Metalex Ventures Ltd. — Management Reports 2021

Aug 27, 2021

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FORM 51-102F1 MANAGEMENT DISCUSSION AND ANALYSIS Year Ended April 30, 2021

The following Management Discussion and Analysis (“MD&A”), prepared as of August 26, 2021, of the results of operations and financial position of Metalex Ventures Ltd. (the “Company”) for the year ended April 30, 2020 should be read together with the audited consolidated financial statements for the year ended April 30, 2020 and related notes attached thereto, which are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and Interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”). All amounts are stated in Canadian dollars unless otherwise indicated.

The reader should also refer to the annual audited consolidated financial statements for the years ended April 30, 2021 and April 30, 2020 and the MD&A for those years.

Additional related information is available on the Company’s website at www.metalexventures.com or on SEDAR at www.sedar.com.

Description of Business

The Company's principal business activity is the acquisition, exploration and development of mineral properties and it is considered to be at the exploration stage. The Company has not yet determined whether the properties contain ore reserves that are economically recoverable. The Company trades on the TSX Venture Exchange under the symbol MTX.

The Company’s areas of work are in the James Bay Lowlands area of Northern Ontario, where the company has a 100% interest in certain mineral claims (“Kyle Lake”) and, in the Attawapiskat area of Northern Ontario, where the Company has a 83.9% contributing interest in the Big Red Diamond Joint Venture and a 82.5% contributing interest in the Dumont Joint Venture. In Quebec, the Company has a 77.59% contributing interest in diamond exploration; the Company holds 100% of the non-diamond commodity exploration on various mineral claims. The Company holds an exploration licence in Morocco and has entered into an agreement in South Africa to acquire up to a 70% interest in a prospecting licence.

The reader is referred to the relevant sections in this, and previous Management Discussion and Analysis for further details on these projects.

Cautionary Note Regarding Forward Looking Statements

Certain statements in this report are forward-looking statements, which reflect our management’s expectations regarding our future growth, results of operations, performance and business prospects and opportunities including statements related to the development of existing and future property interests, availability of financing and projected costs and expenses. Forwardlooking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits we will obtain from them. These forward-looking statements reflect management’s current views and are based on certain assumptions and speak only as of the date of this report. These assumptions, which include management’s current expectations, estimates and assumptions about current mineral property interests, the global economic environment, the market price and demand for diamonds, gold and other minerals and our ability to manage our property interests and operating costs, may prove to be incorrect. A number of risks and uncertainties could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, including: (1) a downturn in general economic conditions, (2) a decreased demand for or price of gold and other minerals, (3) delays in the start of projects with respect to our property interests, (4) inability to locate and acquire additional property interests, (5) the uncertainty of government regulation and politics regarding mining and mineral exploration, (6) potential negative financial impact from regulatory investigations, claims, lawsuits and other legal proceedings and challenges, and (7) other factors beyond our control.

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There is a significant risk that such forward-looking statements will not prove to be accurate. Investors are cautioned not to place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future results. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Performance Summary

The following is a summary of significant events and transactions that occurred during the year ended April 30, 2021:

Mineral Properties

Mineral property expenditures (net of recoveries) incurred during the period were as follows:

James Bay, Quebec	$	380,019
Kyle Lake, Ontario		230,393
Morocco		8,501
South Africa		36,100
Total	$	655,013

Details of activities on the properties are provided in the following commentary. The technical information and results reported in this section have been reviewed by Metalex President & CEO, Chad Ulansky P.Geol. Mr. Ulansky is a Qualified Person under National Instrument 43-101 and is responsible for the technical content herein.

Kyle Lake Property, Ontario

As at April 30, 2021, the Company has a 100% earned interest in certain mineral claims located in the Kyle Lake area of Ontario, located approximately 200 km west of James Bay in Northern Ontario and about 80 km west of De Beers’ Victor Mine. These claims are subject to a 10% carried interest in favour of Kel-Ex Development Ltd. (“Kel-Ex”).

The Company acquired, by staking, a 100% interest in certain mineral claims located in the Kyle Lake area then entered into an agreement effective June 30, 2004 to sell a 20% contributing interest in the property to Arctic Star Diamond Corp (“Arctic Star”) for proceeds of $100,000, reimbursement of 20% of previous staking and exploration costs incurred on the property and an agreement to pay 20% of on-going exploration costs. During 2005, Arctic Star advised the Company that it declined to contribute financially to exploration of the Kyle Lake project and the Company elected to increase its interest in the project by funding Arctic Star’s contribution. In September 2011, the Company acquired all of Arctic Star’s remaining joint venture interests in the Company’s Kyle Lake, James Bay Lowlands and Attawapiskat projects for a lump sum payment of $264,862.

Technical Rationale

The Kyle lake region is considered prospective for commercial diamond bearing kimberlite pipes as all of the known kimberlite pipes in the area are diamondiferous. This proportion of diamond bearing kimberlite pipes is much higher than the global average of 14% and indicates that this part of the Superior craton is extremely fertile for diamonds.

