Pangolin Diamonds Corp. — Management Reports 2023

Mar 1, 2023

Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS December 31, 2022

Overview

This Management’s Discussion and Analysis (“MD&A”) of financial results and related data of Pangolin Diamonds Corp. (“Pangolin” or the “Company”) is reported in Canadian dollars and has been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board. To the extent which may be appropriate, this MD&A should be read in conjunction with the To the extent which may be appropriate, this MD&A should be read in conjunction with the interim consolidated financial statements for the periods ended December 31, 2022 and December 31, 2021 and the annual audited consolidated financial statements for the years ended June 30 , 2022 and June 30, 2021. Additional information relating to the Company may be accessed through SEDAR at www.sedar.com.

This commentary is as of March 1, 2023. The reader should be aware that historical results are not necessarily indicative of future performance.

Forward-Looking Statements

This MD&A contains forward-looking information which may include, but is not limited to, statements with respect to the future financial or operating performance of the Company, future plans and objectives, competitive positioning, requirements for additional capital, government regulation of operations, environmental risks and the timing and possible outcome of litigation and regulatory matters. All statements other than statements of historical fact, included in this MD&A that address activities, events or developments that the Company expects or anticipates may occur in the future are forward-looking statements. Often, but not always, forward-looking statements can be identified by use of forward-looking words such as “may”, “could”, “would”, “might”, “will”, “expect”, “intend”, “plan”, “budget”, “scheduled”, “estimate”, “anticipate”, “believe”, “forecast”, “future” or “continue” or the negative thereof or similar variations. Forward-looking statements are based on certain assumptions and analyses made by the Company, in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances.

Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and known and unknown risks, many of which are outside the control of the Company, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements . Important factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, among other things, general business, economic, competitive, political and social uncertainties, the actual results of current operations, industry conditions, research and development activities, intellectual property and other proprietary rights, production risks, liabilities inherent in the mining industry, accidents, labour disputes, delays in obtaining regulatory approvals or financing and general market factors, including interest rates, currency exchange rates, equity markets, business competition, changes in government regulations. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in the forward-looking statements, there may be other factors that cause results to differ from those anticipated. Forward-looking statements contained in this MD&A are made as of the date hereof and the Company disclaims any obligation to update any forwardlooking statements, whether as a result of new information, future events, results or otherwise, except as required by applicable securities laws.

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS December 31, 2022

Business Background

Pangolin Diamonds Corp. (the “Company” or “Pangolin”) was incorporated under the Ontario Business Corporations Act on November 9, 2011. The Company is currently engaged in the acquisition, exploration and development of mineral properties in Botswana. The head office and principal address of the Company is 82 Richmond St East, Toronto, Ontario M5C 1P1.

On March 22, 2011, the Company acquired all of the issued and outstanding common shares of Pangolin Diamonds Limited (“PDL”), a private company incorporated under the laws of the Republic of Seychelles. PDL holds, through its subsidiaries Pangolin Diamonds (Pty) Limited (“Pangolin Botswana”) and Geocontracts Botswana (Pty) Limited (“Geocontracts”), prospecting licences relating to diamonds in Botswana. As a result of this transaction, the prior shareholders of PDL obtained a majority interest in the issued and outstanding shares of Pangolin Diamonds Corp.

On March 4, 2013, the Company closed its amalgamation with Key Gold Holding Inc. (“Key Gold”). At shareholder meetings for each of Key Gold and PDL held on January 15, 2013, the amalgamation of Key Gold and PDL, pursuant to an amalgamation agreement dated November 26, 2012, was approved (the “Amalgamation”). In connection with the Amalgamation, Key Gold shareholders received one common share of the Company (“Pangolin Share”) for each two outstanding common shares in the capital of Key Gold and PDL shareholders received one Pangolin Share for each outstanding common share in the capital of PDL.

Pangolin Botswana and Geocontracts are wholly-owned subsidiaries of PDL and were incorporated on January 22, 1987 and March 15, 1989, respectively, under the laws of the Republic of Botswana and have a head office and a registered office at Plot 337/338, Corner Khama Street / Selous Street, Francistown, Botswana. They currently manage and execute Pangolin’s day to day operations and their interest in the Pangolin Botswana Prospecting Licences and Geocontracts Prospecting Licences (as such terms are defined below).

