Imperial Metals — Interim / Quarterly Report 2021

Nov 10, 2021

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Management’s Discussion & Analysis For the Three and Nine Months Ended September 30, 2021 and 2020

MANAGEMENT’S DISCUSSION AND ANALYSIS

This Management’s Discussion and Analysis (“MD&A”) for Imperial Metals Corporation (“Imperial”, the “Company”, “we”, “us” or “our”) should be read in conjunction with the unaudited Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2021 including the notes thereto, as well as the audited Consolidated Financial Statements and Management’s Discussion & Analysis for the year ended December 31, 2020. The reporting currency of the Company is the Canadian (“CDN”) Dollar.

This MD&A contains statements that may be considered forward-looking information, and therefore investors are directed to review the “Forward-Looking Statements & Risks Notice” within this MD&A.

The unaudited Condensed Consolidated Interim Financial Statements and comparative information have been prepared in accordance with International Financial Reporting Standards (“IFRS”), including International Accounting Standard 34, Interim Financial Reporting.

Imperial is a Vancouver based mining company active in the acquisition, exploration, development, mining and production of base and precious metals. The Company owns the Mount Polley and Huckleberry copper mines and holds a 30% interest in the Red Chris copper/gold mine. Imperial also maintains a large portfolio of greenfield exploration properties. Management continues to evaluate various opportunities to advance many of these properties.

Imperial’s principal business registered and records office address is Suite 200, 580 Hornby Street, Vancouver, British Columbia V6C 3B6 Canada. The Company is incorporated under the British Columbia Company Act.

The Company is listed on The Toronto Stock Exchange, and its shares trade as symbol III. At November 9, 2021, the Company had 141,392,191 common shares outstanding, and on a diluted basis 143,654,441 common shares outstanding.

Additional Company disclosure can be obtained from imperialmetals.com or sedar.com .

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 1

SIGNIFICANT EVENTS AND LIQUIDITY

The Company’s unaudited Condensed Consolidated Interim Financial Statements have been prepared on a going concern basis which assumes the Company will continue operating in the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course as they come due.

On March 11, 2020, the World Health Organization declared the rapidly spreading coronavirus 2019-nCoV (“COVID-19”) outbreak as a global pandemic. The Company has been closely monitoring developments of the COVID-19 outbreak and has implemented preventive measures to ensure the safety of our workforce and local communities. Throughout the COVID19 pandemic, mining operations at Red Chris, the Company’s various exploration activities, and the care and maintenance of Mount Polley and Huckleberry have been conducted under strict guidance and directives of federal, provincial and regional health authorities. To date, there have been no significant disruptions to production, to the shipment of concentrate or to the supply chain. Changes have been implemented to our business and how we operate in order to minimize the risks to our employees, communities and other stakeholders.

The Company has actively responded to the COVID-19 pandemic at operations controlled by the Company through a variety of means such as:

• restricting travel;

• shifting employees to remote work arrangements wherever possible, including at the corporate office;

• implementing and promoting preventative measures in place at all operations, including social distancing and frequent handwashing;

• adhering to the most up to date guidance from governments and public health authorities in each jurisdiction in which we operate;

• implementing enhanced cleaning and disinfecting protocols; and

• restricting employees with any potential symptoms of COVID-19 from attending Company facilities.

The Company holds a 30% interest in the Red Chris mine through our wholly owned subsidiary. Newcrest Mining Limited (“Newcrest”) holds a 70% interest through its wholly owned subsidiary and is the project operator. The Company understands Newcrest has implemented the following precautionary measures at Red Chris. These measures continue to be refined in accordance with the Provincial Health Officer (“PHO”) orders for work camps which in turn continue to be refined as BC moves through its stages of the re-start plan. The transition from Stage 2 to Stage 3 was undertaken on July 1[st] with a revised PHO work camp order issued on July 7[th] .

The order requirements have been broadened to all communicable diseases rather than just COVID-19.

These include:

• the requirement for a communicable disease prevention plan, which replaces the requirement for a COVID-19 infection prevention and control protocol;

• the appointment of a communicable disease prevention and control co-ordinator (new term of the current infection prevention and control coordinator) who is responsible for oversight of the communicable disease prevention plan and liaison with the health authority;

• maintaining high standards of camp hygiene;

• ensuring workers have an opportunity to consult a health professional and arrange for symptomatic worker testing when recommended by Medical Health Officer (“MHO”) or medical professional;

• establishing a plan for ready access to, the medical, nursing and allied professional support necessary to support the management by public health of cases, clusters and outbreaks of communicable diseases among workers;

• developing procedures for the isolation of a worker exposed to, or with a confirmed or suspected case of communicable disease, and ensure that a worker in isolation has the supplies, support and services the worker needs;

• reporting of cases, clusters or outbreaks of communicable diseases and related information to the medical health officer and work with the MHO to deal with the situation; and

• facilitating access to a vaccination program.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 2

Red Chris has implemented the above requirements since early 2020 with the following precautions by:

• conducting rapid antigen and PCR screening and health checks for all employees, contractors, and visitors entering site and whilst on site;

• minimizing visitor numbers with no ‘ad-hoc’ entry;

• providing the opportunity for all employees, contractors and visitors to be vaccinated with an approved vaccine through the work camp vaccination program;

• providing paid pandemic leave for applicable cases;

• maintaining hygienic practices: mask wearing, social distancing and hand washing to minimize spread of infection;

• employing additional trained medical personnel on-site and providing enhanced medical service on site and supporting local Tahltan communities;

• providing regular written and verbal communication updates to employees on all sites, particularly on personal hygiene practices and what to do if they present symptoms;

• providing medical supplies and provisions to local Tahltan communities;

• working with Tahltan Central Government Emergency Management Committee (“EMC”) to facilitate testing COVID-19 management within the three neighbouring Tahltan communities;

• supporting the weekly EMC meeting which brings together representatives from the three neighbouring Tahltan communities and other Northern British Columbia mining and exploration companies to share COVID-19 management experiences;

• preparing business continuity plans and contingencies in the event of a significant number of operational employees and contractors being exposed or contracting the virus to minimize disruptions to operations; and

• establishing and maintaining an emergency management team of key management at site level.

The Company also understands that the Tahltan Central Government, Iskut First Nation and Tahltan Bands are supportive of Newcrest’s implementation of this package of measures which proactively protect and support communities and enable Tahltan members to support their families and communities, while helping Red Chris to continue to operate during the COVID-19 pandemic.

As Newcrest is the operator of the Red Chris mine, the preventative measures implemented with respect to the project lie outside the direct control of the Company. Any violations to acts and regulations may have an adverse impact on the Company.

Despite the uncertainties and changes relating to the COVID-19 pandemic, and current market conditions, we remain confident in the long-term outlook for our major commodities. However, the extent to which the COVID-19 pandemic impacts the Company’s business, including exploration, development and production activities and the market for its securities, will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the outbreak and the actions taken to contain or treat the COVID-19 outbreak.

The resumption of normal operating activities is highly dependent on the progression of the pandemic and the success of measures taken to prevent transmission, which will influence when health and government authorities remove various restrictions on our business activities. Even after the COVID-19 pandemic has subsided, we may continue to experience material adverse impacts to our business as a result of its global economic impact, including any related recession.

On March 10, 2021, the Company entered into a $10.0 million promissory note financing (“Note”) with an affiliate of its major shareholder. The Note matures on April 1, 2022 and bears interest of 8.0% per annum. The Note was fully repaid on June 28, 2021, prior to its maturity date.

