Lithium Chile — Interim / Quarterly Report 2021

Aug 27, 2021

LITHIUM CHILE INC. June 30, 2021

MANAGEMENT DISCUSSION AND ANALYSIS

This Management Discussion and Analysis (“MD&A”) for Lithium Chile Inc. (“Lithium Chile”’ or the “Corporation”) is a review of how the Corporation performed during the period covered by the condensed interim consolidated financial statements (the “Interim Statements”) and of the Corporation's financial condition and future prospects. The MD&A complements and supplements the Interim Statements of the Corporation and should be read in conjunction with the Interim Statements and the related notes for the six months ended June 30, 2021 as well as the audited consolidated financial statements for the year ended December 31, 2020 and 2019 and the related notes. The Interim Statements have been prepared in Canadian dollars in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”), which are also generally accepted accounting principles (“GAAP”) for publicly accountable enterprises in Canada.

The Corporation's Board of Directors has reviewed and approved the Audited Statements and MD&A, both of which are effective August 26, 2021.

Certain information presented in the MD&A constitutes forward looking information that is subject to substantial risks and uncertainties. Words such as “may”, “will”, “should”, “could”, “anticipate”, “believe”, “expect”, “intend”, “plan”, “potential”, “continue” and similar expressions have been used to describe these forward-looking statements. By their nature, forward-looking statements necessarily involve risks associated with the provision of services such as loss of market, lack of qualified personnel, impact of the regulatory environment, and competition from other companies providing similar services. Readers are cautioned that the assumptions used in the preparation of forward-looking information and statements, although considered reasonable at the time may prove to be imprecise. As such, undue reliance should not be placed on forward-looking statements. A number of factors, many of which are beyond the control of Lithium, may affect the actual performance of the Corporation and actual results may differ from those expressed or implied by such forward looking information. Accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will occur, or if they do occur, what benefit the Corporation will derive from them. Readers are cautioned not to place undue reliance on these forward-looking statements.

DESCRIPTION OF BUSINESS

Lithium Chile Inc. was incorporated pursuant to the provisions of the Business Corporations Act (Alberta) on October 18, 2010. The Corporation's principal business is the acquisition and development of lithium properties in Chile and Argentina and its common shares trade on the TSX Venture Exchange under the symbol “LITH” and on the OTC-QB under the symbol “LTMCF”.

At June 30, 2021, the Corporation had a working capital balance of $5,111,316 (June 30, 2020 - $799,010). Due to the nature of the mining industry, additional financing will be required in due course. Management may seek additional forms of financing through the issuance of new equity or debt instruments to continue its operations, and while it has been successful in doing so in the past, there can be no assurance it will be able to do so in the future. During the period the Corporation closed a private placement for gross proceeds of $4,024,180.

CORPORATE REVIEW AND OUTLOOK

While there are still challenges due to the on-going global pandemic, management of Lithium Chile is optimistic about the Corporation’s prospects through 2021.

Strength in the lithium sector brought about by an 89% rise in lithium carbonate prices in the last quarter of 2020 and the first quarter of 2021 allowed Lithium Chile to raise gross proceeds of $4,024,180 through a private placement that closed during the quarter and provided additional funding totaling almost $1,700,000 from the exercise of outstanding warrants. These proceeds allowed Lithium Chile to recharge its treasury and end the first quarter of 2021 with over $5,000,000 in the bank. This additional financial flexibility will not only allow Lithium Chile to focus on its priority lithium projects, Laguna Blanca, Coipasa, and Los Morros, but allow the company to pursue other opportunities in the lithium space that it views as attractive.

The additional funds will also allow the company to further advance its Carmona battery metals prospect with advanced reconnaissance planned for the Central and Northern anomalies as well as conduct an IP program for the well-defined southern anomaly in the first half of 2021.

MANAGEMENT DISCUSSION AND ANALYSIS ( continued )

During the second quarter of 2021 Lithium Chile initiated an advanced exploration programs on its Carmona copper/gold property to expand the mapping and sampling of the 3 prospective anomalies identified in an earlier exploration program. Subsequent to the end of the first quarter, the Lithium Chile geological team delivered 350+ samples to the ALS labs in Chile for analysis. Those assay results are pending.

Lithium Chile also initiated an advanced exploration program during the first quarter of 2021 on its Laguna Blanca lithium/cesium prospect. An extensive sediment sampling program was completed and assay results returned lithium grades ranging from 1125 to 1450 ppm and cesium grades ranging from 112 to 688. Based on these strong results a second exploration program is planned for the second quarter to further our understanding of the potential of this project.

