Lux Metals Corp. — Management Reports 2020

Dec 11, 2020

Management Discussion and Analysis

HUNTSMAN EXPLORATION INC. (FORMERLY BLUEBIRD BATTERY METALS INC.)

For the Year Ended August 31, 2020

FORWARD-LOOKING INFORMATION AND MATERIAL ASSUMPTIONS

This report on results for the year ended August 31, 2020 contains forward-looking information including forward-looking information about Huntsman Exploration Inc.’s (formerly BlueBird Battery Metals Inc.) (the "Company") operations, estimates, and exploration and acquisition spending.

Forward-looking information is generally signified by words such as “forecast”, “projected”, “expect”, “anticipate”, “believe”, “will”, “should” and similar expressions. This forward-looking information is based on assumptions that the Company believes were reasonable at the time such information was prepared, but assurance cannot be given that these assumptions will prove to be correct, and the forward-looking information in this report should not be unduly relied upon. The forward-looking information and the Company’s assumptions are subject to uncertainties and risks and are based on a number of assumptions made by the Company, any of which may prove to be incorrect.

GENERAL

This Management Discussion and Analysis (“MD&A”) of the financial condition, results of operations and cash flows of the Company for the year ended August 31, 2020 should be read in conjunction with the audited consolidated financial statements as at August 31, 2020 and 2019. This MD&A is effective December 11, 2020. Additional information relating to the Company is available on SEDAR at www.sedar.com.

The Company has prepared its audited consolidated financial statements for the year ended August 31, 2020 in Canadian dollars and in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).

DESCRIPTION OF BUSINESS

The Company is an exploration stage company incorporated pursuant to the British Columbia Business Corporations Act on March 31, 2011. The principal business of the Company is the identification, evaluation and acquisition of mineral properties, as well as exploration of mineral properties once acquired. The Company changed its name from BlueBird Battery Metals Inc. to Huntsman Exploration Inc. on September 17, 2020. The Company’s shares are listed for trading on the TSX Venture Exchange (“TSX-V”) under the symbol “HMAN” and on the US OTC Markets under the symbol “BBBMF”. The address of the Company’s corporate office and its principal place of business is 1680 – 200 Burrard Street, Vancouver, British Columbia, Canada, V6C 3L6.

The Company is currently focusing its financial resources on conducting exploration programs. The Company has not yet determined whether its properties contain reserves that are economically recoverable. The recoverability of amounts shown for exploration and evaluation assets is dependent upon the discovery of economically recoverable reserves, confirmation of the Company’s interest in the underlying mineral claims, the ability of the Company to obtain necessary financing to complete the development of the resource properties and upon future profitable production or proceeds from the disposition thereof.

On September 17, 2020, the Company consolidated its common shares on the basis of one new share for two old shares. All share and per share amounts have been revised to reflect the consolidation.

Management Discussion and Analysis

HUNTSMAN EXPLORATION INC.

For the Year Ended August 31, 2020

EXPLORATION AND EVALUATION ASSETS

Total costs incurred on exploration and evaluation assets are summarized as follows:

	Baxter Spring Canegrass Property Ashburton Property Atikwa Lake / Maybrun Properties Batt Property	Total
	Acquisition Costs Balance, August 31, 2018 $ - $ 995,707 $ 25,000 $ 710,284 $ 92,500 Acquisition and option payments (shares) - 553,125 514,594 - - Claim costs - - 85,474 1,209 - Impairment - - (625,068) (640,000) (92,500)	$ 1,823,491 1,067,719 86,683 (1,357,568)
	Balance, August 31, 2019 - 1,548,832 - 71,493 - Acquisition and option payments (shares) - 131,250 175,000 - - Claim costs 34,071 - - - - Impairment - - (175,000) - - Sale of exploration and evaluation assets - - - (71,493) -	1,620,325 306,250 34,071 (175,000) (71,493)
	Balance, August 31, 2020 $ 34,071 $ 1,680,082 $ - $ - $ -	$ 1,714,153
	Deferred Exploration Expenditures Balance, August 31, 2018 $ - $ 274,893 $ 8,020 $ 258,768 $ 48,629 Camp and other (recovery) - 151 - (2,970) - Drilling - 243,531 - - - Geological (recovery) - 75,060 3,050 (6,100) 21,657 Geophysics - 118,382 - - - Impairment - - (10,682) (1,000) (70,286) Currency translation difference - (10,208) (388) - -	$ 590,310 (2,819) 243,531 93,667 118,382 (81,968) (10,596)
	Balance, August 31, 2019 - 701,809 - 248,698 - Drilling - 7,275 - - - Geological - 260,187 - - - Sale of exploration and evaluation assets - - - (248,698) - Currency translationdifference - 47,406 - - -	950,507 7,275 260,187 (248,698) 47,406
	Balance, August 31, 2020 $ - $ 1,016,677 $ - $ - $ -	$ 1,016,677
	Total Exploration and Evaluation Assets Balance, August 31, 2019 $ - $ 2,250,641 $ - $ 320,191 $ -	$ 2,570,832
	Balance, August 31, 2020 $ 34,071 $ 2,696,759 $ - $ - $ -	$ 2,730,830

