Avanti Helium Corp. — Management Reports 2023

Apr 28, 2023

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Management Discussion & Analysis Years Ending December 31, 2022 & 2021

Avanti Helium Corp

400, 750 11 ST SW Calgary, AB Canada T3M 1Y1

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MANAGEMENT’S RESPONSIBILITY

Management has prepared this Management’s Discussion and Analysis (“MD&A”). The MD&A is based upon Avanti Helium Corp.’s (formerly Avanti Energy Inc., “Avanti” or “AVN” or “the Company”) financial results prepared in accordance with International Financial Reporting Standard (“IFRS”). The MD&A primarily compares the audited consolidated financial results for the years ended, and fourth quarters ended December 31, 2022 and 2021. Management has established and maintains an accounting and reporting system supported by internal controls designed to safeguard assets from loss or unauthorized use and ensure the accuracy of the Company’s IFRS financial records (also see the section titled “Controls and Procedures”). The financial information presented throughout this MD&A should be read in conjunction with the audited consolidated financial statements and related notes for the years ended December 31, 2022 and 2021.

Unless otherwise indicated, all amounts shown below are in Canadian dollars. Additional information regarding our Company is available on SEDAR, www.sedar.com. Such additional information is not incorporated herein unless otherwise specified and should not be deemed to be made part of this MD&A.

All statements in this report that do not directly and exclusively relate to historical facts constitute forwardlooking statements. These statements represent the Company’s intentions, plans, expectations and beliefs, and are subject to risks, uncertainties, and other factors of which many are beyond the control of the Company. These factors could cause actual results to differ materially from the Company’s expectations. The Company assumes no obligation to update or revise any forward-looking statements, as a result of new information, future events or otherwise.

NON-IFRS MEASURES

The Company uses IFRS, additional and non-IFRS (or non-generally accepted accounting principles or non-GAAP) measures to make strategic decisions, to set targets and use in operating activities, and as such, believes that the additional and non-IFRS measures provide useful supplemental information to investors. “Working capital,” is a measure used by the Company that may not have a standard meaning prescribed by IFRS and may not be comparable to similar measures used by other companies. Working capital is calculated by subtracting current liabilities from current assets. Working capital is a non-IFRS measure with no comparable IFRS measure.

Additional and non-IFRS measures are also viewed as key information by the chief decision maker, the Chief Executive Officer, who regularly reviews such measures in making strategic, expense, and capital investment decisions.

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OVERVIEW OF BUSINESS

Avanti is focused on the exploration, acquisition, and development of helium across western Canada and the United States. The Company anticipates moving towards production and sale of helium towards the end of fourth quarter 2023.

Avanti operates with one reportable segment that covers all aspects of the Company’s business.

Avanti considers the basis on which it is organized, including the current economic characteristics (i.e., the nature of the product, government and non-governmental regulatory bodies, potential types of customers, operating segments served within the industry and similarity of segments with other helium companies, quantitative and qualitative thresholds, etc.) and geographic areas, in identifying its reportable segment. The operating segment of the Company is defined as components of the Company for which separate financial information is available and is evaluated regularly by the chief operating decision-maker in allocating resources and assessing performance. The chief operating decision-maker of the Company is the Chief Executive Officer.

Within this MD&A, however, Avanti provides additional asset level information such as expenditures land area or projects and geography as it believes this additional supplemental information is helpful to stakeholders concerning the development of the business.

HELIUM

Helium (“He”) is the second lightest element in the universe and the second most abundant, and yet is incredibly rare here on earth. While the process of fusion in our sun produces an estimated 700 million tons of helium per second, our Earth’s atmosphere has only a paltry 0.0005 percent helium, the rest having escaped into space over time.[1] Helium is formed through the alpha decay of uranium and thorium and can be trapped in the earth’s crust given the right geological conditions.

Helium is a noble gas: it is colorless, odorless and inert with unique properties. It is the most stable of all the elements; it will not burn or react with other elements. Helium has the lowest boiling point of all elements [ 4.2 degrees Kelvin (-268.8 degrees Celsius) ] just four degrees above absolute zero. It is the only element that cannot be solidified by sufficient cooling at normal atmospheric pressure. As a result of these characteristics, helium has become a vital and irreplaceable element in many critical components in industry.

Exploring for helium takes us back to our grass root exploration in the oil and gas sector as it is essentially a conventional play. Like a conventional gas play, a conventional helium reservoir must have three main geological criteria: the source rock, the reservoir rock, and the cap rock. The exploration methodology and the drilling for helium uses all the tools employed in the development of natural gas, though not all the natural gas methods are applicable to finding helium. That is, helium exploration requires a few additional considerations. It is technically challenging and requires significant knowledge related to helium generation, migration, exsolution, accumulation and trapping. The key difference here is that helium is generated differently from hydrocarbons. Rather than being a child or organic change, helium is born of radioactive breakdown from very particular igneous and metamorphic rocks containing radiogenic elements. Therefore, helium bearing reservoir must be connected to its radiogenic source through nearby migration pathways. And it must not be forgotten that helium is the second lightest element in the universe. Its light, gaseous nature gives it the tendency to move upwards on a pathway to ultimately escape its reservoir, and eventually the earth - unless it is trapped. The presence of

1 https://www.britannica.com : information on helium properties

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deep-seated structure is necessarily an important geological attribute for helium accumulation in the reservoir and seismic mapping is critical in the technical workflow in identifying those isolated structures.

It is important to note in Western Canada and Montana, helium pools that have been discovered to date range from 2 km2 to ~20 km2 in pool areal extent. It may be viewed that unconventional (e.g., shale) natural gas exploration as a real estate play, but helium exploration involves a much more detailed geological and geophysical evaluation, and thus, acquisition of massive land rights may not be as beneficial.

There are two main types of commercial helium deposits: helium produced with hydrocarbon and helium produced primarily with nitrogen. The geographic locations of current helium pools in Southern Alberta, Saskatchewan and Montana are rich with nitrogen with lower concentrations of methane and carbon dioxide. Considered ‘green’ helium by Avanti and peers, the development in these fields will have a smaller environmental footprint and have lower emissions.

As a conventional play, a producing helium well may not see a decline for the first 12-24 months (dependent on facility capacity, reservoir size and pressure). By comparison, an unconventional gas well like the Montney has a higher decline rate of ~ 50-70% within the first year of production. A review of Avanti competitor helium production data indicates a blowdown or exponential decline of 25-35% after 1-2 years of flat production.

Like natural gas production and processing, produced helium is gathered in a centralized processing facility where it is purified and sold as gas or liquid. Because the concentration of helium is low relative to overall gas production, processing facilities are best located near the producing wells. The gaseous purification process most commonly uses an extremely reliable pressure swing adsorption (“PSA”) and membrane technology. A cryogenic distillation method is often used for liquefaction. Once the helium has been separated from natural gas or nitrogen, it undergoes further refining to bring it to 99.99+ percent purity for commercial use.

The low boiling point of helium makes it extremely useful for cryogenic applications. Liquid helium is extremely cold, which makes it an excellent cooling medium for state-of-the-art science and technology. Liquid helium is used to cool the Large Hadron Collider, satellite instruments, the superconducting magnets in Magnetic Resonance Imaging (“MRI”) scanners and Nuclear Magnetic Resonance spectrometers, and in space exploration and rocketry (for example, National Aeronautics and Space Administration (“NASA”) uses helium to purge rockets before fueling). In manufacturing, helium is used in high growth industries of fiber-optics and semiconductors.

THE GLOBAL HELIUM MARKET

The world’s helium supply is currently located in just a handful of countries across the globe. For several decades, the United States dominated the market for helium production, accounting for approximately forty percent of the supply. Prior to 2021, the U.S. National Helium Reserve in Texas, was the world’s single largest source of helium. The Helium Stewardship Act expired in September 2021, and the U.S. Bureau of Land Management (“BLM”) auctioned off all remaining public helium reserves, thus depleting its national helium reserves, which were a by-product of a decade’s old natural gas field in decline (there remains some amount of privately owned helium in the facility).

Due to helium’s unique properties, the rapid expansion and growth of uses, the demand for helium is expected to continue to grow. The United States Geological Survey (“USGS”) estimates that the global market for this nonrenewable resource is set to increase, even by a conservative estimate, at a compound annual growth rate (“CAGR”) of over 8.3 percent between 2022 to 2026 (see graph below).

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In the last decade, Algeria, Qatar, Russia, Poland and Australia have joined the helium supply market. Helium production from these regions is typically from extremely low concentrations and is associated with conventional natural gas production which is only made economic through large scale cryogenic liquified natural gas (“LNG”) plants.

HELIUM PRICING

There is no commodity market for helium in that there is no standard pricing like the Western Texas Intermediate (“WTI”) for oil or Henry Hub (“HH”) for gas. The market for helium is primarily governed by privately negotiated longer-term contracts where prices are typically kept confidential. As illustrated in the following graph, the USGS estimates Grade A helium (99 percent helium) has traded for ~ US $200-250 per thousand cubic feet (Mcf) from 2012 to 2019.

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However, more recent estimates provide helium pricing between $300/Mcf to $1,200/Mcf since 2020. A recently announced contract issued by National Aeronautics and Space Administration (“NASA”)[2] to three selected companies to supply (two year plus an option year) 1.4 million liters of liquid helium and 87.7 million standard cubic feet of gaseous helium for use at facilities for a total reported total value of approximately US $149 million, or an average blended rate of ~US $1,200/Mcf, provides for anecdotal evidence for significantly higher pricing. A number of factors may affect anecdotal pricing information including logistics and delivery/receipt point, purity, gaseous vs liquified, term, quantity and market power, and more.

With increasing demand, it is believed that helium will continue to be supply constrained given the lack of substitutes for helium in several critical industrial applications, it being a non-renewable resource, relatively scarce; and thus, an irreplaceable element. This state would define helium pricing as relatively inelastic (i.e., demand will not change significantly as the price goes up). It also is believed that geopolitical risk is adding to price inelasticity as helium end users are attempting to mitigate geopolitical risk.

The Company has had preliminary discussions with helium end-users and is led to believe that many helium customers are also focusing on supply assurance. The Company, however, believes that helium’s future price may also be impacted by any significant decreases or increases in production and may vary based on term of contract. At present, Avanti does not have any contracts with customers on which to base any pricing forecast.

2 NASA Awards Contract for Acquisition of Gaseous, Liquid Helium, September 29, 2022

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AVANTI’S STRATEGY

Amongst other things, Avanti's strategy takes into consideration the above noted external factors, including near- and long-term supply and demand, the competitive landscape, the strengths and structure of helium supply and distribution chains, and the market structure of helium pricing (i.e., difference in price of raw helium gas to gaseous "crude" helium (e.g., lift grade) to gaseous and liquid five nines, e.g., 99.999 per cent pure helium).

