference. The liability is reduced and thereduction of the premium liability is recorded as premium on flow-through shares on a pro-rata basis to thecorresponding eligible expenditures that have been incurred.

Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation thatcan be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle theobligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflectscurrent market assessments of the time value of money and the risks specific to the liability. The unwinding of thediscount is recognized as a finance cost. As at October 31, 2017 and October 31, 2016, the Company had no materialprovisions.

Credit on duties refundable for loss and refundable tax credits for resource investment

The Company is entitled to a refundable credit on duties of 16% for eligible losses under the Québec Mining Duties Actand a refundable resource investment tax credit of 31% under the Québec Income Tax Act. These credits areapplicable to qualified exploration expenditures on properties located within the Province of Québec. Such credits arerecognized using the cost reduction method. Accordingly, they are recorded as a reduction of the related explorationexpenses incurred. Application for these credits is subject to verification and as such, they are recognized only whenthey are actually received or when a notice of assessment confirming the amount to be paid is issued.

Common shares

Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares arerecognized as a deduction from equity, net of any tax effects.

Restricted Stock Unit ("RSU")

Under the RSU Plan, selected employees are granted RSU where each RSU has a value equal to one Eastmaincommon share. RSU are measured at fair value on the grant date. The fair value of RSU are recognized as a chargeto share-based compensation as a general and administrative expense over the vesting period with a correspondingincrease in equity. RSU expected to settle in cash are reclassified as a liability and valued at market.

Basic and diluted loss per share

The Company presents basic and diluted loss-per-share data for its common shares, calculated by dividing the lossattributable to common shareholders of the Company by the weighted average number of shares outstanding duringthe period. Diluted loss per share is determined by adjusting the loss attributable to shareholders and the weightedaverage number of common shares outstanding, during the period for the effect of warrants and options outstanding,that may add to the total number of common shares.

Diluted loss per share is calculated using the treasury stock method. Under the treasury stock method, the weightedaverage number of common shares outstanding, used for the calculation of diluted loss per share, assumes that theproceeds to be received on the exercise of dilutive stock options and warrants are used to repurchase common sharesat the average market price during the year.

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Restoration, rehabilitation and environmental obligations

A legal or constructive obligation to incur restoration, rehabilitation and environmental costs may arise whenenvironmental disturbance is caused by exploration, development or ongoing production activities on a mineralproperty.

The costs of complying with these requirements at the start of a project are capitalized as incurred. The carrying valueis amortized over the expected life of the related asset.

A provision for restoration, rehabilitation and environmental costs and legal claims, where applicable, is recognizedwhen: (i) the Company has a present legal or constructive obligation as a result of past events; (ii) it is likely that anoutflow of resources will be required to settle the obligation; and (iii) the amount can be reliably estimated.

Provisions are measured, at management’s best estimate of the expenditure to settle the obligation at the end of thereporting period, and discounted to present value where the effect is material. Increases to provisions which may benecessary from time-to-time are recognized as interest expense. The present value of the reclamation liabilities maybe subject to change, based on management’s re-evaluation of estimates, changes in remediation technology, orchanges to the applicable laws and regulations prescribed by regulatory authorities, which may affect the ultimate costof remediation and reclamation. Changes to the provisions are reflected in the period in which they occur.

Provision for environmental restoration represents the legal and constructive obligations associated with the eventualclosure of the Company’s property and equipment. These obligations consist of costs of removal of tangible assets andthe cost of reclamation and monitoring activities. The discount rate is based on pre-tax rates that reflect current marketconditions for the time value of money and the risks specific to the liability, excluding risks for which future cash-flowestimates have already been adjusted.

As at October 31, 2017 and October 31, 2016 the Company did not have any asset restoration, rehabilitation orenvironmental obligations.

Income taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred incometax assets and liabilities are recognized for the estimated deferred income tax consequences attributable to differencesbetween the financial statement carrying value of assets and liabilities, and their respective income tax bases.Deferred income tax assets and liabilities are measured using income tax rates in effect for the period in which thosetemporary differences are expected to be recovered or settled.

The effect on deferred income tax assets and liabilities due to a change in income tax rates or laws is recognized as apart of the provision for income taxes in the period in which the changes are substantially enacted. Deferred incometax benefits attributable to these differences, if any, are recognized to the extent that realization of the benefit is morelikely than not.

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Standard issued but not yet effective

IFRS 9 – Financial Instruments ("IFRS 9"), issued by the IASB in October 2010 is intended to entirely replace IAS 39 -Financial Instruments: Recognition and Measurement ("IAS 39"), using a single approach to determine whether afinancial asset is measured at amortized cost or fair value, thereby reducing the complexity of the multiple rules in IAS39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its businessmodel and the contractual cash-flow characteristics of financial assets. Most of the requirements in IAS 39 for theclassification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The new standardalso requires the use of a single method of impairment determination, which replaces the multiple methods availableunder IAS 39. The standard will be effective for annual periods beginning on or after January 1, 2018. The Company iscurrently evaluating the impact this final standard is expected to have on its consolidated financial statements.

4. Use of estimates and judgements

The preparation of these consolidated financial statements under IFRS requires management to make certainestimates, judgements and assumptions about future events that affect the amounts reported in the consolidatedfinancial statements and related notes to the consolidated financial statements. Although these estimates are based onmanagement’s best knowledge of the amounts, events or actions, actual results may differ from those estimates andthese differences could be material.

a) Significant judgements in applying accounting policies

The areas which require management to make significant judgements in determining carrying values include, but arenot limited to:

Exploration and evaluation assets; andIn estimating the recoverability of capitalized exploration and evaluation assets, management is required to applyjudgement in determining whether technical feasibility and commercial viability can be demonstrated for its mineralproperties. Once technical feasibility and commercial viability of a property can be demonstrated, it is reclassified fromexploration and evaluation assets to mineral properties, and subject to different accounting treatment. As at October31, 2017 and 2016 management deemed that no reclassification of exploration and evaluation assets was required.

Income taxes and recoverability of potential deferred tax assetsIn assessing the probability of realizing income tax assets recognized, management makes estimates related toexpectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existingtemporary differences, and the likelihood that tax positions taken will be sustained upon examination by applicable taxauthorities. In making its assessments, management gives additional weight to both positive and negative evidencethat can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operationsand the application of existing tax laws in each jurisdiction. The Company considers whether relevant tax planningopportunities are within the Company's control, are feasible, and are within management's ability to implement.