On July 15, 2022, the company entered into an agreement to acquire from Amulet Diamond Corporation (“Amulet Canada”), an arm’s length party to the Company, all of the issued and outstanding shares of Amulet Diamond (Botswana) Pty Limited (“Amulet Bots”) for nominal consideration, which entity holds certain plant and equipment assets (the “BK11 Assets”) relating to the BK11 Mine, located in Letlhakane, Botswana. The BK11 Assets were originally acquired by Amulet Bots pursuant to the terms of a contractor and sampling services agreement, signed with Firestone Diamonds Limited and dated May 23, 2017.

As at the date hereof, Diacor International Ltd. (“Diacor”), which party is arm’s length to each of Amulet Canada, Amulet Bots and the Company, holds security (the “Amulet Security”) over all of the assets and undertakings of Amulet Canada in connection with the extension of a US$2 million loan (the “Amulet Indebtedness”) made by Diacor to Amulet Canada in May 2017 and has consented to the transactions (the “Transactions”) contemplated in the Agreement, including the discharge of the Amulet Security subject to the terms and conditions of the Agreement. As consideration for the release of the Amulet Security, Pangolin has agreed to use its best commercial efforts to liquidate the BK11 Assets following completion of the Transactions, subject to certain exceptions, and remit to Diacor 90% of the proceeds from such dispositions over a period of up to 18 months (the “Disposition Period”) until Diacor has received US$500,000 in satisfaction of the Amulet Indebtedness.

In connection with the completion of the Transactions, Pangolin has agreed to grant Diacor a general security interest (the “Pangolin Security”) in its assets and undertakings for the duration of the Disposition Period. Regardless of the value of the proceeds remitted to Diacor by Pangolin during the Disposition Period, Diacor has agreed to discharge the Pangolin Security upon the termination of the Disposition Period, at which point Diacor will no longer have any interest in and to the

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS December 31, 2022

proceeds of any future sales of BK11 Assets, as Pangolin will retain a 100% interest in all such sales and any remaining BK11 Assets.

Properties

Pangolin, through its wholly-owned subsidiaries, holds title to various properties (herein, the “Pangolin Properties”). The Pangolin Properties consist of nine (9) diamond prospecting licences (PL033/2019, PL134/2020, PL141/2020, PL172/2020, 261/2022, 262/2022, 263/2022, 264/2022 and 726/2022) granted by the Minister of Minerals Resources, Green Technology and Energy Security, of the Republic of Botswana (herein, the “Ministry”) in favour of Pangolin Botswana (the “Pangolin Botswana Prospecting Licences”).

In the event of a viable diamond deposit being discovered, it is necessary to negotiate the terms of any mining lease with the Botswana Government. Important principles governing such negotiations are that the Botswana Government will maximize the return to the People of Botswana, subject to the licensee receiving a reasonable return on investment. In the case of large, rich deposits such as De Beers’ Jwaneng and Orapa Diamond Mines, the Botswana Government has acquired a 50% interest in the deposit via a holding company, Debswana. History has shown that the working interests negotiated range between a 0% or no interest, up to a 50% interest.

The Botswana Government retains a 10% royalty on the gross market value of produced diamonds and can select to participate in development by contributing its share of development costs. Nomathata Diamonds, a company incorporated in the Republic of the Seychelles, which is controlled by a major shareholder, Dr. Leon Daniels, who is also a director as well as the Chief Executive Officer and President of the Company, holds a 1.15% net smelter royalty on new diamond deposit discoveries – calculated on the same basis as the Botswana Government’s royalty. Nomathata Diamonds agreed to sell a portion of its royalty to Umgeni Holdings International Limited (“Umgeni”) for proceeds of $300,000. Umgeni an arm’s length company, now holds a 3.75% gross overriding royalty of an amount equal to 97% of gross proceeds from the sale of diamonds ("GOR") and a 3.75% NSR on an amount equal to 97% of gross proceeds from the sale of base and precious metals in Pangolin’s Malatswae, Moenyenana and Motloutse diamond projects.

Malatswae Project

The Malatswae Project licences reached the end of their tenure period on September 30, 2022 and expired.

