Aton Resources Inc. — Interim / Quarterly Report 2021

Nov 8, 2021

ATON RESOURCES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

INTRODUCTION

This Management's Discussion and Analysis ("MD&A") of financial condition and results of operations of Aton Resources Inc. and its subsidiaries (the "Company") provides an analysis of the Company's results of operations and financial condition for the nine months ended September 30, 2021. This MD&A supplements but does not form part of the annual audited consolidated financial statements for the year ended December 31, 2020, which were prepared in accordance with International Financial Reporting Standards ("IFRS"). Investors should carefully consider the risk factors that have affected, and which in the future are reasonably expected to affect, the Company and its financial position. Please refer to the section entitled "Risk and Uncertainties" in the Company's MD&A for the fiscal year ended December 31, 2020.

All amounts presented in this MD&A are in Canadian dollars unless otherwise indicated. Additional information related to the Company is available on SEDAR at www.sedar.com and on the Company's website www.atonresources.com. This MD&A contains information up to and including November 08, 2021.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this MD&A constitute "forward-looking statements". All statements other than statements of historical fact contained in this MD&A, including, without limitation, those regarding the Company's future financial position and results of operations, strategy, proposed acquisitions, plans, objectives, goals and targets, and any statements preceded by, followed by or that include the words "believe", "expect", "aim", "intend", "plan", "continue", "will", "may", "would", "anticipate", "estimate", "forecast", "predict", "project", "seek", "should" or similar expressions or the negative thereof, are forwardlooking statements. These statements are not historical facts but instead represent only the Company's expectations, estimates and projections regarding future events. These statements are not guarantees of future performance and involve assumptions, risks and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied or forecasted in such forward-looking statements.

Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed herein under the heading "Risks and Uncertainties" and "Risk Factors". Management provides forward-looking statements because it believes they provide useful information to readers when considering their investment objectives and cautions readers that the information may not be appropriate for other purposes. Consequently, all of the forward-looking statements made in this MD&A are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. These forwardlooking statements are made as of the date of this MD&A and the Company assumes no obligation to update or revise them to reflect subsequent information, events or circumstances or otherwise, except as required by law.

The forward-looking statements in this MD&A 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 assumptions regarding gold prices, business and operating strategies, and the Company's ability to operate on a profitable basis.

NOTE TO U.S. INVESTORS CONCERNING ESTIMATES INFERRED RESOURCES

The term "Inferred" Resources is used herein. United States investors are advised that while such a term is recognized and required by Canadian regulations, the United States Securities and Exchange Commission do not recognize them. "Inferred Mineral Resources" have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral.

Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of a Mineral Resource is economically or legally mineable.

Qualified Person

The technical information contained in this Management Discussion and Analysis was prepared by Javier Orduña MSc MCSM DIC SEG(M) MAIG, Exploration Manager for Aton Resources Inc. Mr. Orduña is a qualified person (QP) under National Instrument 43-101 Standards of Disclosure for Mineral Projects.

HIGHLIGHTS FOR PERIOD ENDED SEPTEMBER 30, 2021 AND SUBSEQUENT EVENTS

• The Company appointed Bill Koutsouras, Chairman of the Company as its interim CEO following the retirement of Mark Campbell as CEO of the Company.
• The Company appointed Dr. Sherif Sousa as its Country Manager in Egypt.
• The Company secured bridge loans totalling $3,450,000 from Moonrider, a significant shareholder of the Company, in order to strengthen the Company's capital position and continue with all work required to commence our next drilling program.
• The Company continued discussions with potential strategic investors to evaluate financing alternatives available to the Company.
• The Company completed the purchase of critical capital assets and commenced civil works in preparation for its planned drilling campaigns at Hamama and Rodruin.
• The Company signed a drilling contract with Energold Drilling to carry out a minimum of 4,250 metres of diamond drilling at its Abu Marawat Concession, with a primary focus on the Rodruin and Hamama projects.
• The Company issued 484,785 common shares at a price of $0.24 per share to settle a total of $116,348 in debt owed to directors and employees.
• On August 13, 2021, the Company appointed Stella Chen as the Chief Financial Officer (CFO) of the Company. Ms. Chen works with a number of public and private companies in the resource and technology industries providing accounting and consulting services. Ms. Chen graduated from Simon Fraser University and holds a Bachelor of Arts in Economics degree as well as a diploma from the Accounting Program at the University of British Columbia.
• The Company appointed Tonno Vahk, director of the Company as its interim CEO following the resignation of Bill Koutsouras as interim CEO of the Company.
• Entered into a bridge loan facility (the "Sixth Facility") with Moonrider, a significant shareholder of the Company for $500,000. Pursuant to the Sixth Facility, the Company borrowed $500,000 from Moonrider at an interest rate of 12% per annum. In connection with the Sixth Facility, Moonrider was issued bonus warrants in October 2021 entitling it to acquire 3,125,000 common shares of the Company

at a price of $0.16 per share. The bonus warrants are exercisable for a period of 12 months from issuance.

