FIRST COBALT CORP.

CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)
 MANAGEMENT’S COMMENTS ON
UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM

FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the
unaudited condensed interim financial statements; they must be accompanied by a notice indicating that the financial
statements have not been reviewed by an auditor.

The accompanying unaudited condensed interim financial statements of First Cobalt Corp. (the “Corporation”) have
been prepared by and are the responsibility of the Corporation’s management. The unaudited condensed interim
financial statements are prepared in accordance with International Financial Reporting Standards and reflect
management’s best estimates and judgment based on information currently available.

The Corporation’s independent auditor, MNP LLP, has not performed a review of these condensed consolidated interim
financial statements in accordance with standards established by the Chartered Professional Accountants of Canada
for a review of the condensed consolidated interim financial statements by an entity’s auditor.
FIRST COBALT CORP.
CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION
AS AT SEPTEMBER 30, 2018 (UNAUDITED)
(expressed in Canadian Dollars)
September 30, December 31,
2018 2017

ASSETS

Current Assets
Cash and cash equivalents $ 11,326,740 $ 29,817,031
Prepaid expenses and deposits (Note 4) 638,477 708,966
GST receivable 1,646,528 718,106

13,611,745 31,244,103

Non-Current Assets
Exploration and evaluation assets (Note 6) 201,551,155 +105,858,028
Plant and equipment (Note 5) 4,716,395 4,705,776

Total Assets $ 219,879,295 $ 141,807,907

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities
Accounts payable and accrued liabilities (Note 7) $ 3,210,849 $ 1,991,221
Flow-through share liability (Note 8) 303,241 1,489,760
3,514,090 3,480,981
Non-Current Liabilities
Asset retirement obligations (Note 6) 800,000 800,000

Total Liabilities $ 4,314,090 $ 4,280,981

Shareholders’ Equity
Common shares (Note 8) 232,547,096 141,945,521
Common shares to be issued - 2,214,433
Share subscriptions receivable (Note 8) - (339,928)
Reserves (Notes 9 and 10) 12,385,393 1,803,046
Warrants to be issued (Note 9) - 4,258,460
Accumulated other comprehensive income 577,037 406,930
Deficit (29,944,321) (12,761,536)

$ 215,565,204 $ 137,526,926

Total Liabilities and Shareholders’ Equity $ 219,879,295 $ 141,807,907

Nature and continuance of operations (Note 1)

Subsequent Events (Note 18)

Approved on behalf of the Board of Directors

/s/ Jeff Swinoga /s/ Trent Mell

Jeff Swinoga, Director Trent Mell, Director

The accompanying notes are integral to these condensed interim financial statements
FIRST COBALT CORP.
CONDENSED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian Dollars)
Three months Three months Nine months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
2018 2017 2018 2017

OPERATING EXPENSES
Exploration and evaluation $ 5,757,754 $ 621,687 $ 10,035,386 $ 739,261
expenditures
General and (Note 11)
administrative 201,416 340,809 758,784 712,394
Investor relations 186,466 268,583 895,096 1,268,998
Marketing and conferences 141,102 - 256,897 -
Professional fees 489,147 247,737 1,625,822 515,420
Salaries and benefits and consulting 432,119 273,385 1,672,220 613,111
fees (Note 17) payment expense
Share-based
(Note 10) 1,570,336 168,038 2,979,723 1,153,111
Travel 143,047 172,029 344,591 260,159

Operating Expenses (8,921,389) (2,092,268) (18,568,519) (5,262,455)

OTHER
Foreign exchange gain (loss) (58,221) (4,690) (59,503) 122
Interest income (expense) 101,316 2,509 201,268 3,465
Realized gain (loss) on short term - - 107,114 -
investments
Write off of exploration and
evaluation assets - - - (118,179)
Write off of debt - - 23,574 104,966
Flow-through share premium 623,150 - 1,186,519 -
Other non-operating income (3,284) - (73,238) 2,945

Net Loss (8,258,427) (2,094,449) (17,182,785) (5,269,136)

Other Comprehensive Income

Foreign currency translation (29,304) - 170,107 -

Net Loss and Comprehensive Loss $ (8,289,731) $ (2,094,449) $ (17,012,678) $ (5,269,136)

Basic and diluted loss per share $ (0.02) $ (0.00) $ (0.06) $ (0.16)

Weighted average number of shares

outstanding (basic and diluted)
(Note 12) 339,135,459 57,259,720 272,784,643 32,899,811

The accompanying notes are integral to these condensed interim financial statements
FIRST COBALT CORP.
CONDENSED INTERIM STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian Dollars)
Nine months Nine months
ended ended
September 30, September 30,
2018 2017
(Note 2)
Cash Flows used in Operating Activities
Net loss $ (17,182,786) $ (5,269,136)
Adjustments for items not affecting cash
Write-off of exploration and evaluation assets - 118,179
Write-off of debt - 104,966
Share-based payment expense 2,979,723 1,153,111
Realized gain on investments (107,114) -
Flow-through share premium (1,186,519) -

(15,388,944) (3,892,880)

Changes in non-cash working capital

Decrease (Increase) in receivables (712,145) (161,204)

Decrease (Increase) in prepaid and other
current assets 337,830 (307,886)
Increase (Decrease) in accounts payable and
accrued liabilities (1,470,140) (37,778)
Increase (Decrease) in promissory note
receivable - 220,000
Increase (Decrease) in due to related party - (13,750)

(17,525,672) (4,193,498)

Cash Flows used in Investing Activities

Capital expenditures (10,620) -
Investment in exploration and evaluation assets (1,539,854) (1,620,000)
Acquisition of US Cobalt 1,171,451 -
Short term investments (1,274,632) -

(1,653,655) (1,620,000)

Cash Flows from Financing Activities

Proceeds from issuance of common shares, net of
share issuance costs 452,429 7,113,483
Proceeds from exercise of warrants 4,000 729,000
Proceeds from exercise of options 62,500 115,000
Proceeds from subscription receivable - 12,000

518,929 7,969,483

Changes in cash during the period (18,660,398) 2,155,985

Effect of exchange rates on cash 170,107 -

Cash – Beginning of the period $ 29,817,031 $ 555,188

Cash – End of the period $ 11,326,740 $ 2,711,173

Supplemental Information (Note 15)