On March 15, 2021, the Company acquired a 30% interest in the GJ Property for a payment of $3.0 million to Newcrest Red Chris Mining Limited.

On April 27, 2021, the Company announced a Normal Course Issuer Bid to provide for purchases of its common shares to satisfy its obligations under the Non-Management Directors’ Plan and the Share Purchase Plan.

On June 25, 2021, the Company completed a rights offering for gross proceeds of $60.4 million. The Company issued 12,853,267 common shares. The proceeds of the rights offering will be used as set out in the Company’s rights offering circular dated May 18, 2021.

On July 2, 2021, the Red Chris Joint Venture received a Notice of Proposed Transfer and Right of First Refusal Offer regarding the sale of an existing 1% Net Smelter Returns Royalty in consideration of US$165.0 million. The Right of First Refusal was not exercised by the Red Chris Joint Venture.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 3

On July 8, 2021, the Company increased its interest in the Ruddock Creek high grade zinc-lead project to 100% by purchasing the 54.72% interest held by its joint venture partners.

On July 15, 2021, the Company’s subsidiary, Huckleberry Mines Ltd., purchased five mineral tenures from ArcWest Exploration Inc. (“ArcWest”). The claims cover 2,526 hectares and are located north of the Huckleberry Mine mining lease. Consideration payable was $50,000 cash and the granting to ArcWest a 1% Net Smelter Returns Royalty.

On July 26, 2021, the Company granted PJX Resources Inc. a five-year option to acquire 100% interest in the Estella Property located northeast of Cranbrook, B.C. The property consists of 14 Crown granted mineral claims covering approximately 224 hectares. Consideration payable to Imperial are staged payments totalling $250,000 and the granting of a 2% Net Smelter Returns Royalty.

On October 20, 2021, the Company received notice that the binding arbitration of the claim from a contractor filed in the June 2020 period was completed. The arbitrator’s partial final award dismissed all of the contractor’s claims and found the contractor liable for numerous misrepresentations and for overbilling. Damages payable by the contractor will be determined in the next phase of arbitration.

On October 29, 2021, the Company increased its existing Credit Facility from $50.0 million to $75.0 million. The increase of $25.0 million in the facility is guaranteed by a related party.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 4

ACCOUNTING POLICIES AND BASIS OF PRESENTATION

The Company’s significant accounting policies are presented in the audited Consolidated Financial Statements for the year ended December 31, 2020.

New Standards, Interpretations and Amendments

The accounting policies adopted in the preparation of the unaudited Condensed Consolidated Interim Financial Statements are consistent with those followed in the preparation of the audited Consolidated Financial Statements for the year ended December 31, 2020. The Company has not adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

QUARTER HIGHLIGHTS

FINANCIAL

Total revenue decreased to $37.1 million in the September 2021 quarter compared to $38.2 million in the 2020 comparative quarter, a decrease of $1.1 million.

In the September 2021 quarter, the Red Chris mine (100% basis) had 4.0 concentrate shipments (2020-4.3 concentrate shipments). Variations in revenue are impacted by the timing and quantity of concentrate shipments, metal prices and exchange rates, and period end revaluations of revenue attributed to concentrate shipments where copper and gold prices will settle at a future date.

The London Metals Exchange cash settlement copper price per pound averaged US$4.25 in the September 2021 quarter compared to US$2.96 in the 2020 comparative quarter. London Bullion Market Association, London gold price per troy ounce averaged US$1,789 in the September 2021 quarter compared to US$1,911 in the 2020 comparative quarter. The average US/CDN Dollar exchange rate was 1.260 in the September 2021 quarter, 5.4% lower than the exchange rate of 1.332 in the 2020 comparative quarter. In CDN Dollar terms the average copper price in the September 2021 quarter was CDN$5.36 per pound compared to CDN$3.94 per pound in the 2020 comparative quarter, and the average gold price in the September 2021 quarter was CDN$2,254 per ounce compared to CDN$2,545 per ounce in the 2020 comparative quarter.

Revenue in the September 2021 quarter decreased by $0.8 million due to a negative revenue revaluation as compared to a $3.3 million positive revenue revaluation in the 2020 comparative quarter. Revenue revaluations are the result of the metal price on the settlement date and/or the current period balance sheet date being higher or lower than when the revenue was initially recorded or the metal price at the last balance sheet date and finalization of contained metal as a result of final assays.

Net loss for the September 2021 quarter was $3.8 million ($0.03 per share) compared to net income of $7.1 million ($0.05 per share) in the 2020 comparative quarter. The decrease in net income of $10.9 million was primarily due to the following factors:

• Income from mine operations went from $12.8 million in September 2020 to $4.9 million in September 2021, decreasing net income by $7.9 million.

• General and Administration expense went from $0.8 million in September 2020 to $1.3 million in September 2021, decreasing net income by $0.5 million.

• Foreign exchange gain/loss went from a loss of $1.1 million in September 2020 to a gain of $0.3 million in September 2021, increasing net income by $1.4 million.

Cash flow was $7.8 million in the September 2021 quarter compared to $17.4 million in the 2020 comparative quarter. Cash flow is a measure used by the Company to evaluate its performance however, it is not a term recognized under IFRS. The Company believes cash flow is useful to investors and it is one of the measures used by management to assess the financial performance of the Company.

Capital expenditures including finance leases were $33.8 million in the September 2021 quarter, an increase from $25.4 million in the 2020 comparative quarter. The September 2021 expenditures included $12.8 million in exploration, $9.9 million for tailings dam construction and $11.1 million on stripping costs and other capital.

At September 30, 2021, the Company had not hedged any copper, gold or US/CDN Dollar exchange. Quarterly revenues will fluctuate depending on copper and gold prices, the US/CDN Dollar exchange rate, and the timing of concentrate sales, which is dependent on concentrate production and the availability and scheduling of transportation.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 5

OPERATIONS

The current impact of the COVID-19 pandemic on our business is described under Significant Events and Liquidity. The Company’s plans for 2021 and beyond could be adversely impacted by the effects of the COVID-19 pandemic. The continuing impact of COVID-19 to travel and other operating restrictions established to curb the spread of COVID-19, could materially and adversely impact the Company’s current plans by causing a temporary closure of the Red Chris mine, suspending planned exploration work, causing an economic slowdown resulting in a decrease in the demand for copper and gold, negatively impacting copper and gold prices, impacting the Company’s ability to transport or market the Company’s concentrate or causing disruptions in the Company’s supply chains.

Red Chris Mine

Metal production for the third quarter of 2021 was 17.2 million pounds copper and 15,249 ounces gold, compared to 22.2 million pounds copper and 18,052 ounces gold produced in the 2020 third quarter.

Imperial’s 30% portion of Red Chris mine third quarter production was 5.2 million pounds copper and 4,575 ounces gold.

	Three Months Ended	Three Months Ended	Nine Months Ended	Nine Months Ended
		September 30*		September 30*
	2021	2020	2021	2020
Ore milled -tonnes	2,543,495	2,777,245	7,199,572	7,196,524
Ore milled per calendar day -tonnes	27,647	30,187	26,372	26,265
Grade % - copper	0.389	0.460	0.407	0.553
Grade g/t - gold	0.336	0.398	0.365	0.462
Recovery % - copper	79.0	78.8	78.5	81.0
Recovery % - gold	55.6	50.8	55.1	53.9
Copper –000’s pounds	17,244	22,203	50,704	71,112
Gold –ounces	15,249	18,052	46,550	57,536

• 100% Red Chris mine production

Metal production for both the three and nine months ended September 30, 2021, decreased compared to the same periods in 2020. The decrease in metal production is largely due to lower metal grades, with copper grade 15.4 % lower and gold grade 15.6% lower compared to September 2020 quarter.

