Grounded Lithium Corp. — Interim / Quarterly Report 2021

Mar 16, 2021

VAR RESOURCES CORP. (formerly CANADIAN INTERNATIONAL PHARMA CORP.)

Management’s Discussion and Analysis

For the three month period ended January 31, 2021

VAR RESOURCES CORP. (formerly CANADIAN INTERNATIONAL PHARMA CORP.) Management’s Discussion and Analysis January 31, 2021

Description of Business and Overview of Operations and Financial Condition

The following is management’s discussion and analysis (“MD&A”), prepared as of March 16, 2021 . This MD&A should be read in conjunction with the Company’s unaudited condensed consolidated interim financial statements for the three month period ended January 31, 2021 and the audited consolidated financial statements and MD&A for the year ended October 31, 2020, all as prepared in accordance with International Financial Reporting Standards (“IFRS”). All amounts are stated in Canadian dollars unless otherwise indicated.

Additional information related to the Company is available for view on SEDAR under the Company’s profile at www.sedar.com.

Description of Business

VAR Resources Corp. (formerly Canadian International Pharma Corp.), (the “Company”) was incorporated under the laws of the Province of British Columbia on November 21, 1983. The Company changed its name on January 29, 2021 and has received approval to trade on the TSX Venture Exchange (“TSX-V”) as a Tier 2 Mining Issuer under the symbol “VAR” (previously “CIP.H”). The Company was previously engaged in the acquisition and exploration of mineral resource properties. Then the Company attempted to pursue new business opportunities in the area of pharmaceutical and nutraceutical manufacturing and distribution; but has returned to its pursuit of mineral resource acquisition and exploration.

On October 30, 2020, the Company entered into an Option Agreement with Longford Capital Corp. (“optionor”), an arm’s length private company, to earn an undivided 100% interest in the Hook Bay Property (“Hook Bay”) consisting of one mineral claim covering 1078.85 hectares located in located in Hook Bay, British Columbia.

Exploration and Evaluation Assets

Realization of assets

Realization of the Company’s investment in these assets is dependent upon the establishment of legal ownership, the attainment of successful production from the properties or from the proceeds of their disposal.

Resource exploration and development is highly speculative and involves inherent risks. While the rewards if an ore body is discovered can be substantial, few properties that are explored are ultimately developed into producing mines. There can be no assurance that current exploration programs will result in the discovery of economically viable quantities of ore.

Environmental

The Company is subject to the laws and regulations relating to environmental matters in all jurisdictions in which it operates, including provisions relating to property reclamation, discharge of hazardous material and other matters. The Company may also be held liable should environmental problems be discovered that were caused by former owners and operators of its properties and properties in which it has previously had an interest. The Company conducts its mineral exploration activities in compliance with applicable environmental protection legislation. Environmental legislation is becoming increasingly stringent and costs and expenses of regulatory compliance are increasing. The impact of new and future environmental legislation on the Company’s operations may cause additional expenses and restrictions. If the restrictions adversely affect the scope of the exploration and development on an exploration and evaluation assets, the potential for production on the property may be diminished or negated.

Title to exploration and evaluation assets

Title to exploration and evaluation assets involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many exploration and evaluation assets. The Company has investigated title to all of its exploration and evaluation assets and, to

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VAR RESOURCES CORP. (formerly CANADIAN INTERNATIONAL PHARMA CORP.) Management’s Discussion and Analysis January 31, 2021

the best of its knowledge, title to all of its properties are in good standing. However, such properties may be subject to prior agreements or transfer and title may be affected by undetected defects.

The Company had previously entered into agreements to acquire, explore and develop certain exploration and evaluation assets located in certain regions of Canada. Several aboriginal groups are claiming inextinguishable aboriginal title to the lands and resources in various regions of Canada, which may include one or more of the mineral claims beneficially owned by the Company. The extent to which any successful aboriginal claim would materially affect the ability of the Company to exploit its exploration and evaluation assets is not determinable at this time.

Exploration programs

A summary of the Company’s prior exploration programs is set out below, however, for additional information and details regarding such matters, reference is made to the Company’s news releases and related filings that can be viewed on Sedar (www.sedar.com).

The technical information regarding the Company’s mineral exploration properties and projects referred to herein has been reviewed and approved by Luke van der Meer, P. Geo., who was acting as the Company’s Qualified Person, in accordance with regulations under NI 43-101.

