Edgemont Gold Corp. — Management Reports 2021

Jan 25, 2021

EDGEMONT GOLD CORP.

Management Discussion and Analysis of Financial Condition and Results of Operation For the Year ended October 31, 2020

This Management Discussion and Analysis (“MD&A”) of Edgemont Gold Corp. (the “Company”) provides analysis of the Company’s financial results for the year ended October 31, 2020 and should be read in conjunction with the accompanying audited annual financial statements and notes thereto for the audited financial statements and notes thereto for the year ended October 31, 2020, all of which are available at www.sedar.com. This MD&A is based on information available as at January 19, 2021.

The accompanying October 31, 2020 audited financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) applicable to the preparation of the financial statements. All amounts are expressed in Canadian dollars, unless otherwise stated.

Certain statements made may constitute forward-looking statements. Such statements involve a number of known and unknown risks, uncertainties and other factors. Actual results, performance and achievements may be materially different from those expressed or implied by these forward-looking statements. Additional information about Edgemont Gold Corp. is available at www.sedar.com .

Edgemont Gold Corp. (formerly Edgemont Resource Corp.) was incorporated on August 2, 2018 under the laws of British Columbia. On January 30, 2020 the Company changed its name to Edgemont Gold Corp. The address of the Company’s corporate office and its principal place of business is 9[th] Floor - 1021 West Hastings Street, Vancouver, British Columbia, V6E 0C3.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This MD&A may contain certain statements that may be deemed “forward-looking statements”. All statements in this document, other than statements of historical fact, which address events or developments that the Company expects to occur, are forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential”, “interprets” and similar expressions, or events or conditions that “will”, “would”, “may”, “could” or “should” occur. Forward-looking statements in this document include statements regarding future exploration programs, joint venture partner participation, liquidity and effects of accounting policy changes.

Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward-looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements include market prices, exploration success, continued availability of capital and financing, inability to obtain required regulatory or governmental approvals and general economic, market or business conditions. Readers are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements.

Forward-looking statements are based on the beliefs, estimates and opinions of the Company’s management on the date the statements are made. The Company undertakes no obligation to update these forward-looking statements in the event that management’s beliefs, estimates, opinions or other factors should change except as required by law.

These statements are based on a number of assumptions including, among others, assumptions regarding general business and economic conditions, the timing of the receipt of regulatory and governmental approvals for the transactions described herein, the ability of the Company and other relevant parties to satisfy stock exchange and other regulatory requirements in a timely manner, the availability of financing for the Company’s proposed transactions and exploration and development programs on reasonable terms and the ability of third-party service providers to deliver services in a timely manner. The foregoing list of assumptions is not exhaustive. Events or circumstances could cause results to differ materially.

Overview

The Company is focused entirely on mineral exploration in British Columbia. Since incorporation, the Company has entered into two option agreements, the Dungate and Mike Option Agreements (the “Dungate Project”), expanded the Dungate Project by staking adjacent claims and begun exploration activities in preparation for initial drilling in 2021.

On December 16, 2019, the Company signed an engagement letter with Mackie Research Capital Corporation (the “Agent”) to raise up to $350,000 in an initial public offering (“IPO”) through the issuance of up to 3,500,000 common shares of the Company at a price of $0.10 per common share. Pursuant to the terms of the engagement letter, the Company has agreed to pay to the Agent a commission of 10% of the gross proceeds of the IPO and grant Agent’s Warrants which will entitle the Agent to purchase up to 10% of the common shares sold under the IPO, at a purchase price that is equal to the price per share offered in the IPO and exercisable for a period of 36 months from the closing date of the offering. In addition, the Company has agreed to pay a corporate finance fee of $25,000, cover the Agent’s legal fees incurred pursuant to the IPO and any other reasonable expenses of the Agent, and grant the Agent an option to increase the size of the offering by up to 15% by giving written notice of the Agent’s exercise of the option at any time up to 48 hours prior to closing of the offering.

On March 17, 2020 the Company’s Prospectus for an IPO was receipted by the B.C. Securities Commission and the IPO was completed on May 29, 2020. The Company commenced trading on the Canadian Securities Exchange (“CSE”) on June 1, 2020 under the symbol “EDGM”. Edgemont began its Phase 1 exploration program on the Dungate project in July 2020.