Examination by applicable tax authorities is based on individual facts and circumstances of the relevant tax positionexamined in light of all available evidence. Where applicable tax laws and regulations are either unclear or subject toongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materiallyaffect the amounts of income tax assets recognized. Also, future changes in tax laws could limit the Company fromrealizing the tax benefits from deferred tax assets. The Company reassesses unrecognized income tax assets at eachreporting period.

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4. Use of estimates and judgements (continued)

b) Significant accounting estimates and assumptions

The areas which require management to make significant estimates and assumptions in determining carrying valuesinclude, but are not limited to:

Impairment of exploration and evaluation assets;When there are indications that an asset may be impaired, the Company is required to estimate the asset’srecoverable amount. The recoverable amount is the greater of value-in-use and fair value less costs to sell.Determining the value requires the Company to estimate future cash flows associated with the assets and a suitablediscount rate in order to calculate the present value. During 2017 the Company’s exploration and evaluation assetswere written down by $132,482 (2016 – $2,476,563).

Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increasedto the revised estimate of its recoverable amount, unless that amount exceeds the carrying value recorded prior to therecognition of the impairment loss, in which case the carrying value would be re-instated to its pre-impairment-losscarrying value. A reversal of an impairment loss is recognized immediately in the consolidated statement of loss andcomprehensive loss.

Management estimates of mineral prices, recoverable reserves, operating capital and restoration costs are subject tocertain risks and uncertainties that may affect the recoverability of exploration and evaluation assets. Althoughmanagement has made its best estimate of these factors, it is possible that changes could occur in the near term thatcould adversely affect management’s estimate of net cash flow to be generated from its projects.

Share-based payments;The amount expensed for share-based payments is derived from the application of the Black-Scholes option pricingmodel, which is highly dependent on the expected volatility of the Company’s shares and the expected life of theoptions. The Company uses an historical volatility rate for its shares based on past trading data. Actual volatility maybe significantly different. While the estimate of share-based payments can have a material impact on the operatingresults reported by the Company, it is a non-cash charge and as such has no impact on the Company’s cash positionor future cash flows.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized in theperiod in which the estimates are revised and in any future periods affected.

Depreciation and impairment of property and equipment; andThe determination of the useful life of property and equipment is based on management estimates. Indicators ofimpairment are also subject to management’s estimates.

Estimation of restoration, rehabilitation and environmental obligations. Restoration, rehabilitation and environmental liabilities are estimated based on the Company’s interpretation of currentregulatory requirements and constructive obligations. These estimates are measured at fair value, which is determinedby the net present value of estimated future cash expenditures for the settlement of restoration, rehabilitation andenvironmental liabilities that may occur upon ceasing exploration and evaluation activities. Such estimates are subjectto change, based on changes in laws and regulations and negotiations with regulatory authorities. Management’sdetermination that there are currently no provisions required for site restoration is based on facts and circumstancesthat existed during the year.

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5. Cash and cash equivalentsAs at As at

October 31, October 31,2017 2016

Cash $ 1,006,243 $ 15,777,640Cash equivalents 5,999,077 664,900

$ 7,005,320 $ 16,442,540

6. Marketable securities

(a) Marketable securities held

Bonds and other securities are recorded at fair value. As at October 31, 2017, the Company did not hold any bonds.Investments in public companies consist of shares in Dianor Resources Inc., which were acquired in exchange forgeological data; shares of Threegold Resources Inc., received as a dividend from Dianor Resources Inc.; shares inKaizen Discovery Inc., Meryllion Resource Corp. and Lithium Americas Corp. (formerly Western Lithium Corp.) werereceived as a result of a sale of prospecting permits and mineral claims to Western Lithium Corp.; shares in HoneyBadger Exploration Inc., were received in conjunction with an option to acquire a 50% interest in the Radissonproperty; and shares of Pine Point Mining Ltd. (formerly Darnley Bay Resources Limited) ("DBL") were acquired inconjunction with an option enabling DBL to acquire a 50% interest in the Lac Lessard project.

As at As atNumber of October 31, Number of October 31,

shares 2017 shares 2016

Pine Point Mining Ltd. (formerly Darnley Bay Resources Limited) common shares 1,600,000 $ 320,000 1,600,000 $ 303,999

Dianor Resources Inc. common shares 500,000 - 500,000 -Honey Badger Exploration common

shares (1) 994,796 44,766 4,973,980 99,480Kaizen Discovery Inc. common shares 107,867 11,865 107,867 15,641Meryllion Resource Corp. common shares 107,867 2,157 107,867 2,697Threegold Resources Inc. common shares 12,380 - 12,380 -

Total investments $ 378,788 $ 421,817

(1) Share consolidation: 4,973,980 common shares were decreased to 994,796 common shares.

(b) Hedging activities

The Company does not engage in hedging activities nor does it hold or issue any derivative financial instruments.

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7. Prepaid and sundry receivablesAs at As at

October 31, October 31,2017 2016

Sales tax input credits recoverable $ 645,090 $ 442,614Sundry accounts receivable 28,366 75,000Government resource tax credits 21,915 -Advances and prepaid expenses (i) 206,541 45,969

$ 901,912 $ 563,583

(i) The significant increase in Advances and prepaid expenses pertains to an advance made to the Eleonore South JVin the amount of $150,000. These funds represent Eastmain’s contribution for the upcoming 2017/2018 explorationprogram at Eleonore South.