Overall Performance

As at January 31, 2021, the Company had $600,240 (October 31, 2020 - $3,032) in cash and working capital was $187,581 (October 31, 2020 – (deficiency) $352,526). The Company incurred a net loss of $66,143 (2020 - $38,477) during the three month period ended January 31, 2021.

Other Events and Transactions

• On October 30, 2020, the Company entered into an Option Agreement with Longford Capital Corp. (“optionor”), an arm’s length private company, to earn an undivided 100% interest in the Hook Bay Property (“Hook Bay”) consisting of one mineral claim covering 1078.85 hectares located in located in Hook Bay, British Columbia.

The Property is located approximately 34 km south of the town of Port Alberni along Alberni Inlet, near Nahmint Bay, on Vancouver Island, British Columbia. Forest service roads provide access to and throughout the property. The underlying geology includes the contact between the Island Plutonic Suite intrusive rocks and the Karmutsen Formation volcanic rocks.

Under the terms of the Option Agreement, the Company has the exclusive right and option to acquire a 100% interest in the Property by making a cash payment of $50,000, issuing an aggregate of 2,700,000 common shares in the capital of the Company and incurring an aggregate of $400,000 in exploration expenditures. As at January 31, 2021, the Company has paid $50,000 and issued 2,200,000 common shares valued at $308,000.

Upon completion of the Option Agreement, the Company will have earned an undivided 100% legal and beneficial interest in Hook Bay, subject to a 2.0% net smelter return royalty to be granted to the optionor. The royalty can be reduced to 1% prior to commercial production by paying $1,500,000 to the optionor.

• On December 7, 2020, the Company held its annual general and special meeting where the shareholders appointed Drew Bonnell as a director of the Company. Douglas Mason and Ron Schmitz were also nominated to continue as directors and Andrzej Kowalski did not stand for re-election as a director but remains as the Company’s chief financial officer.

• On January 29, 2021, the Company received approval of its application to graduate from the NEX board of the TSX Venture Exchange (the “Exchange”) to the Exchange as a Tier 2 Mining Issuer in connection with acquisition of an undivided 100% interest in Hook Bay. In addition, the Company completed a non-brokered private placement, whereby

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VAR RESOURCES CORP. (formerly CANADIAN INTERNATIONAL PHARMA CORP.) Management’s Discussion and Analysis January 31, 2021

the Company issued 6,250,000 subscription receipts at a price of $0.105 per subscription receipt for aggregate proceeds of $656,260. Each subscription receipt entitles the holder to acquire, for no additional consideration, into one unit consisting of one share of the Company and one transferable share purchase. Each warrant shall entitle the holder thereof to acquire one share for a period of five years at a price of $0.14 per share until December 2, 2025. All securities issued in connection with the financing are subject to a statutory hold period expiring four months and one day after closing of the financing. The proceeds of the financing are expected to be used for general working capital and for the expenditures under the Option Agreement. In connection with the NEX Reactivation Transaction, the Company changed its name from Canadian International Pharma Corp. to VAR Resources Corp. effective January 29, 2021. The common shares of the Company resumed trading on February 2, 2021.

• The received $32,754 as loans from shareholders. These loans are non-interest bearing and have no specific terms of repayment.

Events subsequent to the reporting period

• a) The Company repaid $55,000 in principle and $4,959 in accrued interest pursuant to the terms of loan agreements entered into in prior fiscal years.

• b) The Company appointed Rose Zanic as a director effective February 12, 2021.

• c) The Company announced it will hold an Annual General and Special Meeting on April 27, 2021virtually.