DUNGATE PROJECT

In 2019 the Company acquired interests in two mineral claims covering 546.4 hectares 6 km south of the town Houston in the Omineca Mining Division in British Columbia. These claims, and additional claims staked in July 2020, jointly comprise the “Dungate Project” which now consists of five mineral tenures covering 1,582.2 hectares.

==> picture [462 x 357] intentionally omitted <==

For more information on the Dungate Project, and the recommended work program for 2020, please refer to the NI 43101 Technical Report on the Dungate Project, Omenica Mining Division, British Columbia” prepared by B.L. Laird P.Geo with an effective date of November 12, 2019, (the “ Dungate Technical Report ”) and available at www.sedar.com.

Expansion of Dungate Project by Staking

On July, 2020 Edgemont staked an additional 1,035.8 hectares in three claims contiguous to its initial holdings at Dungate, effectively tripling the size of the project area. This additional ground was staked based on soil sampling and a magnetic survey conducted in 2019 that identified a possible additional Quartz Feldspar Porhyryr (“QFP”) intrusive underlying the property that appears to extend to the north from the initial claim area. The following map shows the possible intrusive identified last year at the Dungate project.

==> picture [279 x 361] intentionally omitted <==

The staking was continued further north to include a mineral showing identified at Mud Lake in 1986 (MINFILE 093L 011) that returned assays up of 4.56% Cu, 27.9 g/t Ag and 3.1% Zn from historical grab samples. According to Assessment Report #13733 filed by Amanda Resources in 1986, the “mineral assemblage present is considered typical of massive sulphide deposits similar to the Equity mine”, a past producing silver mine approximately 36 km to the south.

Summer Field Exploration

Edgemont begun summer field work at Dungate in June 2020. Work completed on the project comprised additional geological mapping of the property area, including detailed mapping of existing trenches discovered during field work in 2019. Rock sampling was completed contemporaneously with geological mapping of the project area, with 28 samples being collected. Highlights from these grab samples include >1% zinc, 0.28% copper and 0.13% lead from outcrop at the Mud Lake showing, the location of which is indicated in the map above.

Sampling at the historical Dungate showing concentrated on better understanding of the alteration and zoning of the quartz feldspar porphyry (“QFP”). Anomalous samples from limited outcrop assayed up to 0.11% Cu, 0.033% Mo, and 69 ppb gold (in separate samples) within quartz feldspar porphyry and QFP breccias.

In September 2020 sixteen line kilometers of cut line were established and an induced polarization (“IP”) survey completed in October. The IP response indicates a strong cohesive circular chargeable anomaly approximately 1,200 meters in diameter (chargeability response varies from 15mv/v to greater than 60 mv/v) that is coincident with a total magnetic high on the southern half of the anomaly where a magnetic survey was completed in 2019. The northern half of the chargeability anomaly has a coincident resistivity high. Compilation and interpretation of the data from the current and prior surveys is currently underway.

The Dungate property in its entirety is thought to be mostly underlain by volcanic rocks of either the Jurassic Hazleton Group or the Eocene Endako Group. These volcanic rocks have been intruded by a probable QFP intrusion of Eocene age. The currently known mineralization on the property is proximal to the immediate area of this QFP intrusion. This geological environment hosts potential for porphyry copper-gold-molybdenum mineralization. Outcrop on the property is limited but in the southeast quadrant of the IP anomaly potassic altered quartz feldspar porphyry intrusive occurs in historic trenches with sulphide mineralization grading up to 0.54% Cu, and up to 1.70 g/t Au in nearby outcrops. Please see our news release of October 26,. 2020 for more details.

Drill permit filed for Dungate Project

In December of 2020 the Company filed an application for a drill permit for the Dungate project. The initial drill targets at Dungate are 7 km north of the high-grade gold/silver discovery recently announced by Sun Summit Minerals Corp. on their adjacent Buck property, where their recent claim staking in 2020 also expanded their property to the southern boundary of the Dungate property. A map showing the location of the Dungate property in relation to Sun Summit’s property is available below:

==> picture [439 x 248] intentionally omitted <==

The initial drilling planned for the Dungate project will be comprised of six deep holes (approximately 500 m each) to test the strong cohesive circular chargeable anomaly. This chargeability anomaly appears to be increasing in size and

strength with depth and, with the coincident total magnetic intensity high, occurs on the quartz feldspar porphyry (“QFP”) identified by Edgemont in mapping and surface rock sampling in 2019 and 2020.

