Murchison Minerals Ltd. — Management Reports 2020

Mar 9, 2020

MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2019

This Management’s Discussion and Analysis (“MD&A”) is intended to supplement the consolidated financial statements and notes of Murchison Minerals Ltd. (the “Company” or “Murchison”) for the year ended December 31, 2019 with comparatives for the same period a year earlier. The consolidated financial statements including comparative figures have been prepared by the Company in accordance with International Financial Reporting Standards (“IFRS”) applicable to preparation of financial statements. This MD&A should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes for the year ended December 31, 2019, which are available on the Company’s website (www.murchisonminerals.com). This MD&A covers the most recently completed financial year end and the subsequent period up to March 4, 2020. The information is presented in Canadian dollars unless stated otherwise.

OVERALL PERFORMANCE

Description of Business

Murchison is a Canadian based exploration company with a focus on its Brabant Lake property which includes the high-grade Brabant-McKenzie VMS zinc-copper-silver deposit (the “Deposit”) in north-central Saskatchewan. The Company also owns 100% of the HPM nickel-copper-cobalt project in Quebec. The Company expects to acquire additional properties as attractive opportunities are identified. The Company does not have any projects that generate revenue at this time. The Company’s ability to carry out its business plan in the future rests entirely on its ability to secure equity and other financings or realize cash from the sale of assets.

Trends

The financing, exploration and development of any properties the Company holds or may acquire in the future will be subject to a number of factors including the commodity prices for minerals, applicable laws and regulations, political conditions, currency fluctuations, the hiring of qualified people, and obtaining necessary services in jurisdictions where the Company operates. The current trends relating to these factors could change at any time and negatively affect the Company’s operations and business. Apart from these, the risk factors noted under the heading “Uncertainties and Risk Factors” and “Forward Looking Statement” included in this MD&A, management is not aware of any other trends, commitments, events or uncertainties that would have a material effect on the Company’s business, financial condition or results of operations.

OUTLOOK

The Company completed a systematic follow up field prospecting program at its Brabant Lake project (the “Property”) during this past summer where several highly prospective exploration targets have been identified for drill testing. In January 2020, the Company initiated a drill program and drilled 11 holes in 5 of the prospective targets. The drill program was completed on March 3, 2020 and assays results will be announced when all data have been received and collated by Murchison.

The Company also acquired new claims at the Property in November, December and early February which are mostly contiguous to the existing property holdings, increasing its land position in the Brabant Lake area by 231 km[2 ] to 565 km[2] . The Company is planning a 900-line kilometre helicopter-borne versatile timedomain electromagnetic (VTEM™ Max) geophysical survey with the purpose of investigating the mineral potential over its newly acquired claims which is scheduled to start in the latter part of March 2020.

MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

There are no known legal, political, environmental or other risks that could materially affect the potential development of Company’s exploration projects. Management is of the opinion that it will be able to maintain the status of its current exploration obligations and to keep its properties in good standing. Advancing exploration at the mineral properties will require substantially more financial resources. In the past, the Corporation has been able to rely on its ability to raise financing via equity private placements.

Management’s main objective is to advance its current projects and maximize their potential via the use of different exploration techniques available. The long-term goal remains to develop the Company’s properties and achieve commercial production. The Company may enter into partnerships in order to fully exploit the production potential of its exploration assets.

MINERAL PROPERTIES – EXPLORATION ACTIVITIES

Brabant Property – Saskatchewan

The Property is owned 100% by Murchison, has no royalties and is strategically located along Highway 102 approximately 175 kilometres northeast of the town of La Ronge and near major infrastructure, including grid power. The Property consists of the Brabant-McKenzie VMS Deposit and multiple known mineralized showings and identified geophysical conductors over approximately 57 kilometre strike length of favourable geological horizon, all of which remain under-explored and mostly untested. The 565 km[2] Property shares geological characteristics, including similar age, with the Flin Flon and Lynn Lake volcanogenic massive sulphide (VMS) mining camps in Manitoba.

GEOPHYSICAL INTERPRETATION AND MODELLING

In January 2019, the Company completed a VTEM-Max and magnetic airborne survey over the Property which identified some 30 EM conductors with coincident magnetic signatures. These conductors were subjected to additional ground prospecting, and geophysical follow-up during the summer 2019 field exploration program.

SUMMER 2019 FIELD PROGRAM

The Company started a field prospecting program at the end of May 2019. The goal of this program was to locate any surface expression of sulphide mineralization spatially linked to the electromagnetic (“EM”) conductors and magnetic (“Mag”) high responses identified during the January 2019 VTEM-Max and Mag airborne survey. The whole district is covered by a moderate to shallow glacial till cover masking the underlying rock formation creating a challenge to prospecting and geological mapping. The field teams relied heavily on GDD Instrumentation Inc.’s “Beep Mat” technology in order to detect magnetic and/or electromagnetic mineralization either in bedrock or boulders down to a depth of several metres.