The copper and gold production levels (100% basis) in the September 2021 quarter were close to those in the June 2021 quarter, 17.2 million pounds of copper and 15,249 ounces of gold were produced in the September 2021 quarter compared to production of 17.6 million pounds of copper and 15,451 ounces of gold in the June 2021 quarter, with slightly lower gold and copper grades, being offset by higher through-put in the September 2021 quarter.

The results of the recently released Red Chris Block Cave Pre-Feasibility Study (PFS), have confirmed Imperial’s long held belief that Red Chris had the potential to become a long-life, low-cost block cave copper gold mine. The exploration decline for the proposed block cave development had progressed to 393 metres by October 20, 2021.

There are significant opportunities to enhance the results of the PFS including the ‘early mining’ of the highest-grade pods in the East Zone and the emerging opportunity associated with the discovery of new distinct higher-grade zones of mineralization such as East Ridge.

Drilling at the newly discovered East Ridge continues to expand the extent of mineralization in this zone and has demonstrated continuity of the copper gold mineralization over dimensions of about 400 metres high, 400 metres long and 125 metres wide. Contained within this zone of mineralization is a higher-grade portion with dimensions of approximately 300 metres high, 300 metres long and 100 metres wide. East Ridge remains open to the east and at depth. During the third quarter, there were up to eight diamond drill rigs in operation. A further 29,388 metres of drilling was completed in 24 drill holes, with all drill holes intersecting mineralization (except twelve drill holes which were dedicated geotechnical holes).

Jim Miller-Tait, P.Geo., Imperial Metals Vice President Exploration, is the designated Qualified Person as defined by National Instrument 43-101 for the Red Chris exploration program and has reviewed this information.

Imperial’s 30% share of exploration, development, and capital expenditures were $28.2 million in the September 2021 quarter compared to $26.3 million in the 2020 comparative quarter.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 6

Mount Polley Mine

Mount Polley operations ceased in May 2019 and the mine remains on care and maintenance status. The mine restart plan prepared in 2019, is being updated to include revised pit designs, results of recent drilling and current metal prices. The Company is actively seeking to secure financing to fund the restart of the mine. The COVID-19 pandemic continues to impact the mine restart timeline.

Site personnel continue to maintain access, fire watch, manage collection, treatment and discharge of site contact water and actively monitor the tailings storage facility. In addition, work to facilitate the restart of operations at Mount Polley continued during the quarter. This work included:

• a small crew of mechanics continuing to prepare the mining fleet;

• testing blasthole drills by starting a blasthole pattern on the 1120 metres bench in the Springer Pit Phase 4 pit; and

• hiring mechanical and electrical contractors to inspect and repair as required, equipment in the crusher and concentrator.

For the September 2021 quarter, Mount Polley incurred idle mine costs comprised of $5.8 million in operating costs and $0.6 million in depreciation expense.

Exploration, development, and capital expenditures in the September 2021 quarter were $1.3 million compared to $0.2 million in the 2020 comparative quarter.

Huckleberry Mine

Huckleberry operations ceased in August 2016 and the mine remains on care and maintenance status. The Company anticipates the restart of Huckleberry will follow the start of operations at Mount Polley.

Site personnel continue to focus on maintaining access, water management (treatment and release of mine contact water into Tahtsa Reach), snow removal, maintenance of site infrastructure and equipment, mine permit compliance, environmental compliance monitoring and monitoring tailings management facilities.

A geotechnical drilling program was conducted during the quarter to gather the information required to update the tailings facility designs for future operations and to provide information required for dam safety reviews.

For the September 2021 quarter, Huckleberry incurred idle mine costs comprised of $1.2 million in operating costs and $0.2 million in depreciation expense.

Exploration, development, and capital expenditures in the September 2021 quarter were $1.8 million compared to $0.5 million in the 2020 comparative quarter.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 7

EARNINGS AND CASH FLOW

Select Quarter Financial Information

expressed in thousands of dollars, except share and per share amounts Operations: Total revenues Net income (loss) Net income (loss) per share Diluted income (loss) per share Adjusted net income (loss)(1) Adjusted net income (loss) per share(1) Adjusted EBITDA(1) Cash flow(1)(2) Cash flow per share(1)(2) Working Capital Total assets Total debt (including current portion)(3)

Three Months Ended Nine Months Ended September 30 September 30 2021 2020 2021 2020 $37,064 $38,161 $104,329 $111,182 $(3,772) $7,063 $(11,389) $24 $(0.03) $0.05 $(0.09) $0.00 $(0.03) $0.05 $(0.09) $0.00 $(3,489) $7,015 $(11,165) $132 $(0.02) $0.05 $(0.08) $0.00 $8,136 $17,243 $19,050 $36,001 $7,780 $17,412 $18,408 $35,937 $0.06 $0.14 $0.14 $0.28 $21,950 $27,082 $21,950 $27,082 $1,122,484 $1,092,134 $1,122,484 $1,092,134 $4,850 $2,847 $4,850 $2,847

(1) Refer to Non-IFRS Financial Measures for further details.

(2) Cash flow is defined as the cash flow from operations before the net change in non-cash working capital balances, income and mining taxes, and interest paid. Cash flow per share is defined as cash flow divided by the weighted average number of common shares outstanding during the year.

(3) Total debt consists mainly of equipment leases.

Select Items Affecting Net Income (Loss) (presented on an after-tax basis)

expressed in thousands of dollars Net income (loss) before undernoted items Interest expense Foreign exchange gain (loss) on debt Net Income (Loss)	Three Months Ended Nine Months Ended September 30 September 30 2021 2020 2021 2020
	$(3,348) $7,253 $(10,492) $935 (141) (238) (673) (803) (283) 48 (224) (108)
	$(3,772) $7,063 $(11,389) $24

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 8

NON-IFRS FINANCIAL MEASURES

The Company reports four non-IFRS financial measures: adjusted net income, adjusted EBITDA, cash flow and cash cost per pound of copper produced which are described in detail below. The Company believes these measures are useful to investors because they are included in the measures that are used by management in assessing the financial performance of the Company.

Adjusted net income, adjusted EBITDA, and cash flow are not generally accepted earnings measures and should not be considered as an alternative to net income (loss) and cash flows as determined in accordance with IFRS. As there is no standardized method of calculating these measures, these measures may not be directly comparable to similarly titled measures used by other companies. Reconciliations are provided below.

Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share

Adjusted net loss in the September 2021 quarter was $3.5 million ($0.02 per share) compared to an adjusted net income of $7.0 million ($0.05 per share) in the 2020 comparative quarter. Adjusted net income (loss) shows the financial results excluding the effect of items not settling in the current period and non-recurring items. Adjusted net income (loss) is calculated by removing the gains or loss, resulting from acquisition and disposal of property, mark to market revaluation of derivative instruments not related to the current period, net of tax, unrealized foreign exchange gains or losses on noncurrent debt, net of tax, as further detailed in the following table.