CORPORATE OVERVIEW

The Company is a Canadian mineral exploration company committed to identifying and advancing gold and base metal projects in the Eastern Desert of Egypt. Since October 5, 2010, the common shares have been listed for trading on the TSX Venture Exchange (the "TSX-V") under the symbol "AAN". Through the Company's wholly owned subsidiary, Aton Mining Inc, the Company holds the Abu Marawat exploration concession, which covers an area of 448 km2 in Egypt.

The Company is actively exploring the Abu Marawat Concession, which contains the Company's two main deposits that are the Company's material projects: the Hamama West gold-silver deposit, which has been the main focus of exploration and drilling since 2012, and the Abu Marawat gold-silver-copper-zinc vein deposit.

Both the Hamama West and Abu Marawat deposits have mineral resource estimates prepared in accordance with National Instrument 43-101 – Standards for Disclosure for Mineral Projects ("NI 43-101"). The historical gold and copper mining district in which the Company operates contains numerous small workings, including ancient small-scale mining at Abu Marawat, Hamama, and numerous other sites in the Concession, and two past-producing modern era gold mines (Semna and Sir Bakis), which were in operation during the early 20th Century. The two main projects are located near excellent regional infrastructure. They are 40 kilometers apart, are within 35 kilometers of a four-lane highway, water pipeline, and high-capacity electricity grid, and are near the major cities of Qena, on the Nile River, and Safaga, on the Red Sea.

The Company commenced drilling at its top priority gold exploration project at Rodruin in 2018, with positive results. Rodruin is located 18 kilometers east of the Hamama West deposit. The Company has not yet determined whether these properties and geological targets contain ore reserves.

MINERAL PROPERTIES

Abu Marawat Concession

Through the Company's wholly owned subsidiary, Aton Mining Inc., the Company holds the Abu Marawat exploration concession in Egypt.

The Abu Marawat Concession Agreement is defined by multiple phases of exploration with a required minimum exploration obligation for each phase of exploration. Phase I has a duration of one year, Phase II-A, is for a duration of two years and Phase II-B has a duration of two years. An additional six months may be applied with the approval of EMRA at the end of the last phase of exploration.

The Abu Marawat Concession has met the minimum financial obligation for all three phases and the Company is required to provide a 2% training fee on the total exploration expenditure for the fiscal year.

For the Abu Marawat Concession, on April 23, 2020 EMRA granted the Company a further extension to the Phase II-B exploration period, which will now expire on March 4, 2023.

During the year ended December 31, 2020, the Company relinquished 25% of the Abu Marawat Concession area, as is required by the existing concession agreement. The areas relinquished are sterile ground and have no impact on the Company's identified exploration targets or financial statements.

