Alturas Minerals Corp. — Management Reports 2021

Mar 31, 2021

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ALTURAS MINERALS CORP. Management Discussion and Analysis Year ended December 31, 2020

The following is management’s discussion and analysis of the financial condition and results of operations (“MD&A”) of Alturas Minerals Corp., (the “ Company ” or “ Alturas ”), for the year ended December 31, 2020 ( “F2020’ ), and its financial position as of the same date, and should be read in conjunction with the Company’s audited consolidated financial statements as at December 31, 2020, including the notes thereto. The comparative reporting period is the year ended December 31, 2019 (“F2019 ”).

The consolidated financial statements of Alturas have been prepared in accordance with IFRS as issued by the IASB.

All figures are in US dollars, unless otherwise noted.

Additional information relating to the Company has been filed electronically through the System for Electronic Document Analysis and Retrieval (“ SEDAR ”) and is available online at www.sedar.com.

The Company’s shares are listed on the TSX Venture Exchange under the trading symbol “ALT” and on the Bolsa de Valores de Lima (Lima Stock Exchange) under the symbol “ALT”.

The date of this management’s discussion and analysis is March 31, 2021.

Cautionary Note Regarding Forward-looking Information and Statements:

This MD&A may contain forward-looking statements that are based on the Company’s expectations, estimates and projections regarding its business and the economic environment in which it operates. These statements speak only as of the date on which they are made, and there are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Examples of some of the specific risks associated with the operations of the Company are set out below under “Risk Factors”. Actual outcomes and results may differ materially from those expressed in these forward-looking statements and readers should not place undue reliance on such statements.

Certain information included in this management’s discussion and analysis may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as “may”, “will”, “should”, “expect”, “believe”, “plan”, “scheduled”, “intend”, “estimate”, “forecast”, “predict”, “potential”, “continue”, “anticipate” or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management’s future outlook and anticipated events or results and may include statements or information regarding the future plans or prospects of the Company. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Although the Company believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forwardlooking statements.

For expansion of certain risks and uncertainties that could contribute to a difference in results, please review those risks listed under the heading “Risks Factors” in this MD&A. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results

Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

not to be as anticipated, estimated or intended. Forward-looking statements are not guaranteeing future performance and there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. These forwardlooking statements are made as of the date hereof and the Company takes no responsibility to update them or to revise them to reflect new events or circumstances, except as required by law.

Overall Performance

Principal Business and Corporate History

Alturas is a Canadian corporation, and is the indirect parent of the Peruvian company, Alturas Minerals S.A. (“Alturas Peru”) and the Chilean company, Alturas Chile Limitada (“Alturas Chile”). Alturas Peru has been exploring various mineral projects in Peru since January 2004 and Alturas Chile conducted exploration activities between 2010 and 2014.

Alturas’ exploration strategy is focused on the discovery of large copper-gold porphyry/skarn deposits and epithermal gold mineralized deposits.

The Company has in previous years, transferred ownership of its Pampa Colorada project for development with a residual right of return and disposed of its San Antonio projects to arms’ length parties subject to certain conditions. The Company also did not renew its exploration licenses for Callejones, Ccaccapaqui and Utupara. During F2016 Alturas granted an option for its Sombrero property to Auryn Resources Inc. and in January 2017, signed a definitive agreement with Compañia Minera Milpo S.A.A.(“Milpo”) for Milpo to earn up to an 80% interest on its Huajoto property. During the first quarter of fiscal 2018 Milpo returned the Huajoto property to Alturas, and during the second quarter of fiscal 2019 the Company discontinued its operations in Huajoto. During the third quarter of fiscal 2020, Auryn Resources Inc. exercised its rights to acquire the remaining 20% interest in the Sombrero property, for approximately $4.1 million. In addition, Alturas continues to have near-term royalty and earn-in rights associated with its 2012 agreement on the Pampa Colorada project.

Corporate Developments

The Company's ability to continue as a going concern is dependent upon its ability to fund its exploration, working capital and corporate requirements and eventually to generate positive cash flows, either from operations or sale of properties.

The realization of shareholder value continues to be our key objective. Obtaining appropriate financing to acquired and advance new projects will be fundamental to its ability to meet this objective. Accordingly, Alturas is actively seeking strategic partnering other opportunities.

Corporate financing

The Company has not generated revenue from operations and had a working capital deficiency of $0.9 million as of December 31, 2020. Alturas has approximately $1.1 million in cash and marketable securities and approximately $1.0 million in unlisted securities.

The Company continues to pursue opportunities to raise additional capital through equity markets and strategic partnerships to fund future exploration and operating activities; however, there is no assurance of the success of sufficiency of these initiatives. The Company's ability to continue as a going concern is dependent upon fund securing the necessary working capital and exploration requirements and eventually to generate positive cash flows either from operations or the sale of properties. The consolidated financial

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

statements at December 31, 2020 do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the going concern assumption were inappropriate, and these adjustments could be material. See also “Liquidity and Capital Resources” section below.

Notes payable and advances:

Andes Generating Corporation S.A.C. (“Ancorp” or “Andes”):

On January 23, 2018 the Company entered into an agreement with Ancorp where the expiry date of the Note is extended to January 18, 2019 and carries an annual interest rate of 15%. In addition, the Note had additional conditions such as conversion privileges, repayments of the loan on a change in control or financings over $200,000. In addition, the Company agreed to pay toward the outstanding amount of the Note the amount of $15,336 (paid on January 24, 2018).

