REGULUS RESOURCES INC. - Management Reports 2021

REGULUS RESOURCES INC. MANAGEMENT’S DISCUSSION AND ANALYSIS

General

The following Management Discussion and Analysis (“MD&A”) of Regulus Resources Inc. (the “Company” or “Regulus”) has been prepared by management, in accordance with the requirements of National Instrument 51-102 (“NI 51-102”) as of January 28, 2021 and should be read in conjunction with the consolidated financial statements for the years ended September 30, 2020 and 2019, the related notes contained therein which have been prepared under International Financial Reporting Standards (“IFRS”), and all other disclosure documents of the Company. The information contained herein is not a substitute for detailed investigation or analysis on any particular issue. The information provided in this document is not intended to be a comprehensive review of all matters and developments concerning the Company. The Company is presently a “Venture Issuer” as defined in NI 51-102. Additional information relevant to the Company’s activities can be found on SEDAR at www.sedar.com and the Company’s website at www.regulusresources.com.

All financial information in this MD&A has been prepared in accordance with IFRS and all dollar amounts are quoted in Canadian dollars, the reporting currency of the Company, unless specifically noted.

Management is responsible for the preparation and integrity of the financial statements, including the maintenance of appropriate information systems, procedures and internal controls and to ensure that information used internally or disclosed externally, including the financial statements and MD&A, is complete and reliable. The Company’s Board of Directors follows recommended corporate governance guidelines for public companies to ensure transparency and accountability to shareholders. The board’s audit committee meets with management quarterly to review the financial statements including the MD&A and to discuss other financial, operating and internal control matters.

Description of Business and Overview

Regulus was formed in December 2010 in connection with the sale of Antares Minerals Inc. to First Quantum Minerals Ltd. Regulus is managed by the Antares team responsible for the discovery of the Haquira East porphyry copper deposit, which led to the sale of Antares. The goal of the Company is to discover and de-risk a large scale deposit that could ultimately be sold to a major mining company, similar to what was achieved with Antares. Regulus was initially established to continue exploration at its Rio Grande Au-Cu-Mo porphyry project in northern Argentina. The Company put the Rio Grande project on hold in 2012 in response to challenging market conditions and began pursuing opportunities for new mineral projects with good potential for significant discoveries. In September 2014, the Company completed a merger with Southern Legacy Minerals Inc. (“Southern Legacy”). The primary objective of the merger was to acquire the AntaKori Cu-Au-Ag project in northern Peru, which is now the flagship project for Regulus. The AntaKori project is located in a region with several large-scale gold and copper mines and deposits and adjacent to two operating mines (Tantahuatay and Cerro Corona). In March 2019, the Company released an updated NI 43-101 resource for AntaKori containing Indicated Resources of 250 million tonnes with a copper grade of 0.48%, gold grade of 0.29 grams per tonne and silver grade of 7.5 grams per tonne, and Inferred Resources of 267 million tonnes with a copper grade of 0.41%, gold grade of 0.26 grams per tonne and silver grade of 7.8 granms per tonne. Management is confident that further work will expand the current deposit to a size that will be of interest to major mining companies. In November 2018, all of the Company’s assets in Argentina, including the Rio Grande project, were transferred to Aldebaran Resources Inc. as part of a “spin-out” transaction by way of a statutory plan of arrangement.

Significant Events from October 1, 2019 to the Date of this Report

In October 2019, the Company terminated its option on the Golden Brew property and returned the project to Highway 50 Gold Corp. Further information is discussed under Mineral Property Review below.
In November 2019, the Company announced the receipt of the Declaración de Impacto Ambiental permit ("DIA") which allows up to 40 drill pads for the Anta Norte portion of its AntaKori project.
In November 2019, the Company announced drill results from four additional drill holes from its Phase II drill program; AK-19033A, AK-19-035, AK-19-036 and AK-19-037. The results are discussed under Mineral Property Review below.
In December 2019, the TSX Venture Exchange consented to the extension of the expiry date of 4,217,452 common share purchase warrants (the “Warrants”) that were issued pursuant to a private placement which closed on July 27, 2016 for an additional year to January 27, 2021. The Warrants are exercisable into common shares of the Company at an exercise price of $1.60 per common share. All other terms of the Warrants remain the same.