Calculation of Adjusted Net Income (Loss)

expressed in thousands of dollars, except share and per share amounts Net income (loss) Foreign exchange (gain) loss on debt, net of tax Total Adjusted Net Income (Loss) Basic weighted average number of common shares outstanding Total Adjusted Net Income (Loss) Per Share	Three Months Ended Nine Months Ended
	September 30 September 30
	2021 2020 2021 2020
	$(3,772) $7,063 $(11,389) $24
	283 (48) 224 108
	$(3,489) $7,015 $(11,165) $132
	141,392,191 128,490,174 133,144,378 128,490,174
	$(0.02) $0.05 $(0.08) $0.00

Adjusted EBITDA

Adjusted EBITDA in the September 2021 quarter was $8.1 million compared to $17.2 million in the 2020 comparative quarter. We define Adjusted EBITDA as net income (loss) before interest expense, taxes, depletion, and depreciation, and as adjusted for certain other items described in the following reconciliation table.

Adjusted EBITDA is not necessarily comparable to similarly titled measures used by other companies. We believe that the presentation of Adjusted EBITDA is appropriate to provide additional information to investors about certain non-cash or unusual items that we do not expect to continue at the same level in the future, or other items that we do not believe to be reflective of our ongoing operating performance. We further believe that our presentation of this non-IFRS financial measure provides information that is useful to investors because it is an important indicator of our operations and the performance of our core business.

Adjusted EBITDA is not a measurement of operating performance or liquidity under IFRS and should not be considered as a substitute for earnings from operations, net income or cash generated by operating activities computed in accordance with IFRS. Adjusted EBITDA has limitations as an analytical tool and therefore Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 9

A reconciliation of net income (loss) to Adjusted EBITDA is as follows:

expressed in thousands of dollars Net income (loss) Adjustments: Income and mining tax (recovery) expense Interest expense Depletion and depreciation Accretion of future site reclamation provisions Share based compensation Foreign exchange (gain) loss Revaluation of marketable securities Other Total Adjusted EBITDA	Three Months Ended Nine Months Ended September 30 September 30 2021 2020 2021 2020
	$(3,772) $7,063 $(11,389) $24 (1,229) (1,238) (9,964) 1,944 190 322 909 1,085 12,269 9,110 37,114 30,374 791 695 2,308 2,198 103 278 303 463 (250) 1,112 (271) 19 36 (80) 48 (81) (2) (19) (8) (25)
	$8,136 $17,243 $19,050 $36,001

Cash Flow and Cash Flow Per Share

Cash flow in the September 2021 quarter was $7.8 million compared to $17.4 million in the 2020 comparative quarter. Cash flow per share was $0.06 in the September 2021 quarter compared to $0.14 in the 2020 comparative quarter.

Cash flow and cash flow per share are measures used by the Company to evaluate its performance however they are not terms recognized under IFRS. Cash flow is defined as cash flow from operations before the net change in non-cash working capital balances, income and mining taxes paid, and interest paid. Cash flow per share is the same measure divided by the weighted average number of common shares outstanding during the year.

expressed in thousands of dollars, except per share and per share amounts Net income (loss) Items not affecting cash flows: Deferred mining and income tax (recovery) Depletion and depreciation Share based compensation Accretion of future site reclamation provisions Unrealized foreign exchange (gain) loss Interest expense Other Total Cash Flow Basic weighted average number of common shares outstanding Total Cash Flow Per Share	Three Months Ended Nine Months Ended September 30 September 30 2021 2020 2021 2020
	$(3,772) $7,063 $(11,389) $24 (1,536) (1,481) (10,663) 1,332 12,269 9,110 37,114 30,374 103 278 303 463 791 695 2,308 2,198 (299) 1,501 (214) 544 190 322 909 1,085 34 (76) 40 (83)
	$7,780 $17,412 $18,408 $35,937
	141,392,191 128,490,174 133,144,378 128,490,174 $0.06 $0.14 $0.14 $0.28

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 10

Cash Cost Per Pound of Copper Produced

The cash cost per pound of copper produced is a non-IFRS financial measure that does not have a standardized meaning under IFRS, and as a result may not be comparable to similar measures presented by other companies. Management uses this non-IFRS financial measure to monitor operating costs and profitability. The Company is primarily a copper producer and therefore calculates this non-IFRS financial measure individually for its three copper mines, Red Chris (30% share), Mount Polley and Huckleberry, and on a composite basis for these mines.

The cash cost per pound of copper produced is derived from the sum of cash production costs, transportation and offsite costs, treatment and refining costs, royalties, net of by-product and other revenues, divided by the number of pounds of copper produced during the period.

Cash costs of production include direct labour, operating materials and supplies, equipment and mill costs, and applicable overhead. Off-site costs include transportation, warehousing, marketing, related insurance and treatment and refining costs for smelting and refining concentrate.

Treatment and refining costs applicable to the concentrate produced during the period are calculated in accordance with the contracts the Company has with its customers.

By-product and other revenues represent (i) revenue calculated based on average metal prices for by-products produced during the period based on contained metal in the concentrate; and (ii) other revenues as recorded during the period.

Cost of sales, as reported on the consolidated statement of comprehensive income, includes depletion and depreciation, and share based compensation, non-cash items. The resulting cash costs are different than the cost of production because of changes in inventory levels and therefore inventory and related transportation and offsite costs are adjusted from a cost of sales basis to a production basis. The cash costs for copper produced are converted to US$ using the average US$ to CDN$ exchange rate for the period divided by the pounds of copper produced to obtain the cash cost per pound of copper produced in US$.

Variations from period to period in the cash cost per pound of copper produced are the result of many factors including: grade, metal recoveries, amount of stripping charged to operations, mine and mill operating conditions, labour and other cost inputs, transportation and warehousing costs, treatment and refining costs, the amount of by-product and other revenues, the US$ to CDN$ exchange rate and the amount of copper produced.

Idle mine costs during the periods when the Huckleberry and Mount Polley mines were not in operation have been excluded from the cash cost per pound of copper produced.

The following tables reconcile cost of sales as shown on the consolidated statement of comprehensive income to the cash cost per pound of copper produced in US$ for the three and nine months ended September 30, 2021 and 2020.

Calculation of Cash Cost Per Pound of Copper Produced

expressed in thousands of dollars, except cash cost per pound of copper produced Cost of sales Less: Depletion and depreciation Cash costs before adjustment to production basis Adjust for inventory change Adjust transportation and offsite costs Adjust for other costs Treatment, refining and royalty costs By-product and other revenues Cash cost of copper produced in CDN$ US$ to CDN$ exchange rate Cash cost of copper produced in US$ Copper produced – pounds Cash cost per lb copper produced in US$	Three Months Ended Nine Months Ended September 30 September 30 2021 2020 2021 2020
	$32,201 $25,366 $99,915 $88,849 (11,463) (7,850) (34,523) (26,399)
	20,738 17,516 65,392 62,450 575 4,750 3,850 3,759 (88) 84 (1) (31) (7) 1,090 (387) 1,518 1,583 2,669 6,388 8,675 (10,192) (13,497) (31,027) (39,248)
	$12,609 $12,612 $44,215 $37,123
	1.2600 1.3317 1.2514 1.3540
	$10,007 $9,471 $35,332 $27,417
	5,173 6,661 15,210 21,333 $1.93 $1.42 $2.32 $1.29

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 11

RESULTS FROM OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2020

Overview

Revenues decreased to $37.1 million in the September 2021 quarter compared to $38.2 million in the 2020 comparative quarter, a decrease of $1.1 million or 2.9%. Variations in revenue are impacted by the timing and quantity of concentrate shipments, metal prices and exchange rates, and period end revaluations of revenue attributed to concentrate shipments where copper and gold prices will settle at a future date.

Net loss for the September 2021 quarter was $3.8 million ($0.03 per share) compared to net income of $7.1 million ($0.05 per share) in the 2020 comparative quarter. The decrease in net income of $10.9 million was primarily due to the following factors:

• Income from mine operations went from $12.8 million in September 2020 to $4.9 million in September 2021, decreasing net income by $7.9 million.

