MGX Minerals Inc. — Management Reports 2021

Feb 9, 2021

303 – 1080 Hamilton Street Vancouver, BC V6B 2R9 Tel.: (604) 681-7735

MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2020

The following Management's Discussion and Analysis ("MD&A"), prepared as of February 8, 2021, should be read in conjunction with the audited consolidated financial statements of MGX Minerals Inc. ("MGX" or "the Company") for the year ended July 31, 2020, which were prepared in accordance with International Financial Reporting Standards ("IFRS"). All financial amounts are stated in Canadian dollars unless stated otherwise.

Additional information relating to the Company and its operations is available under the Company's profile on SEDAR at www.sedar.com

FORWARD-LOOKING STATEMENTS

The Company's consolidated financial statements for the year ended July 31, 2020, and this accompanying MD&A contain statements that constitute "forward-looking statements" within the meaning of National Instrument 51-102, Continuous Disclosure Obligations of the Canadian Securities Administrators.

It is important to note that, unless otherwise indicated, forward-looking statements in this MD&A describe the Company's expectations as of February 8, 2021.

Forward-looking statements often, but not always, are identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect", "targeting" and "intend" and statements that an event or result "may", "will", "should", "could", or "might" occur or be achieved and other similar expressions.

These forward-looking statements are based on current expectations and various estimates, factors and assumptions and involve known and unknown risks, uncertainties and other factors. All statements, other than statements of historical fact, included herein, including without limitation, statements about potential mineralization at the Company's properties, the timelines to complete exploration programs or technical reports and statements about the Company's future development of its properties. Forward-looking information is in addition based on various assumptions including, without limitation, the expectations and beliefs of management, the assumed long term price of commodities; that the Company can access financing, appropriate equipment and sufficient labour and that the political environment will continue to support the development and operation of mining projects. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. As a consequence, actual results might differ materially from results forecast or suggested in these forward-looking statements. Additional risks and uncertainties are identified under the heading "RISKS AND UNCERTAINTIES" in this MD&A.

Forward-looking statements contained herein are made as of the date of this MD&A and the Company disclaims any obligation to update any forward-looking statements, except as required by law, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking 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.

DESCRIPTION OF BUSINESS

The Company is engaged in the acquisition, exploration and development of mineral resource properties and industrial technologies. The Company operates and invests in mineral properties located in Canada. The Company's mineral property portfolio consists of lithium, magnesium oxide, silca, niobium-tantulum, and gold properties. The Company owns, operates and sells water treatment systems to the oil and gas industry through its 60% owned partner PurLucid Treatment Solutions ("PurLucid") who continues to develop advanced water treatment technology. The Company owns rapid lithium extraction technology from brine which eliminates the

MD&A July 31, 2020

need for solar evaporation. The head office is located at Suite 303, 1080 Hamilton Street, Vancouver, British Columbia, Canada, V6B 2R9.

On July 4, 2014, the Company completed a reverse takeover transaction (the "RTO" or the "Transaction") by Manto Gold Corp. ("Manto" or the "Subsidiary"). In connection with closing of the Transaction, "Defiant Minerals Corp." ("Defiant") changed its name to "MGX Minerals Inc." and Manto became the wholly-owned subsidiary of the Company.

OVERALL PERFORMANCE

During the year ended July 31, 2020 the MGX Unit was shipped to the waste water facility in September of 2019 with commissioning and initial operations under way in October of 2019 with small amounts of lithium chloride being produced. The extracted lithium chloride is under analysis and revenue has not been generated. On March 23, 2020, the CEO of PurLucid claimed to have cancelled the lithium extraction technology agreement with MGX and as such MGX has advised the CEO that he is in gross breach of duty. On May 19, 2020, the former CEO agreed to resign from his position as CEO of PurLucid and dropped all legal claims against the Company.

On March 6, 2020 the Company agreed to a settlement agreement (the "Settlement") with Zinc8 in regards to the outstanding loan receivable of $5,236,152 for $1,500,000. As per the Settlement agreement Michael Reimann, CFO and Director of both MGX and Zinc8 at the time, resigned from his positions with MGX and released the Company from any liability from his existing Petition against the Company. Jared Lazerson, then a board member of Zinc8 agreed to resign from the board of Zinc8. The Company also agreed to sell 5,500,000 shares held in Zinc8 for $550,000 to a third party as part of the Settlement agreement. The sale of shares and other dilutive events resulted in MGX's interest in Zinc8 decreasing to below 10%. The Company also escrowed the remainder of shares of Zinc8 that it held, to be released over the next year.

There have been multiple claims made against the Company during the year ended July 31, 2020 including claims made by members of the Board of Directors, see Note 23 in the accompanying consolidated financial statements for the year ended July 31, 2020 and the Contingencies section of this MD&A.