Motloutse Diamond Project

The Motloutse Diamond Project is located in eastern Botswana and is comprised of eight diamond PLs as described below:

PANGOLIN DIAMONDS (PTY) LTD

Prospecting Licence	Validity	Validity	Surface Area
	From	To
134/2020	01-Oct-20	30-Sep-23	1000km2
141/2020	01-Oct-20	30-Sep-23	445.3 km2
172/2020	01-Oct-20	30-Sep-23	1000km2

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS December 31, 2022

December 31, 2022
261/2022	01-Oct-20	30-Sep-23	135km2
262/2022	01-Oct-22	30-Sep-25	36 km2
263/2022	01-Oct-22	30-Sep-25	19km2
264/2022	01-Oct-22	30-Sep-25	474 km2
726/2022	01-Oct-22	30-Sep-25	28 km2
Total			3137.3km2

Two prospecting licences, PL321/2016 and PL229/2014 expired at the end of their tenure on December 31, 2022.

Property Description and Status

Five prospecting licences (PL 261/2022, PL262/2022, Pl263/2022, Pl264/2022 and Pl726/2022) have been newly issued to Pangolin Botswana for a three year period from October 1, 2022 to December 31, 2025.

Three prospecting licences (PL134/2020, PL141/2020 and PL172/2020) have been issued to Pangolin Botswana for a period of three years from October 1, 2020 to December 31, 2023.

Exploration to Date

Historically, the first authenticated diamonds in Botswana were found within the boundaries of PL 229/2014. The source of the diamonds has not been discovered.

A number of diverse aeromagnetic targets were followed up on the ground with both soil sampling and geophysical surveys. This programme was undertaken to filter different types of aeromagnetic anomalies identified within the Motloutse Project area. A number of anomalies have been tested since the inception of the Motloutse Project. To date no kimberlite has been discovered. This programme is in progress.

Results of Operations

During calendar Q4/2022, the field operations continued to be focused on following up aeromagnetic targets with ground magnetic surveys and soil sampling. Aeromagnetic targets have been selected for ground magnetic surveys within the prospecting licences. These ground magnetic surveys over selected targets continued during the quarter. In addition, soil sampling of the aeromagnetic targets is in progress.

Exploration Planning

Ground magnetic surveys and soil sampling over selected aeromagnetic anomalies in all current Prospecting Licences will continue. There is no aeromagnetic coverage available over PL 762/2022. This Prospecting Licence, which surrounds the BK16 kimberlite in the Orapa Kimberlite Field, will be systematically covered with blocks of groundmagnetic surveys.

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS December 31, 2022

Pangolin diamonds has entered into an Option Agreement with Diamextract Botswana Proprietary Limited within a defined area of interest of PL172/2020. Diamextrat has the opportunity to earn an interest of 80% in a diamond discovery within the area of interest.

All available data over the new Prospecting Licences will be reviewed and an exploration programme will be developed to follow up targets to be developed.

Kweneng Project

Prospecting Licence 033/2019 has initially been granted to Pangolin Diamonds (Pty) Limited for a period of three years from 01 October 2019 to 30 September 2022.

PL033/2019 has been renewed for a period of two years from 01 October 2022 to 30 September 2024.

The prospecting licence is located in the Kweneng District and covers an area of 361 km[2] . The area was previously explored by De Beers. They reported the recovery of chromites. An assessment of the chromite chemistry has identified a significant number of chromites recovered by De Beers as having compositions similar to that of chromites recovered as diamond inclusions. The regional felsic volcanics are not the source of these chromites. In addition, some of the chromites have compositions consistent with a derivation from a highly reduced mantle and inconsistent with a derivation from volcanics extruded at surface.

Exploration to Date

Five targets have been followed up with ground magnetic surveys. Soil samples have been collected over three of the targets. Drilling has identified an ultramafic dyke associated with mantle chromites in the KW04 valley.

Exploration Planning

Operations in the Kweneng Project will be ground magnetics along the strike and structural direction of the hypabyssal dyke discovered in the KW04 valley.

Yashomann Option Agreement

Pangolin Diamonds has entered into an Option Agreement with Yashomann Industries Limited (Yashomann) to explore PL280/2015 for diamonds. PL280/2015 is located in the Central District of Botswana and is situated in the headwater region of the Motloutse River where the first diamonds were discovered in Botswana.

The Option period was not extended at the end of June, 30 2022.

Yokota Diamond Project

A joint venture has been entered into with Yokota-Kikau (Pty) Ltd, a Botswana registered company, to explore the Orapa kimberlites AK21, AK22 and AK23 in Prospecting Licence 071/2020 and Orapa kimberlite BK08 in Prospecting Licence 072/2020. Pangolin Diamonds has the ability to earn a 90 percent interest in the kimberlites.

