Apollo Silver Corp. — Interim / Quarterly Report 2021

Oct 27, 2021

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APOLLO SILVER CORP. (Formerly Apollo Gold & Silver Corp.)

MANAGEMENT DISCUSSION AND ANALYSIS FORM 51-102F1

FOR THE THREE AND NINE MONTHS ENDED AUGUST 31, 2021

AS AT OCTOBER 27, 2021

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

INTRODUCTION

The following Management Discussion and Analysis (“MD&A”) is for Apollo Silver Corp. (“Apollo” or the “Company”), formerly Apollo Gold & Silver Corp., and has been prepared based on information known to management as of October 27, 2021.

The purpose of this MD&A is to provide readers with management’s overview of the past performance of, and outlook for, Apollo. The report also provides information to enhance readers’ understanding of the Company’s financial statements and highlights important business trends and risks affecting the Company’s financial performance. It is intended to complement and supplement the Company’s condensed interim consolidated financial statements, but it does not form part of those condensed interim consolidated financial statements. This MD&A should be read in conjunction with the condensed interim consolidated financial statements and notes thereto for the three and nine-months ended August 31, 2021 (the “Financial Statements”), the audited financial statements and notes thereto for the years ended November 30, 2020 and 2019 and the MD&A for the year ended November 30, 2020.

All information contained in this MD&A is current as of October 27, 2021, unless otherwise stated.

All financial information in this document, including the Company’s financial position, results of operations and cash flows is prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), unless otherwise stated. All dollar figures included in this MD&A are expressed in Canadian dollars unless otherwise stated.

FORWARD-LOOKING STATEMENTS

This MD&A contains “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) which reflect the Company’s current expectations regarding the future results of operations, performance, and achievements of the Company. Forward-looking statements in this MD&A include, but are not limited to, results of future exploration work on its mineral properties; the prospect of defining, expanding and upgrading the confidence level of historic mineral resource estimates on the mineral properties; the prospects for identification of mineralization and resources on the mineral properties; as well as statements with respect to the Company’s opinions and beliefs, financial position, business strategy, budgets, historic mineral resource estimates, mineral resource estimates, ongoing or future development and exploration opportunities and projects, drilling, re-logging, geochemical and geological modeling plans, data from sampling programs, references to potential higher grades, references to additional potential discoveries, targeting efforts in greenfield areas, assay results, expanded mineralized zones, ground surveys, publication of updated mineral resource estimates, classification of historic mineral resources, classification of mineral resources, and plans and objectives of management for properties and operations.

The Company has tried, wherever possible, to identify these forward-looking statements by, among other things, using words such as “plan”, “anticipate”, “believe”, “estimate”, “expect”, “is expected to”, “budget”, “schedule”, “forecast”, “intend” or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved” or the negative connotation thereof.

The forward-looking statements reflect the current beliefs of the management of the Company and are based on currently available information and upon a number of factors and assumptions that, if untrue, could cause the actual results, performances or achievements of the Company to be materially different from future results, performances or achievements expressed or implied by such statements. Such statements and information are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which the Company will operate in the future, including the price of silver, anticipated costs and ability to achieve goals. Certain important factors that could cause actual results, performances or achievements to differ materially from those in the forward-looking statements include, among others , the Company’s ability to receive mining, exploration and other permits; the impact of increasing competition in the silver business; exploration and development costs for the mineral properties; anticipated results of drilling campaigns; exploration and development activities; the reliability of historical mineral resource estimates; mineral resource estimates and metallurgical recoveries; availability of additional financing; and the Company’s ability to obtain additional financing on satisfactory terms. Although the Company believes its expectations are based upon reasonable assumptions and 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 not to be as anticipated, estimated or intended.

Forward-looking statements are subject to known and unknown risks, uncertainties and other factors which could cause the actual results, performance, or achievements of the Company to differ materially from those expressed in, or implied by, these statements. These uncertainties are factors that include, but are not limited to, risks related to general economic conditions; actual

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

results of current exploration activities and unanticipated reclamation expenses; fluctuations in prices of silver and other commodities; fluctuations in foreign currency exchange rates; increases in market prices of mining consumables; possible variations in mineral resources, grade or recovery rates; accidents, labour disputes, title disputes, claims and limitations on insurance coverage and other risks of the mining industry; delays in obtaining governmental permits and/or approvals or financing; changes in national and local government regulation of mining operations, tax rules and regulations, and political and economic developments in the United States of America and unknown impact related to potential business disruptions stemming from the COVID-19 outbreak, or another infectious illness.

This MD&A contains references to historical mineral resource estimates. The historical mineral resources discussed are referred to as such because although they were calculated using mining industry standard practices, they were done so prior to the implementation of the current Canadian Institute of Mining’s (‘CIM’) standards for mineral resource estimation (as defined by the CIM Definition Standard on Mineral Resources and Ore Reserves dated May 10, 2014). An independent Qualified Person (“QP”) has not completed sufficient work to classify the estimates discussed as current mineral resources or reserves and therefore the reader is cautioned to treat them as historical in nature and not current mineral resources or mineral reserves. The historical estimates are reliable and relevant to be included here in that they simply demonstrate the mineral potential of the properties. A thorough review of all historic data performed by an independent QP, along with additional exploration work to confirm results, would be required in order to produce a current mineral resource estimate for either property.

The Company’s management reviews periodically information reflected in forward-looking statements. The Company has and continues to disclose in its MD&A and other publicly filed documents, changes to material factors or assumptions underlying the forward-looking statements and to the validity of the statements themselves, in the period the changes occur. Historical results of operations and trends that may be inferred from the following discussions and analysis may not necessarily indicate future results from operations.

The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement. Apollo does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Readers should refer to the risks discussed in the Company’s MD&A for the year ended November 30, 2020, the ‘Risks and Uncertainties’ section of this MD&A and subsequent continuous disclosure filings with the Canadian Securities Administrators, which are available at www.sedar.com.

The forward-looking statements contained herein are made and based on information available as of October 27, 2021.

ADDITIONAL INFORMATION

Condensed interim financial statements, annual financial statements, MD&A and additional information relevant to the Company and the Company’s activities can be found on SEDAR at www.sedar.com and on the Company’s website at www.apollosilver.com.

OVERVIEW OF THE BUSINESS

The Company is a publicly listed exploration and development company incorporated on September 22, 1999 under the laws of the Province of Alberta, Canada. The Company filed for continuance under the Canada Business Corporations Act on December 1, 2003 and then under the laws of British Columbia on November 4, 2010. The Company is listed on the TSX Venture Exchange (“TSX-V”) and its shares trade under the symbol APGO. The Company is also listed on the OTCQB and Frankfurt Stock Exchange and its shares trade under the symbol APGOF and 6ZF, respectively. The Company’s head office and principal address is #1507-1030 West Georgia Street, Vancouver, British Columbia, Canada, V6E 2Y3 and its registered and records office is #1500-1055 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4N7.

The Company is a mineral exploration group focused on advancing its portfolio of silver projects in the United States. This portfolio comprises three recently acquired projects: the historical Waterloo Silver-Barite Project (“Waterloo” or the “Waterloo Project”), the Langtry Silver-Barite Project (“Langtry” or the “Langtry Project”), both in the Calico Mining District in San Bernardino County, California, as well as the Arizona Silver District Project (“AZ Silver District” or “AZ Silver District Project”) in La Paz County, Arizona (collectively, the “Projects”). The principal business of the Company is the acquisition, exploration, and definition of potentially economically viable mineral resource deposits on mineral properties. The recoverability of the amounts incurred to acquire the Company’s mineral properties and related exploration costs are dependent upon the existence of economically recoverable resources, the ability of the Company to obtain necessary financing to complete the development of those resources and future profitable production.

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

The Company currently has no source of operating cash flow and has no assurance that additional funding will be available for future exploration and development programs at its properties or to enable the Company to fulfill its obligations under any applicable agreements. The Company’s ability to continue as a going concern is dependent on its ability to obtain additional sources of financing to explore and evaluate its mineral properties and, ultimately, to achieve profitable operations. While the Company has been successful in obtaining funding in the past, there is no assurance that future financing will be available or be available on favorable terms. The ability to raise future financing may be impaired, or such financing may not be available on favorable terms, due to conditions beyond the Company’s control, such as uncertainty in the capital markets, changes in commodity prices or country specific risk factors.

The global spread of COVID-19 has caused and continues to cause considerable disruptions to the world economy, including financial markets, which could adversely impact the Company’s ability to obtain additional financing when necessary. Global supply chains also continue to be impacted, which could adversely impact the Company by increasing costs and lead-time to acquire or procure necessary services and products. Finally, the ongoing pandemic continues to impact the free movement of people across the Canada-US border. The duration of this border restriction, and any change to the level of restriction of movement, is unknown. As the Company’s projects are located in the US, this could impact Apollo’s ability to execute planned work programs. Overall, these pandemic related material uncertainties may cast significant doubt about the Company’s ability to continue as a going concern.

CORPORATE ACTIVITIES

Name Change

On September 3, 2021, Apollo announced that it had received approval from the TSX-V to change its name from Apollo Gold & Silver Corp. to Apollo Silver Corp. , effective as at opening of markets on September 10, 2021 (the “Name Change”). Pursuant to provisions of the articles of the Company, shareholder approval of the Name Change was not required and consequently the Company did not seek shareholder approval for the Name Change. There was no consolidation of the Company’s share capital in connection with the Name Change and as a result, shareholders were not required to exchange their existing share certificates for new certificates bearing the Company’s new name.