Management Discussion and Analysis

For the Year Ended August 31, 2020

HUNTSMAN EXPLORATION INC.

Baxter Spring Property

On August 28, 2020, the Company entered into an option agreement to acquire a 100% interest in the Baxter Spring Property, located in Nevada, from Liberty Gold Corp. (“Liberty”) and Liberty's wholly owned subsidiary, Pilot Gold (USA) Inc.

In consideration, the Company must make payments as follows:

• Cash payment of US$250,000 (paid subsequent to August 31, 2020);

• An additional cash payment US$250,000 on or before December 1, 2021; and

• Issuance of common shares of the Company equal to 19.5% of the outstanding shares (issued 14,986,890 shares valued at $3,821,657 subsequent to August 31, 2020).

The property is subject to a 2% net smelter return royalty (“NSR”) and Liberty retains a back-in right to acquire a 35% interest in the property within three years upon payment of the sum of US$1,000,000 to the Company.

Canegrass Property

On March 15, 2018, the Company entered into an option agreement with Trafalgar Resources Pty. Ltd. (“Trafalgar”) to acquire a 100% interest in the Canegrass Property, located in the Mount Magnet region of Western Australia.

In consideration, the Company must make payments as follows:

• Cash payment of $25,000 (paid) and issuance of 1,500,000 common shares of the Company (issued) upon approval by the TSX-V (approval received on March 21, 2018);

• Issuance of an additional 937,500 common shares of the Company on or before March 21, 2019 (issued and valued at $553,125); and

• Issuance of an additional 937,500 common shares of the Company on or before March 21, 2020 (issued and valued at $131,250).

The Company must also incur exploration expenditures as follows:

• $500,000 on or before March 21, 2019 (incurred);

• An additional $500,000 on or before March 21, 2020 (incurred); and

• An additional $500,000 on or before March 21, 2021.

A finder’s fee of 130,529 shares (issued and valued at $75,707) was paid in relation to the agreement. Subject to further TSX-V approval, a discovery bonus of 750,000 common shares of the Company will be issued in the event of discovery of a copper/cobalt equivalent resource of 250,000 ounces or greater on the Canegrass Property.

The Company also paid a $25,000 letter of intent (“LOI”) fee to Trafalgar during the year ended August 31, 2018.

Phase One Exploration Program

On August 7, 2018, the Company reported the results of surface rock chips collected at VTEM-08 during the cultural survey of the planned drill sites, returning anomalous vanadium, titanium and iron values. The results fell within a broad, elongate, V2O5 surface anomaly defined by historical rock chip samples (refer to the press release dated August 7, 2018).

On October 23, 2018, the Company announced results for five reverse circulation holes drilled near VTEM-08. The holes were drilled on one section and spaced 80 metres between holes. The initial hole on the section BBRC001 targeted the VTEM-08 anomaly to evaluate for potential magmatic nickel, copper

Management Discussion and Analysis

For the Year Ended August 31, 2020

HUNTSMAN EXPLORATION INC.

sulphide mineralization. The remaining four holes on the section targeted a broad, elongate, coincident rock geochemical surface anomaly (vanadium) and magnetic anomaly measuring 4,500 metres by 500 metres. Significant assay results were as follows:

Hole ID	From (m)	To (m)	Interval(1) (m)	V2O5 (%)
BBRC001 including and including	0.00	102.00	102.00	0.36
	35.00	55.00	20.00	0.49
	64.00	81.00	17.00	0.78
	72.00	80.00	8.00	1.03
BBRC002 including and including	0.00	121.00	121.00	0.31
	38.00	61.00	23.00	0.46
	100.00	119.00	19.00	0.53
	110.00	119.00	9.00	0.68
BBRC003 including	0.00	85.00	85.00	0.16
	32.00	34.00	2.00	0.48
BBRC004 including and	25.00	78.00	53.00	0.23
	39.00	42.00	3.00	0.39
	62.00	63.00	1.00	0.63
BBRC005 including including	8.00	63.00	55.00	0.21
	30.00	38.00	8.00	0.58
	35.00	38.00	3.00	0.88

(1) The intervals noted in the above table are measured downhole and are not true width. There is insufficient information at this time to determine the true width of the mineralized zone.