A limited drilling programme was undertaken at the BK08 kimberlite. The samples from holes drilled into the

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS December 31, 2022

kimberlite have been processed and a suite of indicator minerals have been selected for microprobe analysis. The microprobe analyses were received and an assessment of the mineral chemistry prompted Pangolin Diamonds to withdraw from the joint venture.

Letlhakane Diamond Project

Pangolin Diamonds has signed a Joint Venture Agreement with Koos Segolo Business Solutions dated 24 April 2022 to explore PL247/2017. Pangolin diamonds has the ability to earn an 85 percent interest in the project. The prospecting licence is located in the vicinity of Letlhakane between the Letlhakane Mine and the Orapa Mine. The 2125B/K31 kimberlite is situated within the boundaries of PL 247/2017.

After completing groundmagnetic surveys, sampling programmes and pitting operations over areas of interest, no significant targets were identified and Pangolin Diamonds has withdrawn from the joint venture with Koos Segolo Business Solutions.

Amulet

On July 15, 2022, the company entered into an agreement to acquire from Amulet Diamond Corporation (“Amulet Canada”), an arm’s length party to the Company, all of the issued and outstanding shares of Amulet Diamond (Botswana) Pty Limited (“Amulet Bots”) for nominal consideration, which entity holds certain plant and equipment assets (the “BK11 Assets”) relating to the BK11 Mine, located in Letlhakane, Botswana. The BK11 Assets were originally acquired by Amulet Bots pursuant to the terms of a contractor and sampling services agreement, signed with Firestone Diamonds Limited and dated May 23, 2017.

As at the date hereof, Diacor International Ltd. (“Diacor”), which party is arm’s length to each of Amulet Canada, Amulet Bots and the Company, holds security (the “Amulet Security”) over all of the assets and undertakings of Amulet Canada in connection with the extension of a US$2 million loan (the “Amulet Indebtedness”) made by Diacor to Amulet Canada in May 2017 and has consented to the transactions (the “Transactions”) contemplated in the Agreement, including the discharge of the Amulet Security subject to the terms and conditions of the Agreement. As consideration for the release of the Amulet Security, Pangolin has agreed to use its best commercial efforts to liquidate the BK11 Assets following completion of the Transactions, subject to certain exceptions, and remit to Diacor 90% of the proceeds from such dispositions over a period of up to 18 months (the “Disposition Period”) until Diacor has received US$500,000 in satisfaction of the Amulet Indebtedness.

In connection with the completion of the Transactions, Pangolin has agreed to grant Diacor a general security interest (the “Pangolin Security”) in its assets and undertakings for the duration of the Disposition Period. Regardless of the value of the proceeds remitted to Diacor by Pangolin during the Disposition Period, Diacor has agreed to discharge the Pangolin Security upon the termination of the Disposition Period, at which point Diacor will no longer have any interest in and to the proceeds of any future sales of BK11 Assets, as Pangolin will retain a 100% interest in all such sales and any remaining BK11 Assets.

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS December 31, 2022

Additional Disclosure for Venture Issuers Without Significant Revenue

During the quarters ended December 31, 2022 and December 31, 2021 the Company incurred the following exploration and evaluation expenditures:

		2022		2021
Fuels and oils	$	7,693	$	5,722
Exploration drilling		10,064		37,857
Motor vehicle expenses		11,432		15,964
Field consumables and equipment		1,154		1,210
Repairs and maintenance		1		-
General exploration expenses		62,227		59,377
	$	92,571	$	120,130

Results of Operations

Quarterly Results

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Loss

Pangolin had a net loss of $165,464 for the three months ended December 31, 2022. Exploration activities accounted for $92,571, consulting fees of $18,000, investor relations, promotion and travel of $3,006, professional fees of $26,338, depreciation of $121, and a foreign exchange loss of $5,793, Share based payments totaled $nil.

Liquidity

Pangolin has financed its operations to date by the issuance of common shares and the sale of royalty interests. Pangolin had a working capital deficiency of $1,111,056 and cash of $33,024 as at December 31, 2022 as compared to a working capital deficiency of $816,680 and cash of $135,150 as at June 30, 2022. Further financing will be required for working capital and exploration expenditures. The Company is uncertain whether it can obtain, in the current environment, financing to complete its current work programs. This and other conditions reflect a material uncertainty that casts significant doubt about the Company’s ability to continue as a going concern. During the three months ended December 31, 2022, the Company received non-interest bearing advances of $100,018 (year ended June 30, 2022 - $430,018) from a shareholder.