SELECTED ANNUAL INFORMATION

					The following is a summary of certain selected audited consolidated financial information of the Company for the
years	ended	July	31,	2020,	2019	and
2018

	2020$	2019$	2018$
Total revenues	-	-	-
Net loss	(24,977,617)	(26,110,694)	(25,378,273)
Net loss per share (basic and diluted) 1	(0.18)	(0.19)	(0.27)
Mineral properties	3,415,660	3,240,660	10,276,950
Total assets	12,106,194	26,734,303	38,055,472
Long term liabilities	3,011,254	27,322	124,670
Working Capital (Deficit)	(12,020,471)	(5,889,417)	5,676,527

DISCUSSION OF OPERATIONS

The Company recorded a net loss of $24,977,617 ($0.18 per share) for the year ended July 31, 2020 as compared to a loss of $26,110,694 ($0.19 per share) for the year ended July 31, 2019

The change in loss for the year ended July 31, 2020 is due to the following:

The Company incurred $75,772 (2019 – $3,485,715) of advertising and promotion expenses during the year ended July 31, 2020. In the comparative period, the Company incurred increased expenditures as it tried to increase its market presence in the US where it held various lithium properties. As at July 31, 2019 the Company wrote-off all US lithium assets and is no longer focused on that market.

MD&A

July 31, 2020

• Exploration expense decreased from $4,998,675 during the year ended July 31, 2019 to $261,346 during the period ended July 31, 2020. The decrease is a result of the Company no longer having any exploration activities in the US and during the period ended July 31, 2019 the Company was completing a drilling program at the Fran Project.
• The Company incurred research and development costs of $2,198,258 (2019 $5,600,171) related to the development of the water filtration technology through the Company's subsidiary PurLucid.
• Office and administration expense decreased to $355,136 (2019 $1,789,678) as the Company is focused on preserving cash flow.
• Professional fees of $709,410 (2019 $788,166) decreased as the Company completed the spinout transaction of Zinc8 in the previous year.
• During the year ended July 31, 2020, the Company recorded grant revenue of $2,858,450 (2019 $3,023,408) through its subsidiary PurLucid relating to the completion of a project milestone for its water filtration technology.
• The Company recorded share-based compensation expense of $557,772 (2019 $1,740,720) during the year. The decrease is due to a reduced share price resulting in lower share-based compensation expense.
• The Company recorded a loss on debt settlement of $4,497,230 (2019 $nil) related to the loan settlement with Zinc8 and a ruling against the Company in its arbitration hearing with Dawson Geophysics.
• During the year ended July 31, 2020, the Company wrote off $10,709,117 in intangible assets related to PurLucid (2019 - $nil). The Company maintains that the technology is still viable and will continue to work to develop it and the lithium extraction units available for use.

SUMMARY OF QUARTERLY RESULTS

The following table sets out financial information for the past eight quarters:

	Three Months Ended ($)
	July 31,2020	April 30,2020	January 31,2020	October 31,2019
Loss and comprehensive loss	(17,826,846)	(5,512,338)	(783,549)	(854,884)
Basic and diluted loss per share*	(0.13)	(0.04)	(0.00)	(0.01)
Total assets	12,106,194	23,318,641	26,399,844	26,577,311
Working capital (deficit)	(12,020,471)	(8,347,234)	(6,466,756)	(5,660,145)

	Three Months Ended ($)
	July 31,2019	April 30,2019	January 31,2019	October 31,2018
Loss and comprehensive loss	(10,833,880)	(3,324,560)	(5,965,983)	(5,986,271)
Basic and diluted loss per share*	(0.07)	(0.03)	(0.04)	(0.05)
Total assets	26,734,303	36,085,667	36,436,030	35,771,842
Working capital	(5,889,417)	(1,386,356)	251,825	361,314

* No exercise or conversion is assumed during the periods in which a loss is incurred, as the effect is anti-dilutive.

The increase in net loss during the period ended July 31, 2020 is due to the write-off of the intangible asset related to PurLucid of $10,709,117.

The increase in loss for the quarter ended April 30, 2020 is primarily due to the Company recording a loss on debt settlement related to the loan settlement with Zinc8 and a ruling against the Company in its arbitration hearing with Dawson Geophysics.

The decrease in loss for the quarter ended October 31, 2019 is due to grant revenue of $1,966,090 received in PurLucid and decreased exploration and promotional spending in MGX. The decrease in loss during the period ended January 31, 2020 is due to reduced activity and limited cash flow.

MD&A July 31, 2020

The increase in net loss during the period ended July 31, 2019 is due to the write-down of mineral property acquisition costs of $8,931,374. This was offset by a gain from discontinued operations of $425,282 related to the Spin-out of Zinc8.

Investment in MGX Renewables (Formerly ZincNyx Energy Solutions)

During the year ended July 31, 2018 the Company acquired a 100% interest in MGX Renewables Inc. MGX-R is focused on the development of zinc-air mass storage systems.

During the year ended July 31, 2019 the Company entered into an arrangement agreement ("Spin-out"), with its wholly owned subsidiary Zinc8 whereby MGX would complete a spin out of 40% of the common shares of Zinc8 pursuant to a plan of arrangement under the Business Corporations Act (British Columbia). Under the terms of the Spin-Out, the Company's shareholders of record on June 29, 2018 would receive one Zinc8 share for each 12.4163 MGX shares then held, and MGX shareholders of record on October 22, 2018 would receive one Zinc8 share for each 59.8186 MGX shares then held as a return of capital.

