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Northcliff Resources Ltd. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2016 and 2015 (Unaudited ‐ Expressed in Canadian Dollars)

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Page 1: Northcliff Resources Ltd.Northcliff Resources Ltd. $ – Condensed Consolidated Interim Statements of Financial Position (Unaudited – Expressed in Canadian Dollars) April 30, October

NorthcliffResourcesLtd.

CONDENSEDCONSOLIDATEDINTERIMFINANCIALSTATEMENTS

FORTHETHREEANDSIXMONTHSENDEDAPRIL30,2016and2015

(Unaudited‐ExpressedinCanadianDollars)

Page 2: Northcliff Resources Ltd.Northcliff Resources Ltd. $ – Condensed Consolidated Interim Statements of Financial Position (Unaudited – Expressed in Canadian Dollars) April 30, October

NOTICEOFNOAUDITORREVIEWOFCONDENSEDCONSOLIDATEDINTERIMFINANCIALSTATEMENTS

InaccordancewithNationalInstrument51‐102Part4,subsection4.3(3)(a),ifanauditorhasnotperformedareviewofthesecondensedconsolidatedinterimfinancialstatementstheymustbeaccompaniedbyanoticeindicatingthatthecondensedconsolidatedinterimfinancialstatementshavenotbeenreviewedbyanauditor.

TheaccompanyingunauditedcondensedconsolidatedinterimfinancialstatementsoftheCompanyhavebeenpreparedbyandaretheresponsibilityoftheCompany'smanagement.

Page 3: Northcliff Resources Ltd.Northcliff Resources Ltd. $ – Condensed Consolidated Interim Statements of Financial Position (Unaudited – Expressed in Canadian Dollars) April 30, October

NorthcliffResourcesLtd. –$

CondensedConsolidatedInterimStatementsofFinancialPosition(Unaudited–ExpressedinCanadianDollars) April30, October31,

Note 2016 2015

ASSETS

Non‐currentassetsMineralpropertyandequipment 3 23,725,624$ 23,397,181$Investment 13,241 13,241

23,738,865 23,410,422CurrentassetsAmountsreceivableandprepaidexpenses 4 54,504 102,652Cash 821,812 1,149,635

876,316 1,252,287

TOTALASSETS 24,615,181$ 24,662,709$

EQUITY

EquityattributabletoshareholdersoftheCompanySharecapital 6 50,717,274$ 50,717,274$Reserves 3,890,275 3,689,356Accumulateddeficit (33,667,565) (32,922,377)

20,939,984 21,484,253

Non‐controllinginterests 2,750,830 2,709,139

TOTALEQUITY 23,690,814 24,193,392

LIABILITIES

CurrentliabilitiesAmountspayableandotherliabilities 5 71,420 249,733Amountspayabletoarelatedparty 8 408,443 219,584Loanpayable 9 444,504 –

924,367 469,317

TOTALEQUITYANDLIABILITIES 24,615,181$ 24,662,709$

Natureandcontinuanceofoperations(note1)

TheaccompanyingnotesareanintegralpartofthesecondensedconsolidatedInterimfinancialstatements.

ThesecondensedconsolidatedinterimfinancialstatementsareapprovedforissuanceonJune10,2016bytheBoardofDirectorsandaresignedontheCompany'sbehalfbyfollowing:

/s/PeterMitchell /s/ChristopherZahovskis

PeterMitchell ChristopherZahovskisDirector Director

Page2

Page 4: Northcliff Resources Ltd.Northcliff Resources Ltd. $ – Condensed Consolidated Interim Statements of Financial Position (Unaudited – Expressed in Canadian Dollars) April 30, October

NorthcliffResourcesLtd.CondensedConsolidatedInterimStatementsofComprehensiveLoss(Unaudited–ExpressedinCanadianDollars,exceptforweightedaveragenumberofshares)

Note 2016 2015 2016 2015

ExpensesGeneralandadministration 10 241,616$ 609,268$ 620,502$ 1,265,287$Equity‐settledshare‐basedpayments 7 48,747 19,050 116,919 63,770

Lossfromoperations (290,363) (628,318) (737,421) (1,329,057)Interestincome 1,528 6,785 3,708 21,218Financeexpense 9 (36,723) – (38,915) –Foreignexchangegain(loss) 137 (122) (451) (1,371)

Lossandcomprehensivelossfortheperiod (325,421)$ (621,655)$ (773,079)$ (1,309,210)$

Lossandcomprehensivelossattributableto:ShareholdersoftheCompany (316,571)$ (583,384)$ (745,188)$ (1,229,528)$Non‐controllinginterests (8,850) (38,271) (27,891) (79,682)

Lossandcomprehensivelossfortheperiod (325,421)$ (621,655)$ (773,079)$ (1,309,210)$

LosspershareBasicanddilutedlosspershareattributabletoshareholdersoftheCompany –$ –$ (0.01)$ (0.01)$

Weightedaveragenumberofcommonsharesoutstanding 106,405,781 91,288,134 106,405,781 91,288,134

TheaccompanyingnotesareanintegralpartofthesecondensedconsolidatedInterimconsolidatedfinancialstatements.

ThreemonthsendedApril30, SixmonthsendedApril30,

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Page 5: Northcliff Resources Ltd.Northcliff Resources Ltd. $ – Condensed Consolidated Interim Statements of Financial Position (Unaudited – Expressed in Canadian Dollars) April 30, October

NorthcliffResourcesLtd.CondensedConsolidatedInterimStatementsofChangesinEquity(Unaudited–ExpressedinCanadianDollars,exceptforshareinformation)

AttributabletoshareholdersoftheCompany

Sharecapital Reserves

NoteNumberofshares Amount

Equity‐settledshare‐basedpayments

Sharepurchasewarrants(note9) Revaluation Deficit

TotalequityattributabletoshareholdersoftheCompany

Non‐controllinginterests Totalequity

BalanceatNovember1,2014 91,288,134 48,226,465$ 3,550,740$ –$ 26,482$ (30,781,290)$ 21,022,397$ 2,414,311$ 23,436,708$Equity‐settledshare‐basedpayments 7 – – 63,770 – – – 63,770 – 63,770Capitalcontributionsfromnon‐controllinginterests – – – – – – – 228,871 228,871Lossandcomprehensivelossfortheperiod – – – – – (1,229,528) (1,229,528) (79,682) (1,309,210)BalanceatApril30,2015 91,288,134 48,226,465$ 3,614,510$ –$ 26,482$ (32,010,818)$ 19,856,639$ 2,563,500$ 22,420,139$

BalanceatNovember1,2015 106,405,781 50,717,274$ 3,689,357$ –$ (1)$ (32,922,377)$ 21,484,253$ 2,709,139$ 24,193,392$Equity‐settledshare‐basedpayments 7 – – 116,919 – – – 116,919 – 116,919Issuanceofsharepurchasewarrants 9 – – – 84,000 – – 84,000 – 84,000Capitalcontributionsfromnon‐controllinginterests – – – – – – – 69,582 69,582Lossandcomprehensivelossfortheperiod – – – – – (745,188) (745,188) (27,891) (773,079)BalanceatApril30,2016 106,405,781 50,717,274$ 3,806,276$ 84,000$ (1)$ (33,667,565)$ 20,939,984$ 2,750,830$ 23,690,814$

TheaccompanyingnotesareanintegralpartofthesecondensedconsolidatedInterimfinancialstatements.

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Page 6: Northcliff Resources Ltd.Northcliff Resources Ltd. $ – Condensed Consolidated Interim Statements of Financial Position (Unaudited – Expressed in Canadian Dollars) April 30, October

NorthcliffResourcesLtd. –$

CondensedConsolidatedInterimStatementsofCashFlows(Unaudited–ExpressedinCanadianDollars)

Note 2016 2015

OperatingactivitiesNetlossfortheperiod (773,079)$ (1,309,210)$Adjustmentsfor:

Amortization 1,271 1,850Equity‐settledshare‐basedpayments 116,919 63,770Interestincome (3,708) (21,218)Financeexpense 9 38,915 –

Changesinnon‐cashoperatingworkingcapital:Amountsreceivableandprepaidexpenses 45,606 319,118Amountspayableandotherliabilities (22,903) (111,440)Amountspayabletoarelatedparty 214,517 (63,510)

Cashusedinoperatingactivities (382,462) (1,120,640)

InvestingactivitiesDeferredmineraldevelopmentcosts (508,240) (3,873,278)Interestreceived 3,708 21,218

Cashusedininvestingactivities (504,532) (3,852,060)

FinancingactivitiesCapitalcontributionsfromnon‐controllinginterests 69,582 228,871Proceedsfromborrowings 9 500,000 –Interestpaid (10,411) –

Cashprovidedbyfinancingactivities 559,171 228,871

Decreaseincash (327,823) (4,743,829)

Cash,beginningofperiod 1,149,635 5,644,287Cash,endofperiod 821,812$ 900,458$

Supplementarycashflowinformation:

Non‐cashfinancingandinvestingactivities:IssuanceofsharepurchasewarrantspursuanttotheLoan 9 84,000$ –$Deferredmineraldevelopmentcostsaccruedincurrentliabilities 78,000 628,828

TheaccompanyingnotesareanintegralpartofthesecondensedconsolidatedInterimfinancialstatements.

