ANNUAL REPORT 2014 Inuit Land Use Licence Number: KVL308C09 AANDC Land Use Permit Number: N2012C0030 Nunavut Impact Review Board File Number: 08EN052 Submitted to: KIA, AANDC, NIRB Prepared by: Andrew Berry, Chief Operating Officer Kivalliq Energy Corporation February 2, 2015 TABLE OF CONTENTS Section Page Property Description and Location 1 Corporate Background and General Information 4 2014 Work Completed 5 Camp Infrastructure 8 Environmental Baseline Monitoring 10 Environmental Considerations 13 Mitigation Measures 14 Waste Management 15 Fuel Inventory 16 Flight Summary 18 Reclamation and Remediation 18 Socio-Economic Benefits 19 Community Consultation 19 Archaeology and Traditional Knowledge 19 Tables Table 1: 2014 Land Use Permits and Licences 1 Table 2: 2014 Water Use Summary 14 Table 3: 2014 Incineration Summary 16 Table 4: Total Fuel Consumed in 2014 17 Figures Figure 1: Angilak Property Location 2 Figure 2: Angilak Property Land Tenure 3 Figure 3: 2014 Soil Sample Locations 6 Figure 4: 2014 VTEM Geophysical Survey 7 Figure 5: Nutaaq Camp Layout 9 Figure 6: Baseline Environmental Monitoring Study Area 12 ii Appendices Appendix A: 2014 Land Tenure Appendix B: 2014 Kivalliq Water Quality Monitoring Summary Appendix C: 2014 Wildlife Incidental Observation Log Appendix D: 2014 Water Use Records Appendix E: Kivalliq Energy’s Wildlife and Environmental Mitigation Measures Appendix F: NU Spill Report 14-234 and 2BE-ANG1318 Water Licence Inspection Form July 22, 2014 Appendix G: 2014 Contractor Services Appendix H: Community Consultation Log iii PROPERTY DESCRIPTION AND LOCATION The Angilak Project property consists of 107 active mineral claims and Inuit Owned Land Parcel RI-30 (IOL), comprising a total area of 105,280.4 hectares in the Kivalliq region of southern Nunavut Territory (Appendix A). The property is located 350 kilometres west of Rankin Inlet and 225 kilometres southwest of Baker Lake (Figure 1). The property dimensions measure approximately 55 kilometres in an east-west direction and approximately 35 kilometres north- south. As indicated on Figure 2, all mineral claims and the IOL are contiguous and extend north, south, east and west between latitudes 62° 27’ and 62°48’ North and longitudes 98° 21’ and 99°24’ West (UTM coordinates: 6925000N to 6965000N and 479300E to 533000E, NAD83, Zone 14 NTS map areas 65 J/06, 65 J/07, 65 J/09, 65 J/10, 65 J/11 and 65 J/15). Land use permits enabling exploration work to be conducted on the property have been issued, renewed and amended by the Kivalliq Inuit Association (KIA) for parts of the property covering Inuit Owned Lands (IOL) and by Aboriginal Affairs and Northern Development Canada (AANDC) for Crown Lands. Kivalliq Energy Corporation (Kivalliq Energy) also operates under the terms and conditions of a Nunavut Water Board (NWB) licence, covering activities on IOL and Crown Lands. 2014 was the seventh year that Kivalliq Energy operated on the lands described in this report. See Table 1 for a list of active permits and licences issued for lands that comprise the Angilak Property. Table 1: 2014 Land Use Permits and Licences Issuing Agency Date Issued File Number NIRB July 31, 2008 08EN052 KIA August 1, 2008 KVL308C09 NWB March 4, 2013 2BE-ANG1318 AANDC August 7, 2013 N2012C0030 1 Gjoa Haven 110°0'0"W 10 4 0°0'0"W 90°0'0"W Bathurst Inlet N " 0 N ' " 0 0 ° ' 5 0 ° 6 5 Meadowbank 6 !( Agnico Eagle Th el o n Ba sin !( Baker Lake Kiggavik Project Areva Ba ke r L a ke Chesterfield Ba sin Inlet Meliadine Agnico Eagle !( Lutselk'e Rankin Inlet Ya th k ye d ANGILAK Ba sin PROPERTY An g iku n i Whale Cove Ba sin Arviat N " 0 NORTHWEST H u d s o N ' n B a y " 0 0 ° ' 0 0 ° 6 TERRITORIES NUNAVUT 0 6 Fond-du-Lac SASKATCHEWAN MANITOBA Midwest Hathor Churchill th a b a sc a Areva - McClean Lake A Cameco - Eagle Point !( Ba sin !( !( Cigar Lake Cameco/Areva !( McArthur River !( Cameco/Areva Key Lake Cameco/Areva Angilak Property KIVALLIQ ENERGY CORP. Advanced Projects ANGILAK P !( ROPERTY Gold LOCATION C A N A D A !