Big Tree Carbon Inc. — Management Reports 2022

Nov 24, 2022

Big Tree Carbon Inc.

(formerly AurCrest Gold Inc.)

MANAGEMENT’S DISCUSSION AND ANALYSIS For the nine months ended September 30, 2022 (Expressed in Canadian Dollars)

BIG TREE CARBON INC. (formerly AurCrest Gold Inc.) MANAGEMENT’S DISCUSSION AND ANALYSIS

The following management’s discussion and analysis (“MD&A”) of the financial condition and results of the operations of Big Tree Carbon Inc. (“Big Tree” or the “Company”) (formerly AurCrest Gold Inc.) constitutes management’s review of the factors that affected the Company’s financial and operating performance for the nine months ended September 30, 2022. This MD&A was written to comply with the requirements of National Instrument 51-102 – Continuous Disclosure Obligations. This discussion dated November 23, 2022 should be read in conjunction with the Company's condensed consolidated interim financial statements for the nine months ended September 30, 2022 and the audited annual consolidated financial statements for the years ended December 31, 2021 and 2020, together with the notes thereto. Results are reported in Canadian dollars and have been prepared in accordance with International Financial Reporting Standards (“IFRS”).

The Company trades on the TSX Venture Exchange under the symbol “AGO”. Further information about the Company and its operations can be obtained from the offices of the Company or at the Company’s website at www.aurcrest.ca or from www.sedar.com.

EXECUTIVE SUMMARY

Big Tree is an Ontario-based natural resources development company focused on the advancement of indigenous partnerships in the spirit of the 92[nd] Call To Action of the Truth and Reconciliation Commission’s Final Report. The Company has established two subsidiary corporations to accommodate natural resource economic growth opportunities. The Company benefits from the inclusion of indigenous perspectives to holistic resource development at the management and Board levels, including a majority indigenous composition on the Board.

Big Tree Carbon Corp. (“BTCC”), as a subsidiary corporation, is focused on the development of long-term greenhouse gas Emissions Reduction Benefits (“ERBs”) in partnership with First Nations and indigenous groups, primarily through the development of forestry-based carbon sequestration projects.

Wiigwaasaatig Energy Inc. (“WEI”), as a subsidiary corporation, is focused on the development of renewable energy in partnership with First Nations and indigenous groups, through the development of local renewable energy infrastructure projects and the deployment of innovative renewable energy technologies.

On April 22, 2022, the Company changed its name to Big Tree Carbon Inc. to better reflect the new opportunity in the carbon resource business. As the parent publicly-listed corporation, Big Tree operates as a mineral exploration company focused on the acquisition, exploration, and development of mineral resources. The Company has actively engaged and involved local First Nations communities in advancing exploration projects to date and will continue to develop indigenous inclusion and participation with the Company’s exploration activities and overall corporate development.

The mission statement of the Company, applicable to the parent company and subsidiary corporations, is as follows:

• 1) Create and maintain important relationships with the local indigenous peoples and to share the benefits the industry has to offer through employment and ownership in the Company’s efforts;

• 2) Capitalize on the experience and technical abilities of the Company’s management team to effectively explore for gold and associated metals deposits in Northwestern Ontario;

• 3) Source and employ the most advanced exploration technologies available;

• 4) Enter into strategic relationships and generate sufficient capital to maintain a continuously high level of exploration and development activity; and

• 5) Increase shareholder value by adhering to Big Tree’s objectives.

Big Tree Carbon Inc. MD&A September 30, 2022

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BIG TREE CARBON INC. (formerly AurCrest Gold Inc.) MANAGEMENT’S DISCUSSION AND ANALYSIS

Exploration and evaluation assets

Big Tree holds several mineral exploration properties in the Red Lake and Birch-Uchi metamorphic belts, on which the Company is focusing its exploration activities: The following exploration property descriptions reflect minor readjustments to subproperty cell claim arrangement following the April 22[nd] 2022 change of Company name.

• The Ranger Lake Area Gold Property consists of 236 mineral cell claims totaling approximately 4,790 hectares, staked by the Company and held 100% by the Company with no underlying royalty to third parties. The property lies in the Ranger and Little Otter Lake mining townships, partly within the Municipality of Red Lake, and is located approximately 10 kilometres east of the Red Lake and Campbell mining complex.