The Avanti technical team consists of experienced geologists, geophysicists, and petroleum engineers, from large, mid-tier and junior companies. The subsurface team brings a rich technical knowledge and experience having worked both the traditional conventional and recent unconventional (Montney and Duvernay) plays. Avanti has complemented its subsurface team with experienced development, facilities and operations engineers that have extensive experience with exploration execution and in the building and management of natural gas facilities. It is believed that the Avanti team provides a unique set of competencies and internal strengths.

Avanti’s strategy is to leverage its subsurface teams’ expertise and employ a targeted approach and selection methodology to evaluating and prioritizing helium assets across Western Canada and the United States. Avanti’s portfolio approach to land acquisition is focused on targeting opportunities with multiple potential pay zones in the Cambrian and Devonian formations, and diversifying its helium assets, where each asset carries a different risk profile for helium exploration.

In focusing on inert gases, Avanti’s focus is on commercial helium deposits, produced primarily with nitrogen. Nitrogen rich helium is considered ‘green’ helium by Avanti and peer companies. The development of green helium has a smaller environmental footprint with lower or net zero emissions.

Given the small concentration of helium as a percentage of total gas production, the Company is focusing its prospect land acquisitions in areas where it expects to find helium with higher expected net cubic feet of per day and total estimated recoverable resource. Additionally, helium well development is focused on locations where it may be processed in a processing facility located near a cluster of its helium wells. This strategy includes focusing on potential resources with reservoir characteristics (i.e., helium concentration levels, reservoir porosity, permeability, gas pressure, etc.) that may lead to higher net cubic feet production with longer reservoir life and potentially lower decline rates. In the near-term Avanti's strategy focuses on a more rigorous process (i.e., exploration and consulting expenses) in its geological evaluation and land acquisition processes. As the aerial extent of helium pools are much smaller than unconventional natural gas, the Company’s strategy is to not accumulate large land areas for Its own sake, meaning Avanti may avoid subsequent licensing expense, exploration expenditures to maintain land rights, or potential impairment expense. In addition, by having a sharp subsurface and land strategy, it is believed that the Company may be able to focus its resources on nearer term production and commercialization of its helium resources.

Avanti's near-term strategy is to transition from helium exploration company to producing its helium resources. The Company will be focusing on structuring agreements to produce its helium resources with greater integration, which should allow higher helium pricing. This involves being able to provide customers high purity liquid helium, and having the ability to bulk deliver helium. It is also believed that as Avanti can sell increasing volumes of helium, the Company will be able to obtain more advantageous sales contracts. As such Avanti will continue with land acquisitions and explorations.

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OUTLOOK

Avanti continues to see an increase in helium, a non-renewable resource, demand underpinned by the lack of substitutes in the main, high growth, user markets of medical, high-end science / engineering, space exploration (i.e., with SpaceX, Blue Origin, Virgin Galactic, etc.), pressure / purge applications, smart devices, computers and networks and semi-conductors.

Helium economics and pricing have also been impacted by supply issues. In North America and the Western World, the supply of helium in the past number of years has negatively impacted the uncertainty related to the US Congress decision to privatize the Federal Helium Reserve (formerly managed by the Bureau of Land Management or "BLM"), one of the world’s largest and most dependable suppliers of helium. The Federal Helium Reserve's mammoth underground structure also comprises nearly 500 miles of pipeline — stretching from Amarillo, Texas, to the panhandle of Oklahoma to Kansas, and has been reported to supply roughly 40% of domestic US demand for helium.

Internationally there have been several large-scale, helium projects with an estimated total output equal to half of current global production. The largest of these projects are Gazprom’s Amur plant (part of Gazprom dobycha Orenburg) in Russia and RasGas’s Qatar 3 project. In late 2021 major explosion erupted at the Amur Processing Plant in Russia causing a fire and leading to the plant’s closure and a decline in helium supply. It is not known, with any level of certainty, when and if the Amur plant will be back online. It is believed however, that global economic interdependence has become an increasingly disputed issue since COVID and the Russian invasion of Ukraine. Examples of countries moving away from economic interconnectedness include Brexit and the United States’ withdrawal from the Trans-Pacific Partnership.

Helium is economically important to China, due in large part to its role in the semiconductor industry. China; however, does not have the same domestic helium supplies as the US. It has been estimated that foreign-trade dependence ratio of helium in China is 95%.[3 ] As a result, in 2020, China initiated its first large-scale helium production plant to limit its reliance on the US for helium. Recently, Russia and China have been increasing highlevel interactions, forging political trust, and establishes multi-tiered cooperation framework that has seen China - Russian trade exceed US $190 billion In the last year, up 166 per cent from ten years ago.[4] It is believed that China still seeks helium from North America. However, should the Russian Amur helium plant come back online, it may be possible that Russian supply of helium may be principally destined for China thereby impacting future Western helium supply.

The entrenching of geopolitical trade is echoed by Mark Elsesser, the associate director of government affairs for the American Physical Society, belief that "geopolitical risks, it’s not a good idea to depend on Qatar, Algeria, and Russia as a source of helium.”[5 ]

In response to geopolitical risk and amidst a global shortage of semiconductors, the US government passed the CHIPS and Science Act in late July 2022. The US, once a leader in semiconductor chip manufacturing, has lost ground to other countries as they ramped up production, forcing many American technology companies and manufacturers to import chips, which are essential to the production of cars, smartphones and medical equipment. The recently passed US bill, provides that the U.S. will invest more than $200 billion over the next five years to help the U.S. regain a leading position in semiconductor chip manufacturing. The US federal

3 The Resource Potential and Development Prospect of Helium in Changing Gas Field, Academic Editor: Di Feng, July 23, 2022

4 Forging Ahead to Open a New Chapter of China-Russia Friendship, Cooperation and Common Development, Ministry of Foreign Affairs of the People Republic of China, March 20, 2023

5 The Geopolitics of Natural Resources: A Case Study on Helium, by Jessica Maloney, November 8, 2020

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government went further, in noting that U.S. citizens may be faced with losing US citizenship if they continue working in certain foreign countries[6] .

Industry examples of the recent activities in the US-based semiconductor and technology industries, include: Intel announced the spending of more than $40 billion on new semiconductor fabrication facilities in the U.S.[7;] and Micron announced building a $100 billion semiconductor manufacturing campus in Onondaga County[8] .

With growing helium demand in North America, Europe and Asia, Avanti is well positioned as it is generally believed that security of supply may play a big factor in helium purchasing decisions. This is due to geopolitical situations elsewhere in the world, the U.S. [and Canadian] supply is considered the most reliable.[9 ]

The various global and domestic demand and supply issues have translated into “…prices of helium in many cases [to] doubled since January 2022. Contract prices have increased 50 to 100%, in some cases, even more” according to helium consultant Phil Kornbluth.[10] Since helium is not traded on a commodities market there is little transparency on helium pricing. Avanti has yet to enter into a helium offtake agreement, as such the price that the Company may receive on the sale of its helium, and thus revenues to be recognized, is unknown, but the outlook continues to be positive.

EXPLORATION & EVALUATION ASSET OVERVIEW

GREATER KNAPPEN (SOUTHERN ALBERTA / NORTHWESTERN MONTANA)

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The Company’s principal project, Greater Knappen, consists of 70,140 acres (28,056 hectares) under lease, term assignments or similar arrangements in Northwestern Montana and 8320 acres (3328 hectares) under lease or license in Southern Alberta. To date, the Company has finished drilling two exploration wells and one appraisal well in Greater Knappen, the Rankin 01-17, the WNG 11-22 and the WNG 10-21. The three wells have met certain contractual requirements under the various commercial agreements that cover those lands and have extended or validated the Company’s interest therein. The Greater Knappen area, consists of the following:

6 Americans working in China’s semiconductor firms to choose between their citizenship or their jobs, www.fortune.com, by Nicholas Gordon, October 13, 2022

7 U.S. Semiconductor Renaissance: All the Upcoming Fabs, by Anton Shilov, published August 29, 2022

8 Semiconductor Facility Will Bring 50,000 Jobs to Central New York, Finger Lakes Daily News, by Ed Vivenzio, Oct 4, 2022

9 The fate of America’s largest supply of helium is up in the air, by Joyce Marshall, February 7, 2023

10 The fate of America’s largest supply of helium is up in the air, by Joyce Marshall, February 7, 2023

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Knappen Project in Southern Alberta

On March 29, 2021, the Company acquired an aggregate of over 7,040 acres (2,816 hectares) under license from the government of Alberta (the “Knappen Project”). The license was issued with an initial term of 2 years from March 25, 2021. The Company has recently allowed this license to expire on its own terms, it did not meet the Company’s evaluation standards for further exploration and development at this time.

Aden Project in Southern Alberta

On May 10, 2021, the Company announced that it acquired an aggregate of 2,560 acres (1,204 hectares) under lease from the government of Alberta. The Company now holds 4,480 acres (1792 hectares) in the area. The Aden Project is prospective for helium, and the Company is conducting an analysis to identify optimal well locations. One well has currently been licensed.

The Company also holds a further 3,840 acres (1,536 hectares) under lease from the government of Alberta in other nearby Southern Alberta Lands considered prospective for helium exploration.

Police Coulee and Kicking Horse Projects in Northwestern Montana

On August 1, 2021, the Company’s wholly owned subsidiary, Avanti Helium US, Inc. (“Avanti US”), entered into an agreement (the “WNG Agreement”) with Western Natural Gas Co. (“WNG”) whereby Avanti US agreed to acquire 100% of the helium rights from the top of the Paleozoic Era of Formations to the basement in 3,183 acres (1,273 hectares) in Northwestern Montana. Through numerous complementary acquisitions, the Company now holds 9,922 acres (3,969 hectares) in this area.

Sweetgrass Project in Northwestern Montana

On September 1, 2021, Avanti US entered into an agreement (the “MCR Agreement”) with MCR, L.L.C. (“MCR”) to acquire 100% of the helium rights from the base of the Madison Group to the basement in 50,776 acres in Northwestern Montana. Of the 50,776 acres, 49,872 acres (19,948 hectares) forms part of the Sweetgrass Project, while a small portion, 811 acres (324 hectares) is within the Kicking Horse Project and 93.3 acres (37.32 hectares) is within the Police Coulee Project.

The MCR Agreement is subject to an area of mutual interest pursuant to which MCR will be entitled to 100% of the working interest to all oil and natural gas rights from the surface to the base of the Madison Formation and Avanti Montana shall be entitled to 100% of the working interests to all substances from the base of the Madison Formation to the basement.