Brokered Private Placement, Definitive Acquisition Agreement with Stronghold Silver Corp., and Asset Purchase Agreement with Pan American Minerals Inc.

On May 11, 2021, Apollo entered into a definitive acquisition agreement to acquire all issued and outstanding shares of Stronghold Silver Corp. (“Stronghold”), a privately held Canadian company, and amalgamate Stronghold with 1302259 BC Ltd., Apollo’s wholly-owned Canadian subsidiary (the “Stronghold Transaction”). Stronghold, through its wholly-owned subsidiary, Stronghold Silver USA Corp. (“Stronghold USA”), held the rights to explore and acquire three silver projects in the United States: the Waterloo Project, the Langtry Project and the AZ Silver District Project.

Under the terms the Stronghold Transaction, Apollo agreed to issue a total of 40,000,000 common shares of Apollo to Stronghold shareholders at a share exchange ratio of one Apollo common share for one Stronghold common share. An additional condition of closing was that Apollo had to complete a financing of a minimum of $35.0 million (the “Concurrent Financing”).

On June 30, 2021, the Company and Stronghold agreed to an extension of the outside date of the Stronghold Transaction from June 30, 2021 to July 12, 2021. In consideration, the Company paid US$500,000 (approximately $617,500) to Stronghold on July 2, 2021.

On July 7, 2021, the Company completed the Concurrent Financing, which was a brokered financing of subscription receipts (the “Subscription Receipts”). The Company issued a total of 70,533,334 Subscription Receipts for aggregate gross proceeds of $52.9 million. Upon satisfaction of certain escrow release conditions, each Subscription Receipt was automatically converted into one unit of the Company (a “Unit”). Each Unit consisted of one common share of the Company and one-half of one common share purchase warrant (each whole warrant, a “Warrant”). Each Warrant entitles the holder thereof to acquire one common share of the Company (each a “Warrant Share”) at a price of $1.25 per Warrant Share for a period of 24 months from the date of the issuance. Eight Capital, Desjardins Securities Inc. (“Desjardins”) and Cantor Fitzgerald Canada Corporation (the “Agents”) acted as co-lead agents and joint bookrunners in connection with the Concurrent Financing. The Agents received an aggregate cash fee equal to 6.0% of the gross proceeds from subscriptions, except in respect of subscriptions by purchasers on the President’s List, on which the Agents received a cash commission equal to 3.0% of the gross subscription proceeds. Total cash fees paid to the Agents upon closing was approximately $3.2 million.

On July 9, 2021, the Company announced that it had issued 40,000,000 common shares of Apollo to shareholders of Stronghold,

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

and had completed the amalgamation with Stronghold, acquiring its wholly-owned subsidiary Stronghold USA and the rights to explore and acquire the Waterloo Project, Langtry Project and AZ Silver District Project. The Apollo common shares issued to Stronghold shareholders are subject to legends placed on them stipulating hold periods ranging from zero to 36 months after the closing date of the Stronghold Transaction.

Prior to the Stronghold Transaction, Stronghold USA and Pan American Minerals Inc (“Pan American”), a wholly-owned subsidiary of Pan American Silver Corp., had entered into an asset purchase agreement dated January 22, 2021 and as amended on April 1, 2021 and subsequently June 30, 2021 (the “Waterloo Purchase Agreement”), which gave Stronghold USA the right to purchase 100% interest in the Waterloo Project for base consideration of US$25 million (the “Base Purchase Price”). Under the terms of the Waterloo Purchase Agreement, within 15 days of the close of a public listing, or if Stronghold USA had been acquired by a publicly listed entity, Stronghold USA would be required to issue notice providing Pan American ten business days to elect to receive either 1) an additional US$6.0 million in cash or 2) the equivalent of US$6.0 million in common shares of the public entity at the higher of: (i) the 10-day VWAP calculated 10 trading days following the close of the transaction; and (ii) $0.71 per share.

At the time of the Stronghold Transaction closing, Stronghold had already paid US$2.75 million in non-refundable deposits to Pan American which resulted in US$22.25 million remaining outstanding to close the Waterloo Purchase Agreement. Apollo paid the outstanding balance of US$22.25 million (approximately US$27.9 million) to Pan American and acquired the 100% interest in the Waterloo Project on July 12, 2021. Furthermore, as Stronghold USA had been acquired by Apollo, a publicly listed company, Apollo provided notice to Pan American who elected to receive the final US$6.0 million in cash. The final payment of US$6.0 million (approximately $7.51 million) was made in August 2021.

Going forward, Pan American will retain a 2% Net Smelter Royalty on any future production of minerals from the Waterloo Project.

Other Key Highlights and Transactions

On February 12, 2021, Apollo announced that it had terminated the letters of intent in relation to two exploration projects located in Peru, Muylaque and Libertador, because certain conditions of the transactions were not met. Specifically, the vendors did not provide NI 43-101 compliant technical reports and title opinions in a timely manner.

On August 5, 2021, the Company announced that it was terminating the option agreement with Lithium Chile Inc. and Compania Minera Kairos Chile Limitada, which gave the Company the option to earn up to a 90% interest in two early-stage exploration properties in the El Indio Gold Belt of central Chile. This decision was the result of the Stronghold Transaction and the resulting change in strategy and focus for the Company.

Changes to Officers and Directors

On May 12, 2021, the Company announced the appointment of Tom Peregoodoff as President and Chief Executive Officer (“CEO”) of the Company, effective May 1, 2021, replacing outgoing President and CEO, Simon Clarke, who resigned. Mr. Clarke remains on the Board of Directors of Apollo and Mr. Peregoodoff was subsequently elected to the Board of Directors at the Company’s Annual General Meeting on August 10, 2021.

On July 9, 2021, the Company announced the appointment of James Hynes, the former CEO of Stronghold, as a director of the Company, effective on the closing date of the Stronghold Transaction.

On July 13, 2021, Cathy Fitzgerald was appointed Vice President Exploration and Resource Development, replacing Dean Besserer who resigned from his role as Vice President Exploration. Mr. Besserer has been retained as a technical advisor to the Company.

On July 21, 2021, the Company announced the addition of Ignacio Rosada as an advisor to Apollo. Additionally, Alan O’Connor was appointed General Manager of the Calico Silver District projects, effective August 15, 2021.

On August 5, 2021, the Company announced that Chris Cairns had been appointed as the Company’s Chief Financial Officer (“CFO”), effective September 7, 2021. Mr. Cairns replaced outgoing CFO, Daryn Gordon. Mr. Gordon remains on the Board of Directors of Apollo.

On September 27, 2021, the Company announced the addition of Steven Thomas to Apollo’s Board of Directors effective immediately, as well as the appointment of Rona Sellers as the Company’s Vice President Commercial and Compliance, effective October 12, 2021.

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

EXPLORATION AND DEVELOPMENT ACTIVITIES

Calico Silver District projects, California, USA

The Waterloo Project and Langtry Project (the “Calico Projects”) are located in the historic Calico Silver Mining District in the Mojave Desert of San Bernardino County, California, USA. They are situated approximately 145 miles (233 km) northeast of Los Angeles, approximately halfway between Los Angeles and Las Vegas, Nevada along the I-15 interstate highway.

The Calico Silver Mining District has a lengthy history of exploration and mining, with silver-rich mineralization discovered in the Calico Mountains in 1881. The region is a prolific historic silver and barite mining district and is responsible for most of the silver production in the Mojave. Historical extraction focused on high-grade oxidized deposits of vein-related silver with estimates of total extraction ranging from 15-20 million ounces up until 1896. Around this time most mining ceased due to a sharp decline in silver price and economic depression, however limited production from the district continued until approximately 1907. Barite became a mineral of interest in the region in the 1950’s as oil and gas exploration ramped up in the U.S. and there was a concurrent reopening of silver mining, but production remained low. Several past-producing mines and historical workings are situated in the vicinity of the Calico Projects, with most of the historical mining operations situated over a 12 square mile (19.3 km[2] ) area northeast of the Calico Projects. Five past-producing mines are located on the Calico Projects: the Waterloo, Voca, Union and Burcham mines on the Waterloo Property, and the Langtry mine on the Langtry Property.

Mineralization on the property is found as discrete veins in the Miocene-aged volcanic and volcaniclastic Pickhandle Formation striking generally northwest and as veinlet stockworks and disseminations in the Miocene-aged sedimentary Barstow Formation. Mineralization is interpreted to be epithermal or hot-spring precious metal vein-type and stockwork type as a result of hydrothermal fluids being focused along faults and fractures, as well as through favourable horizons in the Barstow Formation. The timing of mineralization is believed to be around 15-20 Ma which corresponds with a period of subduction and extension in the region. Mineralogy of all styles of mineralization are similar, composed primarily of barite, jasperoid/chalcedony, oxides, and sulphides with silver occurring commonly as either native silver or silver salts. Near surface vein exposures are often oxidized, enriching the silver grade. Alteration dominantly consists of silicification (chalcedony and jasperoid) and patchy propylitic alteration with some potassium feldspar alteration observed in the Barstow Formation associated with silver mineralization. Acid sulphate/steam heated leaching has been mapped across the Calico Projects.

The Waterloo Project

The Waterloo Project comprises 27 fee simple land parcels (1,352 acres) and 21 unpatented claims (19 lode mining claims, 2 mill site claims) (418 acres), totaling approximately 1,770 gross acres (collectively, the “Waterloo Property”). Ownership of the Waterloo Project was acquired by Apollo through the Waterloo Purchase Agreement between Stronghold USA and Pan American, which closed on July 12, 2021. Pan American retains a 2% Net Smelter Royalty on any future production of minerals from the Waterloo Project.