T1 Kimberlite

In 2005, the Company discovered the T1 kimberlite by drilling. Promising diamond counts and diamond quality were returned from the discovery hole and subsequent delineation core holes supported the decision to collect a mini bulk sample from T1. Twenty 8 ¾ inch diameter reverse circulation holes were drilled collecting approximately 450 tons of kimberlite. Processing of this kimberlite at the Stornoway Diamond Corp processing plant in North Vancouver recovered 12,446 commercial sized (larger than 0.425mm) diamonds. The size distribution of the parcel suggests that the pipe is not economic at the current time and no additional work is planned at this time.

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Discovery of the U1, U2 and U2NW Kimberlites at the Kyle Project

A 28,620 line kilometre airborne geophysical survey was flown in late 2006. Testing of priority targets during the winter of 2006/2007 discovered three additional kimberlites between the T1 kimberlite and DeBeers’ Victor Diamond Mine (“Victor”): U1, U2 and U2NW. Although all three kimberlites are diamondiferous, work has focused on the U2 kimberlite due to its large size. At over nine hectares, the U2 kimberlite is one of the largest kimberlites in the region, second only to Victor.

Shortly after the U2 kimberlite was discovered by a vertical core hole, four inclined core holes were completed to delineate the pipe. Diamonds recovered from these holes have a coarse size distribution and are predominantly gem quality, similar to those recovered from DeBeers’ Victor Mine. The large size of the U2 kimberlite, its high proportion of white, gem quality stones, its similar age and diamond indicator mineral content to Victor and a coarse diamond distribution curve all supported the decision to collect a mini bulk sample from U2.

Prior to commencing the large diameter RC drill program seven delineation core holes were drilled to better define the pipe walls. RC drilling commenced early in 2010 and approximately 450 tons of kimberlite was collected from 11 holes.

The U2 mini bulk sample was processed at the Stornoway plant and a total of 1,946 commercial sized (larger than 0.425mm) diamonds were recovered. Size distribution information for the diamonds recovered is presented in the following table:

Sieve Sizes (Through / On)	Sieve Sizes (Through / On)	Sieve Sizes (Through / On)	Sieve Sizes (Through / On)	Sieve Sizes (Through / On)	Sieve Sizes (Through / On)	Sieve Sizes (Through / On)	Sieve Sizes (Through / On)	Total
0.6mm 0.425mm	0.85mm 0.6mm	1.18mm 0.85mm	1.7mm 1.18mm	2.36mm 1.7mm	3.35mm 2.36mm	4.75mm 3.35mm	6.7mm 4.75mm
338	804	505	213	56	23	5	2	1,946

As seen above, the size distribution of the diamonds is very coarse with a high proportion of the diamonds being in the large size categories. This is important for a high average carat value. Included in the above figures are a 2.61 carat white gem quality diamond as well as a 1.25 carat diamond and two 0.73 carat diamonds which have been recovered from four separate holes. The 86 largest (+1.7mm) diamonds totalled 15.95 carats.

Dr. Luc Rombouts, renowned diamond specialist from Antwerp, Belgium, flew to Kelowna to examine the diamonds. Of the 86 largest diamonds, he classified 73 as white, six as brown, five as grey and two as coloured (yellow and pinkish brown). This equates to 88.8% white, 7.3% brown, 2.8% grey and 1.1% coloured by weight. Dr. Rombouts confirmed that the two largest diamonds (2.61 and 1.25 carats) recovered from U2 would cut as high quality white gems.

Dr. Rombouts concludes that the parcels of diamonds from U2 is too small to give a reliable average price per carat estimate. The U2 size distribution plots are relatively coarse and indicate significantly larger samples will yield significantly larger diamonds of consequently higher value than the diamonds recovered from this mini bulk sample.

Based on the high proportion of gem quality diamonds, the large size of the U2 kimberlite and the diamond grades, the U2 kimberlite merits the collection of a 10,000 ton bulk sample so that at least 1,000 carats of diamonds can be recovered for assessment. A large diamond parcel is necessary to accurately define the diamond grade and average value per carat.

The proposed bulk sample is to be collected by 48 large diameter (60cm) reverse circulation holes. The drill and all other supplies needed for the program will be mobilized to site by winter road. Drilling and processing of the bulk sample are expected to take approximately 18 months. This will allow the drill and unneeded equipment to be demobilized by winter road the following winter.

Geological and geotechnical logging of 25 pilot holes drilled at U2 where an embedded diamond was discovered in the core while logging. This work is being undertaken under the direction of Dr. Barbara Scott-Smith, a world renowned kimberlite petrologist, and aided in the planning of the bulk sample and interpretation of the bulk sample results.

AMEC Environment and Infrastructure (“AMEC”) was contracted in September, 2011 to complete the permitting required for the program, which was completed in 2015. AMEC has also commenced environmental baseline studies for the project area.