8. Property and equipment

The equipment is recorded at cost and is comprised as follows:

Computer FieldCost equipment equipment Total

Balance, October 31, 2015 $ 58,114 $ 398,536 $ 456,650Additions during the year 15,689 4,860 20,549

Balance, October 31, 2016 73,803 403,396 477,199Additions during the period 309 - 309

Balance, October 31, 2017 $ 74,112 $ 403,396 $ 477,508

Computer FieldAccumulated depreciation equipment equipment Total

Balance, October 31, 2015 $ 49,340 $ 353,184 $ 402,524Depreciation during the year 3,766 14,108 17,874

Balance, October 31, 2016 53,106 367,292 420,398Depreciation during the year 6,278 10,832 17,110

Balance, October 31, 2017 $ 59,384 $ 378,124 $ 437,508

Computer FieldNet book value equipment equipment Total

Balance, October 31, 2016 $ 20,697 $ 36,104 $ 56,801

Balance, October 31, 2017 $ 14,728 $ 25,272 $ 40,000

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9. Exploration and evaluation

Mineral property acquisition, exploration and evaluation expenditures are recorded at cost and are comprised asfollows:

Project expenditures for the year ended October 31, 2017

Project IncomeDrilling & Technical acquisition & Gross tax 2017 net

Project assays surveys maintenance expenditures credits expenditures

Clearwater $ 8,863,661 $ 3,343,247 $ 84,440 $ 12,291,348 $ (21,915) $ 12,269,433Eastmain Mine 916,772 624,883 31,640 1,573,295 - 1,573,295Éléonore South - 1,218,394 18,889 1,237,283 - 1,237,283Ruby Hill - 37,609 22,131 59,740 - 59,740Lac Hudson - - 3,000 3,000 - 3,000Lac Elmer - - 6,275 6,275 - 6,275Radisson - 22,118 - 22,118 - 22,118Lac Clarkie 27,976 244,365 - 272,341 - 272,341Other - - 41,349 41,349 - 41,349

Total $ 9,808,409 $ 5,490,616 $ 207,724 $ 15,506,749 $ (21,915) $ 15,484,834

Cumulative acquisition, exploration and evaluation expenditures as at October 31, 2017

Balance BalanceOctober 31, 2017 net Write- October 31,

Project 2016 expenditures down 2017

Clearwater $ 45,232,040 $ 12,269,433 $ - $ 57,501,473Eastmain Mine 14,606,643 1,573,295 - 16,179,938Éléonore South 518,066 1,237,283 - 1,755,349Ruby Hill - 59,740 (59,740) -Lac Hudson - 3,000 (3,000) -Lac Elmer - 6,275 (6,275) -Radisson - 22,118 (22,118) -Lac Lessard 230,482 - - 230,482Lac Clarkie 122,659 272,341 - 395,000Other - 41,349 (41,349) -

Total $ 60,709,890 $ 15,484,834 $ (132,482) $ 76,062,242

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9. Exploration and evaluation (continued)

Project expenditures for the year ended October 31, 2016

Project IncomeDrilling & Technical acquisition & Gross tax 2016 net

Project assays surveys maintenance expenditures credits expenditures

Clearwater $ 3,239,571 $ 871,958 $ 57 $ 4,111,586 $ (259,003) $ 3,852,583Eastmain Mine 637,391 376,047 - 1,013,438 - 1,013,438Éléonore South 2,355 493,217 22,494 518,066 - 518,066Ruby Hill 19,994 61,647 11,372 93,013 - 93,013Reservoir 39,310 630 4,117 44,057 - 44,057Lac Hudson - - 14,607 14,607 - 14,607Lac Elmer 864 640 211,083 212,587 - 212,587Radisson - - 6,336 6,336 - 6,336Road King - - - - - -Lac Lessard 11,142 2,700 7,442 21,284 - 21,284Lac Clarkie - - 122,659 122,659 - 122,659Other - (7,950) 34,092 26,142 - 26,142

Total $ 3,950,627 $ 1,798,889 $ 434,259 $ 6,183,775 $ (259,003) $ 5,924,772

Cumulative acquisition, exploration and evaluation expenditures as at October 31, 2016

Balance BalanceOctober 31, 2016 Net Write- October 31,

Project 2015 expenditures down 2016

Clearwater $ 41,379,457 $ 3,852,583 $ - $ 45,232,040Eastmain Mine 13,593,205 1,013,438 - 14,606,643Éléonore South - 518,066 - 518,066Ruby Hill - 93,013 (93,013) -Reservoir - 44,057 (44,057) -Lac Hudson 951,171 14,607 (965,778) -Lac Elmer 826,871 212,587 (1,039,458) -Radisson - 6,336 (6,336) -Road King 301,779 - (301,779) -Lac Lessard 209,198 21,284 - 230,482Lac Clarkie - 122,659 - 122,659Other - 26,142 (26,142) -

Total $ 57,261,681 $ 5,924,772 $ (2,476,563) $ 60,709,890

As at October 31, 2017 all properties are in good standing and the Company has not abandoned exploration on theproperties.

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a) Clearwater ProjectEastmain holds 100% interest in the Clearwater Project, located in the central portion of the Eastmain RiverGreenstone Belt within the James Bay Mining District of Québec. The project, which hosts the Eau Claire GoldDeposit, consists of map designated claims (CDC’s) covering an area of 200.68 km2. Clearwater is in the advancedexploration stage.

b) Eastmain Mine ProjectThe Eastmain Mine project hosts the Eastmain Mine Gold Deposit. The past-producing Eastmain Mine propertycomprises 152 mineral claims and an industrial lease. Located in the eastern most part of the Upper Eastmain RiverGreenstone Belt of the James Bay District of Northern Québec, the property covers approximately 8,014 hectares ofhighly prospective terrain. In September 2012, the Company exercised its right of first refusal to purchase theremaining 2% net smelter return ("NSR") on all production exceeding 250,000 ounces of gold at a net cost $400,000.Concurrently, Franco Nevada Corporation and Virginia Mines Inc. (now Osisko Gold Royalties Ltd.) jointly acquired theInitial Production Royalty, a 2.3% NSR applicable only to the first 250,000 ounces of gold produced, and subject to areduction should the price of gold fall below USD $750. Eastmain Mine is in the advanced exploration stage.

c) Éléonore South ProjectThe Éléonore South project consists of two separate blocks of CDC’s, comprising a total of 282 claims coveringapproximately 147 km2 of the Opinaca area of James Bay, Québec. The Éléonore West block consists of 34 mineralclaims covering approximately 17.8 km2, while the Éléonore South block contains 248 claims extending over an area ofapproximately 129.9 km2. The project is a 3-way joint arrangement agreement between Eastmain, Azimut ExplorationInc. (“Azimut”) and Les Mines Opinaca Ltée. (“Les Mines Opinaca”), a wholly-owned subsidiary of Goldcorp Inc.Project ownership is based on participation in the funding of annual exploration programs. As such, the project iscurrently held by the joint operation partners approximately as follows: Eastmain 36.7%; Les Mines Opinaca 36.7%and Azimut 26.6%. Azimut was designated as operator for fiscal 2016 and 2017 field season.