East Keith Project

On September 1, 2021, Avanti US entered into an agreement (the “Three Forks Agreement”) with Three Forks Resources, LLC (“Three Forks”) to acquire 100% of the helium rights from the top of the Paleozoic Era of Formations to the basement in 4,641 acres (1,856 hectares) in Northwestern Montana. The Company has also further acquired another 1,240 acres (496 hectares) through State Land Sale and corporate acquisition in the area.

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LEADER PROJECT (SOUTHWESTERN SASKATCHEWAN)

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Southern Saskatchewan is the hub for Western Canadian helium activity. The government of Saskatchewan blanketed the southern region of the province for helium exploration by granting helium permits. There are several companies actively exploring and developing the helium play in the region. There are currently ~19 helium wells on production to end of January 2023. There are also two wells that have a production history of over 10 years. The Company’s selection of the permit areas is based on the Company’s detailed geological mapping and technical assessment.

The Company has a 100% helium interest in approximately 91,023.70 net acres (36,409.48 hectares) in the Leader region of southwestern Saskatchewan, and consists of 7 helium permits, (permit area names are Kyle, Burstall, Abby, Fox Valley and Maple Creek).

HELIUM EXPLORATION IN GREATER KNAPPEN AND LEADER (CANADIAN ASSET SEGMENT)

The Company’s acreages in Greater Knappen and Leader are strategic acquisitions by Avanti as the regions have all the key geological criteria and considerations for conventional helium exploration, includes high helium concentrations, the presence of reservoir close to the helium source, structural features, and associated traps for helium accumulations in economic quantities. As such, all of Avanti’s acquired land are in highly prospective areas for potential helium extraction.

HIGH HELIUM CONCENTRATIONS

The granitic basement in both regions is a source for high concentration of helium confirmed with available gas analysis and drill stem test (“DST”) data from existing shallow and deep wells. The area is also rich in nitrogen with lower concentrations of methane and carbon dioxide. Analogue well data indicates:

• Helium percentage are up to 2.18% (see helium concentration in Greater Knappen figure below)

• Nitrogen percentage are up to 98%

• Trace methane and carbon dioxide

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RESERVOIR ROCK

Several wells have been drilled into the granitic basement (Precambrian) rock in the region and available well data confirmed the presence of reservoir quality rock in the Cambrian and in the Devonian aged formations (see reservoir rock figure below). As these are conventional reservoirs, they have higher porosity and permeability.

In the Cambrian, the reservoir is sandstone and overlies the Precambrian granitic source rock. The reservoir is called the Cambrian Sandstone in Alberta/Saskatchewan or the Flathead Sandstone in Montana. With the proximity of the reservoir to the source rock, the helium concentration in this zone can also be high, up to 2.18% He in the Greater Knappen area (see helium concentration in Greater Knappen figure below).

In the Devonian, the reservoir is a dolomitized limestone reservoir, and the formation is called the Beaverhill Lake in Alberta or the Souris River in Montana/Saskatchewan. There are two zones within the Beaverhill Lake formation that are prospective for helium, a Lower Beaverhill Lake and an Upper Beaverhill Lake zones. Gas data suggest the Lower Beaverhill Lake has a higher helium concentration compared to the overlying zone (see Reservoir Rock figure below).

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STRUCTURE

The presence of deep-seated structure is an important geological attribute for helium accumulation in the reservoir. Avanti has a proprietary geological mapping technique to identify the basement structures in the area. The presence of those structures is further refined with seismic data. The Company purchased several 2D seismic lines in Greater Knappen and Leader. It also purchased a 27.15 square mile 3D seismic survey in the eastern half of the Sweetgrass project area. With the geological and seismic mapping, the technical team derived a geological model for helium exploration and mapped several isolated deep structures with closures ideal for

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trapping helium in the reservoir rock. The relief on these structures are ~40m to >200m (see depositional model and Greater Knappen map below).

A key point to note, the Company’s land acquisition in both Greater Knappen and Leader are targeted on these isolated fields or pools.

TRAP

An overlying caprock that is tight enough to trap the helium is required in the reservoir for commercial development. The overlying caprock are tight limestone and shale overlying the Cambrian Sandstone and tight anhydrite layers trapping the gas in the Beaverhill Lake zones (see depositional model on left below).

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EXPLORATION & EVALUATION ASSET ACTIVITIES

Phase 1 of Exploration in Greater Knappen

Following a technical and risk assessment exercise, the Company high graded several areas for exploration and selected well locations to test for helium potential in the area The Company applied for and was issued permits to drill wells on each of Rankin 01-17, WNG 11-22, WNG 10-21, Aden 12-4 and Fey 06-33 (see above map denoting Knappen mapped structural highlights and drill permit locations).

EXPLORATION WELL IN RANKIN 01-17 (KICKING HORSE PROSPECT AREA - USA ASSET SEGMENT)

In January 2022, the Company drilled its first exploration well to a depth of 5,860 feet and encountered all the targeted zones for helium potential. Open-hole logging indicated 3 zones with reservoir characteristics suggesting further testing is warranted. DST were performed on the well to high-grade zones for completion. The Cambrian sandstone in the well had an excellent reservoir, however it was wet. The Souris River zones had good porosity and low water saturation including an average helium percentage of up to 0.4%. The completion in the Souris River zones will be conducted later. In late January 2022, the Rankin 01-17 well was the cased to total depth, and the rig moved to the Company's second well location in Greater Knappen.

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EXPLORATION WELL IN WNG 11-22 (SWEETGRASS PROSPECT AREA - USA ASSET SEGMENT)

In February 2022, the Company drilled its second helium exploration well, WNG 11-22, to a total depth of 5,390 feet. Open hole logging of WNG 11-22 confirmed excellent reservoir quality in all three target zones. The Cambrian sandstone exhibits 35 feet of net pay with porosity up to 16%. The Souris River has two intervals totaling 42 feet net pay with porosity up to 18%. DST results on the WNG 11-22 well indicated all three zones showed potentially commercially viable helium concentrations, including an average helium percentage of up to 1.1%.

In April 2022, the Company finished completions on the Flathead Cambrian zone on WNG 11-22. The Company completed an acidization and clean-up process of the Flathead Cambrian zone, after which the well peaked at over 4 MMscf/d for six days on a choke at a flowing pressure of 300 psig (pound-force per square inch gauge). Preliminary lab results show the gas composition of the Cambrian zone to be, 97.5 % Nitrogen, 1.1 % Helium, 1.1% Methane, 0.3% CO2, and trace amounts of other hydrocarbons.

The Company received an initial resource report dated July 1, 2022 based on these preliminary results. During the reporting quarter, the Company received a total estimated unrisked contingent resource for the Sweetgrass Pool of 187MMcf of net recoverable helium gas (based on a raw gas estimate of 17 billion cubic feet “Bcf”) recoverable gas in place in the Flathead Cambrian Sandstone zone, prepared by McDaniel & Associates Consultants Ltd., a qualified reserves evaluator. This volume represents the best estimate of the unrisked contingent resource. The low and high estimates of unrisked contingent resources for the West Sweetgrass Pool, in the category of “Development Pending”, are 66MMcf and 374MMcf of recoverable helium gas, based on 6 Bcf and 34 Bcf recoverable raw gas, respectively.

Based on the test data from the WNG 11-22 well, a best estimate contingent resource (2C) unrisked volume of 77MMcf of net helium (based on 7 Bcf raw gas) is assigned to the WNG 11-22 well in the category “Development Pending”.

Two follow-up wells (the “Follow-up Wells”) were forecasted to be drilled on the Greater Knappen Property in the Flathead Cambrian Sandstone zone and recover an unrisked contingent resource of 55MMcf of net helium per well (based on 5 Bcf of raw gas per well) in the category “Development Pending”.

The contingent resources have been risked to account for the chance of commerciality. The contingent resources have been estimated at a 90% chance of commerciality. As such, the WNG 11-22 Flathead Zone has been assigned “Development Pending” risked contingent resources of 6.3 Bcf raw gas in the 2C case, and the Follow-up Wells, also targeting the Flathead Cambrian Sandstone zone, have been assigned “Development Pending” risked contingent resources of 4.5 Bcf raw gas in the 2C case for a total risked contingent resources of 168MMcf (based on 15.3 Bcf of raw gas).

APPRAISAL WELL IN WNG 10-21 (SWEETGRASS PROSPECT AREA - USA ASSET SEGMENT)

Appraisal well WNG 10-21 was spudded on November 1, 2022. While entering productive zones, the Company saw gas and pressure at surface with helium shows. Shortly thereafter the Company started encountering mud losses. After several attempts to abate mud losses, the Company re-established drilling, but re-encountered more mud losses. A plug was set to heal the well then drilled out the plug and re-established circulation. The Company continued drilling to the basement, but upon pulling out, and due to the tightness of the hole, lost a portion of the drill string. A cement plug was set, and the Company kicked off (deviated) and continued drilling 150' north of the original bottom hole location. Additional mud losses were incurred again in the new bottom hole. To mitigate further operational risks,

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the Company decided to plug and case the well, and return to finish drilling without using mud, utilizing a coil tubing drilling unit.

Subsequent to the year end, which was delayed due to inclement winter weather conditions, the Company brought in a coiled tubing drilling unit and successfully finished drilling calling total depth at 5,368’. A flow test was conducted on the well up casing initially and up production tubing. Details of the flow test are highlighted in the graph and description below.

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Notes:

• i) Total gas rate on the left y axis, the casing, tubing and bottomhole (BH) pressure on the right y axis and cumulative hours on the bottom x axis.

• ii) Opened well to flow #1 (0-22 hrs on chart).

• iii) Rates increased 1 to 13 MMcf/d, and casing pressures continued to rise to 1250 psi as well cleaned up.

• iv) Finished coil tubing drilling, called TD at 5368’ (22 -38 hrs on chart).

• v) Opened well to flow #2 (38 -75 hrs on chart).

• vi) Rates increased from 3 to 23 MMcf/d and flowing casing pressure stabilized at 1250 psi throughout the test.

• vii) Last recorded 3.5 hrs on fully opened 1” choke averaged 20 MMcf/d @ 1250psi flowing casing pressure. viii) Only recovered 22% of total load fluid.

• ix) Shut well in, rigged out coil tubing, set 2 -7/8” production tubing, and landed recorders on bottom.

• x) Opened well to flow #3 (75-122 hrs on chart).

• xi) 5 point step rate test completed, rates increased8 to 14MMcf/d at 600psig flowing tubing pressure, with final flow bottomhole pressure representing only 3% drawdown.

• xii) Shut in well for final buildup (at 122 hrs on chart).

