Argenta Silver Corp. — Management Reports 2021

Mar 24, 2021

Butte Energy Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations As at and for the years ended December 31, 2020 and 2019

Management’s Discussion and Analysis

The following discussion is management’s assessment and analysis of the results and financial condition of Butte Energy Inc. (the “Company”), and should be read in conjunction with the accompanying audited financial statements and related notes. The preparation of financial data is in accordance with International Financial Reporting Standards (“IFRS”) and all figures are reported in Canadian dollars unless otherwise indicated.

The effective date of this report is March 23, 2021.

Caution Regarding Forward Looking Information

Certain information included in this discussion may constitute forward looking statements. Forward looking statements are based on current expectations and entail various risks and uncertainties. These risks and uncertainties could cause or contribute to actual results that are materially different from those expressed or implied. The Company currently has no active operations and is evaluating opportunities, including those outside of the oil and gas industry. See Go-Public Transaction note below. The use of any of the words “target”, “plans”, "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward-looking statements. Such forward-looking information, including but not limited to statements about completion of the Transaction, share consolidation, and Private Placement, involve known and unknown risks, uncertainties and other factors which may cause the actual results of the Company and its operations to be materially different from estimated costs or results expressed or implied by such forward-looking statements. Forward looking information is based on management’s expectations regarding future growth, results of operation, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), environmental matters, business prospects and opportunities. Forward looking information involves significant known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated. Although the Company has attempted to take into account important factors that could cause actual costs or results to differ materially, there may be other factors that cause costs of the Company's results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. See the Risks and Uncertainties section of this MD&A for a further description of these risks. The forward-looking information included in this MD&A is expressly qualified in its entirety by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking information.

Description of Business

The Company is incorporated under the Business Corporations Act (British Columbia). The Company’s head office and principal and registered address is 3123-595 Burrard Street, Vancouver, British Columbia, Canada, V7X 1J1. The Company lists its common shares on the NEX board of the TSX Venture Exchange under the symbol BEN.H.

The Company had been engaged in the acquisition, exploration and development of petroleum and natural gas reserves in Western Canada. In 2017 the Company sold its last remaining asset and has no active operations other than the completion of reclamation activities on previously abandoned wells. In October 2020, there was a change of control of the Company with a new board and management team appointed. The board of directors have been evaluating potential opportunities, including those outside of the oil and gas industry.

In October 2020, the Company appointed Geir Liland, Jeffrey Harder and Travis Musgrave to the Company's board of directors. Geir Liland was appointed as the CEO and Joanna Vastardis was appointed as the CFO and Corporate Secretary. Jason Rickert, Steven Parker and Lee Bowles have resigned from the board.

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Butte Energy Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations As at and for the years ended December 31, 2020 and 2019

Go-public Transaction

In February 2021, the Company entered into an arms-length, legally binding letter of intent dated February 12, 2021 with Genesis Group Limited (“Genesis Mining Group”) to acquire (the “Transaction”):

• (a) all of Genesis Mining Group’s intellectual property relating to cryptocurrency mining operations, including its proprietary (i) datacentre construction, layout, and cooling system known as “AC/DC”; (ii) datacentre monitoring and optimization software platform known as “Hexa”; (iii) blockchain data analysis tool known as "Block Explorer"; and (iv) cryptocurrency market forecasting software platform known as “Janus”; and

• (b) all rights to Genesis Mining Group’s more than 200MW pipeline of contracted cryptocurrency mining data centre construction and expansion projects in Europe and North America.

The Company will constitute Genesis Mining Group’s core business going forward. Concurrent with closing of the Transaction (“Closing”), Genesis Mining Group (or its affiliates and principals) will be issued such number of shares of the Company as will constitute approximately 80% of the issued and outstanding common shares following completion of the equity financing and consolidation (described below). Closing is subject to receipt of TSXV approval, completion of definitive documentation, any requisite shareholder approvals, and completion of the consolidation and equity financing.