During the second quarter of fiscal 2020, the Company entered into a settlement agreement with Andes where Alturas paid $117,000 to settle all its outstanding balance with Andes. As a result, the company recorded a gain on the settlement of this debt for $61,069.

Auryn Resources Inc (“Auryn”) & Sombrero Minerals S.A.C

On March 29, 2019, the Company entered into a loan agreement with Auryn where Alturas issued a note payable to Auryn for the amount of CAD $30,000 ($29,362). The note bore no interest and is payable on demand.

During the second quarter of fiscal 2020, Alturas Minerals SA and Sombrero Minerals SAC (“Sombrero”), respectively subsidiaries of Alturas Minerals Corp. and Auryn Resources Inc. (The “Parties”), entered into an addendum to the Sombrero mining option where Alturas issued to Sombrero a note payable for $117,000, which funds were used to settle a debt with Andes (see Andes Generating Corporation S.A.C – above). The Parties agreed that Sombrero may, at its sole discretion and election, off-set such amount, totally or partially, in one or more installments, against any payment or investment obligation that Sombrero may have under the Option Agreement.

During September 2020, as part of the transaction described below, under Project Developments, the notes due to Auryn for $29,362 (CAD$30,000) and Sombrero Minerals for $117,000 were repaid.

Hanaq Peru SAC (“Hanaq”)

As part of an exclusivity agreement between Alturas and Hanaq Peru SAC, on June 27, 2018, the Company received an advance of $60,000 from Hanaq for the purpose of paying property rights due on its Huajoto property. The note was paid during the fourth quarter of fiscal 2020.

Project Developments

i) Pampa Colorada Project, Peru

On October 29, 2010, the Corporation entered into an agreement with the Origen Group S.A.C. (“Origen”) with respect to the Pampa Colorada property. Origen had originally been assigned the right to mine iron ore from this property for a period of ten years in consideration for royalty payments to the Corporation based on tonnage extracted on a declining scale starting at US$1.70 in year one with a minimum royalty payment of US$50,000 and ending in year 10 at US$0.90 with a minimum royalty payment of US$400,000.

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

The arrangement was amended on December 29, 2011 pursuant to which Alturas transferred the Pampa Colorada Property directly to Origin in consideration for a payment of $1,200,000. Under the new arrangement, Origen will be required to make royalty payments of US$0.60 per ton based on the amount of iron ore extracted. Origen can reduce this to US$0.30 per ton on a declared resource if such royalty is paid within 15 days of advising Alturas of the resource determination. After 10 years the minimum annual royalty shall be US$250,000 regardless of production. Alturas has also the right to reacquire between a 60% and or 100% interest in this property for nominal consideration once Origen ceases to mine iron ore on the property or fails to meet its obligations and investment commitments under the agreement. Alturas therefore retains rights with respect to any other minerals that may be located on this property. Currently Origen has been unable to undertake any exploration work in the property due to social issues. The earnin and royalty rights will be applicable in the near-term as the force majeure situation claimed by Origen only applies to one year in 2013 as stated in the Pampa Colorada Agreement.

ii) Sombrero - Peru

On June 28, 2016, Alturas entered into a conditional option agreement with Auryn Resources Inc. (“Auryn”), to grant Auryn the option to earn up to 100% interest in the Sombrero project (the “Sombrero Option”).

Auryn was required to pay Alturas $140,000 in cash upon the signature of the conditional option agreement (received) and $60,000 on or before the first anniversary closing date of the signature of the Sombrero Option agreement (received during Q3 F2017) and expend a total of $2,100,000 to earn its 80% interest in the property. These conditions were met in 2020.

During the second quarter of fiscal 2020, Sombrero settled certain Alturas debt in the amount of $117,000 where the debt was applicable at the option of Sombrero toward Sombrero’s payment/exploration obligations. See also Note Payable and Advances section, above.

On August 28, 2020, the Company entered into an addendum (the “Addendum”) with Auryn’s Peruvian subsidiary, Sombrero Minerales S.A.C. ("Sombrero Minerales") to implement Auryn exercising its right to acquire the final 20% interest in the property

Under the Addendum Alturas received the following consideration:

(i) One million one hundred thousand (1,100,000) common shares of Auryn having a fair value of C$4.09 each, for a fair value of $3,433,429 (CAD 4,497,790); (ii) A cash payment of $ 475,105 (CAD 625,000); and

(iii) Approximately $143,362 (CAD 183,000) owed by Alturas to Auryn (and its subsidiary Sombrero)

The Company recorded a gain on disposition of mineral interests of $4,054,896 on this transaction.

iii) Huajoto - Peru

On December 28th, 2012 the Company and Compañía Agregados Calcareos S.A.(“COMACSA”) signed a contract terminating the local mining option and assignment agreement and executing the transfer of the mining concession previously held by COMACSA to the Company. In consideration for the Esperanza Uno concession, COMACSA was entitled to a 5% net profit interest royalty on all metals extracted from the Huajoto property block.