SixmonthsendedApril30,

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Page 7: Northcliff Resources Ltd.Northcliff Resources Ltd. $ – Condensed Consolidated Interim Statements of Financial Position (Unaudited – Expressed in Canadian Dollars) April 30, October

NorthcliffResourcesLtd. NotestotheCondensedConsolidatedInterimFinancialStatementsForthethreeandsixmonthsendedApril30,2016and2015(Unaudited–ExpressedinCanadianDollars,unlessotherwisestated)

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1. NATUREANDCONTINUANCEOFOPERATIONS

NorthcliffResourcesLtd.(“Northcliff”orthe"Company")isapubliccompanylistedontheTorontoStockExchangeunder the symbol “NCF” andwas incorporatedonMay18, 2010underthelawsoftheProvinceofBritishColumbia,Canada.TheaddressoftheCompany'scorporateofficeis15thFloor,1040WestGeorgiaStreet,Vancouver,BC,V6E4H1.

The Company is primarily engaged in the acquisition and development of mineralproperties. The Company holds an 88.5% economic interest in the Sisson Tungsten andMolybdenum Project (the “Sisson Project” or the “Property”), located in New Brunswick,Canada.ToddMineralsLtd.(the“ToddGroup”)holdstheremaining11.5%interestintheSissonProject.

Thesecondensedconsolidatedinterimfinancialstatements(the“FinancialStatements”)arecomprisedoftheCompanyanditssubsidiaries(togetherreferredtoasthe"Group").

TheGroup is in theprocessofadvancinganddeveloping theSissonProject. TheGroup’scontinuingoperationsandtheunderlyingvalueandrecoverabilityoftheamountshownforthemineralproperty interest,consistingentirelyof theSissonProject, isdependentupontheabilityoftheGrouptoobtainthenecessaryfinancingtocompletethedevelopmentandconstructionoftheSissonProject,obtainingthenecessarypermitstomine,andthefutureprofitable production from the mine or proceeds from the disposition of its mineralpropertyinterest.

These Financial Statements are prepared on the basis that the Group will continue as agoingconcernwhichcontemplatestherealizationofassetsandthedischargeofliabilitiesinthenormal courseofbusiness for the foreseeable future. TheGroup’s current sourcesoffundingconsistofproceedsfromtheissuanceofdebtandequityandcontributionsbytheTodd Group to the Sisson Project Limited Partnership (the “Partnership”) to be used todeveloptheSissonProject.

AnychangeinthecommitmentortimingofdebtandequityfundingfromexistingornewshareholdersofNorthcliff,alternativecapitalproviders,orexistingornewlimitedpartnersto the Partnership may require Northcliff and the Partnership to curtail planneddevelopment activities or seek alternative sources of funding. The recoverability of thecarryingvalueofitsmineralpropertyinterestisdependentonongoingaccesstofinancingand the successful development and commercial exploitation, or alternatively, the sale oftheSissonProjectortheCompany’sinterestinthePartnership. Assuch,thereismaterialuncertaintythatcastssignificantdoubtabouttheCompany’sabilitytocontinueasagoingconcern.Managementhasconcludedthatpresentationasagoingconcernisappropriateinthese Financial Statements based on the Company’s current financial position, plans for2016(completionofCEAApermittingprocessandthepreservationofcash)andcontinuedfinancingactivities.

Page 8: Northcliff Resources Ltd.Northcliff Resources Ltd. $ – Condensed Consolidated Interim Statements of Financial Position (Unaudited – Expressed in Canadian Dollars) April 30, October

NorthcliffResourcesLtd. NotestotheCondensedConsolidatedInterimFinancialStatementsForthethreeandsixmonthsendedApril30,2016and2015(Unaudited–ExpressedinCanadianDollars,unlessotherwisestated)

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2. SIGNIFICANTACCOUNTINGPOLICIES

(a) StatementofCompliance

These Financial Statements have been prepared in accordance with IAS 34, InterimFinancialReporting(“IAS34”),asissuedbytheInternationalAccountingStandardsBoard(“IASB”). These Financial Statements donot include all of the information and footnotesrequired by International Financial Reporting Standards (“IFRS”) for complete financialstatementsforyear‐endreportingpurposes.TheseFinancialStatementsshouldbereadinconjunctionwiththeGroup’sconsolidatedfinancialstatementsasatandfortheyearendedOctober31,2015.ResultsforthereportingperiodendedApril30,2016arenotnecessarilyindicativeoffutureresults.TheaccountingpoliciesandmethodsofcomputationappliedbytheGroupintheseFinancialStatementsarethesameasthoseappliedbytheGroupinitsmostrecentannualconsolidatedfinancialstatementswhicharefiledundertheCompany’sprofileonSEDARatwww.sedar.com.

(b) BasisofPresentationandConsolidation

These Financial Statements have been prepared on a historical cost basis, except forfinancial instruments classified as available‐for‐sale which are stated at fair value. Inaddition, these Financial Statements have been prepared using the accrual basis ofaccounting,exceptforcashflowinformation.

Intercompany balances and transactions, including any unrealized income and expensesarisingfromintercompanytransactions,areeliminatedinfullonconsolidation.Unrealizedlossesareeliminatedinthesamewayasunrealizedgains,butonlytotheextentthatthereisnoevidenceofimpairment.

TherewasnochangeinthecompositionoftheGroupduringthecurrentfiscalquarter.

(c) SignificantAccountingEstimatesandJudgements

The critical judgements and estimates applied in the preparation of these FinancialStatementsareconsistentwiththoseappliedintheGroup’sauditedconsolidatedfinancialstatementsasatandfortheyearendedOctober31,2015.

(d) OperatingSegments

As Northcliff operates the Sisson Project as a single segment, the Financial Statementsshouldbereadasawholefortheresultsofthissinglereportingsegment.

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NorthcliffResourcesLtd. NotestotheCondensedConsolidatedInterimFinancialStatementsForthethreeandsixmonthsendedApril30,2016and2015(Unaudited–ExpressedinCanadianDollars,unlessotherwisestated)

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(e) AccountingStandards,InterpretationsandAmendmentstoExistingStandards

Accountingstandardsissuedbutnotyeteffective

EffectiveforannualperiodscommencingonorafterJanuary1,2016

AmendmentstoIAS1PresentationofFinancialStatements AmendmentstoIFRS7,FinancialInstruments–Disclosure AmendmentstoIFRS12DisclosureofInterestsinOtherEntities

EffectiveforannualperiodscommencingonorafterJanuary1,2018

IFRS15,RevenuefromContractswithCustomers IFRS9,FinancialInstruments

EffectiveforannualperiodscommencingonorafterJanuary1,2019

IFRS16Leases.

TheGrouphasnotearlyadopted theseamendedstandardsand iscurrentlyassessing theimpact,ifany,thattheseamendmentswillhaveontheGroup’sFinancialStatements.

3. MINERALPROPERTYANDEQUIPMENT

(a) SixmonthsendedApril30,2016

Mineralpropertyacquisitionand

developmentcosts Equipment Total

Cost

BalanceatNovember1,2015 $23,389,292 $46,287 $23,435,579

Additionsduringtheperiod 329,714 – 329,714

BalanceatApril30,2016 $23,719,006 $46,287 $23,765,293

Accumulatedamortization

BalanceatNovember1,2015 $– $38,398 $38,398

Amortizationduringtheperiod – 1,271 1,271

BalanceatApril30,2016 $– $39,669 $39,669

Carryingamount

NetcarryingamountatApril30,2016 $23,719,006 $6,618 $23,725,624

NetcarryingamountatOctober31,2015 $23,389,292 $7,889 $23,397,181

Page 10: Northcliff Resources Ltd.Northcliff Resources Ltd. $ – Condensed Consolidated Interim Statements of Financial Position (Unaudited – Expressed in Canadian Dollars) April 30, October

NorthcliffResourcesLtd. NotestotheCondensedConsolidatedInterimFinancialStatementsForthethreeandsixmonthsendedApril30,2016and2015(Unaudited–ExpressedinCanadianDollars,unlessotherwisestated)

Page9

AtApril30,2016,theCompany’smineralpropertyinterestrepresentsits88.5%economicinterestintheSissonProject.