The accompanying notes are integral to these condensed interim financial statements
 FIRST COBALT CORP.
CONDENSED INTERIM STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(Expressed in Canadian Dollars,
except per share amounts)
Common Shares
Accumulated
Common Warrants Other
Number of Shares to be Subscriptions to be Comprehensi
Shares Amount issued receivable Reserves issued ve Income Deficit Total

Balance – December 31, 2017 219,888,826 $141,945,521 $ 2,214,433 $ (339,928) $ 1,803,046 $ 4,258,460 $ 406,930 $(12,761,536) $ 137,526,926

Net loss for the period - - - - - - - (17,182,785) (17,182,785)

Shares and units issued for:
Acquisition of property (Note 6) 117,109,290 89,095,732 (1,453,781) - - - - - 87,641,951
Cash (Note 8) 151,364 166,500 (50,000) - - - - - 116,500
Exercise of warrants (Note 9) 595,674 710,652 (710,652) - - - - - -
Exercise of options (Note 10) 250,000 62,500 - - - - - - 62,500
Vesting of LTIPs (Note 8) 1,205,842 566,746 - - (566,746) - - - -
Subscriptions received - - - 339,928 - - - - 339,928
Fair value of options exercised - 23,662 (23,662)
Warrants issued - (24,218) - - 4,282,678 (4,258,460) - - -
Stock options issued on acquisition
of US Cobalt Inc. (Note 6) - - - - 3,910,355 - - - 3,910,355
Share-based payment expense - - - - 2,979,723 - - - 2,979,723
Unrealized gain on foreign
exchange translation - - - - - - 170,107 - 170,107

Balance – September 30, 2018 339,200,996 $232,547,095 $ - $ - $12,385,394 $ - $ 577,037 $ (29,944,321) $ 215,565,205

Balance – December 31, 2016 22,657,750 $ 2,610,952 $ - $ - $ 808,268 $ - $ - $ (2,644,811) $ 774,409

Net loss for the period - - - - - - - (5,269,133) (5,269,133)

Shares and units issued for:
Acquisition of property
(Note 6) 11,350,000 4,261,500 - - - - - - 4,261,500
Cash (Note 8) 14,050,001 7,214,001 - - - - - - 7,214,001
Exercise of warrants (Note 9) 7,600,000 1,077,162 - - (348,162) - - - 729,000
Issuance of stock options
(Note 10) - - - - 1,153,111 - - - 1,153,111
Exercise of stock options
(Note 10) 400,000 165,076 - - (50,076) - - - 115,000
Subscription receivable 16,000 - - (4,000) - - - 12,000
Share issuance costs (Note 8) 1,200,000 (172,212) - - - - - - (172,212)

Balance – September 30, 2017 57,257,751 $ 15,172,479 $ - $ - $ 1,559,141 $ - $ - $ (7,931,944) $ 8,817,676

The accompanying notes are integral to these condensed interim financial statements
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

1. General Information and Nature of Operations

First Cobalt Corp. (the “Corporation” or “First Cobalt”) was incorporated on July 13, 2011 under the Business
Corporations Act of British Columbia (the “Act). On September 4, 2017, the Corporation filed a Certificate of
Continuance into Canada and adopted Articles of Continuance as a Federal Company under the Canada
Business Corporations Act (the “CBCA”). The Corporation is in the business of acquisition and exploration of
resource properties. The Corporation is focused on building a North American supply of cobalt.

First Cobalt is a public company which is listed on the Toronto Venture Stock Exchange (TSX-V) and Australian
Stock Exchange (ASX) (in both instances under the symbol FCC). The Corporation’s registered office is Suite
2400, Bay-Adelaide Centre, 333 Bay Street, Toronto, Ontario, M5H 2T6 and the corporate head office is located
at 140 Yonge Street, Suite 201, Toronto, Ontario, M5C 1X6.

Nature of Operations

The Corporation is in the process exploring and developing its mineral properties. The recoverability of the
amounts shown for mineral properties is dependent upon the existence of economically recoverable reserves,
successful permitting, the ability of the Corporation to obtain necessary financing to complete exploration and
development, and upon future profitable production or proceeds from disposition of each mineral property.
Furthermore, the acquisition of title to mineral properties is a complicated and uncertain process, and while the
Corporation has taken steps in accordance with normal industry standards to verify its title to the mineral
properties in which it has an interest, there can be no assurance that such title will ultimately be secured. The
carrying amounts of mineral properties are based on costs incurred to date, and do not necessarily represent
present or future values.

2. Significant accounting policies and basis of preparation

Statement of Compliance
These condensed interim financial statements, including comparatives, have been prepared in accordance with
International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”) using accounting policies
consistent with IFRS issued by the International Accounting Standards Board (“IASB”) and interpretations of the
International Financial Reporting Interpretations Committee (“IFRIC”). Accordingly, these condensed interim
consolidated financial statements do not include all of the information and footnotes required by IFRS for
complete financial statements for year-end reporting process.

These condensed interim consolidated financial statements follow the same accounting policies and methods
of application as the Corporation’s audited financial statements for the nine months ended December 31, 2017.
The policies applied in these condensed interim consolidated financial statements are based on IFRS issued as
of October 30, 2018, the date the Board of Directors approved the financial statements. These condensed
interim consolidated financial statements should be read in conjunction with the Corporation’s consolidated
financial statements for the nine months ended December 31, 2017.

Functional Currency
The functional currency of the Corporation and its controlled entities are measured using the principal currency
of the primary economic environment in which each entity operates. The functional currency of the Corporation
and its subsidiaries is Canadian dollars, except for Cobalt One which has a functional currency of Australian
Dollars.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the date of the transaction. Foreign currency monetary items are retranslated at the period-end exchange rate.
Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the
transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair
values were determined.