In December 2019, the Company announced the closing of a bought deal financing, including the exercise in full of the underwriter's option. A total of 7,783,875 units of the Company, each comprising one common share and one half of one common share purchase warrant ("Units"), were sold at a price of C$1.06 per Unit (the "Offering Price"), for aggregate gross proceeds of approximately $8.25 million (the "Public Offering"). Pursuant to a concurrent non-brokered private placement, 3,066,375 Units were sold to certain funds managed by Route One Investment Co. LP, the Company's largest shareholder, at the Offering Price, for additional aggregate gross proceeds of approximately $3.25 million. Together with the Public Offering, the Company raised total gross proceeds of approximately $11.5 million (the "Offering"). BMO Capital Markets acted as the sole underwriter for the Offering. The net proceeds of the Offering will be used to fund exploration and development activities at the AntaKori project, for working capital, and general corporate purposes.
In January 2020, the Company announced drill results from six additional drill holes from its Phase II drill program; AK-19-038, AK-19-039, AK-19-040, AK-19-041, AK-19-042 and AK-19-043. The results are discussed under Mineral Property Review below.
Peru declared a mandatory quarantine in March 2020 due to the novel coronavirus (“COVID-19”) pandemic. The Company immediately ceased all exploration activites and in-country staff were required to stay in their homes.
In June 2020, the Company announced the granting of stock options to directors, officers, employees and consultants to purchase up to 1,900,000 common shares at a price of $0.86 per share for five years, pursuant to its stock option plan.
In late July 2020, Company employees of the Cajamarca warehouse returned to work to prepare for the resumption of the Phase II drill program at AntaKori. The Company awarded the drilling contract to AK Drilling.
In October 2020, Regulus announced that it had entered into a strategic partnership with Osisko Gold Royalties Ltd. (“Osisko”) whereby Regulus agreed to grant certain rights to Osisko in exchange for an upfront cash payment of US$12.5 M (C$16.6 M). Further information is discussed under Strategic Partnership below.
In October 2020, Anna Tudela was appointed to the Board of Directors.
In October 2020, the Company re-commenced its Phase II drilling program on the Anta Norte geophysical targets at the north of the AntaKori project. The Anta Norte drill campaign is part of a 25,000 m Phase II program, of which 16,368 m were completed prior to the shutdown in March 2020 due to Covid-19. Further information is discussed under Outlook for 2021 below.
In late November 2020, the Company decided to suspend drilling activity at the Anta Norte portion of the project while dealing with environmental concerns voiced by individuals from a nearby community in the vicinity of the AntaKori project. Management confidently states that the drilling has no environmental impact on the body of water at issue due to location and elevation, and is assisting in evaluating the potential source of the impact. Prior to suspension of drilling, the first two holes were nearing anticipated completion depths and were halted in mineralized material. Further information is discussed under Outlook for 2021 below.
In December 2020, the Company announced the closing of the strategic partnership with Osisko.. The transaction added US$12.5 M (CAD$16.2 M) to the Company’s treasury, which will be used to fund exploration and development activities at the AntaKori project, and for working capital and general corporate purposes. Further information is discussed under Strategic Partnership below.
In January 2021, the Company announced drill results from two additional drill holes from its Phase II drill program; AK-19-044 and AK-19-045, the first two holes into the Anta Norte portion of the AntaKori Project. The results are discussed under Mineral Property Review below.
In January 2021, the TSX Venture Exchange consented to the extension of the expiry date of 4,217,452 common share purchase warrants (the “Warrants”) that were issued pursuant to a private placement which closed on July 27, 2016 for an additional six months to July 27, 2021. The Warrants are exercisable into common shares of the Company at an exercise price of $1.60 per common share. All other terms of the Warrants remain the same.

Outlook for 2021

Exploration activities will continue to focus on the AntaKori project in 2021. The Phase II drilling program re-commenced in mid-October 2020 and is anticipated to focus on the promising Anta Norte geophysical targets to the north. The Phase II program is planned to consist of approximately 25-30,000 metres of additional drilling and will form the basis for an updated mineral resources estimate to be completed by the end of 2021. A total of 18,023 m of drilling have been completed to date as part of the Phase II drilling program; of which 14,162 m were completed on Regulus claims, 3,669 m on the Colquirrumi joint venture claims and 191 m on Coimolache claims.

In mid-November 2020, the Company halted drilling due to concerns raised by individuals from a nearby community in the vicinity of the AntaKori project with respect to potential environmental impacts from this drilling on the Anta Norte portion of the project. Given the current political uncertainty in Peru and the upcoming elections, this matter has drawn attention from political interests from farther away from the project and increased the number of parties involved. In light of the challenges presented to communicate with larger groups under COVID-19 pandemic protocols, the Company decided to suspend drilling activity at the Anta Norte portion of the AntaKori project to focus on communication with all interested parties in a safe and constructive manner. The suspension of drilling activity at the Anta Norte target does not affect other ongoing evaluation activity on the greater AntaKori project and the Company is working with all involved parties to be able to reinitiate drilling and to continue to provide support and benefits to the communities in the vicinity of the project. The Company anticipates that drilling will recommence in Q1 2021.

The principal issue that has been brought to the Company’s attention is that waters in the nearby Aguas Coloradas Reservoir (Coloured Waters Reservoir) have become turbid and changed color and there are allegations that drilling activity at Anta Norte may have contributed to this. Regulus is confident that the drilling at Anta Norte has had no effect on the Aguas Coloradas Reservoir, as this body of water is located well to the east of where the drilling is occurring and is at a higher elevation and in a completely different drainage basin. The Company has offered to help fund a study and to work with the local community of Tranca de Pujupe to evaluate the potential source of the discolouration.

Prior to suspension of drilling, the first two holes had nearly reached anticipated completion depths. Hole AK-20-044 stopped at 813.40 m depth and hole AK-20-45 stopped at 841.40 m depth. Both holes have cut an extensive sequence of prospective carbonate host rock stratigraphy cut by porphyry dikes and breccias with increasing intensity of skarn development and sulphide mineralization at depth. Results from these two holes were reported in January 2021 with encouraging results. Hole AK-20-044 was a 370 m step out from previous drilling and successfully extended the mineralized footprint of the AntaKori system well beyond the current limits of the 2019 resource model and conceptual pit. In addition, mineralization and favourable alteration appear to be increasing with depth, with the hole ending in 50.8 m of well mineralized material. Hole AK20-045 is less well mineralized, however the intensity of mineralization and alteration is also clearly increasing towards the bottom of the hole. The results are discussed in more details under Mineral Property Review below. These holes confirm the hypothesis that favourable alteration and mineralization extend significantly to the north of both the reported AntaKori resource and the previously released drill holes in this area.

In addition, the Company had also selected 50 samples for metallurgical analysis that have been sent to local laboratories in Peru. It is anticipated that the Company will receive results on metallurgical testing by Q2 2021. Based upon the results from the metallurgical work, the Company will be able to begin developing a flow-sheet for the AntaKori project.

Given the ongoing Covid-19 pandemic, the Company cannot accurately predict an exploration budget for 2021. The Company currently projects an exploration budget of $16 MM with the majority dedicated to completing approximately 18,000 m of diamond drilling (712,000 m to complete the Phase II program and the remainder to initial a Phase III drilling program), and the acquisition of surface ground and investments into local communities.

At the date of this MD&A, the Company has approximately CAD$15,255,000 in cash and cash equivalents. The only firm commitments for the AntaKori project include 2021 annual concession fees, remediation costs estimated at US$50,000 annually and one public works project at an estimated cost of US$300,000.