On June 26, 2019 the Spin-out was completed whereby MGX distributed 11,991,761 common shares of Zinc8 as a return of capital reducing its interest in Zinc8 from 100% to 46.4%.

As at June 26, 2019 the value of the Company's investment in Zinc8 was as follows:

	$
Value of Investment	5,034,258
Retained by MGX	3,021,937
Return of capital to shareholders	2,012,321
	5,034,258

The Company fair valued its investment in Zinc8 using a fair market price of $0.20 to $3,678,215 and recorded a gain on disposal of $3,213,237 on June 26, 2019.

Upon completion of the Spinout MGX settled $420,000 of debt in exchange for 3,111,110 shares of Zinc8, the shares were fair valued at $420,000 so no gain on debt settlement was recorded. The Company also sold 300,000 shares for proceeds of $43,680. As at July 31, 2019 the Company held 14,597,129 shares of Zinc8 representing 37.63% of all outstanding shares of Zinc8.

On March 6, 2020 the Company agreed to sell 5,500,000 shares of Zinc8, to a third party, as part of the settlement agreement (the "Settlement") for proceeds of $550,000, of which $519,207 was received and $30,793 is still receivable, as part of the Settlement the Company agreed to deposit a portion of it shareholdings in Zinc8 in escrow. Upon completion of the Settlement the Company held 7,616,629 shares of Zinc8. As a result of the settlement and dilution of its holdings in Zinc8 the Company's ownership percentage decreased to less than 10% and the Company no longer maintains significant influence in Zinc8's operations and therefore will not account for its investment using the equity method. The Company has recorded the remainder of its investment in Zinc8 as a fair value through profit or loss financial instrument.

At July 31, 2020 the Company held 7,616,629 shares of Zinc8 and fair valued its holdings at $1,866,074 and recorded a gain on fair value of investment of $2,208,716.

During the year ended July 31, 2020, the Company sold 6,972,500 shares of Zinc8 with a fair value of $2,347,811 for total proceeds of $807,810, resulting in a loss on disposal of $1,540,001.

MD&A July 31, 2020

The balance of the Company's investment in Zinc8 is as follows:

	$
Balance, as at June 26, 2019	3,021,937
Adjustment on fair value of investment on June 26, 2019	656,278
Shares used to settle debt	(420,000)
Sale of shares for proceeds	(43,680)
Loss on equity investment	(150,757)
Balance, as at July 31, 2019	3,063,778
Sale of shares for proceeds	(2,347,811)
Loss on equity investment	(1,058,608)
Fair value gain on investment	2,208,716
Balance, as at July 31, 2020	1,866,075

On June 30, 2018 the Company entered into a loan agreement (the "Loan Agreement") with Zinc8 Energy Solutions Inc., which was at the time a wholly-owned subsidiary of the Company. As at June 30, 2018 the Company had advanced $2,952,222 to Zinc8, these amounts were due on demand and non-interest bearing. The Loan Agreement replaced the existing advances payable with a long-term loan receivable bearing interest at 12% per annum, and due on December 31, 2020. Additional advances by the Company are under the same terms as the Loan Agreement. The loan receivable was previously eliminated on consolidation.

On March 6, 2020 the Company agreed to a debt settlement with Zinc8 to settle the balance owing of $5,236,152 for $1,500,000. As per the terms of the debt settlement the Company recorded a loss on debt settlement of $3,736,152. As part of the debt settlement the Company agreed to dispose 5,500,000 Zinc8 shares as discussed above. During the year ended July 31, 2020 the Company received $880,000.

The balance of the loan at July 31, 2020 is as follows:

	$
Balance, July 31, 2018	-
Addition on Spinout of Zinc8	5,048,825
Repayments	(200,000)
Advances	23,112
Interest	56,040
Balance, July 31, 2019	4,927,977
Advances	5,500
Interest	355,190
Settlement	(3,788,667)
Repayment	(880,000)
Balance, July 31, 2020	620,000

Investment in PurLucid

During the year ended July 31, 2018 the Company acquired a 55% interest in PurLucid, for full details on the acquisition of PurLucid refer to note 10 of the financial statements for the period ended July 31, 2019. PurLucid has developed a high temperature filtration system for the purification of waste water and geothermal brines. PurLucid has developed a low energy design process that removes scale-forming ions and dissolved salts while not requiring a reduction in brine temperatures for filtration to occur. The PurLucid technology separates impurities from oil and gas wastewater and produceds clean water as a final product. MGX continues development of its Rapid Lithium Brine ("RBL") extraction technology which would work in conjunction with PurLucid's water treatment units.

MD&A July 31, 2020

On November 26, 2018, PurLucid had processed the first shipment of 40m3 wastewater brine from an oilsands customer. Purlucid used the 5m3 unit, capable of 750 barrels per day ("BPD") of processing, to treat highly concentrated evaporator blowdown wastewater ("EBD"). PurLucid will analyze the results for the first processed wastewater and make improvements as necessary to have the unit ready for full time commercial use.