The Company discovered the Main Lake West zone which consists of a massive sulphide-type copper mineralization spatially related to seven EM conductors located approximately 700 metres west of the historic Main Lake showing. Multiple zones of sulfide mineralization were identified at the Main Lake West zone. These zones were exposed and sampled using a channel saw and a small backpack drill. The mineralization consists of semi-massive to massive pyrrhotite and disseminated chalcopyrite with assay values up to 0.42% Cu over 1.7 metres and 0.69% Cu over 0.7 metre in backpack drill core, and sampling of nine trenches with assay values up to 0.58% Cu. The mineralization correlates well with the geophysical modelling that indicates several bodies. At this time the full extent of the mineralization remains to be defined.

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MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

The prospecting team also collected a 0.89 metre backpack drill core sample from the rock face of the Main Lake showing which assayed 6.17% Cu, 8.31% Zn, 140 g/t Ag and 0.2 g/t Au. The historic Main Lake showing received limited near surface drilling in 1964, reporting an intercept of 0.7 metre at 5% Zn. This showing correlates well with a 530 metre long modelled conductive unit from the January 2019 VTEMMax and Mag airborne survey. Limited historic exploration paired with the high-grade nature of the showing makes this area a high-priority exploration target for Murchison, as it has strong potential for hosting economic VMS type mineralization.

The Main Lake showing and the Main Lake West zone are located ten kilometres southwest of Murchison’s Brabant-McKenzie Deposit.

The Company also discovered a surface showing of massive sulphide-type zinc mineralization on strike and about 300 metres south of the Deposit.

The Company also confirmed anomalous zinc, silver and gold mineralization at the historic MIN showing during the summer prospecting program. The MIN showing is located south of the large Min Showing North conductive body measuring 1,080 by 888 metres, and approximately four and a half kilometres southwest of, and on strike with, the Brabant-McKenzie VMS deposit and the recently discovered Brabant-McKenzie South mineralization. Multiple channels were cut perpendicular to strike on the exposed mineralization using a diamond saw on the shore of Brabant Lake, with notable assays of 0.32% Zn and 5.3 g/t Ag over 1.2 metres, and 0.39% Zn and 7.8 g/t Ag over 0.35 metre. Anomalous gold-silver values were also noted in a sample with 0.449 g/t Au, 11.4 g/t Ag and 0.15% Zn over 0.50 metre. The mineralization is relatively low grade, however its proximity to nearby conductive bodies is encouraging.

Table 2 – MIN Showing 2019 Channel Sample Results

Channel ID	From (m)	To (m)	Zn (%)	Ag (g/t)	Au (g/t)
MIN001	0.00	0.50	0.15	11.4	0.449
MIN002	0.00	1.20	0.32	5.3	0.026
MIN002	1.20	1.45	0.30	6.6	0.023
MIN006	0.00	0.35	0.39	7.8	0.029
MIN006	0.35	0.95	0.12	13.2	0.028

The MIN Showing was first located in 1959 during regional geologic mapping and was followed up by prospecting in 1983 and 1991 with the most notable assay returned from a grab sample completed in 1983 of 0.17% Zn and 14.4 g/t Ag. This zinc-silver mineralization further indicates the strong VMS potential of the Brabant-McKenzie host geologic unit elsewhere in the project area. Recent geophysical modelling of Murchison’s surface TDEM (Time Domain Electromagnetic), ground Mag data, VTEM (Versatile Time Domain Electromagnetic) airborne data shows the presence of a conductor with moderate conductivity and coincident high magnetic susceptibility that is located under and immediately to the west of the channel samples, suggesting that semi-massive to massive mineralization may be present.

A second conductive unit called Min Showing North which southern boundary lies approximately 350 metres to the north of the Min Showing has been modelled as a large low to moderate conductivity plate measuring 1,080 by 888 metres. Historical drill hole BL-12-04 which is located a short distance east of the plate intersected anomalous silver grading 1.5 g/t Ag over 0.5 metre. Min Showing North represents an encouraging high priority exploration target along the interpreted Brabant-McKenzie VMS trend.

For the year ended December 31, 2019, the Company incurred $768,740 (2018 - $2,389,764) in exploration expenses at the Property.

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MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

MINERAL RESOURCE ESTIMATE

In September, 2018, the Company provided the results of a new mineral resource estimate (the “2018 Mineral Resource Estimate”). The 2018 Mineral Resource Estimate included the addition of 19 diamond drill holes totaling 9,004 metres which were completed during the 2018 winter drilling program as well as a comprehensive re-interpretation of the geology of the Deposit using current and historical drilling data and reports. Please refer to the press release dated September 13, 2018 for full details.

The 2018 Mineral Resource Estimate has been prepared by independent qualified person (“QP”) Finley Bakker, P.Geo., and was calculated using Minesight/Hexagon 3D modeling software to define the mineralized limits of the Deposit.