d) Ruby Hill ProjectThe Company holds 100% interest in Ruby Hill, an early-exploration-stage project, which consists of 204 claim unitscovering 106 km2 in two claim blocks, known as the Ruby Hill East and Ruby Hill West properties. These propertiesoverlie prospective rock formations of the eastern portion of the Eastmain River Greenstone Belt, located in the JamesBay Mining District of Québec.

e) Reservoir ProjectThe Company holds 100% interest in the Reservoir project. Located in the James Bay Region of Québec, Reservoir, adiscovery-stage project comprises 157 mineral cells (CDC’s) covering approximately 81 km2 of highly prospectiveEastmain River / Opinaca Formation rock assemblages.

f) Lac Hudson ProjectThe Company holds 100% interest in this early-exploration-stage project, which covers approximately 97 km2 of theEastmain / Opinaca district gold belt.

g) Lac Elmer ProjectThe Company holds a 50% interest in the Lac Elmer project, which is located within the western portion of theEastmain River Greenstone Belt of the James Bay Mining District of Québec. Barrick Gold Corporation previouslyearned a 50% interest from Eastmain in the Lac Elmer project by funding $1 million in work expenditures. Eastmain isthe project operator. Should Barrick not elect to participate in any given exploration program, or the maintenance of theLac Elmer claims, its interest would be diluted. Lac Elmer, an exploration-stage project, covers roughly 94 km2 of highlyprospective terrain.

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h) Radisson ProjectThe Company holds 100% interest in 207 CDC’s comprising approximately 107 km2 of the La Grande Greenstone Beltin an early-exploration-stage project known as Radisson. A 2% NSR payable to Franco-Nevada Corporation isassigned to eight of the 207 CDC’s.

i) Road King ProjectThe Company holds 100% interest in this very-early-exploration-stage project which covers approximately 57 km2 ofthe Opinaca region of the James Bay Mining District of Québec. The Company elected to allow these claims to lapse inearly 2017 in an effort to focus on its key projects.

j) Lac Lessard ProjectThe Company holds 100% interest in this very-early-exploration-stage project, which covers approximately 25 km2 ofthe Otish Basin area of the James Bay Mining District of Québec. The Company notes that this project was previouslyunder option to DBL. The option has since expired as DBL was unable to make the necessary expenditures to earn aninterest in the property.

k) Lidge ProjectThe Company holds 100% interest in this very-early to early-stage exploration project, which is located in a prospectivegeological regime within the James Bay Mining District of Québec.

l) Lac Clarkie ProjectOn August 11, 2016, the Company announced staking of the 600 claim (31,600 ha) Lac Clarkie Project locatedimmediately east of the Company’s flagship Clearwater project. The Clearwater project and Lac Clarkie claims cover acombined total of 51,614 ha of prospective greenstone belt in the Eastmain/Opinaca district of James Bay, Quebec.

10. Amounts payable and accrued liabilities

As at As atOctober 31, October 31,

2017 2016

Amounts payables and accrued liabilities $ 1,904,833 $ 1,700,083Government remittances payable 8,177 73,314Due to related parties (note 18) 80,824 73,692

$ 1,993,834 $ 1,847,089

11. Flow-through share premium liability and expenditure commitment

In December 2015, the Company raised $440,000 by issuing flow-through shares. The premium paid by investors inexcess of the market price of the shares was $149,600. In accordance with flow-through regulations, the Companywas committed to incur before December 31, 2016 eligible exploration expenditures for the amount renounced toinvestors in December 2015. The flow-through spending commitment has been fulfilled.

In April 2016, the Company raised $4,750,000 by issuing flow-through shares. The premium paid by investors inexcess of the market price of the shares was $nil. In accordance with flow-through regulations, the Company wascommitted to incur before December 31, 2017, eligible exploration expenditures for the amount renounced to investorsin December 31, 2016. The flow-through spending commitment has been fulfilled.

In May 2016, the Company raised $1,550,000 by issuing flow-through shares. The premium paid by investors inexcess of the market price of the shares was $nil. In accordance with flow-through regulations, the Company wascommitted to incur before December 31, 2017, eligible exploration expenditures for the amount renounced to investorsin December 31, 2016. The flow-through spending commitment has been fulfilled.

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11. Flow-through share premium liability and expenditure commitment (continued)

In July 2016, the Company raised $8,999,154 by issuing flow-through shares. The premium paid by investors inexcess of the market price of the shares was $3,215,384. In accordance with flow-through regulations, the Companywas committed to incur before December 31, 2017, eligible exploration expenditures for the amount renounced toinvestors in December 31, 2016. The flow-through spending commitment has been fulfilled.

In June 2017, the Company raised $5,155,760 by issuing flow-through shares. The premium paid by investors inexcess of the market price of the shares was $2,236,690. In accordance with flow-through regulations, the Companyis committed to incur eligible exploration expenditures before December 31, 2018 in the amount of $5,155,760 whichwill be renounced to investors in December 2017.

Flow-through Flow-throughpremium spendingliability commitment

Balance, October 31, 2015 $ - $ -December 2015 flow-through issue 149,600 440,000Reduction for expenses incurred (149,600) (440,000)April 2016 flow-through issue - 4,750,000May 2016 flow-through issue - 1,550,000July 2016 flow-through issue 3,215,384 8,999,154Reduction for expenses incurred - (4,234,551)

Balance, October 31, 2016 3,215,384 11,064,603June 2017 flow-through issue 2,236,690 5,155,760Reduction for expenses incurred (4,537,697) (14,112,647)

Balance, October 31, 2017 $ 914,377 $ 2,107,716

12. Share capital

a) Authorized and issued share capital

The authorized share capital consists of an unlimited number of common shares. The common shares do not have apar value. All issued shares are fully paid.

(i) In December 2015, the Company completed a non-brokered private placement consisting of the issue of 880,000flow-through shares at $0.50 per share for aggregate gross proceeds of $440,000. No finder’s fees were associatedwith the financing. Issue costs in connection with the offer were $26,626. In accordance with income tax legislation, theCompany renounced resource expenditures of $440,000 in favour of the investors with an effective date of December31, 2015, for activities funded by this flow-through share arrangement. The liability for flow-through premium derivedfrom the issue was $149,600.