The Company is currently permitted to conduct exploration activities on the property, including diamond drilling. With the assistance of Windfall Geotek’s (“Windfall”) CARDS AI (“AI”) system and Activation Laboratories (“ActLabs”) spatiotemporal geochemical hydrocarbon (“SGH”) geochemical modelling, in 2021 the Company completed and announced the results of its initial diamond drilling program. Work has continued while the Company interprets information gathered from this first drill program, including SGH soil sampling surveys completed on further targets, and completion of a drone-supported magnetometry survey. Field work is ongoing.

The Company has subdivided the holdings into two subproperties, being the Ranger and Ranger East groupings. The Ranger subproperty consists of 125 mineral cell claims totalling approximately 2,540 hectares, and includes all cell claims subjected to exploration projects conducted by the Company through 2021. The Ranger East subproperty consists of 111 mineral cell claims totalling approximately 2,250 hectares that were subject of grassroots prospecting through 2021, and remain an area of future exploration activities.

• The Richardson Lake Area Gold Property consists of 175 mineral single, boundary and multicell cell claims totaling approximately 3,276 hectares, held 100% by the Company with no underlying royalty to third parties. The property lies in the Casummit Lake Area and Brownstone Lake Area mining townships, approximately 8 kilometres from the Springpole gold deposit and adjacent to the past-producing Argosy Mine.

The Company has completed several exploration programs on the property, including gold discoveries from drilling programs in 2012 and 2014. In 2021, the Company has completed an SGH soil sampling program on the western shore of Richardson Lake. In 2022, the Company completed an innovative lake bottom sediment SGH sampling program on the western embayments of Richardson Lake, with results pending.

• The Trout Lake South Gold Property (formerly Dancing Man Gold Property) consists of 654 mineral cell claims totaling approximately 13,280 hectares, held 100% by the Company with no underlying royalties to third parties. The property lies in the Joyce River Area, South of the Otter Lake, Gerry Lake, and Knott mining townships, spanning approximately 16.2 kilometres north to south and 33.3 kilometres east to west. The Company completed a limited grassroots prospecting program in 2021 where existing forestry roads permitted access. Field work is ongoing.

The Company also retains an interest in several non-core mineral claim assets across Northwestern Ontario:

• The Western Fold Gold Property was an exploration prospect for the Company, contiguous to the Richardson Lake Area Gold Property, consisting of 110 mineral cell claims totaling approximately 2,170 hectares in the Brownstone Lake Area and Casummit Lake Area mining townships. The property was subject to an option agreement with Newrange Gold Corp. (“Newrange” and the “Newrange Option”) for the property. Newrange completed the exercise of the Newrange Option

Big Tree Carbon Inc. MD&A September 30, 2022

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BIG TREE CARBON INC. (formerly AurCrest Gold Inc.) MANAGEMENT’S DISCUSSION AND ANALYSIS

on December 23, 2021; the 110 mineral cell claims transferred to Newrange are subject to a 2% net smelter return royalty, of which 1% may be acquired by Newrange at any time for a $1,000,000 cash payment to the Company, and further subject to a 2-kilomentre Area of Influence for future mineral cell claims staked by Newrange. These cells form a part of Newrange’s “Birch North Property”.

• The Company holds a 100% interest in the McFaulds Lake base metals property in Ontario’s ‘Ring of Fire’ area.

• The Company retains a 35% interest in the Bridget Lake property in the Red Lake Mining District. The Bridget Lake property’s 65% interest is held by Evolution Gold Mining Operations Ltd. (the "Bridget JV Operator") The Company expects that this JV property will revert to an NSR holding, given the Bridget JV Operator’s potential exploration activities in this area.

Greenhouse gas emissions

Big Tree Carbon Inc. is involved with the development of long-term greenhouse gas emissions reduction benefits (“ERBs”) through sequestration of carbon dioxide by implementing improved forest management techniques (the “Forest Carbon Model”) and other potential environmental attributes in the traditional territories of the Company’s partner First Nations.

The Company is working with the Lac Seul First Nation (“LSFN”) and Anew Climate LLC (formerly Blue Source Canada ULC)(“Anew”) to develop an ERB project for the LSFN reserve lands and investigate similar opportunities within the LSFN traditional territory.

