Canstar Resources Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2020

INTRODUCTION

This Management Discussion and Analysis (“MD&A”) should be read in conjunction with the unaudited condensed interim financial statements of Canstar Resources Inc. (the “Company” or “Canstar”) for the three and six months ended December 31, 2020, and the audited financial statements for the year ended June 30, 2020 and related notes. The Company’s reporting currency is the Canadian dollar and all amounts in this MD&A are expressed in Canadian dollars. This MD&A is made as of February 22, 2021.

Additional information relating to the Company is on the System for Electronic Document Analysis and Retrieval (SEDAR) atwww.sedar.com and on the Company’s website atwww.canstarresources.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

Except for statements of historical fact relating to the Company, certain information contained in this MD&A constitutes “forward-looking information” under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the potential of the Company’s properties; the future prices of base and precious metals; success of exploration activities; cost and timing of future exploration and development; the estimation of mineral reserves and mineral resources; conclusions of economic evaluations; requirements for additional capital; and other statements relating to the financial and business prospects of the Company. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”,” would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, and is inherently subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to risks related to: unexpected events and delays during permitting; the possibility that future exploration results will not be consistent with the Company’s expectations; timing and availability of external financing on acceptable terms and in light of the current decline in global liquidity and credit availability; uncertainty of inferred mineral resources; future prices of base and precious metals; currency exchange rates; government regulation of mining operations; failure of equipment or processes to operate as anticipated; risks inherent in base and precious metals exploration and development including environmental hazards, industrial accidents, unusual or unexpected geological formations; and uncertain political and economic environments. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

DESCRIPTION OF THE BUSINESS

The Company is a junior resource company focused primarily on the acquisition, exploration and development of mineral properties located in Canada. The shares of the Company began trading on the TSX Venture Exchange under the symbol “ROX” on April 8, 2005. The Company is a reporting issuer in the provinces of Ontario, Alberta and British Columbia.

The following table contains a brief description of the Company’s core properties, post the transaction with Adventus Zinc Corporation (“Adventus”) and Altius Minerals Corporation (“Altius”) for the Buchans Property completed on July 30, 2018, and the option agreement for the Golden Baie Project executed on September 25, 2020. Further details with respect to the core properties are also provided in this document under the section entitled “Overall Performance”.

Description of Core Property	Target Mineralization	Ownership Interest
The Golden Baie Project covers 62,275 hectares in 57 Mineral Exploration Licences and lies within the Coast of Bays region of south-central Newfoundland.	Gold	During the six months ended December 31, 2020, the Company entered into definitive agreements with Altius Resources Inc., a wholly owned subsidiary of Altius, and other arm's length parties for the option to acquire a 100% interest in the Golden Baie Project. The Company can acquire this interest over a four year period for aggregate cash payments of $325,000, aggregate share issuance of up to 13,833,333 common shares of the Company. In addition, the Company is required to fund exploration expenditures of $1,250,000 over a four-year period, of which $500,000 must be spent in the first year. Some of the optionors will be entitled to an aggregate milestone payment of $1,000,000 by the Company upon the Golden Baie Project claims achieving NI 43-101 defined measured and indicated mineral resources of at least 1,000,000 contained gold ounces.
The Buchans Property, consisting of 1,032 staked claims in 11 licenses totalling 25,800 hectares, abuts the north- west side of Company’s Mary March Joint Venture and encompasses the majority of the north shore of Red Indian Lake. A new 61 claim license was staked in 2020 to secure the eastern extension of the Mary March horizon.	Zinc-silver- lead-copper- gold	100% ownership held in Canstar’s wholly owned subsidiary “Adventus Newfoundland Corporation” subject to a 2% NSR royalty payable to Altius.
The Mary March Joint Venture consists of four Fee Simple Grants consisting of five separate land parcels and covering 1,486.88 hectares and two map-staked licenses containing 8 claims and covering 200 hectares located approximately 20 kilometres east of the past producing Buchans mine, near Buchans Junction, Newfoundland.	Zinc-silver- lead copper- gold	A 56% interest and right of first refusal on the remaining 44% interest held by Glencore plc, the Company’s joint venture partner.(1)The Company is the operator.
The Daniel’s Harbour Property is located in coastal Western Newfoundland and consists of 243 claims in 2 licenses totalling 6,075 hectares. The Daniel’s Harbour Property surrounds the former high-grade zinc mine operated by Teck Resources from 1975 to 1990.	Zinc	100% ownership subject to a 2% NSR royalty payable to Altius. During the year ended June 30, 2019, the Company reduced the number of claims held on this property and accordingly wrote-down the property by $541,240.

Notes:

(1) The Company is required to make a cash payment of $2,000,000 within six months of commercial production. The Company’s interest is also subject to a 1% NSR royalty due upon commencement of commercial production.

The Company also has three non-core properties, identified in the table below.

Description of Property	Target	Ownership Interest
The Miminiska Property, comprised of three contiguous, unpatented mineral claims totaling 44 claim units, located approximately 100 kilometres east of Pickle Lake, Ontario.	Gold	100% owned
The Kenora Gold Property, made up of 31 mining claim blocks comprised of 283 units for an area of 6,182 hectares. The property is located 20 kilometres east of the Town of Kenora.	Gold	Pursuant to an option agreement dated March 2, 2014, the Company earned a 100% interest by making cash payments of $18,200 (paid in 2014 and 2015) and issuing 200,000 common shares (issued in 2016 and valued at $8,000). During the year ended June 30, 2018, management decided to write the Kenora property down to its recoverable amount of $20,000. During the period ended June 30, 2020, the property was sold in consideration for $20,000 and a 1.5% net smelter royalty on all base and precious metals produced on the property which may be repurchased for an aggregate of $3.0 million.
The Slate Bay Property, comprised of 8 contiguous patented claims covering 128 hectares, located approximately 10 kilometres north of the town of Red Lake, Ontario, within the Red Lake greenstone belt.	Copper-gold- silver	A 75% earned interest in the property pursuant to an option and joint venture participation agreement entered into with Luxor Enterprises Inc. (Luxor) on February 4, 2002. On April 25, 2019, the Company entered into a definitive agreement with Angus Gold Inc. (formerly Angus Ventures Inc., “Angus”), whereby it agreed to sell its 75% interest to Angus for consideration of $30,000 and 70,000 shares in the common stock of Angus. Accordingly, the property was revalued at $30,000 as at June 30, 2019. The sale to Angus was completed on November 6, 2019.

An investment in the securities of the Company is highly speculative and involves numerous and significant risks and should be undertaken only by investors whose financial resources are sufficient to enable them to assume such risks and who have no need for immediate liquidity in their investment. Prospective investors should carefully consider the risk factors described below.

OVERALL PERFORMANCE

The Company is currently engaged in mineral exploration in Canada. The Company’s exploration activities are at an early stage, and it has not yet been determined whether its properties contain recoverable ore. As a result, the Company has no current sources of revenue other than interest earned on cash, short-term investments and money market instruments, all of which were derived from issuances of share capital. There are no known deposits of minerals on any of the mineral exploration properties of the Company and any activities of the Company thereon will constitute exploratory searches for minerals.

Trends

Prices of precious and base metals and other minerals are extremely volatile and there are times when there is very limited availability of equity financing for the purposes of mineral exploration and development;
The Company’s future performance is largely tied to the outcome of future drilling results and the overall financial markets; and
Current financial markets are likely to be volatile in Canada for the remainder of calendar 2020 and into 2021, reflecting spread of the COVID-19 virus globally has had a material adverse effect on the global economy and, specifically, the regional economies in which the Company operates. The pandemic could continue to have a

negative impact on the stock market, including trading prices of the Company’s shares and its ability to raise new capital. Companies worldwide have been negatively affected by these trends. As a result, the Company may have difficulties raising equity financing for the purposes of base and precious metals exploration and development, particularly without excessively diluting the interest of current shareholders of the Company.

These trends may limit the Company’s ability to discover and develop an economically viable mineral deposit.

The Golden Baie Project

The Golden Baie Project is the Company’s flagship precious metals exploration asset. The Golden Baie Project covers 62,275 hectares in 57 Mineral Exploration Licences and lies within the Coast of Bays region of south-central Newfoundland.