On November 29, 2018, the Company announced results from five diamond drill holes. All holes during the Phase One drill program targeted VTEM™ anomalies. The diamond drill campaign consisted of 1,380 metres and all holes intersected anomalous Ni, Cu and Co grades, establishing a trend with a 4,500-metre strike length within the magnetite-rich gabbro-norites. Significant assay results are presented in the following table:

Hole ID	From (m)	To (m)	Interval(2) (m)	Ni (%)	Cu (%)	Co (%)	Target
BBDD001 including	142.96	144.66	1.70	1.20	0.41	0.10	VTEM-06
	144.09	144.66	0.57	3.07	0.62	0.24
BBDD002 including	243.15	257.40	14.25	0.69	0.82	0.05	CG-039
	250.80	255.70	4.90	1.33	1.26	0.10
BBDD003	225.80	227.00	1.20	0.48	0.98	0.06	CG-02
BBDD004 including	275.00	279.00	4.00	0.25	0.41	0.05	CG-02
	277.85	279.00	1.15	0.37	0.70	0.08
BBDD005 including	255.70	263.00	7.30	0.14	0.31	0.02	CG-02
	256.75	257.15	0.40	0.50	1.51	0.06

• (2) The intervals noted in the above table are measured downhole and are not true width. There is insufficient information at this time to determine the true width of the mineralized zone.

Management Discussion and Analysis HUNTSMAN EXPLORATION INC.

For the Year Ended August 31, 2020

The technical content in this MD&A has been reviewed and approved by Wesley Hanson, P.Geo., a director of the Company and a Qualified Person pursuant to National Instrument 43-101 Standards of Disclosure for Mineral Projects .

The Company has planned a 2020 drill program on its Canegrass nickel-copper-cobalt project, in Western Australia. The two-phase program will consist of 18 holes (3,160 metres) of Reverse Circulation (“RC”) and Diamond (Core) drilling, which will follow up on 2018 successes and begin to also test new, high priority areas.

The upcoming program will drill untested conductors identified in surface geophysics and continue to assess the extents of the Ni-Cu (Co) mineralization intersected in the previous campaign, including targeting off-hole anomalies.

Drilling will commence with an initial RC program testing the new anomalies. This will be followed by a diamond drilling program deepening the RC holes that will target the geophysical anomalies generated from the last campaign and any encouraging geology arising from the RC campaign. The current strike extents of each prospect is unconstrained and down dip/plunge extensions remain to be tested. In order to drill the nickel prospective conductors, the drilling at Winx will have to pass through the vanadium-rich magnetite horizons that initially attracted explorers to the area.

In addition, an electromagnetic (EM) survey may be conducted over selected areas to evaluate potential new targets.

Ashburton Project

On August 8, 2018, the Company entered into an agreement to acquire a 100% interest in the Ashburton Project, located in Western Australia.

In consideration, the Company must make payments as follows:

• Issuing common shares of the Company upon completion with a volume weighted average price (“VWAP”) over a 30-day period of $750,000 (issued and valued at $514,594 based on the trading price at the date of issuance); and

• Issuing common shares of the Company with a VWAP over a 30-day period of $750,000 on October 9, 2019 (issued and valued at $175,000 based on the trading price at the date of issuance).

The Company also paid a $25,000 LOI fee to the vendor during the year ended August 31, 2018.

The Company recorded impairment charges in the amounts of $635,750 and $175,000 during the years ended August 31, 2019 and 2020, respectively. The Company retains ownership of the Ashburton Project.

Management Discussion and Analysis

For the Year Ended August 31, 2020

HUNTSMAN EXPLORATION INC.

