Metalero Mining Corp. — Management Reports 2021

Mar 2, 2021

Cortus Metals Inc. Management Discussion and Analysis For the ten month period ended October 31, 2020 and the twelve month period ended December 31, 2019

This Management’s Discussion and Analysis (“MD&A”) supplements, but does not form part of, the consolidated financial statements of Cortus Metals Inc. (“Cortus”or the “Company”) and the notes thereto ten month period ended October 31, 2020 and the twelve month period ended December 31, 2019 (the “Financial Statements”). Consequently, the following discussion and analysis of the results of operations and financial condition for Cortus Metals Inc., should be read in conjunction with the Financial Statements which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). All amounts are stated in Canadian dollars unless otherwise indicated. The reader should be aware that historical results are not necessarily indicative of future performance. This MD&A has been prepared based on information known to management as of February 28, 2021.

General

This MD&A was reviewed by the Audit Committee and approved and authorized for issue by the Board of Directors on February 28, 2021.

The Company’s critical accounting estimates, significant accounting policies and risk factors have remained substantially unchanged and are still applicable to the Company unless otherwise indicated. All amounts are expressed in Canadian dollars unless noted otherwise.

Additional information relating to the Company, including regulatory filings, can be found on the SEDAR website at www.sedar.com.

Forward-Looking Statements

Certain statements contained in this MD&A may constitute forward-looking statements. These forward-looking statements can generally be identified as such because of the context of the statements, including such words as “believes”, “anticipates”, “expects”, “plans”, “may”, “estimates”, or words of a similar nature. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from anticipated future results and/or achievements expressed or implied by such forward-looking statements, which speak only as of the date the statements were made. Readers are therefore advised to consider the risks associated with any such forward-looking statements, which speak only as of the date the statements were made, and readers are advised to consider such forward-looking statements in light of the risks set forth herein.

Description of Business and Overview

Cortus Metals Inc. (the “Company”) was incorporated under the Business Corporations Act (British Columbia) on June 25, 2018 and as a Capital Pool Company under the policies of the TSX Venture Exchange (the “Exchange”).

The head office and records of the Company are located at 10545-45 Avenue NW, 250 South Ridge, Edmonton, Alberta, T6H 4M9.

On November 5, 2019, the Company completed its initial public offering (“IPO”) of 4,400,000 common shares of the Company at a price of $0.05 per share for aggregate gross proceeds of $220,000. The common shares of the Company were listed on the TSX Venture Exchange (“TSXV”) as a Capital Pool Company (“CPC”) under the trading symbol “CRTS.P”.

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Cortus Metals Inc. Management Discussion and Analysis For the ten month period ended October 31, 2020 and the twelve month period ended December 31, 2019

Until August 28, 2020, the principal business of the Company was the identification and evaluation of assets or businesses with a view to completing a “Qualifying Transaction” as it is defined in the policies of the Exchange.

During the ten months ended October 31, 2020 the Company executed a definitive purchase agreement (the “Agreement”) to acquire an aggregate 100% interest in and to the Grayson and Powerline properties located in Nevada, USA from Intermont Resources LLC (“Intermont”). The transaction constitutes the Company’s Qualifying Transaction as defined in Policy 2.4 of the Corporate Finance Manual of the TSXV, as a result, the Company is now listed under the trading symbol “CRTS”.

Pursuant to the Agreement, Cortus acquired a 100% interest in the Properties by paying:

• i. cash payments of US $304,400 in aggregate, of which US $19,400 was paid as a non-refundable deposit and US $105,000 was advanced as a secured loan to Intermont (now forgiven as a result of the Agreement) and a remaining cash payment of US $150,000 paid on the closing date;

• ii. the issuance of 1,000,000 common shares in the capital of the Company, issued at a deemed value of $200,000;

• iii. the grant of a 2.0% net smelter returns royalty on each property (the “Royalty”), with a buy out provisions for each of USD $1,500,000 for 1.0%.