Subsequent to the period the Corporation announced that it has added an Argentinian lithium salar property to its portfolio by entering into a binding Letter of Intent (“LOI”) with SMG S.R.L. of Jujuy, Argentina. The LOI enables Lithium Chile to earn up to an 80% interest in the 233 Sq Km Salar De Arizaro located in Salta Province, Argentina. The LOI gives Lithium Chile the opportunity to earn a large and dominant land position in the center of the largest undeveloped salar in Argentina. During the second quarter negotiations were held with the Galli Group on the final definitive agreement for the Joint Venture on the 23,300-hectare Arizaro project. During the same period work continued on organizing the team for the production test well. Andina Perforaciones was hired as drilling contractor and a Senior consulting geologist, Federico Moya Ruiz, with over 33 years’ experience was hired to oversee the project.

Subsequent to the end of the Second quarter approval from the local indigenous community at Tolar Grande as received and road construction began. It is anticipated the drilling on the initial production test well will commence before the end of August 2021.

Results were received on the Carmona sample assays and results continue to point to a potential copper, gold and silver deposit on Carmona. Results indicate there are large anomalies on the central zone running between 1-4 km in size. Out crop assays ranged from 0.6-29.5 g/t gold, 2.2-235g/t silver and 0.4-3.8% copper.

Further work on Carmona is planned for the balance of the year.

On June 30, 2021, the Corporation extended the repayment date on the CAD$1,000,000 note payable due from San Lorenzo Gold Corp. from November 30, 2021 to November 30, 2022. As part of the loan extension Lithium Chile received 500,000 common shares of San Lorenzo Gold as an extension fee. The shares received are subject to a 4 month hold period.

OUTLOOK – “COVID-19”

The novel coronavirus (“COVID-19”) outbreak was declared a pandemic by the World Health Organization on March 11, 2020. This has resulted in significant economic uncertainty and governments worldwide are enacting emergency measures to contain the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global financial markets have experienced significant volatility and weakness as a consequence of this economic uncertainty. The duration and impact of the COVID-19 outbreak is unknown as this time, as is the effectiveness of interventions by governments and central banks. The full extent of the impact on the Company’s future financial results is uncertain given the length and severity of these developments cannot be reliably estimated.

SELECTED FINANCIAL INFORMATION

The following summarizes information derived from the Company’s consolidated financial statements as at and for the six months ended June 30:

ended June 30:
			Six	months ended and as at June 30,
		2021		2020		2019
Net loss and comprehensive loss	$	(1,523,709)	$	(646,572)	$	(1,110,459)
Basic and diluted loss per share	$	(0.01)	$	(0.01)	$	(0.01)
Total assets	$	13,434,628	$	8,974,977	$	7,723,478
Long-term liabilities	$	-	$	50,000	$	-
Share capital	$	17,882,944	$	13,418,001	$	13,060,338
Number of common shares outstanding		140,699,123		116,941,835		101,941,835

Lithium Chile Inc. MD&A Q2-21

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MANAGEMENT DISCUSSION AND ANALYSIS ( continued )

Net Income and Cash Flow from Operations

A comprehensive loss of $1,523,709 resulted for the six months ended June 30, 2021, as compared to a comprehensive loss of $646,572 for the comparable period in 2020. The loss in 2021 is related to the increase in general and administrative expenses described below and to the foreign exchange translation due to the fluctuating Chilean Peso.

General and Administrative

General and administrative expenses are as follows:

		Three Months ended	June 30,	Six Months	ended	June 30,
		2021	2020	2021		2020
Wages and employee benefits	$	45,072$	73,007$	293,960	$	94,097
Business development		142,714	71,783	270,779		11,675
Office		50,321	2,715	89,785		25,812
Consulting fees		59,086	19,500	97,367		23,100
Professional fees		7,219	7,586	33,073		11,675
Rent		3,374	(5,114)	6,760		2,557
Travel and entertainment		(2,356)	-	-		589
	$	305,429$	169,477$	791,468	$	229,613

Professional fees and general office expenditures all increased during the six months ended June 30, 2021. Business activities in the first two quarters of 2020 were scaled back significantly while the Corporation proceeded to raise additional capital and also due to decreased business activity related to COVID-19. Wages increased by $199,863 over the same period in 2020, largely due to bonuses paid to senior management of the Corporation in recognition of successfully closing several private placements over the past three years. In the six months ended June 30, 2021, consulting fees increased $74,267 over 2020. Consulting fees had mostly been suspended while capital was being raised and was reinstated subsequent to Q2-2020.

Business development costs increased by $259,104 over the same period in 2020. Generally, business development costs were higher in 2021 as the Corporation increased activity and incurred several costs to boost and maintain awareness of the Corporation and of lithium.

