I-Minerals Inc (Form: 10-Q, Received: 12/16/2019 06:12:46)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: October 31, 2019

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number: 000-55321

I-MINERALS INC.
(Exact name of registrant as specified in its charter)

Canada		20-4644299
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Suite 880, 580 Hornby Street, Vancouver, BC, Canada V6C 3B6
(Address of principal executive offices)(Zip Code)

(877) 303-6573
Registrant’s telephone number, including area code

Not applicable
(Former name or former address if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer	[ ]	Smaller reporting company	[X]
(Do not check if a smaller reporting company)		Emerging growth company	[X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of December 13, 2019, the registrant had 92,676,115 outstanding shares of common stock.

I-Minerals Inc.
TABLE OF CONTENTS

Part I. Financial Information	3

Item 1. Financial Statements (Unaudited)	3

Condensed interim consolidated balance sheets – October 31, 2019 and April 30, 2019	4

Condensed interim consolidated statements of loss – Three and six months ended October 31, 2019 and 2018	5

Condensed interim consolidated statements of cash flows – Six months ended October 31, 2019 and 2018	6

Condensed interim consolidated statements of capital deficit – Six months ended October 31, 2019 and 2018	7

Notes to the condensed interim consolidated financial statements – October 31, 2019	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3. Quantitative and Qualitative Disclosures About Market Risk	23

Item 4. Controls and Procedures	23

Part II. Other Information	23

Item 1. Legal Proceedings	23

Item 1A. Risk Factors	23

Item 2. Unregistered Sales of Equity Securities and use of Proceeds	23

Item 3. Defaults Upon Senior Securities	23

Item 4. Mine Safety Disclosures	23

Item 5. Other Information	23

Item 6. Exhibits	24

Signatures	25

PART I – FINANCIAL INFORMATION

I-Minerals Inc.

Condensed Interim Consolidated Financial Statements
For the six months ended October 31, 2019
(Unaudited - Expressed in US dollars)

I-Minerals Inc.
Condensed Interim Consolidated Balance Sheets
October 31, 2019 and April 30, 2019

(Unaudited - Expressed in US dollars)
(Prepared in accordance with US GAAP)

	Notes	October 31, 2019 $	April 30, 2019 $
ASSETS
Current assets
Cash		34,106	241,721
Receivables		6,023	5,708
Prepaids		38,837	54,163
		78,966	301,592

Equipment		13,870	14,517
Mineral property interest and deferred development costs	3	1,892,410	1,892,410
Deposits		28,728	28,728

TOTAL ASSETS		2,013,974	2,237,247

LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	4,7	1,769,101	1,464,724
Promissory notes	5	24,784,305	22,685,537
Derivative liabilities	2,6	4,868	6,191
		26,558,274	24,156,452

CAPITAL DEFICIT
Capital Stock
Authorized:
Unlimited common shares with no par value
Issued and fully paid: 92,676,115 (April 30, 2019 – 92,676,115)	6	19,118,229	19,118,229
Additional paid-in capital		1,865,342	1,866,274
Commitment to issue shares	5	106,858	106,858
Deficit		(45,634,729)	(43,010,566)
TOTAL CAPITAL DEFICIT		(24,544,300)	(21,919,205)

TOTAL LIABILITIES AND CAPITAL DEFICIT		2,013,974	2,237,247

Going concern (Note 1)
Subsequent event (Note 10)

On behalf of the Board

“John Theobald” Director

“W. Barry Girling” Director

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

I-Minerals Inc.
Condensed Interim Consolidated Statements of Loss
For the three and six months ended October 31, 2019 and 2018

(Unaudited - Expressed in US dollars)

	Notes	Three months ended October 31,		Six months ended October 31,
		2019	2018	2019	2018
		$	$	$	$


OPERATING EXPENSES
Amortization		981	1,190	3,305	2,377
Management and consulting fees	6, 7	44,569	49,210	101,513	98,294
Mineral property expenditures		444,967	61,964	724,205	115,530
General and miscellaneous		72,928	147,180	136,811	294,203
Professional fees	7	49,030	28,669	111,398	102,756

		(612,475)	(288,213)	(1,077,232)	(613,160)
OTHER (EXPENSE) INCOME
Foreign exchange loss		(1,310)	(1,993)	(1,015)	(121)
Accretion expense	5	(34,810)	(68,249)	(60,348)	(130,580)
Interest expense	5	(751,201)	(559,429)	(1,488,711)	(1,110,060)
Change in fair value of derivative liabilities	2,6,7	7,457	98,320	3,143	235,443

LOSS FOR THE PERIOD		(1,392,339)	(819,564)	(2,624,163)	(1,618,478)

Loss per share – basic and diluted		(0.02)	(0.01)	(0.03)	(0.02)

Weighted average number of shares outstanding		92,676,115	90,758,233	92,676,115	90,301,615

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

I-Minerals Inc.
Condensed Interim Consolidated Statements of Cash Flows
For the six months ended October 31, 2019 and 2018

(Unaudited - Expressed in US dollars)

	2019 $	2018 $
OPERATING ACTIVITIES
Loss for the period	(2,624,163)	(1,618,478)
Items not involving cash:
Amortization	3,305	2,377
Stock-based compensation	888	5,865
Accretion expense	60,348	130,580
Change in fair value of derivative liabilities	(3,143)	(235,443)
Unrealized foreign exchange (gain) loss	-	(4,535)
Change in non-cash operating working capital items:
Receivables	(315)	397
Prepaids	15,326	1,720
Accounts payable and accrued liabilities	1,667,750	1,099,452

Cash flows used in operating activities	(880,004)	(618,065)

INVESTING ACTIVITIES
Additions to mineral property interest and deferred development	(4,953)	(511,482)
Purchase of equipment	(2,658)	(3,865)

Cash flows used in investing activities	(7,611)	(515,347)

FINANCING ACTIVITIES
Proceeds from exercise of stock options and warrants	-	46,084
Promissory notes received	680,000	1,115,000

Cash flows from financing activities	680,000	1,161,084

(DECREASE) INCREASE IN CASH	(207,615)	27,672

CASH, BEGINNING OF THE PERIOD	241,721	213,322

CASH, END OF THE PERIOD	34,106	240,994

SUPPLEMENTAL CASH FLOW INFORMATION (Note 9)
	-
Interest paid	-	-
Taxes paid	-	-

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

I-Minerals Inc.
Condensed Interim Consolidated Statements of Capital Deficit
For the six months ended October 31, 2019 and 2018

(Unaudited - Expressed in US dollars)

	Number of Shares #	Amount $	Commitment to Issue Shares $	Additional Paid-in Capital $	Accumulated Deficit $	Total Capital Deficit $

Balance at April 30, 2018	89,831,955	18,787,998	50,625	1,890,220	(39,300,909)	(18,572,066)

Issued during the period:
Shares issued on exercise of options	600,000	94,002	-	(24,878)	-	69,124
Shares issued as a debt discount	361,657	81,000	(81,000)	-	-	-
Shares issuable as a debt discount	-	-	72,975	-	-	72,975
Share-based payments - vesting	-	-	-	5,865	-	5,865
Loss for the period	-	-	-	-	(1,618,478)	(1,618,478)

Balance at October 31, 2018	90,793,612	18,963,000	42,600	1,871,207	(40,919,387)	(20,042,580)




Balance at April 30, 2019	92,676,115	19,118,229	106,858	1,866,274	(43,010,566)	(21,919,205)

Share-based payments – vesting	-	-	-	888	-	888
Reallocation of vested options to liabilities	-	-	-	(1,820)	-	(1,820)
Loss for the period	-	-	-	-	(2,624,163)	(2,624,163)

Balance at October 31, 2019	92,676,115	19,118,229	106,858	1,865,342	(45,634,729)	(24,544,300)

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

I-Minerals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended October 31, 2019 and 2018

(Unaudited - Expressed in US dollars except where otherwise indicated)

1.	NATURE OF BUSINESS AND BASIS OF PRESENTATION AND LIQUIDITY:

I-Minerals Inc. (the “Company”) was incorporated under the laws of British Columbia, Canada, in 1984. The Company is listed for trading on the TSX Venture Exchange under the symbol “IMA” and the OTCQB marketplace under the symbol “IMAHF”.

The Company’s principal business is the development of the Helmer-Bovill industrial mineral property (“the Property”) located in Latah County, Idaho. Since inception, the Company has been in the exploration and evaluation stage but moved into the development stage in fiscal 2018. In fiscal 2019, the Company reverted back to the evaluation stage as management determined that the Feasibility Study on the property should be considered non-current. The Helmer-Bovill property is comprised of eleven mineral leases that host potentially economic deposits of feldspar, quartz and kaolinitic clays, primarily kaolinite and halloysite.

Basis of Presentation and Liquidity

The accompanying unaudited condensed interim consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information as well as Article 10 of Regulation S-X on the basis that the Company will continue as a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for the next year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At October 31, 2019, the Company had not yet achieved profitable operations, had an accumulated deficit of $45,634,729 since inception and expects to incur further losses in the development of its business, all of which casts substantial doubt upon the Company’s ability to continue as a going concern and, therefore, that it may be unable to realize its assets and discharge its liabilities in the normal course of business.

The financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of our management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the six months ended October 31, 2019 are not necessarily indicative of the results that may be expected for the full year ending April 30, 2020. All amounts presented are in US dollars except where otherwise indicated. For further information refer to the financial statements and footnotes thereto for the year ended April 30, 2019 included in the Company’s Annual Report on Form 10-K filed on July 29, 2019.