On September 25, 2020, the Company entered into definitive agreements with Altius Resources Inc., a wholly owned subsidiary of Altius, and other arm's length parties for the option to acquire a 100% interest in the Golden Baie Project. The Company can acquire this interest over a four year period for aggregate cash payments of $250,000, aggregate share issuance of 11,500,000 common shares of the Company, and the lesser of $500,000 worth of common shares or 2,000,000 common shares of the Company. In addition, the Company is required to fund exploration expenditures of $1,250,000 over a four-year period, of which $500,000 must be spent in the first year. The optionors will be entitled to an aggregate milestone payment of $1,000,000 by the Company upon the Golden Baie Project claims achieving NI 43-101 defined measured and indicated mineral resources of at least 1,000,000 contained gold ounces. So long as Altius owns 9.9% of the Company's shares outstanding, it shall have the right to participate in 19.9% of any equity financing during the term of the Option.

On November 24, 2020, the Company entered into definitive agreements with Altius Resources Inc. and other arm’s length parties for the option to acquire a 100% interest in additional mineral claims located within the previously acquired Golden Baie Project claims. The Company can acquire this interest over a three year period for aggregate cash payments of $75,000 and aggregate share issuance of $75,000 worth of common shares payable in installments as is equal to $75,000 divided by the greater of the prevailing 5-day volume weighted average price per share on the TSX Venture Exchange and $0.225.

Access to the Golden Baie Project is provided by Route 360, a paved highway which bisects the project area, and by recent power line and old forest resource roads. More remote areas are best accessed by helicopter while coastal sections can be accessed by boat from St. Albans or Conne River.

The Golden Baie Project is in the Exploits Subzone of the Dunnage Tectonostratigraphic Zone and is mainly underlain by Ordovician rocks of the Baie d’Espoir Group. The eastern margin of the project straddles the contact between the Dunnage and Gander tectonostratigraphic zones. The two zones are separated by the westward dipping Day Cove Thrust. East of the thrust the property is underlain by the Neoproterozoic to Ordovician Little Passage Gneiss which is intruded by the Silurian Gaultois Granite. The Baie d’Espoir Group lies to the west of the Day Cove Thrust and can be subdivided from east to west into: the Isle Galet, the Riches Island, the St. Joseph’s Cove and the Salmon River Dam formations. Pervasive deformation and metamorphism related to the Salinic orogenic juxtaposition of the Dunnage and Gander zones along the Day Cove Thrust extends up to 3km west of the thrust into rocks of the Baie d’Espoir Group.

The Baie d’Espoir Group is host to both volcanogenic base metal sulphide and structurally-controlled styles of mineralization. The gold mineralization is typical of orogenic-type (structurally-controlled) mineralization associated with compressional deformation processes at convergent plate margins in accretionary and collisional orogens.

Historically mineral exploration activity has largely focused on the Isle Galet Formation. Early exploration was largely base-metal driven and it was not until the mid-1980s that the emphasis shifted to gold when Westfield Minerals Limited (“Westfield”) began work on the Wolf Pond and 22 West zones. After Westfield’s program, gold exploration waned and was sporadic until Mountain Lake Resources (“Mountain Lake”) acquired claims in the area in 2009. Mountain Lake

conducted a regional exploration program and diamond drilling, including on the Osprey and Kendell prospects. Subsequently many of the licences held by Mountain Lake reverted to the original property owner or to the Crown. Kendell and Northcott staked claims and thru dedicated prospecting identified visible gold in quartz veining near the original Kendell Prospect.

Regionally, crustal-scale fault zones throughout central Newfoundland are proving to be significant gold-mineralized structures, i.e. Victoria Lake shear zone and Rogerson Lake structural corridor (Marathon Gold Corp.’s Valentine Lake gold deposits; Canterra Metals’ Wilding Lake gold project); Cape Ray fault zone (Matador Mining Ltd.’s Cape Ray gold deposits); and the Dog Bay Line-Gander River Complex line (New Found Gold Corp.’s Queensway gold project). At Valentine Lake and Wilding Lake, gold is associated with late Silurian deformation that juxtaposed Dunnage Zone rocks with Neoproterozic-aged intrusive rocks of the Gander Zone. This gold mineralization is structurally-controlled and is typical of orogenic-type gold mineralization world-wide.

The Golden Baie Project covers both highly prospective rocks of the Baie d’Espoir Group which historic exploration and recent prospecting have shown to be a prolific host for gold mineralization, and the crustal-scale fault zone (the Day Cove Thrust) which juxtapose Neoproterozic Gander Zone rocks the with Cambro-Ordovician Dunnage Zone rocks. The tectonic setting, the late Silurian deformation and plutonism, the juxtaposition of Neoproterozoic-aged rocks with younger Dunnage Zone rocks, the presence of structurally-controlled gold mineralization and a pronounced linear-trending mineralized belt (Isle Galet Formation) which sits in the hanging-wall to and largely parallels the trend of Day Cove Thrust, all indicate that the Golden Baie Project has significant potential to host economic gold deposits.

A significant amount of mineral exploration has been performed on various portions of the property, resulting in numerous mineral showings prospects and prospective areas. In 1985 Westfield Minerals Limited (and Tillicum Resources Ltd.) began geological mapping and geochemical sampling in the Wolf Pond, 22 West, Barasway de Cerf, Little River and Le Pouvoir prospect areas. Westfield continued exploration into 1989 and eventually conducted large-scale regional exploration programs that included 20,000+ soil samples, till sampling, rock sampling, geophysics as well as trenching and diamond drilling Westfield’s exploration was extensive both in terms of area and level of detail; their work was primarily conducted on the central and north-central portions of the current property. Westfield identified the Little River, Tillicum and Le Pouvoir horizons within the Isle Galet Member of the Baie d’Espoir Group.

In 1988 Westfield noted significant gold and antimony mineralization over widths of up to 4.5 m in drill core. Eventually, Westfield concentrated their efforts on the Wolf Pond and 22 West prospect areas based on positive soil sampling, trenching and drilling results. Westfield also identified cross-cutting structures that appeared to be associated with good gold grades, particularly on the Wolf Pond showing. After extensive exploration work Westfield determined that the Wolf Pond prospect had significant potential for economic grade mineralization but were unsure whether there was sufficient continuity to provide and economic reserve.

Concurrent with Westfield’s work, Labrador Mining and Exploration Company Ltd., Granges Exploration Ltd., Esso Minerals Canada and Cuvier Mines Ltd. conducted geological mapping and geochemistry (primarily rock and soil). Grange’s work focused on the Long Jacks Bight and Bowers Tickle showings, while the rest of the exploration was conducted on the Little River and Collin’s Brook areas. Their results varied, but they confirmed the mineralization from previous exploration explorers and continued exploration into 1988.

Teck Exploration Ltd. conducted geological mapping, trenching, geochemistry and geophysics in the general Milltown area (Pickett, 1990, 1991); their work overlapped with the area now referred to as the Swangers Cove stibnite/gold prospect. The Barasway de Cerf (Cu, Zn, Pb) prospect was the focus of exploration work conducted by Buchan’s River Ltd. in 1998 and Royal Roads Corp. in 2008. Buchan’s River carried out lithogeochemistry and petrography studies (Winter, 1998) and Royal Roads’ work consisted of rock geochemistry (Butler, 2008). In 2000, Altius Resources Corp. conducted reconnaissance geological mapping of the area (Churchill, 2000). This was followed by Vulcan Minerals Inc. and Nortec Ventures in 2003 and 2004 with structural mapping, rock sampling (including core re-sampling) and lithogeochemistry (Laracy et. al., 2003).

Much of the exploration work conducted between 2006 and 2009 was performed by prospectors C. Kendell, A. Turpin and D. Hicks; a combination of rock, soil, stream and lake sediment sampling was conducted during this period. This work confirmed previous results and produced several more gold and antimony prospects throughout the general Little River area. In 2010, 2232143 Ontario Inc. produced a Technical Report on the 22 West and Wolf Pond prospect areas; their work comprised geochemistry, physical properties testing as well as Induced Polarization geophysical surveys. Within their report, they identified two styles of mineralization within the Isle Galet Fm.) disseminated sulphides, including arsenopyrite, pyrrhotite, pyrite and stibnite, associated with carbonate alteration and hosted in felsic to intermediate tuffs and pelite, and 2) antimony and sulphide-bearing quartz ± carbonate-sericite-chlorite veins, fractures and foliation-parallel bands (Currie, et.al., 2010).

