Magma Silver Corp. — Management Reports 2020

Jun 15, 2020

BANKERS COBALT CORP.

MANAGEMENT DISCUSSION AND ANALYSIS Years Ended December 31, 2019 and 2018

TABLE OF CONTENTS

Page
1.DESCRIPTION OF BUSINESS	3.
2.OVERALL PERFORMANCE AND RESULTS OF OPERATIONS – MINERAL PROPERTIES	4.
3.SELECTED ANNUAL RESULTS	5.
4.LIQUIDITY AND CAPITAL RESOURCES – FINANCIAL CONDITION OF THE COMPANY	5.
5.RESULTS OF OPERATIONS	6.
6.SUMMARY OF QUARTERLY FINANCIAL INFORMATION	7.
7.TRANSACTIONS WITH RELATED PARTIES	8.
8.OFF BALANCE SHEET ARRANGEMENTS	8.
9.PROPOSED TRANSACTIONS	8.
10.CRITICAL ACCOUNTING ESTIMATES	8.
11.NEW ACCOUNTING STANDARDS	9.
12.RISKS RELATED TO THE COMPANY’S BUSINESS	9.
13.OTHER MD&A DISCLOSURE REQUIREMENTS	11.

This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes thereto for the years ended December 31, 2019 and 2018 (the “Financial Statements”), which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by IASB. All amounts in the financial statements and this discussion and analysis are presented in United States dollars, unless otherwise indicated. This Management Discussion and Analysis (“MD&A”) is dated June 15, 2020 and discloses specified information up to that date.

FORWARD LOOKING INFORMATION

This management discussion and analysis (“MD&A”) contains certain forward-looking statements and information relating to Bankers Cobalt Corp. (“Bankers” or the “Company”) that are based on the beliefs of its management as well as assumptions made by and information currently available to the Company. When used in this document, the words “anticipate”, “believe”, “estimate”, “expect” and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. This MD&A contains forward-looking statements relating to, among other things, regulatory compliance, the sufficiency of current working capital, the estimated cost and availability of funding for the continued exploration and development of the exploration projects in Democratic Republic of Congo (“DRC”) and Namibia as described below. Such statements reflect the current views of management with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements.

1. DESCRIPTION OF BUSINESS

On March 27, 2007, Bankers Cobalt Corp. (formerly Nomad Ventures Inc.), was incorporated pursuant to the provisions of the Business Corporations Act (British Columbia). The Company commenced trading on the TSX Venture Exchange (“TSX-V”) under the symbol NMD.V on February 17, 2010. On October 11, 2017, the Company changed its name to Bankers Cobalt Corp. and commenced trading on the TSX-V under the symbol BANC effective October 12, 2017.

On October 20, 2017, the Company acquired Katanga Cobalt Corp. (“Katanga”) pursuant to the terms of a previously executed amalgamation agreement between Bankers, Katanga and a subsidiary of Bankers (“Subco”), under which Subco amalgamated with Katanga. For accounting purposes this was considered a reverse takeover whereby Katanga was identified as the acquirer of Bankers.

The Company and its wholly owned subsidiaries, Bankers Cobalt Mining SASU (“Bankers DRC”) and Bankers Cobalt Mining (Namibia) (Proprietary) Limited (“Bankers Namibia”) are engaged in the acquisition, exploration and development of mineral resources. The primary goal was the acquisition and exploration of the varying interests held by Bankers DRC in 29 concessions. During 2018 the number of concessions was reduced to 10 concessions (the “DRC Concessions”) located in Katanga Province in the southern area of the DRC. The reduction in the number of concessions was instituted either based on cost saving or the completion of preliminary exploration and drilling with results received indicating a low potential of economically recoverable resources. The interests in the DRC Concessions are held by Bankers DRC, a private company incorporated pursuant to the laws of the DRC.