The 2018 Mineral Resource Estimate for the Deposit is as follows:

Category	Tonnes	Zn%	Cu%	Pb%	Ag (g/t)	Zn Eq%
Indicated	2,100,000	7.08	0.69	0.49	39.6	9.98
Inferred	7,600,000	4.45	0.57	0.19	18.4	6.29

The 2018 Mineral Resource Estimate for the Deposit was determined on the basis of:

• Drilling results to March 24, 2018 and including historical diamond drilling used in the previous NI43-101 resource estimate completed in 2008 and 2018;

• US$ metal prices of $1.20/lb Zn, $2.50/lb Cu, $1.00/lb Pb, $16.00/oz Ag and $1,200/oz Au;

• CDN$:US$ exchange rate of $1.20;

• An NSR cut-off of $90/tonne or 3.5% zinc equivalent (“Zn Eq”) based on above metal prices;

• Average metallurgical and payable recovery of 75% for all metals;

• Indicated Resource was calculated using a two-hole minimum and a maximum distance of 60 metres from a diamond drill hole;

• Inferred Resource was calculated using a no-hole minimum and a maximum distance of 200 metres from a diamond drill hole;

• As much as possible, a 2 metre intercept minimum was used but not strictly adhere to;

• The resources were also manually reviewed and adjusted to take into consideration drill intercepts from previous operators in the areas of drilling carried out by the Company, and;

• 138 drill holes were used in the calculation and were used to model 2 mineral lenses.

HPM Property – Quebec (100%)

During the first quarter of 2019, the Company announced that it had increased its interest in the HPM property to 100%. As part of the transaction to acquire the remainder 50% interest in the HPM property held by joint venture partner Pure Nickel Inc., the Company paid $50,000 and issued 500,000 common shares valued at $65,000.

For the year ended December 31, 2019, the Company incurred $116,857 (2018 - $1,536) at the HPM property which includes the $115,000 compensation paid to Pure Nickel Inc.

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MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

Pickle Lake Properties – Ontario

In June 2016 (with amendment on February 2, 2017), the Company entered into an agreement with White Metal Resources Corp. (“White Metal”) whereby White Metal could acquire all of the Company’s interest (“Earned Interest”) in its Pickle Lake Gold properties. On July 27, 2017, White Metal assigned its option and right to acquire the Earned Interest to Ardiden Ltd. (“Ardiden”), an Australian exploration company. Under the agreement, Ardiden had to incur $1,200,000 in expenditures and make $45,000 in cash payments within 3 years of the agreement in order to exercise the option and acquire the Earned Interest. Once the Earned Interest was completed, Murchison will be entitled to a 1% net smelter return (the “NSR”) of which fifty percent (50%) can be purchased by Ardiden for $1,000,000 and the balance of the other fifty percent (50%) of the said NSR can be purchased for $1,500,000.

On June 24, 2019, Ardiden Ltd. notified the Company of the completion of the option payments and expenditures by delivering a notice to the Company setting out that it has exercised the option, subject to Murchison’s NSR.

Qualified Persons

The scientific and technical disclosures included in this MD&A have been reviewed and confirmed by John Shmyr, P. Geo. and Martin St-Pierre, P. Geoph., qualified persons as defined by National Instrument 43101. Mr. Shmyr and Mr. St-Pierre are independent consultants to Murchison and the Brabant Lake project.

Access to Properties

The Company’s access to its Canadian properties is dependent on climate and weather conditions. The Brabant property in Saskatchewan is accessible all year round. All projects in Québec can be accessed from January to September as weather limits the activities during other times of the year.

RESULTS OF OPERATIONS

For the year ended December 31, 2019, the Company incurred a loss of $1,470,586 (2018 - $2,590,596). The decrease of $1,120,010 is mainly related to the following factors: 1. lower exploration expenses of $1,476,365 (2019 - $894,935 vs 2018 - $2,371,300) as the Company completed a 12,431 metre drill program in 2018 and geophysical surveys and field exploration in 2019 at the Brabant Lake project. Also in 2019, the Company increased its interest in the HPM property to 100% at a cost of $115,000; 2. lower management fees and salaries of $315,379 (2019 - $194,359 vs 2018 - $509,738) related to lower fees paid to the CEO in 2019 compared to the former CEO in 2018 which included a $225,000 termination payment in December 2018 as well as $50,000 paid in bonuses in Q1/18; 3. lower investor relations expense of $68,431 (2019 - $145,561 vs 2018 - $213,992) due to the reduction of conferences attended and the related travel expenses; 4. lower professional fees of $65,502 (2019 - $34,589 vs 2018 - $100,091) directly related to the court case involving a former director in 2018, offset by; 5. higher noncash flow-through shares premium of $737,513 (2019 - $167,977 vs 2018 - $905,490) as the Company recognized the income based on increased exploration activities in Canada funded by flow-through financing.