In April 2015, the Company was issued the permits which will allow the bulk sample collection to commence. With the necessary permits in place, Metalex must now secure funding for the bulk sample, as well as secure a signed agreement with the First Nations bands in the area. Preliminary discussions with interested parties have been undertaken in regards to financing the project. Management also continues in its efforts to negotiate with the First Nations bands. The Company does not plan to undertake further work on this project until such an agreement with all relevant First Nations bands are in place.

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Wemindji James Bay Property, Quebec

The Company also has interest in various mineral claims located in the Wemindji James Bay region of Quebec, Canada, which were originally acquired from Kel-Ex. As of August 2017, the Company holds 100% of the project for the exploration of nondiamond commodities (various base and precious metals), as well as a 77.59% contributing interest in the original project which will explore solely for diamonds within the same claim area .

In August 2005, it was announced that anomalous concentrations of metals were discovered within the reconnaissance area. In addition to analysis for diamond indicator minerals, the heavy mineral concentrates were subjected to multi-element analysis by both atomic absorption and neutron activation.

Anomalous gold concentrations were found in more than 400 samples, anomalous copper values were found in 109 samples and anomalous uranium values were found in 173 samples. As the Archaean shield of eastern Canada contains a number of world-class metal mines, e.g. gold in the Val d'Or region of Quebec, nickel - copper - cobalt at Sudbury and Voisey Bay, and Uranium at Blind River, the geochemical results obtained above are regarded as most encouraging; particularly since they are spread throughout the regional area. A follow up program of priority results was conducted during 2006.

In November 2012, the Company completed a work program on the project. As a part of this program, 11 claim blocks were staked totaling approximately 20,110 hectares. These claims were staked to cover the heads of anomalous geochemical trains as determined by heavy mineral sampling. Four of the claim blocks cover trains anomalous primarily for gold. One claim block covers a train anomalous primarily in base metals (copper – nickel – cobalt). The remaining six claim blocks are anomalous in both gold and base metals. Also, a total of 1,673 heavy mineral samples were collected during the program.

In the fall of 2013 a further 410 heavy mineral samples were collected. The sample results define a 1.3 kilometre diameter lake as the head of a diamond indicator mineral train which includes G10 and eclogitic Group 1 diamond indicators. A ground geophysical program including magnetic, electromagnetic and gravity techniques commenced in late 2013 to define targets for drill testing. Drilling of the targets did not find kimberlites with economic potential.

In May of 2016 the Company announced the staking of two claim blocks totaling over 1,000 hectares covering the apparent heads of two indicator mineral trains. In late 2016, samples were collected from the two claim blocks to further refine the locations of the sources of the indicator mineral trains.

In August of 2017, the Company signed an agreement with Threegold Resources Inc, (“Threegold”) regarding the non-diamond commodities joint venture. Threegold agreed to assign its right, title and interest in this joint venture to the Company in exchange for $5,000 and the issuance of 100,000 common shares. Approval of this agreement was obtained from the TSX Ventures Exchange on August 11, 2017; 100,000 common shares were subsequently issued to Threegold, and payment made. As such, the Company now owns 100% of the non-diamond commodities project.

In 2020, the Company staked three claim blocks which contain the apparent source areas of strong gold anomalies detected in its heavy mineral sampling programs. One of these three areas also contains strongly anomalous scandium values. A further 46 gold anomalous trains have been identified, with further work planned to identify the source areas.

Morocco

In May 2004, the Company entered into an agreement with the Office National de Hydrocarburers et des Mines (“ONHYM”) to conduct preliminary exploration work in Southern Morocco in order to identify areas on which to undertake further exploration work. In May 2005, the Company added additional areas for exploration work on the same terms and conditions as the first agreement. The agreements were governed by the laws and regulations of the Kingdom of Morocco and were valid until November 2006.

In April 2011, the Company entered into a new joint venture agreement with the ONHYM for further exploration of the claim areas. The Company will hold a 60% interest while ONHYM will retain a 40% interest in the project. Both parties will be responsible for funding their respective interests. A change in the mining laws required the re-negotiation of the Company’s agreement with ONHYM; the Company is in the process of defining the terms of this new agreement with ONHYM.

The licenses cover an area that is one of the only remaining areas of the world that is underlain by an Archean craton (ie rocks older than 2.6 billion years) that has yet to be explored. Archean cratons are considered highly prospective for diamond bearing kimberlite, gold and base and precious metals are very favorable areas for significant mines. All kimberlite diamond mines are on cratons. Many of the world’s largest gold mines are also located on cratons such as the mines at the Witswatersrand in South Africa, the Yilgarn craton in Australia and the Abitibi and Timmins areas in Canada. The prospectivity of the license is

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further demonstrated by the presence of Kinross’ 20 million ounce Tasiast gold mine located 100 kilometers to the south and SNIM’s world class 5.7 billion ton iron mine 200 kilometers to the east.