The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to develop the Property and to meet its obligations and repay its liabilities arising from normal business operations when they come due. Although the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms advantageous to the Company. The Company has been receiving funds from a company controlled by a director of the Company through promissory notes (Notes 5 and 10). Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or promissory notes; however there is no assurance of additional funding being available. The Company has historically satisfied its capital needs primarily by issuing equity securities and/or promissory notes. Management plans to continue to provide for its capital needs by issuing equity securities and/or promissory notes.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Financial Instruments and Fair Value Measures

The book value of cash, receivables, accounts payable and accrued liabilities approximate their fair values due to the immediate or short-term maturity of those instruments. The fair value hierarchy under US GAAP is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

I-Minerals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended October 31, 2019 and 2018

(Unaudited - Expressed in US dollars except where otherwise indicated)

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - observable inputs other than Level I, quoted prices for similar assets or liabilities in active prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 - assets and liabilities whose significant value drivers are unobservable by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s promissory notes are based on Level 2 inputs in the ASC 820 fair value hierarchy. The Company calculated the fair value of these instruments by discounting future cash flows using rates representative of current borrowing rates. October 31, 2019, the promissory notes had a fair value of $24,210,914 (April 30, 2019 – $22,602,379).

The Company had certain Level 3 liabilities required to be recorded at fair value on a recurring basis in accordance with US GAAP as at October 31, 2019 and April 30, 2019. As at October 31, 2019, the Company’s Level 3 liabilities consisted of share purchase options granted to non-employees.

The resulting Level 3 liabilities have no active market and are required to be measured at their fair value each reporting period based on information that is unobservable.

A summary of the Company’s Level 3 liabilities for the six months ended October 31, 2019 and 2018 is as follows:

	2019 $	2018 $

Warrants

Beginning fair value	-	95,570
Issuance	-	1,602
Change in fair value	-	(97,111)
Ending fair value	-	61

Non-employee options (Note 6(c))

Beginning fair value	6,191	205,120
Transfer value on exercise	-	(23,040)
Fair value of options on vesting	1,820	-
Change in fair value	(3,143)	(138,332)
Ending fair value	4,868	43,748

Total Level 3 liabilities	4,868	43,809

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). There were no assets or liabilities measured at fair value on a nonrecurring basis during the periods ended October 31, 2019 and 2018.

Earnings (Loss) Per Share

The basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. For the six months ended October 31, 2019, loss per share excludes 5,979,097 (2018 – 11,340,737) potentially dilutive common shares (related to outstanding options and warrants as well as shares committed to be issued pursuant to the Fifth Promissory Notes) as their effect was anti-dilutive.

I-Minerals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended October 31, 2019 and 2018

(Unaudited - Expressed in US dollars except where otherwise indicated)

New Accounting Pronouncements

Leases

In February 2016, the FASB issued ASU 2016-02, as amended, Leases (Topic 842), which requires a lessee to record a right-of-use asset and a lease liability for all leases with a term greater than twelve months regardless of whether the lease is classified as an operating lease or a financing lease. Effective May 1, 2019, the Company adopted the new standard under the modified retrospective approach, applying the current-period adjustment method. Under the transition guidance of the modified retrospective approach there are a number of optional practical expedients made available to simplify the transition of the new standard. The Company has elected the following:

The condensed consolidated balance sheets for reporting periods beginning on or after May 1, 2019 are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with ASC Topic 840, Leases. The Company did not recognize any cumulative effect adjustment to the opening balance of deficit as there was no impact on adoption of the new standard.

The Company has elected to utilize the package of practical expedients permitted under the transition guidance in the standard, which allowed the Company to not reassess (i) whether any expired or existing contracts contain leases, (ii) historical lease classification, and (iii) initial direct costs.

The Company has elected to keep leases with an initial term of 12 months or less off of the balance sheet.

Upon adoption, the Company did not record any adjustments to the balance sheet, statement of loss or statement of cash flows.

Fair Value Measurements

In August 2018, the FASB issued ASU No. 2018-13, "Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement" which adds the disclosure of the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. Certain alternatives apply. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is assessing the impact of this standard.

3.	MINERAL PROPERTY INTEREST AND DEFERRED DEVELOPMENT COSTS:

Helmer-Bovill Property – Latah County, Idaho

The Company has an undivided 100% interest in 11 State of Idaho mineral leases. The State of Idaho mineral leases are subject to a 5% production royalty on gross sales. The mineral leases are in good standing until March 1, 2023 at which time they will be held by us contingent on production.

In May 2017, the Idaho Department of Lands accepted our operation and reclamation plan. Together with a water rights permit from the Idaho Department of Water Resources, we were able to proceed with development and construction of the mine, subject to obtaining sufficient financing. As a result, Management made the decision to begin capitalizing all development expenditures directly related to the Helmer-Bovill Property. In February 2019, the Company determined that the Feasibility Study should be considered non-current and accordingly, the Company has returned to the evaluation stage for accounting purposes.

I-Minerals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended October 31, 2019 and 2018

(Unaudited - Expressed in US dollars except where otherwise indicated)

4.	ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:

	October 31, 2019 $	April 30, 2019 $

Trade payables	311,925	150,766
Amounts due to related parties (Note 7)	203,407	190,480
Interest payable on promissory notes (Note 5)	1,253,769	1,123,478

Total accounts payable and accrued liabilities	1,769,101	1,464,724

5.	PROMISSORY NOTES:

	October 31, 2019 $	April 30, 2019 $

Third promissory notes	22,159,774	20,908,690
Fifth promissory notes	2,624,531	1,776,847

Total promissory notes	24,784,305	22,685,537

The Company has Third Promissory Notes and Fifth Promissory Notes due to a company controlled by a director of the Company (the “Lender”). The Third Promissory Notes were due on June 30, 2019. On June 28, 2019, the Company entered into an amending agreement with the Lender extending the maturity date to October 31, 2019 for no consideration. The Fifth Promissory Notes were due on December 31, 2019. On October 25, 2019, the Company entered into an amending agreement with the Lender extending the maturity date for both notes, for no consideration, to the earlier of (i) June 30, 2020 and (ii) 60 days after a pre-feasibility study has been filed on SEDAR. The Sixth Promissory Notes have the same maturity date.

In accordance with the guidance of ASC 470-50 and ASC 470-60, the Company determined that the June 28, 2019 and October 25, 2019 extension agreements qualify as troubled debt restructurings. However, as the Company did not transfer assets or grant an equity interest to the Lender and since the carrying amount of the promissory notes at the time of the restructurings did not exceed the total future cash payments specified by the new terms, there was no accounting impact from the debt modifications.

Certain conditions may result in early repayment including immediate repayment in the event a person currently not related to the Company acquires more than 40% of the outstanding common shares of the Company.

Third Promissory Notes

The Third Promissory Notes bear interest at the rate of 12% per annum and during the six months ended October 31, 2019, the Company recorded interest of $1,327,764 (2018 - $1,177,442), of which $nil was capitalized to mineral property interest (2018 - $87,434) and $1,327,764 was expensed (2018 - $1,090,008). Interest is payable semi-annually as calculated on May 31st and November 30th of each year. Interest is to be paid either in cash, in common shares or deemed an advance of principal at the option of the Lender. A 5% late payment penalty may apply if payment is not paid within ten days after the due date. During the six months ended October 31, 2019, the Lender elected to have interest payable from December 1, 2018 to May 31, 2019 of $1,251,084 deemed as advances.

I-Minerals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended October 31, 2019 and 2018

(Unaudited - Expressed in US dollars except where otherwise indicated)

Fifth Promissory Notes

On September 11, 2018, the Company entered into a Loan Agreement with the Lender pursuant to which up to $2,500,000 will be advanced to the Company in tranches (the “Fifth Promissory Notes”). As at October 31, 2019, the Company had received $2,500,000 (April 30, 2019 - $1,820,000) in advances pursuant to the Fifth Promissory Notes.

The Fifth Promissory Notes bear interest at the rate of 14% per annum and during the six months ended October 31, 2019, the Company recorded interest of $160,947 (2018 - $8,450). Interest is payable semi-annually as calculated on May 31st and November 30th of each year. Interest is to be paid either in cash, in common shares or deemed an advance of principal at the option of the Lender. A 5% late payment penalty may apply if payment is not paid within ten days after the due date. During the six months ended October 31, 2019, the Lender elected to have interest payable from December 1, 2018 to May 31, 2019 of $107,336 deemed as advances.

The Company and the Lender agreed that the Lender is to receive bonus shares equal to 6% of each loan tranche advanced under the Fifth Promissory Notes divided by the Company’s common share market price up to a maximum of 1,054,097 bonus shares. At October 31, 2019 and April 30, 2019, the Company was committed to issuing 1,054,097 bonus shares to the Lender with a fair value of $106,858. The fair value of the bonus shares was determined by reference to the trading price of the Company’s common shares on the date the advances were received.

The aggregate finance fees (bonus shares) are recorded against the promissory notes balance and are being amortized to the Statement of Loss over the life of the promissory notes using the effective interest method. The accretion expense in respect of the debt discount recorded on the issuance of bonus shares totalled $60,348 for the six months ended October 31, 2019 (2018 - $2,538). The unamortized debt discount as at October 31, 2019 is $nil (April 30, 2019 – $60,348).

Sixth Promissory Notes

On October 25, 2019, the Company entered into a Loan Agreement with the Lender pursuant to which up to $700,000 will be advanced to the Company in tranches (the “Sixth Promissory Notes”). Subsequent to October 31, 2019, the Company received advances of $500,000.

The Sixth Promissory Notes bear interest at the rate of 14% per annum. Interest is payable semi-annually as calculated on May 31st and November 30th of each year. Interest is to be paid either in cash, in common shares or deemed an advance of principal at the option of the Lender. A 5% late payment penalty may apply if payment is not paid within ten days after the due date.

The Third Promissory Notes, the Fifth Promissory Notes and the Sixth Promissory Notes are collateralized by the Company’s Helmer-Bovill Property.

The following table outlines the estimated cash payments required, by calendar year, in order to repay the principal balance of the Third Promissory Notes, the Fifth Promissory Notes and the Sixth Promissory Notes:

2019

2020

2021

2022

2023

Total

24,784,305

6.	SHARE CAPITAL:

Common shares

Authorized:

Unlimited number of common shares, without par value.