( Uranium Nunavut Territory, Canada Figure 1 ! Town November 2014 L Kilom ambert Confomal Conic Scale: 1 : 6 500 000 0 eters 3,000 Proterozoic Basins K0 ilom02e0ters Kilometers 400 490000 500000 510000 520000 530000 4 0 0 0 0 0 0 0 0 6 6 9 9 6 6 TAL 6 TAL 7 TAL 8 K13327 K13328 K13329 TAL 2 K13323 0 VGR-5 KV 34 KV 35 0 0 0 0 K13336 K13410 K13409 0 0 0 5 YK 39 YK 40 YK 41 YK 42 5 9 F87679 F87680 F87681 F87682 KV 36 9 6 YK 43 K13393 6 F87683 YK 35 YK 36 YK 37 YK 38 F87675 F87676 F87677 F87678 KV 1 KV 2 KV 3 KV 38 KV 39 KV 40 K13355 K13354 K13394 KV 37 K13420 K13417 K13411 YK 28 YK 29 K13392 YK 30 F87668 F87669 YK 31 YK 32 F87670 YK 33 YK 34 F87671 F87672 F87673 F87674 KV 43 YK 25 YK 26 KV 44 KV 45 YK 27 K13391 F87665 F87666 K13416 K13412 KV 5 KV 6 KV 7 KV 8 KV 9 KV 10 F87667 KV 46 K13369 K13364 K13363 K13356 K13353 K13395 K13407 0 0 0 0 0 YK 22 YK 23 YK 24 0 0 F87662 F87663 F87664 0 4 KV 48 Nutaaq 4 9 RI-30 9 K13413 6 Camp 6 YK 18 YK 19 YK 21 F87661 ÆQ F87658 F87659 KV 12 KV 13 KV 14 KV 15 KV 17 KV 18 KV 50 KV 51 YK 20 K13371 K13368 K13365 K13362 K13352 K13396 KV 49 K13406 K13403 F87660 K13414 YK 11 YK 12 YK 13 YK 14 KU 1 KU 2 KU 3 KU 4 KU 5 F87651 F87652 F87653F87654K16148 K16149 K16150 K16151 K16152 YK 6 YK 7 YK 8 KU 11 F87646 F87647 F87648K16158 KV 21 KV 22 KV 23 KV 24 KV 25 KV 26 KV 52 KV 53 KV 54 KU 10 KU 9 KU 8 KU 7 KU 6 VK 1 K13372 K13367 K13366 K13361 K13358 K13351 K13415 K13405 K13404 K16157 K16156 K16155 K16154 K16153 K13321 YK 1 YK 2 KU 12 0 0 0 F84324 F84325 K16159 0 0 0 0 0 3 3 9 KU 13 9 6 6 K16160 DIP 01 DIP 02 KV 28 KV 29 KV 30 KV 31 KU 15 KU 16 KU 17 KU 18 KU 19 KU 20 KU 21 K16138 K16139 K13360 K13359 K13399 K13398 K13344 K13345 K13346 K13347 K13348 K13349 D000294 KU 14 K13343 0 0 0 0 0 0 0 0 2 2 9 9 6 6 ! Gjoa Haven!Kugaaruk! ! ! Repulse Bay! Active Claim KIVALLIQ ENERGY CORP. ! Claim Name N U N A V U T Coral! Claim Number Baker Lake ANGILAK PROPERTY ! Harbour ÆQ ! Nutaaq Camp Chesterfield Inlet ! LAND TENURE Rankin Inlet ! Nunavut Territory, Canada N. W. T. Whale Cove ! IOL Parcel Arviat Hudson Figure 2 Bay November 2014 UTM NAD83 Zone 14 Scale 1 : 275 000 SASK. MANITOBA Lake 0 Kilometers 20 0 Kilometers400 ! CORPORATE BACKGROUND AND GENERAL INFORMATION Kivalliq Energy is a Vancouver-based uranium exploration company holding Canada’s highest- grade uranium resource outside of Saskatchewan’s Athabasca Basin. The company has been operating in Nunavut since 2008. Its flagship project is the Angilak Property. Kivalliq Energy was the first company in Canada to sign a comprehensive agreement with Nunavut Tunngavik Inc. (NTI) to explore on Inuit Owned Land for uranium. As part of this landmark partnership, Kivalliq Energy must meet certain expenditure and corporate commitments. Upon a production decision at the Angilak property NTI can elect to have a participating interest in the project, or collect royalties. Kivalliq Energy also makes advance royalty payments to NTI annually. The agreement not only applies to IOL RI-30, but also, extends to 107 Crown issued mineral claims. The Angilak property totals 105,280.4 hectares in all. Kivalliq Energy Corporation was formed to advance the Angilak Property and other uranium opportunities in Nunavut. Management has extensive background working in Canada’s north. John Robins is Chairman of the Company’s board of directors, Jim Paterson is the Chief Executive Officer and Jeff Ward serves as President. Mr. Jonathan Singh is the Chief Financial Officer and Mr. Andrew Berry is Chief Operating Officer. Bill Cronk serves as Exploration Manager and Jim Malone, Jim Dawson, Dale Wallster and Garth Kirkham serve as directors. The group is committed to the social and economic development of the north while maintaining a level of excellence in minimizing environmental impacts. Kivalliq Energy is proud to have been presented in both 2011 and 2012 with the Environmental Excellence Award from the Kivalliq Inuit Assoication for outstanding environmental stewardship at Kivalliq Energy’s Angilak Property. Kivalliq Energy looks forward to conducting a seventh tour of communities this year to meet with community members and increase awareness about the company and its projects. Since 1979, the property and surrounding area has been called various names (i.e. LGT, Yathkyed, Lac Cinquante) however, Kivalliq Energy collectively refers to all land holdings as the “Angilak Property”. The Angilak property hosts the high-grade Lac 50 (Lac Cinquante) uranium resource and more than 150 mineral showings. From 2007 to 2013, Kivalliq Energy evaluated the Lac 50 trend uranium deposits through a series of exploration programs that include approximately 89,500 metres of diamond drilling and reverse circulation drilling. During that time the company delineated the Lac 50 Main Zone, Western Extension, Eastern Extension, J4 Zone and Ray Zone uranium deposits. On January 15, 2013 the company released an updated NI 43-101 inferred mineral resource estimate for the Lac 50 trend deposits of 43.3 million pounds U O in 2,831,000 tonnes grading 0.69% U O (at 0.2% U O cutoff).