Page 8
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

2. Significant accounting policies and basis of preparation (continued)

Foreign exchange differences on monetary items are recognized in profit or loss in the period in which they arise
except for:

• Exchange differences on foreign currency borrowings relating to assets under construction for future
productive use, which are included in the costs of assets when they are regarded as an adjustment to
interest costs on those currency borrowings
• Exchange differences on transactions entered into in order to hedge certain foreign currency risks and
• Exchange differences on monetary items receivable from or payable to a foreign operation which
settlement is neither planned nor likely to occur, which are recognized initially in other comprehensive
income and reclassified from equity to profit or loss on repayment of the monetary items.

Basis of consolidation
These consolidated financial statements include the accounts of the Corporation and its controlled entities.
Control is achieved when the Corporation has the power to govern the financial operating policies of an entity
so as to obtain benefits from its activities. Subsidiaries are fully consolidated from the date on which control is
transferred to the Corporation until the date on which control ceases.

The following subsidiaries has been consolidated for all dates presented within these financial statements:

Subsidiary Ownership Location

Cobalt Projects International Corp. 100% Canada
Cobalt Industries of Canada Corp. 100% Canada
First Cobalt Holdings (Cayman) Ltd. 100% Cayman Islands
First Cobalt (Cayman) Ltd. 100% Cayman Islands
Cobalt One Limited 100% Australia
CobalTech Mining Inc. 100% Canada
US Cobalt Inc. 100% Canada

All inter-company transactions, balances, income and expenses are eliminated in full upon consolidation.

Comparative Figures
In 2017, the Corporation changed its fiscal year end from March 31, 2017 to December 31, 2017. Accordingly,
the comparative period being the nine months ended September 30, 2017 has been reclassified to conform to
the current period’s presentation.

3. Recent accounting standards issued but not yet effective

The Corporation has reviewed amendments to accounting pronouncements that have been issued but are not
yet effective and determined that the following may have an impact on the Corporation:

IFRS 9 Financial Instruments

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which replaces IAS 39 Financial
Instruments: Recognition and Measurement. IFRS 9 includes requirements for recognition and measurement,
impairment, de-recognition and general hedge accounting. IFRS 9 is effective for annual period beginning on
or after January 1, 2018. The Corporation does not expect the adoption of IFRS 9 to have an impact on the
consolidated financial statements.

IFRS 15 Revenue from Contracts with Customers

In May 2014, the International Accounting Standards Board (“IASB”) issued IFRS 15 Revenue from Contracts
with Customers, which specifies how and when an entity will recognize revenue as well as requiring entities to
provide users of financial statements with more informative, relevant disclosures. IFRS 15 is effective for annual
period beginning on or after January 1, 2018. The Corporation does not expect the adoption of IFRS 15 to have
an impact on the consolidated financial statements.

Page 9
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

3. Recent accounting standards issued but not yet effective (continued)

IFRS 16 - Leases
This new standard was issued with the objective to recognize all leases on the balance sheet. IFRS 16 requires
lessees to recognize a “right of use” asset and a lease liability calculated using a prescribed methodology. The
mandatory effective date of IFRS 16 is for annual periods beginning on or after January 1, 2019. Early adoption
is permitted provided that IFRS 15, Revenue from Contracts with Customers, is also adopted. The Corporation
is currently assessing the impact these standards and amendments may have on its financial statements.

IFRS 2 – Share-based Payment

On June 30, 2016, the IASB issued amendments to IFRS 2 Share-based Payment, clarifying how to account
for certain types of share-based payment transactions. The amendments provide requirements on the
accounting for the effects of vesting and non-vesting conditions on the measurement of cash-settled share-
based payments, share-based payment transactions with a net settlement feature for withholding tax obligations,
and a modification to the terms and conditions of a share-based payment that changes the classification of the
transaction from cash-settled to equity-settled. The amendments apply for annual periods beginning on or after
January 1, 2018. The Corporation intends to adopt the amendments to IFRS 2 in its consolidated financial
statements for the annual period beginning on January 1, 2018. The extent of the impact of adoption of the
standard has not yet been determined. The Corporation has reviewed the amendments to IFRS 2 and there is
no impact on the consolidated financial statements.

4. Prepaid expenses and deposits

September 30, December 31,

2018 2017

Prepaid expenses $ 527,998 $ 619,378

Deposits 110,479 89,588

$ 626,977 $ 708,966

5. Plant and Equipment

As part of the acquisition of Cobalt One Limited (“Cobalt One”), the Corporation acquired the properties, permits,
assets and rights of a cobalt-silver-nickel refinery (“Refinery”) located in North Cobalt, Ontario, Canada. The
carrying value of the Refinery is $4,716,395 (December 31, 2017 - $4,705,775) (Note 6). As at September 30,
2018, the Corporation’s estimated closure costs for the Refinery are estimated to be $800,000 (December 31,
2017: $800,000) and are recorded as asset retirement obligations. No depreciation was recorded for the
Refinery in the current year.

Page 10
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

6. Exploration and Evaluation Assets

Balance Balance Balance

March 31, Acquisition December 31, Acquisition September 30,
2017 Costs Write-Down 2017 Costs 2018

Iron Creek, USA $ - $ - $ - $ - $ 95,343,151 $ 95,343,151

Paradox Basin, USA 212,142 212,142
Cobalt North, Canada
Kerr Lake area - 13,026,368 - 13,026,368 - 13,026,368
Cobalt North Properties - 56,018,275 - 56,018,275 - 56,018,275
Cobalt Central, Canada -
Cobalt Central Properties 31,050,209 - 31,050,209 88,333 31,138,542
Cobalt South, Canada
South Lorrain 1,810,000 10,000 - 1,820,000 7,500 1,827,500
Keeley-Frontier - 3,156,876 - 3,156,876 42,000 3,198,876
Bellellen - 325,000 - 325,000 - 325,000
Werner Lake East, Canada - 296,300 - 296,300 - 296,300
Dickens Lake, Canada 375,058 - (375,058) - - -
Quebec Properties, Canada - 165,000 - 165,000 - 165,000

Total $ 2,185,058 $ 104,048,028 $ (375,058) $ 105,858,028 $ 95,693,126 $ 201,551,154

(a) Acquisition of US Cobalt Inc. (Iron Creek)

On June 4, 2018, the Corporation completed the acquisition of US Cobalt Inc. (“US Cobalt”) buy acquiring 100%
of the issued and outstanding common shares of US Cobalt. Under the terms of the agreement, US Cobalt
received 115,318,357 common shares of the Corporation at $0.76 per share, based on the trading price of the
shares on May 23, 2018, totalling $87,641,951. In addition, the Corporation paid $1,381,746 for 1,410,500 of
US Cobalt shares and issued 9,360,000 First Cobalt stock options to former US Cobalt option holders.