As at December 31, 2019, Bankers DRC owns or has an option to earn an interest in the DRC Concessions located in the Copper Belt in Katanga Province in the southern part of DRC. Bankers DRC has a 100% interest in six concessions known as the King Luba concessions (the “King Luba Concessions”). The King Luba Concessions are exploration permits (“PR”) and have the following permit numbers: PR13723, PR13724, PR13725, PR13726, PR13727, and PR13781.

Four of the remaining concessions are known as ZEA’s under DRC law and are the CMTC, Comipad, Comima and Karajipopo ZEAs. CMTC, Comipad and Comima are contiguous and jointly known as 292 (“292”) and Karajipopo is known as Karajipopo 1. Bankers DRC has a contractual agreement to share in 70% of the economics in any offtake of minerals produced from 292 and Karajipopo. 292 and Karajipopo can, by application, be converted to a Permis de Recherches (“PR”). The PR is an exploration permit. The conversion of a ZEA to a PR permit allows the holder to have

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a mineral interest in the PR and conduct commercial operations. The final concession is Nkwali (“Nkwali”), which was designated as ZRG00121 under DRC mining law. Nkwali is contiguous to 292. In November 2018, Comima with the assistance of Bankers DRC successfully converted 169 hectares of ZRG00121 to a new ZEA known as ZEA 889.

Bankers DRC exploration efforts to date were focused on Kabolela (PE9468), Kankutu (PR13370, PR13371, PR13372, PR13441) and 292. Reconnaissance work was completed on several of the remaining concessions. Exploration activities at Kabolela consisted of soil and rock chip sampling and approximately 2,399 meters of diamond drilling. The diamond drilling produced assay results containing high grade copper and cobalt. The soil and rock chip samples have produced anomalous copper and cobalt assay results. The Company decided in late 2018 to terminate the option on Kabolela as the results from exploration indicated a low potential of economically recoverable resources and recorded an impairment of $4,597,240 in the consolidated statement of loss and comprehensive loss for the year ended December 31, 2018. Exploration activities at 292 consisted of soil and rock chip sampling and trenching. Assay results of soil samples and rock chips have returned anomalous copper. Further trenching has been completed. RC drill targets have been established at 292 and drilling has been postponed until funds are available. The drilling program at Kankutu consisted of 2,045 meters of RC drilling and 2,474 meters of RAB drilling. Due to drill rig limitations the maximum depth drilled per hole was 80 meters. Minor amounts of copper mineralization were discovered. The host rock continues to depth and the geological speculation is the mineralization may be at a greater depth. In late 2018, the Company decided to terminate the Kankutu option due to the low potential of economically recoverable resources and as part of a cost saving process and recorded an impairment of $2,713,825 in the consolidated statement of loss and comprehensive loss for the year ended December 31, 2018.

The Company recorded a further impairment of $1,670,000 in the consolidated statement of loss and comprehensive loss for the year ended December 31, 2018 on a total of 21 additional concessions that were acquired or were in the process of due diligence prior to acquisition.

Bankers announced in late July 2018 that it has entered into an option agreement to acquire a 70% interest in a 135 sq km exploration permit in Namibia. A site visit was conducted to determine the exploration strategy. In addition, on November 26, 2018, the Company announced a two-year option agreement to acquire a 70% interest in an additional 943 km2 permit adjoining the recently acquired Kamanjab Project in Namibia. The Company terminated the two option agreements effective September 9, 2019 and recorded a total impairment of $61,056.

During the quarter ended December 31, 2019, due to the uncertainty surrounding the political climate in the Democratic Republic of Congo and in Namibia, management decided to record an impairment of $3,131,304 on the remaining value of the exploration and evaluation assets in the consolidated statement of loss and comprehensive loss for the year ended December 31, 2019.

