Argenta Silver Corp. — Management Reports 2022

Apr 26, 2022

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" or "Butte"), 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 April 26, 2022.

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. 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 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 March 2022, the Company announced a non-brokered private placement of 1,500,000 units (each, a "Unit") at a price of $0.07 per Unit for gross proceeds of $105,000. Each Unit consists of one common share of the Company, and one common share purchase warrant (each, a "Warrant"). Each whole Warrant entitles the holder to acquire an additional common share of the Company at a price of $0.10 per share for 1 year from the date of the closing of the offering. The private placement is subject to regulatory approval.

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. In August 2021, Joanna Vastardis resigned as CFO and Corporate Secretary and the Company appointed Lindsey Le Ho as CFO and Corporate Secretary.

Other Events

In February 2021, the Company announced a business combination transaction (the "Transaction") with Genesis Group Limited ("Genesis Mining Group"). In connection with the Transaction, the Company announced a non-brokered private placement (the "Private Placement") of 55,000,000 subscription receipts ("Subscription Receipts") at a price of $1.00 per Subscription Receipt for gross proceeds of $55,000,000. Each Subscription Receipt was to convert into one common share of the Company immediately prior to the completion of the Transaction. The Company learned of circumstances which lead it to believe that Genesis Mining Group had breached its agreement with the Company entered in February 2021. In March 2021 and as at the date of this report, the Transaction was terminated and all funds received from subscribers to the Private Placement were returned to the subscribers.

Overview of Prior Oil and Gas Operations

The Company operated one well at Chigwell 04-35-042-26 W4M, which was 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 of 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 $73,944 for the expected reclamation costs is included in the Company's statement of financial position as at December 31, 2021 (December 31, 2020: $80,870). The reclamation process is expected to be completed within one to two years.

Overall Performance and Results of Operations

Total assets decreased to $149,628 at December 31, 2021, from $349,130 at December 31, 2020. The decrease in assets was primarily due to cash of $40,520 as at December 31, 2021, compared to $246,299 as at December 31, 2020. The decrease in cash during the year ended December 31, 2021, was the result of $405,779 used in operating activities, partially offset by proceeds of $200,000 from the exercise of share options in the year.

Years ended December 31, 2021 and 2020

During the year ended December 31, 2021, the Company recorded a net loss and comprehensive loss of $361,785, compared to a loss of $935,068 during the year ended December 31, 2020. Net loss and comprehensive loss for the year ended December 31, 2021, decreased by $573,283 primarily due to:

• A decrease of $43,162 in regulatory and transfer agent. The decrease was primarily due to a refund received in the current year for filing fees incurred in the prior year related to stock option plan filing and the terminated Transaction.
• A decrease of $798,670 in share-based compensation. Share-based compensation in the prior 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.
• A decrease of $57,033 in finance expense. Prior year's finance expense included interest related to the convertible debenture which was settled in October 2020.

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

An increase of $85,000 in advisory and consulting. The increase was due to corporate advisory services rendered in the current period.

• An increase of $186,771 in professional fees. The increase was due to increased legal expenses incurred in the current year related to the terminated Transaction and Private Placement. The increase was also due to audit expenses recorded in the current year that related to the prior year.
• A decrease of $56,827 in gain on write-off of liabilities. During the prior year, the Company negotiated with a third party law firm to write down amounts owed to this law firm for past services.

Three months ended December 31, 2021 and 2020

During the three months ended December 31, 2021, the Company recorded a net loss and comprehensive loss of $38,866, compared to a loss of $908,301 during the three months ended December 31, 2020. Net loss and comprehensive loss for the three months ended December 31, 2021, decreased by $869,435 primarily due to:

• A decrease of $28,643 in professional fees. The decrease was due to minimal transactions in the current period.
• A decrease of $30,613 in regulatory and transfer agent. The decrease was due to minimal transactions in the current period.
• A decrease of $798,670 in share-based compensation. Share-based compensation in the prior 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.

Liquidity and Capital Resources

As at December 31, 2021, the Company had working capital of $54,375 (December 31, 2020: $216,160).

Outstanding Share Data

Selected Annual Information

Presently, the Company does not generate sufficient cash flows from its operations, and has no active operations as ofDecember 31, 2021.Consequently, the new board of directors and management have been evaluating potentialopportunities, including those outside of the oil and gas industry.
In order to fund future operations or acquisitions, the Company will need to raise additional funds by way of equity or debt.There is no assurance that the Company will be able to raise such funds on terms acceptable to it. These factors indicatethe existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a goingconcern.
The Company has no bank debt or banking credit facilities in place.
Outstanding Share Data
As at December 31, 2021 and the date of this report, there were 319,384,202 common shares issued and outstandingand 9,000,000 share options outstanding and exercisable.
Selected Annual Information
	Year endedDecember 31,		Year endedDecember 31,		Year endedDecember 31,
	2021		2020		2019
Total assets	$149,628	$	349,130	$	116,019
Loss for the year	$(361,785)	$	(935,068)	$	(171,384)
Basic and diluted loss per share	$(0.00)	$	(0.00)	$	(0.00)
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Butte Energy Inc.

Summary of Quarterly Results

Summary of Quarterly ResultsThe following is a summary of quarterly financial information prepared in accordance with IFRS:
	Q4	Q3	Q2	Q1
Revenue	$2021-	$2021-	$2021-	$2021-
Net loss and comprehensive lossBasic and diluted loss per share	(38,866)(0.00)	(16,647)(0.00)	(29,667)(0.00)	(276,605)(0.00)
	Q4	Q3	Q2	Q1
	2020	2020	2020	2020
RevenueNet income (loss) and comprehensiveincome (loss)	$-(908,301)	$-30,859	$-(37,759)	$-(19,867)

Q3 2020 included a gain on write-off of liabilities of $66,907. Q4 2020 included share-based compensation of $798,670. Q1 2021 included increased legal fees and regulatory expenses related to the terminated Transaction and Private Placement. Q2 2021 included legal credits received related to the terminated Transaction and Private Placement in Q1 2021. Q3 2021 included filing fees refunds received related to the stock option plan and terminated Transaction in Q1 2021.

Related Party Transactions

a) Compensation of key management personnel

Key management personnel are those persons who 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.

There was no compensation to key management personnel during the year ended December 31, 2021.

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

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 and accrued interest.

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

	Promissory note
Balance, December 31, 2019	$-
Proceeds received from issue of demand promissory note	55,000
Finance expense	2,640
Settlement	(57,640)
Balance, December 31, 2020 and 2021	$-

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:

Convertible note
$326,730
54,393
(381,123)
$-

d) Advance from a related party

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

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 would 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 is 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 is 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.

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. Their carrying values approximate fair value due to the short-term nature of these instruments. Cash is 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.

Liquidity Risk

The Company's cash is invested in bank accounts which are available on demand. As at December 31, 2021, the Company had working capital of $54,375 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 constantly seeking opportunities in the natural resource industry and in new industries.

Additional information relating to the Company is available on SEDAR at www.sedar.com.