Pangolin Diamonds Corp. — Management Reports 2023

Oct 31, 2023

Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS June 30, 2023

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 annual audited consolidated financial statements for the years ended June 30, 2023 and June 30, 2022. Additional information relating to the Company may be accessed through SEDAR at www.sedarplus.ca.

This commentary is as of October 30, 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 forward-looking statements, whether as a result of new information, future events, results or otherwise, except as required by applicable securities laws.

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.

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS June 30, 2023

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 licenses 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 Licenses and Geocontracts Prospecting Licenses (as such terms are defined below).

On July 15, 2022, the Company acquired all of the issued and outstanding shares of Amulet Diamond (Botswana) Pty Limited (“Amulet Bots”) for a total consideration of US$1. The transaction did not constitute a business combination as the acquisition did not meet the definition of a business under IFRS 3 – Business Combinations. As a result, the acquisition has been accounted for as an asset acquisition, whereby all of the assets acquired and liabilities assumed were recorded at the fair value of the consideration paid of US$1. Upon closing of the transaction, Amulet Bots became a wholly-owned subsidiary of the Company.

As part of the acquisition, the assets acquired included certain plant and equipment (the “BK11 Assets”) relating to the BK11 Mine, located in Letlhakane, Botswana. Diacor International Ltd. (“Diacor”), which is an arm’s length party to Amulet Bots and the Company, holds security over the BK11 Assets in connection with a loan provided to the previous parent company of Amulet Bots. As part of the acquisition, Diacor agreed to discharge its security interest over the BK11 Assets subject to terms and conditions of the acquisition agreement, which included an agreement that the Company will use its best efforts to liquidate the BK11 Assets over a period 18 months from the date of the agreement and remit to Diacor proceeds in the amount up to US$500,000 to satisfy the original indebtedness related to the loan. Upon receipt of US$500,000 or if the assets are not liquidated over the 18 month period, Diacor will relinquish any further legal interest in the proceeds of any future sales of BK11 Assets and Pangolin will retain a 100% interest in all such sales and remaining BK11 Assets.

As at June 30, 2023, the Company was not able to obtain access to the BK11 Assets as the assets are being held in a remote location in a secured facility operated by a third party. As a result, the Company has assessed the likelihood of an outflow of resources to be remote and accordingly, no provision has been recognized in the consolidated financial statements.

Properties

Pangolin, through its wholly-owned subsidiaries, holds title to various properties (herein, the “Pangolin Properties”). The Pangolin Properties consist of seventeen(17) diamond prospecting licenses 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 Licenses”).

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS June 30, 2023

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 licenses 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	Status
134/2020	01-Oct-20	30-Sep-23	Renewal applied for 1000 km2
141/2020	01-Oct-20	30-Sep-23	Renewal applied for 445.3 km2
172/2020	01-Oct-20	30-Sep-23	Renewal appliedfor 1000km2
261/2022	01-Oct-20	30-Sep-23	Renewal applied for 135 km2
262/2022	01-Oct-22	30-Sep-25	Active 36 km2
263/2022	01-Oct-22	30-Sep-25	Active 19km2
264/2022	01-Oct-22	30-Sep-25	Active 474 km2
726/2022	01-Oct-22	30-Sep-25	Active 28km2
2537/2023	01-Apr-23	31-Mar-26	Active 414.79 km2

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS June 30, 2023

2538/2023	01- Jul-23	30 Jun 26	Active 332.5km2
2539/2023	01-Jul-23	30-Jun-26	Active 960.46 km2
2540/2023	01-Jul-23	30-Jun-26	Active 184.31 km2
2541/2023	01-Jul-23	30-Jun-26	Active 965.49 km2
2542/2023	01-Jul-23	30-Jun-26	Active 997.12 km2
2543/2023	01-Jul-23	30-Jun-26	Active 919.01 km2
2544/2023	01-Jul-23	30-Jun-26	Active 994.62 km2
2545/2023	01-Jul-23	30-Jun-26	Active 815.41 km2
Total			9721.01 km2

Property Description and Status

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

Three prospecting licenses (PL134/2020, PL141/2020 and PL172/2020) have been issued to Pangolin Botswana for a period of three years from October 1, 2020 to September 30, 2023. Renewal for a period of two years have been applied for to the Department of Mines.

Prospecting license 2537/2023 has been issued to explore for metals in an area where aeromagnetic interpretation suggest there are magmatic intrusions as well as fold structures. This area is located on the edge of the Limpopo Mobile Belt and has not been explored for metals in the past.

Prospecting license 2538-2545/2023 have been issued to prospect for diamonds. These licenses essentially cover areas where exploration rights were lost due to the age lapse of previous prospecting licenses held by Pangolin Diamonds.