PurLucid has completed work on a new 10m3 high temperature system, capable of 1,500BPD, that is not yet deployed. PurLucid is also developing a 20m3 system utilized to treat one-through steam generator boiler blowdown brine.

During the year ended July 31, 2020 the Company incurred the following research and development costs related to the wastewater treatment units and the RBL extraction technology.

	2020	2019
	$	$
Personnel	126,421	486,703
Engineering	682,942	436,163
Operations	1,201,406	791,113
Testing	-	3,879
Materials	187,489	3,882,313
	2,198,258	5,600,171

Eureka Joint Venture

During the year ended July 31, 2019 the Company entered into a Joint Venture (the "JV Agreement") with Eureka Resources LLC. ("Eureka") whereby MGX will deploy its rapid lithium extraction unit acquired from PurLucid, along with additional components provided by PurLucid, at Eureka's waste water treatment facility in Wysox Pennsylvania. The JV Agreement states that MGX and Eureka will share revenue received by MGX from sales of lithium chloride and other agreed upon minerals that are extracted from Marcellus Shale produced water that has first been treated at Eureka's waste water treatment facility using Eureka's intellectual property. The Marcellus Shale produced water will then be treated by MGX for rapid extraction of lithium chloride and other minerals. The JV Agreement has a term of 5 years commencing on the date the MGX unit is ready for use at the Eureka waste water facility, upon mutual agreement the term can be extended for an additional two years at which point upon mutual agreement there can be an additional 2 year extension of the term.

As per the JV Agreement, MGX will be responsible for all costs associated with the installation of its unit, provisions of raw materials to operate the unit, any repairs and maintenance of the unit and any and all costs and taxes associated with the sale or transfer of Lithium Chloride or other minerals. Eureka will be responsible for ensuring the treated waste water is made available to the MGX Unit and for the associated costs. During the first 24 months of the JV Agreement, 35% of gross revenue will be payable to Eureka and 65% of gross revenue shall be retained by MGX. For the remainder of the agreement the gross revenue will be split with each party receiving 50%.

The MGX Unit was shipped to the waste water facility in September of 2019 with commissioning and initial operations under way in October of 2019 with small amounts of lithium chloride being produced. During the period ended July 31, 2020, PurLucid removed their unit offsite and the CEO of PurLucid claimed to have cancelled the lithium extraction technology agreement with MGX and as such MGX has advised the CEO that he is in gross breach of duty. On May 19, 2020 the former CEO agreed to resign from his position as CEO of PurLucid and dropped all legal claims against the Company.

MD&A

July 31, 2020

MINERAL PROPERTIES

The following table summarizes the Company's mineral property assets as at July 31, 2020 and July 31, 2019 and the changes for the years then ended, and exploration expenditures for the year ended July 31, 2020.

	Driftwdoo	Fran	TillicGoldum	CadaLithiunam	SilicPrjtsaoec	Total
	$	$	$	$	$	$
BalaJuly31,2019nce,	230,231	414,429	-	2,005,000	591,000	3,240,660
Additions	-	-	175,000	-	-	165,000
BalaJuly31,2020nce,	230,231	414,429	160005,	2,000005,	91,0005	3,406605,
Exlotioditupranexpenres
Adminisivetrat	-	28	3,251	76	140	3,495
Assays	-	5,006	1,368	-	-	6,374
Colingtnsu	-	-	83,567	-	913	84,480
Fieldkwor	84,490	723	5,620	116	77	91,026
Gelogicalo	1,300	9,477	9,900	2,887	2,200	25,755
Lab wkor	-	153	-	895	3,205	4,253
Licedfensesanes	2945,	30,000	005	-	-	3945,7
Miscllaneeous	-	401	-	-	-	401
Trl&daiontaveaccommo	227	1,275	6,864	433	447	9,687
Total atJuly31,2020	91,806	47,063	111,070	4,398	7,009	261,346

MD&A July 31, 2020

Fran Property (British Columbia)

The Company entered into an option agreement (the "Option Agreement") on May 24, 2013, and amended on June 30, 2013, to acquire a 100% undivided interest in the Fran Claims (the "Fran Property"), located within the Omineca Mining District 60 kilometres north of Fort St. James, British Columbia and 30 kilometers southwest of the Mt. Milligan Mine Gold-Copper Mine

In order to acquire its 100% undivided interest in the Fran Property, the Company must pay Manto Resources Inc. (the "Optionor") a total of $40,000 in cash, issue 24,877,310 shares of the Company to the Optionor and incur up to $100,000 of exploration expenditures on the property September 30, 2019.

The Company completed a fall drill program at the Fran Property that retuned broad intercept from 227.0 to 241.0 meters of gold mineralization at depth. The gold mineralization was contained within a quartzpyrite vein which averaged 21 g/t Au over 2.2m including 35.9 g/t Au across 0.76m and 26.70 g/t Au over 0.75 meters.