The contract established that: (i) If after four (4) years of having entered into this agreement, the construction of mining facilities within any of the Huajoto concessions has not started in order to proceed with the commercial production stage; or (ii) If after six (6) years of having entered into this agreement, the

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

commercial production within any of the Huajoto concessions has not started, then Alturas shall pay COMACSA an annual amount of US$ 50,000 as an advance on the net profit interest royalty.

As the Company did not started the construction of a mining facility in any of the Huajoto concessions within four years of the signature of the agreement, Alturas was required to pay this advanced royalty starting December 2016.

On June 28, 2016 the Company entered into an agreement with Compañía Minera Milpo S.A.A. (“Milpo”) which was subsequently superseded by a definitive agreement dated January 18, 2017, to grant Milpo the option to acquire an 80% interest in the concessions. During the first quarter of fiscal 2018, Milpo terminated its option in Huajoto and returned the property to Alturas. During the second quarter of fiscal 2019, the Company decided to discontinue its operation in Huajoto and returned the Esperanza Uno mining concession to COMACSA.

The Company paid to COMACSA the advanced royalty corresponding to 2016 and accrued $150,000 under this concept corresponding to its obligation for the years 2017 to 2019.

On August 21, 2020, the Company entered into an agreement with COMACSA where Alturas returned to COMACSA 100% of its rights in the Esperanza Uno concession for 1,000 Peruvian Soles and, at the same time, COMACSA forgave 50% of the $150,000 royalty-advance outstanding.

The Company recorded a gain on settlement of debt of $86,441 corresponding to 50% of the outstanding debt plus the tax impact previously accrued on the original provision ($11,441).

Outlook

As a result of its negotiations with strategic partners, Alturas has been able to successfully restructure its financial position in a way that will allow the Company to develop new opportunities that will benefits Alturas stakeholders. The Company has successfully been able to discharge a majority of its non-related party liabilities and has now an appropriate working capital position to explore new opportunities. The Company has significant related-party liabilities that they intend to discharge as it reaches appropriate cash flow levels.

The current world economic situation generated by the COVID-19 global pandemic has generated though significant volatility in the world economy affecting the mining and energy industries as well. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected Alturas’ financial prospective as financial markets and world economies contract the ability of the Company to obtain additional financing that might be necessary to continue its operations. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or ability to raise funds.

On February 4, 2021, the Company announced the signing of a letter of intent with Frontline Gold Corporation to enter into a 50/50 joint venture agreement on Frontline’s 100% owned Copperlode Property (“Copperlode”). In addition to the joint venture terms summarized below, Alturas will also be responsible for 50% of all current and future property expenditures on the Copperlode property.

Copperlode is strategically located 65 km east of Red Lake and contained within the Confederation Greenstone Belt which hosts the former South Bay Cu-Zn mine and several VMS-style occurrences and deposits.

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

Alturas agrees to following initial payment terms to acquire a 50% interest in the Copperlode Property from Frontline:

• A cash payment of C$40,000;

• The issuance of 750,000 shares of Alturas; and

• The agreement to fund 50% of a drillhole data processing contract, conducted by an independent third party at an estimated cost of $20,000 (the “Orix Proposal”),

Orix Proposal will undertake and provide to the Company, a compilation of the approximately 82 drillholes that have been drilled on the Copperlode property. This compilation will allow for the interpretation of assay data in a longitudinal section to provide preliminary drillhole target recommendations for the Company as it prepares for an inaugural drilling program at Copperlode in the spring of 2021.

The JV LOI terms above are not an exhaustive description of the terms and conditions, the precise details of which will be set out in definitive documentation to executed at later date. The definitive documentation will include additional terms and conditions that are customary for this type of transaction.

The transaction is subject to TSX-V exchange approval.

Results of Operations

The Company has no operating revenues and relies on external financings to obtain capital.

For the year ended December 31, 2020, Alturas generated a net income of $2,539,842, compared to a loss of $608,864 for the comparative period.

The most significant items impacting the year ended December 31, 2020, when compared to the same period of fiscal 2019, included a gain on the disposition of a mineral interest of $4.1 million; an unrealized loss on marketable securities of $1.4 million and a gain on debt settlement of $0.2 million.

Disposition of Sombrero:

The gain realized on the disposition of a mineral interest is related to the disposition of the remaining 20% interest that the Company had in its Sombrero property in Peru, as described under the Project Developments section, above.

The unrealized loss on marketable securities is due to the decrease in the market value of the securities held at December 31, 2020, received as part of the transaction with Auryn (now Fury Gold Mines Limited) (“Fury Gold”), where the Company received 1.1 million shares of Auryn as part of the proceeds on the Sombrero transaction.

Subsequent to the disposition of the Sombrero property, Auryn resources entered into a business combination with Eastmain Resources Inc.(“Eastmain”), where Auryn acquired all of the issued and outstanding shares of Eastmain, immediately following a spin out of Auryn’s Peruvian projects to Auryn shareholders, and the completion of a concurrent financing (collectively, the “Transaction”). The Transaction created Fury Gold Mines Limited and two independent spin-out entities (“SpinCos”) which hold Auryn’s Peruvian projects.