Hamama Gold-Silver Project

• a) Hamama is interpreted as a structurally modified gold-silver-zinc bearing, hybrid epithermal-VMS deposit.
• b) Mineralization is found primarily at and stratigraphically below the overturned contact between the stratigraphic footwall consisting of andesitic and felsic volcanic rocks, and the stratigraphic hanging wall consisting of volcanic rocks and volcanogenic sediments (predominantly bedded tuffs and argillites).
• c) Mineralization is primarily hosted in a silica-carbonate-barite rock (SCBR) unit which constitutes the Main Horizon at Hamama, and outcrops over a strike length of approximately 3,000 meters. The Main Horizon is sub-divided into the Western Carbonate, Hamama West, Hamama Central and Hamama East zones.
• d) The Main Zone at Hamama West is capped by a 650-meter-long Gold-Oxide Cap, which extends to an average of 35-40 meters depth. The Gold-Oxide Cap has a surface area of between 30,000sq meters and 40,000sq meters and has been thoroughly trenched at ~50 meter spacing.
• e) Hamama Central is 640 meters long and contains gold-silver, zinc and copper mineralization, as indicated in part by rock chip sampling of the Main Horizon. This returned 6 metres at 0.80 g/t gold, 49 g/t silver, 0.95% copper and 1.6% zinc. Drilling and surface trenching indicates a continuous mineralized sulphide zone, which, where tested so far, is 8-14 m thick. The deepest hole (AHA-020) intersected 8.5 meters of 1.28 g/t gold, 83 g/t silver, 0.24% copper and 6.87% zinc. Surface grab samples from Hamama Central returned assays of up to 15.2 g/t Au, 123 g/t Ag, 0.16 % Cu, and 10.1 % Zn.
• f) Hamama East has a 500-metre-long oxide horizon with extensive ancient workings for copper-zincrich oxide material, which may reflect significant mineralization at depth. Surface grab samples from ancient workings from Hamama East returned assays of up to 1.17 g/t Au, 5.0 g/t Ag, 1.00% Cu, and 31.4% Zn. Recent trenching has indicated the potential development of a zone of surface high grade zinc oxide-gold-silver mineralization at Hamama East.
• g) To date AAN drilled a total of 109 diamond drill holes at Hamama, for a total of 11,827m. Mineralization has been intersected to true depths of up to 200 meters below surface at Hamama West and is open along strike and at depth.
• h) Cube Consulting have completed a maiden mineral resource estimate of the Hamama West deposit. The accompanying NI 43-101 independent technical report was filed during the year ended September 30, 2017. The mineral resource estimate is presented below in Tables 1 and 2.

Classification	Domain	Density	TonnesGradeContained Metal
		(g/cm3)	(t)	AuAg(g/t)(g/t)		AuEq(g/t)	Au(koz.)	Ag(koz.)	AuEq(koz.)
Indicated	FRESH	3.0	3,805,000	0.72	27.6	1.12	88	3,376	137
	TOTAL	3.0	3,805,000	0.72	27.6	1.12	88	3,376	137

Classification	Domain	Density	Tonnes	GradeContained Metal
		(g/cm3)	(t)	Au(g/t)	Ag(g/t)	AuEq(g/t)	Au(koz.)	Ag(koz.)	AuEq(koz.)
Inferred	OXIDE(surface)	2.4	220,000	1.63	19.9	1.92	12	141	14

Table 1: Indicated Mineral Resource by Domain: Above 0.5g/t gold equivalent (AuEq) cut-off

	TOTAL	2.85	8,210,000	0.87	29.7	1.29	230	7,836	341
	FRESH	3.0	5,360,000	0.87	30.4	1.30	157	5,503	235
	OXIDE	2.57	2,630,000	0.80	28.9	1.22	61	2,193	93

Table 2: Inferred Mineral Resource by Domain: Above 0.5g/t gold equivalent (AuEq) cut-off

For additional disclosure regarding the Hamama West deposit, see the Company's press releases as listed for download on the Aton Resources website, www.atonresources.com or filed under the Company's profile on SEDAR at www.sedar.com.

Rodruin Advanced Exploration Project

Rodruin was discovered by the Company's field teams in 2017, and is located 18 kilometers east of the Hamama West deposit. Rodruin was immediately recognised as being a highly prospective gold target and became the main focus of the Company's exploration efforts, leading up to a first phase reverse circulation percussion ("RC") drilling program which was completed in December 2018, with positive results.

Gold mineralization at Rodruin is mainly associated with and located within a carbonate unit, which is extensively gossanized and weathered to depths of up to 70-80m below ground surface. Mineralization in fresh rock is associated with a variably, and sometimes highly sulphidic carbonate rock. The mineralization consists primarily of gold, with subsidiary amounts of silver, zinc, and copper. The Rodruin deposit is also heavily structurally deformed, with the identification of faulting, thrusting, and folding. Gold is also remobilized into higher grade structurally controlled zones of mineralization, which have returned surface grab sample grades of up 321 g/t Au.

An RC drilling programme was completed at Rodruin during the final quarter of 2018, with 50 holes drilled for a total of 4,125m. Most holes were quite shallow, with the maximum hole depth being only 200m. Gold mineralization was intersected in almost every hole, frequently starting from surface (oxide), and also to a downhole depth of up to 172m (sulphide). Selected intersections are tabulated below:

Hole ID		Intersection (m)		Au	Ag	Zn
	From	To	Interval	(g/t)	(g/t)	(%)	Zone
ROP-003	0	56	56	8.20	7.5	0.17	Aladdin's Hill
ROP-017	0	163	163	0.90	7.4	2.54	Aladdin's Hill NE
ROP-029	0	30	30	3.21	13.8	0.47	Spiral Pit Zone
ROP-032	0	40	40	1.30	13.5	0.19	Central Buttress Zone
and	55	70	15	3.95	18.8	0.22
ROP-034	0	36	36	2.15	11.7	0.09	Central Buttress Zone
ROP-050	111	172	61	1.55	8.9	0.86	Aladdin's Hill NE