(ii) In April 2016, the Company issued 60,000 common shares at $0.48 per share to remedy the status of certainclaims.

(iii) In April 2016, the Company completed a non-brokered private placement consisting of the issue of 9,500,000 flow-through shares at $0.50 per share and 999,999 units at $0.35 per unit for aggregate gross proceeds of $5,100,000.Each unit consisted of one common share and one-half of one transferable common share purchase warrant. Eachwhole warrant entitles the holder to acquire one non-flow-through common share at a price of $0.50 until October 11,2018. Issue costs in connection with the offer were $90,770. Finder’s fees of $304,500 for the placement agent wereequal to 6% of the gross proceeds of the financing. There was no liability for flow-through premium derived from thisissue.

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12. Share capital (continued)

a) Authorized and issued share capital (continued)

(iv) In May 2016, the Company completed a private placement consisting of the issue of 3,100,000 flow-through sharesat $0.50 per share and 12,800,000 units at $0.35 per unit for aggregate gross proceeds of $6,030,000. Each unitconsisted of one common share and one-half of one transferable common share purchase warrant. Each wholewarrant entitles the holder to acquire one non-flow-through common share at a price of $0.50 until November 2018.Issue costs in connection with the offer were $43,447. There was no liability for flow-through premium derived fromthis issue.

(v) In July 2016, the Company completed a private placement consisting of the issue of 9,803,000 flow-through sharesat $0.918 per share and 4,197,000 common shares at $0.51 per common share for aggregate gross proceeds of$11,139,624. Issue costs in connection with the offer were $183,847. Underwriting’s fees of $556,981 for theplacement agent were equal to 5% of the gross proceeds of the financing. The liability for flow-through premiumderived from the issue was $3,215,384.

(vi) In June 2017, the Company completed a private placement consisting of the issue of 7,582,000 flow-throughshares at $0.68 per share and 10,000,000 common shares at $0.40 per common share for aggregate gross proceedsof $9,155,760. Issue costs in connection with the offer were $129,229 and underwriting's fees were $392,188. Theliability for flow-through premium derived from the issue was $2,236,690.

b) Share purchase option plan

(i) In November 2015, 250,000 share purchase options with an exercise price of $0.36 were issued to a director. Theoptions fully vested on the date of issue. The estimated fair value of the grant was $53,250 using the Black-Scholesoption pricing model with the following assumptions: dividend of $0.00; expected volatility of 57.6%; a risk-free interestrate of 1.43% and an expected average term of 7.5 years. During the year ended October 31, 2017, $nil (year endedOctober 31, 2016 - $53,250) was recognized as a general and administrative expense (share-based compensation).

(ii) In March 2016, 250,000 share purchase options with an exercise price of $0.36 were issued to a director. Theoptions fully vested on the date of issue. The estimated fair value of the grant was $56,125 using the Black-Scholesoption pricing model with the following assumptions: dividend of $0.00; expected volatility of 62.6%; a risk-free interestrate of 1.02% and an expected average term of 7.5 years. These options were subsequently adjusted to reflect a 5-year term with following vesting terms: one-third of the options vest immediately, one-third vest on the first anniversaryand one-third on the second anniversary. During the year ended October 31, 2017, $nil (year ended October 31, 2016- $56,125) was recognized as a general and administrative expense (share-based compensation).

(iii) In April 2016, 375,000 share purchase options with an exercise price of $0.48 were issued to executives as part ofa termination settlement. The options fully vested on the date of issue. The estimated fair value of the grant was$111,376 using the Black-Scholes option pricing model with the following assumptions: dividend of $0.00; expectedvolatility of 69.9%; a risk-free rate of 0.85% and an expected average term of 5 years. During the year ended October31, 2017, $nil (year ended October 31, 2016 - $111,376) was recognized as a general and administrative expense(share-based compensation).

(iv) In June 2016, 1,885,000 share purchase options with an exercise price of $0.60 were issued to executives,directors and consultants of the Company. One-third of the options vest immediately, one-third vest on the firstanniversary and one-third on the second anniversary. The estimated fair value of the grant was $655,000 using theBlack-Scholes option pricing model with the following assumptions: dividend of $0.00; expected volatility of 66.8%; arisk-free rate of 0.59% and an expected average term of 5 years. During the year ended October 31, 2017, $56,114and $247,156 (year ended October 31, 2016 - $338,850) recognized as a general and administrative expense (share-based compensation).

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b) Share purchase option plan (continued)

(v) In July 2016, 100,000 share purchase options with an exercise price of $0.62 were issued to executives of theCompany. One-third of the options vest immediately, one-third vest on the first anniversary and one-third on thesecond anniversary. The estimated fair value of the grant was $35,000 using the Black-Scholes option pricing modelwith the following assumptions: dividend of $0.00; expected volatility of 72.0%; a risk-free rate of 0.65% and anexpected average term of 5 years. During the year ended October 31, 2017, $14,391 (year ended October 31, 2016 -$16,330) was recognized as a general and administrative expense (share-based compensation).

(vi) In August 2016, 60,000 share purchase options with an exercise price of $0.81 were issued to an employee of theCompany. One-third of the options vest immediately, one-third vest on the first anniversary and one-third on thesecond anniversary. The estimated fair value of the grant was $29,000 using the Black-Scholes option pricing modelwith the following assumptions: dividend of $0.00; expected volatility of 74.2%; a risk-free rate of 0.64% and anexpected average term of 5 years. During the year ended October 31, 2017, $14,341 (year ended October 31, 2016 -$9,905) was recognized as a general and administrative expense (share-based compensation).

(vii) In January 2017, 740,000 share purchase options with an exercise price of $0.51 and expiry date of January 2,2022 were issued to certain executives, employees and contractors of the Company. One-third of the options vestimmediately, one-third vest on the first anniversary and one-third on the second anniversary. The estimated fair valueof the grant was $228,000 using the Black-Scholes option pricing model with the following assumptions: dividend of$0.00; expected volatility of 74.18%; a risk-free interest rate of 1.11% and an expected average term of 5 years. Duringthe year ended October 31, 2017, $170,558 (year ended October 31, 2016 - $nil) was recognized as a general andadministrative expense (share-based compensation).