Share consolidation

On or before Closing, a consolidation of the Company’s issued and outstanding share capital on the basis of one new common share for every four outstanding common shares will be completed.

Concurrent financing

In connection with the Transaction, the Company will complete a non-brokered private placement (the “Private Placement”) of 55,000,000 subscription receipts (“Subscription Receipts”) at a price of C$1.00 per Subscription Receipt for gross proceeds of C$55,000,000. Each Subscription Receipt will convert into one post-consolidation common share of the Company immediately prior to the completion of the Transaction. Proceeds from the Private Placement will be used to commence initial deployments of capital into Genesis Mining Technologies’ existing pipeline and for general working capital. A finders’ fee of up to 6% of gross proceeds of the Private Placement will be paid in cash to certain finders at closing of the Transaction.

Management and Board change

The Company will appoint an experienced management team and board of directors on Closing consisting of principals from the Company and Genesis Mining Group. Marco Streng will be appointed as Chairman. Tillmann Korb will be appointed as the Company’s Chief Executive Officer.

Update to Previously Announced Proposed Transaction

On November 20, 2018, the Company announced it had entered into an agreement to acquire all of the issued and outstanding equity of Pura Valley, LLC and Pura Extractions LLC (the “Purchased Companies”). The acquisition of the Purchased Companies was being done in conjunction with a 10:1 consolidation of Butte's share capital, a change of Butte's name, a financing, and changes to Butte's management (collectively, the "Proposed Transaction").

The original agreement had been subsequently been amended to extend the deadline of negotiation of a definitive agreement and related documentation respecting the Proposed Transaction to June 30, 2019, which has now expired. Although the parties had not formalized a further extension to the completion of the definitive agreement, the parties continued negotiations of finalizing a definitive agreement.

In August 2020, the Company decided that since it has been over a year since the last definitive agreement deadline passed without the parties being able to complete the closing of the announced transaction, it is in the best interests of the

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Butte Energy Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations As at and for the years ended December 31, 2020 and 2019

Company to investigate and pursue other business opportunities. The Company notified Mr. Lasser that it now considers the Proposed Transaction to be terminated in accordance with its terms.

Overview of Prior Oil and Gas Operations

The Company operated one well at Chigwell 04-35-042-26 W4M, which had been shut-in since February 1, 2015. The well was shut-in due to AER guidelines relating to overproduction of non-native gas (CO2). In 2015, the Company actively started to sell the Chigwell property. The Company placed the well at Chigwell 04-35-042-26 W4M in production in February 2017 before shutting it down again at the end of March 2017. On August 15, 2017, the Company announced the completion of the sale of the Chigwell properties, which constituted the final disposition of the Company’s remaining asset. Proceeds of the sale were used for the payments of the liabilities and the Company, and the then board of directors actively sought a transaction(s) whereby the Company could continue as a going concern.

The Company still has obligations regarding the finalization of the reclamation of previously abandoned well sites. A provision of $80,870 for the expected reclamation costs is included in the Company’s statement of financial position as of December 31, 2020. The reclamation process is expected to be completed within one to three years.

Overall Performance and Results of Operations

Total assets increased to $349,130 at December 31, 2020, from $116,019 at December 31, 2019. The increase in assets was primarily due to cash of $246,299 as at December 31, 2020, compared to $14,013 as at December 31, 2019. The increase in cash during the year ended December 31, 2020, was the result of proceeds of $410,096 from exercise of warrants and $55,000 received from promissory note with Stone’s Throw, partially offset by $174,261 used in operating activities and $57,640 repayment of promissory note plus interest.

Three months ended December 31, 2020 and 2019

During the three months ended December 31, 2020, the Company recorded a net loss and comprehensive loss of $908,301, compared to a loss of $47,827 during the three months ended December 31, 2019. Net loss and comprehensive loss for the three months ended December 31, 2020, increased by $860,474 primarily due to:

• An increase of $22,500 in advisory and consulting. The increase was due to corporate administration services rendered in the current period.