Table 3: Selected Rodruin RC drilling intersections

Results of operations for the nine months ended September 30, 2021 as compared with 2020

The net loss for the nine months period increased by $1,412,305 to $2,415,050 (2020 – $1,002,745). Individual items explaining this change in net loss are as follows:

• Exploration and evaluation expenditures increased by $475,262 to $1,001,552 (2020 $526,290) due to an increase in expenditures at the Abu Marawat Concession.

• Management and consulting fees increased by $117,705 to $207,396 (2020 $89,688) due to an increase in consulting costs at the corporate level as compared to prior period.

• Finance expense increased by $254,608 to $272,444 (2020 $17,836) as the Company entered into several bridge loans with an interest rate of 12% per annum.

• Accretion expense increased by $811,605 to $857,312 (2020 $45,707) as the Company entered into several bridge loans with an interest rate of 12% per annum.

Cash Flows for the nine months ended September 30, 2021 as compared to 2020

Cash outflows from operating activities increased by $2,589,582 to $2,819,611 (2020 – outflow of $230,029). The Company paid $1,071,422 to settle accounts payable and accrued liabilities.

Cash outflow from investing activities increased by $243,636 to $243,636 (2020 – $Nil). The Company paid $243,636 to purchase property plant and equipment.

Cash inflow from financing activities increased by $3,072,015 to $3,450,000 (2020 –$377,985). The Company received $3,450,000 from bridge loans.

RESULTS OF OPERATIONS

The following table summarizes the last 8 quarters of the Company.

	September 30,	June 30,	March 31,	December 31,
	2021	2021	2021	2020
	(Unaudited)	(Unaudited)	(Unaudited)
Total assets	$1,046,778	$1,659,398	$2,883,097	$79,791
Working capital	(3,978,166)	(2,805,086)	(1,781,406)	(2,328,604)
Shareholders' equity	(3,747,742)	(2,599,727)	(1,760,266)	(2,306,352)
Net loss	(1,148,015)	(955,810)	(311,225)	(351,974)
Net loss per share, basic & diluted	(0.03)	(0.03)	(0.01)	(0.01)
	September 30,	June 30,	March 31,	December 31,
	2020	2020	2020	2019
	(Unaudited)	(Unaudited)	(Unaudited)
Total assets	$273,741	$117,669	$184,445	$159,464
Working capital	(1,981,720)	(1,838,322)	(1,549,228)	(1,208,712)
Shareholders' equity	(1,935,878)	(1,782,950)	(1,482,938)	(1,131,797)
Net loss	(312,929)	(308,209)	(323,274)	(393,261)
Net loss per share, basic & diluted	(0.01)	(0.00)	(0.00)	(0.00)

Results of operations for the three months ended September 30, 2021 as compared with 2020

The net loss for the three months period increased by $845,051 to $1,157,980 (2020 – $336,677). Individual items explaining this change in net loss are as follows:

• Exploration and evaluation expenditures increased by $329,955 to $490,231 (2020 $160,276) due to an increase in expenditures at the Abu Marawat Concession.
• Management and consulting fees increased by $34,587 to $63,650 (2020 $29,063) due to an increase in consulting costs at the corporate level as compared to prior period.
• Finance expense increased by $132,678 to $140,331 (2020 $7,653) as the Company entered into several bridge loans with an interest rate of 12% per annum.

LIQUIDITY AND CAPITAL RESOURCES

The Company, an exploration-stage company, has sustained operating losses during recent fiscal years and currently has negative cash flow. The Company had working capital deficit of $3,978,166 as at September 30, 2021 (December 31, 2020 - $2,328,604).

The Company's operations to date have been financed by issuing common shares and convertible debentures. The continuing operations of the Company are dependent upon its ability to raise adequate financing and to commence profitable operations in the future. The current working capital deficiency position casts significant doubt as to its ability to continue as a going concern. The Company has limited financial resources, limited sources of operating cash flow and no assurance that additional financing will be available for further development of its projects. The Company has been successful in the past in obtaining financing through equity; however, there is no assurance that the Company will succeed in arranging all necessary financing in the future or on terms satisfactory to the Company.