Based on the results of the fall drill program the Company has commenced an additional drill program that will drill a twin vertical hole to confirm and test below a historic drill hole from 2002. In August 2019 the Company received drill results from its 2018/2019 exploration program, and is now planning a follow up seven-hole 2,800 metre drill program to further delineate the SE and NW extensions of the high-grade Bullion Alley gold zone. Full details are available in the August 12, 2019 news release on Sedar.com

Driftwood Claims (British Columbia)

The Company entered into an option agreement on July 7, 2014 to acquire a 90% interest in the Driftwood Claims (the "Driftwood Property"). The Company has completed the requirements as per the agreement and owns a 90% interest in the Driftwood Property.

During the year ended July 31, 2017, the Company filed a resource estimate for the Driftwood Property that showed measured plus indicated mineral resources of 8.028 million tonnes grading 43.31% magnesium oxide, inferred mineral resources of 846,000 tonnes grading 43.20 magnesium oxide with the bulk of the resource located less than 100 metres from surface. The full NI 43-101 complaint resource estimate was filed on www.sedar.com on September 26, 2016. On October 27, 2016, the Company completed 16 drill holes as part of an infill drilling campaign in an effort to complete a preliminary economic assessment. On December 5, 2016 the Company completed its Phase III drill program on 16 holes totaling 1,212 metres. Significant intercepts from the drill program showed grades ranging from 41.6% to 43.8 at intercepts of 46.5 to 120 metres.

As reported in the Company's March 6, 2018 news release, the Company has completed a successful Preliminary Economic Assessment ("PEA"). The complete PEA has been prepared in accordance with NI-43- 101 standards. The PEA presumes a conventional quarry pit operation with a process plant and a furnace/kiln combination to produce a saleable dead burn magnesium oxide (DBM) product. The plant will also have the ability to produce caustic-calcined magnesium oxide (CCM) as a separate saleable product.

The PEA is preliminary in nature and there is no certainty that the forecast results stated in the PEA will be realized, the full PEA can be found on Sedar.com.

In July 2019, the Company completed an Archaeological Impact Assessment for the Driftwood Property as part of a larger ongoing program to complete a Pre-Feasibility Study ("PFS") to build on the previously completed PEA. In August 2019, the Company received a drill permit for up to 50 sites at the Driftwood property and commenced began mobilization in late October. The program will complete infill and extension drilling to prepare for the PFS.

MD&A July 31, 2020

Longworth Silica Property (British Columbia)

On July 21, 2015, the Company completed its acquisition of a 100% undivided interest in the Longworth Silica Property ("Longworth"). As per the terms of the acquisition, the Company issued 700,000 common shares to Zimtu Capital Corp ("Zimtu") at a fair value of $350,000. On July 7, 2016, the Company filed a NI 43-101 technical report for the property. The Company has commenced a nine-hole diamond drill program. The exposed bedrock samples collected from Longworth assayed up to 99.34% silicon dioxide.

Koot Silica Property (British Colombia)

On March 2, 2015, the Company entered into an Acquisition Agreement with American Manganese Inc. ("AMY") to acquire a 100% interest in 166 contiguous hectares located in the Golden mining district of southeastern British Columbia (the "Koot Claims"). Pursuant to the terms of the Acquisition Agreement, the Company issued 100,000 shares to AMY at the fair value of $14,000 and granted a 0.5% Net Smelter Royalty ("NSR") on any future production to AMY. The Koot Claims are also subject to a 0.5% NSR attributable to Andris Kikauka, a director of the Company.

Wonah Mineral Claims

On December 15, 2015, the Company entered into a Share Purchase Agreement to acquire a 100% undivided interest in the Wonah Mineral Claims ("Wonah"). In consideration, the Company will issue 150,000 shares over a three-year period to the Company's non-independent Qualified Person, Andris Kikauka, and a third party. There are no underlying royalties. During the year ended July 31, 2016, the Company issued 50,000 shares to the vendor at a fair value of $11,000. During the year ended July 31, 2017 the Company issued 50,000 shares that were fair valued at $68,500. The Company issued an additional 50,000 common shares, fair valued at $56,500 during the year ended July 31, 2018.

Gibraltar Claims

On May 17, 2018 the Company acquired the Gibraltar Silicon Claims ("Gibraltar Claims") located northeast of Cranbrook BC. As per the terms of the acquisition agreement the Company acquired a 100% interest in the Gibraltar Claims by issuing 100,000 common shares of the Company, issued on May 17, 2018 and fair valued at $101,000. 50,000 of the common shares were issued to a Director of the Company.

The Company has commenced development activity at both its Koot and Wonah projects. Archaeological assessment and environmental assessments are expected to commence in the near future. The Company has prioritized the evaluation and development of its silicon projects due to the relative simplicity of quarry operations. The Company commenced a diamond drill program at the Koot Claims completing nine drill holes across 50 meter spacing. The Company also completed 2 drill holes as part of an 8-hole drill program at the Gibraltar claims, totaling 2,100 feet. The Company's objective is to test subsurface dimensions of high purity quartzite.

Lithium Properties

Alberta Lithium

On January 28, 2016, the Company entered into a purchase agreement (the "Alberta Lithium Agreement") to acquire a 100% undivided interest in 12 metallic and industrial mineral permits and permit applications in Alberta. The Company made cash payments of $20,000 and issued 1,500,000 common shares, over two year period, fair valued at $1,235,000 and owns a 100% interest in the permits.