Stock exchange listings was not immediately sought for either SpinCo. Fury Gold trades at the TSX and NYSE, both under the symbol FURY. The closing price of a Fury common share on the Toronto Stock Exchange (TSX: FURY) on December 31, 2020, was C$ 1.82.

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

The following describes the chronology of the events and number and value attributed to the securities received from the Transaction:

		Unit Value	Unit Value	Total Value	Total Value
	Units		C$		C$	CAD/USD		in USD
Auryn shares received on sale of interest in	1,100,000	$	4.09	$	4,497,790	1.310	$	3,433,429
Sombrero project (Note 13(a))
Shares conversion (Valued at December 31,2020):
Fury Gold - Public	743,189	$	1.82	$	1,352,604	1.273	$	1,062,366
Sombrero - Private	1,100,000	$	0.12	$	136,510	1.273	$	107,218
Tier One Silver - Private	1,100,000	$	1.00	$	1,100,000	1.273	$	863,965
Marketable securities							$	2,033,549
Unrealized loss for theyear ended December 31, 2020							$	(1,399,881)

The value of Fury Gold share was determined at December 31, 2020 based on the closing price of the shares in the TSX while the value of the shares in Sombrero and Tier One Silver were determined based on financial statements and the latest public information available.

Gain on Settlement of Debt

The Company generated gains on debt settlement include:

• The gain of $61,069 resulting from agreements entered between Andes Generating Corporation, Alturas and Sombrero Mining S.A.C, where a Note payable to Andes was settled at a discount, with funds sourced by Sombrero;

• The gain on settlement of royalties payable to Comacsa, where a payable of $150,000 was settled for $75,000 (plus $11,441 in taxes)

• Settlement with another creditor for $12,670.

Exploration expenses:

There were no significant exploration expenses incurred during the years ended December 31, 2020 or December 31, 2019 as all properties were optioned out.

General and administration expenses:

A detail of general and administration expenses, for the year ended December 31, 2020 and 2019 is shown below:

Years ended December 31,				2020						2019
		Canada		Peru		Total		Canada		Peru		Total
Salaries and fees	$	47,128	$	100,000	$	147,128	$	94,695	$	200,000	$	294,695
Professional fees		24,788		15,643		40,431		22,727		16,343		39,070
Directors Fees		23,000		-		23,000		46,000		-		46,000
Investor Relations		1,099		-		1,099		75		-		75
Listing fees		23,438		842		24,280		79,699		3,049		82,748
Office and administration		1,994		390		2,384		1,702		17,698		19,400
Sale taxes		-		14,698		14,698		-		-		-
	$	121,447	$	131,573	$	253,020	$	244,898	$	237,090	$	481,988

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

The most significant variances in general and administration expenses for the year ended December 31, 2020, when compared to the same period of fiscal 2019 relate to listing fees, management fees and director fees.

The Company has been accruing management and director fees on a quarterly basis until June 30, 2020. During the third quarter of fiscal 2020, the Company discontinued this practice hence explaining the reduction in salaries and fees as well as in director fees by $147,567 and $23,000, respectively.

The decrease in listing fees is related to additional listing costs charged during 2019 related to the Company’s listing in Peru and charged to the Canadian operation.

Share-based compensation:

The Company has a Stock Option Plan (the "Plan") to provide incentive for the directors, officers, employees, consultants and service providers of the Company. The maximum number of shares which may be set aside for issuance under the Plan is 8% of the outstanding common shares.

At December 31, 2020 there were 10,500,000 options outstanding and fully vested (2019: 10,500,000 options outstanding and 5,250,000 options vested), exercisable at CAD $0.05 per share until December 12, 2022.

Summary of Quarterly Results

The following table summarizes the Company’s financial results for each of the eight most recently completed quarters:

The following table summarizes the Company’s financial results for each of the e completed quarters:	The following table summarizes the Company’s financial results for each of the e completed quarters:
Quarter Ended Net Revenue	Exploration General and Total Per Share expenses administration Net Income( loss)
12/31/2020 Nil 9/30/2020 Nil 6/30/2020 Nil 3/31/2020 Nil 12/31/2019 Nil 9/30/2019 Nil 6/30/2019 Nil 3/31/2019 Nil	(1,545,721) $ (0.01) - $ 34,436 $ 4,179,266 0.03 - 35,094 (57,215) (0.00) - 91,052 (36,488) (0.00) - 92,438 (252,408) (0.00) 960 200,649 (109,210) (0.00) (120) 95,249 (90,914) (0.00) - 89,354 (156,332) (0.00) - 96,736

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

Fourth Quarter

Fourth Quarter
Three months ended December 31,		2020		2019
Expenses
Interest on note payable	$	-	$	4,348
Exploration		-		960
Foreign exchange loss		19,353		13,226
General and administration		34,436		200,649
Royalties		-		50,000
		(53,789)		(269,183)
Gain on disposition of mineral property				-
Unrealized loss on marketable securities		(1,492,053)		-
Other income(expenses)		121		16,775
Net loss and comprehensive loss for the
period	$	(1,545,721)	$	(252,408)

The following schedule describes the Company’s general and administrative expenses for the three months ended December 31, 2020, compared to the three months ended December 31, 2019, segregated by country:

Three months ended December 31,			2020	2020						2019
		Canada		Peru		Total		Canada		Peru		Total		Change
Salaries and fees	$	-	$	-	$	-	$	24,162	$	50,000	$	74,162	$	(74,162)
Professional fees		(1,290)		15,643		14,353		22,727		5,107		27,834		(13,481)
Directors Fees		-		-		-		11,500		-		11,500		(11,500)
Investor Relations		527		-		527		1		-		1		526
Listing fees		6,161		(1,497)		4,664		70,571		747		71,318		(66,654)
Office and administration		318		(124)		194		488		16,225		16,713		(16,519)
Sale taxes		-		14,698		14,698		-		(879)		(879)		15,577
	$	5,716	$	28,720	$	34,436	$	129,449	$	71,200	$	200,649	$	(166,213)

The most significant changes in general and administrative arising during the three months ended December 31, 2020, when compared to the same period of fiscal 2019 are:

• The decrease in salaries and fees by $74,162, as a result of management temporarily suspension of the accruing of senior management compensation;

• The decrease in director fees by $11,500, as a result of a temporarily suspension of the accruing of director fees;

• The decrease in professional fees by $13,481 is the result of a decrease in legal fees during the fourth quarter of fiscal 2020;

• The decrease in listing fee of $66,654 is related to the Peruvian listing fees related to previous years that were recognized during the last quarter of fiscal 2019.

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

Selected Annual Information

Years ending December 31,		2020		2019		2018
Assets
Cash and cash equivalents	$	77,292	$	21,564	$	37,364
Marketable securities - listed		1,062,366		-		-
Other current assets		14,064		3,325		5,360
		1,153,722		24,889		42,724
Long-term:
Marketable securities - unlisted		971,183		-		-
Property, plant and equipment		-		-		-
Total assets		2,124,905		24,889		42,724
Liabilities
Current liabilities		2,049,895		2,489,721		1,898,692
Total liabilities	$	2,049,895	$	2,489,721	$	1,898,692
Shareholders’ equity (deficiency)	$	75,010	$	(2,464,832)	$	(1,855,968)
Outstanding number of shares		144,882,143		144,882,143		144,882,143
Total revenues	$	-	$	-	$	-
Operatingexpenses		(277,291)		(573,073)		(776,118)
Loss before other items		(277,291)		(573,073)		(776,118)
Other items:				-		-
Gain on debt settlement		160,180		-		-
Gain on disposition of mineral property		4,054,896		-		-
Unrealized loss on marketable securities		(1,399,881)		-		-
Other income(expenses)		1,938		(35,791)		65,255
Net income (loss) and comprehensive
income(loss)for theyear		2,539,842		(608,864)		(710,863)
Income (loss) per share (basic)	$	0.02	$	(0.00)	$	(0.00)
Income(loss) per share(diluted)	$	0.02	$	(0.00)	$	(0.00)

During the last three years of operation the Company has not conducted exploration and has mainly focused on optioning-out or disposing its properties to generate cash-flow. During fiscal 2020, the Company disposed of its remaining interest in Sombrero generating a gain of approximately $4.1 million. As a result, Alturas has been able to eliminate the majority of its non-related party liabilities bringing itself in a position to reinitiate its mineral properties acquisition and development programs.

General and administration expenses remained relatively stable during fiscal years 2018 and 2019 and during 2020 decreased considerably as a result in reductions in royalty payment, director fees and executive compensation accrued. The Company was also successful in settling certain payables hence improving considerably its 2020 working capital.

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

Liquidity and Capital Resources

Cash Flows

On March 29, 2019, the Company entered into a loan agreement with Auryn Resources Inc (“Auryn”) where Alturas issued a note payable to Auryn for the amount of CAD $30,000. The note boar no interest and it was settled on September 2020 as part of the Auryn transaction described under Project Developments of this MD&A.

During the first quarter of fiscal 2019 the Company received an advance from a company controlled by an officer of the Company for $27,550. The loan was repaid during the second quarter of fiscal 2019.

During the second quarter of fiscal 2020, Alturas issued a note payable to Sombrero Minerals SAC, a subsidiary of Auryn for $117,000. The funds were used to settled its debt outstanding with Andes Generating Corporation SAC, which had a carrying value of $178,069, for $117,000 generating a gain in settlement of debt of $61,069.

As a result of the transaction with Auryn, the Company received $475,105 in cash. As part of the transaction, the notes payable to Sombrero Minerals SAC for $117,000 and $29,362 (CAD $ 30,000) payables to Auryn were also settled on this transaction. The cash received was used to discharge the majority of its nonrelated party debt, as well as a partial payment of $103,029 owed to directors and officers.

Cash and Cash Equivalents

At December 31, 2020 the Company had a cash balance of $77,292 as well as 743,189 shares in Fury Gold, valued at $1,062,366. Most of these funds are deposited with major Canadian chartered banks in Canada and Peru.

The Company will require additional funds acquire new projects, explore and, if warranted, develop one or more of its properties. The Company has limited financial resources and no current source of revenue, and there is no assurance that additional funding will be available to the Company to continue as a going concern and carry out the completion of its planned activities. The terms of any additional financing obtained by the Company will result in dilution to the existing shareholders of the Company. Various factors including the volatility of the Company’s investment position in marketable securities could cause significant fluctuations in the price and volume of trading in the Common Shares of the Company.