TheGroup’smineralpropertyinterestrepresentsitsinterestintheSissonProject, locatedinNewBrunswick,Canada.

During the three and six months ended April 30, 2016, the following deferred mineraldevelopmentcostswererecordedbytheGroupasadditionstomineralpropertyinterest:

ThreemonthsendedApril30, SixmonthsendedApril30,

2016 2015 2016 2015

Engineeringanddesign $30,928 $296,104 $164,893 $801,840

Environmentalandpermitting 12,382 328,515 29,667 618,130

Stakeholdercommunications 59,100 111,520 135,154 268,256

Total $102,410 $736,139 $329,714 $1,688,226

(b) SixmonthsendedApril30,2015

Mineralpropertyacquisitionand

developmentcosts Equipment Total

Cost

BalanceatNovember1,2014 $20,517,902 $46,287 $20,564,189

Additionsduringtheperiod 1,688,226 – 1,688,226

BalanceatApril30,2015 $22,206,128 $46,287 $22,252,415

Accumulatedamortization

BalanceatNovember1,2014 $– $34,697 $34,697

Amortizationduringtheperiod – 1,850 1,850

BalanceatApril30,2015 $– $36,547 $36,547

Carryingamount

NetcarryingamountatApril30,2015 $22,206,128 $9,740 $22,215,868

4. AMOUNTSRECEIVABLEANDPREPAIDEXPENSES

April30,2016

October31,2015

Deposits $5,520 $19,785

Prepaidexpenses 28,806 31,136

Salestaxreceivable 20,178 51,731

Total $54,504 $102,652

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NorthcliffResourcesLtd. NotestotheCondensedConsolidatedInterimFinancialStatementsForthethreeandsixmonthsendedApril30,2016and2015(Unaudited–ExpressedinCanadianDollars,unlessotherwisestated)

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5. AMOUNTSPAYABLEANDOTHERLIABILITIES

Duewithin12months April30,2016

October31,2015

Amountspayable $58,196 $154,607

Accruedliabilities 13,224 95,126

Total $71,420 $249,733

6. SHARECAPITAL

AsatApril30,2016andOctober31,2015,theauthorizedsharecapitalwascomprisedofanunlimitednumberofcommonshareswithoutparvalue.Allissuedsharesarefullypaid.

7. EQUITY‐SETTLEDSHARE‐BASEDPAYMENTS

The following summarizes the changes in the Company’s share purchase options (the“Options”):

ContinuityofOptions

SixmonthsendedApril30,2016

SixmonthsendedApril30,2015

Numberofoptions

Weightedaverage

exercisepriceNumberofoptions

Weightedaverage

exerciseprice

Outstanding–beginningofyear 8,311,080 $0.41 5,842,240 $0.54

Expired (832,680) $0.43 – –

Granted 950,000 $0.09 – –

Forfeited (150,400) $0.27 (55,960) $0.41

Outstanding–endofperiod 8,278,000 $0.37 5,786,280 $0.54

Exercisable–endofperiod 5,626,467 $0.49 5,209,680 $0.57

Awardsvestinseveraltranchesrangingfrom6monthsto18months.

UsingBlack‐ScholesOptionsPricingModel,weightaveragefairvalueoftheOptionsgrantedduring the current period was determined at $0.06 per option, which is based on thefollowingweightedaveragevaluationassumptions:Assumption Value

ExpectedLife(years) 4.37

Shareprice $0.09

Expectedvolatility 96.33%

Riskfreeinterestrate 0.51%

Dividendyield –

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NorthcliffResourcesLtd. NotestotheCondensedConsolidatedInterimFinancialStatementsForthethreeandsixmonthsendedApril30,2016and2015(Unaudited–ExpressedinCanadianDollars,unlessotherwisestated)

Page11

ThefollowingtablesummarizesinformationontheOptionsoutstandingasatthefollowingreportingdates:

April30,2016 October31,2015

ExercisepriceNumberofOptions

outstanding

Weightedaverageremaining

contractuallife(years)

NumberofOptionsoutstanding

Weightedaverageremaining

contractuallife(years)

$0.09 950,000 4.07 – –

$0.12 2,566,600 3.42 2,625,200 3.90

$0.25 1,693,800 2.18 1,729,800 2.65

$0.43 1,440,200 1.77 2,328,680 1.50

$1.00 1,627,400 0.15 1,627,400 0.65

8,278,000 2.31 8,311,080 2.33

ThefollowingtablesummarizesinformationontheOptionsexercisableasatthefollowingreportingdates:

April30,2016 October31,2015

ExercisepriceNumberofOptions

exercisable

Weightedaverageremaining

contractuallife(years)

NumberofOptionsexercisable

Weightedaverageremaining

contractuallife(years)

$0.12 865,067 3.41 – –

$0.25 1,693,800 2.18 1,729,800 2.65

$0.43 1,440,200 1.77 2,328,680 1.50

$1.00 1,627,400 0.15 1,627,400 0.65

5,626,467 1.68 5,685,880 1.61

8. RELATEDPARTYTRANSACTIONS

Balances and transactions between the Company and its subsidiaries, which are relatedpartiesoftheCompany,havebeeneliminatedonconsolidation.

Balancedue to relatedparties, other than the Loanpayable (note 9), is comprisedof thefollowing:

Balancespayabletoarelatedparty April31,2016

October31,2015

BalanceduetoHunterDickinsonServicesInc.(note8(b)) $408,443 $219,584

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NorthcliffResourcesLtd. NotestotheCondensedConsolidatedInterimFinancialStatementsForthethreeandsixmonthsendedApril30,2016and2015(Unaudited–ExpressedinCanadianDollars,unlessotherwisestated)

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Detailsoftransactionswithrelatedpartiesaredisclosedbelow:

(a) TransactionswithKeyManagementPersonnel

Key management personnel (“KMP”) are those persons that have the authority andresponsibilityforplanning,directingandcontrollingtheactivitiesoftheCompany,directlyandindirectly,andbydefinitionincludethedirectorsoftheCompany.

TransactionswithKMPwereasfollows:

RemunerationforservicesrenderedThreemonthsended

April30,Sixmonthsended

April30,

2016 2015 2016 2015

PaymenttoHDSI(i)forservicesofKMP $60,000 $234,000 $265,000 $462,000

PaymenttoKMPdirectlyemployedbytheGroup(ii) – 25,000 12,000 47,000

Share‐basedcompensation 22,000 13,000 49,000 42,000

Total $82,000 $272,000 $326,000 $551,000

(i) Certain of the Company’s executive directors and senior management are employed by the CompanythroughHDSI(note8(b))

(ii) Thesepaymentsrepresentfeespaidindependentdirectors.

InJanuary2016,theCompanyreceivedaloanfromadirectoroftheCompany(note9).

(b) BalancesandTransactionswithRelatedEntities

ManagementbelievesthatHunterDickinsonServicesInc.("HDSI"),aprivatecompany,haspowertoparticipateinthefinancialoroperatingpoliciesoftheCompany.Certaindirectorsand employees of HDSI are KMP of the Company. Pursuant to certain managementagreements between the Company and HDSI, the Group receives geological, engineering,corporate development, administrative, management and shareholder communicationservicesfromHDSI.HDSIalsoincursthirdpartycostsonbehalfoftheGroup.

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NorthcliffResourcesLtd. NotestotheCondensedConsolidatedInterimFinancialStatementsForthethreeandsixmonthsendedApril30,2016and2015(Unaudited–ExpressedinCanadianDollars,unlessotherwisestated)

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ThefollowingisasummaryoftransactionswithHDSIisasfollows:

ThreemonthsendedApril30, SixmonthsendedApril30,

Transactionswithrelatedentities 2016 2015 2016 2015

ServicesreceivedfromHDSIbasedonannuallysetrates:

Accounting,legalandadministration $63,400 $140,100 $158,800 $300,600

Corporatecommunications 2,200 7,200 7,700 12,900

Corporatedevelopment 11,300 52,900 42,000 106,900

Engineering – 20,900 22,400 38,400

Environmentalandpermitting 1,200 60,800 5,500 145,800

Geology 300 5,700 1,800 20,100

Informationtechnology – 100 300 37,700

Managementandstewardship 41,500 179,200 105,800 348,800

Siteservices – 26,400 500 53,300

Stakeholderaffairs 1,200 64,100 18,500 98,900

$121,100 $557,400 $363,300 $1,163,400

ReimbursementofthirdpartycostsincurredbyHDSIonbehalfoftheGroup $54,000 $109,000 $91,000 $177,000

9. LOANPAYABLE

OnJanuary14,2016, theCompanyentered intoa$500,000LoanAgreement(the“Loan”)withadirectoroftheCompany(the“Lender”). TheLoanisunsecuredandisrepayableatthe end of twelvemonths. The Loan bears interest at a rate of 10% per annum that ispayableinarrearsattheendofeachcalendarquarter.