In 2008 Mountain Lake Minerals Inc. (later Mountain Lake Resources Inc.) began to explore the Little River and Le Pouvoir areas with a focus on both gold and stibnite mineralization. During the period 2009-2011, Mountain Lake conducted prospecting, rock, stream and soil geochemistry (undertaking several large soil sampling surveys in both the Little River area as well as the Le Pouvoir area), trenching, geochemistry and drilling (Woods, 2010). Mountain Lake had success in identifying both gold and antimony in trenches and drill core. In the Le Pouvoir area they intercepted 30.6% Sb over 1 m in drill core (drill hole LR-09-16) (Woods, 2010; 2011). Some of the best gold results were encountered in diamond drill hole LR-09-02 (3m averaging 4.8 g/t Au) and drill hole LR-09-01 with 1.7 g/t Au over 2 m (Woods, 2010).

Mountain Lake also identified a trend of anomalous nickel and chromium in soil samples that were associated with a geochemically distinct ultramafic unit within the Le Pouvoir property. The ultramafic rocks had a strong spatial relationship to a well-defined, but general low tenor Sb anomaly (Woods, 2011). In 2015 Mountain Lake also undertook a short exploration program that included a ground-based Gemini 3 survey along ten 1.5 km lines, spaced 100 m apart, in addition to confirming the presence of high-grade antimony mineralization associated with quartz-stibnite veining at the Bower’s Bight Showing (Smith, 2016). However, after several years of exploration work across the property, multiple gold in soil anomalies remain untested and/or un-sourced.

From 2016 to present day, prospectors D. Hicks, Kendell and. Northcott conducted multiple prospecting, rock, soil and stream sediment sampling programs throughout the central, north central and northern portions of the property. Their work primarily focused on the Little River area, the 97 West, 22 West and Wolf Pond gold prospects as well as the Le Pouvoir, Swangers Cove and Kim Lake stibnite prospects. Results of this exploration work varied. However, in 2019 Kendell and Northcott discovered a new gold occurrence near a Mountain Lake trench (Little River area - Kendell Prospect) and drill hole location on the south-central portion of the property (current license 025257M). Results of bedrock sampling in this area produced gold grades up to 4,485 g/t Au. Other bedrock samples within approximately 30 m from Mountain Lake’s trench site contained between 30 g/t Au and 471 g/t Au. Visible gold was also observed in bedrock at these sample sites.

During the summer of 2020 Altius personnel accompanied by Kendell and Northcott visited the Golden Baie Project on several occasions to examine historic and recent showings and prospects. Kendell and Northcott had recently exposed gold-bearing quartz veins within 30 m of the Kendell Prospect (Plates 3 and 4). Kendell and Northcott samples had assayed 4,485 g/t Au (a re-run pulp from a 2,214 g/t Au sample) and 1,073 g/t Au (a re-run pulp from a 1,199 g/t Au sample). Altius collected forty-eight rock samples which were sent to Eastern for analyses. Altius personnel also examined and sampled historic drill core stored at the DNR core storage facilities in Buchans and Pasadena. Eight samples were collected from drill core and analyzed at Eastern Analytical Ltd. (“Eastern”). Sample highlights are presented in Table 1.

Table 1. Assay highlights from Altius grab samples, Kendell Prospect.

Sample	UTME	UTMN	Medium	Type	Rock	Eastern_Certificate	Au_ppb	Au g/t
19178	596813	5297880	outcrop	grab	quartz vein	378-2023582	11278	11.29
19179	596832	5297887	outcrop	grab	quartz vein	378-2023582	153240	153.24
19180	596838	5297893	outcrop	grab	quartz vein	378-2023582	178280	178.28
19181	596824	5297844	outcrop	grab	shale	378-2023582	20643	20.64
19182	596782	5297827	outcrop	grab	quartz vein	378-2023582	774	0.77
19183	596800	5297726	outcrop	grab	shale	378-2023582	419	0.42
19184	596770	5297656	outcrop	grab	siltstone	378-2023582	6069	6.07
19189	598045	5299591	outcrop	grab	shale	378-2023582	4816	4.82
19190	598957	5301054	outcrop	grab	shale	378-2023582	6537	6.54

As part of the independent data verification for a technical report on the Golden Baie Project prepared by David T.W. Evans M.Sc. P.Geo of Pendragon Consulting, Mr. Evans visited the Golden Baie Property on September 21, 2020. Seven grab samples were collected from the Kendell Prospect area. All samples consisted of smokey-grey recrystallized quartz vein material with minor wall rock. The quartz contained fine disseminated arsenopyrite as did the wall rock. Locally both vein and wall rock contain small arsenopyrite laths. Sample location data and Au assay results are presented in Table 2. Very-fine visible gold was observed in samples DE-20-04 and DE-20-06.

Table 2. Sample data, September 21, 2020 site visit.

Sample	UTME	UTMN	Eastern Certificate	Au ppb	Au g/t
DE-20-01	596830	5297874	378-2024017 - Au	7363	7.363
DE-20-02	596825	5297874	378-2024017 - Au	3476	3.476
DE-20-03	596835	5297874	378-2024017 - Au	1826	1.826
DE-20-04	596850	5297879	378-2024017 - Au	8064	8.064
DE-20-05	596850	5297879	378-2024017 - Au	8657	8.657
DE-20-06	596856	5297887	378-2024017 - Au	22506	22.506
DE-20-07	596845	5297883	378-2024017 - Au	4441	4.441

The Buchans-Mary March Project

The Buchans-Mary March Project consists of the Buchans Property and the Mary March Joint Venture. The BuchansMary March Project is the Company’s flagship base metals exploration asset.

The Company acquired a 100% interest in the Buchans Property from Adventus Zinc Corporation (“Adventus”) in exchange for common shares of the Company. Altius retains a 2% net smelter royalty on sales of mineral products from the Buchans Property. The Buchans Property currently comprises 979 map staked claims held under 12 map staked licenses covering an area of 25,961.88 hectares located between the communities of Buchans and Buchans Junction in the Province of Newfoundland and Labrador, Canada.

The Buchans Property covers the majority of prospective Buchans Group stratigraphy that exists outside of the area of previous mining. Past production from the historic Buchans mining camp by the American Smelting and Refining Company (ASARCO) between 1928 and 1984 is reported by Kirkham (1987) to total 16.2 million tonnes of ore from 5 major orebodies having an average head grade of 14.51% zinc, 1.33% copper, 7.56% lead, 126 g/t silver and 1.37 g/t gold.

The Buchans Property is entirely underlain by the Ordovician Buchans Group which comprises a sequence of bimodal volcanic and volcaniclastic rocks of the Buchans River Formation which hosts all of the former producing massive sulphide deposits within the belt. Mineralization consists of sphalerite, galena, chalcopyrite, and lesser pyrite. Barite is the most abundant gangue mineral in the ores and alteration is characterized by quartz-chlorite-sericite +/- K-feldspar +/- carbonate. 7

The Company’s primary exploration target for this project is a high-grade VMS deposit like those previously mined at Buchans. Although the Buchans area has had a long mining and exploration history, it was only during the period after the 1984 mine closure that thrust belt tectonic models emerged for the area, resulting in a simplified stratigraphic interpretation of the district geology and a more complex structural interpretation. The revised stratigraphic and structural models have opened new opportunities for exploration.