The consolidated financial statements of the Company have been prepared in accordance with accounting principles applicable to a going concern, which assumes continuity of operations and realization of assets and settlement of liabilities in the normal course of business for the foreseeable future, which is at least, but not limited to, one year from December 31, 2020. A different basis of measurement may be appropriate when a company is not expected to continue operations for the foreseeable future.

For the year ended December 31, 2020, cash used in Company’s operating activities was $369,782 and the Company had an accumulated shareholders’ equity of $75,010 at December 31, 2020. The Company has not generated revenue from operations (aside from revenue generated on the option or disposition of mineral properties) and has a working capital deficiency of $0.9 million as at December 31, 2020. Additional financing might be currently required to allow the Company to fund new acquisitions, exploration and development programs. Management believes that the current working capital is sufficient to support operations for the next twelve months.

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

Mineral Properties and Other Fixed Assets

The Company considers all funds disbursed on exploration as expenses hence it does not capitalize any of these amounts. During the year ended December 31, 2020 the Company did not incur exploration expenses (2019 - $840).

Current Assets

As at December 31, 2020, total current assets other than cash were $1,076,430 mainly composed by marketable securities and sales tax receivables.

Marketable Securities

Marketable securities valued at $1,062,366 is composed of 743,189 common shares of Fury Gold Mines Limited.

Investments in unlisted securities is composed of:

• Sombrero Resources Inc.: 1.1 million shares valued at $107,218

• Tier One Silver Inc.: 1.1 million shares valued at $863,965

Contractual Obligations and Commitments

The Company is party to certain management contracts and severance obligations. These contracts contain clauses requiring additional payments up to $587,500 to be made upon the occurrence of certain events such as change of control. As the likelihood of these events taking place is not determinable, the contingent payments have not been provided for in the above schedule.

Common Shares and Convertible Securities Summary

As of the date of this report, the Company’s share position consisted of:

Shares issued and outstanding 144,882,143

Related Party Transactions

Key management includes directors (executive and non-executive), and senior officers (Chief Executive Officer and Chief Financial Officer). The compensation accrued to key management for employee/professional services for the year ended December 31, 2020 and 2019 is shown below:

Periods ended December 31,	2020 2019 2020 2019 Three months ended Years ended
Salaries and fees: CEO CFO	- 50,000 100,000 $ 200,000 $ - 24,060 44,958 95,562
	- 74,060 144,958 $ 295,562 $
Directors' fees	- 11,500 23,000 $ 46,000 $

The Company had regularly accrued management and director fees on a quarterly basis until June 30, 2020. There were no management or director fees accrued during the three- or six-months periods ended December 31, 2020.

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

Amount payable to related parties as of December 31, 2020 and December 31, 2019, are described in the schedule below:

As at December 31,		2020		2019
Payable to related parties:
Directors' fees and expenses payable	$	112,385	$	98,500
Management feespayable to officers		1,862,697		1,799,781
	$	1,975,082	$	1,898,281

In September 2020, the Company paid $103,029, on account of amounts owed to directors and officers.

Subsequent Events

On February 4, 2021, the Company announced the signing of a letter of intent with Frontline Gold Corporation to enter into a 50/50 joint venture agreement on Frontline’s 100% owned Copperlode Property (“Copperlode”). In addition to the JV LOI terms summarized below Alturas will also be responsible for 50% of all current and future property expenditures on the Copperlode property. (see outlook section above).

Off-Balance Sheet Transactions

The Company does not have any off-balance sheet arrangements.

Proposed Transactions

The Company, from time to time, reviews potential merger, acquisition, investments and joint venture opportunities. There are no proposed transactions as of December 31, 2020.

Critical Accounting Estimates and Changes in Accounting Policies

Basis of presentation

The Company prepares its financial statements in accordance with International Financial Reporting Standards (“IFRS”).

Critical accounting estimates and judgments

The preparation of financial statements requires management to use judgment in applying its accounting policies and estimates and assumptions about the future. Estimates and other judgments are continuously evaluated and are based on management’s experience and other factors, including expectations about future events that are believed to be reasonable under the circumstances. The following discusses the most significant accounting judgments and estimates that the Company has made in the preparation of the financial statements:

• The recoverability of accounts receivable and value-added taxes receivable that are included in the consolidated statements of financial position. Alturas provides an allowance for doubtful accounts against the majority of its foreign value-added taxes since the generation of sales tax credits from actual revenues are required for the recovery of sales tax receivables. The Company recognizes all sale tax receivables generated in Canada. Alturas cannot be certain of the full recoverability of these amounts which could be material.

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

• Marketable securities of public company share values are determined by using publicly available share information.

• Marketable securities of private company share values, as stated, are not quoted in an active market and are therefore subject to estimation based on the information available to management.

• Calculation of taxes payable is subject to uncertainty with respect to the interpretation of complex tax regulations and changes in tax laws. In calculating tax provisions, the Company utilizes judgement. Tax provisions are subject to regulation by relevant tax authorities.

Accounting Policies

For a detailed overview of the Company’s accounting policies please see Note 3 to the December 31, 2020 consolidated audited financial statements.