(viii) In May 2017, 250,000 stock options with an exercise price of $0.42 and expiry date of May 15, 2022, were grantedto a director of the Company. One-third of the options vest immediately, one-third vest on the first anniversary and one-third on the second anniversary. The estimated fair value of the grant was $63,000 using the Black-Scholes optionpricing model with the following assumptions: dividend of $0.00; expected volatility of 74.00%; a risk-free interest rateof 1.02% and an expected average term of 5 years. During the year ended October 31, 2017, $35,520 (year endedOctober 31, 2016 - $nil) was recognized as a general and administrative expense (share-based compensation).

(ix) In September 2017, 1,125,000 stock options with an exercise price of $0.355 and expiry date of September 14,2022, were granted to executives, directors and consultants of the Company. One-third of the options vestimmediately, one-third vest on the first anniversary and one-third on the second anniversary. The estimated fair valueof the grant was $242,000 using the Black-Scholes option pricing model with the following assumptions: dividend of$0.00; expected volatility of 73.35%; a risk-free interest rate of 1.78% and an expected average term of 5 years. Duringthe year ended October 31, 2017, $96,247 (year ended October 31, 2016 - $nil) was recognized as a general andadministrative expense (share-based compensation).

Weightedaverage

Number of exercisestock options price

Outstanding, October 31, 2015 7,618,605 $ 0.69Granted (i)(ii)(iii)(iv)(v)(vi) 2,920,000 0.55Exercised (1,025,000) 0.33Expired (325,000) 0.81

Outstanding, October 31, 2016 9,188,605 0.69Granted (vii)(viii)(ix) 2,115,000 0.42Exercised (25,000) 0.38Expired/cancelled (518,605) 0.69

Balance, October 31, 2017 10,760,000 $ 0.63

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b) Share purchase option plan (continued)

Options outstanding and exercisable as of October 31, 2017:

Weighted average Weightedremaining average

Number contractual exercise NumberExercise price range outstanding life (years) price exercisable

$0.01 - $0.50 5,175,000 5.37 years $ 0.34 4,175,000$0.51 - $1.00 3,410,000 3.55 years $ 0.66 1,985,000$1.01 - $1.50 1,925,000 3.18 years $ 1.21 1,925,000$1.51 - $2.00 250,000 3.49 years $ 1.51 250,000

The following table reflects the actual stock options issued and outstanding as of October 31, 2017:

Black-Scholes Number of ExerciseExpiry date value ($) options price ($)

April, 2018 173,389 500,000 0.60April, 2020 192,750 250,000 1.35June, 2020 536,250 750,000 1.27September, 2020 66,885 350,000 0.32September, 2020 20,800 25,000 1.46March, 2021 56,125 250,000 0.36April, 2021 111,376 375,000 0.48April, 2021 224,250 250,000 1.51June, 2021 394,916 1,135,000 0.60June, 2021 395,850 650,000 1.15July, 2021 35,000 100,000 0.62August, 2021 29,000 60,000 0.81January, 2022 228,000 740,000 0.51April, 2022 158,250 250,000 1.05May, 2022 63,000 250,000 0.42June, 2022 384,200 850,000 0.88September, 2022 11,975 25,000 0.96September, 2022 242,000 1,125,000 0.36June, 2023 102,000 600,000 0.33September, 2023 27,900 150,000 0.36June, 2024 155,160 900,000 0.30June, 2025 269,075 1,175,000 0.38

3,878,151 10,760,000

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c) RSU

During the year ended October 31, 2017, the Company adopted a RSU Plan. The maximum aggregate number ofshares reserved for issuance under the RSU Plan shall not exceed a combined total of 5% of the Company’s issuedand outstanding shares.

The grant date fair value of the RSU equals the fair market value of the corresponding shares at the grant date. Thefair value of these equity-settled awards is recognized as compensation expense with a corresponding increase inequity. The total amount expensed is recognized over the vesting period, which is the period over which all thespecified vesting conditions should be satisfied.

During the year ended October 31, 2017, the Company granted 340,000 RSU to certain employees under its RSUPlan. These RSU vest as follows: one-third of the options vest immediately, one-third vest on the first anniversary andone-third on the second anniversary. Compensation for the year ended October 31, 2017 was $47,328 (year endedOctober 31, 2016 - $nil).

During the year ended October 31, 2017, 113,332 RSU vested and converted to common shares with a value $39,667.

As at October 31, 2017, there were 226,668 RSU outstanding (October 31, 2016 - $nil). The weighted average fairvalue of RSU granted during the year ended October 31, 2017 was $0.35 per share.

13. Warrants

In April 2016, 499,999 share purchase warrants with an exercise price of $0.50, expiring in October 2018, were issuedas part of a private placement share issue. The estimated fair value of the warrants was $119,300 using the Black-Scholes option pricing model with the following assumptions: dividend of $0.00; expected volatility of 80.1%; a risk-freeinterest rate of 0.55% and an expected term of 2.5 years.

In May 2016, 6,400,000 share purchase warrants with an exercise price of $0.50, expiring in November 2018, wereissued as part of a private placement share issue. The estimated fair value of the warrants was $1,376,000 using theBlack-Scholes option pricing model with the following assumptions: dividend of $0.00; expected volatility of 82.4%; arisk-free interest rate of 0.60% and an expected term of 2.5 years.

Weightedaverage

Number of exercisewarrants price

Outstanding, October 31, 2015 - $ -Issued 6,899,999 0.50

Balance, October 31, 2016 and 2017 6,899,999 $ 0.50

The following table reflects the warrants issued and outstanding as of October 31, 2017:

Exercise WarrantsExpiry date price ($) outstanding Valuation ($)

October 11, 2018 0.50 499,999 119,300November 10, 2018 0.50 6,400,000 1,376,000

6,899,999 1,495,300

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14. Net loss per share

The calculation of basic and diluted loss per share for the year ended October 31, 2017, was based on the lossattributable to common shareholders of $1,605,177 (year ended October 31, 2016 - $6,341,613) and the weightedaverage number of common shares outstanding of 182,428,010 (year ended October 31, 2016 - 151,601,431). Dilutedloss per share did not include the effect of stock options and warrants as they are anti-dilutive.