Modern exploration work on the Waterloo Project began in 1964 by the American Smelting and Refining Company (“ASARCO”) and targeted disseminated silver mineralization in the Barstow Formation. Work comprised geologic mapping, geochemical sampling, trenching and reverse circulation drilling with later advanced work comprising metallurgical and process testing. ASARCO completed internal studies, including extensive metallurgical analysis, which determined the feasibility of the project and resulted in the permitting for an open-pit silver mine in the early 1980’s. A decline in the silver price around this same time caused ASARCO to put the Project on care and maintenance.

Pan American acquired the Waterloo Project in 1994 and completed surface mapping and sampling, reverse circulation drilling (both twinning ASARCO historic holes and infill drilling) and three diamond drill holes between 2008 and 2012. In addition, Pan American completed a significant re-sampling program of ASARCO pulp samples with results showing an excellent correlation between datasets. Pan American’s work and their validation of historic ASARCO data formed the foundation of an internal resource estimate in 2013 which reported 103 million ounces (“Moz”) of silver at an average grade of 86 grams per tonne ("g/t”) at a cutoff grade of 20 g/t silver*. The reader is cautioned that the mineral resource estimate is historic in nature and should not be treated as a current mineral resource. Again around 2012, silver prices started to decline and the project sat idle until 2021 when it was acquired by Apollo.

In April 2017, Pan American obtained a Certificate of Land Use Conformance from San Bernardino County recognizing surface mining as a legal use of the fee simple private lands patented claims and the existence of a “vested right” to conduct surface mining activities thereon. The vested right does not extend to the BLM-managed federal public lands upon which the unpatented claims are located.

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

*Reference to the historic resource at the Waterloo Project refer to an internal company document prepared by Pan American Minerals Corp., dated 2013, (unpublished). For further information please refer to Apollo’s N.I. 43-101 technical report titled “NI 43-101 Technical Report, Waterloo Project, California, USA,” effective May 12, 2021, on SEDAR. Historic resources are reported here as documented in original documents. The historic mineral resource was calculated using mining industry standard practices for estimating Mineral Resource and Mineral Reserves (2005) which was prior to the implementation of the current Canadian Institute of Mining’s (“CIM”) standards for mineral resource estimation (as defined by the CIM Definition Standard on Mineral Resources and Ore Reserves dated May 10, 2014). The reader is cautioned not to treat them, or any part of them, as current mineral resources or reserves. An independent Qualified Person (‘QP’) has not completed sufficient work to classify the estimates discussed as current mineral resources or reserves and therefore the estimates should be treated as historical in nature and not current mineral resources or mineral reserves. Apollo’s Qualified Person (“QP”), Cathy Fitzgerald, has determined these historic resources are reliable, and relevant to be included here in that they demonstrate simply the mineral potential of the Waterloo Property. A thorough review of all historic data performed by an independent QP, along with additional exploration work to confirm results, would be required in order to produce a current mineral resource estimate for the Waterloo property.

The Langtry Project

The Langtry Project comprises 20 patented claims (413 acres) and 38 unpatented lode mining claims (767 acres), totaling approximately 1,180 acres (collectively, the “Langtry Property” or “Langtry Properties”). 20 patented claims and two unpatented claims are under option between Stronghold USA and the Bruce and Elizabeth Strachan Revocable Living Trust dated 7-252007 (“Strachan”), while the remaining 36 unpatented claims are under option between Stronghold USA and Athena Minerals Inc. ( “Athena”). Each agreement is subject to various royalties and encumbrances.

Modern exploration work on the Langtry Project began in 1967 by Superior Oil Co. (“Superior”). Work by Superior comprised geologic mapping and drilling resulting in the discovery of similar disseminated silver mineralization in the Barstow Formation as that observed at Waterloo. Superior drilled a total of 200 rotary holes with the focus of this work being on the patented claims that are subject to the Strachan Agreement. A decline in silver prices led to the eventual sale of the Property to private interest in 1974. The Project ultimately passed through several corporations up until 2010 when it was acquired by Athena, at which time comprised both the patented claims and adjacent unpatented lode mining claims. Between 2010 and 2012 Athena completed 13 reverse circulation drill holes (three of which were exploratory and 10 of which twinned Superior holes to validate the historic data) and excavated three surface trenches for the purpose of metallurgical testing. Based on this work and that by Superior, a historical mineral resource estimate was calculated for silver by Independent Mining Consultants Inc., (“IMC”), in association with SRK Consulting Inc., on behalf of Athena in 2012 (Moran et al., 2012, unpublished). Please refer to Table 1 for the historic mineral resource estimate at the Langtry Project*. The reader is cautioned that the mineral resource estimate is historic in nature and should not be treated as a current mineral resource.

Table 1: Langtry Historic Mineral Resource Estimate

Property	Source	Resource Category	Grade	Tonnage (T)	Cutoff Grade	Total Ounces
Langtry	Moran et al. (2012)	Indicated	1.48 opt Ag	12,700,000	0.76 opt Ag	18,809,000
		Inferred	1.40 opt Ag	30,400,000	0.76 opt Ag	42,623,000

Abbreviations are imperial short tonnes (T) and ounces per imperial short ton (opt).

*Reference to the historic resource at the Langtry Project refer to Moran et al, 2012, an internal report on the Langtry Silver Project, San Bernardino County, California: prepared for Athena Silver Corp., April 2012. [Accessed April 30, 2021]. Historic resources are reported here as documented in original documents (tonnage in imperial short tonnes (“T”) and grade in ounces per imperial short ton (“opt”). The historic mineral resource was calculated using mining industry standard practices for estimating Mineral Resource and Mineral Reserves (2005) which was prior to the implementation of the current Canadian Institute of Mining’s (“CIM”) standards for mineral resource estimation (as defined by the CIM Definition Standard on Mineral Resources and Ore Reserves dated May 10, 2014). The reader is cautioned not to treat them, or any part of them, as current mineral resources or reserves. An independent Qualified Person (‘QP’) has not completed sufficient work to classify the estimates discussed as current mineral resources or reserves and therefore the estimates should be treated as historical in nature and not current mineral resources or mineral reserves. Apollo’s Qualified Person (“QP”), Cathy Fitzgerald, has determined these historic resources are reliable, and relevant to be included here in that they demonstrate simply the mineral potential of the Langtry Property. A thorough review of all historic data performed by an independent QP, along with additional exploration work to confirm results, would be required in order to produce a current mineral resource estimate for the Langtry Properties.

In 2015, Athena obtained a Certificate of Land Use Conformance from San Bernardino County recognizing surface mining as a legal use of the Strachan Lands patented claims and the existence of a “vested right” to conduct surface mining activities thereon.

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

The vested right does not extend to the BLM-managed federal public lands upon which Athena’s unpatented claims are located.

The Langtry Project Option Agreements

Apollo, through it’s wholly-owned subsidiary, Stronghold USA, is party to two option agreements which grant it the rights to acquire a 100% interest in the Langtry Property: the Strachan Agreement and the Athena Agreement, as detailed below.

Strachan Agreement

Stronghold USA, the optionee, and Strachan, the optionor entered into an Option to Purchase Agreement (the “Strachan Agreement”) dated December 23, 2020, which gives Stronghold USA the right to acquire a 100% interest in 20 patented land claims and two unpatented lode mining claims forming a portion of the Langtry Project (“Strachan Lands”) for the aggregate purchase price of the greater of 1) US$5,200,000 or 2) the spot price of 220,000 troy ounces of silver, on or before December 24, 2025.

Under the terms of the Strachan Agreement, Stronghold USA is required to pay US$100,000 on each Strachan Agreement anniversary date to maintain the option in good standing. All payments made during the term of the option shall be applied to the final purchase price. Upon full exercise of the option, Stronghold USA will grant to Strachan the following: 1) a 1% Net Smelter Royalty on any future production of silver from the Strachan Lands; 2) 5% gross royalty on all other mineral production from the Strachan Lands and 3) 10% gross royalty on all other non-mineral production income derived from any other commercial use of the Strachan Lands.

As at August 31, 2021, one non-refundable payment of US$100,000 had been made under the Strachan Agreement which will be credited against the final purchase price at the time of exercise.

Athena Agreement

Stronghold USA, the optionee, and Athena, the optionor, entered into an Option to Purchase Agreement (the “Athena Agreement”) dated December 21, 2020, which gives Stronghold USA the right to acquire 100% interest in 36 unpatented lode mining claims forming a portion of the Langtry Project (“Athena Lands”) for an aggregate purchase price of US$1,000,000 to be made on or before December 21, 2025.

Terms of the option include US$15,000 upon execution of the Athena Agreement (paid in December 2020) and US$25,000 on each Athena Agreement anniversary date. All payments made by the optionee to the optionor during the 24-month period prior to the full exercise of the option shall be credited against the purchase price.

Upon vesting of the 100% interest, Stronghold USA will grant to Athena a 1% Net Smelter Royalty on any future production of minerals from the Athena Lands. The royalty shall only apply on those Athena Lands that currently do not have existing royalties of 1% or higher such that at no time will any property have a royalty of greater than 2%.

Exploration Plans at the Waterloo and Langtry Projects

On September 14, 2021, Apollo provided an update of its technical work program and exploration plans (refer to the Company’s news release dated September 14, 2021). Work to date by Apollo has resulted in increased confidence in the historic estimates made by previous operators of silver mineralization at both Waterloo and Langtry. This determination was based on completion of preliminary 3-D geology models of both projects by an independent consulting group and the creation of an independently verified drill and assay database combining data for both projects. Additionally, many historic documents have been reviewed that provide further validation of the high quality of the drill data.