• General and Administration expense went from $0.8 million in September 2020 to $1.3 million in September 2021, decreasing net income by $0.5 million.

• Foreign exchange gain/loss went from a loss of $1.1 million in September 2020 to a gain of $0.3 million in September 2021, increasing net income by $1.4 million.

The average US/CDN Dollar exchange rate in the September 2021 quarter was 1.260 compared to an average of 1.332 in the 2020 comparative quarter.

Revenue

evenue
expressed in thousands of dollars, except quantity amounts Sales Copper –000’s pounds Gold –ounces Silver –ounces Revenue Copper Gold Silver Corporate and Other Total Revenue	Three Months Ended September 30 2021 2020
	5,501 6,288 4,851 5,080 15,339 13,169 $26,167 $24,432 10,232 12,767 428 409
	$36,827 $37,608 237 553
	$37,064 $38,161

During the September 2021 quarter, the Company sold 5.5 million pounds copper and 4,851 ounces gold compared to 6.3 million pounds copper and 5,080 ounces gold in the 2020 comparative quarter.

In the September 2021 quarter, the Company’s revenue was derived primarily from the sale of copper and gold in concentrate from the Red Chris mine. Copper accounted for 70.6% and gold accounted for 27.6% of the Company’s revenue.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 12

Cost of Sales

ost of Sales
expressed in thousands of dollars Operating expenses Depletion and depreciation	Three Months Ended September 30 2021 2020
	$20,738 $17,516 11,463 7,850
	$32,201 $25,366

Cost of sales for the September 2021 quarter was $32.2 million compared to $25.4 million in the 2020 comparative quarter, due to the following major factors:

• operating expenses for the September 2021 quarter were $20.7 million compared to $17.5 million in the September 2020 quarter; and

• depletion and depreciation for the September 2021 quarter was $11.5 million compared to $7.9 million in the September 2020 quarter.

Interest Expense

terest Expense
expressed in thousands of dollars Interest on non-current debt Other interest	Three Months Ended September 30 2021 2020
	$42 $32 148 290
	$190 $322

Interest expense increased to $0.2 million in the September 2021 quarter from $0.3 million in the 2020 comparative quarter.

Other Finance Loss

ther Finance Loss
expressed in thousands of dollars Accretion of future site reclamation provisions Foreign exchange gain (loss) Fair value adjustment to marketable securities Interest income Other finance loss	Three Months Ended September 30 2021 2020
	$(791) $(694) 250 (1,113) (36) 80
	(577) (1,727) 21 159
	$(556) $(1,568)

Other finance loss totalled $0.6 million in the September 2021 quarter compared to a loss of $1.6 million in the 2020 comparative quarter. The change was largely attributable to a foreign exchange loss of $1.1 million in the comparative 2020 quarter compared to a foreign exchange gain of $0.3 million in the current year quarter.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 13

RESULTS FROM OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2020

Overview

Revenues decreased to $104.3 million in the September 2021 period compared to $111.2 million in the 2020 comparative period, a decrease of $6.9 million or 6.2%. Variations in revenue are impacted by the timing and quantity of concentrate shipments, metal prices and exchange rates, and period end revaluations of revenue attributed to concentrate shipments where copper and gold prices will settle at a future date.

Net loss for the September 2021 period was $11.4 million ($0.09 per share) compared to net income of $nil million ($0.00 per share) in the 2020 comparative period. The decrease in net income of $11.4 million was primarily due to the following factors:

• Income from mine operations went from $22.3 million in September 2020 to $4.4 million in September 2021, decreasing net income by $17.9 million.

• General and Administration expense went from $2.4 million in September 2020 to $3.4 million in September 2021, decreasing net income by $1.0 million.

• Foreign exchange gain/loss went from a loss of $nil million in September 2020 to a gain of $0.3 million in September 2021, increasing net income by $0.3 million.

• Tax went from an expense of $1.9 million in September 2020 to a recovery of $10.0 million in September 2021, increasing net income by $11.9 million.

The average US/CDN Dollar exchange rate in the September 2021 period was 1.251 compared to an average of 1.354 in the 2020 comparative period.

Revenue

expressed in thousands of dollars, except quantity amounts Sales Copper –000’s pounds Gold –ounces Silver –ounces Revenue Copper Gold Silver Corporate and Other Total Revenue	Nine Months Ended September 30 2021 2020
	15,237 21,406 13,937 17,005 38,470 42,654 $73,867 $69,528 28,344 39,375 1,280 781
	$103,491 $109,684 838 1,498
	$104,329 $111,182

During the September 2021 period, the Company sold 15.2 million pounds copper and 13,937 ounces gold compared to 21.4 million pounds copper and 17,005 ounces gold in the 2020 comparative period.

In the September 2021 period, the Red Chris mine had 11.5 concentrate shipments (2020-14.1 concentrate shipments).

The Company’s revenue was derived primarily from the sale of copper and gold in concentrate from the Red Chris mine. Copper accounted for 70.8% and gold accounted for 27.2% of the Company’s revenue.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 14

Cost of Sales

ost of Sales
expressed in thousands of dollars Operating expenses Depletion and depreciation	Nine Months Ended September 30 2021 2020
	$65,392 $62,450 34,523 26,399
	$99,915 $88,849

Cost of sales for the September 2021 period was $99.9 million compared to $88.8 million in the 2020 comparative period, due to the following major factors:

• operating expenses for the September 2021 period were $65.4 million compared to $62.5 million in the September 2020 period; and

• depletion and depreciation for the September 2021 period was $34.5 million compared to $26.4 million in the September 2020 period.

Interest Expense

terest Expense
expressed in thousands of dollars Interest on non-current debt Other interest	Nine Months Ended September 30 2021 2020
	$349 $114 560 971
	$909 $1,085

Interest expense decreased to $0.9 million in the September 2021 period from $1.1 million in the 2020 comparative period.

Other Finance Loss

ther Finance Loss
expressed in thousands of dollars Accretion of future site reclamation provisions Foreign exchange gain (loss) Fair value adjustment to marketable securities Interest income Other finance loss	Nine Months Ended September 30 2021 2020
	$(2,308) $(2,198) 271 (19) (48) 81
	(2,085) (2,136) 182 695
	$(1,903) $(1,441)

Other finance loss totalled $1.9 million in the September 2021 period compared to a loss of $1.4 million in the 2020 comparative period. The change was largely attributable to interest income of $0.7 million in the comparative 2020 period compared to $0.2 million in the current year period.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 15

CAPITAL RISK MANAGEMENT

The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance. The Company’s overall strategy remains unchanged from 2020. The capital structure of the Company consists of current and non-current debt and equity comprised of share capital, contributed surplus, currency translation adjustment and retained earnings.

LIQUIDITY & CAPITAL RESOURCES AND FINANCING

Credit Risk

The Company’s credit risk is limited to cash, trade and other receivables, and future site reclamation deposits in the ordinary course of business. The credit risk of cash and future site reclamation deposits is mitigated by placing funds in financial institutions with high credit quality.

The Company sells to a limited number of traders and smelters. These customers are large and well-capitalized, and credit risk is considered to be minimal. The balance of trade receivables owed to the Company in the ordinary course of business is significant and the Company utilizes short term debt facilities with customers to reduce the net credit exposure.

From time to time the Company enters into derivative instruments with a number of counterparties to limit the amount of credit risk associated with any one counterparty. The Company did not enter into any derivative instruments during the quarter ended September 30, 2021 .