• An increase of $24,204 in professional fees. The increase was due to increased legal expenses incurred in the the current period for general matters.

• An increase of $33,088 in regulatory and transfer agent. The increase was due to increased filing fees incurred in the current period related to the Company’s stock option plan.

• An increase of $798,670 in share-based compensation. Share-based compensation in the current period was due to 11,000,000 share options granted to directors, officers, consultants and charitable organizations at a price of $0.10 per share, exercisable until October 8, 2030.

The increase of net loss and comprehensive loss was partially offset by:

• A decrease of $14,274 in exploration expenses as there were no exploration expenses incurred in the current period.

• A decrease of $15,171 in finance expense. Prior period’s finance expense included interest related to its promissory note and convertible debenture which were settled in the current period.

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Butte Energy Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations As at and for the years ended December 31, 2020 and 2019

Years ended December 31, 2020 and 2019

During the year ended December 31, 2020, the Company recorded a net loss and comprehensive loss of $935,068, compared to a loss of $171,384 during the year ended December 31, 2019. Net loss and comprehensive loss for the year ended December 31, 2020, increased by $763,684 primarily due to:

• An increase of $30,000 in advisory and consulting. The increase was due to corporate administration services rendered in the current year.

• An increase of $31,688 in regulatory and transfer agent. The increase was due to increased filing fees incurred in the current year related to the Company’s stock option plan.

• An increase of $798,670 in share-based compensation. Share-based compensation in the current year was due to 11,000,000 share options granted to directors, officers, consultants and charitable organizations at a price of $0.10 per share, exercisable until October 8, 2030.

The increase of net loss and comprehensive loss was partially offset by:

• A decrease of $14,248 in exploration expenses as there were minimal exploration expenses incurred in the current year.

• A decrease of $27,053 in professional fees due to legal fees incurred on the proposed transaction in 2019.

• An increase of $56,827 in gain on write-off of liabilities. During the current year, the Company negotiated with a third party law firm to write-off $56,827 in amounts payable owed to this law firm for past services.

Liquidity and Capital Resources

As at December 31, 2020, the Company had working capital of $216,160, an increase of $328,091 from the $111,931 deficiency at December 31, 2019.

During the year ended December 31, 2020, 7,158,900 warrants were exercised for proceeds of $410,096. Subsequent to the warrant exercise and in October 2020, the Company repaid $57,640 of promissory notes and $32,000 of advances owing to Stone’s Throw.

Presently, the Company does not generate sufficient cash flows from its operations, and has no active operations as of December 31, 2020. Consequently, the new board of directors and management have been evaluating potential opportunities, and working towards closing the Transaction as noted above.

In order to fund future operations or acquisitions, the Company will need to raise additional funds by way of equity or debt. The Company is working towards closing the Private Placement in connection with the Transaction. However, there is no assurance that the Company will be able to raise such funds on terms acceptable to it. These factors indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.

The Company has no bank debt or banking credit facilities in place.

Outstanding Share Data

As at December 31, 2020 and the date of this report, there were 317,384,202 common shares issued and outstanding and 11,000,000 share options outstanding.

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Butte Energy Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations As at and for the years ended December 31, 2020 and 2019

Selected Annual Information

	Year ended	Year ended	Year ended
	December 31,	December 31,	December 31,
	2020	2019	2018
Total assets	$ 349,130	$116,019	$127,046
Loss for theyear	$(935,068)	$ (171,384)	$ (189,993)
Basic and diluted lossper share	$(0.00)	$ (0.00)	$ (0.00)

Summary of Quarterly Results

The following is a summary of quarterly financial information prepared in accordance with IFRS:

		Q4		Q3		Q2	Q1
		2020		2020		2020	2020
Revenue	$	-	$	-	$	- $ -
Net income (loss) and comprehensive		(908,301)		30,859		(37,759)	(19,867)
income (loss)
Basic and diluted lossper share		(0.00)		0.00		(0.00)	(0.00)
		Q4		Q3		Q2	Q1
		2019		2019		2019	2019
Revenue	$	-	$	-	$	- $ -
Net loss and comprehensive loss		(47,827)		(18,418)		(32,977)	(72,162)
Basic and diluted loss per share		(0.00)		(0.00)		(0.00)	(0.00)

Quarters subsequent to 2017 reflect a reduction in consulting and other general and administrative costs resulting from the downsizing of the Company’s operations and management’s effort to reduce costs. In addition, Q4 2019 reflects an increase in the provision for the estimated reclamation of previously abandoned wells. Q3 2020 includes a gain on writeoff of liabilities of $66,907. Q4 2020 includes share-based compensation of $798,670.

Related Party Transactions

a) Compensation of key management personnel

Key management personnel are those persons have authority and responsibility for planning, directing, and controlling the activities of the Company, directly or indirectly. Senior management personnel include the Company’s executive officers and members of the Board of Directors.

During the year ended December 31, 2020, key management personnel compensation included share-based compensation of $145,213 (2019: $nil).

b) Demand promissory note due to a related party

On May 7, 2020, the Company borrowed the principal amount of $55,000 from a former majority shareholder, Stone’s Throw Capital Inc. (“Stone’s Throw”), which bore interest at 12% per annum and was due on demand. Interest expense was included in finance expense in the statements of net loss and comprehensive loss. In October 2020, the Company repaid $57,640 of promissory notes.

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Butte Energy Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations As at and for the years ended December 31, 2020 and 2019

The promissory note is presented in the financial statements as follows:

		2020		2019
Balance, Janaury 1	$	-	$	-
Proceeds received from issue of demand promissory note		55,000		-
Finance expense		2,640		-
Settlement		(57,640)		-
Balance,December 31	$	-	$	-

c) Convertible loan due to a related party

On January 3, 2018, the Company borrowed the principal amount of $300,000 from Stone’s Throw, which bore interest at 10% per annum and was repayable on the date that is 12 months from the date of issuance. In January 2019, the term of the convertible loan was extended to January 4, 2021 from January 3, 2019.

In October 2020, the debt owing on the principal amount and accrued interest was assumed by a third party and settled by the Company.

On October 8, 2020, the Company issued 6,000,000 units of the Company at $0.05 per unit, with each unit consisting of one common share and one common share purchase warrant, exercisable at a price of $0.05 until October 8, 2021 to settle $300,000 principal debt. The Company also issued 1,158,900 units of the Company at $0.07 per unit, with each unit consisting of one common share and one common share purchase warrant, exercisable at a price of $0.095 until October 8, 2021 to settle $81,123 of accrued interest.

The convertible loan was classified as debt with the residual value allocated to shareholders’ equity. The initial fair value of the liability portion of the convertible loan was determined using a market interest rate of 13% for an equivalent non-convertible loan at the issue date. The liability is subsequently recognized on an amortized cost basis until extinguished on conversion or maturity of the convertible loan. The remainder of the proceeds is allocated to the conversion option and recognized in shareholders’ equity and not subsequently re-measured. At conversion, during the year ended December 31, 2020, $92,085 of equity portion of convertible loan was reclassified to share capital.

Interest expense was calculated by applying the effective interest rate of 13% to the liability component and was included in finance expense in the statements of operations and comprehensive loss.

The convertible loan is presented in the financial statements as follows:

		2020		2019
Balance, Janaury 1	$	326,730	$	266,046
Finance expense		54,393		60,684
Conversion to common shares		(381,123)		-
Balance,December 31	$	-	$	326,730

d) Advance due to a related party

On September 11, 2020, Stone’s Throw advanced $32,000 to the Company. This loan is non-interest bearing and payable on demand. In October 2020, the Company repaid $32,000 of advances.