Longer-term Outlook

Following the completion of the AntaKori Phase II drilling program, estimated for Q3 2021, the Company plans to prepare an updated mineral resource estimate in Q4 of 2021. If the extent of the deposit is not defined by the Phase II drilling program, additional drilling (Phase III) will likely continue. The Company is currently evaluating the best manner in which to complete a preliminary economic assessment (“PEA”) once the extent of the mineralization is largely defined given the challenges of the fragmented land ownership in the District. Once the PEA is completed, 1-2 years of infill drilling, metallurgy and other pre-feasibility level field investigations would be completed, leading to a Pre-feasibility Study at the earliest possible date of 2023. Completion of all of the Company’s objectives is subject to the Risks and Uncertainties listed at the conclusion of this MD&A, including the ability of the Company to raise additional capital in a timely manner.

Strategic Partnership

In December 2020, the Company closed a strategic partnership (the “Partnership”) whereby Regulus has granted certain rights to Osisko in exchange for an upfront cash payment (the “Upfront Payment”) of US$12.5 M (C$16.2 M). Details of the Partnership are as follows:

(a) There are existing royalties covering various claims on the AntaKori project currently held by private parties as described in the AntaKori Technical Report. In the event Regulus acquires any existing royalties within the current project area or within a 1 km area of interest surrounding the project on claims owned 100% by Regulus, Osisko has the option to acquire 50% of the acquired royalty by paying 75% of Regulus’ purchase price for the royalty;
(i) As a significant initial transaction under the Partnership, Regulus has acquired a royalty on the Mina Volare claim of the AntaKori project which represents a 1.5% or 3% NSR depending on location, from a private vendor. As per its right under the Partnership, Osisko has elected to acquire 50% of the royalty for 75% of Regulus’ purchase price, with Osisko’s acquisition cost for the royalty included in the Upfront Payment. Regulus has retired the remaining 50% of the royalty. As such, the Royalty on the Mina Volare claim is now reduced to a 0.75% or 1.5% depending on location, in favour of Osisko.
(ii) The AntaKori project currently has an in-situ resource with 2.6 billion pounds of copper, 2.3 million ounces of gold and 61 million ounces of silver in the indicated category, and 2.4 billion pounds of copper, 2.2 million ounces of gold and 67 million ounces of silver in the inferred category as per the AntaKori Technical Report.
(iii) The Mina Volare claim, where Osisko has acquired the initial royalty, contains approximately 75% of the indicated resource tonnes and approximately 50% of the inferred resource tonnes within the AntaKori project based on the AntaKori Technical Report.
(b) Osisko will have a right of first refusal on all future royalty or stream transactions in relation to claims of the AntaKori project where Regulus has 100% ownership or any additional claims Regulus might acquire with 100% ownership within the area of interest described above;
(c) Should Regulus receive a royalty or stream as consideration for the sale of AntaKori, Osisko will have a right of first refusal should Regulus later choose to sell that royalty or stream; and
(d) Regulus has issued to Osisko 5.5 million warrants having a term of 3 years and an exercise price equal to $2.25 per share representing a 48% premium to the volume-weighted average price of Regulus’ shares over the 20-trading day period ending September 30, 2020.

Mineral Property Review

This review has been prepared by John Black, CEO and Director of the Company. The scientific and technical data contained in the section has been reviewed and approved by Dr. Kevin B. Heather, BSc (Hons), MSc, PhD, FAusIMM, Chief Geological Officer of the Company, who serves as a qualified person (QP) under the definitions of National Instrument 43-101.

AntaKori Project

The flagship project for Regulus is the AntaKori Cu-Au-Ag project located in northern Peru. A NI 43-101 technical report entitled “AntaKori Project, Cajamarca Province, Peru, NI 43-101 Technical Report” (the “AntaKori Technical Report”), dated February 22, 2019 and prepared by Amec Foster Wheeler (Perú) S. A., a Wood company, was filed on SEDAR and can be viewed at www.sedar.com under the profile “REGULUS RESOURCES INC”. The AntaKori Technical Report reports Indicated Resources of 250 million tonnes grading 0.48% Cu, 0.29g/t Au and 7.5g/t Ag, and Inferred Resources of 267 million tonnes grading 0.41% Cu, 0.26g/t Au and 7.8g/t Ag (please refer to Regulus news release of March 1, 2019 and table above). The estimate is based on historical drilling completed by by El Misti Gold (1997-98) and Sinchao Metals (2007-08), as well as new drilling completed through November 2018 by Regulus and drilling data provided through a collaborative agreement established in 2017 with the adjoining property holder (see press release by Regulus dated Jan 24, 2017). The reported resource is only reported for the portion of the mineralization system that is owned or controlled by Regulus and is open for expansion in several directions.