This acquisition has been recorded as an asset purchase of exploration and evaluation assets with the costs of
the acquisition allocated as follows:

Purchase price:
Common shares issued (115,318,357 shares at $0.76 per share) $ 87,641,951
Common shares owned by First Cobalt (1,410,500 shares) 1,381,746
Stock options of US Cobalt (9,360,000 stock options) 3,910,355
92,934,052

Net assets acquired:

Current assets $ 1,459,019
Current liabilities (2,689,768)
Exploration and evaluation asset 94,164,801
$ 92,934,052

The exploration and evaluation asset acquired from US Cobalt has been allocated to Iron Creek property.

During the nine months ended September 30, 2018, the Corporation purchased 1,410,500 publicly traded
common shares of US Cobalt Inc. valued at $1,278,237. Management has determined it appropriate to record
the investments as financial assets and the changes in fair values being recording through profit or loss. Any
changes in the fair value of the common shares and warrants is recorded as unrealized gain or loss of
investments until the investments are sold or impaired for an extended period, at which point any gains and
losses recorded to date will be recognized as gain or loss on investments. On June 4, 2018, the Company
acquired US Cobalt, and 1,410,500 common shares of US Cobalt were sold as part of the acquisition. The fair
market value of the common shares as at May 23, 2018 (date of US Cobalt shareholder approval of the

Page 11
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

6. Exploration and Evaluation Assets (continued)

transaction), was $1,385,351 and therefore a realized gain on investments of $107,114 was recorded during the
nine months ended September 30, 2018.

During the three months ended September 30, 2018, the Corporation acquired 100% ownership of the Iron
Creek Project by making a one-time payment of $1,390,493, (USD $1,067,000). The Iron Creek Project was
previously under lease to the Corporation. Under the terms of the lease, the Corporation was required to make
monthly payments and the leaseholder retained 4% royalty over future production, both of which were eliminated
through this one-time payment. The payment made to acquire the project and eliminate the royalty was a 47%
discount to the amount contained in a 2016 mining lease agreement.

(b) Acquisition of Cobalt One Limited (“Cobalt One”)

On June 23, 2017, the Corporation entered into a letter of intent with Cobalt One to acquire 100% of the issued
and outstanding common shares of Cobalt One. Under the terms of the agreement, Cobalt One shareholders
received 0.145 of a common share of the Corporation for each Cobalt One ordinary share, based on a share
exchange ratio using the last trading price ($0.76) of the Corporation’s shares on June 23, 2017.

In November 2017, the Corporation completed the acquisition of all the issued and outstanding shares of Cobalt
One through the issuance of 107,948,909 common shares. The fair value of the shares was measured by the
last trading price ($0.73) of the date of shareholder approval, November 20, 2017.

This acquisition has been recorded as an asset purchase of exploration and evaluation assets with the costs of
the acquisition allocated as follows:

Purchase price:
Common shares issued (107,948,909 shares at $0.73 per share) $ 78,802,704

Net assets acquired:

Current assets $ 1,127,637
Current liabilities (854,463)
Plant and equipment (Note 6) 4,476,528
Asset retirement obligations (800,000)
Exploration and evaluation asset 74,853,002
$ 78,802,704

The exploration and evaluation asset acquired from Cobalt One has been allocated to Cobalt North, Ontario
(comprised primarily the Silverfields mine and other Cobalt North Properties) and Cobalt Central, Ontario.

In relation to the acquisition of Cobalt One and CobalTech, the Corporation capitalized acquisition costs of
$1,143,861 to be paid in the form of 1,566,934 common shares measured at a fair value of $0.73 per share.
The Corporation has attributed $875,301 of the acquisition cost to the exploration assets of Cobalt One based
on the value of the net assets acquired.

(c) Acquisition of CobalTech Inc. (“CobalTech”)

On August 18, 2017, the Corporation entered into an arrangement agreement with CobalTech to acquire 100%
of the issued and outstanding common shares of CobalTech. Under the terms of the agreement, CobalTech
shareholders received 0.2632 of a common share of the Corporation for each CobalTech ordinary share, based
on the share exchange ratio using last trading price ($0.76) of the Corporation’s shares on June 23, 2017.

In November 2017, the Corporation completed the acquisition of all the issued and outstanding shares of
CobalTech through the issuance of 24,422,438 common shares. The fair value of the shares was measured by
the last trading price ($0.99) of the date of shareholder approval, November 22, 2017.

Page 12
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

6. Exploration and Evaluation Assets (continued)

This acquisition has been recorded as an asset purchase of exploration and evaluation assets with the costs of
the acquisition allocated as follows:

Purchase price:
Common shares issued (24,422,438 shares at $0.99 per share) $ 24,178,214

Net assets acquired:

Current assets $ 1,122,415
Current liabilities (211,789)
Exploration and evaluation asset 23,267,588
$ 24,178,214

The exploration and evaluation asset acquired from CobalTech has been allocated to Other Cobalt North
Properties (comprising of Kerr, Drummond, Conisil, and Silver Banner.), Werner Lake East Cobalt and Quebec
Properties.

In relation to the acquisition of Cobalt One and CobalTech, the Corporation capitalized acquisition costs of
$1,143,861 to be paid in the form of 1,566,933 common shares measured at a fair value of $0.73 per share.
The Corporation has attributed $268,660 of the acquisition cost to the exploration assets of CobalTech based
on the value of the net assets acquired.

