Highlander Silver Corp. — Management Reports 2020

Aug 29, 2020

LIDO MINERALS LTD. MANAGEMENT DISCUSSION AND ANALYSIS FOR NINE MONTHS ENDED JUNE 30, 2020

LIDO MINERALS LTD.

(formerly Commonwealth Cannabis Corp.)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE COMPANY’S FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR NINE MONTHS ENDED JUNE 30, 2020

August 28, 2020

This Management Discussion and Analysis (“MD&A”) of Lido Minerals Ltd. (formerly, Commonwealth Cannabis Corp.) (“Lido” or the “Company”) has been prepared by management as of August 28, 2020 and should be read together with the quarterly financial statements and related notes for the period ended June 30, 2020 which are prepared in accordance with International Financial Reporting Standards (“IFRS”). Additional information regarding the Company can be found on SEDAR at www.sedar.com. All of the following amounts are expressed in Canadian dollars unless otherwise stated.

FORWARD LOOKING STATEMENTS

The information set forth in this MD&A contains statements concerning future results, future performance, intentions, objectives, plans and expectations that are, or may be deemed to be, forward-looking statements. These statements concerning possible or assumed future results of operations of the Company are preceded by, followed by or include the words ‘believes,’ ‘expects,’ ‘anticipates,’ ‘estimates,’ ‘intends,’ ‘plans,’ ‘forecasts,’ or similar expressions. Forward-looking statements are not guarantees of future performance. These forward-looking statements are based on current expectations that involve numerous risks and uncertainties, including, but not limited to, those identified in the Risks Factors section. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate. These factors should be considered carefully, and readers should not place undue reliance on forward-looking statements. The Company may not provide updates or revise any forward-looking statements, except those otherwise required under paragraph 5.8(2) of NI 51-102, whether written or oral that may be made by or on the Company's behalf.

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LIDO MINERALS LTD. MANAGEMENT DISCUSSION AND ANALYSIS FOR NINE MONTHS ENDED JUNE 30, 2020

DESCRIPTION OF BUSINESS

Lido Minerals Ltd. (formerly Commonwealth Cannabis Corp.) was incorporated as 1093684 B.C. Ltd. (the "Company" or “Lido”) on October 19, 2016 under the laws of British Columbia, Canada. On February 11, 2020 the Company changed its name to Lido Minerals Ltd. The Company’s head office and registered office is located at 600 – 1090 West Georgia Street, Vancouver, BC V6E 3V7.

The Company is a publicly reporting issuer in the Provinces of British Columbia and Alberta. The Company changed its business activity to acquisition, and exploration of mining properties. The following table highlights Lido’s acquisitions during the 2019 and 2020 fiscal years. See “Significant Company Events” below for a description of these acquisitions.

Date	Acquired Legal Entity	Project	Location
	Pacific West Exploration
February20,2020	Services Inc.	Nimpkish Property	Nanaimo,BC,Canada

SIGNIFICANT COMPANY EVENT

Pacific West Acquisition

On February 20, 2020, the Company entered into an agreement, pursuant to which the Company has acquired all the outstanding common shares of Pacific West, an arm’s length party (the “Acquisition”). Pacific West, as optionee, is party to an option agreement dated as of May 2, 2019 (the “Option Agreement”) with respect to the Nimpkish Property (the “Property”), under which Pacific West has the exclusive and irrevocable right to acquire a 100% interest in the Property from the registered owners of the Property (collectively, the “Optionor”). In consideration for the outstanding common shares of Pacific West, the Company issued 2,000,000 common shares with a fair value of $200,000.

Pacific West does not meet the definition of a business under IFRS 3; therefore the Acquisition was treated as an acquisition of assets.

The fair value of the assets acquired, and liabilities assumed as at the date of acquisition were as follows:

Net assets acquired
Exploration and evaluation assets	$	200,000
Consideration
Fair value of 2,000,000 common shares issued (Note 7)	$	200,000

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LIDO MINERALS LTD. MANAGEMENT DISCUSSION AND ANALYSIS FOR NINE MONTHS ENDED JUNE 30, 2020

Pacific West Acquisition (Continued)

To successfully exercise the option under the Option Agreement, Pacific West is required to:

Cash Payments: On or before May 1, 2020, Pacific West shall pay to the Optionor a cash payment in the aggregate amount of $30,000 (paid).