Summary of Quarterly Results

Summary of Quarterly Results
	January 31,		October 31,			July 31,		April 30,
		2021		2020		2020		2020
Total assets	$	961,037	$	5,038	$	2,780	$	6,431
Working capital (deficit)		187,581		(352,526)		(335,464)		(304,690)
Shareholders’ equity (deficiency)		545,581		(352,526)		(335,464)		(322,690)
Total revenue		-		-		-		67
Operating expenses		66,143		17,062		12,774		15,892
Net loss		(66,143)		(17,062)		(12,774)		(15,825)
Basic and diluted lossper share		(0.01)		(0.00)		(0.00)		(0.00)
	January 31,		October 31,			July 31,		April 30,
		2020		2019		2019		2019
Total assets	$	7,764	$	14,449	$	35,376	$	41,040
Working capital		(311,865)		(273,388)		(223,658)		(185,755)
Shareholders’ equity		(306,865)		(268,388)		(218,658)		(180,755)
Total revenue		-		-		12		19
Operating expenses		38,477		49,730		40,747		48,884
Net loss		(38,477)		(49,730)		(37,903)		(40,865)
Basic and diluted loss per share		(0.00)		(0.00)		(0.00)		(0.00)

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VAR RESOURCES CORP. (formerly CANADIAN INTERNATIONAL PHARMA CORP.) Management’s Discussion and Analysis January 31, 2021

Results of Operations

Three Month Period Ended January 31, 2021

During the three month period ended January 31, 2021, the Company had a net comprehensive loss of $66,143 (2020 - $38,477). The net comprehensive loss is comprised of the following items:

• Consulting fees of $3,000 (2020 - $8,250) decreased from the comparative period because the current period did not include fees charged by a former director.

• Office and miscellaneous costs of $2,417 (2020 - $8,852) decreased over the comparative period because of reduced office administration costs as a result of the Company’s reorganization.

• Professional fees of $40,132 (2020 - $13,609) are comprised of $37,632 (2020 - $8,609) for legal and $2,500 (2020 - $5,000) for audit and accounting fees. Current period fees are higher than the prior period due to an increase in professional accounting and legal services as a result of the Company’s NEX Reactivation Transaction.

• Shareholder costs of $2,375 (2020 - $Nil) are related to the dissemination of AGM materials, press releases and other information. Current period costs are higher than the comparative period because of a timing difference in the receipt of cost of services provided by the 3[rd] party service providers.

• Transfer agent and regulatory fees of $18,219 (2020 - $1,812) are higher than the comparative period because of regulatory and filing fees required for re-activation and bringing various filings up to date on the TSX-V. The Company also paid fees associated with the private placement financing during the current period.

Liquidity and Capital Resources

The financial statements have been prepared on a going concern basis which assumes that the Company will be able 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 continue to raise adequate financing and to commence profitable operations in the future.

		January 31,		October 31,
		2021		2020
Working capital (deficiency)	$	187,581	$	(352,526)
Deficit		(16,041,735)		(15,975,592)

Net cash used in operating activities for the period was $41,796 (2020 - $6,768). This amount consists of a net operating loss of $66,143 (2020 - $38,477) and changes in non-cash working capital items: a change in receivables of $1,624 (2020 – $83), a change in prepaid expenses of $833 (2020 – $Nil) and a change in accounts payable and accrued liabilities of $25,138 (2020 – $31,792).

The current period used net cash of $50,000 (2020 – $Nil) in investing activities. This consisted of $50,000 (2020 - $Nil) for the acquisition of exploration and evaluation assets.

Financing activities provided net cash of $689,004 (2020 - $Nil). This is comprised of $656,250 (2020 - $Nil) received in gross proceeds pursuant of the issuance of 6,250,000 units and the receipt of $32,754 in loans from shareholders.

There can be no assurance that the Company will be able to obtain adequate financing in the future or that the terms of such financing will be favourable. If adequate financing is not available when required, the Company may be required to delay, scale back or eliminate various programs and may be unable to continue in operation. The Company may seek such additional financing through debt or equity offerings, but there can be no assurance that such financing will be available on

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VAR RESOURCES CORP. (formerly CANADIAN INTERNATIONAL PHARMA CORP.) Management’s Discussion and Analysis January 31, 2021

terms acceptable to the Company or at all. Any equity offering will result in dilution to the ownership interests of the Company’s shareholders and may result in dilution to the value of such interests.

The Company’s revenues, if any, are expected to be in large part derived from the mining and sale of precious minerals or base metals or interests related thereto. The economics of developing and producing mineral properties are affected by many factors including the cost of operations, variations in the grade of ore mined and the prices of minerals and metals. Depending on the foregoing, the Company may determine that it is impractical to continue commercial production. Prices, which have fluctuated significantly, are affected by many factors beyond the Company’s control including anticipated changes in international investment patterns and monetary systems, economic growth rates and political developments. The supply of precious minerals or base metals is related to the economics of new mine production and operating costs for existing producers, as well as the demand from financial institutions and consumers. If the market price falls below the Company’s full production costs and remains at such levels for any sustained period of time, the Company will experience losses and may decide to discontinue operations or other development of a project or mining at one or more of its properties.