Table 1 - Summary of AntaKori Mineral Resource Estimate at a 0.3% CuEq Cut-off

Table 1 - Summary of AntaKori Mineral Resource Estimate at a 0.3% CuEq Cut-off	Table 1 - Summary of AntaKori Mineral Resource Estimate at a 0.3% CuEq Cut-off	Table 1 - Summary of AntaKori Mineral Resource Estimate at a 0.3% CuEq Cut-off	Table 1 - Summary of AntaKori Mineral Resource Estimate at a 0.3% CuEq Cut-off	Table 1 - Summary of AntaKori Mineral Resource Estimate at a 0.3% CuEq Cut-off	Table 1 - Summary of AntaKori Mineral Resource Estimate at a 0.3% CuEq Cut-off	Table 1 - Summary of AntaKori Mineral Resource Estimate at a 0.3% CuEq Cut-off	Table 1 - Summary of AntaKori Mineral Resource Estimate at a 0.3% CuEq Cut-off	Table 1 - Summary of AntaKori Mineral Resource Estimate at a 0.3% CuEq Cut-off	Table 1 - Summary of AntaKori Mineral Resource Estimate at a 0.3% CuEq Cut-off
Resource	Million	Cu Grade	Au Grade	Ag Grade	CuEq Grade	Cu	Au	Ag	CuEq
Category	Tonnes	(%)	(g/t)	(g/t)	(%)	B lbs	M oz	M oz	B lbs
Indicated	250	0.48	0.29	7.5	0.74	2.6	2.3	61	4.1
Inferred	267	0.41	0.26	7.8	0.66	2.4	2.2	67	3.9
Notes to accompany Indicated and Inferred Mineral Resource table assuming open pit mining methods for AntaKori Project: 1. Mineral Resources have an effective date of 22 February 2019; Douglas Reid, P. Eng., a Wood employee, is the Qualified Person responsible for the Mineral Resource estimate. 2. Inputs to costs for cut-off grade assumes a conventional truck and shovel open pit mine handling and feeding a 60,000 t/d concentrator and producing a copper-gold concentrate with arsenic for sale to specialists in concentrate trading, third-party smelters and refineries. 3. Mineral Resources are reported based on a CuEq cut-off of 0.30% constrained within a pit shell. 4. Mineral Resources are only reported within Regulus concessions. 5. CuEq and AuEq grades and metal contents in this table are mutually exclusive and are not additive. 6. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. 7. Copper price used is US$6,614/t (US$3.00/lb), gold price is US$1,400/oz, silver price is US$18.00/oz. 8. Assumed metallurgical recoveries: copper 85%, gold 55%, silver 50%. 9. Assumed pit slope of 45 degrees. 10. Assumed open pit mining cost of US$1.85/t plus lift charge to average US$2.00/t, processing cost of US$7.18/t, G&A cost US$1.00/t.

AntaKori Overview

The AntaKori project hosts a large Cu-Au-Ag skarn system with associated breccias and porphyry-style mineralization developed in sedimentary and intrusive rocks, with a later overprint of epithermal, high-sulphidation mineralization associated with the overlying Miocene volcanic rocks. The project is located 60 km north of the city of Cajamarca in the Hualgayoc District, in a world-class Au-Cu province which hosts a number of nearby deposits, as described below.

➢ Immediately adjacent to the producing Tantahuatay Gold Mine (Buenaventura-Southern Copper)
➢ 7 km to the NW of the Cerro Corona Gold-Copper Mine (Goldfields)
➢ 35 km to the NNW of the Yanacocha Gold Mine (Newmont-Buenaventura)
➢ 40 km to the SE of the La Granja Porphyry Copper deposit (Rio Tinto)
➢ 50 km to the NW of the Michiquillay Porphyry Copper deposit (recently auctioned by the Peruvian Government to Southern Copper)

Highlights of the AntaKori project include the following:

➢ The Company owns or controls 20 mineral concessions, for a total of 438 hectares, which cover most, but not all of the currently known AntaKori mineralized system. Further consolidation of mineral tenure is in process.
➢ A total of 17,954 m of drilling was completed in 70 drill holes (22 reverse circulation drill holes and 48 diamond drill holes ) by previous operators El Misti Gold (1997-98) and Sinchao Metals (2007-08).
➢ A total of 34,477 m of drilling completed in 50 drill holes on AntaKori concessions by Regulus to date.
➢ The AntaKori Technical Report has documented a large Cu-Au-Ag skarn system with associated mineralized breccias and porphyrystyle mineralization hosted in sedimentary and intrusive rocks, and associated epithermal, high-sulphidation mineralization in the overlying volcanic rocks.
➢ Zones of mineralization have been intercepted by the previous drilling within large geophysical anomalies, thus confirming the utility of the geophysics used in identifying future exploration targets.
➢ Indication that the mineralized system is open in all directions, and has potential for expansion through future exploration programs.
➢ Access to infrastructure as property is located adjacent to two operating mines.

The scope of the mineralized system at AntaKori offers significant upside potential but it will require several years and extensive drilling to better define this project.

The project is being explored under definitive agreements with Compañía Minera Coimolache S.A. (“Coimolache”) (the “Coimolache DA”) and Compañía Minera Colquirrumi S.A. (“Colquirrumi”) (the “Colquirrumi DA”), companies that hold mineral concessions immediately adjacent to, and inter-fingering with Regulus AntaKori mineral concessions. These agreements allow for mutual access, mutual rights of expansion and collaborative exploration of the project area, providing benefit to all three parties. Coimolache is a mining company that owns and operates the Tantahuatay gold-silver mine immediately adjacent to the southern margin of AntaKori. The principal shareholders of Coimolache are Compañía de Minas Buenaventura S.A.A. (“Buenaventura” – 40% and operator) and Southern Peru Copper S.A.A. (44%). The Coimolache DA allows for mutual access, mutual rights of expansion and collaborative exploration with a principal objective of determining the size and nature of the AntaKori copper-gold deposit and a secondary objective of allowing the expansion of Coimolache’s Tantahuatay oxide gold mine by way of lay-back onto Regulus’ mining concessions. Colquirrumi is a wholly owned subsidiary of Buenaventura. The Colquirrumi DA allows Regulus an option to earn-in to up to a 70% interest in a large area (2,571 hectares) of Colquirrumi mining concessions located immediately to the north and east of Regulus’ mining concessions and also providing Colquirrumi with a one time option to claw-back to a 70% interest by making a cash payment to Regulus.

Significant Results During the Current Period to the Date of this Report

The Phase I drill program at AntaKori was completed in October 2018 with a total of 22,140 m drilled through hole AK-18-027 (20,325.72m within Regulus concessions). Drilling continued directly into the Phase II program with an additional seventeen holes completed to date (18,023 m from AK-18-028 through AK-18-045). The Phase I program successfully completed the objective of confirming and extending the previously reported resource at AntaKori and provided the basis for the preparation of an updated mineral Resource Estimate which was completed in Q1-2019.

In November 2019, the Company announced the results from Phase II drill holes AK-19-033A and AK-19-035 to AK-19-037 (see news release dated November 19, 2019).