For the year ended December 31, 2019, exploration expenses totaled $894,935 (2018 - $1,476,365) with $768,740 (2018 - $2,389,764) at the Brabant project in Saskatchewan, $116,857 (2018 - $1,536) at HPM in Quebec and $9,338 in general exploration (2018 – recovery of $20,000).

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MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

SELECTED ANNUAL INFORMATION

The following table sets out financial performance highlights for the last three years and was prepared in accordance with IFRS.

ccordance with IFRS.
	December 31, 2019	December 31, 2018	December 31, 2017
Interest Income	$7,732	$25,070	$10,601
OperatingExpenses(1)	$1,341,001	$3,282,388	$1,592,447
Loss	$1,470,586	$2,590,596	$1,179,806
Basic and Diluted loss per share	$0.03	$0.06	$0.05
Total Assets	$1,611,786	$1,339,466	$4,439,525
Exploration Expenses	$894,935	$2,371,300	$1,156,265

(1) The exploration expenses are included in operating expenses and share-based payments are excluded from operating expenses.

The interest income fluctuation from year to year is the direct result of the cash balance and short-term investments available in each of the years. The timing of equity financing and ensuing exploration and operating expenses are the main factors affecting the level of funds invested from time to time. The variation in the interest rates also has an impact on the interest income but such variation has been minimal for the years 2017 to 2019. The higher loss in 2018 was mostly related to the exploration activities and expenses at Brabant in Saskatchewan compared to 2017 and 2019. The total assets in 2019 included $1.43 million in cash compared to $1.18 million in 2018 and $4.39 million in 2017.

SUMMARY OF QUARTERLY RESULTS

	Fourth Quarter 2019	Third Quarter 2019	Second Quarter 2019	Second Quarter 2019	First Quarter 2019
	$	$	$		$
Total Assets	1,611,786	563,941	944,323		948,668
Current Assets	1,598,534	549,590	928,212		945,740
Non-currentAssets	13,252	14,351	16,111		2,928
Total Liabilities	366,118	95,674	116,988		180,029
InterestIncome	1,370	1,761	1,973		2,628
Loss	387,681	243,306	322,458		517,141
LossPerShare (1)	0.01	0.00	0.01		0.01
	Fourth Quarter 2018	Third Quarter 2018	Second Quarter 2018	First Quarter 2018
	$	$	$	$
Total Assets	1,339,466	1,830,107	2,023,442	2,972,594
CurrentAssets	1,337,356	1,827,179	2,019,567	2,968,676
Non-current Assets	2,110	2,928	3,875	3,918
Total Liabilities	179,866	247,462	283,988	947,136
InterestIncome	4,607	5,475	5,335	9,653
Loss	516,683	156,809	286,004	1,631,100
LossPerShare (1)	0.01	0.00	0.01	0.04
(i)Lossper share remains the same on a diluted basis

Due to the nature of the business, the cash balance and short-term investments generating interest income are subject to fluctuations from quarter to quarter. The timing of equity financing and ensuing exploration and operating expenses are the main factors affecting the level of funds invested from time to time. The variation in interest rates also has an impact on the interest income.

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MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

In Q4/2019, the loss includes a $244,200 non-cash share-based payment expense related to stock option granted in December 2019. In Q3-Q2/2019, the Company completed its summer field exploration program at the Brabant Lake project and in Q2-2019, the Company completed a $408,600 non-brokered flowthrough private placement. In Q1-2019, the Company completed an extensive airborne geophysical survey at the Brabant Lake property and on the newly acquired claims. It also acquired joint venture partner Pure Nickel’s 50% interest in the HPM project in Québec at a cost of $115,000. In Q4-2018, the Company made a $225,000 termination payment in December 2018 to end the contract with the former President and CEO of the Company. In Q1-2018, the Company completed a 12,431 metre drill program and a geophysical survey at the Brabant Lake project in Saskatchewan at a total cost of $1.9 million. This amount was offset by $744,494 of non-cash flow-through shares premium.

LIQUIDITY AND CAPITAL RESOURCES

As at December 31, 2019, the Company had no debt, cash of $1,434,347 and working capital (excluding flow-through share premium liability) of $1,562,765 (December 31, 2018 – $1,176,697 and $1,199,157, respectively). The Company’s excess cash, when available, is deposited into interest-bearing accounts or invested in redeemable GICs with major Canadian chartered banks.

As at December 31, 2019, the Company had amounts receivable and prepaid expenses totaling $164,187 which included sales tax receivable of $20,478, prepaid expenses of $22,584 and $121,125 of advances to suppliers related to the winter 2020 drill program.

The December 31, 2019, consolidated financial statements were prepared in accordance with accounting principles applicable to a going concern, which assumes that the Company will be able to realize its assets and discharge liabilities in the normal course of business. The Company’s ability to continue as a going concern is always dependent on its ability to raise new funds to meet its obligations and continue its exploration activities.