Financial Instruments and Other Instruments

Net Fair Value of Financial Assets and Liabilities

The Company’s financial instruments comprise cash and cash equivalents, unlisted marketable securities, accounts receivable, and accounts payable and accrued liabilities.

Cash and cash equivalents have been designated as held-for-trading, which are measured at fair value. Accounts receivable are classified as loans and receivables, which are measured at amortized cost. Accounts payable and accrued liabilities are classified as other financial liabilities, which are measured at amortized cost.

Financial Instrument Risk Exposures

It is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from its financial instruments and that their fair values approximate their carrying value unless otherwise noted.

Controls and Procedures

The CEO and CFO have evaluated the effectiveness of the Company's disclosure controls and procedures and assessed the design and operating effectiveness of the Company's internal controls over financial reporting as of December 31, 2020, pursuant to the requirements of Multilateral Instrument 52-109.

Management has concluded that, as of December 31, 2020 such financial reporting disclosure controls and procedures and the design and operating effectiveness of the Company’s internal controls over financial reporting were effective.

Management is not aware of any changes in its internal controls over financial reporting during the year ended December 31, 2020 that would materially affect, or is reasonably likely to materially affect, its internal controls over financial reporting.

Risk Factors

Alturas’ business of exploring mineral resources involves a variety of operational, financial and regulatory risks that are typical in the natural resource industry. The Company attempts to mitigate these risks and minimize their effect on its financial performance, but there is no guarantee that the Company will be profitable in the future.

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

In addition to other information set forth elsewhere in the financial statements, readers should carefully consider the comprehensive list of risk factors, included in the Annual Information Form under “Risk Factors” . This Annual Information Form is located on SEDAR (www.sedar.com).

The following represents the principal risks faced by the Company:

Capital Requirements

Alturas will require significant capital in order to fund its operating costs, to service future indebtedness and to explore and develop any project. Alturas has no revenues and is wholly reliant upon external financing to fund all of its capital requirements. Alturas will require additional financing from external sources to meet such requirements. There can be no assurance that such financing will be available to Alturas or, if it is, that it will be offered on acceptable terms. If additional financing is raised through the issuance of equity or convertible debt securities of Alturas, the interests of shareholders in the net assets of Alturas may be diluted. Any failure of Alturas to obtain financing on acceptable terms could have a material adverse effect on Alturas’ financial condition, prospects, results of operations and liquidity and require Alturas to cancel or postpone planned capital investments.

Dependence on Mineral Exploration Projects

Any adverse development affecting the progress of Alturas’ exploration projects such as, but not limited to, obtaining financing on commercially suitable terms, hiring suitable personnel and contractors, or securing supply agreements on commercially suitable terms, may have a material adverse effect on Alturas and its business or prospects.

Metal Prices

The development and success of any project of Alturas will be primarily dependent on the future price of gold and other metals. Gold and base metal prices are subject to significant fluctuation and are affected by a number of factors, which are beyond the control of Alturas. Such factors include, but are not limited to, interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand, and the political and economic conditions of major gold-producing countries throughout the world. The price of gold and other precious and base metals has fluctuated widely in recent years, and future serious price declines could cause any future development of and commercial production from Alturas' properties to be impracticable. Depending on the price of gold and other metals, projected cash flow from planned mining operations may not be sufficient and Alturas could be forced to discontinue any development and may lose its interest in, or may be forced to sell, some of its properties. Future production from Alturas' mining properties is dependent on gold and base metal prices that are adequate to make these properties economic.

Furthermore, reserve calculations and life-of-mine plans using significantly lower gold and other metal prices could result in material write-downs of Alturas' investment in mining properties and increased amortization, reclamation and closure charges.

In addition to adversely affecting Alturas' possible future reserve estimates and its financial condition, declining commodity prices may impact operations by requiring a reassessment of the feasibility of a particular project. Such a reassessment may be the result of a management decision or may be required under financing arrangements related to a particular project. Even if the project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause substantial delays or may interrupt operations until the reassessment can be completed.

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

Government Regulation, Permits and Licences

Alturas’ mineral exploration and potential development activities are subject to various laws governing prospecting, mining, development, production, taxes, labor standards and occupational health, mine safety, toxic substances, land use, water use, land claims of local people and other matters. No assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail exploration, development or production. Many of the mineral rights and interests of Alturas are subject to government approvals, licenses and permits. Such approvals, licenses and permits are, as a practical matter, subject to the discretion of the applicable governments or governmental officials. No assurance can be given that Alturas will be successful in maintaining any or all of the various approvals, licenses and permits in full force and effect without modification or revocation. To the extent such approvals are required and not obtained; Alturas may be curtailed or prohibited from continuing or proceeding with planned exploration or development of mineral properties.

Where required, obtaining necessary permits and licenses can be a complex, time consuming process and Alturas cannot assure that required permits will be obtainable on acceptable terms, in a timely manner or at all. The costs and delays associated with obtaining necessary permits and complying with these permits and applicable laws and regulations could stop or materially delay or restrict Alturas from proceeding with the development of an exploration project or the operation or further development of a mine. Any failure to comply with applicable laws and regulations or permits, even if inadvertent, could result in interruption or closure of exploration, development or mining operations or material fines, penalties or other liabilities. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations or in the exploration or development of mineral properties may be required to compensate those suffering loss or damage by reason of such mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Amendments to current laws and regulations governing operations or more stringent implementation thereof could have a substantial adverse impact on Alturas and cause increases in exploration expenses, capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.