I-Minerals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended October 31, 2019 and 2018

(Unaudited - Expressed in US dollars except where otherwise indicated)

The holders of common shares are entitled to receive dividends which are declared from time to time, and are entitled to one vote per share at meetings of the Company. All shares are ranked equally with regards to the Company’s residual assets.

Stock transactions:

During the six months ended October 31, 2019, the Company did not complete any stock transactions.

During the six months ended October 31, 2018, the Company completed the following stock transactions:

On July 30, 2018, the Company issued 600,000 common shares on the exercise of stock options with an exercise price of CAD$0.10 per common share resulting in gross proceeds of CAD$60,000 ($46,085).

ii)

On August 10, 2018, the Company issued 361,657 common shares with a fair value of $81,000. The common shares were issued as debt discounts pursuant to the Third Promissory Notes (Note 5).

Stock options:

The Company has granted stock options under the terms of its Stock Option Plan (the “Plan”). The Plan provides that the directors of the Company may grant options to purchase common shares to directors, officers, employees and service providers of the Company on terms that the directors of the Company may determine are within the limitations set forth in the Plan. The maximum number of shares available under the Plan is limited to 10% of the issued common shares. The maximum term of stock options is ten years. All stock options vest on the date of grant, unless otherwise stated. As at October 31, 2019, the Company had 4,342,612 stock options available for grant pursuant to the Plan (April 30, 2019 – 3,642,612).

The Company’s stock options outstanding as at October 31, 2019 and the changes for the period then ended are as follows:

	Number Outstanding	Weighted Average Exercise Price (in CAD$)

Balance outstanding at April 30, 2019	5,625,000	0.26
Expired	(300,000)	0.25
Forfeited	(400,000)	0.30

Balance outstanding at October 31, 2019	4,925,000	0.25

Balance exercisable at October 31, 2019	3,675,000	0.25

Summary of stock options outstanding at October 31, 2019:

Security	Number Outstanding	Number Exercisable	Exercise Price (CAD$)	Expiry Date	Remaining Contractual Life (years)

Stock options	1,975,000	1,975,000	0.25	January 29, 2020	0.25
Stock options	200,000	200,000	0.25	August 4, 2020	0.76
Stock options	300,000	300,000	0.30	July 21, 2021	1.72
Stock options	1,000,000	1,000,000	0.25	April 20, 2022	2.47
Stock options	⁽¹⁾1,450,000	⁽¹⁾200,000	0.25	August 9, 2023	3.78

Notes:

⁽¹⁾

1,250,000 stock options vest on the completion of certain milestones including equity financing, project financing, mine construction and achieving commercial production. 200,000 stock options vested as to 25% every three months from the date of grant.

I-Minerals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended October 31, 2019 and 2018

(Unaudited - Expressed in US dollars except where otherwise indicated)

Non-Employee Stock Options

In accordance with the guidance of ASC 815-40-15, stock options awarded to non-employees that are fully vested and exercisable in Canadian dollars are required to be accounted for as derivative liabilities because they are considered not to be indexed to the Company’s stock due to their exercise price being denominated in a currency other than the Company’s functional currency. Stock options awarded to non-employees that are not vested are accounted for as equity awards until the terms associated with their vesting requirements have been met. As at October 31, 2019, there were nil (April 30, 2019 – 100,000) non-employee stock option awards that had not yet vested.

The non-employee stock options are accounted for at their respective fair values and are summarized as follows for the six months ended October 31, 2019 and 2018:

	2019 $	2018 $

Fair value of non-employee options, beginning of the period	6,191	205,120
Transfer value on exercise of options	-	(23,040)
Fair value of options on vesting	1,820	-
Change in fair value of non-employee stock options during the period	(3,143)	(138,332)

Fair value of non-employee options, end of the year	4,868	43,748

The Company determined the fair value of its non-employee stock options as at October 31, 2019 and April 30, 2019 using the Black-Scholes option pricing model with the following weighted average assumptions:

	October 31, 2019	April 30, 2019

Stock price (CAD$)	0.03	0.07
Exercise price (CAD$)	0.26	0.26
Risk-free interest rate (%)	1.74	1.52
Expected life (years)	2.16	2.23
Expected volatility (%)	106	64
Expected dividends ($)	Nil	Nil

The non-employee options are required to be re-valued with the change in fair value of the liability recorded as a gain or loss on the change of fair value of derivative liability and included in other items in the Company’s Consolidated Statements of Loss at the end of each reporting period. The fair value of the options will continue to be classified as a liability until such time as they are exercised, expire or there is an amendment to the respective agreements that renders these financial instruments to be no longer classified as a liability.

As at October 31, 2019, the unamortized compensation cost of options is $93,382 and the intrinsic value of options expected to vest is $nil.

Share-based payments are classified in the Company’s Statement of Loss during the six months ended October 31, 2019 and 2018 as follows:

	2019 $	2018 $
Management and consulting fees	888	5,865
	888	5,865

I-Minerals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended October 31, 2019 and 2018

(Unaudited - Expressed in US dollars except where otherwise indicated)

7.	RELATED PARTY TRANSACTIONS:

During the six months ended October 31, 2019, management and consulting fees of $48,000 (2018 - $48,000) were charged by RJG Capital Corporation, a wholly-owned company of W. Barry Girling, Director. Wayne Moorhouse, Director, charged $8,320 (2018 - $1,363) in management and consulting fees. Gary Childress, Director, charged $6,805 (2018 - $nil) in management and consulting fees. $12,760 (2018 - $13,117) was charged by Malaspina Consultants Inc. for the services of Matt Anderson, CFO, and are included in professional fees.

Included in accounts payable and accrued liabilities are amounts owed to directors or officers or companies controlled by them. As at October 31, 2019, the amount was $203,407 (April 30, 2019 – $190,480). All amounts are non-interest bearing, unsecured, and due on demand.

The promissory notes received from a company controlled by a director (Notes 5 and 10) are related party transactions.

8.	SEGMENT DISCLOSURES:

The Company considers its business to comprise a single operating segment being the exploration and development of its resource property. Substantially all of the Company’s long-term assets and operations are located in Latah County, Idaho.

9.	NON-CASH TRANSACTIONS:

Investing and financing activities that affect recognized assets or liabilities but that do not result in cash receipts or cash payments are excluded from the consolidated statements of cash flows. During the six months ended October 31, 2019, the following transactions were excluded from the consolidated statement of cash flows:

The transfer of $1,358,420 of interest payable on the Third and Fifth Promissory Notes from accounts payable and accrued liabilities to promissory notes; and,

Deferred mineral property expenditures of $52,791 included in accounts payable and accrued liabilities at October 31, 2019, less $57,744 included in accounts payable at April 30, 2019 (net inclusion of $4,953).

During the six months ended October 31, 2018, the following transactions were excluded from the consolidated statement of cash flows:

The commitment to issue 478,377 common shares at the fair value of $72,975 and 139,984 warrants at the fair value of $1,602 pursuant to the promissory notes;

The transfer of $1,069,392 of interest payable on the Third Promissory Notes from accounts payable and accrued liabilities to promissory notes; and,

Deferred mineral property expenditures of $89,849 included in accounts payable and accrued liabilities at October 31, 2018, less $140,561 included in accounts payable at April 30, 2018 (net inclusion of $50,712).

I-Minerals Inc.
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended October 31, 2019 and 2018

(Unaudited - Expressed in US dollars except where otherwise indicated)

10.

SUBSEQUENT EVENT:

Subsequent to October 31, 2019:

The Company received advances of $500,000 under the Sixth Promissory Notes (Note 5);

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report constitute "forward-looking statements.” These statements, identified by words such as “plan,” "anticipate,” "believe,” "estimate,” "should,” "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current exploration and development activities; changes in project parameters as plans continue to be refined; changes in labour costs or other costs of production; future mineral prices; equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry, including but not limited to environmental hazards, cave-ins, pit-wall failures, flooding, rock bursts and other acts of God or unfavourable operating conditions and losses; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the section titled "Risk Factors" in our Annual Report on Form 10-K which was filed with the SEC on July 29, 2019.

Forward looking statements are based on a number of material factors and assumptions, including the results of exploration/development and drilling activities, the availability and final receipt of required approvals, licenses and permits, that sufficient working capital is available to complete proposed exploration/development and drilling activities, that contracted parties provide goods and/or services on the agreed time frames, the equipment necessary for exploration/development is available as scheduled and does not incur unforeseen break downs, that no labour shortages or delays are incurred and that no unusual geological or technical problems occur. While we consider these assumptions may be reasonable based on information currently available to it, they may prove to be incorrect. Actual results may vary from such forward-looking information for a variety of reasons, including but not limited to risks and uncertainties disclosed in the section titled “Risk Factors” in this Quarterly Report.

We intend to discuss in our Quarterly Reports and Annual Reports any events or circumstances that occurred during the period to which such documents relate that are reasonably likely to cause actual events or circumstances to differ materially from those disclosed in this Quarterly Report. New factors emerge from time to time, and it is not possible for management to predict all of such factors and to assess in advance the impact of each such factor on our business or the extent to which any factor, or combination of such factors, may cause actual results to differ materially from those contained in any forwarding looking statement.

CAUTIONARY NOTE TO U.S. INVESTORS REGARDING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES AND PROVEN AND PROBABLE RESERVES

The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” as used in this Quarterly Report are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) – CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended (the “CIM Definition Standards”). These definitions differ from the definitions in the United States Securities and Exchange Commission (“SEC”) Industry Guide 7 (“SEC Industry Guide 7”) under the United States Securities Act of 1933, as amended (the “Securities Act”). Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves, and the primary environmental analysis or report must be filed with the appropriate governmental authority.

In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that all or any part of a mineral deposit in these categories will ever be converted into reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all, or any part, of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of unit measures in a resource is permitted disclosure under Canadian regulations; however, the SEC only permits issuers to report mineralization that does not constitute “reserves” by SEC standards as in place tonnage and grade without reference to unit measures.

Accordingly, information contained in this Quarterly Report and any documents incorporated by reference herein contain descriptions of our mineral deposits that may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.