On February 22, 2019, the Company announced initial sampling results at the Ashburton Project. The rock chip sampling results are included in the table below:

Sample	Easting	North	Co **ppm **	Cu **ppm **	Fe %	Mn %	Ni **ppm **	Zn **ppm **
CAPR042	434,478	7,412,365	4,214	935	15.28	11.978	546	569
CAPR024B	430,184	7,414,361	2,095	735	1.02	27.815	92	841
CAPR024A	30,184	414,361	1,333	452	2.42	20.72	61	516
CAPR0442	488,470	380,690	924	X	3.5	22.006	26	93
109682	480,684	386,325	646	385	38.6	5.5351	925	815
CAPR0437	480,925	385,865	467	139	5.37	4.1811	396	384
CAPR0461	513,000	7,365,230	247	35	43.2	0.4721	598	2428
109681	480,702	7,386,075	185	173	5.78	1.7243	47	57
109687	479,239	7,386,866	153	136	22.94	1.6214	256	304
109691	479,125	7,387,008	152	125	10.67	1.2949	135	158

The Company recorded impairment charges in the amounts of $635,750 and $175,000 during the years ended August 31, 2019 and 2020, respectively. The Company retains ownership of the Ashburton Project.

Atikwa Lake / Maybrun Properties

On February 4, 2016, the Company entered into an agreement to acquire a 100% undivided interest in 20 mineral claims located in Ontario. As consideration, the Company issued 37,500 common shares of the Company at a value of $60,000.

In March 2017, an additional five claims were acquired for $6,480.

On May 1, 2020, the Company entered into an agreement to dispose of the claims acquired in February 2016 and March 2017. In consideration, the Company received $50,000 in cash. The Company will also conditionally receive 200,000 common shares of a public company if the purchaser of the claims enters into an amalgamation, a reverse takeover, or similar transaction with a publicly-traded company. Since the receipt of the 200,000 common shares is conditional and uncertain, no receivable has been recorded. For the year ended August 31, 2020, the Company recorded a loss on sale of exploration and evaluation assets of $270,191 (2019 - $nil).

On April 7, 2017, the Company entered into an agreement to acquire a 100% interest in the Maybrun Property located in Ontario. As consideration, the Company issued 600,000 common shares at a value of $600,000 and paid $40,000 in cash.

The vendors retained a 2% NSR on the property. The Company has the option to purchase 1% of the 2% NSR (one-half) at a price of $1,000,000.

During the year ended August 31, 2019, the Company allowed the option title claims to lapse and recorded an impairment charge in the amount of $641,000.

Management Discussion and Analysis

For the Year Ended August 31, 2020

HUNTSMAN EXPLORATION INC.

Batt Property

On March 26, 2018, the Company entered into an option agreement with Strategic Metals Ltd. (“Strategic”) to acquire an 80% interest in the Batt Property, located in Yukon Territory. In consideration, the Company paid cash of $25,000 and issued 125,000 common shares of the Company valued at $67,500.

The Company must also incur exploration expenditures as follows:

• $50,000 on or before March 31, 2019 (incurred);

• An additional $150,000 on or before March 31, 2020; and

• An additional $300,000 on or before March 31, 2021.

Strategic retains a 1% NSR on the property. In the case the option agreement terms are met, a joint venture (“JV”) will be formed between the Company and Strategic. Should Strategic’s JV participation drop below 10%, the NSR will increase to 2%. At that time, the Company may repurchase 1% (one-half) of the NSR for $1,000,000, subject to further TSX-V approval.

During the year ended August 31, 2019, the Company did not have intentions to meet future exploration expenditure requirements and recorded an impairment charge in the amount of $162,786.

SELECTED ANNUAL INFORMATION

	August 31, 2020 $	August 31, 2019 $	August 31, 2018 $
Revenue	-	-	-
Net loss	(1,193,997)	(3,149,962)	(6,300,245)
Basic and diluted loss per common share	(0.04)	(0.13)	(0.44)
Total assets	2,814,731	2,605,316	2,836,018
Long-term debt	-	-	-
Dividends	-	-	-

SUMMARY OF QUARTERLY RESULTS ($000s, except loss per share)

For the Quarter Periods Ending on	August 31, 2020 $	May 31, 2020 $	February 29, 2020 $	November 30, 2019 $
Revenue	-	-	-	-
Net loss	(391)	(609)	(86)	(108)
Basic and diluted loss per common share	(0.02)	(0.02)	(0.00)	(0.00)
Total assets	2,814	2,732	2,640	2,603
Non-current financial liabilities	-	-	-	-

Management Discussion and Analysis

HUNTSMAN EXPLORATION INC.