The Company is working with the Agoke Development Limited Partnership (“ADLP”), a corporation owned by the Eabametoong, Aroland, and Marten Falls First Nations, to develop an ERB project for the Ogoki Forest within the traditional territories of the ADLP-owner First Nations.

The Company continues to promote the Forest Carbon Model to other First Nations on a more regional scale, including First Nations located in other provincial jurisdictions.

Energy

Wiigwaasaatig Energy Inc. is mandated to establish renewable energy business partnerships with First Nations and the mineral exploration/development industry proximal to those First Nations. WEI is intended to reduce diesel dependency for electrical generation in remote First Nations and mineral development sites, provide an economic base contributor for partner First Nations, and develop supplierconsumer relationships with mineral developments proximal to First Nations communities.

WEI continues to work with Cat Lake First Nation (“CLFN”) to investigate and develop up to 40 MW of renewable energy in the CLFN traditional territory, including a phased blend of wind, solar, geothermal and biomass technologies.

WEI continues to promote innovative energy generation partnerships on a more regional scale, including First Nations located in other provincial jurisdictions.

ACTIVITIES

2022 Calendar Year

• In July 2022, the Company completed an innovative lake bottom sediment sampling program for SGH analysis, retrieving 253 total samples from the western embayment of Richardson Lake in the Richardson Lake Area Gold Property ; the results of the SGH analysis are pending.

• On May 19, 2022, the Company amalgamated 16 boundary cell mineral claims within the Richardson Lake Area Gold Property held 100% by the Company with no underlying royalty interests, resulting in 8 new single cell mineral claims.

Big Tree Carbon Inc. MD&A September 30, 2022

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BIG TREE CARBON INC. (formerly AurCrest Gold Inc.) MANAGEMENT’S DISCUSSION AND ANALYSIS

• On April 19, 2022, the Company conducted its Annual Shareholders’ Meeting, and secured shareholder assent to change the Company name from AurCrest Gold Inc. to Big Tree Carbon Inc.

• On April 7, 2022, the Company engaged IBK Capital Corp. to investigate strategic alternatives for mineral sector holdings to increase shareholder value, including potential transactions with interested parties for the Company’s various claim holdings.

• On March 1, 2022, the Company’s subsidiary corporation Big Tree Carbon Corp. announced its participation in the business plan submission by Agoke Development LP to the Ontario government as part of the Ogoki Forest management unit license renewal process, for forest carbon sequestration project development in the management unit, with said license being renewed for ADLP on April 1, 2022.

2021 Calendar Year

• On December 23, 2021, Newrange made their required payment of $100,000 and 500,000 common shares of Newrange to fully exercise their option to the Western Fold Gold Property.

• During the late fall of 2021, the Company completed a drone-borne magnetometry program at the Ranger Lake Gold Property, providing flight line coverage over both SGH survey zones previously surveyed by the Company.

• In November 2021, the Company announced the signing of an ERB management agreement (“ERBMA”) with ADLP for the realization of carbon credit value potential of 974,000 hectares of the Ogoki Forest (located in Northern Ontario).

• During the early fall of 2021, the Company completed an SGH and mobile metal ion (“MMI”) soil sampling program at the western shore of Richardson Lake, west of the 2012 and 2014 gold discoveries, to further refine the Company’s understanding of the Richardson Lake Gold Property’s potential gold mineralization; the results of the MMI survey is pending.

• During the late summer of 2021, the Company completed an SGH soil sampling program east of the AI target zone at the Ranger Lake Gold Property to investigate a historic exploration target identified in the early 1980s by others but with limited subsequent exploration work.

• During the summer of 2021, the Company completed a 9-hole, 1,683 metre drill program at the Ranger Lake Gold Property, with results announced by the Company on November 15, 2021.

• During the summer of 2021, the Company completed an SGH soil sampling program at Ranger Lake across the balance of the AI target, with results received in October 2021 indicating that all the lead indicators used to test for gold anomalies were present in the samples received.

• The Company further expanded the Ranger Lake Gold Property by staking 86 new mineral cell claims in February 2021 and 28 new claim cells in May 2021, for a total of 236 cells.

• In April 2021, the Company staked the Dancing Man Gold Property located 20 km east of the Ranger Lake drilling project and extends Company holdings a further 20 km east to adjoin the “Golden Sidewalk” district of the Birch-Uchi metamorphic belt. Preliminary field exploration began in the summer of 2021.