As used in this Quarterly Report, unless the context otherwise requires, “we,” “us,” “our,” the “Company” and “I-Minerals” refers to I-Minerals Inc. All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.

PART I

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General

We were incorporated under the laws of British Columbia, Canada in 1984. In 2004, we changed our corporate jurisdiction from a British Columbia company to a Canadian corporation. In December 2011, we amended our articles to change our name from “i-minerals inc.” to “I-Minerals Inc.”

The Company is engaged in the exploration, evaluation and development of our Helmer-Bovill industrial minerals property (the “Helmer-Bovill Property”). The Helmer-Bovill Property, in which we hold a 100% interest, is comprised of 11 mineral leases totaling 5,140.64 acres located approximately 6 miles northwest of Bovill, Latah County, Idaho. Since inception, the Company has been in the exploration stage but moved into the development stage in fiscal 2018. In fiscal 2019, the Company reverted back to the evaluation stage.

We acquired the Helmer-Bovill Property from Idaho Industrial Minerals (“IIM”) pursuant to an Assignment Agreement with Contingent Right of Reverter (the “IIM Agreement”) dated August 12, 2002, as amended August 10, 2005, August 10, 2008 and January 21, 2010, between I-Minerals USA (formerly Alchemy Kaolin Corporation), our wholly owned subsidiary, and IIM. Under the terms of the IIM Agreement, we issued a total of 1,800,000 common shares to IIM.

Our principal executive office is located at Suite 880, 580 Hornby Street, Vancouver, British Columbia, Canada and our telephone number is (877) 303-6573. Our operations office is located at 13403 N. Government Way, #102, Hayden, Idaho.

To date, we have not earned significant revenues from the operation of our Helmer-Bovill Property. Accordingly, we are dependent on debt and equity financing as our primary source of operating working capital. Our capital resources are largely determined by the strength of the junior resource markets and by the status of our projects in relation to these markets, and its ability to compete for investor support of its projects.

Our Principal Projects

Our activities at the Helmer-Bovill Property are focused on developing the Bovill Kaolin Project and the WBL Tailings Project.

The Bovill Kaolin Project

Our lead project, the Bovill Kaolin Project, is a strategically located long term resource of quartz, potassium feldspar (“K-spar”), halloysite and kaolinite formed through weathering of a border phase of the Idaho Batholith causing all minerals to be contained within a fine white clay-sand mixture referred to as “primary clay.” The Bovill Kaolin Project is located within 3 miles of state highways with electricity and natural gas already at the property boundary.

Since 2010, our exploration work has focused diamond drilling on the Bovill Kaolin Project. To date, a total of 322 diamond drill holes have been drilled totaling 35,909 feet. As a result of these drill campaigns, four deposits have been identified: Kelly’s Hump, Kelly’s Hump South, Middle Ridge and WBL.

In June 2014, we completed an updated pre-feasibility study on the Bovill Kaolin Project (the “2014 PFS”) and on March 8, 2016, we announced the economic results of our initial feasibility study (the “2016 FS”). However, based on the results of an updated independent market study it is apparent that fundamental changes in the businesses that consume our minerals has taken place over the past several years. These changes include offshoring and reformulation wherein industries that had previously used K-spar for example have reformulated their production batches using alternate minerals. Markets do exist for all of the minerals contained within the Bovill Kaolin Project but not in the volumes contemplated in the 2016 FS. Accordingly, the 2016 FS is considered not to be current and should not be relied upon and previously disclosed proven and probable reserve estimates for the Bovill Kaolin Project should no longer be classified or relied upon as such.

Although the reserves and subsequent financial analyses disclosed in the 2016 FS are no longer current, the mineral resources stated in the 2016 FS remain current and have recently been re-stated in a standalone technical report prepared by SRK Consulting (U.S.) recently completed an updated resource estimate. The updated mineral resource statement from this report contains the same tonnages and grades as were disclosed in the 2016 FS and is summarized below.

In addition, the Company engaged Millcreek Engineering of Salt Lake City, Utah to estimate the capital and operating costs for a smaller plant capable of producing up to 20,000 tons of metakaolin and 10,000 tons of halloysite per year. The estimated Operating Costs and Capital Cost fell in line with expectations and the Company has retained Millcreek to complete a Pre-Feasibility Study of a metakaolin and halloysite operation. It is envisioned that the sand fraction (K-spar and quartz) will be screened and sold into lower value industrial applications.

Updated Measured and Indicated Resource Estimate

Measured Resources of 5.7 million tons containing 76.5% quartz/K-spar sand, 12.3% Kaolinite and 4.0% Halloysite.
Indicated Resources of 15.5 million tons containing 57.0% quartz/K-spar sand, 15.5% Kaolinite and 2.8% Halloysite.
667,000 tons of contained halloysite, 3,119,000 tons of contained kaolinite and 13,235,000 tons of contained quartz/K-spar.

In May 2017, the Idaho Department of Lands (“IDL”) accepted our operation and reclamation plan. We have since re-engaged with the IDL to discuss changes to the operation and reclamation plan given the reduced impacts of the smaller operation.

Plan of Operation

During the next twelve months, our plan of operation is to complete a Prefeasibility study (“PFS”) being undertaken by Millcreek Engineering (“Millcreek”) and assuming the results of the PFS are satisfactory, move to a full Feasibility Study (“FS”). In May 2017, the IDL accepted our Operation and Reclamation Plan on the Bovill Kaolin Project. We have advised the IDL we will be amending our Operation and Reclamation plan to reflect the smaller operation. We have received initial power demand estimates from Millcreek and will discuss our power needs with Avista, the local utility, to see if the electricity grid requires upgrading as was required for the larger of our mineral operation. In the interim we will continue to strengthen our customer list and continue discussions to raise the capital to fund the mine construction.

Outlook

Our focus continues to be the detailed assessment of all of our mineral assets and advancing the Bovill Kaolin Project towards production. The Company has elected to initially focus on the development of a metakaolin and halloysite operation. After receiving operating cost and capital cost estimates from Millcreek Engineering it has engaged Millcreek to complete a PFS. The envisaged plant would produce 10,000 tons of halloysite and 20,000 tons of metakaolin annually. Mine Development Associates of Reno (“MDA”) have been engaged to amend the mine plan to target the more clay rich (kaolin and halloysite) sections of the deposit. Preliminary results from MDA indicate focusing mining efforts on the more weathered material material will materially increase the halloysite and kaolinite grade. Completion of the prefeasibility study is expected in the first calendar quarter of 2020.

With respect to work at GMT, a bulk sample of approximately 60 tons of primary clay material has been processed. Changes to the process flow sheet as compared with prior GMT pilot plants included the installation of a hammer mill at the front end of the circuit and the incorporation of a new hydrocyclone processing step to improve clay/sand separation. Pilot scale hydrocyclone test work resulted in the clay yields increasing to about 30% as compared with a yield of 22% as demonstrated in previous pilot plant work. Successful implementation of the hydrocyclone processing has resulted in increased production of ULTRA HallopureÒ and HalloPureÒ halloysite products and kaolin for metakaolin production beyond the rates achieved in pilot plant work associated with the feasibility study. With the pilot plant completed, the kaolin has been calcined into a metakaolin product. Small portions of the halloysite have been successfully beneficiated into value added products for testing in air and gas filtration applications. Results from the current pilot plant will be incorporated into the ongoing PFS by Millcreek.

Concrete test results using our fine ground metakaolin have been received from CTL | Thomson. Excellent strength numbers were generated while staying within the ASTM C-618 water demand requirements. This batch of metakaolin being tested was produced using flash calcination technologies. Management believes a highly reactive metakaolin would be an attractive pozzolan in the Pacific Northwest as pozzolans with comparable characteristics are too expensive for use in many cement applications.

At present we have inventory of all minerals for distribution to customers.

Sample requests for halloysite have come from North America, Europe, the Middle East, South America and Asia showing both the scarcity of halloysite in general and the quality of I-Minerals halloysite in particular. While we currently have inventory of ULTRA HallopureÒ and HalloPureÒ several companies have advanced their halloysite consuming products to near commercialization and have indicated a need for multiple tons of halloysite to complete the commercialization process.

Results of Operation

Six months ended October 31, 2019

We recorded a loss of $2,624,163 ($0.03 per share) for the six months ended October 31, 2019 as compared to a loss of $1,618,478 ($0.02 per share) for the six months ended October 31, 2018. The increase in the loss recorded for the period ended October 31, 2019 as compared to the period ended October 31, 2018 is the net result of changes to a number of expenses. Of note are the following items:

Management and consulting fees of $101,513 (2018 - $98,294) are comprised of fees to manage our Company and stock-based compensation. The stock-based compensation recognized in the current period was $888 (2018 - $5,865). Approximately 75% of the fees to manage our Company are charged to management and consulting fees and the other 25% is charged to mineral property expenditures.
Mineral property expenditures of $724,205 (2018 - $115,530) are costs incurred on our Helmer-Bovill Property. The expenses increased this period compared to the 2018 period as we are now expensing all mineral property expenditures while in the 2018 period, we capitalized $460,770 of development costs. The main components of costs during the current period included engineering and consulting ($288,263) and metallurgy ($215,727). During the current period, the Company continued mineral product optimization and work on the Prefeasibility Study.
General and miscellaneous expenses of $136,811 (2018 - $294,203) are comprised of office and telephone expenses, payroll taxes, medical benefits, insurance premiums, travel expenses, promotional expenses, shareholder communication fees, transfer agent fees and filing fees. The decrease during the current period was due to a reduction in shareholder communications fees and severance costs.
Professional fees of $111,398 (2018 – $102,756) include legal fees, audit fees and financial consulting fees.
Accretion expense of $60,348 (2018 - $130,580) is the amortization of the fair value of bonus shares and bonus warrants issued to the lender of the promissory notes. The bonus shares and bonus warrants are amortized over the life of the promissory notes.
Interest expense of $1,488,711 (2018 - $1,110,060) is from promissory notes that bear interest at the rates of 12%-14% per year. Interest increased as additional funds were advanced.
We recorded a gain on change in fair value of derivative liabilities of $3,143 (2018 – gain of $235,443). The change in fair value of derivative liabilities is based on the change in remaining term of derivative instruments and our stock price. The derivatives include warrants as well as stock options granted to non-employees. The derivative liabilities do not represent cash liabilities. During Q3 fiscal 2019, the derivative warrants expired unexercised.