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 2023, 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 licenses. These ground magnetic surveys over selected targets continued during the quarter. In addition, soil sampling of the aeromagnetic targets is in progress.

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS June 30, 2023

Exploration Planning

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

All available data over the Prospecting Licenses are being reviewed and an exploration programme will be developed to follow up targets to be developed.

Kweneng Project

Prospecting License 033/2019 has initially been granted to Pangolin Diamonds (Pty) Limited for a period of three years from October 1, 2019 to September 30, 2022.

PL033/2019 has been renewed for a period of two years from October 1, 2022 to September 30, 2024.

The prospecting license 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.

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

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS June 30, 2023

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 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.

Additional Disclosure for Venture Issuers Without Significant Revenue

During the years ended June 30, 2023 and June 30, 2022 the Company incurred the following exploration and evaluation expenditures:

		2023		2022
Exploration drilling	$	55,848	$	29,198
Exploration sample analysis		19,444		-
Field consumables and equipment		8,107		6,329
Fuels and oils		23,620		18,265
Motor vehicle expenses and transport		41,851		43,696
Repairs and maintenance		68		27
Geological consultingand licenses		229,099		215,682
	$	378,037	$	313,197

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS June 30, 2023

Results of Operations

Quarterly Results

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Revenue

The Company did not have any revenue for the years ended June 30, 2023 and 2022.

Share-Based Compensation

Share-based compensation for the year ended June 30, 2023 totaled $nil (year ended June 30, 2022 - $nil).

Costs and Expenses

Costs and expenses for the year ended June 30, 2023 were $588,803 and included the following categories: Exploration and evaluation expenditures, consulting fees, professional fees, administrative costs, travel and promotion, depreciation, and investor relations expenses.

Loss

Pangolin had a net loss of $588,803 for the year ended June 30, 2023. Exploration activities accounted for $378,037, consulting fees of $72,000, and administrative costs of $65,609, investor relations, promotion and travel of $4,938, professional fees of $64,744, and a foreign exchange loss of $1,585, share based payments of $nil, and depreciation totaled $1,890.

Quarterly Results

Loss

Pangolin had a net loss of $167,603 for the three months ended June 30, 2023. Exploration activities accounted for $127,865, consulting fees of $18,000, investor relations, promotion and travel of $1,930, professional fees of $16,765, depreciation of $1,403, and a foreign exchange gain of $4,782, 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 $1,386,362 and cash of $36,708 as at June 30, 2023 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

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS June 30, 2023

that casts significant doubt about the Company’s ability to continue as a going concern. During the year ended June 30, 2023, the Company received non-interest bearing advances of $300,017 (year ended June 30, 2022 - $430,018) from a shareholder.

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 years ended June 30, 2023 and 2022 were as follows:

		2023		2022
Consulting fees (CFO)	$	72,000	$	72,000
Consulting fees included in exploration expenses (CEO)	$	93,854	$	92,300

Related party transactions:

As at June 30, 2023 and June 30, 2022, respectively, the Company had the following balances receivable from (payable to) related parties that are not subsidiaries of the Company:

to) related parties that are not subsidiaries of	the Company:
		June 30,		June 30,
		2023		2022
Shareholder loans (CEO)	$	(952)	$	(8,471)

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

During the year ended June 30, 2023, the Company incurred legal fees of $14,731 (2022 - $2,450) charged by a law firm of which a director of the Company is a partner. Included in amounts payable as at June 30, 2023 was $nil (2022 - $2,343) owing to this law firm.

During the year ended June 30, 2023, the Company incurred rent expense of $18,000, (2022 - $18,000) charged by a director of the Company for use of a facility in Botswana. As at June 30, 2023, $63,000 (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 June 30, 2023

During the year ended June 30, 2023, the Company incurred rent expense of $2,400 (2022 - $2,400) charged by the Company's CFO for office space. As at June 30, 2023, $nil (June 30, 2022 - $nil) was included in amounts payable and accrued liabilities pertaining to rent incurred.

Included in accounts payable is $150,000 (2022 - $84,000) owed to the Company's Chief Financial Officer and $266,350 (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 December 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 officer of the Company, holds a 1.15% net smelter royalty ("NSR") calculated on the same basis as the government’s royalty.

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS June 30, 2023

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 Licenses 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 Licenses 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 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.