In 2006, follow up work of geochemical and geophysical anomalies discovered from earlier reconnaissance sampling indicated that G10 peridotitic garnets occur in 6 drainage/loam samples collected over an area of approximately 1,000 km[2] . One of these samples contained an outstanding result of three G10 garnet grains comprising one G10 - 9, one G10 - 5 and one G10 - 3. Many of the G10 grains are fresh, and they are interpreted to be derived from nearby diamond bearing kimberlite(s). Additionally, 17 sample sites contain picroilmenite grains clustered over an area of 1,000 km[2] . Several samples sites also contain pyrope garnet and a diamond stability field olivine has been found at one location. These results are interpreted to reflect an undiscovered kimberlite field.

From August 2011 to March 2012, an 88,146 line kilometer magnetic and radiometric survey that was flown over virtually the entire 17,100 km[2] license area where the extensive geochemical survey indicated potential for a variety of commodities. The survey data has been processed and interpreted by Scott Hogg and Associates and targets for ground truthing were identified.

Based on the results to date, 22 separate blocks totalling 4,021 square kilometres have been retained for continued exploration.

Attawapiskat Property, Ontario

Big Red Diamond Joint Venture

As at April 30, 2021, the Company has a 83.9% contributing interest (72% participating interest) in certain mineral claims in the Attawapiskat area of Ontario. These claims are subject to a 10% carried interest in favour of Kel-Ex. The Company is obligated to contribute to the costs of the exploration program in proportion to its contributing interest.

During the year ended April 30, 2002, Kel-Ex formed an exploration joint venture with Big Red Diamond Ltd. (“Big Red”), (the Big Red Diamond Joint Venture) with respect to certain mineral claims in the Attawapiskat area of Ontario, with Kel-Ex having an 80% interest and Big Red, a 20% interest. The Company then entered into an agreement with Kel-Ex to acquire KelEx’s 80% interest in these claims in consideration for $300,000 and the issuance of 100,000 common shares of the Company valued at $225,000. Kel-Ex is a company controlled by an individual who is now Metalex’s Chairman of the Board.

During the year ended April 30, 2003, the Company sold, to Arctic Star, a 20% undivided interest in certain mineral claims for proceeds of $300,000. During fiscal 2008, Big Red elected to dilute a portion of its contributing interest which the Company has elected to assume effective January 1, 2010 thereby increasing its contributing interest in the claims from 60% to 63.9%. In September 2011, the Company acquired all of Arctic Star’s remaining joint venture interests thereby increasing their contributing interest in the claims from 63.9% to 80%.

Dumont Joint Venture

As at April 30, 2021, the Company has a 82.5% contributing interest (61.7% participating interest) in certain mineral claims located in the vicinity of the Attawapiskat property. These claims are subject to 10% carried interests in favour of each of KelEx and Dumont Nickel Inc. (“Dumont”). The Company is obligated to contribute to the costs of the exploration program in proportion to its contributing interest.

Pursuant to an agreement between Kel-Ex and Dumont, a joint venture was formed to explore certain mineral claims located in the vicinity of the Attawapiskat property. Kel-Ex was granted an option to earn up to a 90% interest in certain mineral claims held by Dumont and a 100% interest in any new claims staked by the joint venture subject to Dumont's right to receive a 5% interest in the new claims once commercial production is achieved. Under this agreement, Kel-Ex earned a 50% interest by incurring expenditures totaling $1,500,000 and can earn a further 25% by producing a feasibility study and a final 15% (20% on new claims) by bringing the property to commercial production.

The Company, along with Arctic Star and Oasis Diamond Corp. (“Oasis”), entered into an agreement dated October 23, 2003 with Kel-Ex, whereby the parties acquired Kel-Ex’s interest in the Dumont joint venture in exchange for assuming Kel-Ex’s obligations under the Dumont agreement and reimbursing Kel-Ex for its costs incurred. Under this agreement, the Company acquired 70% of Kel-Ex’s interest in the Dumont joint venture with Arctic Star and Oasis acquiring 20% and 10% interests, respectively with Kel-Ex retaining a 10% free carried interest. Pursuant to an agreement dated September 21, 2004, Big Red was assigned a 20% contributing interest of the Kel-Ex interest from the Company in consideration for payment to the Company of $909,747 comprised of a mineral property expense recovery of $892,001 and interest of $17,746. As a result, the Company’s interest was reduced to 50% of Kel-Ex’s right to earn 90% (95% on new claims) in the Dumont joint venture.

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During the year ended April 30, 2008, Big Red and Oasis elected to dilute a portion of their working interests which the Company has elected to assume effective January 1, 2010 thereby increasing its contributing interest in the claims from 50% to 61.1%. In September 2011, the Company acquired all of Arctic Star’s remaining joint venture interests thereby increasing their contributing interest in the claims from 61.1% to 82.5%.

Since August 2003, work on the Attawapiskat project has focused on follow up of the locations where high counts of diamond indicator minerals were found in a D6 glacial fan. This fan is located less than 10 kilometres from De Beers Victor diamond deposit, lies within the Attawapiskat kimberlite trend and straddles ground subject to both the Big Red and Dumont Joint Ventures.