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS December 31, 2022

Capital Resources

Pangolin has no sources of revenue. The availability of equity capital, and the price at which additional equity could be issued, will be dependent upon the success of Pangolin’s exploration activities, and upon the state of the capital markets generally. Additional financing may not be available on terms favourable to Pangolin or at all.

Off-Balance Sheet Arrangements

Pangolin does not have any off-balance sheet arrangements.

Transactions with Related Parties

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company.

Compensation of Key Management Personnel of the Company:

The remuneration of directors and other key members of management personnel during the quarters ended December 31, 2022 and 2021 were as follows:

		2022		2021
Consulting fees (CFO)	$	18,000	$	18,000
Consulting fees included in exploration expenses (CEO)	$	23,000	$	23,000

Related party transactions:

As at December 31 , 2022 and June 30, 2022, respectively, the Company had the following balances receivable from (payable to) related parties that are not subsidiaries of the Company:

		December	31,		June 30,
		2022			2022
Shareholders’ loans (CEO)	$	(10,176)		$	(8,471)

Shareholders’ loans payable are unsecured, non-interest bearing and due on demand.

During the three and six months ended December 31, 2022, the Company incurred legal fees of $6,172 and $13,295, respectively, (three and six months ended December 31, 2021 - $1,475 and $9,161, respectively) charged by a law firm of which a director of the Company is a partner. Included in amounts payable as at December 31, 2022 was $2,343 (June 30, 2022 - $2,343) owing to this law firm.

During the three and six months ended December 31, 2022, the Company incurred rent expense of $4,500 and $9,000, respectively (three and six months ended December 31, 2021 - $4,500 and $9,000, respectively) charged by a director of the Company for use of a facility in Botswana. As at December 31, 2022, $54,000 (June 30, 2022 - $45,000) was included in amounts payable and accrued liabilities pertaining to rent incurred.

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS December 31, 2022

During the three and six months ended December 31, 2022, the Company incurred rent expense of $600 and $1,200, respectively (three and six months ended December 31, 2021 - $600 and $1,200, respectively) charged by the Company's CFO for office space. As at December 31 2022, $nil (June 30, 2022 - $nil) was included in amounts payable and accrued liabilities pertaining to rent incurred.

Included in accounts payable is $120,000 (June 30, 2022 - $84,000) owed to the Company's Chief Financial Officer and $217,346 (June 30, 2022 - $185,168) owed to the Company's Chief Executive Officer who is also a director of the Company for consulting fees and sundry expense reimbursements. These amounts are unsecured, non-interest bearing, with no fixed terms for repayment.

The above noted transactions were approved by the Board of Directors.

Contingency

Environmental contingencies

The Company’s exploration activities are subject to various federal and international laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Company may make in the future, expenditures to comply with such laws and regulations.

Contingency

Pursuant to a share purchase agreement dated March 22, 2011, as amended November 8, 2012, and March 1, 2013, the Company has agreed to pay Leon Daniels, the former majority shareholder of PDL and a current director and officer of the Company, $1,200,000 in the event that the Company discovers at least ten kimberlites in connection with its properties, payable within 24 months of the discovery of such kimberlites, provided that each such kimberlite is “diamondiferous” as verified by a Qualified Person (as such term in defined in NI 43-101). In addition, the parties have agreed that for a kimberlite to be diamondiferous, it must be a kimberlite in which a “macro” diamond is contained – namely a diamond being greater than 0.5 mm in size. If a known diamondiferous kimberlite is acquired by the Company, it will not be counted as one of the 10 as described above. There have been no such kimberlites discovered by the Company to date.

Consulting agreements

The Company entered into a consulting agreement with an individual to perform functions as the Chief Financial Officer of the Company for a monthly fee of $6,000. This agreement was renewed in December 2020, and stipulates a 90 day notice provision in the event of termination.

The Company has also entered into a consulting agreement, effective September 1, 2017, with an individual to perform functions as the Chief Executive Officer of the Company for a monthly fee of US $6,000. This agreement was renewed in December 2020, and stipulates a 90 day notice provision in the event of termination.