Off Balance Sheet Arrangement

The Company is not a party to any off-balance sheet arrangements or transactions.

Additional Disclosure for Venture Issuers without Significant Revenue

Please refer to Note 4 in the unaudited consolidated interim financial statements for three month period ended January 31, 2021 for description of the capitalized exploration and evaluation assets.

Transactions with Related Parties

Included in accounts payable and accrued liabilities at January 31, 2021 is $2,500 (October 31, 2020 - $219,425) owing to companies controlled by directors and officers.

The Company entered into two loan agreements dated February 25, 2020 and May 4, 2020, pursuant to which the Company received $40,000 for working capital purposes. The loans were provided by a company controlled by a director and an officer of the Company with a term of one year with interest at a rate of 1% per month (12% per annum). There were two advances of $23,000 and $17,000 under the loan agreements and a total of $40,000 was outstanding as at January 31, 2021. Subsequent to the period, the Company paid $44,111 comprising of $40,000 as the loan principle and $4,111 in accrued interest as settlement of the two loans.

During the three month period ended January 31, 2021, the Company paid or accrued the following amounts to companies controlled by directors and officers of the Company:

		January 31,		January 31,
		2021		2020
Professional fees	$	2,500	$	-
Consulting fees		-		7,500
Rent		-		5,954

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VAR RESOURCES CORP. (formerly CANADIAN INTERNATIONAL PHARMA CORP.) Management’s Discussion and Analysis January 31, 2021

Key management compensation to the CEO, President, CFO, Directors, Officers and/or related entities includes the following:

		January 31,		January 31,
		2021		2020
Professional fees	$	2,500	$	-
Consultingfees		-		7,500

Capital Management

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition and exploration of 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 to sustain future development of the business. The Company defines capital that it manages as share capital.

The Company is in the exploration stage; as such the Company has historically relied on the equity markets to fund its activities. The Company will continue to assess new sources of financing available and to manage its expenditures to reflect current financial resources in the interest of sustaining long term viability.

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

The Company’s capital management objectives, policies and processes have not been changed over the period presented. The Company is not subject to any externally imposed capital requirements.

Financial Instruments

Fair value

The Company classifies its cash and cash equivalents and marketable securities as fair value through profit or loss; receivables and reclamation deposits as financial assets at amortized cost; and accounts payable and accrued liabilities at amortized cost.

The carrying values of receivables, accounts payable and accrued liabilities and loan payable approximate their fair values due to the short-term maturity of these financial instruments.

The Company’s measurement of fair value of financial instruments in accordance with the fair value hierarchy is as follows:

	Total Level 1 Level 2 Level 3
January 31, 2021 Assets Cash and cash equivalents October 31, 2020 Assets Cash and cash equivalents	$ 600,240 $ 600,240 $ - $ -
	$ 600,240 $ 600,240 $ - $ -
	$ 3,032 $ 3,032 $ - $ -
	$ 3,032 $ 3,032 $ - $ -

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VAR RESOURCES CORP. (formerly CANADIAN INTERNATIONAL PHARMA CORP.) Management’s Discussion and Analysis January 31, 2021

The Company’s risk exposure and the impact on the Company’s financial instruments are summarized below.

Credit risk

Credit risk is the risk of potential loss to the Company if a counter party to a financial instrument fails to meet its payment obligations. The Company is exposed to credit risk with respect to its cash and other receivables.

The Company's credit risk is primarily attributable to cash and short-term investments. Management believes that the credit risk concentration with respect to cash and short-term investments is remote as it maintains accounts with highly rated financial institutions.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they become due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. As at January 31, 2021, the Company had accounts payable and accrued liabilities of $327,702 (October 31, 2020 $302,564). Based on the current funds held, the Company does not have sufficient working capital for the short term, and thus will need to rely upon financing from shareholders and/or debt holders to obtain sufficient working capital. There is no assurance that such financing will be available on terms and conditions acceptable to the Company.