• The Company incorporated Big Tree Carbon Corporation (“BTCC”) in April 2021 as a subsidiary corporation, to hold and conduct the business of forest carbon offset monetization with the Company’s First Nations partner groups.

• The Company issued $1,136,500 flow-through units at a price $0.30 with a full warrant at $0.40 expiring in March 2023 to finance and initiate a preliminary drill program and grass roots prospecting at the Ranger Lake Gold Property and other exploration activities at the Company’s main property groupings.

• In February 2021, the Company received the ActLabs SGH analysis of the 2020 Ranger Lake Gold Property soil sampling program which indicated that all the lead indicators used to test for gold anomalies were present in the samples received.

Big Tree Carbon Inc. MD&A September 30, 2022

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BIG TREE CARBON INC. (formerly AurCrest Gold Inc.) MANAGEMENT’S DISCUSSION AND ANALYSIS

MINERAL PROPERTIES

Ranger Lake Area Gold Property

The Ranger Lake Area Gold Property is an exploration prospect that originally consisted of 50 mineral cell claims totaling approximately 1,010 hectares staked by the Company in October 2018, located approximately 10 kilometres due east of the Red Lake and Campbell Gold Mines in the world-famous Red Lake mining district. The Company acquired a further 50 claim cell units by staking adjacent and contiguous to the original property in June 2020, and staked 27 additional mineral cell claims in September 2020. The Company staked further sets of 31 and 50 mineral cell claims on February 12, 2021 and February 16, 2021 respectively. The Company staked 28 mineral cell claims on May 18, 2021. The combined acquisition of these claims brings Big Tree’s holdings in the area to a total of 236 claim cell units encompassing approximately 4,790 hectares.

The Company acquired the AI data modelling in September 2020, which identified three gold targets in the AI coverage area on the western portion of property; the CARDS coverage was not available for the eastern portion of the property at the time of acquisition. The Company completed an SGH soil geochemistry sampling program in November 2020 indicating several gold signature returns and identified a potential gold redox zone. The Company has completed an initial diamond drilling program testing on several of these targets in May/June 2021, completing nine NQ drill holes for a total of 1,683 metres. Drilling identified sulfide mineralization in eight of the nine holes in what is presently interpreted as a sheared low-grade silver-sulfide trend. The highest silver value reported is 57.6 g/t Ag over 1 metre (Hole RAL21-001CC) and Ag values reported from other hole intersects were less than 3 g/t.

The Company completed a subsequent SGH soil sampling program in July 2021 to the northwest of and contiguous to the original sampling area. The Company also completed a separate SGH soil sampling program to the east of the AI target areas in August 2021, and in November 2021 completed a UAVborne magnetometry survey program over the combined SGH soil sampling areas. Additional field programs are being planned for 2022.

Following the Company’s name change in April 2022, the Ranger Lake Area Gold Property was subdivided into the Ranger and Ranger East subproperties (125 single cell mineral claims and approximately 2,940 hectares, and 111 single cell mineral claims and 2,250 hectares, respectively). The Ranger subproperty includes all claims that were subject to exploration projects conducted by the Company through the 2021 year end. The Ranger East subproperty has been subject to grassroots prospecting activities through the 2021 year end. Both subproperties are subject to future field activities.

Richardson Lake Area Gold Properties

The Richardson Lake Area Gold Properties are situated in the Red Lake Mining Division approximately 100 kilometres northeast of the Municipality of Red Lake within the Birch-Uchi greenstone belt. The reserve lands of the Cat Lake and Slate Falls First Nations are approximately 30 and 50 kilometres from the area property boundary, respectively. The overall area property is 100% owned by the Company, and as of December 8, 2020 the property has no underlying royalty to any third party.

The Company owns 100% of six legacy claims originally optioned in 2002 which, together with four Company legacy claims, mineral claims staked by the Company following Ontario’s conversion to online staking, as well as mineral cell claims acquired from third parties, now form the overall Richardson Lake Area Gold Property . As of the date of name change for the Company, the overall property encompasses 175 single, boundary and multicell mineral cell claims. As some mineral cell claims are subject to existing mining land tenures that predate Ontario’s conversion to online staking, the Company’s claim tenure is approximately 3,295 hectares.