Additional Information

Capitalized exploration and evaluation expenditures for the six months ended June 30, 2021 were $318,049 (2020 - $1,689,586).

Financial Resources and Liquidity

At June 30, 2021, the Corporation had a working capital balance of $5,183,815 (June 30, 2020 - $799,012).

The Corporation believes it has sufficient funds for general and administrative expenses over the next twelve months. However, due to the nature of the mining industry, it is expected that additional financing may be required in due course. Management may seek additional forms of financing through the issuance of new equity or debt instruments to continue its operations. See also Subsequent Events.

Notes and other receivables

Notes and other receivables are comprised of the following:

Notes and other receivables are comprised of the following:
		June 30, 2021	December 31, 2020
Note receivable from an officer (a)	$	-	$	88,540
Note receivable from San Lorenzo Gold. (b)		1,000,000		1,000,000
Interest receivable		-		3,336
Balance, end of period	$	1,000,000	$	1,091,876

The notes receivable are allocated as follows:

		June 30, 2021	December 31, 2020	December 31, 2020
Current	$	1,000,000	$	1,000,000
Long-term		-		91,876
Total	$	1,000,000	$	1,091,876

Lithium Chile Inc. MD&A Q2-21

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MANAGEMENT DISCUSSION AND ANALYSIS ( continued )

a) Note receivable from an officer

Pursuant to an employment agreement entered into during 2017, the Corporation loaned an officer $93,200 to purchase 233,000 shares of the Corporation. The note bears interest at 2% per annum is repayable in annual instalments of 5% of the principal sum each January 1[st] commencing January 1, 2020 plus interest and is due in full October 30, 2022.

The shares were held as security for the note receivable to be released on a proportionate basis following each annual loan repayment. The loan was repaid in full, with interest, during the six months ended June 30, 2021 and the shares were released.

b) Notes receivable

The face value of the original notes receivable from San Lorenzo Gold Corp. (formerly Kairos Metals) of $1,490,400 (US$1,150,000) and Minera San Lorenzo $2,073,600 (US$1,600,000) were due two years from the date of issuance, May 16 and May 8, 2019 respectively.

During the three months ended March 31, 2020, an agreement was entered into that resulted in certain properties being transferred back to the Corporation (the “Retransfer Agreement”). As a result of the negotiated Retransfer Agreement, the values and terms of the notes receivable were adjusted as follows:

• The San Lorenzo Gold note receivable was written down to CAD$1,000,000 with the repayment term extended from May 16, 2020 to November 30, 2021 and is unsecured.

During the six months ended June 30, 2021, the repayment date of the note was extended to November 30, 2022 and an extension fee was paid to the Corporation in the form of 500,000 common shares of San Lorenzo Gold Corp.

• The Minera San Lorenzo note receivable was adjusted to the net estimated recoverable amount of CAD$1,057,638, being the carrying value of the properties to be re-transferred. The properties were re-transferred to the Corporation during the second quarter of 2020.

The Retransfer agreement was approved by TSX during the three months ended March 31, 2020 and was completed in the succeeding quarter of 2020.

succeeding quarter of 2020.
	San	Lorenzo Gold	Minera	San Lorenzo
Balance December 31, 2019	$	1,000,000	$	1,057,638
Retransfer of properties		-		(1,057,638)
Balance, December 31, 2020 and June 30, 2021	$	1,000,000	$	-

The fair value adjustment and related accretion of the Kairos Metals note receivable was charged to operations in the consolidated Statements of Loss and Comprehensive Loss. The San Lorenzo note receivable was issued on the transfer of the properties and is considered a common control transaction and as such, the fair value adjustment was charged to contributed surplus.

Mineral Properties - Exploration and Evaluation Expenditures

Costs related to undeveloped mineral properties consist of the following:

Costs related to undeveloped mineral properties consist of the following:
Balance, December 31, 2019	$	5,014,228
Additions to lithium claims		675,972
Re-transfer of copper/gold/silver claims		1,056,320
Additions to copper/gold/silver claims		236,817
Option payments		(100,000)
Foreign exchange effect		(39,684)
Balance, December 31, 2020		6,843,653
Additions to mineral claims		318,049
Argentinian property acquisition		60,761
Foreign exchange effect		(301,725)
Balance, June 30, 2021	$	6,920,739

Lithium Chile Inc. MD&A Q2-21

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MANAGEMENT DISCUSSION AND ANALYSIS ( continued )

Mineral Property Description

As at June 30, 2021, the Corporation holds a lithium property portfolio consisting of 71,900 hectares covering sections of 10 salars and two laguna complexes in Chile and 23,300 hectares in Argentina.

Lithium Chile also owns 5 properties that are prospective for gold, silver and copper.