An exploration program consisting of 10 core holes and 12 auger holes was completed in Fall 2010. The auger holes were drilled to test for the up ice source of a highly anomalous auger sample which contained abundant diamond indicator minerals and fragments of kimberlite. Samples from both the core and auger drilling were sent to CF Mineral Research Ltd. for analysis. No kimberlites with economic potential were discovered.

James Bay Lowlands Property, Ontario

During fiscal 2008, the Company acquired, by staking, an interest in certain claims located in the James Bay lowlands area of Northeastern Ontario. The Properties are strategically located on and around the “Ring of Fire” and cover approximately 36 square kilometres (8,944 acres) of ground. Certain of these claims were previously included as part of the Kyle Lake project. In March 2008, the Company and Arctic Star entered into a farm-in agreement whereby White Pine Resources Inc. (“WPR”, formerly WSR Gold Inc.) could earn up to a 50% interest in certain mineral claims by funding up to $20,000,000 in expenditures on the property.

In October 2011, having earned a 37.5% interest in the claims to-date, WPR elected to not to earn the Fourth Interest (50%) and, pursuant to the agreement, a joint venture has been formed whereby each party will fund future exploration activities in proportion to their earned interests. The Company maintained a 62.5% earned interest in this project; WPR subsequently sold their 37.5% interest to a privately owned company.

On October 25, 2019, the Company announced that it had reached an agreement with an arms-length private entity to sell its 62.5% interest in certain mineral claims in the Ring of Fire region of the James Bay Lowlands, Ontario. The Company received 2,780,000 common shares (originally valued at $278,000), which was approximately 29% ownership interest in the private entity. The Company currently owns 6.6% of the private entity due to dilution from the issuance of further shares.

Viljoenshof Diamond Project, South Africa

In late 2020, the Company entered into an option agreement with Invest in Property 126 Pty Ltd to acquire up to a 70 percent interest over the Viljoenshof Diamond Project in South Africa through funding conversion of the exploration permit to a mining license, exploration, feasibility studies and mine development.

The property hosts several known kimberlite bodies. Samples collected from these contain diamond indicator minerals of exceptional quality, suggesting a high diamond grade.

General

Certain Metalex exploration projects are managed by Kel-Ex Development Ltd., a company owned by Dr. Charles Fipke, an internationally recognized diamond geologist. Dr. Fipke is the Chairman of Metalex. Kel-Ex provides Metalex with access to its advanced proprietary databases and interpretational techniques. In return, Kel-Ex receives a 10% administration fee on certain projects to cover costs and, in the case of certain projects, a 10% interest carried to production. Dr. Fipke also owns the CF Mineral Research (“CF Minerals”) laboratory where samples collected in certain exploration programs are analyzed. Metalex’s management is satisfied that all such related party transactions are entered into on terms that are reflective of current market conditions.

Overall Performance

As at April 30, 2021, the Company has incurred cumulative losses of $100,221,701 (April 30, 2020 – $100,778,932) and has working capital of $486,882 (April 30, 2020 – deficit of $3,734,769). Operating activities during the year ended April 30, 2021 produced a negative cash flow of $889,317 (year ended April 30, 2020 – $126,596).

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The key performance driver for the Company is the acquisition and development of prospective mineral properties. By acquiring and exploring projects of superior technical merit, the Company increases its chance of finding and developing an economic deposit.

At present, none of the Company’s projects have reached the producing stage, therefore the Company is not anticipating profit or positive cash flow from operations. Until such time as the Company is able to realize profits from the production and sale of commodities from its mineral interests, Company will report an annual loss and will rely on its ability to obtain equity or debt financing to fund ongoing operations.

Selected Annual Information

The following table provides a brief summary of the Company’s financial data for the three most recent fiscal years. For more detailed information, refer to the Financial Statements.

		Year Ended		Year Ended		Year Ended
	April 30, 2021		April 30, 2020		April 30, 2019
Total revenues	$	-	$	-	$	-
Income (loss) before other items		(1,149,465)		(530,576)		(67,220)
Income (loss) for the year		(1,006,483)		844,620		(40,440)
Basic and diluted loss per share		(0.01)		0.01		(0.00)
Total assets		5,617,670		3,106,361		1,845,363

Annual and quarterly information for all periods since May 1, 2010 have been prepared in accordance with IFRS.

The Company has not paid any dividends on its common shares. The Company has no present intention of paying dividends on its common shares, as it anticipates that all available funds will be invested to finance the growth of its business.

Results of Operations

For the year ended April 30, 2021

Net loss for the year ended April 30, 2021 amounted to $1,006,483 (loss of $0.01 per share) compared to net income of $884,620 (income of $0.01 per share) in the year ended April 330, 2020. The significant decrease in income stems mainly from the smaller (unrealized) gain in value of the Company’s investment in a private company, as well as additional exploration expenditures for the Quebec project.