For the Year Ended August 31, 2020

For the Quarter Periods Ending on	August 31, 2019 $	May 31, 2019 $	February 28, 2019 $	November 30, 2018 $
Revenue	-	-	-	-
Net loss	(1,601)	(383)	(744)	(422)
Basic and diluted loss per common share	(0.06)	(0.02)	(0.03)	(0.02)
Total assets	2,605	4,176	3,589	3,586
Non-current financial liabilities	-	-	-	-

OPERATIONS

Three Months Ended August 31, 2020

During the three months ended August 31, 2020, the Company reported a net loss of $391,407 (2019 - $1,601,950). Variations in expenses from the three months ended August 31, 2020 to the three months ended August 31, 2019 were as follows:

• Consulting fees of $158,593 (2019 - $85,059) increased as the Company utilized more consultants than in the comparative period;

• General exploration costs of $5,214 (2019 - $nil) were due to claim costs required to be paid by the Company on the Ashburton Property, which was impaired at the end of fiscal 2019;

• Management fees of $52,500 (2019 - recovery of $27,500) increased due to management charging fees again in the fourth quarter of 2020;

• Office and general of $17,477 (2019 - $16,582) was comparable to the comparative quarter;

• Professional fees of $65,777 (2019 - $52,819) were higher in the current period as a result of increased legal expenses;

• Rent of $9,000 (2019 - $9,000) was comparable to the comparative period;

• Shareholder communications and investor relations of $61,509 (2019 - $20,136) was the result of increased promotional activity for the Company in the current period;

• Transfer agent and filing fees of $21,333 (2019 - $3,469) increased due to the Company’s DTC eligibility filing costs for the OTC Markets in the US;

• Travel of $4 (2019 - $19,864) decreased as a result of limited travel for the current period; and

• Impairment of exploration and evaluation assets of $nil (2019 - $1,439,536) is the result of the Company writing off the Ashburton and Batt properties during the comparative period.

Year Ended August 31, 2020

During the year ended August 31, 2020, the Company reported a net loss of $1,193,997 (2019 - $3,149,962). Variations in expenses from the year ended August 31, 2020 to the year ended August 31, 2019 were as follows:

• Consulting fees of $179,487 (2019 - $465,836) decreased as the Company reduced the use of consultants and received credits in the current year;

• General exploration costs of $11,319 (2019 - $nil) were due to claim costs required to be paid by the Company on the Ashburton Property, which was impaired at the end of fiscal 2019;

• Management fees of $90,000 (2019 - $215,000) were lower due to no CFO fees charged for the first three quarters of 2020 and no CEO fees for the first two quarters of 2020;

• Office and general of $29,613 (2019 - $51,715) decreased due to credits issued for shared office expenses in the current year;

• Professional fees of $154,351 (2019 - $136,914) were higher in 2020 as a result of increased legal expenses;

• Rent of $36,000 (2019 - $33,000) was higher as the Company had a month rent-free in 2019;

Management Discussion and Analysis

HUNTSMAN EXPLORATION INC.

For the Year Ended August 31, 2020

• Share-based payments of $96,301 (2019 - $552,862) decreased due to a smaller number of options being granted in the current year at a lower fair value;

• Decrease in shareholder communications and investor relations of $117,255 (2019 - $167,909) was the result of decreased promotional activity for the Company in the current year;

• Transfer agent and filing fees of $33,078 (2019 - $20,512) increased as a result of the Company’s DTC eligibility filing costs for the OTC Markets in the US;

• Travel of $1,402 (2019 - $66,678) decreased as a result of limited travel for the current year;

• Impairment of exploration and evaluation assets of $175,000 (2019 - $1,439,536) is the result of the Company writing off an Ashburton property payment in the current year and the Ashburton and Batt properties during the prior year; and

• Loss on sale of exploration and evaluation assets of $270,191 (2019 - $nil) is the result of the sale of claims from the Atikwa Lake / Maybrun Properties during 2020.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s cash at August 31, 2020 was $42,653, compared to $18,507 at August 31, 2019. The working capital deficit was $1,197,279 (2019 - $946,524).

The Company has taken the following measures to address working capital concerns during the 2020 fiscal period and as of the date of this MD&A:

• On December 31, 2019, the Company closed a private placement and issued 745,454 units at a price of $0.11 per unit for gross proceeds of $82,000.

• On March 18, 2020, the Company closed a private placement and issued 5,000,000 common shares at a price of $0.10 per share for gross proceeds of $500,000.

• On October 19, 2020, the Company closed a private placement and issued 28,195,000 units at a price of $0.20 per unit for gross proceeds of $5,639,000.

The Company will need to raise additional financing in order to meet general working capital requirements for the 2021 fiscal year, and to make option payments and continue exploration on its mineral properties.