(d) Acquisition of Cobalt Projects International Corp. (Keeley-Frontier)

On April 10, 2017, the Corporation acquired all of the outstanding share capital of Cobalt Projects International
Corp., a privately held Ontario-based mineral exploration company. Cobalt Project holds the rights to earn up to
a 100% interest from Canadian Silver Hunter Inc. in the Keeley and Frontier mines (“Keeley-Frontier”), located
within the historic Silver Centre camp, and bordering on the Corporation’s existing South Lorrain cobalt claim
blocks. As consideration for the acquisition, the Corporation issued 4,450,000 common shares, with a fair value
of $2,430,000, to existing shareholders of Cobalt Projects, which vest in 6 equal tranches over a 4 to 18-month
period. Additionally, promissory notes totaling $435,000 were forgiven. The fair value of the common shares
transferred was estimated to be $2,430,000 using the Black-Scholes Option Pricing Model, assuming a risk free
rate of 0.76%, an expected life of 0.67 years, an expected volatility of 88% and a an exercise price of $0.70 per
share.

Under the terms of the option agreement between Cobalt Projects and Canadian Silver Hunter, the Corporation
may earn up to 100% interest in Keeley-Frontier as follows:

• 50% interest upon payment of $850,000 (of which $550,000 has been paid) and incurring expenditures of
$1,750,000 on the property over a period of three years.

Page 13
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

6. Exploration and Evaluation Assets (continued)

• 51% interest upon payment of $200,000 within 60 days of having exercised the first option and producing
a technical report in compliance with NI 43-101 – Standards of Disclosure for Mineral Projects by the fourth
anniversary.
• 100% interest upon payment of $750,000 and incurring additional expenditures of $1,250,000 by the fifth
anniversary.

Upon earning a 100% interest, Canadian Silver Hunter shall be granted a 2% net smelter return royalty, subject
to the Corporation having the right to purchase 1% for $1 million over the ensuing 10 years. The Corporation
may elect to accelerate the earn-in.

(e) Acquisition of Cobalt Industries of Canada Inc. (South Lorrain)

On December 12, 2016, the Corporation entered into an agreement to acquire all of the outstanding share
capital of Cobalt Industries of Canada Inc. (“Cobalt Industries”), a privately-held Ontario-based mineral
exploration company. Cobalt Industries holds the “South Lorrain Cobalt” claim group, which consists of 17 claim
blocks covering an area of 1,950 hectares or 19.50 square kilometers. The claim group is located adjacent to
the Keeley-Frontier property in the former mining camp of Silver Centre, Ontario, Canada, approximately 30
kilometers south of the town of Cobalt, Ontario.

In consideration for the acquisition, the Corporation issued 6,900,000 common shares for all outstanding share
capital of Cobalt Industries with a fair value of $0.25 per share.

As of the acquisition date of Cobalt Industries, management of the Corporation concluded that the acquisition
does not constitute a business combination as determined by IFRS 3 Business Combinations, the acquisition
was accounted for as an asset acquisition.

During the nine months ended September 30, 2018, the Corporation paid $7,500 option payment for a South
Lorrain property.

(f) Dickens Lake Property

On July 5, 2012, the Corporation acquired a 90% interest in the Dickens Lake Property, located in
Saskatchewan, Canada from Unity Energy Corp. (“Unity”) in exchange for 3,182,750 common shares of the
Corporation with a fair value of $1,466,749. The fair value of the common shares was equal to Unity’s carrying
value of the Dickens Lake Property.

The Dickens Lake Property is subject to a 2% net smelter royalty (“NSR”), which may be purchased by the
Corporation for $1,500,000. During the year ended March 31, 2017 the Corporation re-purchased 1.5% of the
2% NSR for $164,963. The total carrying value of $375,058 relating to Dickens Lake property was written down
to $nil as at December 31, 2017 and as of June 2018, these claims have all lapsed.

(g) Gold Rush Cariboo

On December 7, 2017, the Corporation entered into an agreement to acquire mineral claims from Gold Rush
Cariboo Inc. in exchange for 224,000 common shares at a fair value of $1.33 per share for a total carrying value
of $297,920. During the six months ended June 30, 2018, the 224,000 common shares were issued (Note 9).
These claims are included within the Cobalt Central Properties.

Page 14
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

7. Accounts Payable and Accrued Liabilities

September 30, December 31,

2018 2017

Accounts Payable $ 2,753,210 $ 1,485,471

Accrued Liabilities 457,639 505,750

$ 3,210,849 $ 1,991,221

Accounts payable and accrued liabilities comprise primarily of trade payables incurred in the normal course of
business. Included in accounts payable are amounts total $69,704 (December 31, 2017 - $219,764) due to
related parties (see note 17).

8. Share Capital

(a) Authorized Share Capital

The Corporation is authorized to issue an unlimited number of common shares without par value. As at
September 30, 2018, the Corporation had 339,200,986 (December 31, 2017 – 219,888,826 common
shares outstanding.

(b) Issued Share Capital

During the nine-month period ended September 30, 2018, the Corporation issued common shares as
follows:

• On July 15, 2018, the Corporation issued 1,205,842 common shares on the vesting and entitlement
of certain DSUs, PSUs, and RSUs.

• On January 16, 2018, as part of the Offering, the Corporation completed a non-brokered private
placement by issuing 151,364 Units at $1.10 per unit for gross proceeds of $166,500. Each Unit
consists of one common share of the Corporation and one-half of one common share purchase
warrant (each whole common share purchase warrant (a “Warrant”)) of the Corporation. Each full
Warrant is exercisable at $1.50 per share for a period of 24 months following the date of issue of
Warrants.

• The Corporation issued 595,674 common shares on exercise of warrants which was recorded as
common shares to be issued as at December 31, 2017. The funds of $710,652 were received during
the nine months ended December 31, 2017.

• The Corporation issued 224,000 common shares at a fair value of $297,920 to acquire mineral claims
from Gold Rush Cariboo Inc. (Note 6Error! Reference source not found.).

• In relation to the acquisition of Cobalt One and CobalTech (see Note 6(a)), the Corporation capitalized
acquisition costs of $1,143,861 to be paid in the form of 1,566,934 common shares measured at a
fair value of $0.73 per share.

Page 15
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

8. Share Capital (continued)

• In relation to the acquisition of US Cobalt (see Note 6(a)), the Corporation capitalized acquisition
costs of $87,641,951 to be paid in the form of 115,318,357 common shares measured at a fair value
of $0.76 per share.