Liquidity Risk

The Company has in place a rigorous planning and budgeting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis and its planned capital expenditures. The Company ensures that in addition to cash balances there are sufficient committed credit facilities, including the advance payment facilities with its customers, to provide cash necessary to meet projected cash requirements.

At September 30, 2021, the Company had a working capital balance of $22.0 million, including a cash balance of $45.1 million which compares to a working capital of $9.3 million and cash balance of $34.0 million at December 31, 2020.

The Company has a $50.0 million revolving credit facility of which $39.0 million was utilized primarily for letters of credit to secure reclamation bonds.

On October 29, 2021, the credit facility was increased to $75.0 million.

Cash balances on hand, the projected cash flow from the Company’s 30% share of Red Chris mine, the available credit facility, as well as the promissory note are expected to be sufficient to fund the Company’s obligations as they come due.

The Company holds mineral properties and marketable securities. While these may be convertible to cash, they are not considered when assessing the Company’s liquidity as they are part of the risk management program of the Company, longterm strategic holdings, or are only convertible to cash over a longer time horizon if realizable values exceed management’s assessment of fair value, respectively. Therefore, as part of the Company’s planning, budgeting and liquidity analysis process, these items are not relied upon to provide operational liquidity.

Liquidity risk is also impacted by credit risk should a counterparty default on its payments to the Company, although the Company considers this risk low as described in the Credit Risk section above.

The following is an aging of the Company’s obligations as of September 30, 2021:

expressed in thousands of dollars Trade and other payables Current portion of debt Non-current debt Total	Within 1 Year 2 Years 3 Years 4 Years 5years Total
	$52,374 $ - $ - $ - $ - $52,374 1,877 - - - - $1,877 - 1,606 919 448 - $2,973
	$54,251 $1,606 $919 $448 $- $57,224

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 16

Currency Risk

Financial instruments that impact the Company’s net income (loss) and comprehensive income (loss) due to currency fluctuations include US$ denominated cash, accounts receivable, derivative instrument assets, reclamation deposits, trade and other payables and debt. If the US$ had been 10% higher/lower and all other variables were held constant, net income (loss) and comprehensive income (loss) for the quarter ended September 30, 2021 would have been higher/lower by $0.9 million.

Cash Flow

Cash flow was $7.8 million in the September 2021 quarter compared to $17.4 million in the 2020 comparative quarter.

Cash flow is a measure used by the Company to evaluate its performance however, it is not a term recognized under IFRS and may not be comparable to similar measures used by other companies. Cash flow is defined as cash flow from operations before the net change in working capital balances, income and mining taxes, and interest paid. Refer to Cash Flow and Cash Flow Per Share under Non-IFRS Financial Measures for further details.

Working Capital

At September 30, 2021, the Company had cash of $45.1 million and a working capital of $22.0 million, which includes $1.9 million of current debt, compared to cash of $34.0 million and a working capital of $9.3 million at December 31, 2020, which included $0.8 million of current debt.

Acquisition and Development of Mineral Properties

Acquisition and development of mineral properties totalled $33.8 million in the September 2021 quarter compared to $25.4 million in the September 2020 quarter.

illion in the September 2020 quarter.
expressed in thousands of dollars Capital and Development Expenditures Red Chris Mount Polley Other Exploration Expenditures Red Chris Mount Polley Huckleberry Other	Three Months Ended September 30 Nine Months Ended September 30 2021 2020 2021 2020
	$19,652 $21,713 $45,918 $47,354 1,247 - 1,361 - 112 - 112 -
	21,011 21,713 47,391 47,354
	8,538 4,604 22,024 9,215 79 236 369 600 1,694 469 1,822 513 2,443 (1,626) 2,739 (1,405)
	12,754 3,683 26,954 8,923
	$33,765 $25,396 $74,345 $56,277

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 17

CONTINGENT LIABILITIES

The Company is from time to time involved in various claims and legal proceedings arising in the conduct of its business.

During the third quarter of 2014, a securities class action under section 138 of the Ontario Securities Act was filed against the Company and certain of its directors, officers and others. On September 23, 2020, the Ontario Superior Court denied the Plaintiff leave to proceed with this claim. The Plaintiff has appealed this decision. The Company is of the view that the allegations contained in the claim are without merit and are unlikely to succeed.

During the June 2020 period, a claim from a contractor was filed against the Company and has been submitted to arbitration. The claim is based on a contractor’s self-assessment of additional compensation owed for work previously carried out. The Company has denied that any further amounts are owed and is of the view that the allegations contained in the claim are without merit and are unlikely to succeed. The Company has made a counter claim against the contractor for breach of contract and negligent misrepresentations.

Subsequent to the September 2021 quarter, the Company received notice that the binding arbitration of the claim from a contractor filed in the June 2020 period was completed. The arbitrator’s partial final award dismissed all of the contractor’s claims and found the contractor liable for numerous misrepresentations and for overbilling. Damages payable by the contractor will be determined in the next phase of arbitration.

The Company has commenced action against its insurance underwriters to recover business interruption losses incurred at the Mount Polley mine. The insurers have filed a statement of defense and a counterclaim. The Company is of the view that the counterclaim is without merit and unlikely to succeed.

DERIVATIVE INSTRUMENTS

In the past, the Company has utilized a variety of derivative instruments including the purchase of puts, forward sales, currency swaps and the use of min/max zero cost collars. The Company’s income or loss from derivative instruments may be very volatile from period to period as a result of changes in the copper and gold prices and US/CDN exchange rates compared to the copper and gold prices and US/CDN exchange rate at the time when these contracts were entered into, or the latest balance sheet date and the type and length of time to maturity of the contracts.

The Company had no derivative instruments for copper, gold, or foreign exchange at September 30, 2021 or at the date of this document, other than those embedded in revenue contracts for provisional pricing.

DEBT AND OTHER OBLIGATIONS

At September 30, 2021, the Company’s debt was comprised of equipment loans and leases denominated in both US$/CDN$ with a balance of $4.9 million. Detailed disclosure on the Company’s debt including amounts owed, interest rates and security can be found in Note 6 and 7 of the unaudited Condensed Consolidated Interim Financial Statements.

Interest Rate Risk

From time to time the Company is exposed to interest rate risk on its outstanding borrowings. At September 30, 2021 and December 31, 2020, the Company did not have any borrowings that were at floating interest rates. The Company monitors its exposure to interest rates and is comfortable with its current exposure. The Company has not entered into any derivative contracts to manage this risk.

Off-Balance Sheet Arrangements

At September 30, 2021, the Company did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of the Company.