Drilling was last conducted at Dungate in 1976, with numerous shallow (<100 m) drill holes completed. The only deep hole (333 m) on the property was drilled by Cities Services in 1975 and drill logs reported 142 m of “abundant chalcopyrite” at the bottom of the hole. No assay results are available. The IP survey conducted by Edgemont in 2020 was the first modern geophysical survey ever conducted at Dungate and it indicates that the strongest IP anomalies have never been tested by drilling.

The technical information above has been approved by Joseph Campbell, P. Geo, a Director of Edgemont, who is a Qualified Person as defined in "National Instrument 43-101, Standards of Disclosure for Mineral Projects."

Grant of Incentive Stock Options

On January 1, 2020 the Company granted incentive stock options to directors and officers on 500,000 common shares at an exercise price of $0.10 per share for a period of up to three years from the date of grant.

On November 13, 2020 the Company granted incentive stock options to directors and officers on 600,000 common shares at an exercise price of $0.12 per share for a period of up to three years from the date of grant.

RESULTS OF OPERATIONS

Year ended October 31, 2020

During the year ended October 31, 2020 (the “current period”) the Company reported a net loss of $141,868. This compares to a net gain for the year ended October 31, 2019 (the “prior period”) of $7,792. The significant variations in expenditures were as follows:

Office and administration expense of $12,126 was incurred during the current period as the Company established an office presence and retained a Chief Financial Officer on a contract basis in preparation for completion of its Initial Public Offering in May 2020. There were no comparable expenses incurred during the prior period.

During the current period, the Company incurred $36,392 for share-based payments expense (a non-cash expense) for stock options granted during the period. There were no options granted during the prior period.

Professional fees incurred the current period of $19,757 were reduced from fees of $31,719 incurred for drafting property agreements and finalizing the incorporation of the Company during the comparative period.

Transfer agent, filing fees and shareholder relations expense of $5,888 was incurred during the current year following the listing of the Companies shares on the CSE on May 29, 2020. There were no comparable expenses incurred during the prior period as the Company was still private at that time.

During the current period, the Company incurred listing costs of $66,778 as it prepared to list on the CSE. There were no comparable expenses during the prior period.

Selected Annual Information

Selected Annual Information

==> picture [399 x 109] intentionally omitted <==

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

Year ended Year ended August 2, 2018 to
October 31, 2020 October 31, 2019 October 31, 2020
($) ($) ($)
Loss before Other Items (85,804) (42,994) -
Per Share (0.01) (0.01) -
-
Net Income (Loss) (141,868) 7,792
Per Share (0.01) 0.00 -
Total Assets 379,244 245,149 751
Long-Term Liabilities Nil Nil Nil
----- End of picture text -----

The net loss for the fiscal year ended October 31, 2020 increased to $141,868 from net income of $7,792 during the fiscal year ended October 31, 2019 primarily due to share-based payment expense, a non-cash item, of $36,392 and

listing costs of $66,778 incurred during the current fiscal year. There were no similar costs incurred during the prior year.

The net income of $7,792 for the fiscal year ended October 31, 2019 was due to a flow-through share premium of $61,500 recorded due to the renunciation of exploration expenses funded by the issuance of flow-through shares, offsetting operating expenses of $42,994 and deferred income tax expense of $10,714.

There was no income or loss during the period from inception to October 31, 2018 when the Company was not yet active.

Three-month period ended October 31, 2020

During the three months ended October 31, 2020 (the current period) the Company reported a net loss of $86,931 due primarily to recording listing costs of $66,778 during the period. This compares to a gain of $19,009 for the three months ended October 31, 2019 (the comparative period) when professional and management fees incurred as the Company conducted an exploration program were offset by a gain of $61,500 from the reduction of the flow-through share premium liability when the funds from the flow-through financing completed in early 2019 were completely spent on eligible exploration expenditures during the summer field program.

Summary of Quarterly Results

==> picture [498 x 14] intentionally omitted <==

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

Q4-2020 Q3-2020 Q2-2020 Q1-2020 Q4 -2019 Q3 -2019 Q2-2019 Q1-2019
----- End of picture text -----

Net income (loss) ($)	(86,931)	(9,151)	(4,562)	(41,224)	19,009	(1,391)	(248)	(9,578)
Per Share ($)	(0.01)	(0.00)	(0.00)	(0.00)	0.00	(0.00)	(0.00)	(0.00)

The first quarter of fiscal 2019 was the first quarter in which the Company was active following incorporation on August 2, 2018. Expenses were primarily for professional fees related to completing subscription and property agreements.