On March 14, 2016, after TSX Exchange approval, the Company issued 2,000,000 sharepurchasewarrants(the“Warrant(s)”) to theLenderpursuant to theLoanAgreementand399,769sharepurchasewarrants to theToddGroup,with theapprovalof theCompany’sshareholders and pursuant to their pre‐emptive right to maintain their shareholding at19.9%.TheWarrantsentitletheholderstoacquireonecommonshareoftheCompanyatapriceof$0.095pershareforatwoyearterm,except,thewarrantsissuedtotheToddGroupare only exercisable to the extent shares are issued to the Lender upon exercise of theWarrants.

The fair value of theWarrants was determined as $0.042 perWarrant using the Black‐Scholesoptionpricingmodelbasedonthefollowingassumptions:risk‐freerateof0.53%;expectedvolatilityof91%;expectedlifeof2years;sharepriceof$0.09anddividendyieldofnil.ThefairvalueoftheWarrantsissuedtotheLenderwasrecognizedasreservewithinshareholders’ equity and the correspondingamountwas recordedas financingcost tobeamortizedoverthetermoftheLoan.

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NorthcliffResourcesLtd. NotestotheCondensedConsolidatedInterimFinancialStatementsForthethreeandsixmonthsendedApril30,2016and2015(Unaudited–ExpressedinCanadianDollars,unlessotherwisestated)

Page14

ThecontinuityofthecarryingamountoftheLoanisasfollows:

Sixmonthsended

April30,2016Balanceatthebeginningoftheperiod $–CashproceedsfromtheLoan 500,000FairvalueoftheWarrantsissuedpursuanttotheLoan (84,000)Interestandamortizationofdeferredfinancingcost 38,915Couponpayment (10,411)Balanceattheendoftheperiod $444,504

10. EMPLOYMENTCOSTS

Employees’salaries(i)andbenefitsincludedinvariousexpenseswereasfollows:

ThreemonthsendedApril30, SixmonthsendedApril30,

2016 2015 2016 2015

Generalandadministrationexpenses $138,000 $355,000 $359,000 $748,000

Equity‐settledshare‐basedpayments 49,000 19,000 117,000 64,000

$187,000 $374,000 $476,000 $812,000

(i) SalariesincluderemunerationofKMPsandamountspaidtoHDSIforservicesprovidedtotheGroupbyHDSIpersonnel(seenote8).

Page 16: Northcliff Resources Ltd.Northcliff Resources Ltd. $ – Condensed Consolidated Interim Statements of Financial Position (Unaudited – Expressed in Canadian Dollars) April 30, October

NorthcliffResourcesLtd.

MANAGEMENT’SDISCUSSIONANDANALYSIS

FORTHETHREEANDSIXMONTHSENDED APRIL30,2016

Page 17: Northcliff Resources Ltd.Northcliff Resources Ltd. $ – Condensed Consolidated Interim Statements of Financial Position (Unaudited – Expressed in Canadian Dollars) April 30, October

NORTHCLIFFRESOURCESLTD. FORTHETHREEANDSIXMONTHSENDEDAPRIL30,2016

MANAGEMENT'SDISCUSSIONANDANALYSIS

‐2‐

TABLEOFCONTENTS

1.1  Date ................................................................................................................................. 3 

1.2  Overview ......................................................................................................................... 5 

1.2.1  SissonTungsten‐MolybdenumProject ........................................................................ 5 

1.2.2  Financing ........................................................................................................................ 8 

1.2.3  MarketTrends ................................................................................................................ 9 

1.3  SelectedAnnualInformation ...................................................................................... 10 

1.4  SummaryofQuarterlyResults .................................................................................... 10 

1.5  ResultsofOperations ................................................................................................... 10 

1.6  Liquidity ........................................................................................................................ 12 

1.7  CapitalResources ......................................................................................................... 12 

1.8  Off‐BalanceSheetArrangements ................................................................................ 12 

1.9  TransactionswithRelatedParties .............................................................................. 13 

1.10  FourthQuarter ............................................................................................................. 14 

1.11  ProposedTransactions ................................................................................................ 14 

1.12  CriticalAccountingEstimates ..................................................................................... 14 

1.13  ChangesinAccountingPoliciesIncludingInitialAdoption ...................................... 14 

1.14  FinancialInstrumentsandOtherInstruments .......................................................... 14 

1.14.1  DisclosureofOutstandingShareData ........................................................................ 15 

1.14.2  InternalControlsoverFinancialReportingandDisclosureControls...................... 15 

1.15  RiskFactors .................................................................................................................. 16 

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1.1 Date

This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with theunaudited condensed consolidated interim financial statements of Northcliff Resources Ltd.(“Northcliff” or the “Company”) for the three and sixmonths ended April 30, 2016, the auditedconsolidatedfinancialstatementsfortheyearendedOctober31,2015,andrelatedMD&AaspubliclyfiledonSEDARatwww.sedar.com.

TheCompanyreportsinaccordancewithInternationalFinancialReportingStandardsasissuedbythe International Accounting Standards Board (“IASB”) and interpretations of the IFRSInterpretations Committee (together known as “IFRS”). The following disclosure and associatedfinancial statements are presented in accordance with IFRS. All monetary amounts herein areexpressedinCanadianDollars(“CAD”)unlessstatedotherwise.

ThisMD&AispreparedasofJune10,2016.

CautionaryNoteRegardingForwardLookingStatements

Thisdiscussionincludescertainstatementsthatmaybedeemed"forward‐lookingstatements"or“forward‐lookinginformation”withinthemeaningofCanadianandUnitedStatessecuritieslaw.

Forward‐looking statements are subject to known and unknown risks, uncertainties and otherfactorsthatmaycausetheCompany’sactualresults,levelofactivity,performanceorachievementstobemateriallydifferentfromthoseexpressedorimpliedbysuchforward‐lookingstatements.TheassumptionsusedbyNorthcliff todevelop forward‐looking statements include the following: theSissonProjectwillobtainallinterimandconstructionfinancingrequiredtoadvancetoconstruction,build andoperate themine, theSissonProjectwill receiveall requiredenvironmental andotherpermitsforconstructionofthemine,theSissonProjectwillachievetargetedproductionlevels;studyanddevelopmentoftheSissonProjectwillcontinuetobepositive;contractedpartiesprovidegoodsand/orservicesontheagreedtimeframes;equipmentnecessaryforconstructionanddevelopmentisavailableanddoesnotincurunforeseenbreakdowns;nomateriallabourslowdownsorstrikesareincurred; plant and equipment functions as specified; geological or financial parameters do notnecessitatefuturemineplanchanges;ourexpectationsofcontinuedavailabilityofcapitalanddebtfinancing,andnogeologicalortechnicalproblemsoccur.Thefactorsincludebutarenotlimitedtouncertaintiesandcosts related to theCompany’sexplorationanddevelopmentactivities, suchasthose associated with determining whether mineral resources or reserves exist on a property;uncertaintiesrelatedto feasibilitystudiesthatprovideestimatesofexpectedoranticipatedcosts,expenditures and economic returns from a mining project; uncertainties related to expectedproduction rates, timing of production and the cash and total costs of production and milling;uncertaintiesrelatedto theabilitytoobtainnecessary licenses,permits,electricity,surfacerightsand title fordevelopmentprojects;operatingand technicaldifficulties in connectionwithminingdevelopment activities; uncertainties related to the accuracy of ourmineral reserve andmineralresource estimates and our estimates of future production and future cash and total costs ofproduction, and the geotechnical or hydrogeological nature of ore deposits, and diminishingquantitiesorgradesofmineralreserves;uncertaintiesrelatedtounexpectedjudicialorregulatoryproceedings;changesin,andtheeffectsof,thelaws,regulationsandgovernmentpoliciesaffectingour mining operations, particularly laws, regulations and policies relating to mine expansions,environmental protection and associated compliance costs arising from exploration, mine