Mineral Property Expenditure

The Mineral Properties do not require any minimum work or expenditure commitments. The Corporation is obligated to make annual tax payments of approximately US$1.50/hectare to the Chilean government in relation to exploration concessions and approximately US$7.50/hectare in relation to exploitation claims.

SHARE CAPITAL

(a) Issued

	#	$
Balance, December 31, 2019	101,875,168	13,060,338
Shares issued for cash	15,000,000	1,500,000
Exercise of broker warrants	343,120	34,311
Reclassification on exercise of warrants	-	59,523
Fair value of Unit warrants	-	(626,373)
Share issue costs:
Expenditures	-	(123,385)
Fair value of broker’s warrants	-	(160,428)
Balance, December 31, 2020	117,284,955	13,743,986
Shares issued for cash	14,583,835	4,096,180
Exercise of broker warrants	672,000	67,200
Exercise of unit warrants	7,500,000	1,875,000
Exercise of stock options	658,333	85,833
Reclassification on exercise of broker warrants	-	99,086
Reclassification on exercise of unit warrants	-	626,335
Share issue costs:	-
Expenditures	-	(283,253)
Fair value of broker’s warrants	-	(161,688)
Fair value ofunitwarrants	-	(2,265,735)
Balance, June 30, 2021	140,699,123	17,882,944

Six Months ended June 30, 2021:

• i) During the six months ended June 30, 2021 the Corporation closed a private placement of units of the Corporation at a price of $0.28 per unit (the “Units”) for gross proceeds of $4,024,180. Each Unit is comprised of one common share and one common share purchase warrant (a “Warrant”) of the Corporation. Each whole Warrant entitles the holder to purchase one full common share of the Corporation at a price of $0.60 for 2 years from the date of issuance of the Warrants.

Share issue costs of $283,253 include finders’ fees totaling $249,942 and legal fees of $33,311. Share issuance costs also include the fair value of the brokers’ warrants and Unit warrants totaling $2,427,423.

• ii) During the six months ended June 30, 2021 the following changes to share capital also occurred:

• 672,000 broker warrants were exercised at $0.10 for proceeds of $67,200;

• 7,500,000 Unit warrants were exercised at $0.25 for proceeds of $1,618,750;

• 525,000 stock options were exercised at $0.10 for proceeds of $52,500; and

• 133,333 stock options were exercised at $0.25 for proceeds of $33,333.

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Lithium Chile Inc. MD&A Q2-21

MANAGEMENT DISCUSSION AND ANALYSIS ( continued )

• iii) During the six months ended June 30, 2021, 211,764 common shares were issued at a deemed value of $0.34 as payment for social media services received.

• Six Months ended June 30, 2020:

• i) During the six months ended June 30, 2020, 66,667 common shares were issued on the exercise stock options for proceeds of $16,667.

(b)

Warrants

The details of the broker warrants are as follows at June 30, 2021:

Date of Issuance	June, 2021	June, 2020
Exercise price of broker warrants	$ 0.28	$ 0.10
# of broker warrants issued	892,689	1,026,000
# of broker warrants exercised	-	(1,015,120)
# of broker warrants expired	-	10,880
Balance, June 30, 2021	892,689	-

The Unit warrants expire one year from the date of issuance. At June 30, 2021 the Unit warrants outstanding are as follows and have an average remaining term to expiry of 1.8 years:

Date of Issuance	June, 2021	June, 2020
Exercise price of Unit warrants	$ 0.28	$ 0.25
# of Unit warrants issued	14,372,071	7,500,000
# of Unit warrants exercised	-	7,500,000
# of Unit warrants expired	-	-
Balance, June 30, 2021	14,372,071	-

The fair value of the 2021 warrants has been estimated at the date of grant using the Black-Scholes option pricing model on the following assumptions:

on the following assumptions:
	Issued March 2021
	Broker Warrants	Unit Warrants
Dividend yield	0%	0%
Expected volatility	130.31%	130.31%
Risk-free interest rate	0.22%	0.23%
Forfeiture rate	0%	0%
Share price – on issuance	$ 0.67	$ 0.67
Exercise price	$ 0.28	$ 0.60
Term	18 months	24 months
Fair value per warrant	$ 0.1811	$ 0.1576

(c)

Loss per share

The basic and diluted loss per share as calculated is based on the weighted average number of shares outstanding during the year as follows:

during the year as follows:
	Three Months	ended June 30,	Six Months ended June 30,
	2021	2020	2021	2020
Weighted average number of common shares
Issued and outstanding at beginning of period	139,262,359	101,941,835	117,284,955	101,941,835
Effect of share issuance	491,560	3,960,440	16,030,609	1,980,220
Number of common shares–basic and diluted	139,753,919	105,902,275	133,315,564	103,922,055