Cortus was also granted the right to acquire additional properties held by Intermont within a defined area of interest for a period of twenty-four (24) months for consideration of 200,000 common shares of the Company per additional property acquired.

Concurrent with the execution of the Agreement, the Company has entered into a definitive two-year agreement with Intermont whereby it has the option to acquire 100% of Intermont’s common shares in consideration for the issuance of 6,000,000 common shares, less any shares issued by the Company to acquire additional properties.

On August 25, 2020, the Company’s common shares were split on the basis of two (2) new shares for each one (1) old share (the "Split") applicable to shareholders of record as of the close of business on August 21, 2020 (the "Record Date"). All current and historical references to the Company’s common share, warrant, and option amounts have been updated throughout these consolidated financial statements.

Immediately prior to the completion of the Transaction, the Company completed a non-brokered financing (the “Financing”) raising gross proceeds of $2,562,500.70 through the sale of 17,083,338 units at a price of $0.15 per unit (each a “Unit”). Each Unit comprised one post-split common share and one share purchase warrant (each a “Warrant”) to acquire a further post-split common share at a price of $0.20 per share until August 26, 2022. The Warrants are subject to an accelerated expiry provision such that if the closing price of the Company's common shares is equal to or greater than $0.25 for a period of five consecutive trading days (at any time at or following the expiry of the four months resale restriction period), the Company may, by notice to the warrant holder in writing or via press release reduce the remaining exercise period applicable to the Warrants to not less than 30 days from the date of such notice.

Aggregate finder’s fees of $91,472.99 in cash and 609,818 in finder’s warrants, bearing the same terms as the Warrants, were paid to registered dealers in connection with the Financing.

The proceeds from the Financing will be used primarily for exploration and development costs on the Properties, for general working capital and administrative expenses and to pay the expenses of the Transaction. The securities issued pursuant to the Financing bear a four month hold period expiring on December 27, 2020.

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Cortus Metals Inc. Management Discussion and Analysis For the ten month period ended October 31, 2020 and the twelve month period ended December 31, 2019

On September 17, 2020, the Company entered into a purchase option agreement with Fremont Gold Ltd. (“Fremont”) to acquire 100% interest in 114 unpatented mining claims that are held by Fremont’s wholly-owned subsidiary and a 50% interest in 95 claims that Fremont’s wholly-owned subsidiary owns jointly with a third-party, collectively known as the Goldrun property, located in Nevada, USA. To complete the option, the Company paid $20,000 in cash during the year and is required to issue 250,000 common shares (issued on December 18, 2020).

Company Results and Outlook- Mineral Exploration Projects

Cortus has a portfolio of highly prospective exploration projects in Nevada, USA. Cortus has diligently compiled data, evaluated the project portfolio, secured mineral tenure, and conducted field work, including ground magnetic surveys, gravity surveys, and soil sampling. The results of this work will be announced in due course as drill targets delineated and projects are prioritized based on structural and geophysical interpretations, investigation of geochemical and geobotanical surface anomalies, and stratigraphic analysis of potential host rocks. The projects in the portfolio range in stages from greenfields to drill-ready, with the most advanced being fully permitted and bonded.

Recent exploration activities

Highlights

• Evaluated and prioritized the portfolio of 23 project areas in north-central Nevada.

• Staked, registered and dropped claims to bring mineral interests to >40,000 ha at 18 projects.

• Acquired historical geophysical data and 257 additional claims at the Goldrun property.

• Collected 1,235 soil samples from 74 line-kilometers of grids over 27 km2 at two project areas.

• Submitted 628 soil samples from two project areas, awaiting lab results.

• Acquired historical geophysical data Goldrun property.

• Ground geophysics, soil sampling, fault interpretation, alteration mapping, target delineation.