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 political and 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	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 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

June 30, 2023

		disputes exist with respect to the Company’s properties
	The Company’s ability to meet its working capital needs at the current level for the twelve- month period ending June 30, 2024. 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 June 30, 2024, 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 June 30, 2024, 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 exist with respect to the Company’s properties	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
	Management’s outlook regarding future trends	Financing will be available for the Company’s exploration and operating activities; the price of	Diamond price volatility; changes in debt and equity markets; interest rate and exchangeratefluctuations;

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS June 30, 2023

		diamonds will be favourable to the Company	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) 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 Consolidated 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. The following risk factors are not an exhaustive list of all risk factors associated with an investment in Pangolin or in connection with Pangolin’s operations.

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS June 30, 2023

Nature of Mineral Exploration

Resource exploration and development is a speculative business and involves a high degree of risk which even a combination of experience, knowledge and careful evaluation may not be able to overcome. The properties in which Pangolin holds an interest are without a known mineral resource. Each of the Company’s proposed programs on its properties is an exploratory search for resources. There can be no assurance that commercial quantities of resources will be discovered. There can also be no assurance that even if commercial quantities of resources are discovered, a mineral property will be brought into commercial production. The discovery of mineral deposits is dependent upon a number of factors not the least of which is the technical skill of the exploration personnel involved. The commercial viability of a mineral deposit, once discovered, is also dependent upon a number of factors, some of which are the particular attributes of the deposit, such as size, grade and proximity to infrastructure, metal prices and government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection. Most of the above factors are beyond the control of Pangolin.

Limited Operating History

Pangolin has no history of generating revenue or profits, and has no experience of placing a resource property into commercial production. There can be no assurance that it will generate profits in the future.

Requirement for Further Financing

Pangolin has relied to date, on equity financing to fund its operations. Pangolin does not have sufficient financial resources to undertake all of its currently planned exploration programs. There can be no assurance that Pangolin will be able to raise the financing required or that such financing can be obtained without substantial dilution to its shareholders. Failure to obtain additional financing on a timely basis could cause Pangolin to reduce or terminate its operations or lose its interest in its properties.

Fluctuation in Mineral Prices

The mining industry in general is intensely competitive and there is no assurance that, even if commercial quantities of mineral resource are discovered, a profitable market will exist for the sale of same or those mineral prices will be such that Pangolin’s properties can be mined at a profit. Factors beyond the control of Pangolin may affect the ability of Pangolin to attract investors and receive further funds for exploration. Minerals prices have experienced volatile and significant price movements over short periods of time, and are affected by numerous factors beyond the control of Pangolin, including international economic and political trends, expectations of inflation, currency exchange fluctuations (specifically, the Botswana Pula relative to other currencies), interest rates and global or regional consumption patterns, speculative activities and increased production due to improved mining and production methods. In particular, the supply of and demand for diamonds are affected by, among other factors, political events, economic conditions and production costs in major diamonds producing regions and governmental policies.

No Assurance of Titles or Boundaries

Pangolin believes it has good and valid to title to its mineral properties, but this cannot be construed as a guarantee of title. Other parties may dispute title to any of Pangolin’s mineral properties and any of Pangolin’s properties may be subject to prior unregistered agreements or transfers and title may be affected by undetected encumbrances or defects or governmental actions.

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS June 30, 2023

Uninsurable Risks

In the course of exploration of mineral properties, certain detrimental events and, in particular, unexpected or unusual geological conditions including rock bursts, cave-ins, fires, flooding, and earthquakes may occur. It is not always possible to fully insure against such risks and Pangolin may decide not to take out insurance against such risks as a result of the high cost of premiums or for other reasons. Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of the securities of Pangolin.

Environmental and Other Regulatory Requirements

All phases of Pangolin’s operations are subject to environmental regulation. 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 can be no assurance that future changes in environmental regulation, will not adversely affect Pangolin’s activities. Environmental hazards may exist on the properties in which Pangolin holds interests - which are unknown to Pangolin at the present – but have been caused by previous or existing owners or operators of the properties.

Government approvals and permits are required in connection with Pangolin’s activities. To the extent such approvals are required and not obtained; Pangolin may be restricted or prohibited from proceeding with planned exploration 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 activities to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in exploration may be required to compensate those suffering loss or damage by reason of such 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 exploration companies, or more stringent implementation of existing laws, could have a material adverse impact on Pangolin and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new exploration properties.

Competition

Pangolin will compete with other exploration companies which have greater financial resources and technical facilities for the acquisition of mineral concessions, claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees.

Pangolin’s ability to locate and increase reserves in the future will depend not only on its ability to explore and develop its present properties, but also on its ability to select, acquire and develop suitable properties or prospects.