Highlights from drill holes AK-19-033A, AK-19-035, AK-19-036 and AK-19-037 - AntaKori project:

AK-19-033A:
253.90 m of 0.36% Cu, 0.32 g/t Au and 10.15 g/t Ag (0.68% CuEq) from 235.40 m
- Including 46.00 m of 0.52% Cu, 0.43 g/t Au and 9.75 g/t Ag (0.91% CuEq) from 235.90 m
- ▪ And 28.25 m of 0.40% Cu, 0.35 g/t Au and 19.54 g/t Ag (0.83% CuEq) from 305.55 m
- And 48.90 m of 0.48% Cu, 0.26 g/t Au and 15.84 g/t Ag (0.81% CuEq) from 342.90 m
113.82 m of 0.27 Cu, 0.17g/t Au and 3.35 g/t Ag (0.42% CuEq) from 502.08 m
AK-19-035:
110.37 m of 0.27% Cu, 0.17 g/t Au and 4.92 g/t Ag (0.43% CuEq) from 238.15 m
151.05 m of 0.28% Cu, 0.19 g/t Au and 4.15 g/t Ag (0.45% CuEq) from 371.80 m
- Including 38.00 m 0.43% Cu, 0.33 g/t Au and 10.08 g/t Ag (0.75% CuEq) from 394.10 m
625.30 m of 0.33% Cu, 0.17 g/t Au and 2.67 g/t Ag (0.48% CuEq) from 570.70 m
- Including 504.15 m of 0.36% Cu, 0.19 g/t Au, 2.91 g/t Ag (0.53% CuEq)
  - Including 28.58 m of 0.33% Cu, 0.51 g/t Au and 3.90 g/t Ag (0.73% CuEq) from 734.92
  - And 54.15 m of 0.71% Cu, 0.15 g/t Au and 1.81 g/t Ag (0.83% CuEq) from 1046.05 m
Mineralization hosted primarily in low-As skarn and porphyry material throughout entire hole
From 1,200.78 m to a total depth of 1,321.98 m the hole was drilled on claims belonging to the Colquirrumi earn in agreement (see news release of April 3, 2017)
AK-19-036:
18.30 m of 0.40% Cu, 0.19 g/t Au and 8.92 g/t Ag (0.62% CuEq) from 312.40 m
10.80 m of 0.50% Cu, 0.57 g/t Au and 10.31 g/t Ag (1.00% CuEq) from 390.80 m
Defined the eastern most limits of the deposit
AK-19-037:
69.60 m of 0.31% Cu, 0.15 g/t Au and 15.6 g/t Ag (0.56% CuEq) from 234.80 m
179.90 m of 0.22% Cu, 0.22 g/t Au and 6.95 g/t Ag (0.44% CuEq) from 360.00 m
- Including 38.20 m of 0.35% Cu, 0.50 g/t Au and 18.14 g/t Ag (0.87% CuEq) from 413.10 m
178.70 m of 0.21% Cu, 0.29 g/t Au and 2.74 g/t Ag (0.45% CuEq) from 570.35 m
63.35 m of 0.36% Cu, 0.07 g/t Au and 2.43 g/t Ag (0.43% CuEq) from 1229.75 m
Mineralization hosted primarily in low-As skarn and porphyry material throughout entire hole
From 600.13 m to a total depth of 1,489.30 m, the hole was drilled on claims belonging to the Colquirrumi earn in agreement (see news release of April 3, 2017)

In January 2020, the Company announced the results from Phase II drill holes AK-19-038 to AK-19-043 (see news release dated January 16, 2020).

Highlights from drill holes AK-19-038 through AK-19-043 - AntaKori project:

AK-19-038:
15.38 m of 2.14% Cu, 0.38 g/t Au and 24.96 g/t Ag (2.63% CuEq) from 374.82 m
AK-19-039:
168.75 m of 0.38% Cu, 0.65 g/t Au and 32.69 g/t Ag (1.15% CuEq) from 111.45 m
- Including 14.10 m of 0.95% Cu, 0.80 g/t Au and 24.92 g/t Ag (1.75% CuEq) from 246.60 m
51.50 m of 0.21% Cu, 0.55 g/t Au and 5.38 g/t Ag (0.65% CuEq) from 383.60 m
- Including 12.15 m of 0.38% Cu, 1.02 g/t Au and 10.37 g/t Ag (1.20% CuEq)
Represents discovery of multiple wide zones of base metal carbonate style epithermal mineralization with significant precious metal content
Provides new targets to follow up with future drilling
AK-19-040:
15.30 m of 0.77% Cu, 0.18 g/t Au and 7.89 g/t Ag (0.97% CuEq) from 370.60 m
AK-19-041:
341.00 m of 0.57% Cu, 0.28 g/t Au and 9.29 g/t Ag (0.85% CuEq) from 202.00 m
Including 64.15 m of 1.71% Cu, 0.79 g/t Au and 13.89 g/t Ag (2.40% CuEq) hosted within a high-sulphidation epithermal zone overprinting skarn
172.13 m of 0.35% Cu, 0.14 g/t Au and 4.11 g/t Ag (0.48% CuEq) from 575.95 m
- Including 52.00 m of 0.51% Cu, 0.22 g/t Au and 8.35 g/t Ag (0.75% CuEq) hosted in a high-sulphidation epithermal overprint
539.43 m of 0.41% Cu, 0.09 g/t Au and 2.59 g/t Ag (0.50% CuEq) from 1040.10 m
Intersected mineralization and grades as expected, similar to the results previously reported for AK-19-034 (which was drilled from the same platform)
AK-19-042:
417.40 m of 0.23% Cu, 0.13 g/t Au and 3.90 g/t Ag (0.35% CuEq) from 470.60 m
87.35 m of 0.21% Cu, 0.12 g/t Au and 3.12 g/t Ag (0.32% CuEq) from 929.35 m
Hosted predominantly in low arsenic skarn and porphyry mineralization
AK-19-043:

o 22.50 m of 0.93% Cu, 0.33 g/t Au and 11.71 g/t Ag (1.27% CuEq) from 290.80 m

Further details regarding the mineralized intercepts encountered in drill holes AK19-033A and AK-19-035 to AK-19-043 together with a discussion of the results can be found on the Regulus website.