Prior to acquisition of the Buchans Property by the Company, Altius Minerals Corp carried out exploration programs on the Buchans Property holdings during the 2014 to 2016 period and these were initially focused on compiling historic data and interpreting it in light of the revised stratigraphic and structural interpretations. Work completed included re-logging of archived diamond drill core, digitizing and modelling of historic data sets (geochemical and geophysical surveys plus geology), characterizing physical property and other parameters of a historic rock sample library now held by the Newfoundland and Labrador Department of Natural Resources (NLDNR), and completion of limited field programs consisting of geological mapping and prospecting plus rock, till and soil sampling. Altius also participated in joint research with Memorial University of Newfoundland (MUN), funded by Research Development Corporation (RDC), to develop a till indicator mineral analysis system based on Scanning Electron Microscopy – Mineral Liberation Analysis® (SEM-MLA) methods. In addition to the above, Altius retained Geoscience North Ltd. in 2015 to carry out detailed digital geoscience database compilations for use in developing a fully integrated three dimensional (3D) geological-geophysical model of the Buchans district using the GOCAD® earth modelling platform. This was done to aid exploration targeting and is being developed as a key component of on-going property investigations. The following five initial exploration target areas defined by Altius are considered high in priority with respect to follow up investigations:

Seal Pond Area - An alteration zone outlined in historic drilling and outcrop over an area of at least 0.3 x 6 km. Relogging of the archived drill core by Altius in 2015 discovered stringer and massive sulphide mineralization that had not previously been sampled yielding up to 13.45% Zn, 0.4% Cu over 0.2m (drill hole SP-05-05). A soil geochemical survey over the target area by Altius in 2016 revealed a coincident Zn-Cu soil anomaly over an area of ~1800m x 700m and is defined by Zn in soil values of up to 582 ppm and Cu in soil values of up to 87.5 ppm.
Mary March Brook Area – A historically documented occurrence of altered, mineralized felsic volcaniclastic yielding up to 0.46% Zn, 0.07% Cu and 4 g/t Ag from sampling by Altius in 2015.
Lake 7 and 12 Alteration Zone - Occurs west of the main historically mined deposits at Buchans and is interpreted as structural repetitions of the highly favourable Buchans River Formation stratigraphy that hosts all of the base metal deposits mined to date in the camp. Spatial aspects of these alteration zones have been defined to date through study of historic core logs combined with selective re-logging of key holes by Altius and others. Results show that these alteration trends occur within thrust-bounded structural panels that have typically been drill tested at relatively wide hole spacings in the range of 200 m to 600 m. Occurrence in these zones of isolated, thin (< 10 cm) layers of base metal sulphide plus isolated, transported sulphide clasts and/or stockwork sulphide intervals associated with chloritepyrite alteration adds credibility to the assertion that potential exists in these panels for occurrence of economic base metal sulphide mineralization. The wide spacing of historic drill holes and generally shallow drilling leaves large portions of the zone untested.
Skidder Dacite - In 1995, a historic UTEM survey over the area yielded several targets which were not followed up. A soil survey by Altius in 2014 outlined a coincident Cu-Zn soil anomaly over an area of ~100m x 900m that corresponded with the historic electrical conductive anomalies and an area of outcrop and float of altered and mineralized felsicmafic volcanic rocks. Prospecting by Altius during 2014 and 2015, yielded up to 0.46% Zn. A historic drill hole to the north of the soil anomaly also intersected 0.71% Cu over 1.5 m.

Adventus acquired the Buchans Property from Altius Minerals in 2017 and a 3,867 line km high resolution heliborne time domain electromagnetic (TDEM) survey over the Buchans Property was completed during June 2017. Several target areas have been identified from the survey and follow up programs are currently being undertaken.

As part of its summer 2019 field program at Buchans-Mary March, Canstar discovered a new high-grade copper-gold massive sulphide occurrence, at surface, approximately 1.8 km along strike of the historic Mary March discovery hole, representing a new massive sulphide in bedrock discovery in the Buchans Camp. Canstar intends to follow up this

discovery with additional ground-based geochemical and geophysical surveys, including additional prospecting, to further refine targets for drilling.

Canstar’s 2020 program at Buchans-Mary March consisted of prospecting and soil sampling along the projection of the Mary March horizon to the east of the 2019 trench discovery to further refine trenching targets. Some prospective lithologies were found up to 1 km from the trench, approximately 2.8 km from the Mary March intercept. A sample reportedly uncovered during construction of a private driveway several years ago assayed 14.2% copper with 15.9 ppm silver. A new 61 claim license was staked to secure the further extension of the Mary March horizon. Other activities consisted of systematic prospecting in underexplored areas.

The Mary March Joint Venture

The Company earned its initial 50% interest in the Mary March Joint Venture by incurring $755,000 of property expenditures and issuing 100,000 common shares valued at $16,000 and 100,000 warrants valued at $8,600. The Company is also required to make a cash payment of $2,000,000 within six months of commercial production. The Company’s interest is also subject to a 1% NSR royalty due upon commencement of commercial production. The remaining 50% interest in the Joint Venture is held by Glencore, on which the Company maintains a right of first refusal. For exploration expenditures during 2013, 2014, 2015 and 2016, Glencore was subject to a voluntary reduction due to non-participation of these exploration programs. Canstar now holds a 56% interest in the Joint Venture and Glencore holds a 44% interest. Glencore did not contribute to the current program and accordingly, will be subject to an additional voluntary reduction.

The Mary March Joint Venture is comprised of four Fee Simple Grants consisting of five separate land parcels and covering 1,486.88Ha and two map-staked licenses containing 8 claims and covering 200Ha hectares and is located approximately 20 kilometres east of the past producing Buchans mine, near Buchans Junction, Newfoundland. High grade Cu-Pb-Zn-Ag-Au massive sulphides of economic significance were discovered on the Mary March Joint Venture by Phelps in 1999, but the core discovery areas of the property had been dormant since August 2000.

The Company resumed exploration on the property in 2012, completing a 2,320 metre drilling program, where semimassive and massive sulphides were intersected in four holes MM-12-21, MM-12-23, MM-13-27, and MM-13-28. These results were followed up in fall of 2013 by completing a 1,146 metre drilling program, where additional massive sulphides and stockwork mineralization was encountered in all three completed drillholes. The Company also completed a five-hole diamond drilling program during the summer of 2014 testing both the Mary March and Nancy April zones. Results of the program are encouraging, indicating further along-strike potential of Mary March and a thickening of the Nancy April system. The Company also completed Phase I Drilling at the Mary March Zone, which consisted of drilling in five holes as well as downhole EM surveys on three of the five drill holes. The 2014 and 2019 drill programs are described in more detail, by zone, in the following section.

Mary March Zone

As part of the Company’s exploration program, a number of targets were identified using geophysics. These targets were drill tested in August-September of 2014 with the extension of MM13-30 and a new hole, MM14-32. Highlights include:

Borehole MM14-32 intercepted 11.5 metres 1.2% zinc, 0.2% lead, 1.8 g/t silver, 0.2 g/t gold from 431.5 to 443 metres, including an interval of 3.6 metres grading 2.7% zinc, 0.1% copper, 2.4 g/t silver and 0.1 g/t gold nested in the above intercept from 435.9 to 439.5 metres.

The results of this drilling are tabulated below:

BHID	From	To	Length	Zn%	Cu%	Pb%	Ag ppm	Au ppm
MM14-32	399.68	407	7.32	0.21	0.06	0.01	1.4	0.05
including...	399.68	402	2.32	0.33	0.05	0.02	1.35	0.07
MM14-32	410.39	416.19	5.8	0.43	0.08	0.02	3.45	0.13
including...	411.64	414.47	2.83	0.54	0.14	0.02	5.08	0.17
MM14-32	431.5	443	11.5	1.18	0.16	0.04	1.77	0.12
including...	434.5	441.1	6.6	1.84	0.13	0.06	1.88	0.09
including...	435.9	439.47	3.57	2.73	0.03	0.1	2.39	0.11

The Company completed Phase I Drilling at the Mary March Zone in January-March of 2019. Phase I Drilling consisted of 1,901 metres of drilling in five drill holes, as well as downhole EM surveys on three of the five drill holes. Notable intercepts of this drilling include:

Drillhole	From	To	Interval (m)	Zn%	Cu%	Pb%	Ag g/t	Au g/t
MM19-36	108.1	108.2	0.1	0.01	1.84	0.05	42	0.209
	462	763	1	0.72	0.04	0.003	2.0	0.899
MM19-37	7.0	13.0	6.0	0.52	0.02	0.05	1.1	0.043
including...	9.0	10.0	1.0	2.01	0.07	0.03	1.5	0.041
	38.3	44.4	6.1	0.56	0.09	0.07	1.1	0.030
including...	41.3	42.3	1.0	1.94	0.06	0.06	2.5	0.058
MM19-38	60.3	61.8	1.5	0.72	0.10	0.002	0.6	0.014
	130.1	130.4	0.3	0.59	0.21	2.19	8.2	0.016

The Company will follow up its initial Phase I Drilling with a ground based regional lithogeochemical program, mapping and prospecting, coupled with core review and a structural re-interpretation, to refine future drill targets.

Nancy April Zone

A key development to the drilling results reported in Q2 2014 was the confirmation of the existence of a continuous stockwork zone formed by hydrothermal processes that are conducive to the development of volcanogenic massive sulphide (“VMS”) deposits. The Company conducted a geophysical survey in the summer of 2014 to follow up on these results. An induced polarization (“IP”) survey was conducted to ascertain whether the stockwork zone manifests a chargeable geophysical response, and how this response might continue spatially. The results of this survey outlined a number of chargeable anomalies including a linear coincident with known stockwork mineralization.