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development,mineoperationsandmineclosures;expectedeffectivefuturetaxratesinjurisdictionsinwhichouroperationsarelocated;theprotectionofthehealthandsafetyofmineworkers;mineralrightsownershipincountrieswhereourmineraldepositsarelocated;changesingeneraleconomicconditions,thefinancialmarketsandinthedemandandmarketpricefortungsten,molybdenumandothermineralsandcommodities,suchasdieselfuel,coal,petroleumcoke,steel,concrete,electricityandotherformsofenergy,miningequipment,andfluctuationsinexchangerates,particularlywithrespecttothevalueoftheU.S.DollarandCanadianDollar;unusualorunexpectedformation,cave‐ins, flooding, pressures, and precious metals losses, or other similar events (and the risk ofinadequateinsuranceor inabilitytoobtaininsurancetocovertheserisks);changesinaccountingpoliciesandmethodsweuse to reportour financial condition, includinguncertainties associatedwithcriticalaccountingassumptionsandestimates;theexplorationanddevelopmentofpropertieslocated within First Nations treaty and Aboriginal groups asserted territories may affect or beperceivedtoaffecttreatyandassertedaboriginalrightsandtitle,whichmaycausepermittingdelaysoroppositionbyAboriginalgroupsorcommunities;environmentalissuesandliabilitiesassociatedwithmining including processing and stock piling ore; geopolitical uncertainty and political andeconomic instability incountrieswhichweoperate;and labourstrikes,workstoppages,orotherinterruptionsto,ordifficultiesin,theemploymentoflabourinmarketsinwhichweoperatemineralprojectsormines,orenvironmentalhazards, industrialaccidentsorothereventsoroccurrences,includingthirdpartyinterferencethatinterrupttheproductionofmineralsinourmines.Forward‐looking statements are generally, but not always, identified by the use of forward‐lookingterminologysuchas“plans”,“expects”,“isexpected”,“budget”,“scheduled”,“estimates”,“forecasts”,“intends”,“anticipates”,“projects”,“potential”,“believes”orvariationsofsuchwordsandphrasesorstatementsthatcertainactions,eventsorresults“may”,“could”,“would”,“should”,“might”or“willbetaken”,“occur”or“beachieved”.

The Company reviews its forward‐looking statements on an ongoing basis and updates thisinformationwhencircumstancesrequireit.FormoreinformationontheCompany,investorsshouldreviewtheCompany’sannualinformationformthatisavailableonSEDARatwww.sedar.com.

CautionaryNotetoU.S.InvestorsConcerningReserveEstimates

ThemineralreservesdisclosedinthismanagementdiscussionandanalysishavebeenestimatedinaccordancewithCanadianNationalInstrument43‐101‐StandardsofDisclosureforMineralProjects(“NI43‐101”),asrequiredbyCanadiansecuritiesregulatoryauthorities.TheCompanyisnotsubjectto the reporting requirements of section 13(a) of section 15(d) of the United States SecuritiesExchangeActof1934,asamended(the“ExchangeAct”).However,theCompany’sU.S.investorsarecautioned that SEC IndustryGuide 7 under the ExchangeAct, as interpreted by Staff of the SEC,appliesdifferentstandardsinordertoclassifymineralizationasareserve.Asaresult,thedefinitionsofprovenandprobablereservesusedinNI43‐101differfromthedefinitionsintheSECIndustryGuide 7. Under SEC standards, mineralization may not be classified as a “reserve” unless thedeterminationhasbeenmadethatthemineralizationcouldbeeconomicallyandlegallyproducedorextractedatthetimethereservedeterminationismade.Amongotherthings,allnecessarypermitswouldberequiredtobeinhandorissuanceimminentinordertoclassifymineralizedmaterialasreserves under the SEC standards. Accordingly, mineral reserve estimates contained in thisdiscussionmaynotqualifyas“reserves”underSECstandards.Inaddition,disclosureof“containedounces” is permitted disclosure under Canadian regulations; however, the SEC only permitsExchange Act reporting companies to report reserves in ounces, and requires reporting of

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mineralizationthatdoesnotqualifyasreservesasinplacetonnageandgradewithoutreferencetounitmeasures.

1.2 Overview

Forthepurposesofthediscussionbelow,referencestothequartersareinrelationtotheCompany’sfiscalreportingperiod,unlessotherwiseindicated.

Northcliff is a mineral exploration and development company focused on advancing the SissonTungsten‐MolybdenumProject(the“SissonProject”orthe“Project”)inNewBrunswick,Canadatoproduction. Northcliff holds an 88.5% interest in the Sisson Limited Partnership (the “SissonPartnership”)thatownstheSissonProject.

The Sisson Project is an initiative to develop a 30,000 tonne per day (“tpd”) open pitmine andprocessing facilities that are forecast to produce 557,000metric tonneunits (“mtu”) of tungstentrioxide(“WO3”)and4.1millionpounds(“Mlb”)molybdenum(“Mo”)annuallyovera27‐yearminelife1.

TheProjectiscurrentlyprogressingthroughanenvironmentalimpactassessment(“EIA”)process,whichrequiresbothprovincialandfederalapproval.OnDecember3,2015,apositiveCertificateofDeterminationfortheSissonProjectwasreceivedfromtheGovernmentofNewBrunswick.

OnApril18,2016,theCanadianEnvironmentalAssessmentAgency(“CEAA”)beganthefinal30‐daypubliccommentperiodontheComprehensiveStudyReportfortheSissonProject.Followingthis,arecommendationwillbemadebyCEAAtotheMinisterofEnvironmentandClimateChangeforafinaldecisionontheEIAoftheProject.

Northcliff has conducted an extensive andongoing engagement programwith representatives ofgovernment agencies, local communities, First Nations and other project stakeholders in NewBrunswicksinceearly in its involvementwith theProject. TheSisson teamcontinues toprovideinformationtointerestedpartiesandreceiveinputaboutprojectactivitiesandplans.

ProjectactivitiescontinuetobefocusedonadvancingsuccessfullythroughtheCEAAprocessandtosecureconstructionpermits,includingconsultationnecessarytosupportthefinalstepsoftheEIAapproval process. The management team also continues discussions with identified off‐takecompaniesandpartiesthatcouldprovideinterimandprojectconstructionfinancing.

1.2.1 SissonTungsten‐MolybdenumProject

The18,880‐hectareSissonpropertyislocatedapproximately100kilometresbyroadnorthwestoftheCityofFredericton,which isa centre forbusiness,educationandgovernmentservices in the

1 Further details are provided under Engineering Studies, Section 1.2.1 below.

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Province ofNewBrunswick. NewBrunswick is a progressivemining jurisdiction,with a skilledworkforceandwell‐developedinfrastructure.

Situatedinanareaofrollingtopography,theSissonProjectareaisreadilyaccessiblebyhighwayfromFrederictonandpartsof thesiteareaccessiblebynumeroussecondaryand forestry roads.High‐tensionpowerlinesfromtheprovincialelectricalgridcrosstheproperty.Araillineandsidingarelocated15kilometreseastofthedeposit.ThepropertyisconnectedtodeepseaportsatSaintJohntothesouthandBelledunetothenorthbytheraillineandbyroad.

NorthcliffacquiredacontrollinginterestintheSissonProjectinOctober2010andinitiatedstudiestosupportcompletionofafeasibilitystudy.TheCompanyacquiredtheremainingminorityinterestin June2012andbecame100%ownerof theProject. InOctober2013,Northcliff transferred itsmineralpropertyinterestintheSissonProjectintotheSissonPartnershipand,pursuanttotheSissonProjectLimitedPartnershipAgreement,itseconomicinterestintheSissonProjectwasreducedto88.5%(see1.2.2Financing).

Geology

The Sisson Project hosts a structurally‐controlled deposit that obliquely spans a north‐trending,nearly vertical contact between two phases of the Howard Peak Granodiorite to the west andmetavolcanicandmetasedimentary rocks to theeast. Tungstenandmolybdenummineralizationoccurs mainly as scheelite and molybdenite, respectively, within narrow, sheeted, northwest‐trendingquartz‐sulphideveinswhichsurroundlarger,north‐trendingshearveins.