Based on the cash position on hand as at the date of this MD&A and expected cash flow requirements of the Company for the next twelve months, management believes that the Company will require additional funds to meet its present operational commitments and working capital needs.

PROPOSED TRANSACTIONS

There are no unannounced proposed transactions at the date of this report.

OUTSTANDING SHARE DATA

At the date of this report the Company has 34,183,106 issued and outstanding common shares, 1,839,000 outstanding stock options, and 31,157,312 outstanding warrants.

During the year ended December 31, 2020, the Company consolidated its common shares at a ratio of ten pre-consolidation common shares to one post-consolidated common share. The number of shares, warrants and options and earnings per share data presented in these consolidated financial statements have all been adjusted retroactively to reflect the impact of this share consolidation.

TRANSACTIONS WITH RELATED PARTY AND BALANCES

The following entities are classified as related parties due to the following:

Related party	Relationship
Bill Koutsouras	Former Directorand Former Interim CEO
AnthonyClements	Director
David Laing	Director
Tonno Vahk	Directorand Interim CEO
Kouts Capital	Consulting company for Bill Koutsouras
Bennett Liu	CFO
Red Fern Consulting Ltd.	CFO is an employee
Ou Moonrider("Moonrider")	Significant shareholder

a) Key management personnel compensation

The remuneration of directors and management including the CEO and CFO were as follows:

	For the period endedSeptember 30
	2021		2020
Short-term employee benefits –management compensationShort-term employee benefits –directors' fees	$36,00041,653	$	138,75055,000
	$77,653	$	193,750

b) Related party balances and transactions

The balances due to the Company's current directors and officer included in accounts payables and accrued liabilities were $1,083 (December 31, 2020 – $197,953). These amounts are unsecured, non-interest bearing and payable on demand.

During the period ended September 30, 2021:

• a) The Company borrowed an unsecured short-term loan of $50,000 from Moonrider, a significant shareholder of the Company. The principal balance of loan payable bears an interest of 10% per annum.
• b) The Company entered into a bridge loan facility (the "Third Facility") with Moonrider, a significant shareholder of the Company for $400,000. Pursuant to the Third Facility, the Company borrowed $400,000 from Moonrider at an interest rate of 12% per annum. In connection with the Third Facility, Moonrider was issued bonus warrants in February 2021 entitling it to acquire 1,600,000 common shares of the Company at a price of $0.25 per share. The bonus warrants are exercisable for a period of 12 months from issuance.
• c) The Company entered into a bridge loan facility (the "Fourth Facility") with Moonrider, a significant shareholder of the Company for $1,000,000. Pursuant to the Fourth Facility, the Company borrowed $1,000,000 from Moonrider at an interest rate of 12% per annum. In connection with the Fourth Facility, Moonrider was issued bonus warrants in March 2021 entitling it to acquire 4,255,319 common shares of the Company at a price of $0.235 per share. The bonus warrants are exercisable for a period of 12 months from issuance.
• d) Entered into a bridge loan facility (the "Fifth Facility") with Moonrider, a significant shareholder of the Company for $2,000,000. Pursuant to the Fifth Facility, the Company borrowed $2,000,000 from Moonrider at an interest rate of 12% per annum. In connection with the Fifth Facility, Moonrider was issued bonus warrants in March 2021 entitling it to acquire 8,510,638 common shares of the Company at a price of $0.235 per share. The bonus warrants are exercisable for a period of 12 months from issuance.

During the year ended December 31, 2020:

• a) The Company borrowed an unsecured short-term loan of US$40,000 ($53,486) from Moonrider. The principal balance of loan payable bears an interest of 3% per annum. As at December 31, 2020, the Company accrued interest expense of $519.
• b) The Company borrowed an additional $77,000 from its Second Facility. In connection with the Second Facility, Moonrider was issued bonus warrants entitling it to acquire 154,000 common

shares at a price of $0.50 per share. These bonus warrants had a fair value of $8,198 using riskfree interest rate of 0.26%, expected life of 1 year and volatility of 85.18%, which is accreted over 12 months. The bonus warrants are exercisable for a period of 12 months from issuance.

c) The Company borrowed an additional $141,000 from its Second Facility. In connection with the Second Facility, Moonrider was issued bonus warrants entitling it to acquire 282,000 common shares of the Company at a price of $0.50 per share. These bonus warrants had a fair value of $30,465 using risk-free interest rate of 1.30%, expected life of 1 year and volatility of 87.27%, which is accreted over 12 months. The bonus warrants are exercisable for a period of 12 months from issuance.