In mid-October 2020, the Company re-commenced the Phase II drill program. In November 2020 the Phase II drill program was halted. See Outlook for 2021 for further details.

In January 2021, the Company announced the results from Phase II drill holes AK-19-044 and AK-19-045 (see news release dated January 7, 2021).

Highlights from drill holes AK-19-044 and AK-19-045 - AntaKori project:

AK-20-044:

o 10.60 m of 0.28% Cu, 0.20 g/t Au and 8.36 g/t Ag (0.50% CuEq) from 281.90 m o 59.05 m of 0.47% Cu, 0.38 g/t Au and 30.77 g/t Ag (1.02% CuEq) from 304.25 m o 141.60 m of 0.22% Cu, 0.22 g/t Au and 5.71 g/t Ag (0.43% CuEq) from 477.00 m

▪ Including 10.20 m of 0.15% Cu, 1.08 g/t Au and 15.77 g/t Ag (1.07% CuEq) from 479.00 m

▪ Including 14.70 m of 0.35% Cu, 0.61 g/t Au and 20.61 g/t Ag (0.98% CuEq) from 562.90 m ▪ 50.80 m of 0.32% Cu, 0.28 g/t Au and 1.71 g/t Ag (0.54% CuEq) from 762.60 m ▪ Including 10.80 m of 0.48% Cu, 0.44 g/t Au and 2.51 g/t Ag (0.81% CuEq) from 779.70 m o ▪ Alteration and mineralization were increasing towards the bottom of the hole o ▪ Hole was stopped before it reached the end of the favourable geological sequence for skarn-style mineralization

AK-20-045:

o 15.90 m of 0.31% Cu, 0.76 g/t Au and 2.24 g/t Ag (0.87% CuEq) from 640.75 m o 17.25 m of 0.33% Cu, 0.36 g/t Au and 2.44 g/t Ag (0.61% CuEq) from 821.65 m o Alteration and mineralization were increasing towards the bottom of the hole o Hole was stopped before it reached the end of the favourable geological sequence for skarn-style mineralization

Golden Brew Overview

In August 2019, the Company announced the results of its drill program at Golden Brew explored under an option agreement with Highway 50 Gold Corp. (“Highway 50”) whereby the Company could earn a 50% interest in the central Nevada project. The Company completed three holes for a total of 2,280 m to test potential for a covered Carlin style system to meet a work commitment of US$750,000 in exploration expenditures that had to be completed by May 28[th] , 2019 to maintain the option agreement in good standing, for a total of US1,250,000 in expenditures by that date. After reviewing the results of the drill program, the Company terminated the option agreement in October 2019 and returned the project to Highway 50.

Other Projects Overview

Fireweed, British Columbia, Canada

The Fireweed Property is a polymetallic Ag, Zn, Pb, Cu, Au prospect of massive sulphide and sulphide replacement type mineralization located in central British Columbia, approximately 55 km east-northeast of the city of Smithers. The property is 10 km northwest of the former Granisle Mine, 5 km west of the former Bell Copper Mine, and 17 km southwest of the undeveloped Morrison deposit. The Fireweed property is the only property held by Regulus in Canada and management is currently looking to option the project to a third party.

Operations and Financial Condition

Selected Annual Information

The following selected annual financial information is derived from the audited annual consolidated financial statements of the Company prepared in accordance with IFRS guidelines.

All in 1,000’s except Lossper share and Number of shares	2020		2019		2018
Working capital	$ 2,607	$	2,235	$	17,387
General and administration expenses	4,766		7,122		3,380
Net gain/(loss)	(5,243)		6,870		(4,607)
Gain/(Loss) per share	(0.05)		0.08		(0.06)
Gain/(Loss) per share (fully diluted)	(0.05)		0.07		(0.06)
Total assets	56,303		49,671		58,270
Exploration and evaluation assets	51,892		44,430		33,640
Other non-current assets	1,058		832		3,794
Total liabilities	1,148		2,503		3,862
Share capital(1)(2)	114,707		104,125		122,323
Number of shares(1)(2)	101,849,844		90,994,594		91,002,794
Accumulated deficit	68,646		63,402		70,272

(1) The Company has only one kind and class of shares issued and outstanding, being common shares

(2) No dividends were paid during the years reported above

Results of Operations for the Year Ended September 30, 2020 Compared to the year Ended September 30, 2019

During the year ended September 30, 2020, loss from operating activities was $5,243,229 compared to income from operating activities of $6,869,746 for the year ended September 30, 2019. The primary reason for this significant change is that the Company recorded a gain on transfer of spin-out assets of $16,847,997 during the year ended September 30, 2019. Significant variances in other operating items from the same year in the prior year are as follows:

A decrease of $180,626 in consulting fees. Consulting fees were $13,363 for the year ended September 30, 2020 compared to $193,989 for the year ended September 30 2019. The variance is due to decreased activities in Peru as a result of the declaration of a mandatory quarantine in Peru in March 2020 due to the novel coronavirus (“COVID-19”) pandemic.
A decrease of $113,764 in investor relations and shareholder information. Investor relations and shareholder information was $170,273 for the year ended September 30, 2020 compared to $284,037 for the year ended September 30 2019. The variance is due to decreased activity in the current year.
A decrease of $419,424 in office and administration. Office and administration was $506,341 for the year ended September 30, 2020 compared to $925,765 for the year ended September 30, 2019. The variance is due to decreased activities in Peru as a result of the declaration of a mandatory quarantine in Peru in March 2020 due to the novel coronavirus (“COVID-19”) pandemic.
A decrease of $1,390,196 in share-based compensation. Share-based compensation was $2,612,747 for the year ended September 30, 2020 compared to $4,002,943 for the year ended September 30, 2019 due to the timing of vesting of stock options issued.
A gain of $38,181 on foreign exchange for the year ended September 30, 2020 compared to a gain of $130,625 for the year ended September 30, 2019. The difference was mainly the result of fluctuations of the US$, the Peruvian Nuevo Sol and the CAD$.
During the year ended September 30, 2020, the Company wrote-off receivables of $579,714 (2019 – $1,126,832) related to VAT taxes in Peru for which recoverability is uncertain.