Following the Company’s name change in April 2022, the Richardson Lake Area Gold Property was subdivided into the Richardson , Richardson South , and Richardson North sub properties. These subproperties incorporate 77, 48, and 50 mineral cell claims, respectively. Discounting mining land tenure area coverage, these subproperties cover approximately 1,330 hectares, 960 hectares, and 1,005 hecatres respectively.

Big Tree Carbon Inc. MD&A September 30, 2022

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BIG TREE CARBON INC. (formerly AurCrest Gold Inc.) MANAGEMENT’S DISCUSSION AND ANALYSIS

The Richardson subpropertyis known to contain five areas with gold mineralization or gold mineralization potential. The most significant mineralization tested by the Company to date occurs at the Discovery zone, at the westernmost bay of Richardson Lake, where the gold is hosted by quartz veins and breccia which are encompassed by a broad zone of silicification, carbonization, and sericitization. Drilling on the property commenced in late 2011 and continued into March of 2012. The Company completed the winter 2011/2012 drilling program on Richardson Lake in March 2012 completing eight NQ drill holes for a total of 1,613 metres. Results from this program included a new gold discovery in hole RL12-07. Located in a new area of the property, this discovery provides the Company with an entirely new and very promising area to drill. Hole RL-12-07 encountered 15 metres of 1.83 g/t gold, including 9 metres of 2.95 g/t, including 4 metres of 6 g/t and 3 metres of 7.4 g/t. The highest individual sample within the Discovery zone was 1 metre of 11.1 g/t gold. In late summer through the fall of 2014, the Company continued drilling on this project. Results include RL-14-08 with an average grade of 1.85 g/t Au over 18 metres, including 2.93 g/t Au over 10 metres including 6.0 g/t Au over 4.5 metres, including 7.57 g/t Au over 3.5 meters, and including 10.4 g/t over 2.5 metres.

The Company completed an SGH soil sampling survey on the western shores of Richardson Lake ( Richardson subproperty) in 2021, and an innovative lake bottom sediment SGH sampling program in 2022 ( Richardson subproperty), results pending. The Company also completed a grassroots prospecting program on the Richardson North subproprerty during Summer 2022.

Trout Lake South Gold Property

The Trout Lake South Gold Property (formerly Dancing Man Gold Property) consists of 654 mineral cell claims totaling approximately 13,280 hectares, held 100% by the Company with no underlying royalties to third parties, staked on April 30, 2021. The property lies in the Joyce River Area, South of the Otter Lake and Gerry Lake Area, and Knott mining townships, spanning approximately 36 kilometres east to west. Limited grassroots prospecting was conducted on the property in 2021, and further field work is being planned for the property.

The Company has not yet subdivided the Trout Lake South Gold Property into subproperties, pending further assessment by Company geologists.

Non-Core Assets

McFaulds Lake

The Company currently holds a 100% interest in a group of base metal properties (450 hectares) within the area known as ‘The Ring of Fire’ located in the Lower James Bay region of Ontario, in the proximity of McFaulds Lake.

Bridget Lake

The Company holds a 35% interest in 144 hectares at Bridget Lake in Ball Township, Red Lake Mining Division. The 65% balance of interest in the Bridget Lake property is currently held by Evolution Mining Gold Operations Ltd. The Company expects that this Joint Venture interest will eventually convert to a net smelter returns royalty interest, given the Bridget JV Operator’s expected exploration activities.

Exploration and Evaluation Assets

None of the Company’s exploration and evaluation assets have reached the development stage and as a result are considered exploration and evaluation assets. The Company capitalizes acquisition costs that result in the acquisition and retention of exploration and evaluation assets or an interest therein and expenses all exploration and evaluation expenditures. The amount shown for exploration and evaluation assets represents acquisition costs to date and does not necessarily reflect present or future values. If the properties are sold, allowed to lapse or are no longer of interest, accumulated capitalized costs are written off.

Expenditures on properties in which the Company does not have a registered or contractual interest are expensed as incurred.