FeasibilityandBasicEngineeringStudies

TheFeasibilityStudy2fortheSissonProjectwascompletedinearly2013bySamuelEngineering,Inc.,withinputfromotherspecialistengineeringfirms. ThestudydefinestheSissonProjectasa30,000tpdopenpitmineandconventionaloreprocessingfacilitiesthataresupplementedbyvalue‐addedon‐siteprocessingof tungstenconcentrates in anammoniumparatungstate (“APT”)plant,producinganaverageof557,000mtuWO3inAPTand4.1MlbMoinconcentrateannuallyovera27‐yearminelife.Thestudyanticipatesaninitialcapitalexpenditure(including15%contingency)of$579millionandaveragecashcostsofAPTproductionof$8.18/tmilledor$153/mtu(netofMo

2 The 2013 Feasibility Study and Technical Report:

Assumptions used include average long-term metal prices of US$350/mtu for APT and US$15/lb for Mo and US$:$C exchange rates of 1:1 for capital cost estimates, and 0.98-0.92:1 (years 1-4) and 0.90:1 (year 5+) for the financial analysis. Results presented are based on a 100% interest.

At an US$8.83/t NSR cut-off, Proven and Probable Mineral Reserves are 334,363,000 tonnes grading 0.066% WO3 and 0.021% Mo.

Further details are provided in the Technical Report and in the Company’s 2015 AIF which are filed at www.sedar.

Independent Qualified Persons for the Technical Report, effective date January 22, 2013 are David W. Rennie, PEng, Roscoe Postle Associates, Inc., Jim Gray, PEng, Moose Mountain Technical Services, Daniel Freidman, PEng, Knight Piesold Consulting, Matt Bolu, PEng, Bolu Consulting Engineering, Inc., Gene Greskovich, PE, and Steven Pozder, PE, Samuel Engineering, Inc.

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credits).Economicresultsincludedapost‐taxnetpresentvalue(atan8%discount)of$418millionwithaninternalrateofreturnof16.3%anda4.5yearpayback.

From2013‐2015,Northcliffand itsconsultantsadvancedbasicengineeringstudies, includingtheplant site and associated infrastructure, tailings storage facility andwatermanagement systems,openpitmineandwatertreatmentfacilities.Inaddition,in2015NBPowercompletedaprogramalongtheproposedrouteandrefinedthedesignfora138kVtransmissionline.

BasicengineeringwillresumependingEIAapprovals,improvedmarketconditions,andavailabilityoffunding.

EnvironmentalStudies

Since 2011, Northcliff has undertaken studies of air quality, acoustics, surface and groundwaterresources,environmentalgeochemistry,terrestrialandaquatichabitats,fishandwildlife,wetlands,landandresourceuses,heritageresources,socio‐economics,andtraditionalAboriginal landuses.Theinformationfromthesestudieshasbeenusedforprojectplanninganddesignandtopreparetheenvironmentalimpactassessmentreport(“EIAReport”),anditwillalsoprovidebaselinedataformonitoring during construction and operation. An archeological test pitting program was alsocompleted.

EnvironmentalAssessmentProcess

ThedraftEIAReportwassubmittedtotheCanadianEnvironmentalAssessmentAgency(“CEAA”)andNewBrunswickDepartment of Environment and Local Government (“NBDELG”) on July 31,2013.CEAApostedthedraftEIAReporttoitswebsiteonAugust30,2013forinitialreviewbythepublicandFirstNations,anditwasalsoreviewedbyfederalandprovincialgovernmentagencies.FromNovember2013toDecember2014,Northcliffrespondedtonumerousroundsofinformationrequests related to the EIA Report from both governments, the public and First Nations. AComprehensiveStudyReportisbeingpreparedbyCEAAforpublicreview.

TheprovincialreviewofthedraftEIAReportwascompletedinMarch2015,andtheFinalEIAReportwas the subject of a 90‐day public consultation period completed on July 17, 2015. A positiveCertificateofDeterminationwasreceivedfromtheProvincialGovernmentonDecember3,2015.

TheCanadianEnvironmentalAssessmentAgency(“CEAA”)postedtheComprehensiveStudyReportfortheSissonProjectontheCEAAwebsiteonApril15,2016.Thefinal30‐daypubliccommentperiodbeganonApril18,2016.Oncethesecommentshavebeenconsidered,thefederalgovernmentwillmakeafinaldecisionontheProject.

Key project permit applications for authorizations under the Fisheries Act and amendment ofSchedule2oftheMetalMiningEffluentRegulationstolisttheSissonProjectTSFhavebeeninitiatedinparallelwiththeEIAprocess.Inaddition,applicationsforaminingleasefromtheProvinceundertheMiningActandaCrownLeasehavecommenced.

ConsultationwithFirstNationsisanintegralpartoftheEIAprocessandisalsopartoftheFisheriesActauthorizationandSchedule2amendmentprocesses.TheCompanyprovidedfundingandin‐kindsupporttoNewBrunswickFirstNationstoassistintheirparticipationthroughouttheEIAprocess,capacity funding was also provided to New Brunswick First Nations under CEAA’s Participant

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FundingProgramandNewBrunswickFirstNationsreceivedfundingfromtheNewBrunswickandFederalgovernmentsduringtheEIAprocess.

CommunityandStakeholderEngagement

Public, stakeholder and First Nations engagement continues to be a central focus of the SissonPartnership’sactivitiesinNewBrunswick.Consistentwithitscommitmenttoresponsiblemineraldevelopment,theSissonPartnershipintendstocontinueoutreachthroughallstagesofdevelopment,operationandclosure.Publicoutreachtodatehasincludednumerouspublicopenhouses,projectandCompanywebsites,regularnewsletters,communityfocusgroupsandcommunitygiving.

AProcessAgreementwhichprovidesaframeworkforaCooperationAgreement(alsoknownasanImpactBenefitsAgreement)hasbeensignedbyNorthcliffandtheWoodstockFirstNation,aMaliseetNation communitywhose traditional territory is in the areawhere the Sisson Project is located.NegotiationstowardsaCooperationAgreementarecontinuing.

Engagement activitieswith the otherNewBrunswick FirstNations is facilitated through regularcommunications, a First Nation‐government‐Sisson Partnership EIA working group and otheractivities.

1.2.2 Financing

InOctober2013,NorthcliffenteredintoanagreementwithToddMineralsLtd.,asubsidiaryoftheTodd Corporation (together referred to herein as the “Todd Group”), whereby the Todd Groupcompletedaprivateplacementof$5millionandacquired13,888,889commonsharesofNorthcliff,becomingthelargestshareholderoftheCompanywithanapproximate15%interestinNorthcliff.

NorthcliffandtheToddGroupalsoenteredintotheSissonProjectLimitedPartnershipagreementwherebytheToddGroupacquiredaninitial11.5%interestintheSissonPartnershipforaninitialcontributionof$14millionintheSissonProject,whichwasreceivedonastagedbasisduringtheperiodofOctober2013toOctober2014.Movingforward,theSissonProjectdevelopmentcostmaybe funded by the partners in proportion to their respective ownership interest in the SissonPartnership.

The ToddGroup has the option to earn an additional 10% interest in the Sisson Partnership byinvesting $20million in the Sisson Partnership at any time up to a final investment decision tocommenceconstruction.

InMay2015,Northcliffcompleteda$2.7millionnon‐brokeredprivateplacementfinancinginwhichToddCorporation("Todd")participatedandacquiredanadditional7,380,000commonshares.Toddnowholds19.99%interestinNorthcliff.

OnJanuary14,2016,Northcliffenteredintoa$500,000LoanAgreement(the“Loan”)withanon‐arm’slengthdirectoroftheCompany(the“Lender”).TheLoanisunsecured,willbearinterestatarateof10%perannumandisrepayableaftertwelvemonthsorearlierontheoccurrenceofadefault.InconnectionwiththeLoan,NorthcliffagreedtoissuetotheLender2,000,000ofitssharepurchasewarrants,eachentitlingtheholdertoacquireonecommonshareofNorthclifffortwoyearsatapriceof$0.095pershare.OnMarch14,2016,theCompanyissued2,000,000sharepurchasewarrantstotheLenderpursuanttotheLoanagreementand399,769sharepurchasewarrantstotheToddGroup,

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withtheapprovaloftheCompany’sshareholdersandpursuanttotheirpre‐emptiverighttomaintaintheirshareholdingat19.9%.ThewarrantstotheToddGroupwereissuedunderthesametermsastheLoan,andareonlyexercisabletotheextentsharesareissuedtotheLender.

TheCompanycontinuestofocusonpreservingitscashresourceswhilemaintainingitsoperationalactivitiesassetoutabove.

1.2.3 MarketTrends

TheinformationintheMarketTrendssectionisbasedoncalendaryears.

Chinacontinuestoproducemorethan80%ofglobaltungstensupplyandholdsthelargestglobalreserves of tungsten. As the world’s largest single consumer of tungsten, China has reduced itstungstenexportsthroughseveralmeans,mostnotablythroughexportquotas,inordertofocusitssupplyonmeetingdomesticneeds. InresponsetoaWorldTradeOrganization(“WTO”)rulingin2014,theselevieswereabolishedeffectiveMay1,2015andreplacedwitha6.5percentresourcetaxchargedinChinaonthevalueofconcentrateprocessedfromminingores.