15. Capital management

The Company’s objectives in managing capital are to ensure that there are adequate resources to sustain operationsand to continue as a going concern, to maintain adequate levels of funding to support acquisition and exploration ofmineral properties, to maintain investor and market confidence, and to provide returns to shareholders. The Companymay manage its capital structure by issuing new shares, adjusting capital spending or disposing of assets. The Boardof Directors does not establish quantitative return on capital criteria for management, but relies on management’sexpertise to sustain future development of the business.

Exploration involves a high degree of risk and there are substantial uncertainties about the ultimate ability of theCompany to achieve positive cash flow from operations. Consequently, management reviews its capital managementapproach on an ongoing basis, taking into consideration operating expenditures and other investing and financingactivities. As a part of this review, management considers the cost of capital and the risks associated with each classof capital. Based on recommendations from management, the directors balance overall capital structure through newshare issues.

Management intends to continue to use various strategies to minimize its dependence on equity capital, including thesecuring of joint arrangements where appropriate.

Management considers its capital structure to consist of equity attributable to equity holders of the Company,comprising issued share capital, warrants, contributed surplus and accumulated deficit, which at October 31, 2017totalled $74,744,936.

There were no changes in management’s approach to capital management during the year ended October 31, 2017.The Company is not subject to externally imposed capital requirements.

16. Financial risk factors

The Company has not entered into any specialized financial agreements to minimize its investment risk, currency riskor commodity risk and the Company does not hold any asset-backed commercial paper. The Company’s financialinstruments are exposed to certain financial risks, including currency risk, credit risk, liquidity risk, interest-rate risk andcommodity-price risk. The Company’s exposure to risk factors and their impact on the Company’s financial instrumentsare summarized below:

a) Fair valueFair value represents the amount of which a financial instrument could be exchanged between willing parties, based oncurrent markets for instruments with the same risk, principal and remaining maturity. Fair-value estimates are based onquoted market values and other valuation methods.

b) Credit riskCredit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet itscontractual obligations. The Company’s credit risk is primarily attributable to cash and cash equivalents, marketablesecurities, and receivables included in prepaid and sundry receivables. The Company has no significant concentrationof credit risk arising from operations. Cash and cash equivalents are held with the Royal Bank of Canada, from whichmanagement believes the risk of loss to be minimal. Financial instruments included in prepaid and sundry receivablesconsist of other receivables. Management believes that its concentration of credit risk, with respect to financialinstruments included in prepaid and sundry receivables, is minimal.

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16. Financial risk factors (continued)

c) Liquidity riskLiquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. TheCompany’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities whendue. As at October 31, 2017, the Company had current assets of $7,907,232 to settle current liabilities of $2,908,211.All of the Company’s financial liabilities have contractual maturities of 30 days or less except flow-through liabilitieswhich continue until December 31, 2018.

During the year ended October 31, 2017, the Company raised net proceeds of $8,643,843 through the issue ofcommon shares and the exercise of options. In management’s opinion, there are sufficient funds to support theongoing operating costs and discharge the Company’s financial commitments for the foreseeable future.

d) Market riskMarket risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchangerates, and commodity and equity prices.

Interest rate riskThe Company has cash balances, interest-bearing bank accounts and no interest-bearing debt. TheCompany’s current policy is to invest excess cash in investment-grade bonds, treasury bills, bankers’acceptances and money market funds. Due to the short-term nature of these financial instruments, fluctuationsin market rates do not have a significant impact on the estimated fair value as at October 31, 2017.

Foreign currency riskThe Company’s functional currency is the Canadian dollar and major purchases are transacted in Canadiandollars. The Company funds certain administrative expenses in the United States on a cash-call basis using USdollar currency converted from its Canadian dollar bank account held in Canada. Management believes theforeign currency risk derived from currency conversions is manageable and therefore, does not hedge itsforeign currency risk.

Sensitivity analysis

Based on management’s knowledge and experience of the financial markets, the Company believes the followingmovements are reasonably possible over a twelve month period:

i. Cash and cash equivalents are subject to floating interest rates. The Company has no variable debt andreceives low interest rates on its cash and cash equivalent balances. As such, the Company does not havesignificant interest rate risk.

ii. As at October 31, 2017, all of the Company's $378,788 investment in marketable securities is subject tomarket fluctuations. If the fair value of the Company's investment in marketable securities had increased ordecreased by 25%, with all other variables held constant, the comprehensive loss and equity for the yearended October 31, 2017 would have been approximately $95,000 higher or lower.

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17. General and administrative expenses


2017 2016

Depreciation $ 17,110 $ 17,874General and office 2,453,922 2,860,065Professional fees 226,093 526,414Share-based compensation 625,541 585,836Contract termination costs - 1,438,214

$ 3,322,666 $ 5,428,403

In early 2016, the Company was subject to an opportunistic attempt to take control of the Company. The Board ofDirectors formed a Special Committee and hired an Investment Bank to evaluate strategic alternatives. While theprocess was ongoing, Columbus Gold Corporation, with the support of several major shareholders, began a dissidentproxy battle to replace management and the Board of Directors. As a result of the proxy battle and strategicalternatives process, the Special Committee reached a solution accepted by dissident shareholders and approved atthe Annual General Meeting. Three senior executives agreed to their termination, four of seven Board Directors werenewly slated and approved and a strategic investment from Integra Gold Corp. was enacted. The costs to evaluatestrategic alternatives and defence of the dissident proxy battle were $920,840. Transition payments for the threeexecutives were $1,461,296, additional fees paid to the special committee and outgoing directors totaled $190,000 andfinancing costs were $550,000. The aggregate was approximately $3,122,000, resulting in a significant variance togeneral and office expenditures.

18. Related party balances and transactions

Related parties include the Board of Directors, key management, close family members and enterprises that arecontrolled by these individuals. Related party transactions conducted in the normal course of operations are measuredat the amount established and accepted by the parties.

(a) Transactions with related parties


2017 2016

Donald Robinson (i)(ii) $ - $ 119,400Shawonis Explorations and Enterprises Ltd. (“Shawonis”) (i)(iii) $ - $ 109,746QB 2000 Inc. (i)(iv) $ - $ 31,200OTD Exploration Services Inc. ("OTD") (v) $ 233,230 $ 90,461OTD - rental agreement (vi) $ 7,532 $ -

(i) Transactions with related parties ceased April 29, 2016.