Liquidity and Capital Resources

Our aggregate operating, investing and financing activities during the six months ended October 31, 2019 resulted in a net cash outflow of $207,615 (2018 – inflow of $27,672). As at October 31, 2019, we had a working capital deficiency of $26,479,308.

During the six months ended October 31, 2019, $2,562,765 was used in operations before changes in non-cash operating working capital items (2018 - $1,719,634). During the six months ended October 31, 2019, we spent $7,611 on investing activities (2018 - $515,347) and we received $680,000 from financing activities (2018 - $1,161,084).

We have been financed by advances pursuant to promissory notes advanced by BV Lending LLC, an entity controlled by Allen L. Ball, a member of our Board of Directors and our largest shareholder (the “Lender”). During the six months ended October 31, 2019, the Company was receiving advances pursuant to the Fifth Promissory Notes. As at October 31, 2019, the principal balance of the promissory notes was $24,784,305.

On October 25, 2019, the Company entered into a loan agreement with the Lender pursuant to which up to $700,000 will be advanced to the Company in tranches (the “Sixth Promissory Notes”). Subsequent to October 31, 2019, the Company received advances of $500,000. An additional $200,000 of advances are available under the Sixth Promissory Notes.

The Third Promissory Notes, the Fifth Promissory Notes and the Sixth Promissory Notes have a maturity date of the earlier of (i) June 30, 2020 and (ii) 60 days after a pre-feasibility study has been filed on SEDAR.

We have not as yet put into commercial production any mineral properties and as such have no operating revenues. Accordingly, we are dependent on debt and equity financing as the primary source of operating working capital. Our capital resources are largely determined by the strength of the junior resource markets and by the status of our projects in relation to these markets, and our ability to compete for investor support of our projects.

We remain dependent on additional financing to fund development requirements on the Helmer-Bovill property and for general corporate costs. With respect to funds required for capital cost items, State-sponsored debt financing instruments may be available on attractive terms, and we intend to pursue such financial instruments to cover portions of the capital costs associated with placing the Bovill Kaolin deposits into production.

We do not have the ability to internally generate sufficient cash flows to support our operations for the next twelve months. We have been receiving funds from a company controlled by a director of the Company through promissory notes. We have no formal plan in place to address this going concern issue but consider that we will be able to obtain additional funds by equity financing and/or debt financing; however, there is no assurance of additional funding being available. As a result, our auditors included an emphasis of matter note in their report on the financial statements for the year ended April 30, 2019 about our ability to continue as a going concern.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.

Critical Accounting Policies

Measurement Uncertainty

The preparation of these consolidated financial statements in conformity with US GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We regularly evaluate estimates and assumptions related to the useful life and recoverability of long lived assets, stock-based compensation, valuation of convertible debentures and derivative liabilities, and deferred income tax asset valuation allowances. We base our estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by us may differ materially and adversely from our estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. The most significant estimates with regard to our condensed consolidated financial statements relate to the determination of fair values of derivative liabilities and stock-based transactions.

Stock-based Compensation

We account for all stock-based payments and awards under the fair value based method. Stock-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable.

The fair value of stock-based payments to non-employees is periodically re-measured until the counterparty performance is complete, and any change therein is recognized over the vesting period of the award and in the same manner as if we had paid cash instead of paying with or using equity based instruments. The cost of the stock-based payments to non-employees that are fully vested and non-forfeitable as at the grant date is measured and recognized at that date, unless there is a contractual term for services in which case such compensation would be amortized over the contractual term.

We account for the granting of stock options to employees using the fair value method whereby all awards to employees will be recorded at fair value on the date of the grant. The fair value of all stock options is expensed over their vesting period with a corresponding increase to additional paid-in capital.

Compensation costs for stock-based payments that do not include performance conditions are recognized on a straight-line basis. Compensation cost associated with a share based award having a performance condition is recognized on the probable outcome of that performance condition during the requisite service period. Share based awards with a performance condition are accrued on an award by award basis.

We use the Black-Scholes option valuation model to calculate the fair value of stock options at the date of the grant. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimates.

Derivative Liabilities

We evaluate our financial instruments and other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market at each balance sheet date and recorded as a liability and the change in fair value is recorded in the consolidated statement of loss. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instruments that become subject to reclassification are reclassified at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current as settlement of the derivative instruments are at the option of the holder.

We use the Black-Scholes option valuation model to value derivative liabilities. This model uses Level 3 inputs in the fair value hierarchy established by ASC 820 Fair Value Measurement.

Mineral Property Acquisition and Exploration Costs

Mineral property acquisition costs are capitalized when incurred. Acquisition costs include cash consideration and the fair market value of shares issued on the acquisition of mineral property claims.

Costs related to the development of our mineral reserves are capitalized when it has been determined an ore body can be economically developed. The development stage begins when an ore body is determined to be economically recoverable based on proven and probable reserves and appropriate permits are in place, and ends when the production stage or exploitation of reserves begins. Major mine development expenditures are capitalized, including primary development costs such as costs of building access ways, tailings impoundment, development of water supply and infrastructure developments.

Exploration costs include those relating to activities carried out (a) in search of previously unidentified mineral deposits, or (b) at undeveloped concessions. Pre-development activities involve costs incurred in the exploration stage that may ultimately benefit production that are expensed due to the lack of evidence of economic development, which is necessary to demonstrate future recoverability of these expenses. Secondary development costs are incurred for preparation of an ore body for production in a specific ore block or work area, providing a relatively short-lived benefit only to the mine area they relate to, and not to the ore body as a whole.

Once production has commenced, capitalized costs will be depleted using the units-of-production method over the estimated life of the proven and probable reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to the Consolidated Statements of Loss in that period.

We assess the carrying cost of our mineral properties for impairment whenever information or circumstances indicate the potential for impairment. Such evaluations compare estimated future net cash flows with our carrying costs and future obligations on an undiscounted basis. If it is determined that the future undiscounted cash flows are less than the carrying value of the property, a write down to the estimated fair value is charged to the Consolidated Statements of Loss for the period. Where estimates of future net cash flows are not available and where other conditions suggest impairment, management assesses if the carrying value can be recovered.

For significant exploration and development projects, interest is capitalized as part of the historical cost of developing and constructing assets in accordance with ASC 835-20. Interest is capitalized until the asset is ready for service. Capitalized interest is determined by multiplying the Company’s weighted-average borrowing cost on general debt by the average amount of qualifying costs incurred. Once an asset subject to interest capitalization is completed and placed in service, the associated capitalized interest is expensed through depletion or impairment.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable

Item 4. Controls and Procedures.

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of October 31, 2019. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of October 31, 2019. There were no material changes in the Company’s internal control over financial reporting during the second quarter of fiscal 2020.

PART II

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

There have been no material changes from the risk factors as previously disclosure in our Annual Report on Form 10-K which was filed with the SEC on July 29, 2019.

Item 2. Sale of Unregistered Securities.

All unregistered sales of equity securities during the period covered by the Quarterly Report were previously disclosed in our current reports on Form 8-K and our Annual Report on Form 10-K.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (The “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. During the six months ended October 31, 2019, our U.S. exploration and evaluation property was not subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the "Mine Act").

Item 5. Other Information.

2019 Annual General Meeting Results

On December 10, 2019, the Company held its annual general meeting of the shareholders (the “Meeting”). All items submitted to the shareholders for approval as set out in the Company’s Proxy Statement were approved by the requisite majority of votes at the AGM.

The details of the voting results for the election of directors are outlined below:

Director	Votes For		Votes Withheld
	#	%	#	%
John Theobald	25,382,044	99.64%	92,000	0.36%
Allen L. Ball	25,440,044	99.87%	34,000	0.17%
W. Barry Girling	25,382,044	99.64%	92,000	0.36%
Gary Childress	25,444,044	99.88%	30,000	0.12%
Wayne Moorhouse	25,444,044	99.88%	30,000	0.12%

In addition to the re-election of the directors, shareholders also approved the re-appointment of BDO Canada LLP as auditors of the Company, set the number of directors at five, approved amending the Company’s stock option plan and the renewal of the Company’s stock option plan.

Entry into Security Agreements

On December 9, 2019, in accordance with the terms of the Third Promissory Notes, the Fifth Promissory Notes and the Sixth promissory Notes agreements, the Company granted the following security interests to BV Lending LLC:

(a)	a general security interest over all the present and after acquired personal property of the Company pursuant to the terms of a general security agreement between the Company and BV Lending LLC;

(b)	a mortgage on the leases that comprise the Bovill Kaolin Project and a security interest over the present and after acquired personal property of i-minerals USA, Inc. pursuant to a Mortgage and Security Agreement between i-minerals USA, Inc. and BV Lending LLC; and,

(c)	a continuing and unconditional guaranty by I-Minerals, Inc. to BV Lending LLC.

Item 6. Exhibits.