• 250,000 stock options were exercised at $0.25 per share for gross proceeds of $62,500.

During the nine-month period ended December 31, 2017, the Corporation issued common shares as
follows:

• The Corporation issued 9,840,728 common shares on exercise of warrants for total gross proceeds
of $1,164,830, of which $42,008 is recorded as a subscription receivable. The Corporation received
funds of $710,652 for the exercise of 595,674 warrants. The amount is recorded as common shares
to be issued.

• The Corporation issued 1,175,000 common shares on exercise of stock options for total gross
proceeds of $359,250.

• On April 10, 2017, the Corporation issued 4,450,000 common shares with a fair value of $2,430,000
for the acquisition of Cobalt Projects.

• On May 31, 2017, the Corporation issued 2,050,001 flow-through shares at $0.60 per share for total
gross proceeds of $1,230,001. In connection with the flow-through share offering, the Corporation
paid cash finders’ fee of $37,029.

The Corporation renounced $1,230,001 under the general method on December 31, 2017. As at
December 31, 2017, the Corporation has spent all proceeds reserved for flow-through exploration
expenditures.

• On November 30, 2017, the Corporation issued 107,948,909 common shares at $0.73 per share for
the acquisition of Cobalt One (Note 6(b)).

• On November 30, 2017, the Corporation issued 24,422,438 common shares at $0.99 per share for
the acquisition of CobalTech (Note 6(c)).

• On December 21, 2017, the Corporation issued on a bought deal basis (i) 4,700,000 units of the
Corporation (“Flow-Through Units”) at $1.51 per unit and 20,950,000 units (the “Units”) at $1.10 per
unit for gross proceeds of $30,142,000 (the “Offering”).

Each Unit consists of one common share of the Corporation and one-half of one common share
purchase warrant (each whole common share purchase warrant (a “Warrant”)) of the Corporation.
Each Flow-Through Unit consists of one ‘flow-through share’ (a “Flow-Through Share”) of the
Corporation and one-half of one Warrant. Each full warrant is exercisable at $1.50 per share for a
period of 24 months following the date of issue of Warrants.

Of the cash proceeds received from the Units, $24,492,000 was allocated to share capital and
$4,193,000 was allocated to warrants based on their relative fair value.

The amount of the flow-through share liability associated with the flow-through shares was
determined to be $1,457,000 based on the difference between the fair value price per share of the
Flow-Through Units and the Units.

Page 16
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

8. Share Capital (continued)

The Corporation renounced $7,097,000 under the look-back method on December 31, 2017. During
the nine months ended September 30, 2018, the Corporation spent $5,893,727 of flow-through
exploration expenditures and therefore has reclassified $1,186,519 of the flow-through share liability
to other income. The Corporation intends to spend the remaining balance of $1,506,273 in the fiscal
year ending December 31, 2018.

• Concurrent with the Offering, the Corporation completed a non-brokered private placement on
December 28, 2017 of 234,000 Flow-Through Units at $1.33 per unit for gross proceeds of $311,220,
of which $297,920 is recorded as a subscription receivable. Each Flow-Through Unit consists of one
flow-through share and one-half share purchase warrant. Each full warrant is exercisable at $1.50
per share for 24 months from the date of issue of Warrants. The issuance of the warrants is subject
to shareholder approval.

The amount of the flow-through share liability associated with the flow-through shares was
determined to be $32,760 based on the difference between unit price of the flow-through unit less the
stock price as at the date of grant. The remaining proceeds from the flow-through shares, after
deducting the flow-through share liability was $278,460, of which $213,000 was allocated to share
capital and $65,460 was allocated to warrants based on their relative fair value. As at December 31,
2017, the Corporation has recorded the warrants as warrants to be issued.

The Corporation renounced $311,220 under the look-back method on December 31, 2017. As at
December 31, 2017, the Corporation has not spent any proceeds reserved for flow-through
expenditures and intends to spend the balance of $311,220 in the fiscal year ending December 31,
2018.

• The issuance of the Warrants was subject to the approval of the Australian Stock Exchange (“ASX”)
and approval of the shareholders of the Corporation. Pursuant to ASX listing requirements, the
Corporation called a special meeting of shareholders to seek approval for the issuance of the
Warrants. On March 9, 2018, the shareholders of the Corporation have approved the issuance of all
common share purchase warrants under the Offering. Accordingly, an aggregate of 13,017,682
common share purchase warrants which formed part of the Corporation’s December 2017 bought
deal private placement (12,825,000 warrants) and non-brokered private placement (192,682
warrants) were issued.

Page 17
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

9. Warrants

Details regarding warrants issued and outstanding are summarized as follows:

Weighted Number of shares

Average exercise issued or issuable
price on exercise

Balance – March 31, 2017 $0.10 9,840,000

Issuance of warrants $1.14 1,674,584

Issuance of warrants $1.20 526,400
Exercise of warrants $0.06 (700,000)
Exercise of warrants $0.10 (8,940,000)
Exercise of warrants $1.14 (270,002)
Exercise of warrants $1.20 (526,400)
Expiry of warrants, unexercised $1.14 (1,404,582)

Balance – December 31, 2017 $0.06 200,000

Issuance of warrants $1.50 13,017,682

Balance – September 30, 2018 $1.48 13,217,682

The expiry of warrants are as follows:

Number of Weighted Average

Grant Date Expiry Date warrants issued Exercise Price

May 31, 2016 May 31, 2021 200,000 $0.06

January 16, 2018 January 16, 2020 13,017,682 $1.50

13,217,682 $1.48

During the nine months ended December 31, 2017, the Corporation issued 2,200,984 share purchase warrants
and received subscriptions for 12,942,000 share purchase warrants which were issued after year end (Note 10).
The total fair value of $4,258,460 was recorded in equity. The fair value of the warrants has been estimated
using the Black-Scholes Option Pricing Model assuming a risk free interest rate of 1.68% to 1.69%, an expected
life of 2 years, an expected volatility of 74% to 133% and no expected dividends.

During the nine months ended September 30, 2018, the Corporation issued 75,682 share purchase warrants
(see Note 8(b)). The total fair value of $24,218 was recorded in equity. The fair value of the warrants has been
estimated using the Black-Scholes Option Pricing Model assuming a risk-free interest rate of 1.73%, an
expected life of 2 years, an expected volatility of 92.8% and no expected dividends.