The loss for the second quarter of fiscal 2019 decreased to $248 from the loss of $9,578 during the first quarter of 2019. This amount was comprised solely of bank charges incurred during the period.

The loss for the third quarter of fiscal 2019 increased to $1,391 from the loss of $248 for the second quarter primarily due to additional professional fees incurred during the third quarter to support fundraising activities.

The Company earned $19,009 during the fourth quarter of fiscal 2019 as operating expenditures during the period of $31,776 were offset by a gain of $61,500 from the reduction of the flow-through share premium liability incurred on the issuance of flow-through shares in February 2019. This was the result of the expenditure of all the flow through funds raised earlier in the year during the fourth quarter on eligible exploration expenditures. Operating expenses during the fourth quarter of fiscal 2019 were primarily comprised of professional and management fees incurred as the Company conducted its exploration program. The Company did not conduct any exploration activities during the prior quarter ending July 31, 2019.

The loss for the first quarter of fiscal 2020 increased to $41,224 from the gain of $19,009 during the fourth quarter of fiscal 2019 primarily as a result of share-based payments expense of $36,392 recorded during this quarter for the grant of stock options. There was also no reversal of the flow through share premium liability during the first quarter of fiscal 2020 as that liability had been reduced to nil at the end of the prior quarter.

The loss for the second quarter of fiscal 2020 was reduced to $4,562 from the loss of $41,224 during the first quarter of fiscal 2020 primarily due to the absence of share-based payments expense of $36,392 during the second quarter, as no options were granted during the period.

The loss for the third quarter of fiscal 2020 increased to $9,151 from the loss of $4,562 during the second quarter of fiscal 2020 primarily due to an increase in office and miscellaneous expense during the third quarter.

The loss for the fourth quarter of fiscal 2020 increased to $86,931 from the loss of $9,15 during the third quarter of fiscal 2020 primarily due to the reclassification of listing expenses of $66,778 from share issuance costs to an operating expense during the period.

Figures for the periods prior to October 31, 2018 are not available as the Company was incorporated in August of 2018 and only commenced operating activities in November of 2018.

LIQUIDITY AND CAPITAL RESOURCES

Edgemont is in the development stage and therefore has no regular cash flow. As of October 31, 2020, the Company had working capital of $144,506 (October 31, 2019 – working capital of $104,437 excluding the deferred tax liability of $10,714, a non-cash items), inclusive of cash on hand of $150,066 (October 31, 2019 - $144,860).

At October 31, 2020 the Company had current assets of $155,220, total assets of $379,244 and total liabilities of $10,714. The Company has no long-term debt. There are no known trends in the Company’s liquidity or capital resources.

On May 29, 2020 the Company completed its Initial Public Offering for gross proceeds of $355,400. The net proceeds of this prospectus offering are sufficient to fund the Company’s planned Phase I exploration program on the Dungate Project properties and its general and administrative expenses through until the third quarter of fiscal 2021. The Company will need to raise additional equity capital in order to fund the proposed drill program planned for the Dungate project in 2021.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has not entered into any off-balance sheet arrangements.

TRANSACTIONS WITH RELATED PARTIES

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

The Company has incurred the following key management personnel cost from related parties:

	Year ended	Year ended
	October 31, 2020	October 31, 2019
	$	$
Office and administration	3,000	-
Management fees	9,000	10,000
Share-based payments	36,392	-
Total	48,392	10,000

During the year ended October 31, 2020 the Company paid $9,000 (2019 - $10,000) to West Oak Capital Group, Inc., a private company wholly-owned by Stuart Rogers, a director and officer of the Company, for his services as Chief Executive Officer of the Company.

During the year ended October 31, 2020 the Company paid $3,000 (2019 - $Nil) to Goring Development Corp., a private company controlled by Gord Steblin, for his services as Chief Financial Officer of the Company.

During the year ended October 31, 2020 the Company recognized share-based payments expense totaling $36,392 (2019 - $Nil) relating to stock options granted to directors and officers of the Company.

Management fees and share-based payments were incurred from the Chief Executive Officer of the Company and a company owned by the Chief Executive Officer. Office and administration fees and share-based payments were also incurred from the Chief Financial Officer of the Company. Only share-based payments were incurred from the remaining Directors of the Company. Key management includes directors and key officers of the Company, including the Chief Executive Officer and Chief Financial Officer.