Royalty Agreement

The Botswana government retains a 10% net royalty on the market value of produced diamonds and can select to participate in development by contribution of its share of development costs. Nomathata Diamonds Inc., a corporation incorporated in the Republic of the Seychelles, which is controlled by a significant shareholder who is also a director and

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS December 31, 2022

officer of the Company, holds a 1.15% net smelter royalty ("NSR") calculated on the same basis as the government’s royalty.

On November 27, 2018, the Company announced it had reached an agreement with Umgeni Holdings International Limited ("Umgeni") under which Umgeni has agreed to acquire a royalty interest in Pangolin’s Licences located within the Central District of Botswana, as well as an area defined as the Adjacent Area of Interest for $600,000. Umgeni is a private company of which Dr. Christopher Jennings is a beneficiary of the sole shareholder that initially purchased a 1.3% GOR and a 1.3% NSR for $600,000 in May of 2017.

Under the terms of the agreement, Umgeni agreed to pay Pangolin an additional $600,000, (of which all $600,000 had been received during the year ended December 31 , 2020), for a total of $1,200,000 in funding to date to acquire the following royalty interests in Pangolin’s Malatswae, Moenyenana and Motloutse diamond projects: a 2.6% gross overriding royalty on diamonds ("GOR") and a 2.6% net smelter returns royalty on base and precious metals ("NSR") over the Licences issued to Pangolin Diamonds (Pty) Limited and Geocontracts Botswana (Pty) Limited, located within the Central District of the Republic of Botswana, as well as a defined Adjacent Area of Interest.

Nomathata Diamonds agreed to sell a portion of its royalty Umgeni Holdings International Limited (“Umgeni”) for proceeds of $300,000. Umgeni an arm’s length company, now holds a 3.75% gross overriding royalty of an amount equal to 97% of gross proceeds from the sale of diamonds ("GOR") and a 3.75% NSR on an amount equal to 97% of gross proceeds from the sale of base and precious metals in Pangolin’s Malatswae, Moenyenana and Motloutse diamond projects.

Proposed Transactions

Pangolin has not entered into and has no current plans to enter into any asset or business acquisitions or dispositions.

Forward Looking Information (additional disclosure)

The following information provides further clarification with respect to the Company’s forward-looking information.

Forward-looking statements	Assumptions	Risk factors
Potential of the Company’s properties to contain diamond deposits	Financing will be available for future exploration and development of the Company’s properties; the actual results of the Company’s exploration and development activities will be favourable; operating, exploration and development costs will not exceed the Company’s expectations; the Company will be able to retain and attract skilled staff; all requisite regulatory and governmental approvals for exploration projects and other operations will be received on a timely basis upon terms acceptable to the Company, and applicable politicaland	Diamonds price volatility; uncertainties involved in interpreting geological data and confirming title to acquired properties; the possibility that future exploration results will not be consistent with the Company’s expectations; availability of financing for and actual results of the Company’s exploration and development activities; increases in costs; environmental compliance and changes in environmental and other local legislation and regulation; interest rate and exchange rate fluctuations; changes in economic and politicalconditions; the