On March 11, 2020, the novel coronavirus outbreak (“COVID-19”) outbreak was declared a pandemic by the World Health Organization. The situation is dynamic and the ultimate duration and magnitude of the impact on the economy and the Company’s business are not known at this time. These impacts could include an impact on the Company’s ability to obtain debt and equity financing to fund ongoing exploration activities as well as our ability to evaluate, explore and conduct business. These conditions result in significant uncertainties that may cast substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.

2. OVERALL PERFORMANCE AND RESULTS OF OPERATIONS

To best understand our financial results, it is important to gain an appreciation of the significant events, transactions and activities on mineral properties which occurred during and subsequent to the reporting period, and these are summarized below.

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In May 2019, the Company announced entering into a binding letter agreement with a private DRC company to acquire a 70% interest and act as operator for the M’Sesa tailings and waste rock project (the “M’Sesa Project”). Grant Dempsey, President and COO of the Company has significant operating experience on tailings projects in the DRC. The M’Sesa Project is located in the village of Kambove, in Katanga Province, DRC approximately 23 kms Northwest of the town of Likasi. The Company terminated the letter agreement during the current year as the project did not pass the due diligence review process.

During the quarter ended December 31, 2019, due to the uncertainty surrounding the political climate in the Democratic Republic of Congo and in Namibia, management decided to record an impairment of $2,894,641 on the remaining value of the exploration and evaluation assets in the consolidated statement of loss and comprehensive loss for the year ended December 31, 2019.

Previously completed Management Discussion and Analysis documents covering comments for earlier periods have been prepared and filed accordingly on www.sedar.com.

Share consolidation

Subsequent to the year ended December 31, 2019, the Company consolidated its common shares on the basis of 1 new share for every 10 old shares (the “Consolidation”). All references herein to the number of shares, options, warrants, weighted average number of common shares and loss per share have been restated for the Consolidation.

3. SELECTED ANNUAL RESULTS

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4. LIQUIDITY AND CAPITAL RESOURCES – FINANCIAL CONDITION OF THE COMPANY

As at December 31, 2019, the Company had current assets of $8,312 and current liabilities of $2,765,701. There is a working capital deficiency of $2,757,389 at December 31, 2019.

The financial information presented in this MD&A is based on consolidated financial statements that have been prepared on the basis of accounting principles applicable to a “going concern”, which assumes that the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. The Company has not generated any revenues or cash flows from operations to date. The Company expects that it will require additional debt or equity funding in the next 12 months in order to continue its planned exploration and evaluation activities and meet its business objectives. The Company plans to raise the necessary funds primarily through issuance of shares. The Company’s ability to continue on a going concern basis is therefore dependent on its ability to successfully raise additional funds. Although the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms acceptable to the Company. Furthermore, subsequent to December 31, 2019, the COVID-19 outbreak was declared a pandemic by the World Health Organization. The situation is dynamic and the ultimate duration and magnitude of the impact on the economy and the Company’s business are not known at this time. These impacts could include an impact on the Company’s ability to obtain debt

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and equity financing to fund ongoing exploration and evaluation activities as well as our ability to explore and conduct business. These conditions result in significant uncertainties that may cast substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.

On July 29, 2019, the Company settled aggregate debt of $165,906 through the issuance of 448,185 common shares with a fair value of $85,148 and recorded a gain on settlement of debt of $80,758.

On August 8, 2019, the Company issued 150,000 common shares with a fair value of $39,602 as incentive share grants to two insiders pursuant to agreed contractual arrangements. This cost is included in management and consulting fees in the consolidated statements of loss and comprehensive loss.