COMMITMENTS

The Company is committed to certain cash payments, share issuances and exploration expenditures in connection with the acquisition of its mineral property claims.

CRITICAL ACCOUNTING POLICIES

Share-based Payments

The Company has a stock option plan, which is described in the notes to the financial statements. Share-based payments to employees and others providing similar services are measured at the estimated fair value of the instruments issued on the grant date and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of the goods or services received or the fair value of the equity instruments issued if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The amount recognized as an expense is adjusted to reflect the number of awards expected to vest. The offset to the recorded cost is to equity settled share-based payments reserve.

Consideration received on the exercise of stock options is recorded as share capital and the related equity settled sharebased payments reserve is transferred to share capital. Charges for options that are forfeited before vesting are reversed from equity settled share-based payment reserve.

Risk, Uncertainties and Outlook

The business of mineral deposit exploration and extraction involves a high degree of risk. Few properties that are explored ultimately become producing mines. At present, none of the Company’s properties has a known commercial ore deposit. Other risks facing the Company include competition for mineral properties, environmental and insurance risks, fluctuations in metal prices, fluctuations in exchange rates, share price volatility and uncertainty of additional financing.

Going Concern

The Company is in the exploration stage and has no revenue or income from operations. The Company has limited capital resources and has to rely upon the sale of equity and/or debt securities for cash required for exploration and development purposes, for acquisitions and to fund the administration of the Company. Since the Company does not expect to generate any revenues from operations in the near future, it must continue to rely upon the sales of its equity or debt securities or joint venture agreements to raise capital. It follows that there can be no assurance that financing, whether debt or equity, will be available to the Company in the amount required by the Company at any particular time or for any period and that such financing can be obtained on terms satisfactory to the Company.

The Company’s financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The continuing operations of the Company are dependent upon its ability to obtain the necessary financing to meet its ongoing commitments and further its mineral exploration programs.

The Company may encounter difficulty sourcing future financing in light of the recent economic downturn. The current financial equity market conditions and the inhospitable funding environment make it difficult to raise capital through the private placements of shares. The junior resource industry has been severely affected by the world economic situation as it is considered speculative and high-risk in nature, making it even more difficult to fund.

While the Company is using its best efforts to achieve its business plans by examining various financing alternatives, there is no assurance that the Company will be successful with any financing ventures.

On March 11, 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s exploration activities or its ability to raise funds. As of the date of this report, Covid19 has had no impact on the Company’s ability to access and explore its current properties but may impact the Company’s ability to raise money or explore its properties should travel restrictions currently in effect in B.C. due to Covid-19 be extended or expanded in scope

Financial Risk Management

The Company is exposed in varying degrees to a variety of financial risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash held in bank accounts. The majority of cash is deposited in bank accounts held with a major bank in Canada. As most of the Company’s cash is held by one bank there is a concentration of credit risk. This risk is managed by using major banks that are high credit quality financial institutions as determined by rating agencies. The Company’s secondary exposure to risk is on its other receivables. This risk is minimal as receivables consist primarily of refundable government goods and services taxes.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents.

Historically, the Company's sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity funding. The Company’s liquidity risk is high.

Foreign exchange risk

The Company’s expenses are denominated in Canadian dollars. The Company’s corporate office is based in Canada and current exposure to exchange rate fluctuations is minimal.

The Company does not have any significant foreign currency denominated monetary liabilities. The principal business of the Company is the identification and evaluation of assets or a business and once identified or evaluated, to negotiate an acquisition or participation in a business subject to receipt of shareholder approval and acceptance by regulatory authorities. The Company is not exposed to significant foreign currency risk.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company has positive cash balances at October 31, 2019 and no-interest bearing debt, therefore, interest rate risk is nominal.

Capital Management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the sourcing and exploration of its resource properties. The Company does not have any externally imposed capital requirements to which it is subject.

The Company considers the aggregate of its share capital and deficit as capital. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares or dispose of assets or adjust the amount of cash.

Equity Securities Issued and Outstanding

The Company had 13,109,001 common shares issued and outstanding as of January 19, 2021 of which 3,000,001 shares were held in escrow. On January 19, 2021 there were also 355,400 share purchase warrants exercisable at $0.10, along with 500,000 incentive stock options exercisable at $0.10 and 600,000 incentive stock options exercisable at $0.12.