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Butte Energy Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations As at and for the years ended December 31, 2020 and 2019

Risks and Uncertainties

The Company was engaged in the acquisition and exploration of oil and gas projects, an inherently risky business, and there was no assurance that economically recoverable resources will ever be discovered and subsequently put into production. Most exploration projects do not result in the discovery of economically recoverable resources.

Exploration activities require large amounts of capital. There was a risk that during the current difficult economic situation the Company will not be able to raise sufficient funds to finance its projects to a successful development and production stage. While the Company’s management and technical team carefully evaluated all potential projects prior to committing the Company’s participation and funds, there was a high degree of risk that the Company’s exploration efforts will not result in discovering economically recoverable resources.

The Company depended on the business and technical expertise of its management team and there is little possibility that this dependence will decrease in the near term.

The Company is currently working on closing the announced Transaction. There is no assurance that the Company will be able to complete the announced Private Placement, and complete the Transaction.

Covid-19

To the date of this report, the spread of COVID-19 has severely impacted many local economies around the globe. In many countries, including Canada, businesses are being forced to cease or limit operations for long or indefinite periods of time. Measures taken to contain the spread of the virus, including travel bans, quarantines, social distancing, and closures of non-essential services have triggered significant disruptions to businesses worldwide, resulting in an economic slowdown. Global stock markets have also experienced great volatility. Governments and central banks have responded with monetary and fiscal interventions to stabilize economic conditions. As at the date of this report, the Company has not been significantly impacted by the spread of COVID-19.

The duration and impact of the COVID-19 pandemic, as well as the effectiveness of government and central bank responses, remains unclear at this time. It is not possible to reliably estimate the duration and severity of these consequences, as well as their impact on the financial position and results of the Company for future periods.

FINANCIAL INSTRUMENTS

Financial Risk Management and Fair Value Measurement

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s financial instruments consist of cash, amounts receivable, reclamation deposits and amounts payable and accrued liabilities, and convertible loans. Their carrying values approximate fair value due to the short-term nature of these instruments. There are no financial instruments carried at fair value.

Financial Instrument Risk Exposure

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board approves and monitors the risk management processes.

Credit Risk

Credit risk arises from the potential for non-performance by counterparties of contractual financial obligations. The Company is exposed to credit risk on cash. The Company reduces its credit risk on cash by maintaining its bank account with a large international financial institution. The maximum exposure to credit risk is equal to the carrying value of its cash.

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Butte Energy Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations As at and for the years ended December 31, 2020 and 2019

Liquidity Risk

The Company’s cash is invested in bank accounts which are available on demand. As at December 31, 2020, the Company had working capital of $216,160 and requires additional funding to continue operations for the next twelve months.

Market Risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign currency and price risk.

• a) Interest Rate Risk

The Company is nominally exposed to interest rate risk. The Company’s cash earns interest at variable rates. Interest rate exposure is considered to be insignificant.

b) Foreign Currency Risk

The Company is nominally exposed to material currency risk.

• c) Price Risk

The Company is exposed to price risk with respect to equity prices. Equity price risk is defined as the potential adverse impact on the Company’s earnings due to movements in individual equity prices or general movements in the level of the stock market. The Company closely monitors individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company.

Management’s Report on Internal Control over Financial Reporting

In connection with National Instrument (“NI”) 52-109 (Certification of Disclosure in Issuer’s Annual and Interim Filings) adopted in December 2008 by each of the securities commissions across Canada, the Chief Executive Officer and Chief Financial Officer of the Company will file a Venture Issuer Basic Certificate with respect to the financial information contained in the audited annual financial statements and respective accompanying management’s discussion and analysis.

The Venture Issuer Basic Certification does not include representations relating to the establishment and maintenance of disclosure controls and procedures and internal control over financial reporting, as defined in NI 52-109.

Outlook

The Company is working towards closing the Transaction as noted above. Additional information relating to the Company is available on SEDAR at www.sedar.com.

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