Equity Financing

The Company’s exploration projects are at an early stage and it has not yet been determined whether any of its properties contain economically recoverable ore. As a result, the Company has no current sources of revenue and has relied on the issuance of shares to generate the funds required to further its projects.

Private Placement

On June 19 and 27, 2019, the Company completed a non-brokered flow-through private placement and issued 3,714,545 flow-through common shares priced at $0.11 per share for gross proceeds of $408,600 of which, $130,009 was allocated to the flow-through premium. Finders’ fees of $3,000 were also paid. Officers of the Company acquired 260,000 flow-through common shares for gross proceeds of $28,600.

On December 12, 2019, Murchison completed a non-brokered private placement and issued 4,166,667 common share units (the “Units”) at a price of $0.06 per Unit and 12,097,356 flow-through units (the “FT Units”) at a price of $0.087 per FT Unit for aggregate gross proceeds of $1,302,470 of which $326,650 was allocated to the flow-through premium. Each Unit consisted of one common share of the Company and one full common share purchase warrant. Each warrant entitles the holder to acquire one additional common share until December 12, 2020 at an exercise price of $0.10 per share. Each FT Unit consisted of one flow-through common share of the Company and one full non flow-through common share purchase warrant having the terms as the warrant issued as part of the Unit. All securities issued pursuant to the private placement are subject to a four month hold period from the date of issue. Finder’s fees totaling $36,770 were paid under the December 12, 2019 private placement. A director of the Company participated in the private placement for a total of $237,760.

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MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

Warrants

In December 2019, 4,844,970 warrants exercisable at $0.24 expired unexercised.

As part of the December 12, 2019 private placement, Murchison issued 16,264,023 warrants exercisable at $0.10 until December 12, 2020.

Stock Options

In March 2019, the Company granted 665,000 stock options exercisable at $0.095 to its officers, directors and key consultants. The options were for a period of 5 years and vested immediately.

In December 2019, Murchison granted 3,300,000 stock options exercisable at $0.085 to its officers and directors. The options were for a period of 5 years and vested immediately.

During the year ended December 31, 2019, 2,312,800 stock options expired.

General

The Company’s ability to successfully acquire mineral projects or recover amounts expended on mineral properties is conditional on its ability to secure financing when required. The Company expects to meet additional financing requirements through equity financing. The Company may seek other alternatives for financing in the future depending on market conditions and exploration results; however, there can be no assurance that such financing attempts will be successful. The impact on our business and the cost and availability of financing remain uncertain and could affect our overall liquidity.

Commitments and Obligations

As at December 31, 2019, the Company has to incur $1,064,097 in qualifying exploration expenditures by December 31, 2020 to meet its flow-through commitments. At this time, management anticipates meeting that obligation and as a result, no additional provisions are required.

The Company's mining and exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.

The Company has no long-term contractual obligations.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

TRANSACTIONS WITH RELATED PARTIES

a) Remuneration of directors and the officers was as follows:

	2019	2018
Salaries and benefits	$ 194,359	$ 509,738
Share-based payments	278,700	211,185
	$ 473,059	$ 720,923

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MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

For the year ended December 31, 2019, the salaries and benefits amount above includes $91,407 (2018 - $111,250) for fees invoiced by a corporation controlled by the CFO of the Company for his services and $102,952 (2018 - $5,988) for fees invoiced by the CEO of the Company for his services as CEO. In 2018, the Company paid $392,500 including $225,000 as termination payment to a corporation controlled by the former CEO of the Company $225,000 for termination payment to a corporation controlled by the former CEO of the Company. Included in accounts payable and accrued liabilities at December 31, 2019 is $nil (2018 - $10,374) owed to corporation controlled by the CFO and $15,013 (2018 - $6,247) owed to the CEO.

b) Private Placement As part of the private placement completed in June 2019, officers of the Company acquired 260,000 flowthrough common shares for gross proceeds of $28,600. As part of the private placement completed in December 2019, a director of the Company subscribed for common share units for gross proceeds of $237,760.

PROPOSED TRANSACTIONS

The Company continues to evaluate quality exploration projects and financing opportunities. There are no transactions currently pending.

CHANGES IN ACCOUNTING POLICIES

IFRS 16 – Leases (“IFRS 16”) was issued in January 2016 and replaces IAS 17 – Leases as well as some lease related interpretations. With certain exceptions for leases under twelve months in length or for assets of low value, IFRS 16 states that upon lease commencement a lessee recognizes a right-of-use asset and a lease liability. The right-of-use asset is initially measured at the amount of the liability plus any initial direct costs. After lease commencement, the lessee shall measure the right-of-use asset at cost less accumulated depreciation and accumulated impairment. A lessee shall either apply IFRS 16 with full retrospective effect or alternatively not restate comparative information but recognize the cumulative effect of initially applying IFRS 16 as an adjustment to opening equity at the date of initial application. IFRS 16 requires that lessors classify each lease as an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. Otherwise it is an operating lease. IFRS 16 is effective for annual periods beginning on or after January 1, 2019. At January 1, 2019, the Company adopted this standard and there was no material impact on the Company’s condensed interim consolidated financial statement.