Summary of financial results

Selected Annual Financial Information

Years ended	October 31, 2020 $	December 31, 2019 $
Total assets($)	2,693,740	231,613
Mineralproperties($)	1,117,193	25,040
Current liabilities($)	337,718	17,254
Net loss($)	608,638	104,496
Weighted average shares	13,559,563	2,848,219
Basic and diluted net lossper common share($)	0.04	0.04

Summary of Quarterly Results

Selected financial data published for operations of the Company during the last quarters are as follows:

1/3 months ended (in Dollars)	Oct 2020	Sep 2020	Jun 2020	Mar 2020	Dec 2019	Sep 2019	Jun 2019	Mar 2019
Net loss	(109,762)	632,919	83,724	1,757	79,756	449	2,227	22,064
Basic and Diluted net lossper share	0.04	0.04	0.02	0.00	0.00	0.00	0.00	0.01
Total Assets	2,693,740	2,588,045	225,987	231,536	231,613	106,643	107,092	112,123
Total Liabilities	337,718	168,827	97,109	18,934	17,254	2,000	2,000	5,000

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Cortus Metals Inc. Management Discussion and Analysis For the ten month period ended October 31, 2020 and the twelve month period ended December 31, 2019

Operating Results, Financial Condition and Liquidity

Financial Condition

At October 31, 2020, the Company had current assets of $1,576,547 (December 31, 2019 - $188,898), current liabilities were $337,718 (December 31, 2019 - $17,254) and working capital of $1,238,829 (December 31, 2019 – $171,644). At the date of this MD&A, the company had working capital of approximately $330,000.

Operating Results

Cortus is an established asset generator operating in north-central Nevada, a perennially top-ranked mining jurisdiction. The Company’s mandate is to provide early-stage investors with access to windfall through its portfolio of highly prospective exploration projects. Each project is evaluated and advanced based on criteria designed to identify significant potential for discovery of a major epithermal or Carlin-type gold and silver deposit of more than 1 million ounces beneath shallow cover. The status of the projects ranges from grassroots to drill-ready, with the most advanced being fully permitted and bonded. The majority of them are located near operating mines or known deposits, generally on the same host structures. Two-thirds of them are within the prolific Carlin, Cortez, Battle Mountain/Eureka, Getchell and Long Canyon trends, while one-third are within the underexplored and faultcontrolled Lahontan basin.

Cortus is continuously expanding and adding value to its portfolio with proprietary data, innovative methodologies, expert management, and a combination of in-house and third-party exploration. Its projects are being prioritized systematically for drilling based on extensive structural and geophysical interpretations, investigation of geochemical and geobotanical surface anomalies, and stratigraphic analysis of potential host rocks. During the ten month period ended October 31, 2020, and subsequently, Cortus has focused on securing tenure and executing field programs, including soil sampling, magnetic surveys and gravity surveys, which remain in progress.

Results of Operations for the Year Ended October 31, 2020

The Company did not generate revenue for the ten month ended October 31, 2020 and expenses incurred include office and administration of $29,864 (December 31, 2019 – $1,471), management fee paid to key executives of $41,104 (December 31, 2019 - $nil), professional fees including legal and accounting expenses of $146,324 (December 31, 2019 - $27,703), project evaluation fees of $29,204 (December 31, 2019 – $nil) and regulatory and filing fees of $38,592 (December 31, 2019 - $23,330) The Company also incurred advertising and promotion expenses of $235,266 (December 31, 2019 – $nil) and share-based compensation of $93,273 (December 31, 2019 -$26,400). In the comparative period the Company also recorded initial listing fee expenses of $25,592.

Partially offsetting expenses, the Company received interest income of $4,809 (December 31, 2019 – $nil) of interest from cash deposited at its financial institution.

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Cortus Metals Inc. Management Discussion and Analysis For the ten month period ended October 31, 2020 and the twelve month period ended December 31, 2019

Capital Resource and Liquidity

At October 31, 2020, cash was $1,469,539 (December 31, 2019 - $181,357).

During the ten month period ended October 31, 2020, the net cash flows used in operating activities was $276,693 (December 31, 2019 - $71,058), which comprises of net loss for the period of $608,638 (December 31, 2019 - $104,496), an increase of GST receivable of $24,107 (December 31, 2019 - $23,216), an increase of prepayments and deposits, and accounts receivable of $57,685 (decrease in December 31, 2019 - $13,000) and an increase in accounts payable and accrued liabilities of $320,464 (December 31, 2019 - $17,254).