Some of the significant expenses for the year ended April 30, 2021 are as follows:

• Net exploration expenditures of $655,013 have increased significantly from $305,779 in the prior year. Additional lab processing costs were incurred in the current period relating to re-examining old projects with new technology, as well as planning and preparation for the Spring 2021 Quebec sampling program. There were also consulting fees for the new South Africa program, and work done relating to the Kyle Lake samples. Please refer to Note 6 in the financial statements for additional detail on exploration expenditures.

• During the period, the Company expensed directors fees totalling $281,876 (2020 – $60,000) under the deferred share unit plan. The accrual (or recovery) of management fees each quarter relates in part to fluctuations in the share price; deferred share units were issued at the end of each quarter. The value of the accrual is then adjusted based on the weighted average trade price of the shares over the last five trading days prior to quarter end; any decline in price can decrease the overall liability, despite an increase in the number of shares issuable. The significantly higher expense for the current year reflects the revaluation of the deferred share units using the higher fair market value as at the 2021 year end.

• The Company had net office and administrative expense of $125,625 (2020 – $104,622). The increase is due in part to the change in remuneration for the Company’s CFO (direct billing of time, rather than shared costs of the group), and due to the overall increase in insurance premiums since COVID 19. There was also a change in the Company’s proportion of shared office expenses due to the Company’s increased level of activity in the group.

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• Professional fees of $49,238 (2020 – $39,930) have increased from prior year due to a higher year-end audit fee relating to additional work regarding the valuation of the Company’s investment in a private entity. There were also additional accounting fees in the prior year related to a review of Quebec tax credits.

• Transfer agent and filing fees of $26,552 (2020 – $18,730) have increased due to the Company issuing several news releases in relation to the private placement, as well as news releases relating to the Quebec and South Africa projects.

• Travel and promotion costs of $8,086 (2020 – $1,489) have increased with additional fees due to revamping the Company’s website, as well as additional travel costs relating to the private placement this year.

During the year ended April 30, 2021, the Company used cash of $889,317 on operating activities (2020 – $126,596). Please refer to the consolidated statements of cash flows in the financial statements for a breakdown of the operating activities.

Summary of Quarterly Results

		Three Months		Three Months		Three Months		Three Months
		Ended April 30,		Ended January 31,	Ended October 31,		Ended	July 31, 2020
		2021		2021		2020
Total revenues	$	-	$	-	$	-	$	-
Income (loss) before other items		11,382		(738,893)		(195,633)		(226,321)
Income (loss) for the period		502,376		(745,837)		(52,385)		(710,637)
Basic and diluted loss per share		0.00		(0.01)		(0.00)		(0.01)
		Three Months		Three Months		Three Months		Three Months
		Ended April 30,		Ended January 31,	Ended October 31,		Ended	July 31, 2019
		2020		2020		2019
Total revenues	$	-	$	-	$	-	$	-
Income (loss) before other items		(77,297)		(315,107)		(45,581)		(93,835)
Income (loss) for the period		(964,789)		2,230,607		239,176		(88,554)
Basic and diluted loss per share		(0.01)		0.02		0.00		(0.00)

During the three months ended October 31, 2019, the Company sold its interest in certain minerals claims resulting in Other income for the period. The claims were sold in exchange for shares of a private entity, which owns other claims in the same area. There was also a recovery of Quebec project costs, which more than covered exploration expenditures during the period.

During the three months ended April 30, July 31, and October 31, 2020, the Company revalued its minority investment in the private entity, resulting in a significant unrealized loss on investment. During the three month periods ended January 31, 2020 and April 30, 2021, the Company had a significant unrealized gain on investment.

During the three month periods ended July 31, and April 30, 2019, the Company had no significant transactions or activity, resulting in a smaller net loss for the period comparable to other quarter ends. During the three month period ended July 31, 2020, the Company incurred significant additional exploration expenditures relating to lab fees. During the three month periods ended January 31 and April 30, 2021, the Company incurred project costs for Quebec, Kyle Lake and South Africa.

The loss for the three month period ended January 31, 2021 included a significant expense related to Directors fees. The quarterly allocation of deferred share units (original value of $15,000 per quarter) was revalued to reflect the current fair market value. Due to the significant increase in the Company’s share price, there was a resulting significant expenditure for the quarter.

The Company charges all exploration costs to operations in the period incurred until such time that there is a determination of the feasibility of mining operations and a decision to proceed with development, in which case subsequent exploration and property development costs will be capitalized. All direct costs related to the acquisition of resource property interests have been capitalized as an asset.

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Liquidity and Capital Resources

The Company has financed its operations to date primarily through the issuance of common shares. The Company continues to seek capital through various means including joint ventures partnerships and the issuance of equity and/or debt.

As mentioned in the Performance Summary, the Company will be endeavouring to complete a large-scale bulk sample program on the U2 kimberlite project which is estimated to cost approximately $50 million. In 2015, the Company received the required permits for the U2 bulk sample. Despite significant time delays in being able to move the project forward, the Company remains committed to the U2 project and has been in touch other parties to find a finance partner for the project. The Company has also continued its work in obtaining a signed exploration agreement with the First Nations bands in the area.