Results of Operations for the Three Months Ended September 30, 2020 Compared to the Three Months Ended September 30, 2019

During the three months ended September 30, 2020, gain from operating activities was $721,196 compared to loss from operating activities of $4,325,191 for the three months ended September 30, 2019. Significant variances from the same year in the prior year are as follows:

A decrease of $391,962 in office and administration. Office and administration was $121,727 for the three months ended September 30, 2020 compared to $513,689 for the three months ended September 30, 2019. The variance is due to decreased activities in Peru as a result of the declaration of a mandatory quarantine in Peru in March 2020 due to the novel coronavirus (“COVID-19”) pandemic.
A decrease of $676,883 in share-based compensation. Share-based compensation was $564,316 for the three months ended September 30, 2020 compared to $1,241,199 for the three months ended September 30, 2019 due to the timing of vesting of stock options issued.

Cash Flow

Operating Activities

Cash outflow from operating activities was $1,701,213 for the year ended September 30, 2020 compared to $4,949,613 for the year ended September 30, 2019. The change was the cumulative result of several variations in the items affecting cash flow from operations as discussed above under “Results from Operations”.

Financing Activities

Cash inflow from financing activities was $10,582,799 for the year ended September 30, 2020 compared to cash outflow of $894,200 for the year ended September 30, 2019. The cash inflow in the current year was a result of proceeds from an equity financing and cash outflows in the prior year were the result of the repayment of loans payable and cash transferred to Aldebaran pursuant to the spin-out of assets.

Investing Activities

Cash outflow from investing activities was $8,533,982 for the year ended September 30, 2020 compared to $11,071,081 for the year ended September 30, 2019. The cash outflows are primarily from expenditures on exploration and evaluation assets in the current and prior year.

Summary of Quarterly Results

The following is a summary of certain selected financial information for the most recent eight fiscal quarters:

	September 30,	June 30,	March 31,	December 31,
All in $1,000’s except loss (gain) per share	2020	2020	2020	2019
Working capital (deficiency)	$2,607	$4,394	$5,539	$8,222
Loss (gain)	$(721)	$1,995	$2,736	$1,238
Loss (gain) per share	$(0.01)	$0.02	$0.03	$0.01
Loss (gain) per common share (diluted)	$(0.01)	$0.02	$0.03	$0.01
Total assets	$56,303	$56,034	$56,734	$59,348
Total liabilities	$1,148	$1,115	$1,531	$2,458
Deficit	$68,646	$69,367	$66,172	$64,640
	September 30,	June 30,	March 31,	December 31,
All in$1,000’s exceptloss (gain) pershare	2019	2019	2019	2018
Working capital (deficiency)	$2,235	$6,269	$10,342	$13,470
Loss (gain)	$2,325	$5,373	$2,165	$(16,733)
Loss (gain) per share	$0.04	$0.05	$0.03	$(0.17)
Loss (gain) per common share (diluted)	$0.04	$0.05	$0.03	$(0.17)
Total assets	$49,671	$50,872	$51,758	$54,438
Total liabilities	$2,503	$1,722	$1,887	$2,861
Deficit	$63,402	$59,077	$55,704	$53,539

During the three months ended December 31, 2018, the Company recorded a gain on transfer of spin-out assets of $16,847,997 and a reduction in share capital of $18,198,920.

Liquidity and Capital Resources

Cash at September 30, 2020 totaled $2,750,410 compared to $3,036,369 at September 30, 2019. Working capital at September 30, 2020 was $2,606,966 compared to $2,235,443 as at September 30, 2019. The Company has no source of operating cash flows and as such the Company’s ability to continue as a going concern is contingent on its ability to monetize assets or obtain additional financing. There can be no assurance that the Company will be able to obtain adequate financing or that the terms of such financing will be favourable. See “Outlook for 2020” above for further details.

On December 27, 2019, the Company closed a public financing comprised of 7,783,875 units of the Company, each comprising one common share and one-half of one common share purchase warrant, at a price of $1.06 per unit, for aggregate gross proceeds of approximately $8,250,908. Pursuant to a concurrent private placement, 3,066,375 units were sold to certain funds managed by Route One Investment Co. LP, the Company's largest shareholder, at the same offering price, for additional aggregate gross proceeds of approximately $3,250,358. Together with the public offering, the Company raised total gross proceeds of approximately $11,501,266.

In December 2020, the Company announced the closing of the strategic partnership with Osisko. The transaction added US$12.5 M (CAD$16.2 M) to the Company’s treasury, which will be used to fund exploration and development activities at the AntaKori project, and for working capital and general corporate purposes. Further information is discussed under Strategic Partnership below.

Exploration and evaluation of assets at September 30, 2020 totaled $51,891,535 compared to $44,430,445 as at September 30, 2019.

The ability of the Company to recover the costs it has incurred to date on its exploration and evaluation assets is dependent upon the Company being able to finance its exploration and development expenditures and to resolve any environmental, regulatory or other constraints which may hinder the successful exploitation or disposal of its exploration and evaluation assets. To date, the Company has not earned revenues and is considered to be in the exploration stage.

Share Capital

The Company’s authorized capital consists of an unlimited number of common shares without par value.