The Company tested several of these targets in September 2014 with a 4-hole drilling program with an additional extension of an existing hole drilled in 2013, totaling 1,724 metres. Three of the four holes intersected mineralization. Highlights include:

Borehole MM14-33 intersected 5.33 metres 1.2% copper, 0.2% zinc, 4.9 g/t silver, 0.4 g/t gold from 66.5 to 71.8 metres, including an interval of 2.3 metres grading 2.5% copper, 0.1% zinc, 8.6 g/t silver and 0.7 g/t gold nested in the above intercept from 69.5 to 71.8 metres.
Borehole MM14-33 returned 93.7 metres of 1.0% zinc, 0.2% lead, and 2.9 g/t silver in stockwork sulphides, including an interval of 10.2 metres of 3.4% zinc, 0.1% copper, 7.1 g/t silver and 0.3 g/t gold

In addition to MM14-32, diamond drill hole MM13-30 (see News Release dated January 21, 2014) was extended as part of this program in order to test a geophysical anomaly that was identified near the end of this hole. The extended hole encountered significant pyrite mineralization, however, assays did not return any significant results.

The remaining three holes reported were designed to test an extensive IP anomaly that is coincident with the Nancy April Horizon. The Nancy April deposit lies approximately 500 metres west of the Mary March deposit and was discovered in 1999 by Phelps. Phelps' discovery hole intersected 6.8 metres of 1.5% zinc, 0.8% copper and 0.6% lead. Geochemical work and re-logging on historic drill core completed by the Company in summer of 2013 noted strong alteration with minor mineralization downhole of Nancy April intersect and it was hypothesized that a footwall zone to a larger system may be present in the area. Drilling in Fall 2013 confirmed these results. The latest results are tabulated below:

BHID	From	To	Length	Cu%	Pb%	An%	Ag ppm	Au ppm
MM14-33	66.46	71.79	5.33	1.21	0.03	0.15	4.85	0.35
including...	69.54	71.79	2.25	2.49	0.03	0.1	8.64	0.72
MM14-33	128.66	129.58	0.92	0.03	2.09	1.8	19.96	0.46
MM14-33	200.88	294.54	93.67	0.05	0.15	1	2.92	0.03
including...	237	247.17	10.17	0.12	0.01	3.36	7.13	0.03
MM14-34	383.58	390.89	7.31	0.05	0.17	0.28	8.8	0.08
MM14-35	61.4	68.39	6.99	0.08	0.02	0.05	10.07	0.23

Daniel’s Harbour Property

The Daniel’s Harbour Property is located in coastal Western Newfoundland and consists of 360 claims in 2 licenses totalling 9,000 hectares. The Daniel’s Harbour project surrounds the former high-grade zinc mine operated by Teck Resources from 1975 to 1990 that produced approximately 7 Mt of ore grading ~7.8% Zn from 1975 to 1990.

The Mississippi Valley Type mineralization at Daniel’s Harbour has clear structural and stratigraphic controls but no deep drilling has been completed to test obvious trends and favourable stratigraphy. There are sufficient untested parts of property to host significant resources located outside of mine site and four target areas have been identified which require further assessment with potential for follow-up drill testing. Zinc mineralization at Daniel’s Harbour generally occurs in long, narrow, NE trending bodies. Of 21 zones mined at Daniel’s Harbour, the largest was the “L” zone which extended over a length of 3,000 metres with a 30 metre maximum vertical thickness of ore.

Two types of zinc mineralization were exploited at in the “L” zone. The most common mineralization occurred as cavity fillings in a series of narrow (1/2 metre to 2 metres) pseudobreccia beds separated by barren massive “Grey Dolomite”. The second type of mineralization, which was prevalent in the thickest portion of the “L” zone, consisted of veins which cut the pseudobreccia and consisted almost entirely of sphalerite, with minor quantities of pyrite, marcasite and galena. This mineralogy enabled good recoveries (98%) and production of a premium grade concentrate (63%).

Company management believes Daniel’s Harbour has the potential to host additional high grade zinc lenses within the upper stratigraphy as well as at depth. Until recently, the Property has not been subject to modern exploration methodologies although several companies in addition to Canstar are now actively exploring the area.

Canstar engaged Abitibi Geophysics to undertake an OreVision induced polarization survey and a high resolution gravity survey in the fall of 2018 at Daniel’s Harbour and these concluded in December 2018. Results from these surveys generated two gravity high targets that warrant drill testing as well as several other gravity anomalies that warrant further testing/investigation.

Canstar dropped a number of claims on the Daniel’s Harbour Properties and accordingly these balances were written down during the year ended June 30, 2019.

		Buchans-Mary	Daniel’s	Golden
		March	Harbour	Baie
		Properties	Properties	Property	Total
		$	$	$	$

PROPERTY ACQUISITION COSTS
	Balance, June 30, 2020	4,887,465	200,000	-	5,087,465
	Incurred during the period	-	-	1,695,000	1,695,000
	Balance,December 31,2020	4,887,465	200,000	1,695,000	6,782,465
	DEFERRED EXPLORATION COSTS
	Balance, June 30, 2020	2,722,710	200	-	2,722,910
	Access	-	-	84,850	84,850
	Administrative	6,204	-	112,908	119,112
	Assaying	5,062	-	10,186	15,248
Field supplies		1,536	-	11,706	13,242
Geological consulting		21,300		181,793	203,093
	Labour and supervision	22,768	-	67,777	90,545
	Travel	807	-	5,358	6,165
	Balance,December31,2020	2,780,387	200	474,578	3,255,165
	Total,December 31,2020	7,667,852	200,200	2,169,578	10,037,630

		Buchans-		Daniel’s
		Mary March	Kenora	Harbour	Slate Bay
		Properties	Properties	Properties	Properties	Total
		$	$	$	$	$

	PROPERTY ACQUISITION COSTS
	Balance, June 30, 2019	4,887,465	20,000	200,000	-	5,107,465
	Sold duringtheperiod	-	(20,000)	-	-	(20,000)
	Balance,December 31,2019	4,887,465	-	200,000	-	5,087,465
	DEFERRED EXPLORATION COSTS
	Balance, June 30, 2019	2,644,683	-	-	30,000	2,674,683
	Access	6,790	-	-	1,999	8,789
	Administrative	42,723	-	-	-	42,723
	Assaying	22,207	-	-	-	22,207
Field supplies		9,551	-	-	-	9,551
Geophysics and exploration		1,000	-	-	-	1,000
Labour and supervision		82,435	-	-		82,435
Travel		2,844	-	-	-	2,844
Sold duringtheperiod		-	-	-	(31,999)	(31,999)
Balance, December 31, 2019		2,812,233	-	-	-	2,812,233
	Total,December 31,2019	7,699,698	-	200,000	-	7,899,698

SELECTED ANNUAL FINANCIAL INFORMATION

*NUAL FINANCIAL INFORMATION*
Fiscal Year	2020	2019	2018
Operatingexpenses	$ 350,149	$ 397,882	$ 223,113
Loss from operations	350,149	397,882	223,113
Net loss for the year	336,149	1,396,138	1,508,770
Loss per share – basic and diluted	0.01	0.03	0.07
Total assets	12,862,125	8,050,327	3,895,761
Total liabilities	316,390	223,326	1,788,302

RESULTS OF OPERATIONS

Three months ended December 31, 2020 compared to three month ended December 31, 2019

Total operating expenses were $281,225 for the three months ended December 31, 2020 compared to $67,892 in the comparative period, an increase of $213,333. The main reason for the change was an increase of $120,498 in sharebased payments expense related to the stock options granted during the three months ended December 31. In addition, there was a $61,400 increase in professional fees related to increased legal fees incurred in connection with increased corporate activity resulting from the financing and property acquisition. Management fees increased by $39,044 compared to the comparative period, as a result of services provided by the new Chief Executive Officer. Interest and bank charges were lower, at $442, as the comparative period included a $5,739 Part XII.6 penalty incurred in respect of Canadian Exploration Expenses that were not incurred by December 31, 2019, pursuant to the sale of flow-through shares. Rent increased by $3,000 due to a new rental agreement entered into during the three month period ended December 31, 2020.