Sturgeon Lake Lithium

On August 16, 2016, the Company entered into an agreement to acquire a 100% interest in the Sturgeon Lake Lithium Brine Property ("Sturgeon Lake") in west-central Alberta. As per the terms of the agreement, the Company issued 2,000,000 common shares fair valued at $340,000 and made a cash payment of $40,000. Additionally, the property is subject to a 2% gross overriding royalty.

MD&A July 31, 2020

Kibby Basin

On July 12, 2018, the Company entered into an option agreement with Belmont Resources to acquire a 25% interest in the Kibby Basin Property ("Kibby") located in Nevada, the Company must incur exploration expense of $300,000 no later than October 2018. During the year ended July 31, 2019 a drill program was completed at Kibby and the Company plans to conduct up to an additional 4,800 feet of drilling across four diamond drill holes. Initial samples from the previous drill results ranged from 100PPM lithium to 580PPM lithium.

Tillicum Gold

On May 7, 2020, the Company entered into an agreement to purchase a 100% interest in the Heino-Money Gold deposit and Tillicum Claims in the West Kootenay region of British Columbia (the "Tillicum Agreement"). By issuing shares and cash totaling $5,000,000 and completing a work program of $1,050,000 over a three-year term, MGX will acquire a 100% interest in the property. The property will be subject to a Net Smelter Return royalty of 5% which may purchased for $1,000,000. The Company can acquire a 90% interest by completing the following:

• $25,000 cash within 14 days of execution of agreement (Paid);
• $50,000 prior to July 15, 2020 (Paid);
• $100,000 prior to each of the following October 1, 2020, January 1, 2021 and March 1, 2021;
• $125,000 prior to October 1, 2021 and $125,000 prior to each three month period thereafter ending on May 1, 2024.
• 2,000,000 commons shares within 14 days of execution of agreement (issued and fair valued at $100,000);
• 2,000,000 common shares prior to October 1, 2020 (issued subsequent to July 31, 2020) and 2,000,000 prior to each 6 month period thereafter ending on October 1, 2023
• 4,000,000 common shares prior to May 1, 2024.

The remaining 10% can be acquired for a cash payment of $1,000,000 at any time.

On May 15, 2020 the Company announced it had entered into an agreement to acquire files relating to the Tillicum Claim, including spreadsheets of all data, drill holes, assays, surveys, underground workings and assays, trenches, topography, geology and 3D model, as well as sections and plans through the deposit and original scans of documents. The Company will pay $42,500 consisting of $7,500 in cash and 500,000 common shares of the Company (issued subsequent to July 31, 2020).

MD&A July 31, 2020

OUTSTANDING SHARE DATA

Authorized: Unlimited common shares without par value

All share information is reported as of February 8, 2021, in the following table:

Type of Security	Number
Issued and outstanding common shares	159,639,814
Stock options with a weighted average exercise price of $0.43	18,665,000
Warrants with a weighted average exercise price of $1.20	11,632,378
Total	189,937,192

TRANSACTIONS BETWEEN RELATED PARTIES

The Company incurred the following charges with directors and officers of the Company and/or companies controlled by them during the years ended July 31, 2020 and 2019:

	2020	2019
	$	$
Management fees	178,000	271,000
Geological fees	21,650	38,614
Share-based compensation	212,381	499,792
Salaries	47,115	-
	459,146	809,406

All related party transactions are in the normal course of operations and have been measured at the agreed to amounts, which is the amount of consideration established and agreed to by the related parties.

As at July 31, 2020 the Company had $291,115 (July 31, 2019 - $237,917) owing to related parties included in accounts payable, all of which is unsecured, non-interest bearing and due on demand. A total payable of $199,066 (July 31, 2019 - $233,893) was owed to directors and officers of the Company and companies owned by them. A payable of $92,049 (2019 - $960) was owed to a company with common directors and a payable of $nil (2019 - $3,064) was owed to a former parent company. The amounts are non-interest bearing and due on demand.

LIQUIDITY AND CAPITAL RESOURCES

As at July 31, 2020, the Company had working capital deficit of $12,020,471 (July 31, 2019 – $5,889,417), has not generated any revenue from operations and has an accumulated deficit of $88,611,453 (July 31, 2019 - $64,650,249). The Company had $624,525 of cash at July 31, 2020 (July 31, 2019 - $158,531), the Company's operations during the year ended July 31, 2020 used $1,138,776 of cash (2019 - $12,496,717).

The Company has no operations that generate cash flow and its long-term financial success is dependent on discovering properties that contain mineral reserves that are economically recoverable. The Company's primary capital assets resource properties and intangible assets held through subsidiaries. Exploration expenditures are expensed as incurred.

The Company's resource property agreement is an option agreement and the exercise thereof is at the discretion of the Company. To earn its interest in the properties, the Company must incur certain expenditures in accordance with the agreements (see "Mineral Properties" in this MD&A for more information).

The Company depends on equity sales to finance its exploration programs and to cover administrative expenses.