5. RESULTS OF OPERATIONS

The information for the three months and years ended December 31, 2019 and 2018 is based on the consolidated financial statements:

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THREE MONTHS ENDED DECEMBER 31, 2019 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2018

For the quarter ended December 31, 2019, the net loss was $3,671,378 compared to a net loss of $9,298,650 recorded during the same period in 2018. Material variances from the prior year period are as follows:

• No consulting fees were paid during the period so there was an increase in management and consulting fees of $419,931 due to management’s accruals in the current period;

• A decrease in professional fees of $25,073 in the current quarter related to a decrease in activity;

• A decrease in travel and accommodation of $71,886 due to management’s decision to preserve cash in the current quarter;

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• A decrease in the impairment of exploration and evaluation assets of $6,157,074. Due to the uncertainty surrounding the political climate in the Democratic Republic of Congo and in Namibia, management decided to record an impairment of $2,833,585 on the remaining value of the exploration and evaluation assets in the quarter ended December 31, 2019. In the quarter ended December 31, 2018, the impairment was $8,990,659;

• A GST recovery of $29,860 compared to a GST write off of $41,139 recorded in the quarter ended December 31, 2018. In the quarter ended December 31, 2018, management recorded an allowance against the amount of GST recoverable due to the uncertainty of collection.

YEAR ENDED DECEMBER 31, 2019 COMPARED TO YEAR ENDED DECEMBER 31, 2018

For the year ended December 31, 2019, the net loss was $4,134,088 compared to $11,127,199 recorded during 2018, a decrease of $6,993,111. Material variances from the prior year are as follows:

• During the year ended December 31, 2019, the Company settled aggregate debt of $165,906 through the issuance of 4,481,850 common shares with a fair value of $85,148 (CAD$112,046) and recorded a gain on settlement of debt of $80,758 compared to a gain on settlement of debt of $31,595 recorded in 2018;

• During the year ended December 31, 2019, the Company entered into debt cancellation and settlement agreements with various parties whereby trade payables and accrued liabilities of $277,035 were forgiven;

• A decrease in filing fees of $57,978. Filing fees for 2018 were incurred in relation to listing the Company on the OTCQB;

• A decrease in investor relations costs of $319,843 as there were minimal investor relations activities. Costs for 2018 were incurred to raise the profile of the Company in the investing community;

• An increase in management and consulting fees of $49,219 due to the fees not meeting the required criteria to capitalize various management costs;

• A decrease in professional fees of $176,888. Costs for 2018 were related to drafting new consulting agreements, preparation of the Company’s first information circular, drafting of a stock option plan as well as setting up new accounting systems, policies and procedures in the DRC. Higher fees were also incurred in 2018 in relation to the year end financial statements and audit due to the complexity of the reverse takeover transaction.

• A decrease in travel and accommodation of $217,610 due to management’s decision to preserve cash in the current year;

• A decrease in the impairment of exploration and evaluation assets of $6,096,018. Due to the uncertainty surrounding the political climate in the Democratic Republic of Congo and in Namibia, management decided to record an impairment of $2,894,641 on the remaining value of the exploration and evaluation assets in the consolidated statement of loss and comprehensive loss for the year ended December 31, 2019;

• A GST recovery of $29,860 compared to a GST write off of $41,139 recorded in the year ended December 31, 2018. In the year ended December 31, 2018, management recorded an allowance against the amount of GST recoverable due to the uncertainty of collection.

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6. SUMMARY OF QUARTERLY FINANCIAL INFORMATION

The following Information is derived from unaudited interim financial statements:

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7. TRANSACTIONS WITH RELATED PARTIES

Related party transactions for the years ended December 31, 2019 and 2018 are as follows:

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Included in trade payables and accrued liabilities at December 31, 2019 is $823,277 (December 31, 2018 - $184,862) due to related parties. Amounts due to related parties are non-interest bearing, unsecured and due on demand.

On August 8, 2019, the Company issued 150,000 common shares with a fair value of $39,602 as incentive share grants to two insiders pursuant to agreed contractual arrangements. This cost is included in management and consulting fees in the consolidated statements of loss and comprehensive loss.

8. OFF BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

9. PROPOSED TRANSACTIONS

As of the date of this document, there are no proposed transactions approved by the Board of Directors.

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10. CRITICAL ACCOUNTING ESTIMATES

The preparation of consolidated financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported revenues and expenses during this year.