Lithium Chile Inc. MD&A Q2-21

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MANAGEMENT DISCUSSION AND ANALYSIS ( continued )

(d) Stock Options

The Corporation has adopted an incentive stock option plan in accordance with the policies of TSX Venture (the “Stock Option Plan”) for the benefit of directors, officers, employees and other key personnel of the Corporation. A maximum of 10% of the issued and outstanding Common Shares of the Corporation are reserved for issuance pursuant to the exercise of stock options to be granted to directors, officers, employees and other key personnel of the Corporation. In addition, the number of common shares reserved for issuance to any one person shall not exceed five percent (5%) and for consultants shall not exceed two percent (2%) of the issued and outstanding common shares. The Stock Option Plan provides that the terms of the options and the option price shall be fixed by the directors subject to the price restrictions and other requirements imposed by TSX Venture. Stock options granted under the Stock Option Plan may not be exercisable for a period longer than ten (10) years and the exercise price must be paid in full upon exercise of the option.

A summary of the stock option plan and changes during the periods then ended is as follows:

	June	30,	2021	December	December	31, 2020
	# of Stock		Weighted	# of Stock		Weighted
	Options		Average Price	Options		Average Price
Balance, beginning of year	4,683,333	$	0.43	5,083,333	$	0.36
Granted	2,100,000	$	0.51	-	$	-
Expired	(700,000)	$	(1.05)	(400,000)	$	0.52
Exercised	(658,333)	$	(0.13)	-	$	-
Balance, end of period	5,425,000	$	0.48	4,683,333	$	0.43

During the six months ended June 30, 2021, 525,000 stock options were exercised at $0.10 for proceeds of $52,500; and 133,333 stock options were exercised at $0.25 for proceeds of $33,333. Also during the period, 700,000 options were forfeited at the end of the one-year period following the resignation of two directors or officers.

Also during the period, 2,100,000 stock options were granted to employees, director and officers and consultants of the Corporation. The Options are exercisable for a period of ten years at $0.51 and will vest as to one third each on the date of grant and the first and second anniversaries of the grant

A summary of the stock options outstanding is as follows:

As at June 30, 2021

		Weighted Average
Options		Remaining Contractual	Exercisable
Outstanding	Exercise Price	Life(years)	Options	Expiry Date
525,000	$0.10	1.1	525,000	February 18, 2021
2,358,333	$0.25	2.1	2,358,333	February 17, 2022
600,000	$0.45	2.6	600,000	August 22, 2022
900,000	$1.05	3.1	900,000	February 20, 2023
300,000	$0.52	4.1	300,000	January 7, 2024
4,683,333	$0.43	2.5	4,683,333

Related Party Transactions

(a) During the six months ended June 30, 2021 and 2020, the Corporation incurred expenses included in the Condensed Interim Consolidated Statements of Loss and Comprehensive Loss, as follows:

Interim Consolidated Statements of Loss and Comprehensive Loss, as follows:
Three months ended December 31, 2021	2020
Administrative and accounting services provided by officers $ 13,500 Rent and office expenses charged by a company with common directors and officers 6,450 Shared rent, office expenses and consulting fees in Chile charged by a company with common directors and officers 75,843 Loan interest earnedfroma director $311	$ 8,100 2,847 - $ 900

The above transactions were in the normal course of operations and were recorded at fair value.

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Lithium Chile Inc. MD&A Q2-21

MANAGEMENT DISCUSSION AND ANALYSIS ( continued )

(b) The related party amounts included in the Condensed Interim Consolidated Statements of Financial Position, are as follows:

follows:
As at June 30, 2021		2021		2020
Due to officers for administrative and accounting services (included in trade and other
payables)	$	2,500	$	-
Notes receivable owed by corporations related by common director and officers_(note 5)_		1,000,000		1,000,000
Consulting services provided by an officer in Chile (included in Mineral Properties)		37,212		45,630
Due to an officer in Chile for consulting services (included in trade and other payables)		26,107		70,516
Due to a related company for rent and office expenses		6,450		-
Due from an officer including accrued interest (included in notes receivable)	$	-	$	90,957

SELECTED QUARTERLY INFORMATION

		June 30,		March 31		December 31,		September 30,
Fiscal Quarter Ended		2021		2020		2020		2020
Revenue	$	79,886	$	2,761	$	461	$	459
Comprehensive income (loss)	$	(775,370)	$	(748,339)	$	(10,725)	$	30,751
Net lossper share	$	(0.01)	$	(0.01)	$	(0.00)	$	0.00
		June 30,		March 31,		December 31,		September 30,
Fiscal Quarter Ended		2020		2020		2019		2019
Revenue	$	451	$	449	$	37,197	$	22,843
Comprehensive (loss)	$	(603,108)	$	43,464	$	(132,001)	$	(416,807)
Net lossper share	$	(0.01)	$	(0.00)	$	(0.00)	$	(0.00)

CASH FLOW

For the six months ended June 30, 2021 the Corporation’s cash increased by $4,395,650. The increase in cash results from cash used in operations of $963,557, cash used in investing activities of $515,949 and cash proved by financing activities of $5,875,156.

