Mr. Paul Gill of Lomiko Metals reports

UPDATE ON ACQUISITION OF 100% INTEREST IN LA LOUTRE AND LAC DES LES FLAKE GRAPHITE PROPERTIES AND BROKERED PRIVATE PLACEMENT

Further to Lomiko Metals Inc.'s press release dated Dec. 31, 2018, the company wishes to update shareholders regarding its option to earn 100 per cent of the La Loutre and Lac des Iles flake graphite properties, Quebec. The company has completed its initial option and has earned its 80-per-cent interest in the properties.

Pursuant to an agreement dated Dec. 22, 2018, the company and Quebec Precious Metals Corp. (previously known as Canada Strategic Metals Inc.) have agreed to extend two option agreements relating to the properties, which allow the company to earn 100-per-cent ownership. Pursuant to an amendment dated May 13, 2016, in order to earn a further 20-per-cent interest for a total of 100 per cent, the company was to issue an aggregate of five million shares (preconsolidation) (2.5 million on or before July 31, 2017, and 2.5 million on or before Dec. 31, 2018) and finance exploration expenditures of an aggregate of $1,125,000 ($250,000 by Dec. 31, 2016, $375,000 by Dec. 31, 2017, and $500,000 by Dec. 31, 2018). The parties agreed to extend the deadline date for the company to finance exploration work of $1,125,000 to Dec. 31, 2019, and the company shall forthwith, upon regulatory approval, issue 500,000 common shares (five million preconsolidation) shares. In order to close the transaction, the company must have adequate funds available, and the transaction is subject to the approval of the TSX Venture Exchange. The transaction is arm's length.

Further to the press release dated Aug. 20, 2019, announcing the engagement of Leede Jones Gable Inc. as lead agent on a commercially reasonable agency basis to undertake a brokered private placement of a combination of units (as hereinafter defined) and flow-through shares (as hereinafter defined) for gross proceeds of up to $2.75-million, the company discloses that it will be relying on certain prospectus exemptions, including, but not limited to, the existing securityholder exemption and B.C. Instrument 45-536 -- exemption from prospectus requirement for certain distributions through an investment dealer, an exemption where the purchaser has obtained advice regarding suitability from a person registered as an investment dealer.

Subject to applicable securities laws, the company will permit each person or company that, as of Sept. 13, 2019 (being the record date set by the company pursuant to Multilateral CSA Notice 45-313 -- Prospectus Exemption for Distributions to Existing Security Holders), holds common shares as of that date to subscribe for the units and FS shares that will be distributed pursuant to the offering, provided that the existing securityholder exemption is available to such person or company.

Pursuant to CSA 45-313, each subscriber relying on the existing securityholder exemption may subscribe for a maximum of 300,000 units or 300,000 FS shares, being such amount of units and FS shares that results in an acquisition cost of less than or equal to $15,000 for such subscribers, unless a subscriber is resident in a jurisdiction of Canada and has obtained advice regarding the suitability of the investment from a registered investment dealer (in which case such maximum subscription amount will not apply). In the event that aggregate subscriptions for units or flow-through shares under the offering exceed the maximum number of securities to be distributed, then units will be sold to qualifying subscribers on a pro rata basis, based on the number of units or flow-through shares subscribed for. In addition to conducting the offering pursuant to the existing securityholder exemption, the company will also accept subscriptions for units or flow-through shares where other prospectus exemptions are available. Any current shareholder subscribing for units or flow-through shares pursuant to a prospectus exemption other than the existing securityholder exemption will not be limited to a maximum of 300,000 units or 300,000 flow-through shares.

The company also advises that the insiders of the company may also participate in the financing, which will be completed pursuant to available related party exemptions under Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions.

Up to 20 million units of the company will be offered at five cents per unit to raise gross proceeds of up to $1-million. Each unit will consist of one common share and one-half of one common share purchase warrant. Each full warrant shall entitle the holder to acquire one common share at seven cents per share for a period of 24 months following closing. Up to 35 million flow-through shares will be offered at five cents per flow-through share for gross proceeds of up to $1.75-million.

The gross proceeds from the issuance of the flow-through shares will be used for Canadian exploration expenses and will qualify as flow-through mining expenditures, as defined in Subsection 127(9) of the Income Tax Act (Canada), which will be renounced to the subscribers with an effective date no later than Dec. 31, 2019, to the initial purchasers of the offered securities in an aggregate amount not less than the gross proceeds raised from the issue of the flow-through shares, as applicable, and, if the qualifying expenditures are reduced by the Canada Revenue Agency, the company will indemnify each flow-through subscriber for any additional taxes payable by such subscriber as a result of the company's failure to renounce the qualifying expenditures as agreed.

The net proceeds from the offering of the units and the gross proceeds from the offering of flow-through shares will be primarily used for: (i) approximately $50,000 for a new resource estimate prepared in accordance National Instrument 43-101 regulations, which will include recent drill results from the Refractory zone; (ii) approximately $700,000 for completion of work required for a preliminary economic assessment (PEA), including, but not limited to, metallurgical/engineering testing and drilling, community relations, testing for conversion to spherical graphite for use in graphite anodes, environmental assessment, and extraction and processing cost studies; (iii) finance exploration work of $1,125,000 to Dec. 31, 2019, $425,000 on exploration in 2020; and (iv) approximately $150,000 to pursue potential offtake partners, fees and for general working capital. While the company intends to spend the net proceeds from the offering as stated above, there may be circumstances where, for sound business reasons, funds may be reallocated at the discretion of the board.

The closing of the offering is expected to occur on or about Oct. 30, 2019. Closing is subject to a number of prescribed conditions, including, but without limitation to, approval of the TSX-V. All the securities issued under the offering are subject to resale restrictions under applicable securities legislation.

Offering jurisdictions

The offering will take place by way of a brokered private placement to qualified investors in such provinces of Canada as the agent may designate, as well as otherwise in those jurisdictions where the offering can lawfully be made under applicable exemptions.

Agent's compensation

On the closing of the offering, the company has agreed to pay to the agent, subject to certain exclusions, a commission equal to 8 per cent of the gross proceeds arising from the offering. At the closing of the offering, the company will also issue to the agent non-transferable warrants exercisable at any time up to 24 months from closing to acquire common shares from treasury in an amount equal to 8 per cent of the aggregate number of units and flow-through shares issued pursuant to the offering.

The company discloses that there are no material facts or material changes about the company that have not been generally disclosed.

The corporation does not expect to provide any offering materials to subscribers in connection with the offering.

We seek Safe Harbor.