Planning is underway for a comprehensive work program for both the Waterloo and Langtry Projects, which will include a geophysical program comprising a surface Induced Polarization (“IP”) survey and airborne magnetic survey; and a surface geological mapping and sampling program for fall 2021. Additionally, permitting for drilling is underway. Ongoing work includes the continued evolution of the 3D geologic model development and historical data review. All aspects of the technical program are targeted so as to declare a maiden resource estimate for both the Waterloo and Langtry Projects.

The Arizona Silver District Project, Arizona, USA

The AZ Silver District Project is a district-scale property position located in the heart of the historic Silver Mining District in La Paz County, southwestern Arizona. The AZ Silver District Project comprises 3 patented claims, 85 unpatented lode mining claims, 23 unpatented mill and a state exploration lease, totaling over 2,000 acres. The mineral title and lease covers three major epithermal vein structures (West, Central, East), having a collective strike length of 13 km (8 miles). Drilling by previous

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

operators totalled 19,162 metres across 465 holes across the land package, but depths did not extend below approximately 45 metres. The AZ Silver Project represents an under-explored areas in a prolific mining district with further discovery potential. Silver mineralization was discovered in the area in 1862 with reported historic mining production of approximately 1.5 million ounces of silver and 2.3 million pounds of lead. Production occurred primarily between 1883 and 1893 from underground operations at the Red Cloud and Clip mines. A resurgence of mining activity in the area from 1915 to 1924 deepened old workings, but a depressed silver price then resulted in termination of mining. Workings in the area reportedly reached the water table where sulfide mineralization dominated (galena and sphalerite).

More modern exploration work was completed on the property by Yuma Metals between 1950-1982 which included further underground development, and by New Jersey Zinc Co. (“NJZC”) and Orbex Mineral Ltd. (“Orbex”) (and various successor companies) between 1973 and 2000. NJZC and Orbex drilled 465 shallow reverse circulation holes for an aggregate length of 19,161 metres (62,866 feet), conducted metallurgical test work and carried out scoping studies. Interest in the AZ Silver District Project was acquired by Columbus Silver Corp. in 2004, and then by Magellan Gold Corp. in 2012, both predecessor companies of Gulf + Western Industries Inc. (“Gulf”). During this period the companies completed surface mapping, soil sampling, one line of a Controlled-source Audio-frequency Magnetotellurics (“CSAMT”) survey, a 20 line-kilometre ground magnetic survey and drilled three diamond core holes (in 2014), one of which was designed to confirm historic drilling.

Mineralization in the AZ Silver District comprises extensive silver-fluorite-barite veins that are controlled by three major northwest trending vein systems extending over a collective strike length of 13 kilometres (West, Central and East Vein Systems). The epithermal veins occupy faults that cut the major rock units, which are comprised of Precambrian metamorphic rocks (quartz biotite gneiss and granitic rocks) intruded by Cretaceous granite and diorite stocks later overlain by Tertiary (Miocene) volcanic flows, volcaniclastics and tuffs. Silver-bearing veins consist of mostly oxidized silver and lead-zinc mineralization in massive quartz-calcite-fluorspar-barite veins and breccia zones. Pod-like bodies commonly 5-15 metres or more wide and hundreds of ft long occur along the main mineralized veins systems.

Option Agreement to Acquire a 100% Interest in the AZ Silver District Project

Stronghold USA, the optionee, and Gulf, the optionor, entered into an Option to Purchase Agreement dated January 22, 2021 (the “AZ Silver District Option Agreement”) which gives Stronghold USA the right to acquire a 100% interest in mineral claims, state exploration licence and leased lands forming the AZ Silver District Project for an aggregate purchase price of US$1,970,000 to be made in a series of payments on or before January 22, 2026.

Terms of the AZ Silver District Option Agreement include:

1) US$70,000 due upon execution of the AZ Silver District Option Agreement (paid in January 2021);

• 2) US$100,000 plus US$100,000 in common shares of Apollo on January 22, 2022;

• 3) US$125,000 plus US$125,000 in common shares of Apollo on January 22, 2023;

• 4) US$175,000 plus US$175,000 in common shares of Apollo on January 22, 2025;

• 5) US$250,000 plus US$250,000 in common shares of Apollo on January 22, 2025;

• 6) US$300,000 plus US$300,000 in common shares of Apollo on January 22, 2026.

Additional bonus payments will be made by Apollo in the following events;

1) US$250,000 plus US$250,000 in common shares of Apollo in the event the property becomes the flagship property of the company on or before January 22, 2024;

• 2) US$250,000 plus US$250,000 in common shares of Apollo in the event Apollo declares a NI 43-101 compliant resource of at least 30 million ounces of silver on or before January 22, 2024;

• 3) US$3,000,000 in the event that the price of silver exceeds US$125/ounce for ninety days on or before January 22, 2026.

Upon vesting of the 100% interest, Apollo will grant to Gulf a 2% Net Smelter Royalty on any future production of minerals from the AZ District Project.

Exploration Plans at the AZ Silver District Project

Apollo’s near-term exploration plan for the AZ Silver District Project includes desktop review of historical data, surface geological investigation and compilation of all geological data into a database and preliminary three-dimensional geological model. Initial ground-truthing is expected to commence in fall of 2021, which, combined with the data compilation and analysis work will form the foundation for target generation and evaluation that will guide a possible on-the ground program in 2022.

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

The Apollo and San Carron Project, Chile

On March 25, 2020, the Company entered into an option agreement with Lithium Chile Inc., and Compania Minera Kairos Chile Limitada, giving the Company the option to earn up to a 90% interest in two early-stage exploration properties in the El Indio Gold Belt of central Chile (the “El Indio Option Agreement”). After the closing Stronghold Transaction and resultant change in strategy and focus, the Company served notice to the vendors that it had terminated the El Indio Option Agreement. As a result, the carrying value of $100,000 relating to the Apollo and San Carron Mineral Property was written-off and expensed in the consolidated statements of loss and comprehensive loss.

Technical Information and Qualified Person

The technical information in this MD&A pertaining to the Waterloo Project, Langtry Project and AZ Silver District Project have been reviewed, verified and approved by Cathy Fitzgerald, P.Geo., a Qualified Person as defined by NI 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). Ms. Fitzgerald is the Vice President Exploration and Resource Development of Apollo and is not considered independent under NI 43-101.

SELECTED QUARTERLY FINANCIAL INFORMATION

The following table provides selected financial information for the eight fiscal quarters ended August 31, 2021:

		August 31, 2021		May 31, 2021		February 28, 2021		November 30, 2020
Revenue	$	-	$	-	$	-	$	-
Exploration and evaluation expenditures		389,794		38,562		-		146,237
Other operating expenses		1,478,569		273,337		226,349		373,834
Gain on foreign exchange		(149,784)		-		-		-
Other income		(1,018,080)		-		-		-
Net loss		700,499		311,899		226,349		520,071
Loss per share - basic and diluted		-		(0.01)		-		(0.01)
Total assets		95,426,012		5,930,927		6,182,472		6,347,818
Total liabilities		3,567,363		115,684		92,580		147,536
Shareholders' equity (deficit)		91,858,649		5,815,243		6,089,892		6,200,282
		August 31, 2020		May 31, 2020		February 29, 2020		November 30, 2019
Revenue	$	-	$	-	$	-	$	-
Exploration and evaluation expenditures		41,945		7,166		-		-
Other operating expenses		276,532		783,768		36,363		41,157
Gain on foreign exchange		-		-		-		-
Other income		(34,973)		(19,935)		-		-
Net loss		283,504		770,999		36,363		41,157
Loss per share - basic and diluted		-		(0.03)		-		(0.01)
Total assets		6,094,026		2,267,934		24,011		24,557
Total liabilities		239,763		356,967		256,366		220,549
Shareholders' equity (deficit)		5,854,263		1,910,967		(232,355)		(195,992)

(i) Certain figures in the comparative periods above have been reclassified to conform with current period presentation.

The changes in the Company’s financial results on a quarter-by-quarter basis are due primarily to fluctuations in the level of activity of the Company. These fluctuations relate to the Company’s activities relating to project acquisitions, financing, exploration and evaluation programs, and corporate administration. The Company is a mineral exploration and development company and does not currently generate operating revenue.

Exploration and evaluation expenditures increased significantly in the quarter ended August 31, 2021 compared to all previous quarters because Apollo completed the Stronghold Transaction, acquiring the rights to explore the Waterloo Project, Langtry Project and AZ Silver District Project. Furthermore, the Company then began exploration activities at the properties, which resulted in increased expenditure on salaries, geological consultants, permitting and travel. Additionally, share-based payments relating to those individuals whose primary activities pertain to exploration has been allocated to exploration and evaluation expenditures.

Other operating expenses fluctuate based on corporate activity. Significant increases are noted in the quarters ended August 31, 2021 and May 31, 2020, which relate primarily to the grants of stock options in those periods. The fair value of the stock options granted is estimated and is recorded as share-based payments in line with the vesting schedule, which typically results in much larger expense in the period of the initial grant. Furthermore, other operating expenses in the quarter ended August 31, 2021 also

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

increased due to increased activity leading up to and subsequent to closing the Stronghold Transaction, as the Company made additions to its personnel, resulting in increases to salary and consulting fees.

Other income is not consistent period-to-period. In the quarters ended August 31, 2020 and May 31, 2020, other income was recorded due to certain payables being forgiven, resulting in a gain on settlement. In the quarter ended August 31, 2021, other income increased as a result of a fair value adjustment related to the Company’s warrant liability, which is a derivative liability measured at fair value at each reporting date, using the Black-Scholes option pricing model.