(ii) Donald Robinson was the former President and Chief Executive Officer ("CEO") of Eastmain and a member of theBoard of Directors of Eastmain to April 29, 2016. Fees paid to Donald Robinson are related to management servicesand office rental.

(iii) The Exploration Manager of Eastmain to April 29, 2016, is the president of Shawonis and is related to the formerCEO of Eastmain. Fees paid to Shawonis are related to professional geological exploration and management services.

(iv) The Chief Financial Officer ("CFO") of Eastmain to April 29, 2016, is the president of QB 2000 Inc. Fees paid to QB2000 Inc. are related to the CFO function.

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18. Related party balances and transactions (continued)

(a) Transactions with related parties (continued)

(v) The Vice President Exploration of Eastmain is the President of OTD. Fees paid to OTD are related to professionalgeological exploration and management services. At October 31, 2017, the amount due to OTD was $55,436 (October31, 2016 - $23,504) related to a) his function as the Vice President Exploration of Eastmain and to b) reimburseoperating and exploration expenses incurred by OTD on behalf of the Company.

(vi) In addition, Eastmain signed a mobile equipment rental agreement with OTD in April 2017 for a period of 12months at a monthly rate of $1,076 per month.

Amounts due to related parties are included in amounts payable and accrued liabilities.

(b) Remuneration of directors and key management personnel other than consulting fees


2017 2016

Salaries and benefits $ 750,500 $ 621,515Share-based compensation $ 463,236 $ 482,051

The Company considers its key management personnel to be the CEO and CFO.

Certain previous officers had employment or service contracts with the Company which triggered termination paymentson April 28, 2016. Directors do not have any employment or service contracts but received remuneration as a result oftheir work under the mandate of the Special Committee. Officers and directors are entitled to share-basedcompensation and cash remuneration for their services.

At October 31, 2017, the amount due to officers was $25,263 (October 31, 2016 - $31,948) and the amount due todirectors was $125 (October 31, 2016 - $18,240).

(c) A director of the Company purchased 14,285 units and 40,000 flow-through shares in the April 2016 PrivatePlacement.

(d) Officer and directors of the Company purchased 1,250,000 shares in the July 2016 financing.

(e) Officer and directors of the Company purchased, on a net basis, 800,000 shares in the June 2017 financing.

(f) The Company has a diversified base of investors. To the Company’s knowledge, no shareholder holds more than10% of the Company’s common shares as at October 31, 2017.

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19. Provision for income taxes

The income tax recovery varies from the amounts that would be computed applying the basic federal and provincialincome tax rate aggregating 26.5% (2016 - 26.5%) to loss before income taxes as shown in the following:

2017 2016

Expected income tax $ (348,528) $ 1,931,320Share-based compensation (165,768) (155,247)Share issue costs 150,000 145,928Effect of flow-through renunciation 3,336,909 (2,311,982)(Loss) gain on marketable securities (11,402) 105,813Other (5,727) (5,930)Impairment of exploration and evaluation assets (35,108) (656,289)

Deferred income tax expense $ 2,920,376 $ (946,387)

Significant components of the Company's deferred income tax assets and liabilities are as follows:

2017 2016

Non-capital losses carried forward $ 4,762,989 $ 3,977,032Capital assets 183,719 179,186Exploration and evaluation assets (12,270,079) (8,565,336)Share issue costs 350,348 362,172Other 237,908 232,207

Future income taxes $ (6,735,115) $ (3,814,739)

Non-capital loss carry forwards

The Company has reported non-capital losses available for deduction which expire as follows:

2026 $ 731,6762027 682,7172028 926,9362029 879,5152030 1,062,5042031 940,8792032 1,131,6722033 1,074,6042034 1,155,9652035 1,118,4082036 5,302,7932037 2,965,873

$ 17,973,542

Other

a) Canadian exploration expenditures and Canadian development expendituresThe Company has Canadian exploration and development expenditures available to reduce future years' taxableincome of approximately $29,800,000. The tax benefit of these amounts may be carried forward indefinitely.

b) Capital lossesThe Company has unused capital losses of $523,692 which have no expiry date. These capital losses can only beused to reduce future income from capital gains.

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20. Contingencies

(i) The Company is subject to legal proceedings and claims which arise in the ordinary course of business includingmatters related to contracts, taxes, employment and workers' compensation claims and other matters. A claim hasbeen filed against the Company whereby in the opinion of management, the amount of ultimate liability with respect tothis action will not materially affect the financial position of the Company and no provision has been made in thesefinancial statements in respect of this action.

(ii) Subsequent to the year end, the Company received a notice of reassessment from the Canada Revenue Agencyregarding a routine audit with respect to flow-through spending in 2013 and 2014. The Company is in the process ofreviewing the notification submitted by the Canada Revenue Agency. Given the nature of the process, the Companyretains the ability to object, appeal and challenge any reassessment. At this time, it is not yet possible for the Companyto make any realistic prediction regarding the outcome of the assessment or an amount that will be payable.Accordingly, no amount has been recorded as a liability in these consolidated financial statements.

21. Subsequent events

(i) On December 14, 2017, the Company closed a non-brokered offering (the “Offering”) of 6,000,000 “flow-through”common shares (the “FT Shares”) at a price of $0.38 per FT Share, to raise aggregate gross proceeds of $2,280,000.

The net proceeds of the Offering are expected to be used to fund exploration and development of the Company’smineral concessions in Quebec. All FT Shares issued pursuant to the Offering are subject to a statutory hold periodexpiring April 15, 2018.

(ii) Subsequent to year end, the Company’s investment in DBL (refer to note 6(a)) was subject to a friendly acquisitionby Osisko Metals Inc. ("Osisko Metals"). Under the terms of the agreement, holders of DBL common shares will beentitled to receive, for each share held immediately prior to the arrangement: (a) 0.271 of a common share of OsiskoMetals; (b) 0.0677 of a common share purchase warrant of Osisko Metals, with each Osisko Metals considerationwarrant entitling the holder thereof to acquire one Osisko Metals share at an exercise price of $1.50 per Osisko Metalsshare for a period of 12 months from the closing of the arrangement; and (c) one common share of Spinco, which willbe consolidated on a 10:1 basis under the arrangement.”

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