Six months ended December 31, 2020 compared to six months ended December 31, 2019

Total operating expenses were $350,149 for the six months ended December 31, 2019, compared to $87,643 in the comparative period in 2019. The increase was mainly due to a $158,370 increase in share-based payments for the reasons noted above for the three month period.

Transfer agent and filing fees and shareholder information for the six months ended December 31, 2020, are $13,246 and $8,226, respectively, slightly less than in the six-month comparable period. Management fees and professional fees of $40,495 and $138,990, respectively, are higher than the $18,000 and $52,894 in the comparable period for the reasons noted above for the three month period. Interest and bank charges were lower, at $633, for the reasons noted above. Rent is higher by $8,005, also for the reasons noted above.

SUMMARY OF QUARTERLY RESULTS

The following table sets out selected quarterly results of the Company for the eight quarters prior to the effective date of this report. The information contained herein is drawn from the audited annual financial statements and unaudited interim financial statements of the Company.

ncial statements of the Company.
Calendar Year	2020	2020	2020	2020
Quarter	December 30,	September 30,	June 30,	March 31,
Revenue	$nil	$nil	$nil	$nil
Working capital (deficiency)	2,505,260	417,171	44,346	19,956
Interest in exploration properties and deferred explorationand evaluationexpenditures	10,037,630	7,904,882	7,810,375	7,925,022
Expenses	281,225	68,924	53,187	83,722
Net income (loss)	(328,125)	(8,024)	(87,187)	(76,022)
Net income (loss) per share(1)	(0.00)	(0.00)	(0.00)	(0.00)

Calendar Year	2019	2019	2019	2019
Quarter	December 31,	September 30,	June 30,	March 31,
Revenue	$nil	$nil	$nil	$nil
Working capital (deficiency)	(90,090)	(100,211)	42,263	142,293
Interest in exploration properties and deferred explorationand evaluationexpenditures	7,899,698	7,903,971	7,782,148	8,917,232
Expenses	67,892	19,751	53,456	114,096
Net income (loss)	1,836	10,822	(1,117,091)	(142,717)
Netincome (loss) pershare (1)	0.00	0.00	(0.03)	(0.00)

Notes:

(1) Net income (loss) per share on a diluted basis is the same as basic net income (loss) per share, as all factors, which were considered in the calculation, are anti-dilutive.

RELATED PARTY TRANSACTIONS

The remuneration of directors and key management during the three months and six months ended December 31, 2020 and 2019 were as follows:

Short-term benefits Share-based payments (recovery)	Three months ended December 31, Six months ended December 31
	2020 $ 2019 $ 2020 $ 2019 $
	30,975 10,000 30,975 40,000 112,630 (32,702) 112,630 (32,702)
	143,605 (22,702) 143,605 7,298

During the three and six months ended December 31, 2020, $nil (2019 - $4,000 and $16,000, respectively) of short-term benefits was capitalized as deferred exploration expenditures and $30,975 (2019 - $nil and $18,000, respectively) is included in management fees.

During the three and six months ended December 31, 2020, the Company incurred $27,737 and $53,310, respectively (2019 - $6,410) for professional fees and legal expenses incurred for the Golden Baie Property option agreements and $19,358 and $31,020, respectively (2019 - $6,410) for share issue costs, charged by Peterson McVicar LLP, a law firm of which a director is a partner. As at December 31, 2020, $41,981 was payable to this law firm (June 30, 2020 - $5,000) and this amount was included in accounts payable and accrued liabilities.

During the three and six months ended December 31, 2020, the Company incurred $3,000 and $9,510, respectively (2019 - $nil and $1,505, respectively) for rent charged by a significant shareholder of the Company. As at December 31, 2020, $7,578 was payable to this shareholder (June 30, 2020 - $1,704) and this amount was included in accounts payable and accrued liabilities.

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including directors (executive or non-executive) of the Company.

During the six month period ended December 31, 2020, directors and officers of the Company subscribed for 2,870,050 Part & Parcel Units for gross proceeds of $301,355. Directors and/or officers of an insider of the Company acquired an aggregate of 385,700 Units for gross proceeds of $60,748.

As at December 31, 2020, the directors and officers of the Company together control 8,241,619 common shares or approximately 11.34% of the total common shares outstanding. Two corporate investors control 17,336,339 common shares and 7,669,024 respectively or approximately 24% and 11% of the total common shares outstanding.

LIQUIDITY

As at December 31, 2020, the Company had working capital of $2,505,260 compared to working capital of $44,346 at June 30, 2020. The Company has no revenue from operations and is dependent on financings for working capital.

The Company’s operating costs are expected to remain approximately the same for the remainder of fiscal 2021, while exploration costs will depend on the exploration program budget as approved by the directors. The Company is committed to incur flow-through eligible expenditures of $1,286,370 by December 31, 2021.

WORKING CAPITAL RESOURCES

Additional financings will be required to fund future exploration and for working capital purposes.

Most of the Company’s requirements for capital to maintain its ownership level in its properties, as well as pay for exploration expenditures and administrative expenses have been met through the completion of private placements and the exercise of stock options and warrants. Typically, these monies have come from institutional and high net worth investors and the amounts raised have been a function of the level of market interest in the junior resource industry as well as the general level of interest in the equity and mineral commodity markets. The Company will have to rely on further equity financings in order to maintain an adequate liquidity base with which to support its general operations and exploration and development mandate.

The mineral exploration business is risky and most exploration projects will not become mines. The Company may offer other mining companies the opportunity to acquire interests in any of its properties in return for funding by such companies of all or part of the exploration and development of such properties. For the funding of any property acquisitions or exploration conducted by the Company, the Company depends on the issue of shares from treasury to investors. Such financing will depend, in turn, on various factors, such as a positive mineral exploration climate, positive stock market conditions, the Company’s track record and the experience of management. If such financing is unavailable for any reason, the Company may become unable to retain its mineral interests and carry out its business plan.

OFF-BALANCE SHEET ARRANGEMENTS

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

PROPOSED TRANSACTIONS

None.

CRITICAL ACCOUNTING ESTIMATES

Critical accounting estimates used in the preparation of the financial statements include the Company’s estimate of the recoverable value of its mineral properties and related deferred exploration and evaluation expenditures, as well as the value of stock-based compensation. These estimates involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control.

The factors affecting stock-based compensation include estimates of when stock options and compensation warrants might be exercised and stock price volatility. The timing for exercise of options is out of the Company’s control and will depend on a variety of factors, including the market value of the Company’s shares and financial objectives of the sharebased instrument holders. The Company used historical data to determine volatility in accordance with the Black-Scholes option pricing model. However, the future volatility is uncertain and the model has its limitations.

The Company’s recoverability of its recorded value of its mineral properties and associated deferred exploration and evaluation expenses is based on current market conditions for minerals, underlying mineral resources associated with the properties and future costs that may be required for ultimate realization through mining operations or by sale. The Company operates in an industry that is dependent on a number of factors including environmental, legal and political risks, the existence of economically recoverable reserves, and the ability of the Company to obtain necessary financing to complete the development, and future profitable production or the proceeds of disposition thereof.

FUTURE ACCOUNTING CHANGES

The Company has not yet adopted certain new IFRS standards, amendments and interpretations to existing standards, which have been published but are only effective in future periods. The Company does not currently expect the adoption of these new IFRS standards to have a material impact on its financial statements.

CHANGE IN ACCOUNTING POLICIES

Effective July 1, 2020, the Company adopted the following new or amended IFRS standards with no material impact on its financial statements:

(a) IFRS 3, Business Combinations ("IFRS 3")

Amendments to IFRS 3, issued in October 2018, provide clarification on the definition of a business. The amendments permit a simplified assessment to determine whether a transaction should be accounted for as a business combination or as an asset acquisition.

(b) IAS 1, Presentation of Financial Statements ("IAS 1")

Amendments to IAS 1, issued in October 2018, provide clarification on the definition of material and how it should be applied. The amendments also align the definition of material across IFRS and other publications.

(c) IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors ("IAS 8") Amendments to IAS 8, issued in October 2018, provide clarification on the definition of material and how it should be applied. The amendments also align the definition of material across IFRS and other publications.

COMMITMENTS AND CONTINGENCIES

Environmental Contingencies

The Company’s mining and exploration activities are subject to various federal, provincial and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company conducts its operations so as to protect public health and the environment and believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.