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Notes:

• i) The above rates represent best well from each respective pool from all known Canadian and northern USA helium pools.

• ii) Rates are from Cambrian Basal Sandstone zone unless noted as (BHL) which are from Devonian Beaver Hill Lake zone.

• iii) Drawdown % are from bottom hole pressure data, provided only for wells tested in the Cambrian zones, for comparison with Avanti WNG 10-21 Cambrian zone test

• iv) GeoScout Database – Test results from the last 20 years. The rates represent the best wells from each respective pool from all known CDN. and northern USA helium pools.

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Notes:

• i) Forecast over 10 years of production, initial flat rate production 1-2 years, and a decline of ~25% thereafter.

• ii) Production data from 9 top tier producing helium wells from Alberta and Saskatchewan were used to build the type curve[1].

• iii) Type Curve has a initial rate of 5 MMcf/d flat, peak rate of over 4.5 MMcf/d for 14 months then declining to reserves of 8.3 bcf.

• iv) Production history of the wells goes beyond 10 years.

• v) Avanti Greater Knappen wells had initial test rates of ~14 MMcf/d and ~4.5 MMcf/d respectively.

The Company received an updated contingent resource estimate from McDaniel & Associates Consultants Ltd. ("McDaniels") dated January 31, 2023. The updated total unrisked P50 contingent resource estimate for the Sweetgrass Pool in Greater Knappen has increased by 22% to 221MMcf of net recoverable helium as detailed in the below table.

the below table.	the below table.	the below table.	the below table.
Sweetgrass Pool Contingent Helium Resources				Greater Knappen Prospective Resource
	Net Unrisked Total Gas	Helium	WI	Percentage Change	Net Unrisked Total Gas	Helium	WI
			AVG				AVG
	Bcf	MMcf	%	+/-	Bcf	MMcf	%
Net Loss	14.3	153	91.0%	+138%	47	503	87.2%
Low	20.5	221	91.0%	+22%	108	1,152	87.2%
Medium	37.8	402	91.0%	+11.1%	241	2,563	87.2%

This volume represents the best estimate of the unrisked contingent resource and best estimate of the unrisked prospective resource.

Notes:

• (1) Disclosure of helium in place volumes is not included in NI 51-101 guidelines.

• (2) There is uncertainty that it will be commercially viable to produce any portion of the contingent resources.

• (3) There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources.

EXPLORATION WELL IN FEY 6-33 (SWEETGRASS PROSPECT AREA - USA ASSET SEGMENT)

The Rankin well was DST'd with 0.4% helium from the Souris River zone, the well had different raw gas composition than that of the WNG wells. The Fey well is located in close proximity to the Rankin well with similar geological risks and gas composition. It is believed that the Fey and Rankin wells can be brought into production, but would require different mid-stream facilities, given the different gas composition, that is being contemplated for WNG wells.

Although Avanti's current focus of moving towards helium off takes and sales, to generate cash inflows, the Company has ranked ordered and will target the highest probability of success prospects for all potential future well locations in the USA asset segment. The subsurface and engineering teams have identified four potential future well locations in the USA asset segment to next be drilled. The proximity of the Company's planned mid-stream facility and gas composition may impact which of the future success ranked wells will be drilled first. Drilling timelines have yet to be set and well targets may vary depending on subsequent additional land acquisitions, new subsurface data, Company resources, etc.

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Phase 2 Exploration in Greater Knappen

During a prior quarter the Company was issued permits to drill wells on each of WNG 10-21 and Aden 12-4.

EXPLORATION WELLS

The Company has obtained drilling permits for wells in Alberta.

The Company has also ranked ordered and probability success ranked potential future well locations in the Canadian asset segment. The subsurface and engineering teams have identified four potential future well locations in the Canadian asset segment to next be drilled. The timing of the Canadian well drilling may be impacted by necessary drilling and other permits required before drilling. As such, future success ranked well rankings may be impacted by the resources and timing of necessary permitting. In addition to permitting, drilling timelines have yet to be set and well targets may vary depending on subsequent additional land acquisitions, new subsurface data, Company resources, etc.

Phase 3 – Development of Facilities

With the goal of bringing the Company's helium wells into production, earlier in the fiscal year the Company assessed the option of designing, constructing and operating its own facility versus engaging a third party midstream facility operator. In designing, constructing and operating its own facility, the Company completed a preliminary front end engineering and design (“pre-FEED”) process to determine the technology to use based on Avanti’s well gas composition.

The Company also sought out and evaluated engaging mid-stream facility for the processing of gaseous helium. The advantage of using helium specific mid-stream operators would allow the Company to better manage and mitigate construction and operating risks, while focusing on its core competencies. It is also believed that entering into an agreement with a mid-stream operator would dramatically reduce equity capital requirements as the midstream company would provide the capital equipment for a fixed fee for service, which for Avanti would be classified as a right-of-use asset. A midstream company may also accelerate establishment to a facility over a Company built facility, and thus, accelerate advancement to potential helium sales and potential cash inflows. In the coming months, the Company expects to finalize a decision on whether to enter into an agreement for a gaseous mid-stream facility or construct its own facility in Montana.

Irrespective of the direction of a midstream facility, the Company, in parallel, also screened and secured a surface lease for mid-stream gaseous processing plant, and land right of ways for electrical, and feed and fuel pipelines, and concluded a utility power study to determine maximum loads (inclusive of possible utility gas tie-ins to allow for supplemental power generation) available for the processing plant as illustrated below.

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The Company desires to sell its helium in liquid form in order to maximize its returns and better control the value chain. To maintain optionality to sell gaseous helium and to facilitate the potential ability ship gaseous helium for liquefaction, the Company, subsequent to the fiscal year end has entered into an agreement to rent six high pressure gaseous trailers. For a period of time, and subject to certain conditions, Avanti maintains an option to purchase the six high pressure gaseous trailers.

The Company had, earlier in the fiscal year, engaged financial consultants to assist in the financial modelling, capital structure, and in the accessing of potential debt financing of various associated related components of the facilities and operations.

RECONCILIATION OF PROSPECTUS’ ANTICIPATED EXPENDITURES

The following table sets out the reconciliation of the disclosed use of proceeds as disclosed in the Short Form Prospectus of March 2022 and October 2022.

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----- Start of picture text -----

March 2022 October 2022 Fiscal 2022 Fiscal 2022
Business Objective Offering Offering Total Offerings Expenditures
Proposed drilling and completions $ 6,200,000 $ 4,300,000 $ 10,500,000 $ 8,751,564 (1)
- - - (2)
Acquisition of long-lead materials 1,890,087
-
Land acquisitions 500,000 500,000 1,936,176
- (3)
Geophysical studies 600,000 600,000 1,331,455
- -
Unallocated working capital 1,459,000 1,459,000
$ 7,300,000 $ 5,759,000 $ 13,059,000 $ 18,818,000
Net Proceeds Raised $ 9,282,281 $ 5,719,356
----- End of picture text -----

Notes:

(1) Includes $1,579,913 of expenditures that were Incurred prior to March 15, 2022 Offering.

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Subsequent to fiscal 222, the Company incurred expenditures of $1,165,620 related to the drilling and completions of the proposed wells.

• (2) Long-lead materials were consumed in the above noted drilling and completions. The balance of long-lead materials as at December 31, 2022 Is $530,776.

• (3) As at December 31, 2022 the cash and cash equivalent balance from the various Offerings was $2,831,293.

The Company had initially targeted drilling three wells in the Greater Knappen area (US asset segment), and obtained drilling permits for all three wells. The targeted wells had two different geological structures, which would have provided for greater insights into the formations in the Greater Knappen prospect area. After drilling and undertaking a technical review of the subsurface data related Fey 6-33, the Company decided to next drill an appraisal well, WNG 10-21. The proximity of the WNG 10-21 to WNG 11-22, is helping support the economic decision to acquire a facility or engage a mid-stream partner, which would advance the Company towards selling helium and generating cash inflows.

Instead of drilling the three wells in the Greater Knappen area, the Company incurred an estimated of up to $500,000 in costs related to the drilling and completions of previous wells. Additionally, due to supply chain issues, foreign exchange rates, etc., which impacted certain materials pricing, the Company diverted funds from the planned drilling in the Greater Knappen to acquire oilfield tubulars.

The unexpected well drilling costs related to increased third party unit costs, consumption of more items (i.e., fuel, drilling mud, etc.), higher than anticipated foreign exchange rates, and the cost overruns due to nature and complexity of the wells. In completing the WNG 11-22 well, the Company encountered greater skin formations, which although rectified, will provide for enhanced completion procedure for future wells, increased costs.

As noted above appraisal well WNG 10-21 was spudded on November 1, 2022, and saw gas and pressure at surface with helium shows. Shortly thereafter the Company started encountering mud losses. The decision to continue to the basement, set a plug and kick off (deviate) 150' north of the original bottom hole location, and to finish drilling without using mud, utilizing a coil tubing drilling unit fundamentally meant the Company drilled two wells in the one location (which is also reflected in the well costs).

Due to subsurface complexity, and efforts required to obtain and analyze data, geophysical expenses were higher than anticipated. Geophysical expenses are included within exploration and consulting expenses on the Statement of Loss and Comprehensive Loss.

CONSOLIDATED OPERATING RESULTS FISCAL YEAR ENDED DECEMBER 31, 2022 & 2021

During the year ended December 31, 2022, the Company’s operations reflect the continued strategy of utilizing its subsurface team to evaluate land projects for acquisition and locations for exploration efforts, engineering team’s finishing of drilling and completion of Rankin 01-17 well, the drilling and completion of exploration well WNG 11-22, commencing of drilling of appraisal well WNG 10-21, and the evaluation of production facilities and working towards helium sales (offtakes).

Total expenses were $8,221,944 for the reporting year, a decrease of $2,369,901 or 22.4% from that recorded for the comparative year of $10,591,845. Of the recorded expenses the Company notes:

The recorded share-based compensation totaled $2,472,268, a decrease of $1,948,775 from that recorded in fiscal 2021 of $4,421,043. The stock option expense is related to seven separate issuances for an aggregate of 4,540,000 incentive stock options. The share-based expense is a function of the incentive options issued, the low forfeiture estimate, high volatility rate and a 12-month vesting term.

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Although the Company has been fortunate to attract a highly skilled team of employees and consultants, it recognizes it cannot compete on a cash compensation basis with large exploration and productions companies, and thus, uses incentive options attract and retain the high quality of staff and consultants. The unamortized share-based compensation expense as at December 31, 2022 is $64,299. Future sharebased compensation expense will include the current unamortized share-based compensation expense, plus the fair valuation of the subsequent issuance of 2,300,000 stock options.