Exploration Expenditures: Pacific West shall make an aggregate of $425,000 in exploration expenditures on the Property on or before the following dates:

Date				Amount of Exploration Expenditures
December	31,	2020	(Completed)	$ 75,000
December	31,	2021		$ 100,000
December	31,	2022		$ 100,000
December	31,	2023		$150,000
				$425,000

In addition, under the Option Agreement Pacific West shall grant to the Optionor a 2.0% Net Smelter Returns royalty (“NSR”) on the Property. Pacific West shall have the right at any time to repurchase one-half of the NSR from the Optionor by paying $1,000,000 to the Optionor at any time before the commencement of commercial production on the Property. Beginning on December 31, 2023, and annually thereafter, Pacific West will make annual advanced minimum royalty (“AAMR”) payments of $7,500 to the Optionor, and any such AAMR payments shall be deducted from future NSR payments.

SELECT ANNUAL INFORMATION AND RESULTS OF OPERATIONS

As at June 30, 2020, the Company had total assets of $2,676,765 (September 30, 2019: $873,918). As at June 30, 2020, the Company did not have any non-current liabilities (September 30, 2019: $nil).

For nine months ended June 30, 2020, the Company recorded a net income of $1,601,769 (2019: loss of $193,577). The expenses for the nine months ended June 30, 2020 comprised of general and administrative fees of $9,544 (2019: $1,779), professional fees of $25,359 (2019: $63,710), audit fees of $20,671 (2019: $10,798), management fees of $nil (2019: $1,000), and regulatory, filing and transfer agent fees of $14,892 (2019: $26,325). The overall change in the net income is due to the Company’s sale of its investments during the period ended June 30, 2020 which were received in the prior year which resulted in a gain on sale of investments of $1,830,594 (2019: $Nil).

The overall expenditures of the Company are comparable to the prior period, with increases attributable to an increase in consulting and administration fees as the Company required services related to the Pacific West acquisition and expenses incurred for its exploration property.

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LIDO MINERALS LTD. MANAGEMENT DISCUSSION AND ANALYSIS FOR NINE MONTHS ENDED JUNE 30, 2020

SUMMARY OF QUARTERLY RESULTS

The Company’s results of operations for previous eight quarters have been presented in the table below.

Net income (loss) Basic and diluted earnings (loss) per share	Q3 Q2 Q1 Q4
	2020 2020 2020 2019 $1,601,769 $ 359,932 $(52,162) $(244,892) $0.12 $0.03 $(0.00) $(0.06)
Net income (loss) Basic and diluted earnings (loss) per share	2019 2019 2019 2018
	$(36,279) $(101,936) $(51,611) $(14,233) $(0.00) $(0.01) $(0.34) $(7.20)

LIQUIDITY AND CAPITAL RESOURCES

The Company reported working capital of $2,436,609 at June 30, 2020 (September 30, 2019: $864,840) and cash of $2,439,603 (September 30, 2019: $743,813). Current liabilities as at June 30, 2020 consisted of accounts payable and accrued liabilities of $10,156 (September 30, 2019: $9,078).

For the nine months ended June 30, 2019:

On January 31, 2019, the Company issued 8,552,000 common shares at $0.10 per share for total proceeds of $855,200.

On February 4, 2019, all 2,332,000 outstanding Special Warrants were exercised, for no further consideration, into 2,332,000 of Company’s common shares.

For the nine months ended June 30, 2020:

On February 20, 2020, the Company issued 2,000,000 common shares with a fair value of $200,000 in relation to the purchase of Pacific West (Note 5).

Special Warrants

For the nine months ended June 30, 2019:

On October 1, 2018, the Company completed a non-brokered private placement of 2,332,000 Special Warrants of the Company at a price of $0.20 per Special Warrant for total proceeds of $466,400.

For the nine months ended June 30, 2020:

No Special Warrants were granted during the period.

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LIDO MINERALS LTD. MANAGEMENT DISCUSSION AND ANALYSIS FOR NINE MONTHS ENDED JUNE 30, 2020

RELATED PARTY TRANSACTIONS

The Company incurred the following related party transactions, with associated persons or corporations, which were measured at the exchange amount as follows:

Key management includes Directors and Officers which constitutes the management team. The Company paid or accrued compensation in form of consulting fees to companies controlled by Directors and Officers as follows:

	June 30,	June 30,
	2020	2019
Nine monthperiod ended	$	$
Consulting fees paid or accrued to the former Chief Financial
Officer (“CFO”)	10,000	9,000
Consulting fees paid or accrued to a corporation controlled by
a Director of the Company	3,000	1,500
Consulting and advisory fees paid or accrued to a corporation
controlled by a Director of the Company	52,000	-
Consulting fees paid or accrued to a corporation controlled by
the CFO and Corporate Secretary of the Company	7,500	-
Management feespaid to a former Director	-	1,000
	72,500	11,500

At June 30, 2020, the Company owed $1,575 (2019: $Nil) in consulting fees to a corporation controlled by the CFO of the Company, CFO of the Company, and $Nil (2019: $1,050) to the former CFO of the Company, which is included in accounts payable. These amounts are unsecured, bear no interest and are due on demand.