Total assets increased significantly in the quarter ended August 31, 2021 as the Company completed a brokered private placement, raising gross proceeds of $52.9 million to complete the Stronghold Transaction and Waterloo Purchase Agreement. Total assets for the prior four quarters remained relatively consistent as the Company incurred minimal expenditures to maintain operations. Total assets increased in both May 31, 2020 and August 31, 2020 as the Company completed private placements to fund its activities and replenish its treasury.

Total liabilities increased significantly in the quarter ended August 31, 2021 as the Company recognized a warrant liability at the time of closing the Stronghold Transaction. The warrants assumed in the transaction are classified as a derivative liability, resulting in them being recorded as a liability in the statement of financial position. Liabilities also increased in the quarter due to the Stronghold Transaction because many of the liabilities incurred as a result of the transaction were not settled prior to the end of the reporting period. Liabilities in the previous four quarters were relatively consistent and lower than the quarters ended August 31, 2020, May 31, 2020, February 29, 2020 and November 30, 2019, which were higher because the Company had minimal cash and lower turnover of payables.

Shareholders equity (deficit) has increased steadily over the past eight quarters as the Company has financed itself through equity placements and the exercise of share purchase warrants. Increases in equity in each period are offset by the losses incurred in that period, resulting in a relatively consistent balance from the quarter ended August 31, 2020 to May 31, 2021. Prior to May 31, 2020, the Company ran a deficit until it completed its first of three private placements in the year ended November 30, 2020, raising net proceeds of $6.49 million. The significant increase in the quarter ended August 31, 2021 relates to the Company issuing shares as a result of the Concurrent Financing and Stronghold Transaction.

RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
		Three months ended August 31,				Nine months ended August 31,
		2021		2020		2021		2020
Exploration and evaluation	$	389,794	$	41,945	$	428,356	$	49,111
Write-off of exploration and evaluation assets		100,000		-		100,000		-
Corporate administration		1,377,928		275,957		1,874,861		1,095,966
Depreciation		641		575		3,394		697
Fair value adjustment on warrant liabilty		(1,018,080)		-		(1,018,080)		-
Gain on foreign exchange		(149,784)		-		(149,784)		-
Other income		-		(34,973)		-		(54,908)
Net loss for theperiod	$	700,499	$	283,504	$	1,238,747	$	1,090,866

Third Quarter Results – Three months ended August 31, 2021 (“Q3 2021”) compared to the three months ended August 31, 2020 (“Q3 2020”)

Exploration and evaluation (“E&E”) expenditures

During the three months ended August 31, 2021, E&E expenditures increased by approximately $348,000 compared to the three months ended August 31, 2020. The increase is due to the Company having acquired the rights to explore at Waterloo Project, Langtry Project and AZ Silver District Project in the current quarter. After closing the Stronghold Transaction in early July 2021, the Company began working on the Projects, incurring expenditures relating to salaries, geological consulting, permitting and travel, all of which were not incurred in the comparative quarter as the Company did not have an active mineral property that it was exploring at that time. E&E expenditures in the comparative period consisted of general project evaluation costs related to prospective properties, none of which included the properties acquired in the Stronghold Transaction.

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

Write-off of exploration and evaluation assets

Following the completion of the Stronghold Transaction and resulting change in Apollo’s strategy and focus, the Company terminated its option agreement with Lithium Chile Inc. and Compania Minera Kairos Chile Limitada, which gave the Company the option to earn up to a 90% interest in two early-stage exploration properties in Chile (the “Chilean Properties”). Therefore, in the three months ended August 31, 2021, the E&E asset relating to the Chilean Properties of $100,000 was written-off. No such write-off was recognized in the comparative period.

Corporate administration

During the three months ended August 31, 2021, corporate administration expenses increased by approximately $1.1 million. The increase is primarily due to a $919,000 increase in share-based compensation, a $239,000 increase in salaries and consulting fees, a $30,000 increase in professional fees, offset by a $27,000 decrease in investor relations.

Share-based payments are typically not consistent from period to period. At the date of the grant, the fair value of the underlying options is estimated and amortized consistent with the vesting patterns for each option. Therefore, given the significant grant in the current period, there was a significant increase in share-based payments. There was no grant and related increase in sharebased payments in the comparative period.

The increase in salaries and consulting fees primarily relates to the closing of the Stronghold Transaction, which resulted in a significant increase in the amount of time allocated to the Company by management in Q3 2021 compared to the Q3 2020 when the Company was relatively inactive. Additionally, a number of full-time personnel were hired during Q3 2021, including a fulltime CEO, VP of Exploration and Resource Development and General Manager of the Calico Silver District projects. In order to assist during this transition period, certain former officers also continued to provide services to the Company, which contributed to the increased costs.

Professional fees increased in the three months ended August 31, 2021 because the Company had acquired a US subsidiary and became a more active entity. Accordingly, increased legal fees were incurred to support certain tasks, such as preparation for the Annual General Meeting in August 2021, and other general corporate matters.

Investor relations fees decreased slightly in the current period primarily due to the timing of consumption of prepaid marketing expenses. The Company had prepaid for marketing services in the comparative period, but signed on with a new service provider in July 2021. As such, the amount incurred in Q3 2021 was slightly lower compared to Q3 2020 due to the amount of the service agreement consideration and timing of expenses incurred.

Fair value adjustment on warrant liability

During the three months ended August 31, 2021, the Company recorded a $1.02 million fair value adjustment on its warrant liability, which is re-measured each reporting period. No such warrant liability existed in the comparative period.

Gain on foreign exchange

Foreign exchange arose in the three months ended August 31, 2021 because the Company completed the Stronghold Transaction and began to incur certain transactions denominated in US dollars. Prior to closing the Stronghold Transaction, the Company primarily transacted in Canadian dollars and was not exposed to foreign exchange gains or losses.

Other income

Other income in Q3 2020 related to the write-off of certain payables that were owed by the Company and forgiven by the counterparties. No such transactions occurred in Q3 2021.

Year-To-Date Results – Nine months ended August 31, 2021 (“YTD 2021”) compared to the nine months ended August 31, 2020 (“YTD 2020”)

Exploration and evaluation (E&E) expenditures

During the nine months ended August 31, 2021, E&E expenditures increased by approximately $379,000 compared to the nine

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

months ended August 31, 2020. The increase is primarily due to the Company having acquired the rights to explore at Waterloo Project, Langtry Project and AZ Silver District Project in the current period, as well as concession payments that were paid relating to the Chilean Properties prior to the decision to terminate the option. After closing the Stronghold Transaction in early July 2021, the Company began working on the Projects, incurring expenditures relating to salaries, geological consulting, permitting and travel, all of which were not incurred in the comparative period as the Company was not active at its mineral property. E&E expenditures in the comparative period consisted of general project evaluation costs related to prospective properties, none of which included the properties acquired in the Stronghold Transaction.

Write-off of exploration and evaluation assets

Following the completion of the Stronghold Transaction and resulting change in Apollo’s strategy and focus, the Company terminated its option agreement with Lithium Chile Inc. and Compania Minera Kairos Chile Limitada, to earn up to a 90% interest in the Chilean Properties. Therefore, in the nine months ended August 31, 2021, the E&E asset relating to the Chilean Properties of $100,000 was written-off. No such write-off was recognized in the comparative period.

Corporate administration

During the nine months ended August 31, 2021, corporate administration expenses increased approximately $779,000. The increase is primarily due to a $265,000 increase in share-based compensation, a $394,000 increase in salaries and consulting fees, an $85,000 increase in professional fees and a $30,000 increase in investor relations.

Share-based payments is typically not consistent from period to period. At the date of the grant, the fair value of the underlying options is estimated and amortized consistent with the vesting patterns for each option. Exercise prices have a significant impact on the fair value of stock options, which subsequently impacts the related amount of share-based compensation expense. In YTD 2021, 4,550,000 options were granted at an exercise price of $0.86. Comparatively, in YTD 2020, 2,500,000 options were granted at an exercise price of $0.33, resulting in a lower fair value than the current period. The higher fair value and volume of the YTD 2021 grant relative to the YTD 2020 grant resulted in the increased share-based payments.

The increase in salaries and consulting fees primarily relates to the closing of the Stronghold Transaction, which resulted in a significant increase in the amount of time allocated to the Company by management in YTD 2021 compared to the YTD 2020 when the Company was relatively inactive. Additionally, a number of full-time personnel were also hired during the YTD 2021, including a full-time CEO, VP of Exploration and Resource Development, and General Manager of the Calico Silver District projects. In order to assist during the transition period, certain former officers also continued to provide services to the Company, which contributed to the increased costs.

Professional fees increased in the nine months ended August 31, 2021 because the Company had acquired a US subsidiary and become a more active entity. Accordingly, increased of legal fees were incurred to support certain tasks such as ongoing general corporate matters and preparation for the Annual General Meeting in August 2021.

Investor relations fees increased primarily due to differences in the service agreements in place with marketing service providers, of which the services provided and associated costs are not consistent from period to period.

Fair value adjustment on warrant liability

During the nine months ended August 31, 2021, the Company recorded a $1.02 million fair value adjustment on the warrant liability, which must be re-measured at each reporting date. No such warrant liability existed in the comparative period.

Gain on foreign exchange

Foreign exchange arose in the nine months ended August 31, 2021 because the Company completed the Stronghold Transaction and began to incur certain transactions denominated in US dollars. Prior to closing the Stronghold Transaction, the Company primarily transacted in Canadian dollars and was not exposed to foreign exchange gains or losses.