The cash spent on investing activities is related to the exploration program on the mineral properties. Cash was provided by a private placement and from the proceeds of warrants and stock options being exercised.

CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

The Corporation is not a party to any industry contracts or obligations and there are no off-balance sheet arrangements.

CRITICAL ACCOUNTING ESTIMATES

There are no critical or material accounting estimates.

SUBSEQUENT EVENTS

Subsequent to the six months ended June 30, 2021 the Corporation executed a definitive agreement to acquire 60% interest in the Arizaro lithium property in Salta Province, Argentina., and the Corporation’s wholly owned Argentinian subsidiary, Argentum Lithium was legally incorporated and registered.

Lithium Chile Inc. MD&A Q2-21

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MANAGEMENT DISCUSSION AND ANALYSIS ( continued )

BUSINESS RISKS

Mining Industry Risks

The exploration for and development of mineral deposits involves a high degree of risk that even a combination of careful evaluation, experience, knowledge and sufficient financial resources may not eliminate. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit such as size, grade and proximity to infrastructure; commodity prices which are inherently cyclical and cannot be predicted with certainty; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The effect of these factors cannot be accurately predicted and the combination of these factors may result in not receiving an adequate return on invested capital.

Properties without Known Mineable Reserves

The Corporation’s activities will continue to be directed towards the search for, evaluation of, and development of mineral deposits. There is no assurance that expenditures associated with those activities will result in securing commercial mineral deposits and actual expenditures may be higher than currently anticipated.

Uncertainty as to Calculations of Mineral Deposit Estimates

There is a significant degree of uncertainty attributable to the calculation of mineral deposit estimates. Until the mineral is actually mined and processed, mineral deposit estimates, grades and recovery rates must be considered as estimates only. Consequently, there can be no assurance that any mineral deposit estimates or grade information will prove accurate. In addition, the value of mineral deposits may vary depending on mineral prices and other factors. Any material change in grades, stripping ratios or other mining and processing factors may affect the economic viability of projects. Furthermore, mineral deposit estimate information should not be interpreted as any assurance of mine life or of the potential profitability of existing or future projects.

Uninsurable Risks

The Corporation may become subject to liability for cave-ins, pollution or other hazards against which it cannot insure or against which it may elect not to insure because of high premium costs or for other reasons. The payment of any such liabilities would reduce the funds available for development and mining activities. Payment of liabilities for which the Corporation does not carry insurance may have a material adverse effect on the Corporation’s financial position.

Currency

Currency fluctuations may materially affect the financial position and results of the Corporation. Lithium Chile does not intend to engage in currency hedging to offset currency fluctuations risks.

Governmental Regulation of the Mining Industry

The mineral development or exploration activities of the Corporation are subject to various laws governing prospecting, development, production, taxes, labour standards and occupational health, mine safety, toxic substances and other matters. Mining and exploration activities are also subject to various laws and regulations relating to protection of the environment. Although the Corporation believes that its activities are currently carried out in accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner that could limit or curtail production or development. Amendments to current laws and regulations governing the operations and activities of the Corporation or more stringent implementation thereof could have a material adverse effect on the business, financial condition and results of operations of the Corporation.

Exploration and Development Risks

Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover deposits but also from finding deposits that, though present, are insufficient in quantity and quality to return a profit from production. The marketability of resources or reserves acquired or discovered by the Corporation may be affected by numerous factors which are beyond the control of the Corporation and which cannot be accurately predicted, such as market fluctuations, the proximity and capacity of facilities, commodity markets, processing equipment availability and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection, the combination of which factors may result in the Corporation not receiving an adequate return of investment capital.

Lithium Chile Inc. MD&A Q2-21

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MANAGEMENT DISCUSSION AND ANALYSIS ( continued )

There is no assurance that the Corporation’s mineral exploration and development activities will result in any discoveries or acquisitions of commercial bodies of minerals. The long-term profitability of operations will in part be directly related to the costs and success of its development efforts which may be affected by a number of factors. Substantial expenditures are required to establish reserves through drilling and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may be derived from the discovery or acquisition of a deposit, no assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis.