As at April 30, 2021, the Company had cash of $2,264,936 (April 30, 2020 – $275,853) and working capital of $486,882 (April 30, 2020 – deficit of $3,734,769). The Company has sufficient funds to meet its working capital requirements through the current period. Beyond that, to continue operations, the Company will require non-flow through funds either through a private placement financing, the exercise of stock options and/or the sale of unproven mineral interests. Current market conditions may impact the Company’s ability to raise further capital and fund ongoing operations.

As part of its December 2020 Annual General Meeting, disinterested shareholders passed a resolution approving a proposed shares for debt transaction to settle up to $2,750,000 of related party debt owed to Kel-Ex Development Ltd. The shares for debt arrangement was finalized and settled on January 15, 2021, with the issuance of 32,352,941 shares.

The consolidated financial statements have been prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of business. The ability of the Company to continue operations is dependent upon the existence of economically recoverable reserves, successful development of the Company’s mineral properties, complete equity financings, and generate profitable operations in the future. As shown in the consolidated financial statements, the Company has suffered recurring losses, has had negative working capital and has a significant deficit from operations. Management plans to obtain additional financing through future private placements for common shares or from the issuance of common shares on the exercise of outstanding options and warrants. These conditions may raise significant doubt regarding the Company’s ability to continue as a going concern. The consolidated financial statements do not give effect to any adjustment should the Company be unable to continue as a going concern and therefore, be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts differing from those reflected in the condensed consolidated interim financial statements. There can be no assurance that sufficient working capital can be generated from operations and external financing to meet the Company’s liabilities and commitments as they become due. Failure to generate sufficient working capital from operations or obtain external financing will cause the Company to curtail operations and the Company’s ability to continue as a going concern will be impaired. It is not possible to predict whether economically recoverable reserves exist, the Company’s financing efforts will be successful, or the Company will attain profitable level of operations.

Related Party Transactions

During the years ended April 30, 2021 and 2020, the Company had related party transactions with the following companies related by way of common directors or shareholders:

• C.F. Mineral Research Ltd. (“CF Minerals”) – a private company owned by Metalex Chairman, Charles Fipke. CF Minerals provides heavy mineral geochemistry services to the Company.

• Kel-Ex Development Ltd. (“Kel-Ex”) - a private company owned by Metalex Chairman, Charles Fipke. Kel-Ex provides administration, payroll and office services to the Company, as well as some shared exploration expenditures.

• Element 29 Ventures Ltd. (“Element 29”) - a private company owned by Metalex CEO, Chad Ulansky. Element 29 provides geological consulting services to the Company.

• FourIrons Consulting (“FourIrons”) - a private company owned by Metalex CFO, Jennifer Irons. FourIrons provides financial consulting services to the Company.

• Cantex Mine Development Corp. (“Cantex”) - a publicly listed company with common directors and management. Metalex and Cantex share office space and thus have certain shared expenditures which get re-billed on a costrecovery basis.

The key management personnel of the Company are the Directors, Chief Executive Officer, and Chief Financial Officer.

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The Company’s related party expenses consist of the following:

The above noted transactions represent amounts incurred or accrued, but not necessarily paid, during the periods indicated.

	Years ended April 30,
	2021 2020
Laboratory and mineralogical costs, including storage fees	$ 186,261$ 33,672
Administration fees (10%)	16,9775,232
Consulting fees	63,3419,022
Shared field expenditures	67,102147,460
Shared office and administrative costs	12,46714,505
	$ 346,148$ 209,891
	Years ended April 30,
	2021 2020
C.F. Mineral Research Ltd.	$ 186,261$ 33,672
Element 29 Ventures Ltd.	83,9288,966
FourIrons Consulting	26,400-
Kel-Ex Development Ltd.	49,559167,253
	$ 346,148$ 209,891

The Company’s expenses recovered from related parties consist of the following:

	Years ended April 30,
	2021 2020
Shared office and administrative costs	$ 33,669$ 21,776
Shared field expenditures	23,88620,741
	$ 57,555$ 42,517
	Years ended April 30,
	2021 2020
Cantex Mine Development Corp.	$ 36,128$ 31,951
Kel-Ex Development Ltd.	21,42710,566
	$ 57,555$ 42,517

Metalex shares office space with Cantex and Kel-Ex and thus has certain shared expenditures.

Included in accounts payable of the Company are the following amounts due to related parties:

	April 30,	April 30,
	2021	2020
C.F. Mineral Research Ltd.	$ 1,074,958	$ 1,068,803
Element 29 Ventures Ltd.	15,191	673
FourIrons Consulting	2,310	-
Kel-Ex Development Ltd.	38,286	2,611,158
	$ 1,130,745	$ 3,680,634

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Included in receivables of the Company are the following amounts due from related parties:

	April 30, 2021	April 30,2020
Cantex Mine Development Corp.	$ 3,917	$ 2,454
Kel-Ex Development Ltd.	588	1,393
	$ 4,505	$3,847

The remuneration of directors and officers is as follows:

The remuneration of directors and officers is as	follows:
	Years ended	April 30,
	2021		2020
Director fees(1)	$ 281,876	$	60,000
Wages and benefits(2)	68,895		40,275
	$ 350,771	$	100,275

(1) Directors fees are amounts accrued under the Company’s deferred share unit plan as described in Note 11 (d) to the financial statements. Each quarter, $15,000 in DSUs are accrued under the plan, with the number of DSUs issued being dependant on the market price of the Company; the total number of DSUs outstanding is then adjusted at each quarter end based on the fair market value of the share price, resulting in fluctuations in the amount of fees expensed or recovered.