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS

December 31, 2022

	economic conditions are favourable to the Company; the price of diamonds and applicable interest and exchange rates will be favourable to the Company; no title disputes exist with respect to the Company’s properties	Company’s ability to retain and attract skilled staff
The Company’s ability to meet its working capital needs at the current level for the twelve- month period ending September, 2023. The Company expects to incur further losses in the development of its business Should the Company not raise sufficient capital, it may cease to be a reporting issuer	The operating and exploration activities of the Company for the twelve-month period ending December 31 , 2023, and the costs associated therewith, will be consistent with the Company’s current expectations; debt and equity markets, exchange and interest rates and other applicable economic conditions are favourable to the Company	Changes in debt and equity markets; timing and availability of external financing on acceptable terms; increases in costs; environmental compliance and changes in environmental and other local legislation and regulation; interest rate and exchange rate fluctuations; changes in economic conditions
The Company’s ability to carry out anticipated exploration on its property interests	The exploration activities of the Company for the twelve-month period ending December 31, 2023, and the costs associated therewith, will be consistent with the Company’s current expectations; debt and equity markets, exchange and interest rates and other applicable economic conditions are favourable to the Company	Changes in debt and equity markets; timing and availability of external financing on acceptable terms; increases in costs; environmental compliance and changes in environmental and other local legislation and regulation; interest rate and exchange rate fluctuations; changes in economic conditions; receipt of applicable permits
Plans, costs, timing and capital for future exploration and development of the Company’s property interests, including the costs and potential impact of complying with existing and proposed laws and regulations	Financing will be available for the Company’s exploration and development activities and the results thereof will be favourable; actual operating and exploration costs will be consistent with the Company’s current expectations; the Company will be able to retain and attract skilled staff; all applicable regulatory and governmental approvals for exploration projects and other operations will be received on a timely basis upon terms acceptable to the Company; the Company will not be adversely affected by market competition; debt and equity markets, exchange and interest rates and other applicable economic and political conditions are favourable to the Company; the price of diamonds will be favourable to the Company;no title disputes	Diamond price volatility, changes in debt and equity markets; timing and availability of external financing on acceptable terms; the uncertainties involved in interpreting geological data and confirming title to acquired properties; the possibility that future exploration results will not be consistent with the Company’s expectations; increases in costs; environmental compliance and changes in environmental and other local legislation and regulation; interest rate and exchange rate fluctuations; changes in economic and political conditions; the Company’s ability to retain and attract skilled staff

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS December 31, 2022

	exist with respect to the Company’s properties
Management’s outlook regarding future trends	Financing will be available for the Company’s exploration and operating activities; the price of diamonds will be favourable to the Company	Diamond price volatility; changes in debt and equity markets; interest rate and exchange rate fluctuations; changes in economic and political conditions
Prices and price volatility for diamonds	The price of diamonds will be favourable; debt and equity markets, interest and exchange rates and other economic factors which may impact the price of diamondswillbefavourable	Changes in debt and equity markets and the spot price of diamonds; interest rate and exchange rate fluctuations; changes in economic and political conditions

Significant Accounting Policies

Significant Accounting Judgments and Estimates

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. The consolidated financial statements include estimates, which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods.

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

(i) Income, Value Added, Withholding and Other Taxes

The Company is subject to income, value added, withholding and other taxes. Significant judgment is required in determining the Company’s provisions for taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination of the Company’s income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The Company’s interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. All tax related filings are subject to government audit and potential reassessment subsequent to the consolidated financial statement reporting period. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax related accruals and deferred income tax provisions in the period in which such determination is made.

(ii) Existence of Decommissioning and Restoration Costs and the Timing of Expenditure

Decommissioning, restoration and similar liabilities are estimated based on the Company’s interpretation of current regulatory requirements and constructive obligations and are measured at fair value. Fair value is determined based on the net present value of estimated future cash expenditures for the settlement of decommissioning, restoration or

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS December 31, 2022

similar liabilities that may occur upon decommissioning of the mine. Such estimates are subject to change based on changes in laws and regulations and negotiations with regulatory authorities.

‐ (iii) 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 share awards are determined at the date of grant using generally accepted valuation techniques. Assumptions are made and judgment 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 behaviours and corporate performance. Such judgments and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates.

Management’s Responsibility for Financial Statements

The preparation of the consolidated financial statements is the responsibility of management. In the preparation of the consolidated financial statements, estimates are sometimes necessary to make a determination of future values for certain assets or liabilities. Management believes such estimates have been based on careful judgments and have been properly reflected in the consolidated financial statements. Management maintains a system of internal controls to provide reasonable assurance that Pangolin’s assets are safeguarded and to facilitate the preparation of relevant and timely information.

RISK FACTORS RELATING TO PANGOLIN

Pangolin’s common shares should be considered highly speculative due to the nature of Pangolin’s business and the present stage of its development and the location of its properties in Botswana. For a more complete listing of the risk factors relating to Pangolin, please refer to the Company’s MD&A for the year ended June 30, 2022.

Share Capital

As at the date of this MD&A, there are 186,232,618 common shares outstanding, 51,725,800 warrants outstanding at an exercise price of between $0.05 and $0.07 per share and 4,500,000 stock options outstanding at an exercise price of between $0.05 and $0.10.

Trends

Pangolin is not aware of any trend, commitment, event or uncertainty that is reasonably expected to have a material effect on Pangolin’s business, financial condition or results of operations as of the date of this MD&A, except as otherwise disclosed herein or except in the ordinary course of business.

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