MD&A July 31, 2020

FINANCING ACTIVITIES AND CAPITAL EXPENDITURES

During the year ended July 31, 2020 the Company completed the following financing activities:

• Made lease payments of $10,474 relating to an office lease;
• Received $880,000 in loan repayments from Zinc8 and advanced $5,500;

During the year ended July 31, 2020 the Company incurred capital expenditures of $75,000 related to the acquisition of mineral properties; $2,066 pursuant to equipment purchases and a refund of $10,000 of reclamation deposits.

During the year ended July 31, 2020 the Company received $807,810 of proceeds pursuant to the sale of Zinc8 shares.

The Company is dependent on the sale of treasury shares to finance its exploration activities, property acquisition payments and general and administrative costs. The Company will have to raise additional funds in the future to continue its operations. There can be no assurance, however, that the Company will be successful in its efforts. If such funds are not available or other sources of financing cannot be obtained, then the Company will be forced to curtail its activities.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not utilize off-balance sheet transactions.

PROPOSED TRANSACTIONS

The Company has no proposed transactions that will materially affect the performance of the Company.

ACCOUNTING POLICIES

The following standards have been adopted during the year ended July 31, 2020:

IFRS 16 Leases

IFRS 16 – Leases is a new standard that became effective for the Company on August 1, 2019

IFRS 16 specifies how an issuer will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less, or the underlying asset has an insignificant value. Lessors continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged from its predecessor, IAS 17. The adoption of IFRS 16 did not have a significant impact on its financial statements as it does not have any material leases.

FINANCIAL INSTRUMENTS

The Company's financial instruments consist of cash, marketable securities, investment in Zinc8, loan receivable, accounts payable and accrued liabilities, short-term loans payable and long-term loans payable. Cash is measured at amortized cost and marketable securities and investment in Zinc8 are measured at fair value through profit of loss. Accounts payable and accrued, short-term loans and long-term loans are all measured at amortized cost.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company currently settles its financial obligations out of cash. The ability to do this relies on the Company raising equity financing in a timely manner and by maintaining sufficient cash in excess of anticipated needs. As at July 31, 2020, the Company has a working capital deficit of $12,020,471 (2019 – working capital deficit of $5,889,417).

MD&A July 31, 2020

Credit Risk

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

The Company's cash is largely held in large Canadian financial institutions. The Company does not have any asset-backed commercial paper. The Company's receivables consist of GST receivable due from the Federal Government of Canada. The Company has not experienced any significant credit losses and believes it is not exposed to any significant credit risk.

Price Risk

The Company is exposed to price risk with respect to commodity prices. The Company's ability to raise capital to fund exploration and development activities is subject to risks associated with fluctuations in the market price of commodities.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Financial assets and liabilities with variable interest rates expose the Company to cash flow interest rate risk. The Company does not hold any financial liabilities with variable interest rates. The Company does maintain bank accounts which earn interest at variable rates but it does not believe it is currently subject to any significant interest rate risk.

Foreign currency exchange rate risk

The Company's functional and reporting currency is the Canadian dollar and major purchases are transacted in Canadian dollars. As a result, the Company's exposure to foreign currency risk is minimal.

RISKS AND UNCERTAINTIES

The Company's principal activity is mineral exploration and development. Companies in this industry are subject to many and varied kinds of risk, including but not limited to, environmental, metal prices, political and economical.

The mineral exploration business is risky and most exploration projects will not become mines. The Company may offer an opportunity to a mining company to acquire an interest in a property in return for funding all or part of the exploration and development of the property. For the funding of property acquisitions and exploration that the Company conducts, the Company depends on the issue of shares from the treasury to investors. These stock issues depend on numerous factors including a positive mineral exploration environment, positive stock market conditions, a company's track record and the experience of management.

The Company has no significant source of operating cash flow and no revenues from operations. The Company has limited financial resources. Substantial expenditures are required to be made by the Company to establish mineral reserves.

There is no guarantee that the Company will be able to contribute or obtain all necessary resources and funds for the exploration and exploitation of its permits, and may fail to meet its exploration commitments.

Mineral exploration involves a high degree of risk and few properties, that are explored, are ultimately developed into producing mines.

If the Company's efforts do not result in any discovery of commercial mineralization, the Company will be forced to look for other exploration projects or cease operations.

The Company is subject to the laws and regulations relating to environmental matters in all jurisdictions in which it operates, including provisions relating to property reclamation, discharge of hazardous material and other matters.

CONTINGENCIES

On June 18, 2019 Blue Sun Productions filed a claim against the Company for unpaid invoices totalling amounts of $112,518 USD and $7,440 for services performed during the year ended July 31, 2019. The Company did not

MD&A July 31, 2020

dispute the amounts owing and has recorded them in full as accounts payable and accrued liabilities on the consolidated statement of financial position as at July 31, 2020. A default judgement order was awarded to Blue Sun Production for the outstanding balance, interest calculated at 2% per annum up to November 28, 2019 and additional costs of $1,334. The full amount of interest and additional costs has been accrued for as at July 31, 2020.