Currency Risks and Fluctuations

Alturas’ proceeds from offerings of its securities and other financing activities are typically received in Canadian dollars and United States dollars while a significant portion of its operating expenses will be incurred in United States dollars and Peruvian Soles. From time-to-time Alturas may borrow funds and will incur capital expenditures that are denominated in foreign currency. Accordingly, foreign currency fluctuations may adversely affect Alturas’ financial position and operating results.

The effects on operating costs and, hence, on cash flows, of the foreign exchange rate and the escalation of the Peruvian Sol are significant. The appreciation of these currencies against the U.S. dollar would increase the costs of exploration and development, which could materially and adversely affect Alturas, results of operations and financial condition.

Competition

The mining industry is competitive in all of its phases. Alturas faces strong competition from other exploration and mining companies in connection with the acquisition of properties producing or capable of producing, precious and base metals. Many of these companies have greater financial resources, operational experience and technical capabilities than Alturas. As a result of this competition, Alturas may be unable to maintain or acquire attractive mining properties on terms it considers acceptable or at all.

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

Consequently, the financial condition and any future revenues and operations of Alturas could be materially adversely affected.

Exploration, Development and Operational Risk

The exploration for, and development of, mineral deposits involve significant risks that even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few properties, which are explored, are ultimately developed into producing mines. Major expenses may be required to locate and establish mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are the particular attributes of the deposit, such as size, grade and proximity to infrastructure, metal prices which are highly cyclical, and government regulations including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in Alturas not receiving an adequate return on invested capital.

Alturas does not currently operate a mine on any of its properties. There is no certainty that the expenditures made by Alturas towards the search for, and evaluation of, mineral deposits will result in discoveries of commercial quantities of ore.

Mining operations generally involve a high degree of risk. Such operations are subject to all the hazards and risks normally encountered in the exploration for, and development and production of gold and other precious or base metals. Such hazards and risks include unusual and unexpected geologic formations, seismic activity, rock bursts, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of mines and other producing facilities, damage to life or property, environmental damage and possible legal liability. Milling operations are subject to hazards such as equipment failure or failure of retaining dams around tailings disposal areas which may result in environmental pollution and consequent liability.

Joint Venture Strategy

Alturas’ business strategy includes continuing to seek new joint venture opportunities. In pursuit of such opportunities, Alturas may fail to select appropriate joint venture partners or negotiate acceptable arrangements, including arrangements to finance such opportunities or, where necessary, integrate the acquired businesses and their personnel into Alturas' operations. Alturas cannot assure that it can complete any business arrangement that it pursues on favorable terms, or that any business arrangements completed will ultimately benefit Alturas' business.

Reliance on Management and Key Employees

The success of the operations and activities of Alturas is dependent to a significant extent on the efforts and abilities of its management, a relatively small number of key employees, outside contractors, experts and other advisors. Investors must be willing to rely to a significant extent on management’s discretion and judgment, as well as the expertise and competence of its key employees, outside contractors, experts and other advisors. Alturas does not have in place formal programs for succession of management and training of management nor does it have key person insurance on its key employees. The loss of one or more of these persons, if not replaced, could adversely affect Alturas’ operations and financial performance.

No Assurance of Titles, Boundaries or Approvals

Titles to Alturas’ properties may be challenged or impugned, and title insurance is generally not available. Alturas’ mineral properties may be subject to prior unregistered agreements, transfers or claims, and title may be affected by, among other things, undetected defects. In addition, Alturas may be unable to operate

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Alturas Minerals Corp. Management Discussion & Analysis Year ended December 31, 2020.

its properties as permitted or to enforce its rights with respect to its properties. Alturas cannot assure that it will receive the necessary approval or permits to exploit any or all of its mineral projects in the future. The failure to obtain such permits could adversely affect Alturas’ operations.

Environmental Risks and Hazards

All phases of Alturas' operations are subject to environmental regulation in the jurisdiction in which it operates. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect Alturas' operations. Environmental hazards may exist on the properties in which Alturas holds interests which are unknown to Alturas at present and which have been caused by previous or existing owners or operators of the properties.

Uninsured Risks

Alturas’ business is subject to a number of risks and hazards generally, including adverse environmental conditions, industrial accidents, labor disputes, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods and earthquakes. Such occurrences could result in damage to mineral properties or production facilities, personal injury or death, environmental damage to Alturas' properties or the properties of others, delays in development or mining, monetary losses and possible legal liability.

Although Alturas maintains insurance to protect against certain risks in such amounts as it considers commercially reasonable, its insurance will not cover all of the potential risks associated with its operations. Alturas may also be unable to maintain insurance to cover these risks at economically feasible premiums. Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. Moreover, insurance against risks such as environmental pollution or other hazards as a result of exploration is not generally available to Alturas on affordable and acceptable terms. Alturas might also become subject to liability for pollution or other hazards which may not be insured against or which Alturas may elect not to insure against because of premium costs or other reasons. Losses from these events may cause Alturas to incur significant costs that could have a material adverse effect upon its financial condition and results of operations.

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