SUBSEQUENT EVENTS

See Liquidity and Capital Resources for private placements closed.

Subsequent to August 31, 2020, 154,545 warrants and 1,000 stock options were exercised for gross proceeds of $21,636 and $200, respectively.

OFF-BALANCE SHEET ARRANGEMENTS

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

Management Discussion and Analysis

For the Year Ended August 31, 2020

HUNTSMAN EXPLORATION INC.

TRANSACTIONS WITH RELATED PARTIES

These amounts of key management compensation are included in the amounts shown on the consolidated statements of comprehensive loss:

		2020		2019
Consulting fees	$	-	$	104,294
Geological	$	-	$	10,125
Management fees	$	90,000	$	215,000
Share-basedpayments	$	68,213	$	282,495

During the year ended August 31, 2020, the Company also paid or accrued:

• $36,000 (2019 - $33,000) in rent to a company with common officers and directors;

• $1,891 (2019 - $nil) to a private company for a director’s services;

• $nil (2019 - $80,000) in consulting fees to a private company controlled by a former officer; and

• $15,000 (2019 - $40,000) in office expenses to a private company controlled by a former officer.

As at August 31, 2020, included in accounts payable and accrued liabilities is $160,544 (2019 - $179,767) due to directors and officers of the Company, $110,250 (2019 - $96,886) due to a company controlled by a former officer, $10,500 (2019 - $15,750) due to a company with common officers and directors, and $156,715 (2019 - $42,000) due to former directors and officers. The amounts are unsecured, non-interestbearing and are due on demand.

As at August 31, 2020, included in loans payable is $75,000 (2019 - $nil) due to an officer and director and $125,000 (2019 - $125,000) due to a private company controlled by a former officer. The amounts are unsecured, non-interest-bearing and are due on demand.

COMMITMENTS

The Company is obligated to make certain payments and issue shares in connection with the acquisition of its exploration and evaluation assets.

SIGNIFICANT ACCOUNTING POLICIES

The Company adopted IFRS 16 Leases effective September 1, 2019. Refer to Note 4 – Significant Accounting Policies in the Company’s consolidated financial statements for the year ended August 31, 2020 for further details.

NEW ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE

Certain new standards, interpretations and amendments to existing standards have been issued by the IASB or the International Financial Reporting Interpretations Committee that are mandatory for accounting periods noted below. Some updates that are not applicable or are not consequential to the Company may have been excluded from the list below.

Management Discussion and Analysis

For the Year Ended August 31, 2020

HUNTSMAN EXPLORATION INC.

IFRS 3 Business Combinations

IFRS 3 has been amended to revise the definition of a business to include an input and a substantive process that together significantly contribute to the ability to create outputs. The amendment to IFRS 3 is effective for years beginning on or after January 1, 2020. The amendment to IFRS 3 is expected to have no impact for the Company.

International Accounting Standard (“IAS”) 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

IAS 1 and IAS 8 have been amended to use a consistent definition of materiality throughout IFRS and the Conceptual Framework for Financial Reporting; clarify the explanation of the definition of material; and incorporate guidance in IAS 1 regarding immaterial information. The amendments to IAS 1 and IAS 8 are effective for years beginning on or after January 1, 2020. These amendments are expected to have no impact for the Company.

CRITICAL ACCOUNTING POLICIES

Critical judgments in applying accounting policies

Information about critical judgments in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in the consolidated financial statements within the next financial year are discussed below.

Impairment of exploration and evaluation assets

The application of the Company’s accounting policy for exploration and evaluation expenditures and impairment of the capitalized expenditures requires judgment in determining whether it is likely that future economic benefits will flow to the Company, which may be based on assumptions about future events or circumstances. Estimates and assumptions made may change if new information becomes available. If, after an expenditure is capitalized, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalized is written off in profit or loss in the year the new information becomes available.

Title to mineral property interests

Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

Income taxes

Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Company recognizes liabilities and contingencies for anticipated tax audit issues based on the Company’s current understanding of the tax law. For matters where it is probable that an adjustment will be made, the Company records its best estimate of the tax liability, including the related interest and penalties in the current tax provision. Management believes they have adequately provided for the probable outcome of these matters; however, the final outcome may result in a materially different outcome than the amount included in the tax liabilities.

In addition, the Company recognizes deferred tax assets relating to tax losses carried forward to the extent that it is probable that taxable profit will be available against which a deductible temporary difference can

Management Discussion and Analysis

HUNTSMAN EXPLORATION INC.