3.1	Certificate of Continuation.⁽²⁾
3.2	Articles of Continuance.⁽²⁾
3.3	Certificate of Amendment.⁽²⁾
3.4	Articles of Amendment.⁽²⁾
3.5	By-Laws.⁽²⁾
10.1	Assignment Agreement with Contingent Right of Reverter dated August 10, 2002, between the Company, Idaho Industrial Minerals, LLC and Northwest Kaolin Inc.⁽²⁾
10.2	Amendment and Ratifications of Assignment Agreement with Contingent Right of Reverter dated August 10, 2005, between the Company, Idaho Industrial Minerals, LLC and Northwest Kaolin Inc.⁽²⁾
10.3	Second Amendment and Ratifications of Assignment Agreement with Contingent Right of Reverter dated August 10, 2005, between the Company, Idaho Industrial Minerals, LLC and Northwest Kaolin Inc.⁽²⁾
10.4	Third Amendment and Ratifications of Assignment Agreement with Contingent Right of Reverter dated August 10, 2008, between the Company, Idaho Industrial Minerals, LLC and Northwest Kaolin Inc.⁽²⁾
10.5	Fourth Amendment and Ratifications of Assignment Agreement with Contingent Right of Reverter dated January 1, 2010, between the Company, Idaho Industrial Minerals, LLC and Northwest Kaolin Inc.⁽²⁾
10.6	Employment Agreement dated April 1, 2013 between the Company and Thomas M. Conway.⁽²⁾
10.7	Loan Agreement dated September 13, 2013 between the Company and BV Lending LLC.⁽²⁾
10.8	Stock Option Plan.⁽¹⁾
10.9	Sales Agreement dated April 28, 2014 between I-Minerals USA, Inc. and Pre-Mix, Inc.⁽²⁾
10.10	Loan Agreement dated February 18, 2015 between the Company and BV Lending LLC.⁽³⁾
10.11	Amendment Agreement dated December 1, 2015 between the Company and BV Lending LLC.⁽⁴⁾
10.12	Loan Agreement dated June 1, 2016 between the Company and BV Lending LLC.⁽⁵⁾
10.13	Amending Agreement dated October 25, 2017 between the Company and BV Lending LLC.⁽⁶⁾
10.14	Amending Agreement dated January 18, 2018 between the Company and BV Lending LLC.⁽⁷⁾
10.15	Amending Agreement dated March 30, 2018 between the Company and BV Lending LLC.⁽⁸⁾
10.16	Employment Agreement dated March 1, 2018 between the Company and John Theobald.⁽⁹⁾
10.17	Settlement Agreement dated August 3, 2018 between the Company and Thomas Conway.⁽⁹⁾
10.18	Loan Agreement dated September 11, 2018 between the Company and BV Lending LLC.⁽⁹⁾
10.19	Amending Agreement dated March 27, 2019 between the Company and BV Lending LLC.⁽¹⁰⁾
10.20	Amending Agreement dated June 28, 2019 between the Company and BV Lending LLC.⁽¹⁰⁾
10.21	Amending Agreement dated October 25, 2019 between the Company and BV Lending LLC.
10.22	Loan Agreement dated October 25, 2019 between the Company and BV Lending LLC. ⁽¹¹⁾
31.1	Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002 (Rule 13a-14 and 15d-14 of the Exchange Act)
31.2	Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002 (Rule 13a-14 and 15d-14 of the Exchange Act)
32.1	Certification of Chief Executive Officer pursuant to pursuant to Section 1350 of Title 18 of the United States Code
32.2	Certification of Chief Financial Officer pursuant to pursuant to Section 1350 of Title 18 of the United States Code

Notes:

(1)

Filed as an exhibit to our Registration Statement on Form 10 filed with the SEC on November 17, 2014.

(2)

Filed as an exhibit to our Registration Statement on Form 10/A filed with the SEC on December 24, 2014.

(3)

Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on March 11, 2015.

(4)

Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on December 7, 2015.

(5)

Filed as an exhibit to our Form 10-Q filed with the SEC on September 14, 2016.

(6)

Filed as an exhibit to our Form 10-Q filed with the SEC on December 15, 2017.

(7)

Filed as an exhibit to our Form 10-Q filed with the SEC on March 14, 2018.

(8)

Filed as an exhibit to our Form 10-K filed with the SEC on August 3, 2018.

(9)

Filed as an exhibit to our Form 10-Q filed with the SEC on September 14, 2018.

	(10)	Filed as an exhibit to our Form 10-K filed with the SEC on July 29, 2019.
	(11)	Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on November 8, 2019.

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			I-MINERALS INC.



Date:	December 13, 2019	By:	/s/ John Theobald
			JOHN THEOBALD
			Chief Executive Officer and President
			(Principal Executive Officer)


Date:	December 13, 2019	By:	/s/ Matthew Anderson
			MATTHEW ANDERSON
			Chief Financial Officer
			(Principal Financial Officer and Principal Accounting Officer)

THIS AGREEMENT is dated October 25, 2019.

BETWEEN:

I-Minerals Inc., a body corporate, continued under the laws of Canada, having its head office at Suite 880 – 580 Hornby Street, Vancouver, British Columbia, Canada V6C 3B6

(hereinafter called the “Company”)

OF THE FIRST PART

AND:

BV Lending, LLC, an Idaho limited liability company, having its head office at Suite 201 – 901 Pier View Drive, Idaho Falls, Idaho, U.S.A. 83402

(hereinafter called “BV”)

OF THE SECOND PART

WHEREAS:

Pursuant to an agreement among the parties dated June l, 2016, as amended by an amending agreement dated October 25, 2017 (hereinafter called the "First Amending Agreement"), as further amended by an amending agreement dated January 19, 2018 (hereinafter called the "Second Amending Agreement"), as further amended by an amending agreement dated March 20, 2018 (hereinafter called the “Third Amending Agreement”), as further amended by an amending agreement dated March 27, 2019 (hereinafter called the “Fourth Amending Agreement”), as further amended by an amending agreement dated June 28, 2019 (hereinafter called the “Fifth Amending Agreement”), with the loan agreement dated June 1, 2016, as amended by the First Amending Agreement, the Second Amending Agreement, the Third Amending Agreement, the Fourth Amending Agreement and the Fifth Amending Agreement hereinafter collectively called the "Loan Agreement", BV agreed to advance certain funds to the Company to advance its Bovill Kaolin Project located in the State of Idaho, U.S.A.;

B.	Pursuant to an agreement among the parties dated September 11, 2018 (hereinafter called the “2018 Loan Agreement”), BV agreed to advance an additional $2,500,000 to the Company to further advance its Bovill Kaolin Project located in the State of Idaho, U.S.A.;

C.	The Loan Agreement and the 2018 Loan Agreement are hereinafter collectively referred to as the “Loan Agreements”;

D.	The parties have agreed to extend the repayment date by which the principal and interest outstanding pursuant to the Loan Agreements is to be made, as provided for herein;

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of these presents and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each of the parties, the parties hereby agree as follows:

1.	Extension for the repayment of the Indebtedness

1.01

Notwithstanding the provisions for the repayment of the cash advances made pursuant to the Loan Agreements, together with all accrued and unpaid interest thereon, as provided for in the Loan Agreements and pursuant to certain related promissory notes issued pursuant to the Loan Agreements, the date for the repayment of all cash advances made pursuant to the Loan Agreements, together with all accrued and unpaid interest thereon is hereby extended until the earlier of:

(a)

June 30, 2020; and

(b)

60 days after a Pre-Feasibility Study in respect of the Bovill Kaolin Project has been prepared in accordance with National Instrument 43-101 and has been duly filed on SEDAR.

2.	Notices

2.01	All notices, payments and other communications given in connection with this Agreement shall be in writing, and the respective addresses of the parties for the service of any notice, payment or other communication shall be as follows:

(a)

if to the Company:

I-Minerals Inc.
Suite 880 – 580 Hornby Street
Vancouver, British Columbia, Canada
V6C 3B6

Attention: Barry Girling, Director
Email: wbg@imineralsinc.com

(b)

if to BV:

BV Lending, LLC
Suite 201 – 901 Pier View Drive
Idaho Falls, Idaho, U.S.A.
83402

Attention: Cortney Liddiard, Chief Executive Officer
Email: flyfish@ballventures.com

with a copy to:

Thel W. Casper, Esq.
General Counsel to Ball Ventures, LLC
P. O. Box 51298
Idaho Falls, Idaho, U.S.A.
83402

Email: tcasper@ballventures.com

Any notice, payment or other communication shall be sufficiently given if delivered by email or by hand or by reputable courier service, or, absent postal disruption, if sent by registered mail, postage prepaid, posted within either Canada or the United States of America, to the parties at their respective addresses for service as set forth above. Any notice, payment or other communication shall be deemed to have been given and received on the first business day on which it is presented during normal business hours at the address for service of the addressee. Any party may change its address for service by notice in writing to the other parties.

3.	Time of the Essence

3.01	Time shall be of the essence of this Agreement.

4.	U.S. Dollars

4.01	All references herein to dollar amounts are to lawful currency of the United States of America, unless otherwise specifically provided for herein.

5.	Headings

5.01	The headings contained herein are for convenience only and shall not affect the meaning or interpretation hereof.

6.	Singular and Plural, etc.

6.01	Where the context so requires, words importing the singular number include the plural and vice versa, and words importing gender shall include the masculine, feminine and neuter genders.

7.	Entire Agreement

7.01	This Agreement constitutes the only agreement among the parties with respect to the subject matter hereof and shall supersede any and all prior negotiations and understandings. This Agreement may be amended or modified in any respect by written instrument only.

8.	Severability

8.01	The invalidity or unenforceability of any particular provision of this Agreement shall not effect or limit the validity or enforceability of the remaining provisions of this Agreement.

9.	Governing Law

9.01

This Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein. The parties irrevocably attorn to the jurisdiction of the courts of British Columbia, which will have non-exclusive jurisdiction over any matter arising out of this Agreement.

10.

Dispute Resolution

10.01

If any dispute arises between any of the Parties (the Parties in dispute being the “Participants”) concerning this Agreement or its interpretation or the respective rights, duties or liabilities of the Parties, then a Participant may give to the other Participants notice in writing of the existence of such dispute, specifying its nature and the point at issue and the Participants agree:

(a)

to try to resolve the dispute by participating in a structured negotiation with a mediator under the Commercial Mediation Rules of British Columbia International Commercial Arbitration Centre (“BCICAC”);

(b)

where a dispute is not resolved by mediation within a period of 30 days after the appointment of a mediator or within such further period of time to which the Participants agree, any Participant may refer the dispute to be finally resolved by arbitration under the BCICAC Rules. The appointing authority will be the BCICAC, the case shall be administered by the BCICAC in accordance with its “Procedures for Cases under the BCICAC Rules” and the place of arbitration shall be Vancouver, British Columbia. The appointment by the BCICAC is binding upon all of the Participants;

(c)

the arbitrator will give his decision in writing within three weeks of his being appointed and the decision, both on the dispute and on the costs of the arbitration will be final and binding upon the Participants;

(d)

the arbitrator will have full authority to rule on any question of law in the same manner as any Judge in any Court of the Province of British Columbia and the ruling of the arbitrator on any question of law will be final and binding upon the Participants; and

(e)

the failure of any Participant to abide by the decision of the arbitrator is considered a material breach of this Agreement.