CRITICAL ACCOUNTING ESTIMATES

The preparation of the Financial Statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the Financial Statements, and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from management’s best estimates as additional information becomes available.

SIGNIFICANT ACCOUNTING POLICIES

New Accounting Change

IFRS 16 Leases

In January 2016, the IASB issued IFRS16 – Leases which replaces IAS 17 – Leases and its associated interpretative guidance. IFRS 16 applies a control model to the identification of leases, distinguishing between a lease and a service contract on the basis of whether the customer controls the asset being leased. For those assets determined to meet the definition of a lease, IFRS 16 introduces significant changes to the accounting by lessees, introducing a single, on-balance sheet accounting model that is similar to current finance lease accounting, with limited exceptions for short-term leases or leases of low value assets. Lessor accounting remains similar to current accounting practice. The standard is effective for annual periods beginning on or after January 1, 2019. The Company adopted this new standard on October 1, 2019. This new standard did not have any impact on the Company’s financial statements because the Company does not have any leases.

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LIDO MINERALS LTD. MANAGEMENT DISCUSSION AND ANALYSIS FOR NINE MONTHS ENDED JUNE 30, 2020

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The carrying amounts of cash and accounts payable approximate fair value because of the short-term maturity of these items.

Investments

On August 8, 2019, the Company subscribed to 1,000,000 units of Champignon Brands Inc. (“Champignon”), a publicly traded company (CSE: SHRM), for cash consideration of $100,000. Each unit consisted of one common share and one half of one share purchase warrant. Each whole warrant was exercisable into one common share at $0.15 per share for a period of three years.

During the period ended June 30, 2020, the Company exercised 500,000 share purchase warrants to purchase 500,000 common shares of Champignon for $75,000.

During the period ended June 30,2020, the Company sold all shares of Champignon for total proceeds of $2,030,594 in the open market and realized gains of $1,830,594.

At June 30, 2020, the Company had Nil shares and Nil warrants (September 30, 2019 – 1,000,000 shares and 500,000 warrants) of Champignon with a fair value of $Nil (September 30, 2019 - $125,000).

The Company is exposed to a variety of financial risks by virtue of its activities including credit, interest rate, liquidity, commodity price, and global economic risk.

a) Credit risk

Credit risk is risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations. The Company’s cash is held in large Canadian financial institutions and its receivables are due from the Government of Canada. As such, the Company determined that it is not exposed to significant credit risk.

b) 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 is exposed to limited interest rate risk as it only holds cash and highly liquid short-term investments.

c) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they come due. The Company’s ability to continue as a going concern is dependent on management’s ability to raise the required capital through future equity or debt issuances. The Company manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities. Management and the Board of Directors are actively involved in the review, planning, and approval of significant expenditures and commitments.

d) Commodity price risk

The ability of the Company to explore and develop its exploration and evaluation assets and the future profitability of the Company are directly related to the price of base metals. The Company monitors these metal prices to determine the appropriate course of action to be taken.

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LIDO MINERALS LTD. MANAGEMENT DISCUSSION AND ANALYSIS FOR NINE MONTHS ENDED JUNE 30, 2020

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS (Continued)

e) Global economic risk

General global economic conditions, including, without limitation, general levels of economic activity, fluctuations in the market prices of securities, participation by other investors in the financial markets, economic uncertainty, national and international political circumstances, natural disasters, public health crises(such as the recent global outbreak of a novel coronavirus, COVID-19, refer to note below) and other events outside of our control, may affect the activities of Lido.

Covid-19

Since December 31, 2019, the outbreak of the novel strain of coronavirus, specifically identified as “COVID19”, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The measures taken by world governments, 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 of the Company and its operations in future periods.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not utilize off-balance sheet arrangements.

MANAGEMENT’S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The information provided in this report as referenced from the Company’s consolidated financial statements for the referenced reporting period is the sole responsibility of management. In the preparation of the information along with related and accompanying statements and estimates contained herein, management uses careful judgement in assessing the values (or future values) of certain assets or liabilities. It is the opinion of management that such estimates are fair and accurate as presented.

OTHER REQUIREMENTS

Summary of Outstanding Securities as at August 28, 2020

Authorized: Unlimited number of common shares without par value.

Issued and outstanding: 13,035,054 Common Shares

On August 10, 2020, the Company granted incentive stock options to certain members of the board of Directors, management, and consultants entitling them to purchase up to 1,210,000 common shares of the Company at an exercise price of $0.27 per common share, pursuant to the Company’s Stock Option Plan. The options are valid for a period of five years and will expire on August 10, 2025.

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