Marketing expenses totaled $410,485, a decrease of $1,547,427 from that recorded in fiscal 2021 of $1,957,912. In the comparative period, the Company was of the belief that helium is an emerging sector, and that prospective investors have limited or no knowledge of helium as a high priority commodity and critical element. The Company’s Management and Board of Directors believe that investor education is necessary to increase shareholder value and attract the requisite capital to advance the Company's exploration projects. In order to reach and educate the broadest audience possible, the Company engaged various consultants and media marketing companies to provide marketing, presentation materials, industry educational tools, media assets, graphic and website design, helium market assessment and analysis and other deliverables. The Company chose to engage independent contractors, as opposed to hiring employees, to provide flexibility and reduce costs. The current period cost also includes expenses related to sourcing out, and preliminary contact with helium end users and potential clients. At present the Company does not see its marketing expenses approaching the levels reported in its fiscal 2021 financial statements.

Exploration expenses totaled $1,1331,455, a decrease of $472,403 from that recorded in fiscal 2021 of $1,803,858. The exploration expenses in the current year relate to technical and risk assessment and geological follow-up technical work related to geological mapping and geophysical data, the analysis of other helium well data and the analysis of geophysical data related to the Greater Knappen prospect area. Exploration expenses were also impacted by Avanti's drilling of the technical work related to the planning and assessment of its exploration well, WNG 10-21, and appraisal well, WNG 11-22. The success of these wells has resulted in the Company focusing on moving towards production, and potential offtakes and cash inflow, and as a result less exploration expenses. As the Company progresses towards production, it is believed that Avanti’s exploration and consulting expenses increase as other assets are evaluated and acquired, as the Company expands its portfolio.

Exploration expense was also impacted by the decision to allow the Knappen Alberta land leases (7,040 acres) expire. As a result the Company transferred (impaired) $224,065 from exploration and evaluation assets to exploration expense.

Wage, wage benefits and contractor expenses include salary and benefits of $1,039,887 (2021 - $437,845), consulting fees of $1,467,875 (2021 - $21,173,190), management fees $165,000 (2021 - $193,500). Wage and wage benefits increased by $602,042 as a result of almost doubling of staff size, and the accrual of certain benefits that were not in the prior year. In addition to the increase of number of employees, the Company increased the number of consultants thereby increasing the consulting expense by $294,685 to support the indirect work done to support the helium exploration efforts. Offsetting these increases was reduction in management fee by $28,500.

As the Company evolves, its workforce has grown from four employees in the prior reporting period to seven in the current period. Salary and benefits in the current reporting period were also impacted by vacation, workers compensation and other payroll accruals. The Company has elected to employ independent contractors, as opposed to hiring employees, in order to access a skilled subsurface and engineering teams necessary to execute its selective exploration strategy and the potential development

22

of helium facilities in the Sweetgrass area. It is believed that the decision to engage independent contractors will also provide the Company with flexibility as it moves into its next stage of evolution.

Administrative expenses totaled $742,234, an increase of $483,663 from that recorded in fiscal 2021 of $258,571. The largest variance to administrative expenses was a result of rent expense, which totaled $171,708 (2021 - $43,750) for rent related to offices in Calgary and Vancouver, and a Montana field and local office, the vast majority of which only pertains to the current period. Included in administrative expenses are information technology application support and on-premise, month-to-month software license subscriptions, and expenses related to the Company’s website totaling $136,432 (2021 - $83,724). Administrative expenses also insurance expenses of $134,385 (2021 - $29,368).

Professional expenses of $469,055, an Increase of $187,948 from that recorded in fiscal 2021 of $281,107. Professional expenses in the current reporting year includes accrual audit and quarterly review fees, annual tax preparation and transfer pricing accruals, legal and listing fees. Professional expenses were impacted by public company operations, increased corporate governance, various land due diligence, etc. Professional fees are expected to increase in the near term due to the growth of Avanti, which will necessitate greater governance, planning, and assessment of various agreements.

Despite increasing the size of the Avanti team, the finishing of the drilling and the completions of Rankin 01-17 well, the drilling and completions of WNG 11-22 well, commencement of drilling appraisal well WNG 10-21, and move towards planning for facilities and production, the Company was able to reduce the recorded net loss for the fiscal year ended December 31, 2022 by $2,264,484 and recorded net loss of $8,294,086, over the comparative quarter's recorded net loss of $10,558,570.

The comprehensive loss of $7,474,889 for the year ended December 31, 2022, was negatively impacted by a foreign translation gain of $819,197 on its foreign, wholly owned subsidiary, Avanti Helium US, Inc.

CONSOLIDATED OPERATING RESULTS THREE-MONTHS ENDED - DECEMBER 31, 2022 & 2021

For the fourth quarter ended December 31, 2022, the Company’s operations reflect the continued strategy of utilizing its subsurface team to evaluate land projects for acquisition and locations for exploration efforts, commencing of drilling of appraisal well WNG 10-21, and the continued evaluation of production facilities and working towards helium sales (offtakes). During the three months ended December 31, 2022, expenses totaled $1,655,406, a decrease of $2,002,985 from that recorded for the comparative quarter of $3,658,391. Of the recorded expenses the Company notes:

Share-based compensation expense for the three months ended December 31, 2022 was $223,870, a decrease of $1,325,269 to the comparative period expense of $1,549,139.

Marketing expenses for the three months ended December 31, 2022 was $28,392, a decrease of $533,047 to the comparative period expense of $561,439.

Exploration expense for the three months ended December 31, 2022 was $604,281, a decreased of $1,633 to the comparative period expense of $602,648. The exploration expense for the reporting for the fourth quarter relates technical and risk assessment and geological follow-up work related to geological mapping and the analysis of other helium well data, the analysis of geophysical data related to the Greater Knappen prospect area, and transfer (impaired) of $224,065 from exploration and evaluation assets to exploration expense related to the expire of the Knappen Alberta land lease.

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Wage, wage benefits and contractor expenses for the three months ended December 31, 2022 was $658,906, a decrease of $97,015 to the comparative period expense of $755,921. Wage, wage benefits and contractor expenses include salary and benefits of $316,433 (2021 - $204,835), consulting fees of $312,474 (2021 - $209,833), management fees $30,000 (2021 - $45,000). During the reporting period, the Company increased both the number of employees and consultants, as a result of the direct and indirect work done to support the helium exploration efforts.

Professional expenses for the three months ended December 31, 2022 $23,146, a decrease of $89,269 to the comparative period expense of $112,415. Professional expenses in the fourth quarter 2022 were impacted by accruals earlier in the fiscal year.

Administrative expenses for the three months ended December 31, 2022 was $133,755, an increase of $71,680 to the comparative period expense of $62,075.

The recorded net loss for the fourth quarter ended December 31, 2022 was $1,663,463, a decrease of $2,009,925 over the comparative quarter's recorded net loss of $3,673,388.

SUMMARY OF QUARTERLY RESULTS

The following tables sets forth selected data derived from our unaudited condensed consolidated interim financial statements for each of the eight most recently completed quarters. The Company did not realize any revenue during the eight most recently completed quarters. This information should be read in conjunction with the applicable interim unaudited and annual audited financial statements and related notes thereto.

	4th Qtr 2022 3rd Qtr 2022 2nd Qtr 2022 1st Qtr 2022 Dec 31 '22 Sept 31 '22 Jun 30'22 Mar 31'22
Net Loss Basic & diluted loss per share Common shares outstanding Weighted average shares outstanding Exploration and evaluation assets Total Assets Net Assets Net Loss Basic & diluted loss per share Common shares outstanding Weighted average shares outstanding Exploration and evaluation assets Total Assets Net Assets	(1,663,463) $ (1,849,814) $ (2,020,257) $ (2,822,957) $ (0.03) $ (0.03) $ (0.03) $ (0.06) $ 65,571,237 53,189,176 58,201,852 51,120,280 27,155,853 $ 21,036,826 $ 19,048,099 $ 16,852,597 $ 30,345,071 $ 23,085,179 $ 23,054,946 $ 24,625,547 $ 25,709,714 $ 21,685,830 $ 22,316,176 $ 23,098,725 $ 4th Qtr 2021 3rd Qtr 2021 2nd Qtr 2021 1st Qtr 2021 Dec 31'21 Sept 30 '21 Jun 30'21 Mar 31'21
	3,223,768 $ (3,657,343) $ (3,032,235) $ (629,687) $ 0.07 $ (0.08) $ (0.07) $ (0.03) $ 49,246,319 47,513,316 41,246,244 24,081,057 11,355,736 $ 9,526,664 $ 5,589,653 $ 5,171,746 $ 17,060,963 $ 18,267,295 $ 13,859,292 $ 13,391,246 $ 15,435,154 $ 17,020,662 $ 13,533,947 $ 13,227,553 $

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The Company’s quarterly results have and will vary in relation to the underlying activities related towards the execution of the Company’s strategy. The increased losses commencing in the fiscal 2021 are mainly the result of the increased corporate activities as the Company continued to become more active in the exploration helium, which necessitated the hiring of employees, engaging specialized consultants, and began a marketing campaign to raise the Avanti’s corporate profile. Expenses and net losses in fiscal 2022 compared to fiscal 2021 have trended lower. Prior to the current reporting quarter, the significant portion of the expenses incurred are as follows:

- Third Quarter 2022 Three months ended September 31, 2022

The recorded loss of $1,849,814 was impacted by $773,340 in wage, wage benefits and contractor expenses, $318,550 in exploration expenses, and $409,227 in share-based compensation expense.

During the third quarter 2022, the Company undertook additional exploration work, planned for the drilling of its third exploration well WNG 10-21. Additionally, the Company completed a preliminary front end engineering and design process to determine the technology to use in a production facility based on its well WNG 11-22 well gas composition.

- Second Quarter 2022 Three months ended June 30, 2022

The recorded loss of $2,020,257 was impacted by $976,514 in share-based compensation expense, $99,741 in exploration expense, and $3621,867 in consulting expense.

WNG 11-22, spudded in the first quarter 2022, was drilled to a total depth of 5,390 feet. Open hole logging confirmed excellent reservoir quality in all three target zones. The Cambrian sandstone exhibits 35 feet of net pay with porosity up to 16%. The Souris River has two intervals totaling 42 feet net pay with porosity up to 18%. DST results on the WNG 11-22 well indicated all three zones showed potentially commercially viable helium concentrations, including an average helium percentage of up to 1.1%.

The Company completed an acidization and clean-up process of the Flathead Cambrian zone, after which the well peaked at over 4 MMscf/d for six days on a choke at a flowing pressure of 300 psig (pound-force per square inch gauge). Preliminary lab results show the gas composition of the Cambrian zone to be, 97.5 % Nitrogen, 1.1 % Helium, 1.1% Methane, 0.3% CO2, and trace amounts of other hydrocarbons.