TungsteniscommonlyquotedastheintermediaryproductcalledAPT,whichispricedinUS$permtu(anmturepresents10kilogramsofWO3).

TheaverageannualpriceofAPTincreasedfromUS$237/mtuin2010toUS$428/mtuin2011.From2012tothelatterpartof2014,priceswerevariable,thendecreasedin2015.Anuptrendappearstohavebegunsinceearly2016withpricesattheendofAprilbreachingthe$200/mtubarrier.

Molybdenumpriceswerevariablebutimprovingin2010and2011,andvariablebutweakeningin2012and2013.FollowinganuptrendfromJanuarytoAugust2014,priceslargelydecreasedoverthenext18months(totheendof2015)buthavealsoimprovedsinceearly2016.

Averageannualtungstenandmolybdenumpricesoverthepastfiveyears,aswellastheaverageofpricestodatein2016,aretabulatedbelow.

YearAverageAPTPrice

(US$/mtu)AverageMoPrice

(US$/lb)2011 428 15.442012 385 12.812013 370 10.402014 344 11.592015 234 6.73

2016(tothedateofthisMD&A) 200 5.85

Source:www.metalprices.com

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1.3 SelectedAnnualInformation

Notapplicable

1.4 SummaryofQuarterlyResults

Amounts are expressed in thousands of Canadian Dollars, except per share amounts. Minordifferencesareduetorounding.

Apr302016

Jan312016

Oct312015

Jul312015

Apr302015

Jan312015

Oct312014

July312014

G&A $241 $379 $372 $520 $609 $656 $921 $1,104

Share‐basedpayments 49 68 59 16 19 45 54 138

Taxcreditreceived – – – – – – – (166)

Lossfromoperations (290) (447) (431) (536) (628) (701) (975) (1,076)

Otheritems(i) (35) (1) 4 (1) 7 13 7 20

Netloss $(325) $(448) $(427) $(537) $(621) $(688) $(968) $(1,056)

TotallossattributabletoshareholdersoftheCompany $(317) $(428) $(402) $(510) $(583) $(647) $(886) $(958)

BasicanddilutedLosspershareattributabletoshareholdersoftheCompany $– $– $– $(0.01) $– $(0.01) $(0.01) $(0.01)

Weightedaveragenumberofcommonshares(‘000’) 106,406 106,406 106,406 101,846 91,288 91,288 91,288 91,288

(i) Otheritemsincludefinanceexpenseandincome

Starting October 2013, the Company began capitalizing costs relating to the development of theSissonProject,andasaresult,nolongerrecognizedexplorationandevaluationcostsfortheproject.ThecreditreceivedduringtheJuly2014quarterrelatestoarefundableprovincialinvestmenttaxcredit forexpendituresqualifyingas scientific researchandexperimentaldevelopment thatwereincurredduringthe2011fiscalyear.

Administrativecostsgenerally follow the trendandactivity formineraldevelopmentandprojectadvancement of the Sisson Project. During the July 2014 quarter, there was significant activityinvolvedwithobtainingfinancingfortheCompany,includingobtainingservicesfromtheProject’sfinancialadvisor(SocieteGenerale)oninitialprojectdebtandequityfinancingoptions. SincetheJuly 2014 quarter, the decline in administrative costs has been consistent with overall projectspendingonengineeringcostsandcostsassociatedwiththesubmissionoftheEIAinNovember2014.

1.5 ResultsofOperations

ThefollowingfinancialdataisexpressedinCanadianDollars,unlessotherwisestated,andisroundedtonearestthousandsofdollars.

The Company’s operations and business are not driven by seasonal trends, but rather theachievement of project milestones such as the achievement of various technical, environmental,

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socio‐economic and legal objectives, including obtaining the necessary permits and regulatoryapprovals, completion of feasibility and engineering studies, preparation of engineering designs,commencement of mine construction and production and receipt of financing to fund theseobjectives.

ResultsfortheQuarterandYear‐to‐Date(“YTD”)PeriodEndedonApril30,2016vs.2015

DuringthequarterendedApril30,2016,theCompanyrecordedanetlossof$325,000(2016YTD–$773,000)comparedtoanetlossof$622,000duringthequarterendedApril30,2015(2015YTD‐$1,309,000). Of the current quarter’s net loss, $317,000was attributable to shareholders of theCompany(2016YTD–$745,000)comparedto$583,000duringthesameperiodofprioryear(2015YTD–$1,230,000).Thedecreaseinnetlossismainlyduetolowergeneralandadministrationcostscommensuratewiththedeclineinprojectrelatedactivities.

Theanalysishereinisbasedontotalexpenditures,includingamountsattributabletonon‐controllinginterests.

TheCompanyincurredgeneralandadministrationexpensesof$242,000duringthecurrentquarter(2016YTD–$621,000)comparedto$609,000duringthesamequarterofprioryear(2015YTD–1,265,000). During the prior period, there was significant activity relating to project financingmatters,aswellasmeetingswithgovernmentagencies,stakeholdersandFirstNations.Duringthecurrentquarter,thereductioningeneralandadministrationexpenseswasinlinewiththereductioninoveralloperatingactivitiesasdiscussedherein.

Duringthecurrentquarter,expensesforequity‐settledshare‐basedpaymentsincreasedto$49,000(2016YTD–$117,000)comparedto$19,000duringthelastyear’squarter(2015YTD–64,000).TheincreaserelatesmainlytothefairvalueamortizationoftheCompany’ssharepurchaseoptionsgrantedinthelastquarteroffiscalyear2015aswellasinthefirstquarterofthecurrentfiscalyear.

Duringthecurrentquarter,theCompanyrecordedfinanceexpenseof$37,000,whichcomprisesofinterestandamortizationoffinancecostrelatingtheshort‐termborrowingfromadirector.Duringtheprioryearquarter,therewasnodebtoutstanding.

FinancialpositionasatApril30,2016vs.October30,2015

The Company’s total assets at April 30, 2016 were approximately equal to its total assets atOctober30,2015.

Deferredmineraldevelopmentcostsincurredduringtheperiodwereasfollow:

Threemonthsended

April30,Sixmonthsended

April30,

2016 2015 2016 2015

Engineeringanddesign $30,928 $296,104 $164,893 $801,840

Environmentalandpermitting 12,382 328,515 29,667 618,130

Stakeholdercommunications 59,100 111,520 135,154 268,256

Total $102,410 $736,139 $329,714 $1,688.226

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1.6 Liquidity

At April 30, 2016, the Company had cash of $0.8million (October 31, 2015 – $1.1million) andnegativeworkingcapitalofapproximately$0.1million(October31,2015–workingcapitalof$0.8million).Approximately$0.3millionofthecashbalanceasatApril30,2016washeldbytheSissonPartnership.

The financing received from theMay 2015 private placement and the Todd Group to date haveallowedtheCompanytocontinueengineeringstudies,supporttheEIAprocess,preparepermittingapplications,pursueprojectfinanceinterest,advanceofftakeinterestintheproducts,aswellasfundtheCompany’songoingadministrativeandstewardshipexpenses. InJanuary2016,theCompanyreceived a $500,000 loan from one of its directors to fund working capital requirements (1.2.2Financing).

FurtheradvancementanddevelopmentoftheSissonProjectwillrequireadditionalfundingfromacombination of the Company’s shareholders, the Sisson Partnership’s existing or potential newpartners,alternativecapitalproviders,anddebtfinancing.AstheSissonProjectiscurrentlyinthedevelopmentstage,theSissonPartnershipdoesnothaveanyrevenuesfromoperations,exceptforinterest income from its cash and cash equivalents. Therefore, the Sisson Partnership relies onfunding from its partners for its continuing financial liquidity and the Company relies on equitymarket,alternativecapitalproviders,anddebtfinancingassourcesoffunding.TheCompany’sandthePartnership’splansfor2016iscenteredoncashpreservation,obtainingnewsourcesoffinancingandadvancingthepermittingprocessattheSissonProject.

TheCompanyandtheSissonProjectdonothaveanymaterialcapital leaseobligations,purchaseobligationsoranyotherlong‐termobligations.