Flow·Through Commitments

Pursuant to the terms of the flow-through share agreements, the Company needs to comply with its flow-through contractual obligations with subscribers with respect to the Income Tax Act (Canada) by incurring qualified exploration expenditures before December 31, of the year following the year in which the agreement is entered into. The Company indemnifies the subscribers of current and previous flow-through share offerings against any tax related amounts that become payable by the shareholder as a result of the Company not meeting its expenditure commitments. The Company is committed to incur flow-through expenditures of $1,286,370 by December 31, 2021.

COVID-19

The outbreak of the novel strain of coronavirus, specifically identified as “COVID-19”, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of

these developments and the impact on the financial results and condition in future periods. The Company is closely monitoring the business environment as a result to ensure minimal disturbance to business operations.

FINANCIAL INSTRUMENTS

The Company’s activities expose it to a variety of financial risks: liquidity risk, market risk (including interest rate, foreign exchange rate and price risk) and credit risk.

Risk management is carried out by the Company's management team with guidance from the Audit Committee under policies approved by the Board of Directors. The Board of Directors also provides regular guidance for overall risk management.

Credit risk

The Company's credit risk is primarily attributable to cash and cash equivalents and receivables included in amounts receivable and prepaid expenses. The Company has no significant concentration of credit risk arising from operations. Financial instruments included in amounts receivable and prepaid expenses consist of goods and services tax due from the Federal Government of Canada. Management believes that the credit risk concentration with respect to financial instruments included in amounts receivable and prepaid expenses is remote.

Liquidity risk

The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at December 31, 2020, the Company had a cash and cash equivalents balance of $2,652,327 (June 30, 2020 - $95,648) to settle current liabilities of $316,390 (June 30, 2020 - $109,088). The Company's ability to continue operations and fund its exploration property expenditures is dependent on management's ability to secure additional financing. Management is continuing to pursue various financing initiatives in order to provide sufficient cash flow to finance operations as well as funding its exploration expenditures. The Company's financial liabilities generally have contractual maturities of less than 30 days and are subject to normal trade terms.

Interest rate risk

The Company has cash, cash equivalents and short-term investment balances subject to interest. Management does not believe the Company is exposed to significant interest rate risk.

Foreign currency risk

The Company's functional currency is the Canadian dollar and major purchases are transacted in Canadian dollars. The Company is not exposed to foreign exchange risk.

Price risk

The Company is exposed to price risk with respect to commodity prices. The Company closely monitors commodity prices to determine the appropriate course of action to be taken by the Company. The Company is also exposed to price risk with respect to its investment in shares of Angus Gold Inc.

Sensitivity analysis

Based on management's knowledge and experience in the financial markets, the Company believes the following movements are "reasonably possible" over a twelve-month period:

Cash, cash equivalents and short-term investments are invested with a Canadian chartered bank or a financial institution controlled by a Canadian chartered bank. Sensitivity to a plus or minus 1% change in rates, based on the balance of cash and cash equivalents at December 31, 2020, would affect net loss by plus or minus $26,500 during a twelve-month period.

The Company does not hold significant balances in foreign currencies to give rise to exposure to foreign exchange risk.

As a result of the 70,000 shares held in Angus Gold Inc., a 10% fluctuation in the price of investment in the fair value of the shares of Angus Gold Inc. would result in a change in fair value of $6,000.

CAPITAL MANAGEMENT

When managing capital, the Company’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management adjusts the capital structure as necessary in order to support the acquisition, exploration and development of its mineral properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management team to sustain the future development of the business. The Company considers its capital to be equity, which is comprised of capital stock, share purchase warrants, broker compensation warrants, contributed surplus and deficit.

The properties in which the Company currently has an interest are in the exploration stage. As such the Company is dependent on external financing to fund its activities. In order to carry out its planned exploration programs and pay for administrative costs, the Company will spend its existing working capital and raise additional amounts when economic conditions permit it to do so. Management has chosen to mitigate the risk and uncertainty associated with raising additional capital in current economic conditions by:

(i) maintaining a liquidity cushion in order to address any potential disruptions or industry downturns; (ii) minimizing discretionary disbursements;
(iii) reducing or eliminating exploration expenditures that are of limited strategic value; and (iv) exploring alternative sources of liquidity.

In light of the above, the Company will continue to assess new properties and seek to acquire an interest in additional properties if the Company believes there is sufficient potential and if it has adequate financial resources to do so.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is appropriate.

The Company is not subject to any capital requirements imposed by a regulator or lending institution body, other than of the TSX Venture Exchange (“TSXV”) which requires adequate working capital or financial resources of the greater of (i) $50,000 and (ii) an amount required in order to maintain operations and cover general and administrative expenses for a period of 6 months. The Company expects that its current capital resources are sufficient to discharge its liabilities as at December 31, 2020.

SHARE CAPITAL

Common shares

On September 15, 2020, the Company completed a private placement consisting of the sale of 4,761,920units ("Part & Parcel Unit") at $0.105 per Part & Parcel Unit for gross proceeds of $500,002. Each Part & Parcel Unit was comprised of one common share in the capital of the Company and one common share purchase warrant ("Warrant") at an exercise price of $0.21 per Warrant for two years from the date of issuance.

A fair value of $203,546 was estimated for the Warrants using the Black-Scholes pricing model based on the following weighted average assumptions: expected dividend yield of 0%; risk free interest rate of 0.26%; expected life of 2 years; and an expected volatility of 171% based on the Company’s historical trading data. All securities issued are subject to the applicable statutory hold period of four months and one day from the closing.

In connection with the private placement, directors and officers of the Company acquired a total of 2,870,050 Part & Parcel Units for aggregate proceeds of approximately $301,355.

On October 1, 2020, the Company completed the second and final tranche (the “Second Tranche”) of the non-brokered private placement comprised of the sale of 9,523,810 units ("Units") at a price of $0.1575 per Unit for gross proceeds of $1,500,000. Each unit is comprised of one common share and one warrant ("Regular Warrant"). Each Regular Warrant entitles the holder to purchase one common share at a price of $0.21 for a period of two years. The Company paid finder’s fees of $14,175 and issued 90,000 finder warrants to purchase Units at a price of $0.1575 per Unit. Directors and/or officers of Adventus acquired 385,700 Regular Units for gross proceeds of $60,748.

On November 17, 2020, the Company issued 4,000,000 common shares to Altius, 1,600,000 common shares to Colin Kendell, and 400,000 common shares to Corwin Northcott pursuant to the Golden Baie option agreement.

On December 30, 2020, the Company closed a non-brokered private placement consisting of the sale of 3,675,342 flowthrough shares ("FT Share”) at a price of $0.35 per FT share for aggregate gross proceeds of $1,286,370. Each FT Share

is composed of one common share of the Company. In connection with the flow-through offering, the Company paid commissions of an aggregate of $26,736 in cash and 76,388 finder warrants exercisable at a price of $0.35 per common share for a period of 24 months from the closing of the offering. All securities issued are subject to the applicable statutory hold period of four months and one day from the closing.

Stock options

On April 22, 2020, the Company granted 150,000 stock options to a consultant of the Company. Each stock option allows the holder to acquire one common share of the Company at an exercise price of $0.10 for a period of 3 years. The options shall vest as to one-third upon the date of grant, one-third on October 19, 2020, and one-third on October 19, 2021.

On October 14, 2020, the Company granted 3,800,000 stock options to directors, officers, consultants and employees of the Company. Each stock option allows the holder to acquire one common share of the Company at an exercise price of $0.28 for a period of 5 years. The options vest as to 1/3 on each of the first, second and third anniversaries of the grant date.

On February 8, 2021, the Company granted 1,200,000 stock options to officers, employees and consultants of the Company. Each stock option allows the holder to acquire one common share of the Company at an exercise price of $0.28 for a period of 5 years. The options vest as to 1/3 on the date of the grant, and 1/3 on each of the first and second anniversaries of the grant date. The grant is subject to regulatory approval.

During the three and six months ended December 31, 2020, $124,380 and $130,650, respectively (three and six months ended December 31, 2019 - $3,882 and a credit of $27,720) was expensed to share-based payments.