- First Quarter 2022 Three months ended March 31, 2022

The recorded loss of $2,822,957 was impacted by $862,656 in share-based compensation expense, $306,811 in exploration expense, $307,442 in consulting expense, and $325,467 in marketing expenses.

The exploration and consulting expenses for the first quarter 2022 and prior quarters relate to the preselection of prospect properties, geological and geophysical assessment of properties leading towards drilling, and hiring of consultants over employees to gain access to certain levels of expertise and to maintain flexibility. Whereas the marketing expenses were in an effort to improve necessary investor education to increase shareholder value and attract the requisite capital to advance the Company's exploration projects.

During the first quarter 2022 the Company also spudded the Rankin 01-17 well drilling to a depth of 5,860 feet. The Souris River zones had good porosity and low water saturation including an average helium percentage of up to 0.4%. Additionally, the Company spudded its second exploration well, WNG 11-22.

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- Fourth Quarter 2021 Three months ended December 31, 2021

The recorded loss of $3,223,768 for the three months ended December 31, 2021, was impacted by $1,488,260 in share-based compensation expense, $555,151 in exploration expense, $209,833 in consulting expense, and $568,524 in marketing expenses.

- Third Quarter 2022 Three months ended September 31, 2021

The recorded loss of $3,657,343 for the three months ended September 30, 2021, was impacted by $1,549,139 in share-based compensation expense, $602,648 in exploration expense, $533,357 in consulting expense, and $561,439 in marketing expenses.

- Second Quarter 2021 Three months ended June 30, 2021

The recorded loss of $3,032,235 for the three months ended June 30, 2021, was impacted by $1,147,932 in share-based compensation expense, $372,500 in exploration expense, $430,000 in consulting expense, and $827,949 in marketing expenses.

- First Quarter 2021 Three months ended March 31, 2021

The recorded loss of $629,687 for the three months ended March 31, 2021, was impacted by $235,712 in share-based compensation expense and $273,559 in exploration expense as the Company increased its exploration activities.

SUPPLEMENTARY INFORMATION

SELECTED ANNUAL INFORMATION

The following is selected annual consolidated financial information from Avanti's audited financial statements for each of the three most recently completed years ended December 31. This information should be read in conjunction with the applicable interim unaudited and annual audited financial statements and related notes thereto.

		2022		2021		2020
Net Loss	$	(8,294,086)	$	(10,558,570)	$	(543,756)
Basic & diluted loss per share	$	(0.14)	$	(0.26)	$	(0.05)
Common shares outstanding
Weighted average shares outstanding		58,337,909		40,558,030		12,061,121
Exploration and evaluation assets	$	27,155,853	$	1,493,529	$	-
Total Assets	$	30,345,071	$	17,060,963	$	1,784,535
Net Assets	$	25,709,714	$	15,435,154	$	1,769,675

Prior to the current fiscal year ended December 31, 2022, the significant portion of the expenses incurred are as follows:

26

Fiscal year ended December 31, 2021

During the year, the Company’s operations reflect its exploration of the Montana Project, and its on-going focus on evaluating further opportunities within the helium sector. The Company incurred a net loss of $10,558,570, compared with the $534,756 incurred in 2020. However, in 2021 the expenses incurred include the significant non-cash charge of $4,421,043 for share-based compensation to recognize the grant of stock options during the year. The Company incurred marketing expenses of $1,957,912 compared to $nil in 2020. The marketing expenses consist of promotional expenses incurred to increase investor awareness, including lead generation, digital marketing, news dissemination, social media and website design. The remaining increase in operating expenses primarily reflects the Company’s on-going focus on identifying prospective helium projects.

Additionally, in fiscal 2021 the Company acquired additional helium land rights totaling $10,960,031, and spudded its first helium exploration well, Rankin 01-17.

Fiscal year ended December 31, 2020

During the year, the Company’s operations reflect its singular focus on maintaining operations and evaluating opportunities to negotiate an agreement to acquire an interest in a material asset or business which will constitute the Company’s ongoing operations. The Company incurred a net loss of $534,756, compared with the $320,794 incurred in 2019. However, in 2020 the expenses incurred include the significant non-cash charge of $392,000 for share-based compensation to recognize the grant of stock options during the year. Absent the non-cash charge, and items related to transfer agent and filing fees, all expense categories were reduced dramatically. The reduction in expense categories reflect the Company’s efforts to trim outflows during a year of transition.

CAPITAL EXPENDITURES

The Company exploration and evaluation assets increased in recorded costs by $15,705,797 (see above discussion on Exploration and Evaluation Asset Activity) and purchases of property and equipment of $8,088 for the fiscal year ended December 31, 2022.

Subsequent to the reporting year, the Company entered into a lease agreement for six high-pressure gaseous trailers, with an option to purchase. The lease commences on or about November 1, 2023, for a lease term of 36 months. The undiscounted, aggregate, lease payments or option to purchase the trailers are approximately US $5,000,000.

LIQUIDITY AND CAPITAL RESOURCES

ASSETS

Total assets increased by $13,284,108 from the prior year end to $30,345,071, the changes of which principally relate to the increase of $15,800,117 in exploration and evaluation assets and primarily relate to the drilling and completions of the helium wells in US asset segment (despite the decision to allow the Knappen Alberta lease expire resulting in a reduction (impairment) in exploration and evaluation assets and offsetting expense of $240,065). The translated value of the Company’s exploration and evaluation assets were Impacted by $94,320 due to the change in the foreign exchange rate. Additionally, during the year receivables increased due to refunds related to a land acquisition, Canadian sales tax, and legal refund related to an equity offering.

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During the reporting period, the Company transferred its “investments” to “cash and cash equivalents”. “Cash and cash equivalents” declined from the aggregate of “cash” and “investments” by $2,548,633. The changes within cash and cash equivalents was used to provide working capital to fund operations, and moreover to fund the investment in $15,929,862 in exploration and evaluation assets. Additionally, current assets saw prepaid expenses decrease by $109,318 as the Company was able to avoid prepayment of certain expenditures, i.e., rent, insurance, information technology, consulting and exploration expenses, which were recognized during the fiscal year.

LIABILITIES

Total liabilities increased by $3,009,549 from the prior year-end to $4,635,358. Of the changes in liabilities, the largest decrease in accrued liabilities relates to the drilling and completions activities in the US asset segment, and in particular the drilling and completion of the appraisal well, WNG 10-21. Accrued liabilities as at December 31, 2022 include amounts related to WNG 10-21, approximate US $2,113,656 (translated CAD $2,862,735). Other year end accruals related to year-end audit, tax preparation, transfer pricing, and sustaining and listing fees.

There was a net increase of $44,972 in the Company’s decommissioning obligation, the changes within relate to a change in estimate of <$18,697>, and the recognition of an additional of $41,117 related to the well WNG 1021. The majority of the decommissioning obligations are not expected to be paid for approximately 14 years in the future and will be funded from general Company resources at that time.

LIQUIDITY

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

The majority of the Company’s liabilities are classified as current, the bulk of which (i.e., approximately US $2,113,656, translated CAD $2,862,735 relate to the accrual of expenditures for the drilling and completion of WNG 10-21, which was subsequently paid out of the Company’s working capital and the net proceeds from the subsequent equity offering. The Company's approach to managing liquidity risk is to ensure that it will have sufficient financial resources to meet liabilities when due. As at December 31, 2022, the Company had negative working capital of $1,351,553 (December 31, 2021 – positive working capital of $4,002,924).

As of April 28, 2022, Avanti had $1,261,135 in cash and cash equivalents on hand.

WORKING CAPITAL

The following table presents working capital information as at December 31, 2022 and 2021:

As at December 31, 2022	As at December 31, 2021 Change
Current assets 3,112,052 $ Current liabilities (4,463,606)	5,627,269 $ (2,515,217) $ (1,624,345) (2,839,261)
Balance, December 31, 2022(1) (1,351,554) $	4,002,924 $ (5,354,478) $

Note 1: Working capital is calculated by subtracting current liabilities from current assets, and is further discussed in NonIFRS Measures

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Changes in working capital relate to the net decreases in current cash and cash equivalents of $2,548,633 (i.e., decrease in investments of $4,041,315, as all amounts are now recognized as cash and cash equivalents, and an offsetting increase in cash and cash equivalents of $1,492,682). Changes in working capital was also impacted by an increase in accounts payable and accrued liabilities by $2,967,877, of which approximately US $2,113,656 (translated CAD $2,862,735) relate to the accrual of expenditures for the drilling and completion of WNG 10-21.

The net decrease in cash and cash equivalents is a function of the timing of exploration and evaluation activities and the need to fund growing operations. Working capital was also highly impacted by increases in accounts payable and accrued liabilities related to the timing of the activity related to the WNG 10-21 appraisal well and the Company subsequent financing.

Until the Company produces and sells its helium, Avanti believes that its working capital position will continue to fluctuate.

FINANCINGS

The Company’s activities have been funded to date through the issuance of common shares. Please refer to the financial risk section in this MD&A.

• i) Effective March 15, 2022, the Company closed a bought Short Form Prospectus offering issuing 8,414,550 units (“Unit”) at a price of $1.23 per unit. Gross proceeds of $10,349,897 were received by the Company. Each Unit consisted of one common share and one half of one share purchase warrant (“Unit Warrants”). Each whole Unit Warrants entitles the holder to purchase one common share at a price of $1.60 per share until the Unit Warrant expiry date of March 15, 2024. Within the Unit, a value of $1.17 was attributed to common share and $0.06 to the warrants using the residual value method. The Company allocated $9,845,024 to share capital and $504,873 to warrants. The Company incurred share issuance costs of $1,067,615, of which $968,311 was allocated to common shares and $99,305 to warrants.

The Company also issued 589,018 broker warrants (“Broker Warrant”). Each Broker Warrant entitles the holder to purchase one common share at a price of $1.23 per share until the warrant expiry date of March 15, 2024. The fair value of the Broker Warrants was determined to be $457,827 and estimated on the date of issue using the Black-Scholes option valuation model with the following weighted average assumptions: dividend yield of $nil, risk free interest rate of 1.80%, expected life of 2 years and expected volatility of 137%.