FINANCIAL INSTRUMENTS

		2019		2018
Financial assets:
Amortized cost
Cash and cash equivalents	$	1,434,347	$	1,176,697
Amounts receivable		-		816
FVPL
Investments		2,196		2,110
Financial liabilities:
Amortized cost
Accounts payable and accrued liabilities	$	35,769	$	138,199

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MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

As of December 31, 2019 and December 31, 2018, the fair value of all the Company's financial instruments approximates the carrying value, due to their short-term nature, except as for the investment which is presented at fair value.

As at December 31, 2019, the Company’s Investment on the consolidated statements of financial position was recorded at level 1 with a fair value of $2,196 (2018 - $2,110).

Significant accounting judgments and estimates:

The preparation of consolidated financial statements in conformity with IFRS requires the Company’s management to make judgments, estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and related notes to the financial statements. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results may differ from those estimates.

The areas that require management to make significant judgments, estimates and assumptions in determining carrying values include, but are not limited to the following:

• Assets’ carrying values and impairment charges

• In the determination of carrying values and impairment charges, management looks at the higher of recoverable amount or fair value less costs to sell in the case of assets and at objective evidence, significant or prolonged decline of fair value on financial assets indicating impairment. These determinations and their individual assumptions require that management make a decision based on the best available information at each reporting period.

Income and other taxes

Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax expense is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is provided using the statement of financial position liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes and the initial recognition of assets or liabilities that affect neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the financial position reporting date.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized.

• Share-based payments

Management determines costs for share-based payments using market-based valuation techniques. The fair value of the market-based and performance-based non-vested share awards are determined at the date of grant using generally accepted valuation techniques. Assumptions are made and judgments used in applying valuation techniques. These assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield, future employee turnover rates and future employee stock option exercise behaviors and corporate performance. Such judgments and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates. The Company currently estimates the expected volatility of its common

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MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

shares based on historical volatility taking into consideration the expected life of the options and warrants.

Capital Management:

The Company manages its capital with the following objectives:

• to ensure sufficient financial flexibility to achieve the ongoing business objectives including funding of future growth opportunities, and pursuit of accretive acquisitions and

• to maximize shareholder return through enhancing the share value.

The Company monitors its capital structure and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business and industry in general. The Company may manage its capital structure by issuing new shares, repurchasing outstanding shares, adjusting capital spending, or disposing of assets. The capital structure is reviewed by Management and the Board of Directors on an ongoing basis.

The Company considers its capital to consist of equity, comprising share capital, reserves and deficit. The Company manages capital through its financial and operational forecasting processes. The Company reviews its working capital and forecasts its future cash flows based on operating expenditures, and other investing and financing activities. The forecast is regularly updated based on its exploration and development activities. Selected information is regularly provided to the Board of Directors of the Company. The Company’s capital management objectives, policies and processes have remained unchanged during the years ended December 31, 2019 and 2018. The Company is not subject to any capital requirements imposed by a regulator or lending institution.

ADDITIONAL INFORMATION

Outstanding Shareholders’ Equity Data

As of March 4, 2020, the following are outstanding:

•	Common Shares	64,688,449
•	Stock Options	5,155,000
•	Warrants	16,264,023

Uncertainties and Risk Factors

An investment in the securities of the Company is highly speculative and involves numerous and significant risks. Such investment should be undertaken only by investors whose financial resources are sufficient to enable them to assume these risks and who have no need for immediate liquidity in their investment. Prospective investors should carefully consider the risk factors that have affected, and which in the future are reasonably expected to affect, the Company and its financial position.

In addition to the risks outlined below, Murchison has identified the extreme volatility occurring in the financial markets as a significant risk for the Company. As a result of the market turmoil, investors are moving away from assets they perceive as risky to those they perceive as less so. Companies like Murchison are considered risk assets and as mentioned above are highly speculative. The volatility in the markets and investor sentiment may make it difficult for the Company to access the capital markets to raise the funds required for its future expenditures.

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MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

Exploration, Development and Operating Risks

Mining operations generally involve a high degree of risk. The Company’s operations are subject to all the hazards and risks normally encountered in the exploration, development and production of gold, precious metals and other minerals, including unusual and unexpected geologic formations, seismic activity, rock bursts, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and possible legal liability. Although adequate precautions to minimize risk will be taken, milling operations are subject to hazards such as equipment failure or failure of retaining dams around tailings disposal areas which may result in environmental pollution and consequent liability.

The exploration for and development of mineral deposits involves significant risks which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of a mineral-bearing structure may result in substantial rewards, few properties which are explored are ultimately developed into producing mines.