Big Tree Carbon Inc. MD&A September 30, 2022

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BIG TREE CARBON INC. (formerly AurCrest Gold Inc.) MANAGEMENT’S DISCUSSION AND ANALYSIS

SUMMARY OF QUARTERLY RESULTS

For the eight most recent quarters:

	September 30	June 30	March 31	December 31
	2022	2022	2022	2021
	$	$	$	$
Net income (loss) for the period	(182,208)	(218,106)	(35,387)	(239,674)
Net income (loss) per share (basic
and diluted)	(0.00)	(0.00)	(0.00)	(0.00)
	September 30	June 30	March 31	December 31
	2021	2021	2021	2020
	$	$	$	$
Net income (loss) for the period	(292,309)	(1,498,230)	(94,256)	(89,136)
Net income (loss) per share (basic
and diluted)	(0.00)	(0.02)	(0.00)	(0.00)

The variations in net loss between quarters are generally due to timing of the Company’s exploration activities, including the receipt of property option payments. During the three months ended June 30, 2021, the Company incurred $1,199,102 in exploration expenditures and granted 1,950,000 stock options resulting in share-based compensation of $445,575 for the period.

RESULTS OF OPERATIONS

The Company’s net loss for the nine months ended September 30, 2022 was $182,208 or $0.00 per share (net loss of $292,309 or $0.00 per share for the nine months ended September 30, 2021). General and administrative expenses were $285,424 for the nine months ending September 30, 2022 ($359,867 for the nine months ended September 30, 2021). The Company also recognized $66,605 in unrealized losses on marketable securities ($38,620 in 2021) and $46,745 in interest income on its outstanding promissory notes (nil in 2021).

General and administrative expenses included costs associated with the promotion, financing and regulatory compliance activities of the Company, and the Company’s overhead, as noted below.

For the nine months ended September 30	2022	2021
	$	$
Consulting and management fees	154,500	214,500
Professional fees (legal & audit)	58,808	75,864
Shareholder communications, advertising and promotion	15,094	29,936
Regulatory and filing fees	27,970	25,927
Office costs	29,052	14,180
	76,721	360,407

EXPLORATION EXPENDITURES

Property acquisition cost

	$
Balance, December 31, 2020	66,350
Property acquisition	38,150
Balance, December 31, 2021 and September 30, 2022	104,500

Big Tree Carbon Inc. MD&A September 30, 2022

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BIG TREE CARBON INC. (formerly AurCrest Gold Inc.) MANAGEMENT’S DISCUSSION AND ANALYSIS

Exploration & project evaluation

	Cumulative	Expenditures/	Cumulative
	expenditures as	receipts	expenditures as
	at January 1	for the period	at June 30
	2022		2022
	$	$	$
Ranger Lake	1,413,361	2,000	1,415,361
Richardson Lake	1,979,954	129,417	2,109,371
Other	14,435,428	-	14,435,428
Amount expensed	17,828,743	131,417	17,960,160

“Other” includes exploration expenditures on projects with minor activity during the period and includes the Confederation Lake, Bridget Lake, McFaulds Lake and the Fredart Lake properties, all of which are in Northern Ontario. Note: As disclosed in the Company’s significant accounting policies (Note 2) exploration and project evaluation expenditure have been reflected in the statement of loss and comprehensive loss.

LIQUIDITY AND CAPITAL RESOURCES

As at September 30, 2022 and November 23, 2022, the Company had no sources of operating cash flows. The Company will therefore require additional funding which, if not raised, would result in the curtailment of activities and project delays. As at September 30, 2022, Big Tree had a working capital deficit of $887,352 (a working capital deficit of $360,740 as at December 31, 2021), and has an accumulated operating deficit of $22,686,246. During the year ended December 31, 2021, the Company completed a flow-through financing for gross proceeds of $1,136,500 and had warrants and stock options exercised for $779,266 and $70,000 respectively. The Company’s ability to continue as a going concern is uncertain and is dependent upon its ability to continue to raise adequate financing. There can be no assurances that the Company will be successful in this regard, and therefore, there is substantial doubt regarding the Company’s ability to continue as a going concern, and accordingly, the use of accounting principles applicable to a going concern. If the going concern assumption is not appropriate, then adjustments to the carrying values of the assets and liabilities, the expenses and the balance sheet classifications, which could be material, would be necessary.

FINANCIAL INSTRUMENTS

The carrying amount of financial instruments approximates fair value. The Company’s financial assets include cash, cash equivalents, and accounts receivable. The Company does not consider these assets to be subject to credit risk or interest rate risk.