Other Price Risks

The Company is exposed to equity price risk arising from marketable securities. Marketable securities are classified as held for trading because the Company intends to liquidate the marketable securities when market conditions are conducive to a sale of these securities.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 18

SELECT QUARTERLY FINANCIAL INFORMATION

ELECT QUARTERLY FINANCIAL INFORMATION
Unaudited - expressed in thousands of dollars, except per share amounts, prices, and exchange rates Total revenues Net loss Basic loss per share Diluted loss per share Adjusted net loss(1) Adjusted net loss per share(1) Adjusted EBITDA(1) Cash flow(1) Cash flow per share(1) Average LME copper price/lb in US$ Average LBMA gold price/troy oz in US$ Average US$/CDN$ exchange rate Period end US$/CDN$ exchange rate Total revenues Net income (loss) Basic income (loss) per share Diluted income (loss) per share Adjusted net income (loss)(1) Adjusted net income (loss) per share(1) Adjusted EBITDA(1) Cash flow(1) Cash flow per share(1) Average LME copper price/lb in US$ Average LBMA gold price/troy oz in US$ Average US$/CDN$ exchange rate Period end US$/CDN$ exchange rate	Three Months Ended
	September 30 2021 June 30 2021 March 31 2021 December 31 2020
	$37,064 $34,215 $33,050 $36,915 $(3,772) $(5,075) $(2,542) $(4,916) $(0.03) $(0.04) $(0.02) $(0.04) $(0.03) $(0.04) $(0.02) $(0.04) $(3,489) $(5,111) $(2,565) $(5,553) $(0.02) $(0.04) $(0.02) $(0.04) $8,136 $8,283 $2,631 $33 $7,780 $8,102 $2,662 $712 $0.06 $0.06 $0.02 $0.01 $4.25 $4.40 $3.85 $3.25 $1,789 $1,816 $1,798 $1,873 $1.260 $1.228 $1.267 $1.303 $1.274 $1.240 $1.258 $1.273
	September 30 2020 June 30 2020(2) March 31 2020(2) December 31 2019(2)
	$38,161 $45,056 $27,965 $30,728 $7,063 $(182) $(6,857) $(13,840) $0.05 $(0.00) $(0.05) $(0.11) $0.05 $(0.00) $(0.05) $(0.11) $7,015 $(310) $(6,573) $(16,475) $0.05 $(0.00) $(0.05) $(0.13) $17,243 $16,224 $2,535 $(3,610) $17,412 $16,100 $2,477 $(4,476) $0.14 $0.14 $0.02 $(0.04) $2.96 $2.42 $2.56 $2.67 $1,911 $1,711 $1,583 $1,480 $1.332 $1.386 $1.345 $1.320 $1.334 $1.363 $1.419 $1.298

(1) Refer to tables under heading Non-IFRS Financial Measures for details of the calculation of these amounts.

(2) Quarterly periods from December 2019 to June 2020 have been restated to incorporate the finalization of fair values relating to the sale of Red Chris in August 2019.

The financial information for each of the most recently completed eight quarters has been prepared in accordance with IFRS other than in respect of the non-IFRS financial measures described in more detail under Non-IFRS Financial Measures .

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 19

Variations in the quarterly results are impacted by two primary factors:

• (a) Fluctuations in revenue are due to the timing of shipping schedules and quantities of copper and gold sold on each ship, production volumes at the mines, changes in the price of copper and gold, and the US/CDN exchange rate.

• (b) Fluctuations in net income are due to the revenue changes described above and realized and unrealized gains/losses on derivative instruments based on movements in the reference item hedged, changes in foreign exchange rates on US$ denominated debt, changes in production cost inputs and changes in tax rates.

In addition to the variations in quarterly results caused by the primary factors discussed above the following periods had non-recurring transactions that further impacted net income:

• (a) The primary reasons for the decrease in net income in the December 2019 quarter compared to income in the September 2019 quarter was largely due to a $436.5 million gain on sale and revaluation of interest in Red Chris mine which was recognized in the September 2019 quarter.

• (b) The primary reason for the decrease in net loss in the March 2020 quarter compared to the December 2019 quarter was due lower operating expenses in the March 2020 quarter.

• (c) The primary reasons for the increase in net income in the June 2020 quarter compared to March 2020 quarter was due to increased production at Red Chris mine and higher metal prices which led to increased revenue.

• (d) The primary reason for the increase in net income in the September 2020 quarter compared to June 2020 quarter was due to an increase in tax recovery compared to the prior quarter

• (e) The primary reason for the decrease in net income in the December 2020 quarter compared to September 2020 quarter was due to higher operating expenses at Red Chris mine. However, compared to December 2019 quarter, net income increased in the December 2020 quarter largely due to higher tax recovery.

• (f) The primary reason for the decrease in net loss in the March 2021 quarter compared to December 2020 quarter was due to an increase in tax recovery compared to the prior quarter which was triggered by an increase in discount rate for future site reclamation provision. Compared to March 2020 quarter, net loss decreased due to an increase in tax recovery in the current year quarter compared to a tax expense in the prior year quarter.

• (g) The primary reason for the increase in net loss in the June 2021 quarter compared to March 2021 quarter was due to a decrease in tax recovery compared to the prior quarter. Compared to June 2020 quarter, net loss increased primarily due to lower metal grades at Red Chris mine which led to decreased revenue in the current year quarter.

• (h) The primary reason for the decrease in the net loss in the September 2021 quarter compared to June 2021 quarter was due to increased sale of copper and gold in the current year quarter which led to increased revenue. However, compared to September 2020 quarter, net loss increased primarily due to higher operating expenses at Red Chris mine.

RELATED PARTY TRANSACTIONS

Corporate

The Company incurred the transactions and balances noted below in the normal course of operations. Expenses have been measured at the fair value which is determined on a cost recovery basis. Related party transactions and balances with a significant shareholder, companies controlled by a significant shareholder, companies in which directors are owners, and with directors and officers are as follows: interest expense of $nil million and $0.2 million for the three and nine months ended September 30, 2021; and $nil balances outstanding at September 30, 2021 and December 31, 2020.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 20

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported on a timely basis to senior management, so that appropriate decisions can be made regarding public disclosure. At the end of the period covered by this MD&A, management evaluated the effectiveness of the Company’s disclosure controls and procedures as required by Canadian securities laws.

Based on that evaluation, management has concluded that, as of the end of the period covered by this MD&A, the disclosure controls were effective to provide reasonable assurance that information required to be disclosed in the Company’s annual filings and interim filings (as such terms are defined under National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings) and other reports filed or submitted under Canadian securities laws is recorded, processed, summarized and reported within the time periods specified by those laws, and that material information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Internal Controls and Procedures

The Company's management is responsible for establishing and maintaining adequate internal controls over financial reporting and disclosure controls and procedures. The Company’s internal control system over financial reporting is designed to provide reasonable assurance to management and the Board of Directors regarding the preparation and fair presentation of published financial statements in accordance with IFRS. The Company’s internal control over financial reporting includes policies and procedures that:

• pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, the transactions and dispositions of the assets of the Company;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.

The Company’s management, under the supervision of the Chief Executive Officer and the Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting at September 30, 2021. In making this assessment, management used the criteria set forth in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has concluded that, as of September 30, 2021, the Company’s internal control over financial reporting were effective .

Following the sale of a 70% interest in the Red Chris mine to Newcrest on August 15, 2019, the Company’s management has limited the scope of the design of the Company’s disclosure controls and procedures and internal controls over financial reporting to exclude controls, policies and procedures of the Red Chris mine, in which the Company now holds a 30% beneficial interest and is proportionately consolidated in the Company’s unaudited Condensed Consolidated Interim Financial Statements. As the minority partner in the Red Chris Joint Venture, the Company’s management does not have the ability to dictate or modify controls at this entity and does not have the ability to assess, in practice, the controls at the entity. The Red Chris Joint Venture constitutes 59.9% of the Company’s net assets, 61.6% of total assets, and 99.2% of revenues of the unaudited Condensed Consolidated Interim Financial Statements amounts as of and for the period ended September 30, 2021. The Red Chris Joint Venture is not a taxable entity as each joint venture participant calculates its own income taxes on their share of income from the joint venture. The Company’s share of the Red Chris Joint Venture’s pre-tax loss totalled $2.7 million for the period ended September 30, 2021.