Other income

Other income in YTD 2020 related to the write-off of certain payables that were owed by the Company and forgiven by the

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

counterparties. No such transactions occurred in the YTD 2021.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Liquidity

The Company’s approach to managing liquidity risk is to forecast cash flows required for its planned operating, investing and financing activities so that it will have sufficient liquidity to meet liabilities when due. Management expects that cash flows related to operating, general and administrative, and exploration and evaluation activities will be funded by Apollo’s cash on hand. While the Company’s current cash is sufficient to settle its current liabilities and fund its general and administrative and exploration program activities, the Company will continue to forecast its cash flows and investigate opportunities to obtain further financing, if necessary, through transactions to maintain liquidity, such as equity placements, debt or joint venture arrangements.

During the nine-months ended August 31, 2021, the Company issued a total 111,236,659 common shares. A total of 703,325 common shares were issued for gross proceeds of $231,000, resulting from the exercise of share purchase warrants. A total of 70,533,334 were issued for gross proceeds of $52.9 million (less issue costs of approximately $3.47 million). A total of 40,000,000 shares were issued in exchange for all outstanding common shares of Stronghold, as part of the Stronghold Transaction.

During the comparative period, nine-months ended August 31, 2020, Apollo issued a total of 30,532,000 common shares for net proceeds of approximately $6.49 million. The common shares were issued in three separate private placements of units. In each placement, a unit consisted of one common share and one common share purchase warrant that entitled the holder to purchase one common share at prices ranging from $0.25 to $0.75, for a period of two years from the date of issuance.

As at August 31, 2021, the Company believed that it had adequate resources to maintain its minimum near-term obligations, including general corporate activities and planned exploration programs, based on its cash position and the ability to pursue additional sources of financing, if necessary.

Cash Flow Summary

Cash Flow Summary
		Nine months ended August 31,
		2021		2020
Cash, beginning of period	$	6,125,876	$	10,822
Cash used in operating activities		(2,571,497)		(564,801)
Cash used in investing activities		(36,137,888)		(104,569)
Cash from financing activities		49,658,116		6,487,682
Effectofchangesin foreignexchangerates oncash		16,156		-
Cash,end ofperiod	$	17,090,763	$	5,829,134

Cash flows used in operations for the nine-months ended August 31, 2021 totaled approximately $2.57 million, compared to $565,000 in the comparative period in 2020. The increase in cash used in operations is primarily due to the significant prepaid expense of approximately $1.2 million relating to marketing services for the year, as well as the increase in the operating expenses for the period.

During the nine months ended August 31, 2021, Apollo’s cash flows from financing totaled approximately $49.66 million compared to $6.49 million in 2020. The inflows in 2021 were the result of issuing common shares in the Concurrent Financing for gross proceeds of $52.9 million (less issue costs of approximately $3.47 million), and the exercise of share purchase warrants of approximately $231,000.

Cash flows used in investing activities for the nine-months ended August 31, 2021 totaled approximately $36.14 million, compared to $105,000 in the comparative period in 2020. During the nine months ended August 31, 2021, the Company completed the Stronghold Transaction for total cash payments of approximately $745,000, and the subsequent acquisition of the 100% interest in the Waterloo Project, for total cash payments of US$28.25 million (approximately $35.33 million) to Pan American, plus approximately $58,000 in transaction and other related closing costs. In the comparative period, the Company made payments on the El Indio Option Agreement relating to the Apollo and San Carron properties. The Waterloo Project did not exist in the comparative period.

The following table represents the net capital of the Company:

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

		August 31,		November 30,
		2021		2020
Shareholders' equity	$	91,861,256	$	6,200,282

The Company uses net shareholders’ equity to monitor leverage. The increase in capital during the nine months ended August 31, 2021 is primarily due to the issuance of common shares on closing of the Concurrent Financing for gross proceeds of $52.9 million and the Stronghold Transaction, offset by the increase in deficit resulting from operations of the Company.

Working Capital

The Company has working capital of approximately $17.8 million at August 31, 2021 compared to approximately $6.1 million as at November 30, 2020, representing an increase of approximately $11.7 million. The increase in working capital is comprised of an increase in current assets of approximately $12.2 million and an increase of approximately $435,000 in current liabilities.

The net increase to working capital primarily relates to the successful closing of the Concurrent Financing for gross proceeds of $52.9 million (less issue costs of approximately $3.47 million). This resulted in a significant increase in cash, of which a significant portion was used to fund the acquisition of the 100% interest in the Waterloo Project, a prepayment for marketing services (for which a prepaid expense is recorded in the statement of financial position) and other operating activities during the nine months ended August 31, 2021. The increase in current assets was offset by an increase in current liabilities as the Company assumed certain obligations upon closing of the Stronghold Transaction, which were not yet settled as at August 31, 2021.

CONTRACTUAL OBLIGATIONS

In the normal course of operations, the Company may assume various contractual obligations and commitments. The Company has entered into employment agreements with certain senior officers, whereby if the Company terminates the employment contract without cause or experiences a change of control, the officers are owed a payment equal to 6 or 12 months’ salary.

OFF-BALANCE SHEET ARRANGEMENTS

During the nine months ended August 31, 2021, the Company was not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the result of operations, financial condition, capital expenditures, liquidity or capital resources of the Company.

PROPOSED TRANSACTIONS

There are no proposed transactions that have no been disclosed herein.

OUTSTANDING SHARE DATA

The company is authorized to issue an unlimited number of common shares without par value.

As at October 27, 2021, the Company had the following issued and outstanding:

• 162,279,573 common shares.

• 61,538,720 share purchase warrants, which are exercisable to purchase a total of 61,538,720 common shares of the Company at a weighted average exercise price of $0.88. The exercise prices range from $0.25 to $1.25.

• 7,050,000 stock options with a weighted average exercise price of $0.67. Each stock option is exercisable to purchase one common share of the Company at prices ranging from $0.33 to $0.86.

RELATED PARTY TRANSACTIONS

Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note. The Company had transactions during the three and nine months ended August 31, 2021 and 2020 with related parties consisting of companies controlled by directors and officers of the Company as follows:

• a) Accounting fees of $5,000 and $14,650 for the three- and nine-month periods ended August 31, 2021, respectively (2020 - $2,000 and $5,850) to a company controlled by the former CFO and current director of the Company.

• b) Consulting fees of $15,000 and $93,000 for the three- and nine-month periods ended August 31, 2021, respectively (2020 – $42,000 and $62,000) to a company controlled by the former CEO and current director of the Company.

• c) Consulting fees of $nil and $nil for the three- and nine-month periods ended August 31, 2021, respectively (2020 -

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

• $Nil and $17,500) to a company controlled by a former CEO and director of the Company.

• d) Consulting fees of $16,000 and $64,000 for the three- and nine-month periods ended August 31, 2021, respectively (2020 – $5,000 and $26,000) to a company controlled by the former VP Exploration of the Company.

Included in accounts payable and accrued liabilities as at August 31, 2021 is $22,518 (November 30, 2020 - $22,575) due to certain Officers of the Company and a company controlled by a director and former officer of the Company.

Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of the Company’s Officers and members of the Company's Board of Directors. The remuneration of directors and key management personnel during the three and nine months ended August 31, 2021 and 2020, were as follows:

		Three months ended August 31,	Three months ended August 31,	Three months ended August 31,		Nine months ended August 31,	Nine months ended August 31,	Nine months ended August 31,
		2021		2020		2021		2020
Salaries and consulting fees	$	365,352	$	42,000	$	491,352	$	59,500
Accounting fees		7,000		2,000		14,650		5,850
Share-based payments		647,133		339,788		647,133		339,788
Total key management compensation	$	1,019,485	$	383,788	$	1,153,135	$	405,138

(i) Share-based payments represent the fair value of the stock-options granted to key management personnel that were recognized in the statements of loss and comprehensive loss in the three and nine months ended August 31, 2021.

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Financial Instruments

Financial assets and liabilities have been classified into categories that determine their basis of measurement and, for items measured at fair value on a recurring basis, whether changes in fair value are recognized at fair value through profit or loss (“FVTPL”) or fair value through other comprehensive income (“FVTOCI”).

The Company’s financial assets and financial liabilities are classified as follows:

		August 31,		November 30,
		2021		2020
Financial assets
Cash	$	17,090,763	$	6,125,876
Receivables		43,441		22,002
Total financial assets	$	17,134,204	$	6,125,876
Financial liabilities
Accounts payable and accrued liabilities	$	582,227	$	147,536
Warrant liability		2,985,136		-
Total financial liabilities	$	3,567,363	$	147,536

IFRS 7, Financial Instruments: Disclosures establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value as follows:

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

• Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Cash is carried at fair value using a level 1 fair value measurement and the receivables and accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments.

The Company’s only level 3 financial instrument consisted of a warrant liability that is measured using the Black-Scholes option valuation model, and is recorded at fair value.

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.

Financial risk factors

The Company’s financial instruments are exposed to certain financial risks, including credit risk, liquidity risk and market risk, and the impact on the Company’s financial instruments are summarized below:

Credit risk

Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial assets including cash. The Company limits exposure to credit risk on liquid financial assets through maintaining its cash with high quality financial institutions as determined by a primary ratings agency. Receivables consist solely of GST receivable for input tax credits from the Government of Canada. The Company has been successful in recovering input tax credits and believes credit risk with respect to receivables is insignificant.