(2) Wages and benefits includes amounts paid or accrued for geological consulting fees included in exploration expenditures, as well as consulting fees and payroll costs due to related parties included in office and administrative expenses within the statements of profit or loss.

Off-Balance Sheet Arrangements

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

Risks and uncertainties

The business of mineral exploration and extraction involves a high degree of risk. Few properties that are explored ultimately become producing mines. At present, none of the Company’s properties has a known commercial ore deposit. Certain of the Company’s mineral properties are also located in emerging nations and consequently may be subject to a higher level of risk compared to developed countries. Operations, the status of mineral property rights, title to the properties and the recoverability of amounts shown for mineral properties in emerging nations can be affected by changing economic, regulatory and political situations. Other risks facing the Company include competition, environmental and insurance risks, fluctuations in metal prices, share price volatility and uncertainty of additional financing.

Financial instruments

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.

Cash is carried at fair value using a level 1 fair value measurement. The carrying value of receivables, accounts payable and accrued liabilities and provision for indemnity approximate their fair value because of the short-term nature of these instruments.

Non-controlling interest in private company is carried at fair market value, which has been based on the last share purchase price used to raise funds. Any adjustments to the value of this investment will be reflected in Statement of Income and Comprehensive Income.

The Company is exposed to a variety of financial risks by virtue of its activities including currency, credit, interest rate, liquidity and commodity price risk.

Currency risk – While the Company’s capital is raised in Canadian dollars, the Company is also conducting business internationally. As such, the Company is subject to risk due to fluctuations in the exchange rates for certain currencies including

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the United States and Canadian dollar. The Company does not use derivative financial instruments to reduce its exposure to foreign currency risk.

Credit risk – Credit risk is the risk of a financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations.

The Company’s cash is in large Canadian financial institutions and it does not have any asset-backed commercial paper. The Company’s receivables consist mainly of receivables from relates parties for shared expenditures and GST receivable due from the Federal Government of Canada. The Company is subject to the risk that its joint venture partners will default on amounts owing for their portion of exploration expenditures (April 30, 2021 and 2020 – $Nil). Any such amounts defaulted would dilute that partners’ interest in the exploration joint venture and would require the Company to pick up the proportionate share of future exploration expenditures. As at April 30, 2021, the Company had, $4,505 in outstanding related party receivables; the Company has subsequently received 100% of this balance.

Interest rate risk – Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. There is a very limited interest rate risk as the Company holds no material interest bearing financial obligations or assets.

Liquidity risk – Liquidity risk is the risk that the Company will not be able to meet its obligations as they become due. The Company’s ability to continue as a going concern is dependent on management’s ability to raise required funding through future equity issuances. The Company manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities. Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments.

Price risk – The ability of the Company to explore its mineral properties and the future profitability of the Company are directly related to the market price of diamonds and other minerals. The Company’s input costs are also affected by the price of fuel. Management monitors diamond, precious metal and fuel prices to determine the appropriate course of action to be taken by the Company.

Capital risk management

The Company includes equity, comprised of issued common shares, the convertible advance, reserves and deficit, in the definition of capital.

The Company’s objective when managing capital is to maintain its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders.

The Company expects its current capital resources will be sufficient to complete its currently budgeted exploration programs and operations through its current operating period. Until its equity financing was recently completed, the Company had relied on extended credit terms and/or advances from a related party to fund its operations. The Company is currently not subject to externally imposed capital requirements. The Company does not pay out dividends. The Company’s investment policy is to invest its short-term excess cash in secure deposits in large Canadian financial institutions.

The Company's primary objective with respect to capital management is to ensure adequate liquid capital resources are in place to fund the exploration and development of its mineral properties while maintaining its ongoing operations. To secure the additional capital to pursue these plans, the Company may attempt to raise additional funds through the issuance of debt and or equity.

Future accounting standards

Certain pronouncements were issued by the International Accounting Standards Board (the “IASB”) or the IFRS Interpretations Committee that are mandatory for accounting periods on or after January 1, 2019 or later periods. Many are not applicable or do not have a significant impact to the Company and have been excluded.

Outstanding share data

The authorized share capital of the Company consists of an unlimited number of common shares without par value.

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As at August 26, 2021, the Company had outstanding 185,895,918 common shares, 12,261,376 warrants exercisable at $0.10 per share, and 6,286,000 stock options with a weighted average exercise price of $0.12 per share.

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