Page 18
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

10. Share based payments

The Corporation adopted a new long-term incentive plan on June 27, 2018 (the “Plan”) whereby it can grant
stock options, restricted share units (“RSUs”), Deferred Share Units (“DSUs”), and Performance Share Units
(“PSUs”) to directors, officers, employees, and consultants of the Corporation. The maximum number of shares
that may be reserved for issuance under the Plan is limited to 10% of the issued common shares of the
Corporation at any time.

(a) Stock Options

The changes in incentive share options outstanding are summarized as follows:

Weighted Number of
average shares issued
exercise or issuable on
price exercise Amount

Balance – March 31, 2017 $0.50 4,050,000 $ 1,013,473

Stock options granted $1.07 3,248,482 --

Share based compensation expense - - 468,716
Stock options exercised $0.31 (1,175,000) (162,522)

Balance – December 31, 2017 $0.95 6,123,482 $ 1,319,667

Stock options cancelled1 $1.43 (1,683,482) -

Stock options granted1 $1.43 1,683,482 -
Stock options granted $0.49 2,273,333 -
Stock options granted $0.40 9,360,000 -
Stock options granted $0.33 1,300,000 -
Stock options granted $0.33 1,000,000 -
Share based compensation expense - - 1,249,080
Stock options exercised $0.25 (250,000) (23,662)
Balance – September 30, 2018 $0.54 19,806,815 $ 2,545,085

1.
On December 1, 2017, the Board of Directors of the Corporation approved the grant of 1,683,482 stock
options to certain directors, officers, employees and consultants of the Corporation under its Amended and
Restated Long-Term Incentive Plan (“LTIP”). The manner in which the Granted Securities under the LTIP
were granted did not comply with the ASX Listing Rules and therefore, at the request of the ASX the Granted
Securities were cancelled on May 24, 2018. Under the rules of the TSX-V, this method of making long-term
incentive grants to directors, officers, employees and consultants under an approved long-term incentive plan
is customary. However, since the Corporation’s admission to the ASX, it must also comply with Australian
listing rules, which vary in a few significant respects. On June 27, 2018, these options were re-issued on the
same terms.

During the nine months ended September 30, 2018, the Corporation also issued an aggregate of 15,616,815
incentive options at an average exercise price of $0.51 per share.

The fair value of options at the date of grant was estimated using the Black-Scholes Option Pricing Model,
assuming a risk-free interest rate of 1.57% to 2.39% per annum, an expected life of options of 2.5 to 3.5 years,
an expected volatility of 112.26% to 134.28%, and no expected dividends.

Page 19
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

10. Share based payments (continued)

Incentive share options outstanding and exercisable September 30, 2018 are summarized as follows:

Options Outstanding Options Exercisable

Number of Weighted Weighted Number of Weighted

Shares Average Average Shares Average
Issuable on Remaining Exercise Issuable on Exercise
Exercise Price Exercise Life (Years) Price Exercise Price

$0.35 350,000 3.28 $0.35 350,000 $0.35

$0.33 2,300,000 5.40 $0.33 250,000 $0.33
$0.38 300,000 3.23 $0.38 300,000 $0.38
$0.66 1,975,000 3.42 $0.66 1,975,000 $0.66
$0.69 1,565,000 3.67 $0.69 465,516 $0.69
$1.43 1,683,482 4.74 $1.43 695,738 $1.43
$0.49 2,273,333 4.74 $0.49 - $0.49
$0.294 3,281,250 0.34 $0.294 3,281,250 $0.294
$0.294 187,500 3.36 $0.294 187,500 $0.294
$0.358 393,750 0..34 $0.358 393,750 $0.358
$0.358 562,500 2.63 $0.358 562,500 $0.358
$0.418 1,200,000 0.34 $0.418 1,200,000 $0.418
$0.418 225,000 3.84 $0.418 225,000 $0.418
$0.511 2,250,000 0..04 $0.511 2,250,000 $0.511
$0.511 810,000 4.30 $0.511 810,000 $0.511
$0.518 450,000 4.34 $0.518 450,000 $0.518

19,806,815 1.79 $0.54 13,396,254 $0.50

(b) Deferred Share Units (DSUs), Performance Share Units (PSUs), and Restricted Share Units
(RSUs)

During the nine-months ended December 31, 2017, the Corporation issued 898,964 DSUs to certain non-
executive directors of the Corporation and 581,682 PSUs to the chairman and certain officers of the
Corporation. DSUs vest immediately and may not be exercised until a director ceases to serve on the board.
PSUs may vest in two tranches over a 12-month period contingent on achieving strategic corporate objectives.
The manner in which the Granted Securities under the LTIP were granted did not comply with the ASX Listing
Rules and therefore, at the request of the ASX the Granted Securities were cancelled on May 24, 2018. Under
the rules of the TSX-V, this method of making long-term incentive grants to directors, officers, employees and
consultants under an approved long-term incentive plan is customary. However, since the Corporation’s
admission to the ASX, it must also comply with Australian listing rules, which vary in a few significant respects.
On June 27, 2018, the Corporation received approval from requisite shareholders and securities regulators
and as such, these LTIPs were re-issued.

In addition, during the nine months ended September 30, 2018, the Corporation issued 255,000 RSUs,
120,833 PSUs, and 765,000 DSUs to certain officers and directors of the Corporation. DSUs vest immediately
and may not be exercised until a director ceases to serve on the board. PSUs may vest in two tranches over
a 12-month period contingent on achieving strategic corporate objectives. RSUs vested immediately.

During the nine months ended September 30, 2018, the Corporation has recorded $884,719 (2017: $144,407)
for DSUs, $720,209 (2017: $nil) for PSUs and $125,715 (2017 $nil) for RSUs as share-based payment
expense for DSUs and PSUs respectively.