If Lithium loses or abandons its interest in its properties, there is no assurance that it will be able to acquire another mineral property of merit or that such an acquisition would be approved by the Exchange. There is also no guarantee that the Exchange will approve the acquisition of any additional properties by Lithium, whether by way of option or otherwise, should Lithium wish to acquire any additional properties.

The business of exploration and development of minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines and there is no guarantee Lithium’s new projects will become producing mines.

Insurance

In the course of exploration, development and production of mineral properties, certain risks, and in particular, unexpected or unusual geological operating conditions including rock bursts, cave-ins, fires, flooding and earthquakes may occur. It is not always possible to fully insure against such risks and the Corporation may decide not to take out insurance against such risks as a result of high premiums or other reasons. Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of the securities of the Corporation.

Permits and Licenses

The future operations of the Corporation may require permits from various governmental authorities and will be governed by laws and regulations governing prospecting, development, mining, production, export, taxes, labour standards, occupational health, waste disposal, land use, environmental protections, mine safety and other matters. There can be no guarantee that the Corporation will be able to obtain all necessary permits and approvals that may be required to undertake development activity or commence construction or operation of mine facilities on the Corporation’s properties.

Environmental Legislation

Environmental laws and regulations may affect the operations of the Corporation. These laws and regulations set various standards regulating certain aspects of health and environmental quality. They provide for penalties and other liabilities for the violation of such standards and establish, in certain circumstances, obligations to rehabilitate current and former facilities and locations where operations are or were conducted. The permission to operate can be withdrawn temporarily where there is evidence of serious breaches of health and safety standards, or even permanently in the case of extreme breaches. Significant liabilities could be imposed for damages, clean-up costs or penalties in the event of certain discharges into the environment, environmental damage caused by previous owners of acquired properties or non-compliance with environmental laws or regulations. In all major developments, the Corporation generally relies on recognized designers and development contractors, from which the Corporation will, in the first instance, seek indemnities. The Corporation intends to minimize risks by taking steps to ensure compliance with environmental, health and safety laws and regulations and operating to applicable environmental standards

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions hereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations, including the Corporation may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on the Corporation and cause increases in exploration expenses, capital expenditures or production costs, reduction in levels of production at producing properties, or abandonment or delays in development of new mining properties.

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MANAGEMENT DISCUSSION AND ANALYSIS ( continued )

Title to Properties

The acquisition of title to mineral properties is a very detailed and time-consuming process. Title to, and the area of, mineral concessions may be disputed. Although The Corporation believes it has taken reasonable measures to ensure proper title to its properties, there is no guarantee that title to any of its properties will not be challenged or impaired. Third parties may have valid claims underlying portions of the Corporation’s interests.

Market Prices

If the Corporation seeks to bring a property to production, the profitability of its operations will be dependent in part upon the market price of the minerals. Mineral prices fluctuate widely and are affected by numerous factors beyond the control of the Corporation. The level of interest rates, the rate of inflation, the world supply of and demand for mineral commodities, and exchange rate stability can all cause significant price fluctuations. Such external economic factors are in turn influenced by changes in international investment patterns, monetary systems and political developments. The price of commodities has fluctuated widely in recent years, and future price declines could cause commercial production to be impracticable, thereby having a material adverse effect on the Corporation’s business, financial condition and results of operations.

Competition

The mining industry is intensely competitive in all of its phases and the Corporation will compete with many companies possessing greater financial and technical resources than itself. Competition in the mining industry is primarily for: mineral rich properties which can be developed and produced economically; the technical expertise to find, develop, and operate such properties; the labour to operate the properties; and, the capital for the purpose of funding such properties. Many competitors not only explore for and mine minerals, but conduct refining and marketing operations on a world-wide basis. Such competition may result in the Corporation being unable to acquire desired properties (due to the auction process involved in property acquisition), to recruit or retain qualified employees or to acquire the capital necessary to fund its operations and develop its properties. Existing or future competition in the mining industry could materially adversely affect the Corporation’s prospects for mineral exploration and success in the future.

Additional Financing

The exploration and development of the Corporation’s properties, including continuing exploration and development projects, and the construction of mining facilities and the commencement of mining operations, will require substantial additional financing. Failure to obtain sufficient financing will result in a delay or indefinite postponement of exploration development or production on any or all of the Corporation’s properties or even a loss of a property interest. Sources of funds now available to the Corporation are limited and may include the sale of equity capital, properties, royalty interests, the entering into of future joint ventures and the exercise of outstanding options and warrants. Additional financing may not be available when needed or, even, if available, the terms of such financing might not be favourable to the Corporation and might involve substantial dilution to existing shareholders. Failure to raise capital when needed would have a material adverse effect on the Corporation’s business, financial condition and results of operations.