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient cash to meet its financial obligations as they come due. The Company’s approach to managing liquidity risk is to ensure forecast its cash flows required by its planned operating, investing and financing activities so that it will have sufficient liquidity to meet liabilities when due. As at August 31, 2021, the Company had a cash balance of approximately $17.09 million (November 30, 2020 - $6.13 million) to settle current liabilities of approximately $582,000 (November 30, 2020 - $148,000). All of the Company’s accounts payable and accrued liabilities have contractual maturities of 30 days, or are due on demand and are subject to normal trade terms. Amounts due to related parties are without stated terms of interest or repayment. While the Company’s current cash is sufficient to cover settle its current liabilities and planned expenditures for the upcoming year, to maintain liquidity, the Company will continue forecasting its cash flows and if necessary, investigate opportunities to obtain further financing through transactions equity placements, debt or joint venture arrangements.

Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices. The Company does not have a practice of trading derivatives.

(i) Interest rate risk

Interest rate risk is the risk that the fair values and future cash flows of the Company's financial instruments will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its bank deposits, which is insignificant due to their short-term nature. The Company’s current policy is to invest excess cash in investment-grade short-term deposit certificates issued by its highly-rated financial institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks. As at August 31, 2021, the Company did not have any investments in investment-grade short-term deposit certificates.

• (ii) Foreign currency risk

The Company reports its financial results in Canadian dollars but also undertakes transactions in the US dollar. As the exchange rates between the Canadian dollar and US dollar fluctuates, the Company experiences foreign exchange gains and losses. The Company has cash, accounts payable and accrued liabilities, and warrant liability denominated in USD, which are subject to currency risk.

The Company does not enter into any financial instruments to hedge currency risk, but the Company monitors its foreign exchange exposure and considers its exposure to foreign currency risk to be minimal as at August 31, 2021.

(iii) Price risk

The mining industry is heavily dependent upon the market price of the metals or minerals being mined. There is no assurance that, even if commercial quantities of mineral resources are discovered, a profitable market will exist for their sale. There can be no assurance that mineral prices will be such that the Company’s properties can be mined at a profit. Factors beyond control of the Company may affect the marketability of any minerals discovered. The price of silver has experienced volatile and significant price movements over short periods of time and is affected by numerous factors

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

beyond the Company’s control. The Company’s profitability and ability to raise capital to fund exploration, evaluation and production activities is subject to risks associated with fluctuations in mineral prices. The Company closely monitors commodity prices, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.

ADDITIONAL DISCLOSURE FOR VENTURE ISSUERS

For the disclosure required under Section 5.3 of National Instruments 51-102 – Continuous Disclosure Obligations , please see “Exploration and Development Activities”, “Selected Quarterly Information” and “Results of Operations”.

OTHER DATA

Additional information related to the Company is available for viewing under the Company’s profile at www.sedar.com.

ADOPTION OF NEW AND AMENDED IFRS PRONOUNCEMENTS

The Company has adopted the following amendments to IFRS:

Amendments to IFRS 3, Business Combinations (effective January 1, 2020) assist in determining whether a transaction should be accounted for as a business combination or an asset acquisition. The definition of a business has been amended to include an input and a substantive process that together significantly contribute to the ability to create goods and services provided to customers, generating investment and other income, and to exclude returns in the form of lower costs and other economic benefits. The amendment includes an optional test that makes it easier to conclude that a company has acquired a group of assets, rather than a business, if the value of the assets acquired is substantially all concentrated in a single asset or group of similar assets. These amendments did not impact the Company’s consolidated financial statements or disclosures at the time of adoption.

Amendments to IAS 1, Presentation of Financial Statements and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors (effective January 1, 2020) were made to refine the definition of material in IAS 1 and align the definitions used across IFRS Standards and other publications. The concept of ‘obscuring’ material information with immaterial information has been included as part of the new definition and the threshold for materiality influencing users has been changed from ‘could influence’ to ‘could reasonably be expected to influence’. These amendments did not impact the Company’s consolidated financial statements or disclosures at the time of adoption.

The Company has not applied the following amendments to standards that have been issued but are not yet effective:

Amendments to IAS 1, Presentation of Financial Statements (effective January 1, 2023) clarifies the presentation of liabilities in the statement of financial position. The classification of liabilities as current or non-current is based on contractual rights that are in existence at the end of the reporting period and is unaffected by expectations about whether an entity will exercise its right to defer settlement. A liability not due over the next twelve months is classified as non-current even if management intends or expects to settle the liability within twelve months. The amendment also introduces a definition of ‘settlement’ to make clear that settlement refers to the transfer of cash, equity instruments, other assets, or services to the counterparty. Management is currently assessing the impact of this amendment.

RISKS AND UNCERTAINTIES

The Company’s principal business activities are the acquisition, exploration, and definition of potentially economically viable mineral resource deposits on mineral properties, which, by nature, are speculative. Companies in this industry are subject to many and varied kinds of risks, including but not limited to; environmental, fluctuating commodity prices, social, political, financial and economics. Additionally, few exploration projects successfully achieve development due to factors that cannot be predicted or foreseen. While risk management cannot eliminate the impact of all potential risks, the Company strives to manage such risks to the extent possible and practicable. Due to the high-risk nature of the Company’s business and the present stage of the Company’s various mineral properties, an investment in the Company’s common shares should be considered a highly speculative investment that involves significant financial risks, and prospective investors should carefully consider all of the information disclosed in this MD&A, the risk factors discussed below, and the Company’s other public disclosures, including the risks described in the “Risk Factors” section of the Company’s MD&A for the year ended November 30, 2020, prior to making any investment in the Company’s common shares.

The risk factors described below do not necessarily comprise all of the risks and uncertainties that the Company faces. Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial may also adversely affect the Company’s business, results of operations, financial results, prospects and price of common shares. These risk factors could materially affect the Company’s future operating results and could cause actual events to differ materially from

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

those described in forward‐looking statements relating to the Company.

Mineral property exploration and mining risk

Mineral exploration and development are highly speculative and are characterized by a number of significant inherent risks, which may result in the inability to successfully develop a project for commercial, technical, political, regulatory or financial reasons, or if successfully developed, may not remain economically viable for their mine life owing to any of the foregoing reasons.

The Company’s ability to identify Mineral Resources in sufficient quantity and quality to justify development activities and/or its ability to commence and complete development work and/or commence and/or sustain commercial mining operations at any of its projects will depend upon numerous factors, many of which are beyond its control, including exploration success, the obtaining of funding for all phases of exploration, development and commercial mining, the adequacy of infrastructure, geological characteristics, metallurgical characteristics of any deposit, the availability of processing and smelting capacity, the availability of storage capacity, the supply of and demand for silver and other metals, the availability of equipment and facilities necessary to commence and complete development, the cost of consumables and mining and processing equipment, technological and engineering problems, accidents or acts of sabotage or terrorism, civil unrest and protests, currency fluctuations, changes in regulations, the availability of water, the availability and productivity of skilled labour, the receipt of necessary consents, permits and licenses (including mining licenses), and political factors, including unexpected changes in governments or governmental policies towards exploration, development and commercial mining activities.

Furthermore, cost over-runs or unexpected changes in commodity prices in any future development could make the projects uneconomic, even if previously determined to be economic under feasibility studies. Accordingly, notwithstanding the positive results of one or more feasibility studies on the projects, there is a risk that the Company would be unable to complete development and commence commercial mining operations at one or more of the mineral properties which would have a material adverse effect on the Company’s business, financial condition, results of operations and prospects.

Financing and share price fluctuation risk

The Company has no source of operating cash flow and has no assurance that additional funding will be available to it for further exploration and development of its mineral properties. Future exploration and development of the Company’s mineral properties may be dependent upon the Company’s ability to obtain financing through equity, debt or other means. There can be no assurance that needed financing will be available in a timely or economically advantageous manner, or at all. Failure to obtain sufficient financing could result in delay or indefinite postponement of further exploration and development of on any or all of its mineral properties which could result in the loss of its property, in which case, the Company’s ability to operate would be adversely affected. To obtain substantial additional financing, the Company may have to sell additional securities including, but not limited to, its Common Shares or some form of convertible securities, the effect of which may result in substantial dilution of the present equity interests of the Company’s shareholders.

Securities markets have at times in the past experienced a high degree of price and volume volatility, and the market price of securities of many companies, particularly those considered to be exploration stage companies such as the Company, have experienced wide fluctuations in share prices which have not necessarily been related to their operating performance, underlying asset values or prospects. There can be no assurance that these kinds of share price fluctuations will not occur in the future, and if they do occur, how severe the impact may be on the Company’s ability to raise additional funds through equity issues.

Commodity prices risk

The Company, along with all mineral exploration and development companies, is exposed to commodity price risk. A decline in the market price of gold, silver, base metals and other minerals may adversely affect the Company’s ability to raise capital in order to fund its ongoing operations. Commodity price declines could also reduce the amount the Company would receive on the disposition of its mineral properties to a third party.

History of losses risk

The Company has no history of generating profits and has incurred losses since its inception. The Company expects to continue to incur losses in the future until such time that it develops its properties, commences mining operations and derives sufficient revenues from its operating activities. The amount and timing of expenditures will depend on a number of factors, some of which are beyond the Company's control, including, but not limited to, the progress of exploration and development activities and the rate at which operating losses accumulate. There can be no assurance that the Company will generate operating revenues or profits in the future.

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

Title risk

Title on mineral properties and mining rights involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyance history of many mining properties. The Company has diligently investigated and continues to diligently investigate and validate title to its mineral claims; however, this should not be construed as a guarantee of title. The Company cannot give any assurance that title to properties it acquired will not be challenged or impugned and cannot guarantee that the Company will have or acquire valid title to these mineral properties.