Major expenses may be required to locate and establish mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that the exploration or development programs planned by The Company will result in a profitable commercial mining operation. Whether a gold or other mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as quantity and quality of mineralization and proximity to infrastructure; mineral prices which are highly cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in The Company not receiving an adequate return on invested capital.

There is no certainty that the expenditures made by the Company towards the search and evaluation of gold or other minerals will result in discoveries of commercial quantities of gold or other minerals.

Country Risk

The Company may conduct business in jurisdictions and some countries in which the title to its properties may be uncertain or where access to infrastructure, or political stability, or security, among other things, may be unknown, or known, and prevent, or severely compromise, the Company from carrying out business. It may be that the Company accepts some or all of these risks, to the extent that they can be determined at all, in favour of acquiring properties with exceptional exploration and development potential, and may ultimately be prevented from exploring and developing those properties for any number of reasons which may, or may not, be predictable, foreseeable, or manageable.

Current Economic Conditions

There are significant uncertainties regarding the price of precious metals and other minerals and the availability of equity financing for the purposes of mineral exploration and development. The prices of precious metals and other minerals have fluctuated substantially over the past several years. The Company’s future performance is largely tied to the development of its current mineral properties and the overall financial markets. Current financial markets are likely to be volatile for the remainder of the calendar year, reflecting ongoing concerns about the stability of the global economy and global growth prospects. As well, concern about global growth has led to sustained drops in the commodity markets for commodities other than gold. As a result, the Company may have difficulties raising equity financing for the purposes of mineral exploration and development, particularly without excessively diluting present shareholders of the Company. These economic trends may limit the Company’s ability to develop and/or further explore its mineral property interests.

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MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

Limited Operating History

The Company has a limited history of operations, is in the early stage of exploration and must be considered a start-up company. As such, the Company is subject to many risks common to such enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial and other resources and lack of revenues. It is common in new mining operations to experience unexpected problems and delays. In addition, delays in the commencement of mineral production often occur. There is no assurance that the Company will be successful in achieving a return on shareholders’ investment or successfully establish mining operations and the likelihood of success must be considered in light of its early stage of operations.

Reliability of Resource Estimates

There is no certainty that any mineral resources identified in the future on any of the Company’s properties will be realized. Until a deposit is actually mined and processed the quantity of mineral resources and grades must be considered as estimates only. In addition, the quantity of mineral resources may vary depending on, among other things, metal prices. Any material change in quantity of mineral resources, grade or stripping ratio may affect the economic viability of any project undertaken by the Company. In addition, there can be no assurance that gold recoveries or other metal recoveries in small-scale laboratory tests will be duplicated in a larger scale test under on-site conditions or during production.

Fluctuations in gold and other base or precious metals prices, results of drilling, metallurgical testing and production and the evaluation of studies, reports and plans subsequent to the date of any estimate may require revision of such estimate. Any material reductions in estimates of mineral resources could have a material adverse effect on the Company’s results of operations and financial condition from time to time.

Insurance and Uninsured Risks

The Company’s business is subject to a number of risks and hazards generally, including adverse environmental conditions, industrial accidents, labour disputes, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods and earthquakes. Such occurrences could result in damage to mineral properties or production facilities, personal injury or death, environmental damage to The Company’s properties or the properties of others, delays in mining, monetary losses and possible legal liability.

Although the Company may in the future maintain insurance to protect against certain risks in such amounts as it considers to be reasonable, its insurance will not cover all the potential risks associated with a mining company’s operations. The Company may also be unable to maintain insurance to cover these risks at economically feasible premiums. Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. Moreover, insurance against risks such as environmental pollution or other hazards as a result of exploration and production is not generally available to the Company or to other companies in the mining industry on acceptable terms. The Company might also become subject to liability for pollution or other hazards which may not be insured against or which the Company may elect not to insure against because of premium costs or other reasons. Losses from these events may cause the Company to incur significant costs that could have a material adverse effect upon its financial performance and results of operations.

Environmental Risks and Hazards

All phases of the Company’s operations are subject to environmental regulation in the jurisdictions in which it operates. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Company’s operations. Environmental hazards may exist on the properties on which the Company holds interests which are unknown to the

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MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

Company at present and which have been caused by previous or existing owners or operators of the properties.

Government approvals and permits are currently and may in the future be required in connection with the Company’s operations. To the extent such approvals are required and not obtained, the Company may be curtailed or prohibited from continuing its exploration or mining operations or from proceeding with planned exploration or development of mineral properties.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations or in the exploration or development of mineral properties may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Amendments to current laws, regulations and permits governing operations and activities of mining and exploration companies, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in exploration expenses, capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.

Infrastructure

Mining, processing, development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges, power sources and water supply are important determinants, which affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect the Company’s operations, financial condition and results of operations.