Although management uses historical experience and its best knowledge of the amount, events or actions to form the basis for judgments and estimates, actual results may differ from these estimates.

Critical judgments exercised in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are as follows:

i) Going concern - The Company’s assessment of its ability to continue as a going concern requires significant judgments about whether there are material uncertainties that may cast significant doubt about the Company’s ability to continue as a going concern. The Company must determine whether sufficient financing will be obtained in the near term.

ii) Economic recoverability and probability of future benefits of the advances for exploration and evaluation costs. During the year ended December 31, 2019, due to the uncertainty surrounding the political climate in the Democratic Republic of Congo, management decided to record an impairment of $2,894,641 on the remaining value of the exploration and evaluation assets in the consolidated statement of loss and comprehensive loss.

11. NEW ACCOUNTING STANDARDS

IFRS 16 - Leases

On January 1, 2019, the Company adopted the new accounting standard, IFRS 16. IFRS 16 requires all leases, including financing and operating leases, to be reported on a company’s balance sheet. The adoption of IFRS 16 had no impact on the Company’s financial statements as the Company has no leases.

12. RISKS RELATED TO THE COMPANY’S BUSINESS

Resource exploration is a speculative business and involves a high degree of risk. There is a probability that the expenditures made by the Company in exploring its properties will not result in discoveries of commercial quantities of minerals. A high level of ongoing expenditures is required to locate and estimate ore reserves, which are the basis to further the development of a property. Capital expenditures to support the commercial production stage are also very substantial.

The following sets out the principal risks faced by the Company.

COVID 19. The Company’s business could be significantly adversely affected by the effects of any widespread global outbreak of contagious diseases. A significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downtown that could affect demand for the Company’s products and likely impact operating results. In particular, the recent outbreak of COVID-19 has had a negative impact on global financial conditions. The Company cannot accurately predict the impact COVID-19 will have on the Company’s business, including its ability to obtain financing or third parties’ ability to meet their obligations to the Company, as well as due to uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected countries. Financing risks . Exploration and development of mineral deposits is an expensive process, and frequently the greater the level of interim stage success the more expensive it can become. As at December 31, 2019, the Company had not yet achieved profitable operations. During the year ended December 31, 2019, the Company incurred a net loss of $4,134,088 (2018 - $11,127,199), a cash outflow from operating activities of $29,242 (2018 - $1,017,916) and, as of December 31, 2019, the Company had a working capital (current assets minus current liabilities) deficiency of $2,757,389 (2018 – $1,998,274).

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The Company has no producing properties and generates no operating revenues; therefore, for the foreseeable future, it will be dependent upon selling equity in the capital markets to provide financing for its continuing substantial exploration budgets. While the Company has been successful in obtaining financing from the capital markets for its projects in recent years, there can be no assurance that the capital markets will remain favourable in the future, and/or that the Company will be able to raise the financing needed to continue its exploration programs on favourable terms, or at all. Restrictions on the Company’s ability to finance could have a material adverse outcome on the Company and its securities.

Exploration risk . There can be no assurance that economic concentrations of minerals will be determined to exist on the Company’s property holdings within existing investors’ investment horizons or at all. The failure to establish such economic concentrations could have a material adverse outcome on the Company and its securities. The Company’s planned programs and budgets for exploration work are subject to revision at any time to take into account results to date. The revision, reduction or curtailment of exploration programs and budgets could have a material adverse outcome on the Company and its securities.

Market risks . The Company’s securities trade on public markets and the trading value thereof is determined by the evaluations, perceptions and sentiments of both individual investors and the investment community taken as a whole. Such evaluations, perceptions and sentiments are subject to change, both in short term time horizons and longer-term time horizons. An adverse change in investor evaluations, perceptions and sentiments could have a material adverse outcome on the Company and its securities.