Limitations

The Company’s management believes that any disclosure controls and procedures or internal controls over financial reporting, no matter how well designed and operated, can only provide reasonable and not absolute assurance that the objectives of the control system are met. Therefore, even those systems determined effective cannot provide absolute assurance that all control issues and instances of fraud within the Company, if any, have been prevented or detected.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 21

RISK FACTORS

The Company’s business involves a high degree of risk. You should carefully consider the risks described in this MD&A, in the audited Consolidated Financial Statements of the Company and in the annual MD&A for the year ended December 31, 2020. The risks and uncertainties described therein are not the only risks and uncertainties that we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of those risks actually occur, our business, financial condition, results of operations and cash flow would suffer.

FORWARD-LOOKING STATEMENTS & RISKS NOTICE

This MD&A is a review of the Company’s operations and financial position, as at and for the year ended December 31, 2020, and plans for the future based on facts and circumstances as of November 9, 2021. Except for statements of historical fact relating to the Company, certain information contained herein constitutes forward-looking information which is prospective in nature and reflect the current views and/or expectations of Imperial. Often, but not always, forward-looking information can be identified by the use of statements such as "plans", "expects" or "does not expect", "is expected", "scheduled", "estimates", "forecasts", "projects", "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", "should", "would", "might" or "will" be taken, occur or be achieved. Such information in this MD&A includes, without limitation, statements regarding: future impacts of the COVID-19 pandemic; the ability to continue operations in lieu of the COVID-19 pandemic; changes to the Company’s business and operations in order to minimize the risks to employees, communities and other stakeholders; the effectiveness of preventative actions put in place by the Company, including measures taken in accordance with PHO orders, to respond to the COVID-19 pandemic as well as to implement a prevention plan for all communicable diseases; expectations regarding the care, maintenance and rehabilitation activities at the Mount Polley mine and Huckleberry mine; updates to the mine restart plans prepared for the Mount Polley mine and the Huckleberry mine; expectations regarding the Mount Polley mine and Huckleberry mine restart timelines and the impact of vaccine distribution; the Company’s ability to secure financing to fund the restart of the Mount Polley mine and Huckleberry mine; expectations regarding the potential cost and length of life mine of Red Chris; the progression of the exploration decline for the proposed block cave development; expectations and timing regarding current and future exploration and drilling programs; the potential significant opportunities to enhance the results of the PFS including the early mining of highest-grade pods in the East Zone and the discovery of new distinct higher grade zones of mineralization; the potential to define further zones of higher-grade mineralization in the East Ridge; production and marketing; expectations regarding metal recoveries; capital expenditures; adequacy of funds for projects and liabilities; use of proceeds of the Rights Offering; the exercise of a right of first refusal and the resulting ownership of the Ruddock Creek exploration project; our belief in the merit of and expectations regarding ongoing legal claims; outcome and impact of litigation; cash flow; working capital requirements; the requirement for additional capital; the ability for the Company to continue as a going concern; results of operations, production, revenue, margins and earnings; authorizations and permits; potential acquisitions; future prices of copper and gold; future foreign currency exchange rates and impact; future accounting changes; and future prices for marketable securities.

Forward-looking information is not based on historical facts, but rather on then current expectations, beliefs, assumptions, estimates and forecasts about the business and the industry and markets in which the Company operates, including, but not limited to, assumptions that: the scope and duration of the COVID-19 pandemic and its impact on our business will not be significant and the Company’s operations will be able to return to normal after the COVID-19 pandemic has subsided; the Company will have access to capital as required and will be able to fulfill its funding obligations as the Red Chris minority joint venture partner; risks related to holding non-majority investment interests in the Red Chris mine and the Ruddock Creek Joint Venture; the Company will be able to advance and complete remaining planned rehabilitation activities within expected timeframes; there will be no significant delay or other material impact on the expected timeframes or costs for completion of rehabilitation of the Mount Polley mine and the Huckleberry mine; the Company’s rehabilitation activities at Mount Polley and Huckleberry will be successful in the long term; all required permits, approvals and arrangements to proceed with planned rehabilitation at Mount Polley and Huckleberry will be obtained in a timely manner; the Company’s belief that the counterclaim with respect to the business interruption at Mount Polley is without merit; there will be no material operational delays at the Red Chris mine; equipment will operate as expected; there will not be significant power outages; there will be no material adverse change in the market price of commodities and exchange rates; the Red Chris mine will achieve expected production outcomes (including with respect to mined grades and mill recoveries and access to water as needed). Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. We can give no assurance that the forward-looking information will prove to be accurate.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 22

Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause Imperial’s actual results, revenues, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements constituting forward-looking information.

Important risks that could cause Imperial’s actual results, revenues, performance or achievements to differ materially from Imperial’s expectations include, among other things: the risk that the Company’s beneficial interest of the Red Chris mine may be diluted over time should it not have access to capital as required and will not be able to meet its funding obligations as the Red Chris minority joint venture partner; that additional financing that may be required may not be available to Imperial on terms acceptable to Imperial or at all; uncertainty regarding the outcome of sample testing and analysis being conducted on the area affected by the Mount Polley Breach; risks relating to the timely receipt of necessary approvals and consents to proceed with the rehabilitation plan at Mount Polley and Huckleberry; risks relating to the remaining costs and liabilities and any unforeseen longer-term environmental consequences arising from the Mount Polley Breach; uncertainty as to actual timing of completion of rehabilitation activities at Mount Polley and Huckleberry; risks relating to the impact of the Mount Polley Breach on Imperial’s reputation; risks relating to mining operations and mine restart timelines; uncertainty regarding general economic conditions; uncertainty regarding the short-term and long-term impact of the COVID-19 pandemic on the Company’s operations and investments and on the global economy and metals prices generally; risks relating to the potential ineffectiveness of the measures taken in response to the COVID-19 pandemic; risks associated with competition within the mining industry; the Company’s dependency on third party smelters; risks relating to trade barriers; the quantum of claims, fines and penalties that may become payable by Imperial and the risk that current sources of funds are insufficient to fund liabilities; risks that Imperial will be unsuccessful in defending against any legal claims or potential litigation; risks of protesting activity and other civil disobedience restricting access to the Company’s properties; failure of plant, equipment or processes to operate in accordance with specifications or expectations; cost escalation, unavailability of materials and equipment, labour unrest, power outages, and natural phenomena such as weather conditions and water shortages negatively impacting the operation of the Red Chris mine; changes in commodity and power prices; changes in market demand for our concentrate; risks that the COVID-19 pandemic may adversely affect copper and gold prices, impact our ability to transport or market our concentrate, cause disruptions in our supply chains and create volatility in commodity prices and demand; inaccurate geological and metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources); uncertainty relating to mineral resource and mineral reserve estimates; uncertainty relating to production estimates; risks associated with mineral exploration and project development; fluctuations in exchange rates and interest rates; risks associated with permitting and government regulations; environmental and health and safety matters; risks relating to joint venture projects; risks relating to foreign operations; dependence on key management personnel; taxation risk; conflicts of interest; cyber threats; risks relating to the use of derivative contracts and other hazards and risks disclosed within this MD&A for the three and nine months ended September 30, 2021 and other public filings which are available on Imperial’s profile at sedar.com . Further disclosure of the Company’s Risk Factors is provided in the annual MD&A for the year ended December 31, 2020. For the reasons set forth above, investors should not place undue reliance on forward-looking information. Imperial does not undertake to update any forwardlooking information, except in accordance with applicable securities laws.

Imperial Metals Corporation | Management’s Discussion & Analysis | September 30, 2021 | # 23

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Imperial Metals Corporation 200-580 Hornby Street Vancouver, BC V6C 3B6

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