• ii) Effective October 24, 2022, the Company closed an overnight market best efforts offering issuing 9,757,575 units (“Unit”) at a price of $0.80 per unit. Gross proceeds of $6,440,000 were received by the Company. Each Unit consisted of one common share and one transferable share purchase warrant (“Unit Warrants”). Each whole Unit Warrant entitles the holder to purchase one common share at a price of $0.80 per share until the Unit Warrant expiry date of October 24, 2024. Within the Unit, a value of $0.54 was attributed to common share and $0.12 to the warrants using the residual value method. The Company allocated $6,635,151 to share capital and $1,170,909 to warrants. The Company incurred share issuance costs of $710,114, of which $565,843 was allocated to common shares and $144,271 to warrants. Of the Units issued, Directors and Officers subscribed to 544,600 Units for gross proceeds of $359,436.

The Company also issued 683,030 broker warrants (“Broker Warrants”). Each Broker Warrant entitles the holder to purchase one common share at a price of $0.66 per share until the warrant expiry date of October 24, 2024. The fair value of the Broker Warrants was determined to be $137,479 and estimated

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on the date of issue using the Black-Scholes option valuation model with the following weighted average assumptions: dividend yield of $nil, risk free interest rate of 3.87%, expected life of 2 years and expected volatility of 89.5%.

• iii) During the year ended December 31, 2022, the Company issued 315,130 common shares upon the exercise of existing share purchase warrants for proceeds of $275,130. As a result, a value of $434,339 was transferred from equity reserve to share capital. A Director and Officer exercised 20,000 warrants with an exercise price of $0.60 for gross proceeds of $12,000.

Subsequent to the reporting year, the Company closed a public offering of 9,035,665 units of the Company (“Offering Unit”) at a price of $0.70 for aggregate gross proceeds of $6,324,966. Each Offering Unit consisted of one common share and one transferable share purchase warrant (“Unit Warrant”). Each Unit Warrant entitles the holder to purchase one common share at a price of $1.00 until February 6, 2024. Directors and officers subscribed for a total of 545,000 Offering Units of the public offering for aggregate gross proceeds of $359,700.

In connection with the Offering, the Company issued to the Agents 516,079 Broker Warrants options. Each Broker Warrant entitles the holder to purchase one common share at a price of $0.70 until February 6, 2024.

The Company did not default nor was it in arrears on any contractual commitments or leases and is not subject to any penalties related to delayed payments.

CAPITAL MANAGEMENT

Currently, and in addition to the Contractual Commitments (noted below), and in accordance with Avanti’s strategic plan, cash resources will be judiciously managed, however, it will generally be used for the following:

Ensuring the Company’s solvency;

• To safeguard the Company’s ability to continue as a going concern and ensure Its solvency;

• To maintain flexibility in order to preserve the Company’s ability to meet financial obligations with a long-term view of maximizing shareholder value; and,

• To maintain sufficient cash and cash equivalents and short-term investments to fund its business plan, inclusive of:

• Progress toward the development of a helium mid-stream production facility in the greater Knappen prospect area;

• Progress toward the sale (off take) of the Company's helium and resources;

• Continued evaluation and acquisition of land assets; and

• Continued Drilling and completion of helium wells in the Greater Knappen prospect area.

There are currently no known trends or restrictions in Avanti’s capital resources.

Given the Company’s stage of development, Avanti has tried to limit its contractual commitments (see below). As a result, the Company has fairly wide discretion on what expenses are incurred and when such expenses may be incurred. Thus, expenditures and budgets are based on exploration opportunities and plans, and available resources at the time. Should the Company have liquidity concerns, it may postpone and / or terminate expenditures or activities. Based on financings and the aforementioned capital management objectives, the Company expects working capital to continue to fluctuate.

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Credit risk of any deposits is linked to the insurance coverage limits as prescribed by the Canadian Deposit Insurance Corporation and that of Scotia Bank.

The Company incurred a net loss of $8,294,086 during the year ended December 31, 2022 (December 31, 2021 – $10,558,570). As at December 31, 2022, the Company had negative working capital of $1,351,554 (December 31, 2021 – positive working capital of $4,129,704). Management has determined; however, that the Company has adequate resources to continue as a going concern for the foreseeable future, which management has defined as being at least the next 12 months. In arriving at this judgment, management has considered cash flow projections through the next 12 months from the date of these consolidated financial statements. Future operations of the Company will be dependent on its ability to raise additional equity or debt financing, and the attainment of profitable operations.

CONTRACTUAL COMMITMENTS

The following table details the Company’s remaining contractual maturity for its financial liabilities as at December 31, 2022. The table has been prepared based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.

Contractual commitments Trade accounts payable and accrued liabilities Lease liabilities	Years After 5 Year 1 Year 2 3 to 5 years
	246,214 $ - $ - $ - $ 4,461,406 - - - 2,691 - - -
	4,710,311 $ - $ - $ - $

Subsequent to the year end, the Company renewed on a month to month, office lease commitment, with monthly payments of $8,750, which are not included in the above table.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

TRANSACTIONS WITH RELATED PARTIES

During the years ended December 31, 2022 and 2021, the Company had the following related party expense transactions:

Related Party Pacific Equity Management Corp. Elbert Wong Hatchette Holdings Ltd. Malaspina Consultants Inc.	December 31, December 31, 2022 2021
	- $ 4,500 $ 180,000 189,000 71,494 57,388 22,500 30,000
	273,994 $ 280,888 $

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The Company identified the following related party transactions.

Related Party Nature of Transaction Consulting services for the service of the former Chief Financial Officer and Corporate Secretary of the Company. The Elbert Wong agreement commenced September 1, 2019, on a month-tomonth basis and was terminated April 1, 2021. The contracted amount was $500 per month.

Consulting fees for the services of Rob Gamley, President, Director, and Audit Committee Chair of the Company. The Hatchette Holdings Ltd. agreement was effective September 1, 2019, and was amended (“Hatchette”) effective April 1, 2021, on a month-to-month basis. The contracted amounts was $1,000 per month to April 2021, and $15,000 thereafter.

Consulting services for the service of Natasha Tsai, being the former Chief Financial Officer and Corporate Secretary of the Company. The agreement commenced April 1, 2021, on a Malaspina Consultants Inc. month-to-month basis and was terminated September 15, 2022. The contracted amounts ranged from $50 to $185 per hour.

An agreement for share office expenses and rent in Vancouver, BC. The three-year agreement commenced July 1, 2017, Pacific Equity Management expired December 31, 2020, and was extended on a month-toCorp. month basis till it was terminated on September 30, 2022. The contracted amounts for the office rent and supplies was $30,000 per year.

PROPOSED TRANSACTIONS

Avanti is moving towards constructing its own mid-stream helium production facility or engaging a third party to provide mid-stream production facilities and operations (the latter of which would involve the third party providing the asset and the Company recording a right-of-use asset), and sales (or offtakes) of helium. These may involve a number of transactions in the normal course of business; however, at the time of this report the Company has no undisclosed or proposed transactions.

RISK AND UNCERTAINTIES

The Company remains confident in its abilities to achieve its long-term corporate objectives; however, like our competitors and other companies at similar stage of development, it is exposed to risks and uncertainties.

Avanti's exploration activities are concentrated in the Western Canada and Montana, where activity is highly competitive, albeit most competitors are at a similar stage of development but include a variety of differentsized companies. Avanti is subject to a number of risks that are also common to other organizations involved in

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the helium, or gas, industries. Such risks include finding and developing helium reserves at economic costs, estimating amounts of recoverable reserves, the eventual production of helium in commercial quantities, marketability of helium, fluctuations in commodity prices, stock market volatility, debt service which may limit timing or amount of commercialization as well as market price of shares, financial and liquidity risks and environmental and safety risks.

In order to reduce exploration risk, Avanti employs or contracts highly qualified and motivated professionals who have demonstrated the ability to generate quality proprietary geological and geophysical prospects. Avanti has retained independent specialized consultants that assist the Company in evaluating recoverable amounts of helium reserves. Such estimates will vary from actual results and such variations may be material.

Avanti is exposed to market risk to the extent that the demand for helium within Canada and the United States and abroad. External factors beyond the Company's control may affect the marketability of helium produced. These factors include helium prices and contract terms, foreign currency exchange rate which, in turn, responds to economic and political circumstances throughout the world. In directly, oil and gas prices and economics impact North American supply and demand fundamentals for resources required for helium exploration and eventual production.

Exploration, and in the future production of helium, is capital intensive. In addition to funds flow, the Company accesses the equity markets as a source of new capital. Funds flow also fluctuates with changing helium prices. Equity and debt capital are subject to market conditions, and availability may increase or decrease from time to time.

The Company's business and operations were impacted by COVID-19. Actions taken to reduce the spread of COVID-19 resulted in volatility and disruptions in regular business operations, supply chains and financial markets, as well as declining trade and market sentiment. The extent to which Avanti’s operational and financial results continue to be affected by COVID-19 will depend on whether, and to what extent, actions are taken by businesses and governments in response to any resurgence of the pandemic and the speed and effectiveness of responses to combat any such resurgence of the virus.

Additional information regarding risk factors including, but not limited to, business risks is available in our Annual Information Form for the year ended December 31, 2022, a copy of which may be accessed through the SEDAR website (www.sedar.com).

ENVIRONMENTAL RISK

The Company is committed to ensuring that all stakeholders are aware of both their responsibility for safety matters and protection of the environment and how integral those matters are to Wavefront’s business. These risks are managed by executing policies and standards that are designed to comply with or exceed government regulations and industry best practices. In addition, Avanti maintains a system, in respect of our operations, that identifies, assesses, and controls safety, security, and environmental risk and requires regular reporting to Senior Management and the Board of Directors. The Safety, Health and Environmental Affairs Operational Committee of the Company provides recommended environmental policies for approval by our Board and oversees compliance with government laws and regulations. Monitoring and reporting programs for environmental, health and safety performance in day-to-day operations, as well as inspections and assessments, are designed to provide assurance that environmental and regulatory standards are met. Contingency plans are in place for a timely response to an environmental event.

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CLIMATE GOVERNANCE AND RISK MANAGEMENT

Aspects of Avanti’s business strategy may be impacted by future regulatory changes and associated compliance costs, commodity prices, access to markets and capital, social preferences, general capital investment declines in the energy sector, and reputational and Environmental, Social and Governance (“ESG”) risk (related to climate change, human rights and ethical and sustainable business practices), and technology development.

The Company currently has a Safety, Health and Environmental policy as part of its Corporate policy manual. The Safety, Health and Environmental policy assists the Board in fulfilling its obligations relating to safety, health and environmental matters concerning Avanti. Safety and protection of the environment have always been top priorities in Avanti’s business operations. Avanti believes dedication to safety and environmental protection go beyond implementing the right policies and having the right equipment or department; but ensuring that everyone at Avanti is aware of both their responsibility for safety matters and protection of the environment and how integral those matters are to the Company’s business.