Stock options outstanding for the Company at the date of this MD&A were as follows:

Options	Exercisable
Granted	Options	Exercise Price	Expiry Date
#	#	$
357,500	357,500	0.55	January 3, 2022
100,000	100,000	0.30	January 15, 2022
40,000	40,000	0.25	January 12, 2023
150,000	100,000	0.10	October 19, 2023
3,800,000	-	0.28	October 14, 2025
1,200,000	400,000	0.28	February 8, 2026
5,647,500	997,500	0.29

Warrants

Warrants outstanding for the Company at the date of this MD&A were as follows:

Number of
Warrants	Exercise Price	Expiry Date
#	$
4,761,920	0.21	September 15, 2022
9,523,810	0.21	October 1, 2022
90,000(1)	0.1575	October 1, 2022
76,388	0.35	December 30,2022
14,452,118	0.26

(1) Exercisable into units comprised of once common share and one warrant exercisable at $0.21 until October 1, 2022.

RISKS AND UNCERTAINTIES

• Exploration Stage Company and Exploration Risks

The Company is a junior resource company focused primarily on the acquisition and exploration of mineral properties located in Canada. The properties of the Company have no established reserves. There is no assurance that any of the projects can be mined profitably. Accordingly, it is not assured that the Company will realize any profits in the short to medium term, if at all. Any profitability in the future from the business of the Company will be dependent upon developing and commercially mining an economic deposit of minerals, which in itself is subject to numerous risk factors. The exploration and development of mineral deposits involve a high degree of financial risk over a significant period of time that even a combination of management’s careful evaluation, experience and knowledge may not eliminate. While discovery of ore-bearing structures may result in substantial rewards, few properties that are explored are ultimately developed into producing mines. Major expenses may be required to establish reserves by drilling and to construct mining and processing facilities at a particular site. It is impossible to ensure that the current exploration, development and production programs of the Company will result in profitable commercial mining operations. The profitability of the Company’s operations will be, in part, directly related to the cost and success of its exploration and development programs, which may be affected by a number of factors. Substantial expenditures are required to establish reserves that are sufficient to commercially mine some of the Company’s properties and to construct complete and install mining and processing facilities on those properties that are actually mined and developed.

• No History of Profitability

The Company is a development stage company with no history of profitability. There can be no assurance that the operations of the Company will be profitable in the future. The Company has limited financial resources and will require additional financing to further explore, develop, acquire, retain and engage in commercial production on its property interests and, if financing is unavailable for any reason, the Company may become unable to acquire and retain its mineral concessions and carry out its business plan.

• Government Regulations

The Company's exploration operations are subject to government legislation, policies and controls relating to prospecting, development, production, environmental protection, mining taxes and labor standards. In order for the Company to carry out its mining activities, its exploitation must be kept current. There is no guarantee that the Company's exploitation will be extended or that new exploitation will be granted. In addition, such exploitation could be changed and there can be no assurances that any application to renew any existing will be approved. The Company may be required to contribute to the cost of providing the required infrastructure to facilitate the development of its properties. The Company will also have to obtain and comply with permits and that may contain specific conditions concerning operating procedures, water use, waste disposal, spills, environmental studies, abandonment and restoration plans and financial assurances. There can be no assurance that the Company will be able to comply with any such conditions.

• Market Fluctuation and Commercial Quantities

The market for minerals is influenced by many factors beyond the control of the Company such as changing production costs, the supply and demand for minerals, the rate of inflation, the inventory of mineral producing companies, the international economic and political environment, changes in international investment patterns, global or regional consumption patterns, costs of substitutes, currency availability and exchange rates, interest rates, speculative activities in connection with minerals, and increased production due to improved mining and production methods. The metals industry in general is intensely competitive and there is no assurance that, even if commercial quantities and qualities of metals are discovered, a market will exist for the profitable sale of such metals. Commercial viability of precious and base metals and other mineral deposits may be affected by other factors that are beyond the Company’s control including particular attributes of the deposit such as its size, quantity and quality, the cost of mining and processing, proximity to infrastructure and the availability of transportation and sources of energy, financing, government legislation and regulations including those relating to prices, taxes, royalties, land tenure, land use, import and export restrictions, exchange controls, restrictions on production, as well as environmental protection. It is impossible to assess with certainty the impact of various factors that may affect commercial viability so that any adverse combination of such factors may result in the Company not receiving an adequate return on invested capital.

• Mining Risks and Insurance

The Company is subject to risks normally encountered in the mining industry, such as unusual or unexpected geological formations, cave-ins or flooding. The Company may become subject to liability for pollution, damage to life or property and other hazards of mineral exploration against which it or the operator if its exploration programs cannot insure or against which it or such operator may elect not to insure because of high premium costs or other reasons. Payment of such liabilities would reduce funds available for acquisition of mineral prospects or exploration and development and would have a material adverse effect on the financial position of the Company.

• Environmental Protection

The mining and mineral processing industries are subject to extensive governmental regulations for the protection of the environment, including regulations relating to air and water quality, mine reclamation, solid and hazardous waste handling and disposal and the promotion of occupational health and safety, which may adversely affect the Company or require it to expend significant funds.

• Capital Investment

The ability of the Company to continue exploration and development of its property interests will be dependent upon its ability to raise significant additional financing. There is no assurance that adequate financing will be available to the Company or that the terms of such financing will be. Should the Company not be able to obtain such financing, its properties may be lost entirely.

• Conflicts of Interest

Certain of the directors and officers of the Company may also serve as directors and officers of other companies involved in base and precious metal exploration and development and consequently, the possibility of conflict exists. Any decisions made by such directors involving the Company will be made in accordance with the duties and obligations of directors to deal fairly and in good faith with the Company and such other companies. In addition, such directors will declare, and refrain from voting on, any matters in which they may have a conflict of interest.

• Current Global Financial Conditions

Current global financial conditions have been characterized by increased volatility, declining liquidity and the exit of a number of traditional investors from public markets. Access to public financing has been made more challenging by a global contraction of commercial and consumer credit markets. The ensuing decline in consumption has led to a marked erosion of investor confidence and risk tolerance. A major consequence/contributor to these factors may be seen in the unparalleled number of established financial institutions facing involuntary corporate reorganization, insolvency, bankruptcy and/or governmental intervention. While the most sensational of the corporate casualties have occurred in the United States, the global nature of today’s economic reality has left no interrelated public market unscathed. These factors may affect the ability of the Company to obtain equity or debt financing in the future on terms favorable to the Company or at all. Any or all of these economic factors, as well as other factors not specifically identified herein, may cause a decline in asset values that could be deemed to be other than temporary, resulting in impairment losses. If such conditions continue, the Company’s operations could be negatively impacted, and the trading price of its common shares may be adversely affected.

Securities of mining and mineral exploration companies, including the common shares of the Company, have experienced substantial volatility in the past, often based on factors unrelated to the financial performance or prospects of the companies involved. These factors include macroeconomic developments in Canada and globally, and market perceptions of the attractiveness of particular industries. The price of the securities of the Company is also significantly affected by short-term changes in commodity prices, base and precious metal prices or other mineral prices, currency exchange fluctuation and the political environment in the countries in which the Company does business.

DISCLOSURE OF INTERNAL CONTROLS

Management has established processes to provide them sufficient knowledge to support representations that they have exercised reasonable diligence that (i) the audited annual 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 audited annual financial statements and (ii) the audited annual financial statements fairly present in all material respects the financial condition, results of operations and cash flow of the Company, as of the date of and for the years presented.

In contrast to the certificate required for non-venture issuers under National Instrument 52-109, Certification of Disclosure

in Issuers’ Annual and Interim Filings (NI 52-109), the Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52- 109. In particular, the certifying officers filing this certificate 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 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.

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in the certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR 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.

DISCLOSURE OF OUTSTANDING SHARE DATA (AS AT FEBRUARY 22, 2021)

The Company’s authorized capital consists of an unlimited number of common shares without par value, of which 72,661,545 are issued and outstanding as of the date of this MD&A. On a fully diluted basis the Company has 92,851,163 common shares outstanding assuming the exercise of 5,647,500 outstanding stock options, 14,452,118 warrants, of which 90,000 finder warrants are exercisable into units comprised of one common share and one warrant.

APPROVAL

The Board of Directors of the Company has approved the disclosure contained in the Management Discussion and Analysis. A copy of this report will be provided to anyone who requests it.

OTHER MATTERS

Additional information relating to the Company can be found on SEDAR at www.sedar.com and the Company’s website at www.canstarresources.com.

AI assistant

Canstar Resources Inc. — Interim / Quarterly Report 2021

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