This paragraph shall survive any termination of this Agreement and continues in full force and effect notwithstanding any determination by a court or the Parties that one or more other provisions of this Agreement are invalid, contrary to law or unenforceable.

11.

Successors and Assigns

11.01

The terms and provisions of this Agreement shall be binding upon and enure to the benefit of each of the parties and their respective successors and permitted assigns; provided that this Agreement shall not be assignable by any party without the written consent of each of the other parties hereto.

12.

Further Assurances

12.01

Each of the parties hereto shall do or cause to be done all such acts and things and execute or cause to be executed all such documents, agreements and other instruments as may reasonably be necessary or desirable for the purpose of carrying out the provisions and intent of this Agreement.

13.

Effective Date

13.01

This Agreement is intended to and shall take effect as of the date first set forth above, notwithstanding its actual date of execution or delivery.

14.

Counterparts and Facsimile

14.01

This Agreement may be executed in any number of counterparts by original, facsimile or other form of electronic signature, each of which so executed shall constitute an original and all of which taken together shall form one and the same agreement.

IN WITNESS WHEREOF the parties have executed and delivered this Agreement as of the day and year first above written.

Executed by I-Minerals Inc. in the presence of:
___________________________________________________
Authorized Signatory

Executed by
BV Lending, LLC

By: Ball Ventures, LLC, an Idaho limited
liability company, the Member

Per:
Cortney Liddiard, CEO

DATED: October 25, 2019

Between:

I-Minerals Inc.

OF THE FIRST PART

And:

BV Lending, LLC

OF THE SECOND PART

AGREEMENT

Tupper Jonsson & Yeadon
1710 - 1177 West Hastings Street
Vancouver, B. C.
V6E 2L3

Telephone: (604) 640-6355

THIS LOAN AGREEMENT (“this Agreement”) is dated October 25, 2019.

AMONG:

I-Minerals Inc., a body corporate, continued under the laws of Canada, having its head office at Suite 880 – 580 Hornby Street, Vancouver, British Columbia, Canada V6C 3B6

(hereinafter called the “Company”)

OF THE FIRST PART

AND:

i-minerals USA Inc., an Idaho limited liability company, having an office c/o the Company, at Suite 880 – 580 Hornby Street, Vancouver, British Columbia, Canada V6C 3B6

(hereinafter called the “Subsidiary”)

OF THE SECOND PART

AND:

BV Lending, LLC, an Idaho limited liability company, having its head office at Suite 201 – 901 Pier View Drive, Idaho Falls, Idaho, U.S.A. 83402

(hereinafter called “BV”)

OF THE THIRD PART

WHEREAS:

B.	Pursuant to an agreement among the parties dated September 11, 2018 (hereinafter called the “2018 Loan Agreement”), BV agreed to advance an additional $2,500,000 to the Company to further advance its Bovill Kaolin Project located in the State of Idaho, U.S.A.;

C.	BV has agreed to provide additional funding to the Company pursuant to the terms and conditions of this Agreement;

D.	The Subsidiary is a wholly-owned subsidiary of the Company and is the legal owner of the Helmer-Bovill Property hosting the Bovill Kaolin Project in the State of Idaho, U.S.A. referred to in Recitals A. and B. herein;

1.	Definitions

1.01	In this Agreement, the following words and phrases shall have the following meanings, namely:

(a)

“Advance” means the principal amount of cash advances from BV to the Company pursuant to this Agreement, as well as interest owing under this Agreement, at BV’s election;

(b)

“Bonus Shares” has the meaning set out in Exchange Policy 5.1;

(c)

“Discounted Market Price” has the meaning set out in Exchange Policy 1.1;

(d)

“Effective Date” means the date of this Agreement as set forth on the first page hereof;

(e)

“Exchange” means the TSX Venture Exchange;

(f)

“Exchange Policy 1.1” means TSX Venture Exchange Policy 1.1, entitled “Interpretation”;

(g)

“Exchange Policy 5.1” means TSX Venture Exchange Policy 5.1, entitled “Loans, Bonuses, Finder’s Fees and Commissions”;

(h)

“Exchange Policy 5.9” means TSX Venture Exchange Policy 5.9, entitled “Protection of Minority Security Holders in Special Transactions”;

(i)

“Exchange Rate” means the Bank of Canada Noon Rate for Canadian/U.S. dollars on the applicable dates provided for herein;

(j)

“Indebtedness” means the principal amount of each cash Advance pursuant to this Agreement, collectively, as well as interest which is considered an Advance in accordance with sections 2.01 and 2.02 hereof;

(k)

“Market Price” has the meaning set out in Exchange Policy 1.1;

(l)

“this Agreement” means this Loan Agreement.

2.	Cash Advances to be made

2.01

BV hereby agrees to advance up to an additional $700,000 in cash to the Company in tranches in accordance with Schedule A attached hereto (individually an “Advance” and collectively “Advances”), with each Advance to be considered a secured loan accruing interest at the rate of fourteen percent (14%) per annum calculated from the date of each Advance as at May 31 and as at November 30 of each year in which such interest is payable hereunder, such interest also to be considered Advances hereunder over and above the amounts set forth in Schedule A, unless BV elects otherwise, as provided for in paragraph 2.02 herein. If applicable this interest will be considered an Advance received on the date such interest is payable as provided for in paragraph 2.02 herein.

The Company will repay to BV the principal amount of each Advance as provided for in paragraph 6.01 herein. Advances hereunder, other than interest when considered an Advance hereunder, will be made in accordance with Schedule A attached hereto. Advances are to be made on the first business day of each month in which Advances are to be made.

2.02

As provided for in paragraph 2.01 herein, interest owing on Advances will also be considered Advances, unless BV elects otherwise, in which event it may direct that the Company pay the interest owing on the Advances hereunder either in cash or in common shares in its capital stock (“Shares”). In the event BV elects to have the interest paid either in cash or in Shares, it will so notify the Company within ten (10) business days prior to the date such interest payments become due and payable. The interest will be due on or before June 30 and December 31 of each year in which such interest is payable hereunder. In the event interest is to be paid in Shares, they would be issued at a deemed price per Share equal to the greater of:

(a)

the Discounted Market Price of the Company’s common shares as of the close of the market on the date of the Company’s news release announcing the proposed payment of interest in Shares, provided that said news release shall be issued on the date that BV elects to receive the payment of interest in Shares; and

(b)

the volume weighted average trading price (the “VWAP”) of the Company’s common shares over the twenty (20) trading days prior to the date such interest is calculated (being May 31 and November 30 each year), with the VWAP to be calculated by dividing the total value of common shares of the Company as traded on the Exchange (or on such other stock exchange or quotation system where the majority of the Company’s trading takes place) by the total volume of shares traded, with the amount of interest to be calculated in Canadian funds based on the Exchange Rate as of the date such interest is calculated.

2.03

The Company shall pay to BV a late charge equal to five percent (5%) of each payment due under this Agreement, or under any other instrument evidencing or securing this Agreement, that is not paid in full within ten (10) days after the applicable due date as provided for in paragraph 6.01 herein. Such late charge shall accrue and be due as of the due date for such payment and represents a reasonable estimate of fair compensation for the loss that may be sustained by BV for the failure of the Company to make timely payment. Such late charge shall be paid without prejudice to the right of BV to collect any other amounts provided for hereunder or to pursue any other rights and remedies available to BV under this Agreement, under any documents securing and/or guaranteeing this Agreement, at law or in equity.

2.04

All past due principal (whether in due course or by acceleration), past due interest and past due late charges shall, both before and after judgment, bear interest at the default rate of eighteen percent (18%) per annum compounded monthly from and after the applicable due date, as provided for in paragraph 6.01 herein, until paid in full.

2.05

The Company agrees to pay any and all reasonable costs and expenses (regardless of the particular nature thereof and whether incurred before or after the initiation of suit or before or after judgment) which may be incurred by BV in connection with the enforcement of any of its rights under this Agreement and/or any instrument securing or guaranteeing this Agreement, including but not limited to attorney fees and all costs and expenses of collection.

2.06

The Company, and all sureties, guarantors, and endorsers hereof, severally waive presentment for payment, demand, and notice of dishonor and nonpayment of this Agreement, and consent to any and all extensions of time, renewals, waivers, or modifications that may be granted by BV with respect to the payment or other provisions of this Agreement, and to the release of any security, or any part thereof, with or without substitution.

2.07	Notwithstanding any other provision contained in this Agreement or in any instrument given to evidence or secure the obligations evidenced hereby:

(a)

the rates of interest and charges provided for herein and therein shall in no event exceed the rates and charges which would result in interest being charged at a rate equaling the maximum allowed by law; and

(b)

if for any reason whatsoever BV ever receives as interest in connection with the transaction of which this Agreement is a part an amount which would result in interest being charged at a rate exceeding the maximum allowed by law, such amount or portion thereof as would otherwise be excessive interest shall automatically be applied toward reduction of the unpaid principal balance then outstanding hereunder and not toward payment of interest.