SHAREHOLDERS’ EQUITY

The Company is authorized to issue an unlimited number of common shares and an unlimited number of preference shares. As at September 30, 2022, the Company had no preference shares issued and outstanding.

Big Tree Carbon Inc. MD&A September 30, 2022

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BIG TREE CARBON INC. (formerly AurCrest Gold Inc.) MANAGEMENT’S DISCUSSION AND ANALYSIS

Share capital

Share capital comprises the following:

	Number	Amount
	of shares	$
Balance, December 31, 2020	93,696,858	19,468,230
Private placement	3,788,333	1,136,500
Share issuance costs	-	(145,814)
Exercise of warrants	10,371,332	860,646
Exercise of stock options	1,400,000	138,320
Common shares issued for exploration expenditures	400,000	78,000
Balance, December 31, 2021	109,656,523	21,535,882
Exercise of warrants	3,413,333	219,214
Exercise of stock options	250,000	24,700
Balance, September 30, 2022 and November 23, 2022	113,319,856	21,779,796

Stock options

The following summary sets out the activity in the Plan:

		Weighted
		average
	Options	exercise price
	#	$
Outstanding and exercisable, December 31, 2020	8,000,000	0.05
Exercised	(1,400,000)	(0.05)
Granted	1,950,000	0.24
Outstanding and exercisable, December 31, 2021	8,550,000	0.09
Exercised	(250,000)	(0.05)
Outstanding and exercisable, June 30, 2022 and
November 23, 2022	8,300,000	0.09

On April 7, 2021, the Company granted 1,950,000 stock options at an exercise price of $0.24 per share exercisable for a period of 5 years.

Warrants

Certain issuances of common shares include warrants entitling the holder to acquire additional common shares of the Company. A summary of the warrant activity is as follows:

		Weighted average
	Warrants	exercise price
	#	$
Balance, December 31, 2020	15,979,331	0.08
Issued – private placement	4,535,999	0.04
Exercised	(10,371,332)	0.08
Expired	(28,000)	0.08
Balance, December 31, 2021	10,115,998	0.22
Exercised	(3,413,333)	0.06
Balance, September 30, 2022 and November 23, 2022	6,702,665	0.30

Fully diluted share capital

As of September 30 and November 23, 2022, the Company had issued 113,319,856 common shares, 8,300,000 common share stock options and 6,702,665 common share purchase warrants. The number of common shares outstanding, on a fully-diluted basis was 128,322,521.

Big Tree Carbon Inc. MD&A September 30, 2022

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BIG TREE CARBON INC. (formerly AurCrest Gold Inc.) MANAGEMENT’S DISCUSSION AND ANALYSIS

RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT REMUNERATION

Compensation of key management and directors

Key management compensation expense includes the Chief Executive Officer, the Executive VicePresident, the Chief Financial Officer.

For the nine months ended September 30	2022	2021
	$	$
Management fees	154,500	214,500
Legal fees provided by a law firm related to William Johnstone	43,808	66,864
Share-based compensation	-	342,750
	198,308	624,114
Balances owing as at	September 30	December 31
	2022	2021
	$	$
Legal fees provided by a law firm related to William Johnstone	398,509	365,200
Management fees	190,162	161,913
Directors’loans	26,520	9,520
	615,191	620,847

These amounts were expensed in the period incurred as administrative and general expenses. The amounts paid and owing are measured at the exchange amount, are non-interest bearing and due on demand.

As at December 31, 2021, the directors of the Company have loaned the Company working capital in the amount of $9,520. During the three months ended September 30, 2022, a director loaned the Company an additional $17,000. The loans are in the form of demand promissory notes bearing interest at 10% per annum.

OFF-BALANCE SHEET ARRANGEMENTS

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

SUBSEQUENT EVENTS

There were no subsequent events.

RISK FACTORS

Given the Company's current status as an exploration stage company, there are numerous risk factors that could affect the Company’s business prospects and future performance and are detailed in the audited consolidated financial statements and management’s discussion and analysis for the year ended December 31, 2021. These risks and uncertainties are not the only ones facing the Company. Additional risks and uncertainties not presently known to the Company, or that the Company currently deems immaterial, may also affect the Company’s business prospects and future performance.