Avanti is in the process of augmenting its Safety, Health and Environmental policy to include a multi-disciplinary risk management process, which considers ESG and climate change risks and opportunities as part of Avanti’s business evaluation. Processes for identifying, assessing, and managing climate-related issues will be integrated into the Company’s enterprise risk management (“ERM”) framework.

FINANCIAL AND OTHER INSTRUMENTS

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company’s critical accounting policies and estimates are disclosed in Note 3, “Significant Accounting Policies” and Note 5, “Critical Accounting Estimates and Judgments” of the Consolidated Financial Statements for the year ended December 31, 2022.

CHANGES IN ACCOUNTING POLICIES

The changes in accounting policies are disclosed in Note 4, “Changes In Accounting Policies And New Standards Issued But Not Yet Adopted”, of the Consolidated Financial Statements for the year ended December 31, 2022.

CREDIT RISK

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

The Company’s cash and investments are held at a large Canadian financial institution. As a result, the Company does not believe it is exposed to significant credit risk, however, the Company’s maximum exposure is equal to the carrying value of these balances.

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.

FOREIGN CURRENCY RISK

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Avanti is exposed to currency risks as currently some exploration, drilling and completion expenses are in the United States of America. Therefore, the Company is exposed to fluctuations in exchange rates to the extent that a strengthening Canadian dollar environment will result in a negative impact and a weakening Canadian dollar environment will result in positive impact on our income from operations.

The Company is exposed to foreign currency risk on fluctuations related to cash and accounts payable and accrued liabilities that are denominated in a foreign currency. As at December 31, 2022, a 10% fluctuation in the foreign exchange rate of the United States dollar against the Canadian dollar would affect the Company’s loss and comprehensive loss for the period by approximately $400,034 (December 31, 2021 - $1,018).

Avanti does not use derivative instruments to reduce its exposure to foreign currency risk.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash, receivables, investments, reclamation bonds, and accounts payable and accrued liabilities. The carrying value of receivables, accounts payable and accrued liabilities, approximate fair value due to their short terms to maturity. The carrying value of the reclamation bond approximates its fair value. Cash and investments are measured at fair value using level 1 inputs.

INTEREST RATE RISK

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates.

The Company is exposed to interest rate risk to the extent that the cash and investments maintained at the financial institutions are subject to a floating rate of interest. The interest rate risk on cash and investments are not considered significant, as the investments have fixed interest rates.

DESCRIPTION OF SHARE CAPITAL

As at December 31, 2022, Avanti’s share capital consisted of the following:

Common shares
Authorized: Issued and outstanding: Convertible into common shares Share purchase warrants Incentive stock options	unlimited 68,050,957 15,236,898 5,365,000 20,601,898
Fully diluted share capital:	88,652,855

Subsequent to the reporting year, the Company closed a public offering of 9,035,665 units of the Company (“Offering Unit”) at a price of $0.70 for aggregate gross proceeds of $6,324,966. See the above section titled Financing on page 28 for further discussion.

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As at April 28, 2023, Avanti’s number of issued and outstanding shares is 77,086,623, fully diluted 109,540,264.

MARKET FOR SECURITIES

Avanti Helium Corp.’s common shares are traded on the TSX Venture Exchange ("TSX-V") under the symbol "AVN" and are listed for trading on the OTC, a U.S. based securities trading system, under the symbol "ARGYF".

WARRANTS GRANTED DURING THE PERIOD

During the years ended December 31, 2022 and 2021, the Company issued the following warrants:

==> picture [438 x 109] intentionally omitted <==

----- Start of picture text -----

Date of Number of Exercise
Grant Warrants Warrant Holder Price Epiry Date
15-Mar-22 4,207,275 Unit Placees $ 1.60 15-Mar-24
15-Mar-22 589,018 Agent Underwritter $ 1.23 15-Mar-24
24-Oct-22 9,757,575 Unit Placees $ 0.80 24-Oct-24
24-Oct-22 683,030 Agent Underwritter $ 0.66 24-Oct-24
15,236,898
----- End of picture text -----

Subsequent to the year ended December 31, 2022, the Company issued 4,517,833 Unit Warrants, and 516,079 Broker Warrants. See the above section titled Financing on page 28 for further discussion.

WARRANTS OUTSTANDING

As at December 31, 2022, the following warrants were issued and outstanding:

Date of Grant	EpiryDate	Number of Warrants Exercise Price 4,207,275 1.60 $ 589,018 1.23 $ 9,757,575 0.80 $ 683,030 0.66 $ 15,236,898
15-Mar-22 15-Mar-22 24-Oct-22 24-Oct-22	15-Mar-22 15-Mar-22 24-Oct-22 24-Oct-22

Subsequent to the year ended December 31, 2022, 4,517,833 Unit Warrants were issued, and 516,079 Broker Warrants were issued to Agents related to the subsequent Offering.

OPTIONS GRANTED DURING THE PERIOD

The Company maintains a Stock Option Plan under which the Company is authorized to grant executive officers and directors, employees and consultants incentive stock options for up to 10% of the issued and outstanding common stock of the Company. Under the Stock Option Plan, the exercise price of each option may equal the market price of the Company’s common stock, less than the “Discounted Market Price” (as defined in the policies of the TSX Venture Exchange) at the date of grant, provided that the exercise price shall not be less than $0.05 per share. All stock options awarded are exercisable for a period of up to ten years, and vest at the discretion of the Board of Directors.

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The following incentive stock options were issued during the reporting period.

==> picture [463 x 79] intentionally omitted <==

----- Start of picture text -----

Date of Exercise
Grant Number of Options Option Holder Price Epiry Date
29-Mar-22 214,000 Director & Officers $ 1.36 29-Mar-27
29-Mar-22 721,000 Employees & Consultants $ 1.36 29-Mar-27
935,000
----- End of picture text -----

Subsequent to the year ended December 31, 2022, the Company issued 2,300,000 stock options. The option have an exercise price of $ 0.80, expire five years from the date of grant, expiring on March 1, 2028, and vest quarterly over one year. Of the 2,300,000 options issued, 1,010,00 were issued to Directors and Officers of the Company.

OPTIONS OUTSTANDING

As at December 31, 2022, the following options were outstanding:

Date of Grant	EpiryDate	Number of Options Exercise Price 1,350,000 0.30 $ 1,045,000 1.45 $ 450,000 (i) 1.30 $ 150,000 2.45 $ 1,200,000 1.64 $ 75,000 0.64 $ 210,000 1.53 $ 885,000 1.36 $ 5,365,000
30-Nov-20 11-Mar-21 31-May-21 12-Jul-21 23-Aug-21 05-Nov-21 29-Dec-21 29-Mar-22	30-Nov-20 11-Mar-21 31-May-21 12-Jul-21 23-Aug-21 05-Nov-21 29-Dec-21 29-Mar-22

Note: during the fiscal year ended December 31, 2022, the exercise price of the noted options was modified from $2.70 to $1.30.

Subsequent to the year ended December 31, 2022, the Company issued 2,300,000 stock options. The options have an exercise price of $ 0.80, expire five years from the date of grant, expiring on March 1, 2028

CONTROLS AND PROCEDURES

Under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”), the Company, as a “Venture Issuer” files on an annual basis Form 52-109FV1, the “Certificate of Annual Filings – Venture Issuer Basic Certificate” (the “Annual Form”) which does not include representations relating to the establishment and maintenance of disclosure controls and procedures (“DC&P”) and internal controls over financial reporting (“ICFR”), as defined in NI 52-109. In particular, the certifying officers filing the Annual Form are not making any representations relating to the establishment and maintenance of:

• i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under

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securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and,

• ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

However, the Company’s Management, and its certifying officers on the Certificates are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in those Certificates. The Certificates do contain representations which confirms that Management has established processes, which are in place to provide the certifying officers with sufficient knowledge to support their written representations that they have exercised reasonable diligence that (i) the financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the financial statements and that (ii) the financial statements fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of the date of and for the periods presented by the financial statements.

The Company’s certifying officers of the Certificates are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in those Certificates. However, the reader should be aware that inherent limitations on the ability of the certifying officers to design and implement, on a cost-effective basis, DC&P and ICFR for the Company as defined in NI 52-109, may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation, including this Management Discussion & Analysis.

FORWARD LOOKING STATEMENTS

Certain statements contained herein regarding Avanti and its operations constitute “forward-looking statements” within the meaning of Canadian securities laws and the United States Private Securities Litigation Reform Act of 1995. The information herein contains forward-looking statements and assumptions. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, "expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and other similar expressions. Such statements and assumptions also include those relating to guidance, results of operations and financial condition, capital spending and financing sources. By their nature, forward-looking statements are subject to numerous known and unknown risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, actual results may differ materially from those predicted. The Company is exposed to numerous operational, technical, financial and regulatory risks and uncertainties, many of which are beyond its control and may significantly affect anticipated future results.

The financial risks the Company is exposed to include, but are not limited to, access to debt or equity markets and fluctuations in interest rates. The Company is subject to regulatory legislation; compliance with which may require significant expenditures and non-compliance with which may result in fines, penalties or production restrictions.

We provide this forward-looking information for Avanti’s business in order to describe the Management expectations and targets by which Avanti measures its success and to assist Avanti shareholders in understanding Avanti’s financial position as at and for the periods ended on the dates presented in this report. Readers are cautioned that this information may not be appropriate for other purposes. We caution that such “forward-

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looking statements” involve known and unknown risks and uncertainties that could cause actual results and future events to differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. For a more detailed description of these risks, and of other risks to which Avanti is subject, please see the "Risks and Uncertainties", “Environmental Risk” and “Financial and Other Instruments” sections in this Management Discussion and Analysis. In determining Avanti's forward-looking statements, Avanti considers material factors including assumptions and expectations regarding customer demand and adoption rates for helium; helium prices and interest and foreign exchange rates; and the availability and cost of inputs, labour and services, patent, technology and competitive risk. Many of these factors are beyond Avanti’s control and have effects which are difficult to predict. These material risk factors and material assumptions are not intended to represent a complete list of the factors that could affect Avanti; please see other factors that are described in further detail in Avanti’s continuous disclosure filings, from time to time, and available on SEDAR at www.sedar.com . Investors and the public should carefully consider these factors, other uncertainties and potential events, and the inherent uncertainty of forward-looking statements when relying on these statements to make decisions with respect to Avanti.

The forward-looking statements contained herein represent Avanti's expectations at April 28, 2023, and, accordingly are subject to change after such date. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

ADDITIONAL INFORMATION

Additional information regarding Avanti Helium Corp. can be found on System for the Electronic Document Analysis and Retrieval (“SEDAR” at www.sedar.com).