Further, the gross disparity in size between large and small mining producers in Botswana restricts small producers in that they have limited influence to secure access to Botswana’s transportation infrastructure. This access is necessary for producers to access international export markets for its production and to competitively sell Botswana minerals in international markets. Pangolin may have difficulties successfully accessing transportation infrastructure necessary to export the minerals it may produce in the future.

Conflicts of Interest

Certain directors and officers of Pangolin are also directors, officers or shareholders of other companies that are similarly engaged in the business of acquiring, developing and exploiting natural resource properties. Such associations may give

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS June 30, 2023

rise to conflicts of interest from time to time. The directors of Pangolin are required by law to act honestly and in good faith with a view to the best interests of Pangolin and to disclose any interest which they may have in any project or opportunity of Pangolin. If a conflict of interest arises at a meeting of the board of directors, any director in a conflict is required under the OBCA to disclose his interest and to abstain from voting on such matter.

Dependence on Key Management Employees

Pangolin’s development to date has depended, and in the future, will continue to depend, on the efforts of key management employees. The loss of any key management employees could have a material adverse effect on Pangolin. Furthermore, at present, Pangolin does not have key man insurance in place.

Foreign Currency Fluctuations

Pangolin’s current and proposed exploration operations in Botswana render it subject to foreign currency fluctuations, which may materially affect its financial position and results. Specifically, Pangolin sends funds to Botswana in CDN dollars and converts these funds into Botswana Pula. The important exchange rates for Pangolin are currently the rate between the CDN dollar and the Botswana Pula. While Pangolin is funding work in Botswana, Pangolin’s results could be impaired by adverse changes in the CDN dollar to the Botswana Pula exchange rate.

Unreliable Historical Data

Pangolin has compiled technical data in respect of its properties, much of which was not prepared by Pangolin. While the data represents a useful resource for Pangolin, much of it must be verified by Pangolin before being relied upon in formulating exploration programs.

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 Pangolin’s operations, financial condition and results of operations.

Government Regulation

The mineral exploration activities of Pangolin 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. Although Pangolin’s exploration and development activities are currently carried out in material compliance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be introduced and, if introduced, complied with. Amendments to current laws and regulations governing operations and activities of exploration, mining and milling or more stringent implementation thereof could have an adverse impact on Pangolin.

Enforcement of Civil Liabilities

Substantially all of the assets of Pangolin are located outside of Canada and certain directors and officers of Pangolin are residents outside of Canada. As a result, it may be difficult or impossible to enforce judgments granted by a court in Canada against the assets of Pangolin or the directors and officers of Pangolin residing outside of Canada.

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Pangolin Diamonds Corp. TSXV: PAN MANAGEMENT’S DISCUSSION & ANALYSIS June 30, 2023

Market Price of Pangolin’s Shares

Securities of micro-cap and small-cap companies have experienced substantial volatility in the past, often based on factors unrelated to the financial performance or prospects of the companies involved. These factors include macroeconomic developments in North America and globally and market perceptions of the attractiveness of particular industries. The price of Pangolin’s common shares is also likely to be significantly affected by short-term changes in mineral prices and its financial condition or results of operations. Other factors unrelated to Pangolin’s performance that may have an effect on the price of the Pangolin’s common shares include the following: the extent of analytical coverage available to investors concerning Pangolin’s business may be limited if investment banks with research capabilities do not follow Pangolin’s securities; decreasing trading volume and lack of general market interest in Pangolin’s securities may affect an investor’s ability to trade significant numbers of Pangolin Shares; the size of Pangolin’s public float may limit the ability of some institutions to invest in Pangolin’s securities; and a substantial decline in the price of the Pangolin’s common shares that persists for a significant period of time could cause Pangolin’s securities, if listed on an exchange, to be delisted from such exchange, eliminating market liquidity.

As a result of any of these factors, the price of Pangolin’s common shares at any given point in time may not accurately reflect Pangolin’s long-term value.

Dividend Policy

No dividends on the Pangolin Shares have been paid by Pangolin to date and none are expected to be paid for the foreseeable future. Payment of any future dividends will be at the discretion of Pangolin’s board of directors after taking into account many factors, including the Company’s operating results, financial condition and current and anticipated cash needs.

Future Sales of Shares by Existing Shareholders

Sales of a large number of the Company’s common shares in the secondary markets, or the potential for such sales, could decrease the trading price of its shares.

Share Capital

As at the date of this MD&A, there are 186,232,618 common shares outstanding, 51,725,800 warrants outstanding at exercise prices of between $0.05 and $0.07 per share and 4,500,000 stock options outstanding at exercise prices of between $0.05 and $0.06.

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.

Subsequent Event

On July 1, 2023, eight prospecting licenses were issued to the Company for a three year period to June 30, 2026.

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