For the Year Ended August 31, 2020

be utilized. This is deemed to be the case when there are sufficient taxable temporary differences relating to the same taxation authority and the same taxable entity that are expected to reverse in the same year as the expected reversal of the deductible temporary difference, or in years into which a tax loss arising from the deferred tax asset can be carried back or forward. However, utilization of the tax losses also depends on the ability of the taxable entity to satisfy certain tests at the time the losses are recouped.

Going concern risk assessment

The Company’s ability to continue its operations and to realize assets at their carrying values is dependent upon its ability to fund its existing acquisition and exploration commitments on its exploration and evaluation assets when they come due, which would cease to exist if the Company decides to terminate its commitments, and to cover its operating costs. The Company may be able to generate working capital to fund its operations by the sale of its exploration and evaluation assets or raising additional capital through equity markets. However, there is no assurance it will be able to raise funds in the future. The consolidated financial statements do not give effect to any adjustments required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the consolidated financial statements.

Key sources of estimation uncertainty

The following are key assumptions concerning the future and other key sources of estimation uncertainty that have a significant risk of resulting in material adjustments to the consolidated financial statements.

Decommissioning liabilities

Rehabilitation provisions have been created based on the Company’s internal estimates. Assumptions, based on the current economic environment, have been made, which management believes are a reasonable basis upon which to estimate the future liability. These estimates take into account any material changes to the assumptions that occur when reviewed regularly by management. Estimates are reviewed annually and are based on current regulatory requirements. Significant changes in estimates of contamination, restoration standards and techniques will result in changes to provisions from year to year. Actual rehabilitation costs will ultimately depend on future market prices for the rehabilitation costs that will reflect the market condition at the time the rehabilitation costs are actually incurred.

The final cost of the currently recognized rehabilitation provisions may be higher or lower than currently provided for. As at August 31, 2020, the Company has no known rehabilitation requirements, and accordingly, no provision has been made.

Fair value of stock options granted

The Company uses the Black-Scholes option pricing model to value the stock options granted during the year. The Black-Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The model requires management to make estimates that are subjective and may not be representative of actual results. Changes in assumptions can materially affect estimates of fair values.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The Company’s financial instruments include cash, amounts receivable, accounts payable and loans payable. Cash is classified as fair value through profit or loss. Amounts receivable is classified as measured at amortized cost. Accounts payable and loans payable are classified as measured at amortized cost. The carrying values of these instruments approximate their fair values due to the relatively short periods to maturity.

Management Discussion and Analysis

For the Year Ended August 31, 2020

HUNTSMAN EXPLORATION INC.

Financial risk management objectives and policies

The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. Management manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner.

Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The financial instrument that potentially subjects the Company to concentrations of credit risk consists principally of cash. To minimize the credit risk on cash, the Company places its cash with a major Canadian financial institution.

Liquidity risk

The Company manages liquidity risk by maintaining a balance between continuity of funding and flexibility through the use of borrowings. Management closely monitors the liquidity position and expects to have adequate sources of funding to finance the Company’s projects and operations. As at August 31, 2020, the Company had cash of $42,653 (2019 - $18,507) to settle accounts payable and accrued liabilities of $1,018,878 (2019 - $856,008) and loans payable of $262,300 (2019 - $125,000). The Company will be required to obtain additional financing to satisfy its liabilities. All of the liabilities presented as accounts payable are due within 30 days of the reporting date.

The maturity dates of the Company’s contractual obligations as at August 31, 2020, are as follows:

		Less Than			More Than	5
	Total	1 Year	1-5 years		Years
Accounts payable and
accrued liabilities	$ 1,018,880	$ 1,018,880	$	-	$	-
Loans payable	262,300	262,300		-		-
Total	$1,281,180	$1,281,180	$	-	$	-

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on capital.

• i) Currency risk – Currency risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. The Company has operations in Canada, USA and Australia, and incurs operating and exploration expenditures in all currencies. The fluctuation of the Canadian dollar in relation to the United States dollar and Australian dollar will have an impact upon the results of the Company. A fluctuation in the exchange rates between the Canadian and Australian dollars of 10% would result in a change to the Company’s cash of $200 and accounts payable and accrued liabilities of $200. A fluctuation in the exchange rates between the Canadian and Australian dollars of 10% would result in a change to the accounts payable and accrued liabilities of $3,400. The Company does not use any techniques to mitigate currency risk.

• ii) Interest rate risk – The Company is exposed to interest rate risk on the variable rate of interest earned on bank deposits. The fair value interest rate risk on bank deposits is insignificant, as the

Management Discussion and Analysis HUNTSMAN EXPLORATION INC.