Based on the current funds held, the Company does not have sufficient working capital for the short term, and thus will need to rely upon financing from shareholders and/or debt holders to obtain sufficient working capital. There is no assurance that such financing will be available on terms and conditions acceptable to the Company.

Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, and commodity and equity prices. These fluctuations may be significant and the Company, as all other companies in its industry, has exposure to these risks.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk.

(i) Interest rate risk

Interest rate risk consists of two components:

• To the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in the prevailing market interest rates, the Company is exposed to interest rate cash flow risk.

• To the extent that changes in prevailing market rates differ from the interest rate in the Company’s monetary assets and liabilities, the Company is exposed to interest rate price risk.

The Company is not exposed to significant interest rate risk.

• (ii) Foreign currency risk

The Company is not exposed to foreign currency risk.

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VAR RESOURCES CORP. (formerly CANADIAN INTERNATIONAL PHARMA CORP.) Management’s Discussion and Analysis January 31, 2021

(iii) Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company is not exposed to other price risk since it has sold its marketable securities.

Critical Judgments and Estimates

The information provided in this report, including the financial statements, is the responsibility of management. The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. Estimates are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to estimates on the resulting effects of the carrying amounts of the Company’s assets and liabilities are accounted for prospectively.

All of the Company’s significant accounting policies and estimates are included in Note 3 of the unaudited consolidated interim financial statements for the three month period ended January 31, 2021.

New Standards Adopted

IAS 1 - Presentation of Financial Statements is effective for annual periods beginning on or after January 1, 2020.

IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors is effective for annual periods beginning on or after January 1, 2020.

The IASB made amendments to IAS 1 and IAS 8. The amendments clarify that the reference to obscuring information addresses situations in which the effect is similar to omitting or misstating that information, and that an entity assesses materiality in the context of the financial statements as a whole. Also, the meaning of ‘primary users of general purpose financial statements’ to whom those financial statements are directed, by defining them as ‘existing and potential investors, lenders and other creditors’ that must rely on general purpose financial statements for much of the financial information they need.

There is no material impact on the statements of financial position or results of operations as a result of adopting the new standards above.

Outstanding Share Data

The following table summarizes the Company’s outstanding share data as of the date of this Management Discussion and Analysis:

Analysis:
	Number of shares
	issued or issuable
Common shares	12,295,302
Stock options	40,500
Warrants	6,250,000

As at the date of this Management Discussion and Analysis, there are no common shares held in escrow.

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VAR RESOURCES CORP. (formerly CANADIAN INTERNATIONAL PHARMA CORP.) Management’s Discussion and Analysis January 31, 2021

COVID-19

In March 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 business or results of operations at this time. The Company has had to significantly reduce its international travel due to COVID-19.

Outlook

The Company is focused on exploring and developing the Hook Bay Property and reviewing any other opportunities that become available to the Company that have the potential to add shareholder value.

Officers and Directors

Douglas Mason, CEO and Director (Chairman) Andrzej Kowalski, CFO Ron Schmitz, Director Drew Bonnell, Director Rose Zanic, Director

Forward-Looking Statements

This report includes certain statements that may be deemed “forward looking statements” within the meaning of applicable securities legislation. All statements, other than statements of historical facts, that address such matters as future exploration, drilling, exploration activities, potential mineralization and resources and events or developments that the Company expects, are forward looking statements and, as such, are subject to risks, uncertainties and other factors of which are beyond the reasonable control of the Company. Such statements are not guarantees of future performance and actual results or developments may differ materially from those expressed in, or implied by, this forward-looking information. With respect to forward looking statements and information contained herein, the Company has made numerous assumptions, including among other things, assumptions about the price and future prices of ores and/or mineralization that are being explored for by the Company, anticipated costs and expenditures and the Company’s ability to achieve its goals. Although management believes that the assumptions made, and the expectations represented by such statements or information are reasonable, there can be no assurance that a forward-looking statement or information herein will prove to be accurate. Forward looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements or information. These factors include but are not limited to such matters as market prices, exploitation and exploration results, continued availability of capital and financing, and general economic, market or business conditions. Although we have attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actual results, performances, achievements or events not to be anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward looking statements for information. Any forward-looking statements are expressly qualified in their entirety by this cautionary statement. The information contained herein is stated as of the current date and subject to change after that date and the Company does not undertake any obligation to update publicly or to revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

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