Land Title

No assurances can be given that there are no title defects affecting property or any other property interests of the Company. Title insurance generally is not available, and the Company’s ability to ensure that it has obtained secure claim to individual mineral properties or mining concessions may be severely constrained. Furthermore, the Company has not conducted surveys of the claims in which it holds an interest and, therefore, the precise area and location of such claims may be in doubt. Accordingly, the Company’s mineral properties may be subject to prior unregistered liens, agreements, transfers or claims, including native land claims, and title may be affected by, among other things, undetected defects. In addition, the Company may be unable to operate its properties as permitted or to enforce its rights with respect to its properties.

Competition

The mining industry is competitive in all of its phases. The Company faces strong competition from other mining companies in connection with the acquisition of properties producing, or capable of producing, precious and base metals. Many of these companies have greater financial resources, operational experience and technical capabilities than the Company. As a result of this competition, the Company may be unable to maintain or acquire additional attractive mining properties on terms it considers acceptable or at all. Consequently, the Company’s revenues, operations and financial condition could be materially adversely affected.

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MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

Additional Capital

The development and exploration of the Company’s properties will require substantial additional financing.

Failure to obtain sufficient financing may result in the delay or indefinite postponement of exploration, development or production on any or all of the Company’s properties or even a loss of property interest. The primary source of funding available to the Company consists of equity financing. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favourable to the Company.

Commodity Prices

The price of the Company’s common shares, the Company’s financial results and exploration, development and mineral development activities may in the future be significantly adversely affected by declines in the price of precious metals or other minerals. The price of precious metals and other minerals fluctuates widely and is affected by numerous factors beyond the Company’s control such as the sale or purchase of commodities by various central banks and financial institutions, interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand, the political and economic conditions of major mineral-producing countries throughout the world, and the cost of substitutes, inventory levels and carrying charges. Future serious price declines in the market value of precious metals or other minerals could cause continued development of and commercial production from the Company’s properties to be impracticable. Depending on the price of precious metals and other minerals, cash flow from mining operations may not be sufficient and the Company could be forced to discontinue production and may lose its interest in, or may be forced to sell, some of its properties. Future production from the Company’s mineral exploration properties is dependent upon the prices of precious metals and other minerals being adequate to make these properties economic.

In addition to adversely affecting the Company’s future resource or reserve estimates, if any, and its financial condition, declining commodity prices can impact operations by requiring a reassessment of the feasibility of a particular project. Such a reassessment may be the result of a management decision or may be required under financing arrangements related to a particular project. Even if the project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause substantial delays or may interrupt operations until the reassessment can be completed.

Government Regulation

The development and mineral exploration activities of the Company are subject to various laws governing prospecting, development, production, taxes, labour standards and occupational health, mine safety, toxic substances, land use, water use, land claims of local people and other matters. In addition, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not otherwise be applied in a manner which could limit or curtail production or development in any of the jurisdictions in which the Company operates. Amendments to other current laws and regulations governing mineral exploration and development or more stringent implementation thereof could also have a substantial adverse impact on the Company.

Dividend Policy

No dividends on the common shares have been paid by the Company to date. Payment of any future dividends will be at the discretion of the Company’s board of directors after taking into account many factors, including the Company’s operating results, financial condition and current and anticipated cash needs.

Dilution to the Company Common Shares

As of March 4, 2020, the Company had 64,688,449 common shares and 21,419,023 convertible securities issued and outstanding. The increase in the number of securities issued and outstanding and the possibility of sales of such shares may have a depressive effect on the price of the common shares. In addition, as a result of such additional securities, the voting power of the existing shareholders in the Company will be diluted.

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MURCHISON MINERALS LTD. MANAGEMENT’S DISCUSSION AND ANALYSIS – DECEMBER 2019

Key Executives

The Company is dependent on the services of key executives, including the directors of Murchison and a small number of highly skilled and experienced executives and personnel. Due to the relatively small size of the Company, the loss of these persons or the Company’s inability to attract and retain additional highly skilled employees may adversely affect its business and future operations.

Conflicts of Interest

Certain directors and officers of the Company also serve as directors and/or officers of other companies involved in natural resource exploration and development and consequently there exists the possibility for such directors and officers to be in a position of conflict. Any decision made by any of such directors and officers involving Murchison should be made in accordance with their duties and obligations to deal fairly and in good faith with a view to the best interests of Murchison and its shareholders. In addition, each of the directors is required to declare and refrain from voting on any matter in which such directors may have a conflict of interest in accordance with the procedures set forth in the Canada Business Corporations Act and other applicable laws.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements based on the Company’s current expectations. Forward-looking information can often be identified by forward looking words such as “anticipate”, “believe”, “expect”, “goal”, “plan”, “intend”, “estimate” or similar words suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance.

These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those presented in this document. Accordingly, the Company undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change, unless required by law. Readers are cautioned not to place undue reliance on forward-looking information .

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