For the Year Ended August 31, 2020

deposits are short-term. The Company has not entered into any derivative instruments to manage interest rate fluctuations. The Company has no interest-bearing financial liabilities.

iii) Other price risk – Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk. The Company does not have significant exposure to this risk.

SHARE CAPITAL

As at December 11, 2020, the Company had the following securities issued and outstanding:

	December 11,	August 31,	August 31,
	2020	2020	2019
Common shares	78,770,075	33,532,640	25,299,187
Warrants	31,468,858	533,472	5,068,667
Stock options	2,591,500	2,742,500	2,492,500
Fully diluted shares	112,830,433	36,808,612	32,860,354

RISKS

The Company, and the securities of the Company, should be considered a highly speculative investment. The following risk factors should be given special consideration when evaluating an investment in any of the Company's securities.

There are a number of outstanding securities and agreements pursuant to which common shares of the Company may be issued in the future. This will result in further dilution to the Company's shareholders.

The Company has a very limited history of operations, is in the early stage of development and has received no revenues other than insignificant interest revenues following its transition to a mineral exploration and development company. As such, the Company is subject to many risks common to such enterprises. There can be no assurance that the Company will be able to obtain adequate financing in the future or, if available, that the terms of such financing will be favourable. The Company does not anticipate paying any dividends in the near future.

Although the Company has taken steps to verify the title to mineral properties in which it has acquired an interest, no assurance whatsoever can be given that the Company’s interests may not be challenged by third parties. If challenged, and if the challenge is sustained, it will have an adverse effect on the business of the Company. Title to mineral properties may be subject to unregistered prior agreements or transfers and may also be affected by undetected defects or the rights of indigenous peoples.

Environmental legislation is becoming increasingly stringent and costs and expenses of regulatory compliance are increasing. The impact of new and future environmental legislation on the Company’s operations may cause additional expenses and restrictions. If the restrictions adversely affect the scope of exploration and development on the mineral properties, the potential for production on the properties may be diminished or negated.

The exploration of mineral properties involves significant risks, which even experience, knowledge and careful evaluation may not be able to avoid. The price of metals has fluctuated widely, particularly in recent years, as it is affected by numerous factors that are beyond the Company’s control, including international economic and political trends, expectations of inflation or deflation, currency exchange fluctuations, interest rate fluctuations, global or regional consumptive patterns, speculative activities and increased production due to new extraction methods. The effect of these factors on the price of metals, and therefore, the economic viability of the Company’s interests in the mineral properties cannot be accurately predicted.

Management Discussion and Analysis HUNTSMAN EXPLORATION INC.

For the Year Ended August 31, 2020

Furthermore, changing conditions in the financial markets and Canadian income tax legislation may have a direct impact on the Company’s ability to raise funds for exploration expenditures. A drop in the availability of equity financings will likely impede spending. As a result of all these significant risks, it is quite possible that the Company may lose its investments in the Company’s mineral property interests.

In early March 2020, there was a global outbreak of coronavirus (COVID-19) that has resulted in changes in global supply and demand of certain mineral and energy products. These changes, including a potential economic downturn and any potential resulting direct and indirect negative impact to the Company, cannot be determined, but they could have a prospective material impact to the Company’s project exploration activities, cash flows and liquidity.

The Company’s corporate offices were closed in March 2020 as a precaution. Safety protocols have been implemented, and the corporate offices have only re-opened in a limited capacity as of the date of this MD&A. The Company intends to commence exploration again in 2021, subject to any guidance from Australian state and federal governments. The Company continues to monitor the situation. To date, the Company has not applied for any assistance related to COVID-19 from the Canadian provincial or federal governments.

BOARD OF DIRECTORS

Certain directors of the Company are also directors, officers and/or shareholders of other companies that are similarly engaged in the business of acquiring, developing and exploring natural resource properties. Such associations may give rise to conflicts of interest from time to time. The directors of the Company are required to act in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project opportunity of the Company. If a conflict of interest arises at a meeting of the Board of Directors, any director in a conflict will disclose his/her interest and abstain from voting in the matter(s). In determining whether the Company will participate in any project or opportunity, the directors will primarily consider the degree of risk to which the Company may be exposed and its financial position at the time.

Current directors of the Company are as follows:

Peter Dickie, President, Chief Executive Officer and Director Nathan Tribble, Director Jeremy Ross, Director Neil McCallum, Director