On September 12, 2019 Lions Gate Risk Management Group Ltd. ("Lions Gate") filed a claim again the Company in the amount of $176,398 relating to security services provided to Jared Lazerson, the CEO of the Company. As at July 31, 2020 the Company had recorded the full $176,398 as accounts payable and accrued liabilities on the consolidated statement of financial position. Subsequent to July 31, 2020 the Company entered into a settlement agreement with Lions Gate whereby MGX will pay $10,000 in ten installments on the first of every month, commencing on December 1, 2020 for a total payment of $100,000.

On November 1, 2019 AIS Resources Limited ("AIS") filed a claim against the Company in the amount of $170,527 USD for unpaid exploration work carried out by AIS at the Salinitas project on behalf of the Company as per an oral agreement made at the time. The claim was settled on April 13, 2020, under the terms of the settlement MGX is to issue 3,705,733 common shares to AIS, and the shares were issued subsequent to July 31, 2020.

During year ended July 31, 2020 Randy Keller filed a claim against the Company for unpaid consulting fees in the amount of $157,500 USD, severance of $42,000 USD and expenses of $17,442. The Company's position is that Keller's work did not meet contractual standards, and in April 2019 Keller agreed to amend his consulting agreement such that his work and fees would be substantially reduced. No settlement has been made and the eventual outcome is not determinable. As at July 31, 2020 the Company has accrued $232,396 relating to the Randy Keller claim as accounts payable and accrued liabilities on the consolidated statement of financial position.

The Company went to arbitration with Dawson Geophysics Inc. ("Dawson") regarding a planned geophysics program for a Utah petrolithium project that was never executed. Dawson claimed approximately $183,728 USD in preparation costs and requests additional amounts for additional preparation and lost opportunity because the project was never completed. MGX claimed it was not the operator and therefore not responsible. During the year ended July 31, 2020 an arbitration award in favour of Dawson was awarded as follows:

• Unpaid invoices $183,729 USD
• 5% Surcharge of $9,186 USD
• Lost profits of $580,511 USD
• Total sum of $773,426 USD.

MGX plans to appeal the decision and failing that, will commence litigation against the operator of the Utah Petrolithium property. As at July 31, 2020 the Company has recorded the total amount as accounts payable, the $580,511 USD of lost profits and 5% surcharge of $9,186 USD were recorded as a loss on debt settlement.

In December, 2019 a Petition was filed by Lyndon Patrick and Michael Reimann (the "Petitioners"), directors of the Company, in which the Company and Jared Lazerson, a CEO of the Company, are named as Respondents. The Petitioners are seeking various orders mainly concerning Jared Lazerson's position as CEO. On October 7, 2019 the Petitioners put forward a motion to remove Jared Lazerson as the Company's President, CEO and signing authority. The petitioners both voted in favour of the motion while Andris Kikauka and Jared Lazerson voted against. Lazerson cast the deciding vote, declaring the motion defeated. The Petitioners took the position that Lazerson was prohibited from voting under the Company's articles and the "disclosable interest" provisions of the British Columbia Business Corporations Act.

On January 17, 2020 the matter was resolved in the Supreme Court of British Columbia, with the court ruling in favour of Jared Lazerson and confirming him as the CEO. The remainder of claims made by the Michael Reimann as part of the Petition were settled as part of the Settlement with Zinc8 and he resigned from his position as CFO and from the Board of MGX.

On March, 5, 2020, Michael Frank commenced an action against the Company whereby he is seeking $135,600 in unpaid consulting fees. As at July 31, 2020 the Company has recorded $135,600 as accounts payable and

MD&A July 31, 2020

subsequent to July 31, 2020 the Company settled the amount owing in exchange for 2,773,022 common shares of the Company.

On May 21, 2020, Fasken Martineau DuMoullin LLP ("Fasken") filed a claim against the Company for unpaid invoices totalling $797,323. The Company did not dispute the amounts owing and has recorded them in full as accounts payable and accrued liabilities on the consolidated statement of financial position as at July 31, 2020. Fasken is also claiming post-judgement interest at the contractual rate of 18%, any and all Goods and Services Tax payable on all judgement amounts, and costs, costs of proceedings on a solicitor and own client basis or such basis which may be directed by the Honourable Court and such further rand other relief as the Honorable Court sees fit.

FINANCIAL AND DISCLOSURE CONTROLS AND PROCEDURES

In connection with National Instrument 52-109 (Certification of Disclosure in Issuer's Annual and Interim Filings) ("NI 52-109"), the Chief Executive Officer and Chief Financial Officer of the Company have filed a Venture Issuer Basic Certificate with respect to the financial information contained in the consolidated financial statements for the year ended July 31, 2020, and this accompanying MD&A (together the "Annual Filings").

In contrast to the full certificate under NI 52-109, the Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures and internal control over financial reporting, as defined in NI 52-109. For further information the reader should refer to the Venture Issuer Basic Certificates filed by the Company with the Annual Filings on SEDAR at www.sedar.com.

OUTLOOK

The outlook for precious metals is good. The capital markets needed to access financing are challenging but management believes the Company will continue as a viable entity. The properties will require significant investment as they transition into development stage projects.

OTHER

Additional information relating to the Company's operations and activities can be found by visiting www.sedar.com and www.mgxminerals.com.