1.7 CapitalResources

TheCompany’scurrentcapitalresourcesconsistofitscashreserves.Todate,theCompany’smainsource of fundinghas been through the issuance of equity securities for cash, primarily throughprivateplacementstoinvestorsandinstitutions,throughthecashcontributionsmadetotheSissonPartnership by the Todd Group and debt. The Company’s access to development and projectfinancingisalwaysuncertain.Therecanbenoassuranceofcontinuedaccesstosignificantequity,debtoralternativesourcesoffundingtofinancetheCompany’songoingoperations.

Exceptasdiscussedherein,theCompanyhasnolinesofcreditorothersourcesoffinancingwhichhavebeenarrangedbutareasyetunused.TherewerenoexternallyimposedcapitalrequirementstowhichtheCompanyissubjecttoandwithwhichtheCompanyhasnotcomplied.

1.8 Off‐BalanceSheetArrangements

None.

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1.9 TransactionswithRelatedParties

KeyManagementPersonnel

Thisdisclosureisprovidedinnote8oftheCompany’sunauditedcondensedconsolidatedinterimfinancialstatementsasatandforthethreeandsixmonthsendedApril30,2016,whicharepubliclyfiledonSEDARatwww.sedar.com.

HunterDickinsonInc.

DescriptionoftheRelationship

Hunter Dickinson Inc. (“HDI”) and its wholly‐owned subsidiary, Hunter Dickinson Services Inc.("HDSI"),areprivatecompaniesestablishedbyagroupofminingprofessionalsengagedinadvancingmineral properties for a number of publicly‐listed exploration companies, one of which is theCompany.

ThefollowingdirectorsorofficersoftheCompanyalsohavearolewithinHDSI:

Individual RolewithintheCompany RolewithinHDSI

MarchandSnyman Director,Chairman DirectorRobertDickinson Director DirectorScottCousens Director DirectorChristopherZahovskis Director,President,ChiefExecutiveOfficer EmployeeBryceHamming ChiefFinancialOfficer EmployeeTrevorThomas CorporateSecretary Generalcounsel

BusinessPurposeoftheRelatedPartyTransactions

HDSI provides technical, geological, corporate communications, regulatory compliance, andadministrativeandmanagementservicestotheCompany,onanas‐neededandas‐requestedbasisfromtheCompany.

HDSI also incurs thirdparty costs onbehalf of theCompany. Such thirdparty costs include, forexample,directorsandofficersinsurance,travel,conferences,andtechnologyservices.

Asaresultofthisrelationship,theCompanyhasreadyaccesstoarangeofdiverseandspecializedexpertiseonaregularbasis,withouthavingtoengageorhirefull‐timeemployeesorexperts.TheCompanybenefitsfromtheeconomiesofscalecreatedbyHDSIwhichitselfservesseveralclients.

MeasurementBasisUsed

TheCompanyprocuresservicesfromHDSIpursuanttoanagreementdatedJuly2,2010.ServicesfromHDSIareprovidedonanon‐exclusivebasisasrequiredandasrequestedbytheCompany.TheCompany is not obligated to acquire anyminimum amount of services fromHDSI. The fees forservicesfromHDSIaredeterminedbasedonacharge‐outrateforeachemployeeperformingtheserviceandforthetimespentbytheemployee.Suchcharge‐outratesareagreedandsetannuallyinadvance.

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Thirdpartycostsarebilledatcost,withoutmarkup.

OngoingContractualorOtherCommitmentsResultingfromtheRelatedPartyRelationship

TherearenoongoingcontractualorothercommitmentsresultingfromtheCompany'stransactionswithHDSI,otherthanthepaymentforservicesalreadyrenderedandbilled.Theagreementmaybeterminatedupon60days'noticebyeitheroftheCompanyorHDSI.

Transactionswithandbalancedueto/fromHDSI

Thisdisclosureisprovidedinnote8oftheCompany’sunauditedcondensedconsolidatedinterimfinancialstatementsasatandforthethreeandsixmonthsendedApril30,2016,whicharepubliclyfiledonSEDARatwww.sedar.com.

1.10 FourthQuarter

NotapplicablefortheinterimMD&A.

1.11 ProposedTransactions

There are no proposed assets or business acquisitions or dispositions, other than those in theordinarycourseofbusiness.

1.12 CriticalAccountingEstimates

Therequireddisclosureisprovidedinnote2(c)oftheCompany’sconsolidatedfinancialstatementsasatandfortheyearendedOctober31,2015,whicharepubliclyfiledonSEDARatwww.sedar.com.

1.13 ChangesinAccountingPoliciesIncludingInitialAdoption

Therequireddisclosureisprovidedinnote2(e)oftheCompany’sunauditedcondensedconsolidatedinterimfinancialstatementsasatandforthethreeandsixmonthsendedApril30,2016,whicharepubliclyfiledonSEDARatwww.sedar.com.

1.14 FinancialInstrumentsandOtherInstruments

The required disclosure is provided in note 15 of the Company’s audited consolidated financialstatements as at and for the year endedOctober 31, 2015,which arepublicly filedon SEDARatwww.sedar.com.TheCompany’suseoffinancialinstrumentsandrelatedriskshavenotsignificantlychangedsinceOctober31,2015.TheCompany’sliquiditypositionhasbeenanalyzedinsection1.6Liquidityabove.

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1.14.1 DisclosureofOutstandingShareData

ThefollowingdetailsthesharecapitalstructureasatthedateofthisMD&A:

Number

Commonshares 106,405,781

Sharepurchaseoptions 8,327,600

Sharepurchasewarrants 2,399,769

1.14.2 InternalControlsoverFinancialReportingandDisclosureControls

DisclosureControlsandProcedures

TheCompanyhasdisclosurecontrolsandproceduresinplacetoprovidereasonableassurancethatanyinformationrequiredtobedisclosedbytheCompanyundersecuritieslegislationisrecorded,processed, summarized and reported within the appropriate time periods and that requiredinformationisaccumulatedandcommunicatedtotheCompany'smanagement,includingtheChiefExecutiveOfficerandChiefFinancialOfficer,asappropriate,sothatdecisionscanbemadeaboutthetimelydisclosureofthatinformation.

InternalControlsoverFinancialReportingProcedures

TheCompany'smanagement,includingtheChiefExecutiveOfficerandtheChiefFinancialOfficer,isresponsible for establishing and maintaining adequate internal control over financialreporting. Under the supervision of the Chief Executive Officer and Chief Financial Officer, theCompany’s internal control over financial reporting is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation of consolidatedfinancialstatementsforexternalpurposesinaccordancewithIFRS.TheCompany'sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat:

a) pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsoftheCompany;

b) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with IFRS, and that receipts andexpenditures of the Company are beingmade only in accordance with authorizations ofmanagementanddirectorsofthecompany;and

c) provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition,useordispositionoftheCompany'sassetsthatcouldhaveamaterialeffectontheconsolidatedfinancialstatements.

TherehasbeennochangeinthedesignoftheCompany’sinternalcontroloverfinancialreportingthathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theCompany’sinternalcontroloverfinancialreportingduringtheperiodcoveredbythisManagement’sDiscussionandAnalysis.

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LimitationsofControlsandProcedures

TheCompany’smanagement,includingitsChiefExecutiveOfficerandChiefFinancialOfficer,believethatanysystemofdisclosurecontrolsandproceduresorinternalcontroloverfinancialreporting,nomatterhowwellconceivedandoperated,canprovideonlyreasonable,notabsolute,assurancethattheobjectivesofthecontrolsystemaremet.Furthermore,thedesignofacontrolsystemmustreflectthefactthatthereareresourceconstraintsandthebenefitsofcontrolsmustbeconsideredrelativetotheircosts.Becauseoftheinherentlimitationsinallcontrolsystems,theycannotprovideabsoluteassurance that all control issues and instances of fraud, if any, within the Company have beenpreventedordetected.Theseinherentlimitationsincludetherealitiesthatjudgmentsindecision‐makingcanbefaultyandbreakdownscanoccurbecauseofsimpleerrorormistake.Additionally,controlscanbecircumventedbytheindividualactsofsomepersons,bycollusionoftwoormorepeople,orbyunauthorizedoverrideofcontrols.Thedesignofanysystemofcontrolsisalsobasedinpartuponcertainassumptionsaboutthelikelihoodoffutureevents,andtherecanbenoassurancethat any design will succeed in achieving its stated goals under all potential futureconditions. Accordingly, because of the inherent limitations in a cost effective control system,misstatementsduetoerrororfraudmayoccurandnotbedetected.

1.15 RiskFactors

The required disclosure is provided in the “Risk Factors” section of the Company’s AnnualInformationForm(“AIF”)fortheyearendedOctober31,2015.ManagementhasnotidentifiedanyadditionalriskfactorsotherthanthedisclosureprovidedintheAIF.