COMMITMENTS AND CONTINGENCIES

As at the date of this MD&A, the Company has no undisclosed commitments or contingencies.

A former director and CEO of the Company commenced litigation against the Company alleging wrongful dismissal and claiming damages of US$500,000 for severance and unpaid wages of $236,798 plus interest and costs related. The Company is defending the cases and believes they are without merit. No liability other than unpaid fees for services amounting to $253,386 has been recorded in relation to these legal proceedings.

Former employees of the Company commenced litigation against the Company in Egypt alleging wrongful dismissal and claiming damages up to $71,901 and a former vender of the Company claiming fees and compensation of US$14,596. During the year ended December 31, 2019, the Company won its case but then had this overturned by the appellate court. Aton has filed an appeal in the Court of Cassation to overturn this appeal ruling. However, as the appellate court judgment is enforceable while it is adjudicated by the Court of Cassation, the Company recorded a legal provision of $71,901 for contingent lawsuit expense.

In the ordinary course of business, the Company is from time to time involved in legal proceedings and litigation. Various legal claims were brought against the Company during the year. Unless recognized as a provision, management considers these claims to be unjustified and the probability that they will require settlement at the Company's expense to be remote.

The Company did not accrue any loss contingencies in this respect as of September 30, 2021, as the Company did not consider an unfavourable outcome in any material respects in these legal proceedings and litigations to be probable.

FINANCIAL INSTRUMENTS

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2: Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

Level 3: Inputs that are not based on observable market data.

The fair value of the Company's receivables and accounts payable and accrued liabilities, and loan payable approximate carrying value, which is the amount recorded on the consolidated statement of financial position. Cash under the fair value hierarchy is based on level one quoted prices in active markets for identical assets or liabilities including legal provision and loan payable.

The Company is exposed to varying degrees to a variety of financial instrument related risks:

Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations.

The Company's cash (excluding nominal petty cash) are all held at large Canadian or International financial institutions in interest bearing accounts. The Company has no investment in asset-backed commercial paper.

The Company's receivables consist mainly of goods and services tax receivables due from the government of Canada. As at September 30, 2021, the Company's exposure to credit risk is minimal. The advances receivable were received during the September 30, 2021 and therefore not subject to credit risk.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.

Accounts payable and accrued liabilities, legal provision and loan payable are due within one year. The Company's approach to managing liquidity risk is to try to have sufficient liquidity to meet liabilities when due. To maintain liquidity, the Company is currently investigating financing opportunities. While the Company has been successful in obtaining its required funding in the past, there is no assurance that future financings will be available.

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.

a) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. A 1% change in interest rates on cash deposits would have a nominal effect on net loss.

b) Foreign currency risk

The Company is exposed to foreign currency risk on fluctuations related to cash, accounts receivable and accounts payable and accrued liabilities that are denominated in US Dollars (USD).

c) Price risk

The Company is exposed to price risk with respect to commodity and 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. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company closely monitors commodity prices of gold, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.

Sensitivity Analysis

Based on management's knowledge and experience of the financial markets, the Company believes the following movements are "reasonably possible".

The Company has cash and accounts payable and accrued liabilities denominated in USD and the Egyptian Pound (EGP) and are exposed to risk from changes in the USD and EGP. A 10% depreciation or appreciation of the CAD against the USD and EGP would result in an increase/decrease of $22,620 and $20,323, respectively.

Capital management

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In the management of capital, the Company considers components of shareholders' deficiency. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue debt, acquire or dispose of assets or adjust the amount of cash and investments.

In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. The Company currently is not subject to externally imposed capital requirements. There were no changes in the Company's approach to capital management during the period.

OUTLOOK

On April 28, 2020, Aton was granted a three year extension to the final period of the current Abu Marawat exploration lease, until March 4, 2023, while retaining its right to declare a commercial discovery and obtain an exploitation lease in accordance with the terms of its existing concession agreement.

The Company plans to continue its regional exploration program over the highly prospective Abu Marawat Concession, with a primary focus on the Rodruin prospect, while also taking the additional time provided in the extension as an opportunity to consider moving to the new terms and conditions to the mining law in Egypt which are designed to make investment in the mining sector much more attractive to investors.

OFF-BALANCE SHEET ARRANGEMENTS

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

APPROVAL

The Board of Directors of the Company has approved the disclosure contained in this MD&A.

ADDITIONAL INFORMATION

Additional information relating to the Company can be found on SEDAR at www.sedar.com.