During the ten month period ended October 31, 2020, the net cash flows used by investing activities were $892,153 (December 31, 2019 – 25,040) for costs of the Qualifying Transaction and exploration activities.

During the ten month period ended October 31, 2020, the net cash flows provided by financing activity was 2,457,028 (December 31, 2019 - $183,268) as net proceeds of the concurrent financing.

As of the date of this MD&A, the Company has no outstanding commitments. The Company has not pledged any of its assets as security for loans, or otherwise and is not subject to any debt covenants. Management has evaluated that the Company will be required to raise additional equity capital or other borrowings to be able to pay its liabilities and finance operating costs.

To date, the Company has not generated revenues. Continued operations of the Company are dependent on the receipt of related party debt or equity financing on terms which are acceptable to the Company.

Outstanding Share Data

Cortus is authorized to issue an unlimited Class number of common shares without par value. As at the close of trading on March 1, 2021, the following common shares and warrants were outstanding:

Common shares issued	27,737,278
Options outstanding	880,000 @ $0.05 to November 4, 2024 1,680,000 @ $0.15 to August 26, 2025 238,500 @ $0.15 to January28,2026
Warrants outstanding	132,726 @ $0.05 to November 4, 2021 17,050,004 @ $0.20 to August 26, 2022 609,818 @ $0.20 to August 26,2022
Fullydiluted	48,328,326

As at October 31, 2020, and the MD&A date, 5,040,000 common shares are held in escrow.

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Cortus Metals Inc. Management Discussion and Analysis For the ten month period ended October 31, 2020 and the twelve month period ended December 31, 2019

Related Party Transaction

Unless otherwise noted, related party transactions were incurred in the normal course of operations and are measured at the amount established and agreed upon by the related parties. The Company incurred and paid fees to directors and officers for management and professional services as follows:

For the year(*) ended Management fees paid to key management and directors Share-based payments	October 31 December 31 2020 2019 $ 57,304 $ - 93,273 26,400
	$ 150,577 $ 26,400

During the year ended October 31, 2020, the Company recorded share-based compensation expense of $93,273 in relation to 1,680,000 stock options issued to directors and officers of the Company.

Key management compensation

Key management includes directors and key officers of the Company Chief Executive Officer and Chief Financial Officer. The remuneration of key management personnel is summarized below:

For the year(*) ended Short term benefits Share based payments	October 31, 2020 December 31, 2019
	$ 57,304 $ - 33,312 10,560
	$ 90,616 $10,560

Related party balances

At October 31, 2020, accounts payable and accrued liabilities include $35,575 (December 31, 2019 - $nil) due to key management, directors of the Company and companies controlled by management or directors for services provided. These amounts are unsecured, non-interest bearing and have no specific terms of repayment.

*The 2020 period referenced above is for the ten-month period from January 1, 2020 to October 31, 2020.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

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Cortus Metals Inc. Management Discussion and Analysis For the ten month period ended October 31, 2020 and the twelve month period ended December 31, 2019

Financial instruments and risk management

Fair value of financial instruments

IFRS requires disclosures about the inputs to fair value measurements for financial assets and liabilities recorded at fair value, including their classification within a hierarchy that prioritizes the inputs to fair value measurement.

The three levels of hierarchy are:

• Level 1 - Quoted prices in active markets for identical assets or liabilities;

• Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability,

• either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3 - Inputs for the asset or liability that are not based on observable market data.

As at October 31, 2020, the Company believes that the carrying values of cash, accounts receivable, and accounts payable and accrued liabilities approximate their fair values because of their nature and relatively short maturity dates or durations.

Financial instruments risk

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counter party limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

Credit risk

Credit risk is defined as the risk of loss associated with counterparty’s inability to fulfill its payment obligations. The maximum exposure to credit risk is the carrying amount of the Company’s financial assets.

Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle its obligations as they come due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds available to meet its short-term business requirements by taking into account the anticipated cash expenditures for its exploration and other operating activities, and its holding of cash and cash equivalents. The Company will pursue further equity or debt financing as required to meet its commitments. There is no assurance that such financing will be available or that it will be available on favourable terms.

As at October 31, 2020, the Company’s financial liabilities consist of its accounts payable and accrued liabilities, which are all current obligations.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to foreign exchange risk is minimal.

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Cortus Metals Inc. Management Discussion and Analysis For the ten month period ended October 31, 2020 and the twelve month period ended December 31, 2019

Classification of financial instruments

Financial assets included in the consolidated statement of financial position are as follows:

		October 31	December 31	December 31
		2020		2019
Financial asset at amortized cost
Cash	$	1,469,539	$	181,357
Accounts Receivable		18,630		-
	$	1,488,169	$	181,357

Financial liabilities included in the consolidated statement of financial position are as follows:

		October 31	December 31	December 31
		2020		2019
Non-derivative financial liabilities
Accounts payable and accrued liabilities	$	337,718	$	17,254
	$	337,718	$	17,254

Capital management

The Company monitors its equity as capital.

The Company’s objectives in managing its capital are to maintain a sufficient capital base to support its operations and to meet its short-term obligations and at the same time preserve inventor’s confidence and retain the ability to seek out and acquire new projects of merit. The Company is not exposed to any externally imposed capital requirements.

Business Risk and Uncertainties

The Company, like all companies in the mining sector, is exposed to a variety of risks which include title to mining interests, the uncertainty of finding and acquiring reserves, funding and developing those reserves and finding storage and markets for them. In addition, there are commodity price fluctuations, interest and exchange rate changes and changes in government regulations. The mining industry is intensely competitive and the Company must compete against companies that have larger technical and financial resources. The Company works to mitigate these risks by evaluating opportunities for acceptable funding, considering farm-out opportunities that are available to the Company, operating in politically stable countries, aligning itself with joint venture partners with significant international experience and by employing highly skilled personnel. The mining industry is subject to extensive and varying environmental regulations imposed by governments relating to the protection of the environment and the Company is committed to operate safely and in an environmentally sensitive manner in all operations. Please also refer to Forward-Looking Statements.

Management’s Responsibility for Financial Information

The Company's consolidated financial statements and the other financial information included in this management report are the responsibility of the Company's management, and have been examined and approved by the Board of Directors. The consolidated financial statements were prepared by management in accordance with generally accepted Canadian accounting principles and include certain amounts based on management’s best estimates using careful judgment. The selection of accounting principles and methods is management’s responsibility.

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Cortus Metals Inc. Management Discussion and Analysis For the ten month period ended October 31, 2020 and the twelve month period ended December 31, 2019

Management recognizes its responsibility for conducting the Company’s affairs in a manner to comply with the requirements of applicable laws and established financial standards and principles, and for maintaining proper standards of conduct in its activities.

The Board of Directors supervises the financial statements and other financial information through its audit committee, the majority of which is comprised of non-management directors.

This committee’s role is to examine the financial statements and recommend that the Board of Directors approve them, to examine the internal control and information protection systems and all other matters relating to the Company’s accounting and finances. In order to do so, the audit committee communicates annually with the external auditors, with or without the Company’s management, to review their respective audit plans and discuss the results of their examination. This committee is responsible for recommending the appointment of the external auditors or the renewal of their engagement.

Qualified Person

The disclosures contained in this MD&A regarding the Company’s exploration & evaluation properties have been prepared by, or under the supervision of, Mr. Michael Dufresne, M.Sc., P. Geo., P.Geol., a Director of the Company and a Qualified Person for the purposes of National Instrument 43-101.

Approval

The Board of Directors of the Company approved the disclosures contained in this MD&A.

Additional Information

Continuous disclosure relating to the Company may be found on SEDAR at www.sedar.com.

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