Insured and Uninsurable Risks

In the course of exploration, development and production of mineral properties, the Company is subject to a number of hazards and risks in general, including adverse environmental conditions, operational accidents, labor disputes, unusual or unexpected geological conditions, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods, and earthquakes. Such occurrences could result in damage to the Company’s properties or facilities and equipment, personal injury or death, environmental damage to properties of the Company or others, delays, monetary losses and possible legal liability.

Although the Company maintains insurance to protect against certain risks in such amounts as it considers reasonable, its insurance may not cover all the potential risks associated with its operations. The Company may also be unable to maintain insurance to cover these risks at economically feasible premiums or for other reasons. Should such liabilities arise, they could reduce or eliminate future profitability and result in increased costs, have a material adverse effect on the Company’s results and could cause a decline in the value of the securities of the Company.

Competition risk

Significant and increasing competition exists in the mining and mineral exploration industry. The Company faces strong competition from other mining and exploration companies in connection with the acquisition of properties producing, or capable of producing, minerals. Many of these companies are larger, more established, and have greater financial resources, operational experience and technical capabilities than the Company and make it difficult to compete for the acquisition of mineral claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees and other personnel. As a result of this competition, the Company may be unable to acquire additional attractive mining or exploration properties on terms it considers acceptable or at all. Consequently, the Company’s business, results of operation, financial conditions and prospects could be adversely affected.

Regulatory risks

The mining industry in the United States is subject to extensive controls and regulations imposed by various levels of government. All current legislation is a matter of public record and the Company will be unable to predict what additional legislation or amendments may be enacted. Amendments to current laws, regulations and permits governing operations and activities of mining companies, including environmental laws and regulations which are evolving in the United States, or more stringent implementation thereof, could cause delays, and increases in expenditures and costs, and could affect the Company’s ability to expand existing operations or require the Company to abandon or delay the development of its properties.

Conflicts of interest risk

Certain of the Company’s directors and officers do, and may in the future, serve as directors, officers, promoters and members of management of other mineral exploration and development companies and, therefore, it is possible that a conflict may arise between their duties as a director, officer, promoter or member of the Company’s management team and their duties as a director, officer, promoter or member of management of such other companies. The Company’s directors and officers are aware of the laws establishing the fiduciary duties of directors and officers including the requirement that directors act honestly and in good faith with a view to the best interests of the Company and to disclose any interest which they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in a conflict is required under the Business Corporations Act (British Columbia) to disclose their interest.

Environmental risk

All phases of the Company’s operations are subject to extensive environmental regulations. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation, mitigation of impact of activities to wildlife and plant life, and provide for restrictions and prohibitions on spills, releases or emissions of various substances produced in

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

association with certain mining industry activities and operations. They also set forth limitations on the generation, transportation, storage and disposal of hazardous waste. A breach of these regulations may result in the imposition of fines and penalties. In addition, certain types of mining operations require the submission and approval of environmental-related permits and/or environmental impact assessments. 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. The cost of compliance with changes in governmental regulations has a potential to impact the timing of execution of work pans and reduce the viability or profitability of operations. Environmental hazards may exist on the properties in which the Company holds its interests or on properties that will be acquired which are unknown to the Company at present and which have been caused by previous or existing owners or operators of those properties.

Foreign operations risk

The Company currently operates in the United States where there are added risks and uncertainties. Risks of foreign operations include political unrest, labour disputes and unrest, invalidation of governmental orders and permits, corruption, organized crime, theft, war, civil disturbances and terrorist actions, arbitrary changes in law or policies of particular countries (including nationalization of mines), trade disputes, foreign taxation, price controls, delays in obtaining or renewing or the inability to obtain or renew necessary environmental permits, opposition to mining from environmental or other nongovernmental organizations, social perception impacting our social licence to operate, limitations on foreign ownership, limitations on the repatriation of earnings, limitations on mineral exports and increased financing costs. There can be no assurance that changes in the government or laws, or changes in the regulatory environment for mining companies, or for non-domiciled companies, will not be made, that would adversely affect the Company’s business, financial condition, results of operations and prospects.

Community relations risk

The Company’s relationships with the communities in which it operates, and other stakeholders are critical to ensure the future success of the development of its properties. There is an increasing level of public concern relating to the perceived effect of mining activities on the environment and on communities impacted by such activities. Publicity adverse to the Company, its operations or extractive industries generally, could have an adverse effect on the Company and may impact relationships with the communities in which the Company operates and other stakeholders. While the Company is committed to operating in a socially responsible manner, there can be no assurance that its efforts in this respect will mitigate this potential risk. Further, damage to the Company’s reputation can be the result of the perceived or actual occurrence of any number of events, and could include any negative publicity, whether true or not. The increased usage of social media and other web‐based tools used to generate, publish and discuss user‐generated content and to connect with other users has made it increasingly easier for individuals and groups to communicate and share opinions and views in regard to the Company and its activities, whether true or not. While the Company strives to uphold and maintain a positive image and reputation, the Company does not ultimately have control over how it is perceived by others. Reputation loss may lead to increased challenges in developing, maintaining community relations and advancing its projects and decreased investor confidence, all of which may have a material adverse impact on the financial performance and growth of the Company.

Litigation risk

All industries, including the mining industry, may be made subject to legal claims and proceedings, with and without merit. Defence and settlement costs can be substantial, even with respect to claims that have no merit. The Company may also in the future become the subject of a legal claim or proceeding at any time, and without advance notice of the commencement of the proceeding. To the extent the Company becomes subject to any such claim or proceeding, it may materially impact management’s time and the Company’s financial resources to defend, even if it is without merit. As well, due to the inherent uncertainty of the litigation process, the resolution of any particular legal claim or proceeding could have a material adverse effect on the Company’s business, results of operations, financial condition (including its cash position) and prospects.

Climate change risk

The potential physical impacts of climate change on the Company’s exploration projects is highly uncertain and are particular to the geographic circumstances. These may include changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperatures. The Company’s future exploration programs in the United States may require water and a lack of necessary water could disrupt exploration programs and adversely impact future development and mining activities. Climate change is an international concern and as a result poses the risk of changes in government policy including introducing climate change legislation and treaties at all levels of government that could result in increased costs. The trend towards more

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Apollo Silver Corp. (Formerly Apollo Gold & Silver Corp.) – Management Discussion and Analysis

stringent regulations and carbon-pricing mechanisms aimed at reducing the effects of climate change could impact the Company’s decision to pursue future opportunities, or maintain our existing exploration programs, which could have an adverse effect on our business.

Fluctuations in the price of consumables risk

Fluctuations in the prices and availability of consumables used in connection with exploration, development and mining, such as natural gas, diesel, oil, electricity and reagents can significantly impact the operating cost of exploration and mining activities. These fluctuations can be unpredictable, can occur over short periods of time and may have a materially adverse impact on operating costs, the costs of exploration, and the timing and future costs of undeveloped properties.

Foreign currency risk

The Company’s reporting currency is the Canadian dollar. Exploration activities in the USA are expected to be primarily incurred in US dollars, and exploration and administrative activities in Canada are mainly incurred in Canadian dollars. Exchange rate fluctuations in these currencies are beyond the Company’s control and such fluctuations could have an adverse effect on the Company’s exploration and development activities, financial condition, results of operations, business and prospects.

Information technology risk

The Company is reliant on the continuous and uninterrupted operations of its information technology (“IT”) systems. User access and security of all IT systems are critical elements to the operations of the Company. The Company’s operations depend, in part, on how well the Company and its suppliers protect networks, equipment, IT systems and software against damage from a number of threats, including, but not limited to, cable cuts, damage to physical plants, natural disasters, terrorism, fire, power loss, hacking, computer viruses, vandalism and theft. The Company’s operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre‐emptive expenses to mitigate the risks of failures. Any IT failure pertaining to availability, access or system security could result in disruption for personnel and could adversely affect the reputation, operations or financial performance of the Company.

The Company’s IT systems could be compromised by unauthorized parties attempting to extract business sensitive, confidential or personal information, corrupting information or disrupting business processes or by inadvertent or intentional actions by the Company’s employees or vendors. A cyber security incident resulting in a security breach or failure to identify a security threat, could disrupt business and could result in the loss of business sensitive, confidential or personal information or other assets, as well as litigation, regulatory enforcement, violation of privacy and security laws and regulations and remediation costs.

Although to date the Company has not experienced any material losses relating to cyber‐attacks or other information security breaches, there can be no assurance that it will not incur such losses in the future. The Company’s risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of controls, processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority. As cyber threats continue to evolve, the Company may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.

Impact of pandemics risk

All of the Company’s operations are subject to the risk of emerging infectious diseases or the threat of viruses or other contagions or pandemic diseases, including COVID-19. Any outbreak or threat of an outbreak of a virus or other contagions or pandemic disease could have a material adverse effect on the Company’s business, results of operations and financial condition as well as the operations of the Company’s suppliers, contractors, service providers and host communities. The significant ongoing global uncertainty surrounding COVID-19 could also have an adverse impact on the Company’s ability to complete its current and future exploration and development activities, impact the Company’s ability to enter and operate in the United States, and impact its ability to raise financing. A material spread of COVID-19 or other infectious disease could impact the timing and ability of the Company to proceed with planned exploration programs. An outbreak could cause governmental agencies to close for prolonged periods of time causing delays in regulatory permitting processes. Governments may introduce new or modify existing laws, regulations, orders or other measures that could impede the Company’s ability to manage the Company’s operations. The extent to which COVID-19 continues to affect our business will depend on future events which are highly uncertain and cannot be predicted, including the geographic spread, duration of the pandemic, actions taken by government authorities in response to the pandemic, and the impacts on global and regional markets and the Company’s suppliers and service providers.

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