3.	Bonus Shares

3.01

As additional consideration for the cash Advances made by BV to the Company pursuant to paragraph 2.01 hereof, the Company agrees to issue to or as directed by BV the Bonus Shares referred to in sub-paragraph 3.01(a) herein as follows, with such Bonus Shares to be issued within ten (10) business days of each of June 30 and December 31 of each year in which such securities are to be issued hereunder, with the number of Bonus Shares to be calculated as set forth below:

(a)

that number of Bonus Shares in its capital equal to six percent (6%) of the amount of the Advance, divided by the Market Price of the Company’s common shares as of the close of business on the date of the Advance, as adjusted by the Exchange Rate on the date of the Advance, subject to the minimum price per share and the maximum number of Bonus Shares provided for in Exchange Policy 5.1; and

(b)

for greater certainty, Bonus Shares shall not be issuable in respect of interest which is deemed to be an Advance in accordance with sections 2.01 and 2.02 hereof.

4.	Security for Advances

4.01

As security for the repayment of the Advances made pursuant to this Agreement, together with all accrued and unpaid interest thereon, the Company hereby grants, mortgages and charges in favour of BV, by way of a floating charge, its undertaking and all of its other property and assets for the time being, real and personal, movable and immovable, of whatsoever nature and kind, both present and in the future (the “Property”), including all of the issued and outstanding shares of the Subsidiary. For greater certainty, the parties specifically acknowledge and agree that the charges hereby created in favour of BV constitute a first charge and will rank pari passu with the floating charge granted in favour of BV in respect of cash advances made pursuant to earlier loan agreements among the parties, together with all accrued and unpaid interest thereon; the parties also acknowledge and agree that these charges are in priority to any and all specific or floating charges created by the Company in favour of any other creditors. The Company and the Subsidiary each agree to take all steps and actions as are reasonably necessary to assist BV with the registration of its interest in the Property in any provincial, state or federal property or title registries. It is also acknowledged by the parties that the Company shall be at liberty to, in the future, create or suffer to be created mortgages, charges, liens or encumbrances, by other specific charges or floating charges, ranking subsequent to the floating charges hereby created; it is also acknowledged by the parties that, unless otherwise specifically agreed to in writing by BV, the Company shall not be at liberty to, and shall not create or suffer to be created, any mortgage, charge, lien or encumbrance upon the Property or the issued and outstanding shares of the Subsidiary ranking in priority to or pari passu with the charges hereby created, or to sell or dispose of the same otherwise than in the ordinary course of its business as at present conducted.

4.02	The parties also agree that the security provided for in paragraph 4.01 herein will be cancelled and of no further force or effect in the event of the repayment of the Indebtedness.

5.	Board Representation

5.01

During the period any portion of the Indebtedness remains outstanding, the Company, if requested to do so by BV, agrees to include an individual designated by BV as one of management’s nominees for director in the notice of meeting and information circular to be distributed to the shareholders of the Company in connection with the next annual general meeting of its shareholders held subsequent to its receipt of said request from BV.

6.	Repayment Provisions

6.01	The parties agree that the Company will repay the Indebtedness on the earlier of:

(a)

June 30, 2020; and

(b)

60 days after a Pre-Feasibility Study in respect of the Bovill Kaolin Project has been prepared in accordance with National Instrument 43-101 and has been duly filed on SEDAR.

7.	Participation Right

7.01	If at any time after the Effective Date hereof and for so long as any Advance is outstanding, the Company proposes to issue or sell any common shares or convertible securities (“Additional Securities”) other than:

(a)

pursuant to the exercise of any stock options granted under the Company’s stock option plan; or

(b)

pursuant to the exercise of any share purchase warrants issued pursuant to previously-completed private placements; or

(c)

for property interests other than money;

BV shall have the right to subscribe for and purchase (directly or through an affiliate) Additional Securities, at the price at which such Additional Securities are offered for sale to other purchasers, up to its then pro rata interest in the issued and outstanding common shares of the Company, in each case, prior to giving effect to the issuance or sale of such Additional Securities (the “Maximum Additional Securities”).

7.02

If the Company intends to authorize and/or issue Additional Securities that give rise to BV’s rights pursuant to paragraph 7.01, the Company shall provide notice to BV (the “Rights Notice”) no less than six business days before the date on which the Company intends to issue Additional Securities giving rise to BV’s rights pursuant to paragraph 7.01.

7.03

The Rights Notice shall provide the same information to BV regarding the particulars of the issuance or sale of the Additional Securities as is provided to other persons proposing to participate in the subscription for Additional Securities. BV shall give notice (an “Acceptance Notice”) to the Company not later than 5:00 p.m. (Vancouver time) on the fifth business day following the receipt of any Rights Notice, setting out the number of Additional Securities, if any, up to the Maximum Additional Securities, which BV intends to subscribe for and purchase. Following receipt of an Acceptance Notice, BV shall be entitled to participate in the subscription for Additional Securities in the same manner as other persons subscribing for Additional Securities and shall be entitled to subscribe for the number of Additional Securities specified in the Acceptance Notice under such subscription.

8.	Acceptances and Approvals

8.01

The Company agrees to make application to the Exchange for its acceptance for the issuance of any Shares payable in settlement of interest owing on any Advances as provided for in paragraph 2.02 herein, and for the issuance of the Bonus Shares pursuant to paragraph 3.01 herein, which applications will include all required supporting documents and information and the applicable filing fees. The issuance of any such Shares and/or Bonus Shares will in each case be subject to the Company receiving written acceptance from the Exchange therefor.

8.02

In the event the provisions of Exchange Policy 5.9 and Multilateral Instrument 61-101 (each entitled “Protection of Minority Security Holders in Special Transactions”) apply to any of the provisions of this Agreement, the Company also agrees to seek the required approval of its shareholders thereunder at its next annual general meeting of its shareholders, to be held on or before December 31, 2018, in order to seek the requisite approval from its shareholders for the provisions hereof requiring such approval.

9.	Notices

9.01	All notices, payments and other communications given in connection with this Agreement shall be in writing, and the respective addresses of the parties for the service of any notice, payment or other communication shall be as follows:

(a)

if to the Company:

I-Minerals Inc.
Suite 880 – 580 Hornby Street
Vancouver, British Columbia, Canada
V6C 3B6

Attention: Barry Girling, Director
Email: wbg@imineralsinc.com

(b)

if to the Subsidiary:

i-minerals USA Inc.
Suite 880 – 580 Hornby Street
Vancouver, British Columbia, Canada
V6C 3B6

Attention: Barry Girling, Director
Email: wbg@imineralsinc.com

(c)

if to BV:

BV Lending, LLC
Suite 201 – 901 Pier View Drive
Idaho Falls, Idaho, U.S.A.
83402

Attention: Cortney Liddiard, Chief Executive Officer
Email: flyfish@ballventures.com

with a copy to:

Thel W. Casper, Esq.
General Counsel to Ball Ventures, LLC
P. O. Box 51298
Idaho Falls, Idaho, U.S.A.
83402

Email: tcasper@ballventures.com

10.

Time of the Essence

10.01

Time shall be of the essence of this Agreement.

11.

U.S. Dollars

11.01

All references herein to dollar amounts are to lawful currency of the United States of America, unless otherwise specifically provided for herein.

12.

Headings

12.01

The headings contained herein are for convenience only and shall not affect the meaning or interpretation hereof.

13.

Singular and Plural, etc.

13.01

Where the context so requires, words importing the singular number include the plural and vice versa, and words importing gender shall include the masculine, feminine and neuter genders.

14.

Entire Agreement

14.01

This Agreement constitutes the only agreement among the parties with respect to the subject matter hereof and shall supersede any and all prior negotiations and understandings. This Agreement may be amended or modified in any respect by written instrument only.

15.

Severability

15.01

The invalidity or unenforceability of any particular provision of this Agreement shall not effect or limit the validity or enforceability of the remaining provisions of this Agreement.

16.

Governing Law

16.01

17.

Dispute Resolution

17.01

(a)

(b)

(c)

(d)

(e)

the failure of any Participant to abide by the decision of the arbitrator is considered a material breach of this Agreement.

18.

Successors and Assigns

18.01

19.

Further Assurances

19.01

20.

Effective Date

20.01

This Agreement is intended to and shall take effect as of the date first set forth above, notwithstanding its actual date of execution or delivery.

21.

Counterparts and Facsimile

21.01

IN WITNESS WHEREOF the parties have executed and delivered this Agreement as of the day and year first above written.

Executed by I-Minerals Inc. in the presence of:
___________________________________________ Authorized Signatory

Executed by i-minerals USA Inc. in the presence of:
___________________________________________ Authorized Signatory

Executed by
BV Lending, LLC

By: Ball Ventures, LLC, an Idaho limited
liability company, the Member

Per:
Cortney Liddiard, CEO

SCHEDULE A

2019
Budget	October	November	December
	$250,000	$250,000	200,000

DATED: October 25, 2019

Among:

I-Minerals Inc.

OF THE FIRST PART

And:

i-minerals USA Inc.

OF THE SECOND PART

And:

BV Lending, LLC

OF THE THIRD PART

LOAN AGREEMENT

Tupper Jonsson & Yeadon
1710 - 1177 West Hastings Street
Vancouver, B. C.
V6E 2L3

Telephone: (604) 640-6355

Exhibit 31.1

CERTIFICATION

I, John Theobald, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of I-Minerals Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 13, 2019

/s/ John Theobald
JOHN THEOBALD
Chief Executive Officer and President

Exhibit 31.2

CERTIFICATION

I, Matthew Anderson, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of I-Minerals Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

(a)

(b)

(c)

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 13, 2019

/s/ Matthew Anderson
MATTHEW ANDERSON
Chief Financial Officer

Exhibit 32.1

CERTIFICATION BY CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES‑OXLEY ACT OF 2002

In connection with the Quarterly Report of I-Minerals Inc. (the “Company”) on Form 10-Q for the period ended October 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Theobald, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: December 13, 2019

/s/ John Theobald
JOHN THEOBALD
Chief Executive Officer and President

Exhibit 32.2

CERTIFICATION BY CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES‑OXLEY ACT OF 2002

In connection with the Quarterly Report of I-Minerals Inc. (the “Company”) on Form 10-Q for the period ended October 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew Anderson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: December 13, 2019

/s/ Matthew Anderson
MATTHEW ANDERSON
Chief Financial Officer