Competition for Key Personnel

The Corporation will be dependent upon the continued support and involvement of a number of key management personnel. The loss of the services of one or more of such personnel could have a material adverse effect on the Corporation. The Corporation’s ability to manage its exploration and development activities and, hence, its success, will depend in large part on the efforts of these individuals. The Corporation faces intense competition for qualified personnel and there can be no assurance that the Corporation will be able to attract and retain such personnel.

Possible Volatility of Stock Price

The market price of the Corporation Shares will be subject to wide fluctuations in response to factors such as actual or anticipated variations in the Corporation’s consolidated results of operations, changes in financial estimates by securities analysts, general market consolidated and other factors. Market fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations may adversely affect the market price of the the Corporation Shares. Factors such as the price of minerals, announcements by competitors, and changes in stock market analyst recommendations regarding the Corporation, and general market conditions and attitudes affecting other exploration and mining companies may have a significant effect on the market price of the Lithium Shares. Moreover, it is likely that during future quarterly periods, ‘s’s results and exploration activities may fluctuate significantly or may fail to meet the expectations of stock market analysts and investors and, in such event, the market price of the Lithium Shares could be materially adversely affected.

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MANAGEMENT DISCUSSION AND ANALYSIS ( continued )

In the past, securities class action litigation has often been initiated following periods of volatility in the market price of a company’s securities. Such litigation, if brought against the Corporation, could result in substantial costs and a diversion of management’s attention and resources, which could have a material adverse effect on the Corporation’s business, financial condition and results of operations.

Ability to Manage Growth

The size of the Corporation’s business and assets is expected to grow in the coming years. In order to effectively deploy its capital and manage its growth, the Corporation will need to retain additional personnel and augment, improve or replace existing systems and controls. As a result, there can be no assurances that the Corporation will be able to effectively manage its growth and, if it is unable to do so, its business, financial conditions and results could be adversely affected.

Ability to Sell Securities

Securities of the Corporation may be subject to resale restrictions under applicable securities legislation. Accordingly, there may be a long time period between the date of purchase of securities and the date that a shareholder is able to sell these securities. In this time, the market price of the Corporation’s securities will vary. Additionally, there may be limited liquidity in the market for such securities. As such, there is no assurance that the market price at which a shareholder is able to sell any will equal or exceed the price at which the securities were originally issued by the Corporation.

Acquisition Risk

As part of the Corporation’s business strategy, it may seek to grow by acquiring businesses that it believes will complement its current business. The Corporation may not effectively select acquisition candidates or negotiate or finance acquisitions or integrate the acquired businesses and their personnel into its business. The Corporation cannot guarantee that it can complete any acquisition it pursues on favourable terms, or that any completed acquisitions will ultimately benefit its business and the results of operations of the Corporation.

The risks inherit with acquisitions include the risks associated with the integration of acquired operations, diversion of management’s attention and potential loss of key employees. The Corporation may not be able to successfully integrate products, technologies or personnel of a business acquired in the future. Failure could have a Material Adverse Effect on the business, financial condition and results of operations of the Corporation.

Dividends

To date, the Corporation has not paid any dividends on their outstanding shares and does not expect to do so in the foreseeable future. Any decision to pay dividends on the Corporation’s Shares will be made by the Board of Directors of the Corporation on the basis of the Corporation’s earnings, financial requirements and other conditions.

Conflicts of Interest

Certain of the directors and officers of the Corporation will be engaged in, and will continue to engage in, other business activities on their own behalf and on behalf of other companies and, as a result of these and other activities, such directors and officers of The Corporation may become subject to conflicts of interest. The Business Corporations Act (Alberta) (“ABCA”) provides that in the event that a director has an interest in a contract or proposed contract or agreement, the director shall disclose his interest in such contract or agreement and shall refrain from voting on any matter in respect of such contract or agreement unless otherwise provided under the ABCA. To the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the ABCA.

Other Risks

The Corporation also faces a number of risk factors that are outside of its control, generally, including, without limitation, natural disasters, general economic and other conditions.

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CORPORATE INFORMATION

CONTACT

Head Office

Lithium Chile Inc. 900, 903 – 8[th] Avenue S.W. Calgary, Alberta T2P 0P7 Tel: (587) 393-5801 Fax: (587) 393-5812 E-Mail: steve@lithiumchile.ca

AUDITORS

MNP LLP

Calgary, Alberta

BANKERS

Canadian Western Bank Calgary, Alberta

TRANSFER AGENT

DIRECTORS

Kenneth L. DeWyn Al J. Kroontje Steven Cochrane Terrence Walker Kenneth Booth Jose de Castro Alem Kelly Kimbley

Odyssey Trust Calgary, Alberta

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