OUTLOOK

Big Tree Carbon Inc. acknowledges that the onset of the COVID-19 pandemic in 2020 and its continued effects through 2022 have given rise to serious financing and logistical implications to exploration projects on an industry-wide scale, including governmental response for exploration plans and permits. The Company further acknowledges that regional and local responses to successive waves of the pandemic may continue to be a factor throughout 2022 and potentially through 2023.

Big Tree Carbon Inc. MD&A September 30, 2022

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BIG TREE CARBON INC. (formerly AurCrest Gold Inc.) MANAGEMENT’S DISCUSSION AND ANALYSIS

The Company also acknowledges that the COVID-19 pandemic and its continued effects has given rise to regulatory delays and other ERB project development delays for projects in which the Company has an interest.

The exploration and delineation of prospects on the Company’s early-stage exploration properties have proven to be possible within a pandemic-restricted environment, through the use of technology that provides guidance to more traditional exploration activities, and through adherence to public health measures enacted by the provincial government with respect to operation of essential workplaces. Several areas of interest have been identified by Company geologists and the results of recent field programs warrant further exploration activities on Company holdings.

Ongoing project development for the Company’s ERB (aka “carbon sequestration”) projects has also proven to be possible within a pandemic-restricted environment, largely through the use of remote meeting technologies.

Big Tree and its subsidiary companies have and will continue to work diligently to grow its model of partnership and inclusion with neighbouring First Nations and Indigenous communities and believes that this ongoing focus will enhance overall Company success. Three of the five Directors of Big Tree are members of First Nations in Northwestern Ontario, giving the Company a uniquely Indigenous approach to natural resource development in Canada. The Company applies the wisdom and experiences of these individuals into our model of inclusion and participation for the mutual benefit of our shareholders and the communities proximal to our mineral exploration areas and carbon sequestration project footprints.

It is management’s view that further exploration and delineation of the prospects at the Ranger Lake Area Gold Property is in the best interests of shareholders, building upon 2021 drilling activities and conducting further prospecting, geochemistry, and magnetometry to provide further guidance to drilling programs at other prospects in 2023 and beyond. The evaluation of results from the initial drill program is ongoing and the mineralized system as encountered through drilling and outlined by geophysics and geochemistry appear to be significant and to warrant continued investigation.

Concurrently, the application of innovative technological approaches utilized at the Ranger Lake Area Gold Property will be applied to the Richardson Lake Area Gold Property and the Trout Lake South Gold Property to advance the geological understanding of the structures at both properties and their potential as exploration targets in the coming months. The Company acknowledges that energy costs are a significant impediment to future drill programs, particularly given the continued high prices of diesel, naphtha and jet fuel, and could influence the timing of future drill programs.

The Company and its subsidiaries have grown the positive relationship with our neighbouring First Nations into the development of potentially-significant carbon sequestration projects and other environmental attributes across the traditional territories of several First Nations in the Boreal Forest, to monetize long-term carbon sequestration opportunities through carbon offset credit trading for the mutual benefit of the First Nations partnership groups and the Company’s shareholders. The Company has continued to educate potential First Nations partners to the Forest Carbon Model and will advance the Lac Seul project, Agoke project, and other projects as the federal and provincial governments finalize the protocols governing ERB projects.

Big Tree continues to strengthen its relationships with the local communities and believes that this ongoing focus will enhance future exploration and natural resource development success. These valued relationships provide proper access to natural resource development opportunities and are integral to the Company’s success, forming the most important part of our business endeavours.

Greg Davison, P.Geo., a consultant to the Company and a qualified person as defined by National Instrument 43-101, has reviewed and approved the technical information contained in this MD&A.

Big Tree Carbon Inc. MD&A September 30, 2022

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BIG TREE CARBON INC. (formerly AurCrest Gold Inc.) MANAGEMENT’S DISCUSSION AND ANALYSIS

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Management’s Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to such risks and uncertainties. Many factors could cause our actual results to differ materially from the statements made, including those factors discussed in filings made by us with the Canadian securities regulatory authorities. Should one or more of these risks and uncertainties, such as actual results of current exploration programs, the general risks associated with the mining industry, the price of gold and other metals, currency and interest rate fluctuations, increased competition and general economic and market factors, occur or should assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, or expected. We do not intend and do not assume any obligation to update these forward-looking statements except as required by law. Shareholders are cautioned not to put undue reliance on such forward-looking statements.

Big Tree Carbon Inc. MD&A September 30, 2022

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