Commodity price risks . The Company’s exploration projects seek copper and cobalt in the DRC. While each of these minerals have recently been the subject of significant price increases from levels prevalent earlier in the decade, there can be no assurance that such price levels will continue, or that investors’ evaluations, perceptions, beliefs and sentiments will continue to favour these target commodities. An adverse change in these commodities’ prices, or in investors’ beliefs about trends in those prices, could have a material adverse outcome on the Company and its securities.

Share Price Volatility and Price Fluctuations . In recent years, the securities markets in Canada have experienced a high level of price and volume volatility, and the market prices of securities of many companies, particularly junior mineral exploration companies like the Company, have experienced wide fluctuations which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. There can be no assurance that these price fluctuations and volatility will not continue to occur.

Currency risks. The Company’s exploration expenditures are predominately in US dollars and equity raised is predominately in Canadian dollars. The financial risk is the risk to the Company's operations that arises from fluctuations in foreign exchange rates and the degree of volatility of these rates. The Company is subject to fluctuations in foreign currency exchange rates and currently does not use derivative instruments to reduce its exposure to foreign currency risk.

Key personnel risks . The Company’s exploration efforts are dependent to a large degree on the skills and experience of certain of its key personnel. The Company does not maintain “key man” insurance policies on these individuals. Should the availability of these persons’ skills and experience be in any way reduced or curtailed, this could have a material adverse outcome on the Company and its securities.

Competition . Significant and increasing competition exists for the limited number of mineral property acquisition opportunities available. As a result of this competition, some of which is with large established mining companies with substantial capabilities and greater financial and technical resources than the Company, the Company may be unable to acquire additional attractive mineral properties on terms it considers acceptable.

Cyber Security Risks. As the Corporation continues to increase its dependence on information technologies to conduct its operations, the risks associated with cyber security also increase. The Corporation relies on management information systems and computer control systems. Business and supply chain disruptions, plant and utility outages and information technology system and network disruptions due to cyber-attacks could seriously harm its operations and materially adversely affect its operation results, Cyber security risks include attacks on information technology and infrastructure by hackers, damage or loss of information due to viruses, the unintended disclosure of confidential information, the issue or loss of control over computer control systems, and breaches due to employee

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error. The Corporation’s exposure to cyber security risks includes exposure through third parties on whose systems it places significant reliance for the conduct of its business. The Corporation has implemented security procedures and measures in order to protect its systems and information from being vulnerable to cyber-attacks. The Corporation believes these measures and procedures are appropriate. To date, it has not experienced any material impact from cyber security events. However, it may not have the resources or technical sophistication to anticipate, prevent, or recover from rapidly evolving types of cyber-attacks. Compromises to its information and control systems could have severe financial and other business implications

Foreign Countries and Regulatory Requirements . Currently, the Company’s principal properties are located in the DRC and in Namibia. Consequently, the Company is subject to certain risks associated with foreign ownership, including currency fluctuations, inflation, and political risk. Both mineral exploration and mining activities and production activities in foreign countries may be affected in varying degrees by political stability and government regulations relating to the mining industry. Any changes in regulations or shifts in political conditions are beyond the control of the Company and may adversely affect its business. Operations may be affected in varying degrees by government regulations with respect to community rights, restrictions on production, price controls, export controls, restriction of earnings, taxation laws, expropriation of property, environmental legislation, water use, labour standards and workplace safety. The Company maintains the majority of its funds in Canada and only forwards sufficient funds to meet current obligations.

Environmental and Other Regulatory Requirements . The current or future operations of the Company, including development activities and commencement of production on its properties, require permits from various governmental authorities and such operations are and will be subject to laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, safety and other matters. Companies engaged in the development and operation of mines and related facilities generally experience increased costs, and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. There can be no assurance that approvals and permits required to commence production on its properties will be obtained on a timely basis, or at all. Additional permits and studies, which may include environmental impact studies conducted before permits can be obtained, may be necessary prior to operation of the properties in which the Company has interests and there can be no assurance that the Company will be able to obtain or maintain all necessary permits that may be required to commence construction, development or operation of mining facilities at these properties on terms which enable operations to be conducted at economically justifiable costs.

Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions there under, 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 or extraction operations may be required to compensate those suffering loss or damage by reason of such 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 Company and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or abandonment or delays in development of new mineral exploration properties.

To the best of the Company's knowledge, it is currently operating in compliance with all applicable environmental regulations.

History of Net Losses; Accumulated Deficit; Lack of Revenue from Operations . The Company has incurred net losses to date. Its deficit as of December 31, 2019 was $24,421,866. Even if the Company commences development of certain of its properties, the Company may continue to incur losses. There is no certainty that the Company will produce revenue, operate profitably or provide a return on investment in the future.

Uninsurable risks . The Company and its subsidiaries may become subject to liability for pollution, fire, explosion, against which it cannot insure or against which it may elect not to insure. Such events could result in substantial

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damage to property and personal injury. The payment of any such liabilities may have a material, adverse effect on the Company's financial position.

13. OTHER MD&A DISCLOSURE REQUIREMENTS

Information available on SEDAR

As specified by National Instrument 51-102, Bankers advises readers of this MD&A that important additional information about the Company is available on the SEDAR website http://www.sedar.com/

Outstanding Share Data

As at June 15, 2020, the Company had 11,587,466 common shares outstanding. As at the same date there were 1,396,001 warrants outstanding at exercise prices ranging from $1.00 to $10.00 per share and 623,750 stock options outstanding at an exercise prices ranging from $0.50 to $6.60 per share.

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Vancouver, British Columbia June 15, 2020

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain of the statements made and information contained herein is “forward-looking information” within the meaning of the British Columbia Securities Act. These statements relate to future events or the Company’s future performance. All statements, other than statements of historical fact, may be forward-looking statements. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “anticipates”, “plans”, “budget”, “scheduled”, “continue”, “estimates”, “forecasts”, “expect”, “is expected”, “project”, “propose”, “potential”, “targeting”, “intends”, “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might”, or “will be taken”, “occur” or “be achieved” or the negative connotation thereof. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forwardlooking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this MD&A should not be unduly relied upon by readers, as actual results may vary. These statements speak only as of the date of this MD&A and are expressly qualified, in their entirety, by this cautionary statement. In particular, this MD&A contains forward-looking statements, pertaining to the following: capital expenditure programs, development of resources, treatment under governmental and taxation regimes, expectations regarding the Company’s ability to raise capital, expenditures to be made by the Company on its properties and work plans to be conducted.

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With respect to forward-looking statements listed above and contained in the MD&A, the Company has made assumptions regarding, among other things:

• uncertainties relating to receiving or maintaining mining, exploration and other permits in the DRC & in Namibia;

• impact related to potential business disruptions stemming from the COVID-19 outbreak, or another infectious illness;

• unpredictable changes to the market prices for copper, cobalt and other commodities;

• exploration and developments costs for properties in the DRC and in Namibia;

• availability of additional financing and farm-in or joint-venture partners;

• anticipated results of exploration and development activities;

• the Company’s ability to obtain additional financing on satisfactory terms or at all.

The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below in this MD&A: volatility in the market price for minerals; uncertainties associated with estimating resources; geological, technical, drilling and processing problems; liabilities and risks, including environmental liabilities and risks, inherent in mining operations; fluctuations in currencies and interest rates; incorrect assessments of the value of acquisitions; unanticipated results of exploration activities; competition for, amongst other things, capital, undeveloped lands and skilled personnel; lack of availability of additional financing and farm-in or joint venture partners and unpredictable weather conditions. Although the Company has attempted to identify important factors that could cause results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Readers are cautioned that the foregoing lists of factors are not exhaustive. Forward looking statements are made as of the date hereof and accordingly are subject to change after such date. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement. The Company does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.

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