Page 20
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

11. Exploration and Evaluation Expense

Exploration and evaluation expenditures incurred for the nine months ended September 30, 2018 and 2017
are as follows

September 30, 2018 September30, 2017

Cobalt, Iron Creek, Cobalt, Iron Creek,
Canada USA Total Canada USA Total

Drilling $ 2,078,336 $ 2,416,643 $ 4,494,979 $ 378,325 $ - $ 378,325

Exploration support
and administration 16,588 765 17,353 19,505 - 19,505
Field Operations and
consumables 121,862 - 121,862 118,031 - 118,031
Geochemistry 1,300,633 329,556 1,630,189 78,781 - 78,781
Geological
consulting 556,674 9,133 565,807 144,619 - 144,619
Geologist Salaries 870,559 - 870,559
Property taxes 22,301 - 22,301 - - -
Sampling and
geological costs 928,024 1,384,312 2,312,336 - - -

$ 5,894,977 $ 4,140,409 $ 10,035,386 $ 739,261 $ - $ 739,261

12. Loss Per Share

The following table sets forth the computation of basic and diluted loss per share for nine months ended
September 30, 2018 and 2017:

September 30, September 30,

2018 2017

Numerator
Net loss for the period $ (17,182,785) $ (5,269,136)

Denominator
Basic – weighted average number of shares
outstanding 272,784,643 32,899,811
Effect of dilutive securities - -
Diluted – adjusted weighted average number
of shares outstanding 272,784,643 32,899,811

Loss Per Share – Basic and Diluted $(0.06) $(0.16)

The basic loss per share is computed by dividing the net loss by the weighted average number of common
shares outstanding during the year.

The diluted loss per share reflects the potential dilution of common share equivalents, such as outstanding stock
options, and share purchase warrants, in the weighted average number of common shares outstanding during
the year, if dilutive.

Share purchase warrants and stock options were excluded from the calculation of diluted weighted average
number of common shares outstanding during the nine months ended September 30, 2018 as the warrants and
stock options were anti-dilutive since the Corporation was in a loss position.

Page 21
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

13. Financial Instruments

Fair value
The Corporation’s financial instruments consisted of cash and cash equivalents. The fair values of cash and
cash equivalents approximate their carrying values because of their current nature.

Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the
other party to incur a financial loss. The Corporation’s primary exposure to credit risk is on its cash and short-
term investments which are being held in bank accounts. The cash and short-term investments are deposited
in bank accounts held with one major bank in Canada so there is a concentration of credit risk. This risk is
managed by using a major bank that is a high credit quality financial institution as determined by rating agencies.
The Corporation has secondary exposure to risk on its sales tax receivables. The risk is minimal since it is
recoverable from the Canadian government.

Foreign currency risk

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because they are denominated in currencies that differ from the Corporation’s functional currency. The
Corporation only operates in Canada and is therefore not exposed to foreign exchange risk arising from
transactions denominated in a foreign currency.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flow of a financial instrument will fluctuate because
of changes in market interest rate. The Corporation’s exposure to interest rate risk relates to its ability to earn
interest income on cash at variable rates. The risk is minimal.

Liquidity risk
Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due. The
Corporation has a planning and budgeting process in place to help determine the funds required to support the
Corporation’s normal operating requirements on an ongoing basis. The Corporation attempts to ensure there is
sufficient access to funds to meet on-going business requirements, taking into account its current cash position
and potential funding sources.

14. Management of Capital

The Corporation manages its capital structure, consisting of share capital, and will make adjustments to it
depending on the funds available to the Corporation for its future acquisition, exploration and development of
exploration and evaluation assets. The Board of Directors does not establish quantitative return on capital
criteria for management, but rather relies on the expertise of the Corporation’s management to sustain future
development of the business.

The Corporation’s objectives of capital management are to create long-term value and economic returns for its
shareholders. It does this by seeking to maximize the availability of finance to fund the growth and development
of its mining projects, and to support the working capital required to maintain its ability to continue as a going
concern. The Corporation manages its capital structure and makes adjustments to it in the light of changes in
economic conditions and the risk characteristics of its assets, seeking to limit shareholder dilution and optimize
its cost of capital while maintaining an acceptable level of risk. To maintain or adjust its capital structure, the
Corporation considers all sources of finance reasonably available to it, including but not limited to issuance of
new capital, issuance of new debt and the sale of assets in whole or in part, including mineral property interests.

Management reviews its capital management approach on an ongoing basis and believes that this approach,
given the size of the Corporation, is reasonable. The Corporation is not subject to externally imposed capital
requirements. There were no changes in the Corporation’s approach to capital management during the nine
months ended September 30, 2018 compared to the nine months ended December 31, 2017.

Page 22
FIRST COBALT CORP.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)
(expressed in Canadian dollars)

15. Supplemental Cash Flow Information

The Corporation did not make any cash payments and had no cash receipts for interest or income taxes during
the nine months ended September 30, 2018 and 2017.

16. Segmented Information

The Corporation’s exploration and evaluation activities are located in the provinces of Ontario and Quebec,
Canada and Idaho, USA, with its head office function in Canada. All of the Corporation’s capital assets, including
property, plant and equipment and exploration and the exploration and evaluation asset are located in Canada
and USA. Refer to note 6 and 11 for segmented information by geographic locations.

17. Related Party Transactions

The Corporation’s related parties include key management personnel and companies related by way of directors
or shareholders in common.

(a) Key Management Personnel Compensation

During the nine months ended September 30, 2018 and 2017, the Corporation paid and/or accrued the
following fees to management personnel and directors:

September 30, September 30,

2018 2017

Management $ 682,423 $ 329,169

Directors 387,200 16,983

$ 1,069,623 $ 346,152

During the nine months ended September 30, 2018 the Company also had share based payments made
to management and directors of $2,450,561 (2017 - $1,065,710).

(b) Due to Related Parties

As at September 30, 2018 and December 31, 2017, the Corporation has the follow amounts due to
related parties:

September 30, December 31,

2018 2017

Accounts payable and accrued liabilities $ 69,703 $ 219,764

$ 69,703 $ 219,764

18. Subsequent Events

(a) Subsequent to September 30, 2018, the Corporation granted 400,000 stock options, with an exercise
price of $0.27 for a period of 5 years.

(b) On October 23, 2018, the Corporation issued 120,833 common shares on the vesting and entitlement of
PSUs.

Page 23