As at the date of this report, the Company had 101,849,844 common shares issued and outstanding and the following stock options and warrants outstanding:

Stock Options

Exercise	Price	NumberOutstanding	ExpiryDate
$	1.50	1,950,000	September 2, 2021
$	0.86	215,000	June 29, 2023
$	2.00	50,000	July 11, 2023
$	1.60	5,550,000	February 4, 2024
$	1.78	200,000	March 1, 2024
$	1.40	200,000	June 6, 2024
$	0.86	1,685,000	June 29, 2025
$	1.49	200,000	October 19, 2025
		10,050,000

Warrants

Exercise	Price	Number Outstanding	Expiry Date
$	1.60	4,217,452	July 27, 2021
$	1.70	5,420,124	December 27, 2021
$	2.25	5,500,000	December 1, 2023
		15,137,576

Related Party Transactions

During the year ended September 30, 2020, the Company entered into the following transactions with key management personnel and related parties.

a) Double Black Diamond Resources LLC. (“DBD Resources”) is a private company controlled by Mr. John Black, CEO and a director of the Company. For the year ended September 30, 2020, DBD Resources was paid $235,419 (2019 - $241,622). Amounts paid to DBD Resources are classified as management fees expense in the consolidated statements of profit and loss.

At September 30, 2020, the Company owed $Nil (September 30, 2019 – $Nil) to DBD Resources. During the year ended September 30, 2018, Mr. John Black loaned the Company $460,122 ($350,000 USD). During the year ended September 30, 2019, the Company repaid the loan in full, including accrued interest of $8,224 ($6,374 USD).

b) For the year ended September 30, 2020, Mr. Fernando Pickmann, President, COO and a director of the Company, was paid or accrued $235,395 in consulting fees (2019 – $232,629). Amounts paid or accrued to Mr. Pickmann are classified as management fees in the consolidated statements of profit and loss. A law firm at which Mr. Pickmann was a partner was also paid or accrued $251,896 (2019 -

$340,087) for legal services. Legal fees paid to Mr. Pickmann’s law firm are classified as legal expenses in the consolidated statements of profit and loss.

At September 30, 2020, the Company owed $Nil (September 30, 2019 – $Nil) to Mr. Pickmann and owed $2,435 (September 30, 2019 – $Nil) to the law firm at which Mr. Pickmann was a partner which is included in accounts payable and accrued liabilities.
c) Unicus Funds Ltd. (“Unicus”) is a private company controlled by Mr. Mark Wayne, CFO and a director of the Company. For the year ended September 30, 2020, Unicus was paid $75,000 (2019 – $68,750). Amounts paid to Unicus are classified as management fees expense in the consolidated statements of profit and loss.

At September 30, 2020, the Company owed $Nil (September 30, 2019 – $Nil) to Unicus. During the year ended September 30, 2018, Mr. Mark Wayne loaned the Company $800,000. During the year ended September 30, 2019, the loan was paid in full, including accrued interest of $17,454.

d) K.B. Heather & Socios Limitada (The Rock Doctor Limitada) (“K.B. Heather”) is a private company controlled by Dr. Kevin B. Heather, Chief Geological Officer of the Company. For the year ended September 30, 2020, K.B. Heather was paid $201,768 (2019 – $215,950). Amounts paid to K.B. Heather are classified as management fees in the consolidated statements of profit and loss.

At September 30, 2020, the Company owed $Nil (September 30, 2019 – $Nil) to K.B. Heather. During the year ended September 30, 2018, Dr. Kevin B. Heather loaned the Company $300,000. During the year ended September 30, 2018, the Company repaid the loan in full and during the year ended September 30, 2019, the Company paid the accrued interest of $4,767.

e) At September 30, 2020, the Company was owed $Nil (September 30, 2019 - $67,290) from Aldebaran. This balance is included in receivables at September 30, 2020 and September 30, 2019. For the year ended September 30, 2019, the Company incurred $234,275 of expenses on behalf of Aldebaran.
f) The Company holds 2,000,000 common shares (September 30, 2019 – 2,000,000 common shares) of Highway 50 Gold Corp., a company with a director in common, included within long term investments.

Key Management Personnel:

Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of executive and non-executive members of the Company’s Board of Directors.

The remuneration of directors and other members of key management personnel during the year ended September 30, 2020 and 2019 are as follows:

	Fees andBonus Share-based Benefits Total
Year ended September 30, 2020 Chief Executive Officer Chief Geological Officer Chief Financial Officer Chief Operating Officer Non-executive directors	$ 235,419 $ 393,366 $ 628,785 201,768 393,366 595,134 75,000 393,366 468,366 235,395 393,366 628,761 - 276,029 276,029
	$ 747,582 $ 1,849,493 $ 2,597,075
Year ended September 30, 2019 Chief Executive Officer Chief Geological Officer Chief Financial Officer Chief Operating Officer Non-executive directors	$ 241,622 $ 625,109 $ 866,731 215,950 625,109 841,059 68,750 625,109 693,859 232,629 625,109 857,738 - 323,670 323,670
	$ 758,951 $ 2,824,106 $ 3,583,057

Investor Relations

In January 2019, the Company amended an agreement with Ms. Laura Brangwin to provide investor relations services to the Company (the “IR Agreement”). Ms. Brangwin is now paid USD$2,500 per month and has been granted 135,000 stock options at various prices between $0.86-$2.00 under the terms and conditions of the Company’s Stock Option Plan. Ms. Brangwin does not own any shares of Regulus.

Financial and Capital Risk Management

Please refer to the September 30, 2020 consolidated financial statements on www.sedar.com.

Recent Accounting Policies

Please refer to the September 30, 2020 consolidated financial statements on www.sedar.com.

The users of this information, including but not limited to investors and prospective investors, should read it in conjunction with all other disclosure documents provided including but not limited to all documents filed on SEDAR (www.SEDAR.com).

Proposed Transactions

There are no proposed transactions that have not been disclosed herein.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Critical Accounting Estimates

The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting year. Actual reports could differ from management’s estimates.

Contingencies

There are no contingent liabilities.

Internal Controls Over Financial Reporting

Changes in Internal Control over Financial Reporting (“ICFR”)

In connection with National Instrument 52-109, Certification of Disclosure in Issuer’s Annual and Interim Filings (“NI 52-109”) adopted in December 2008 by each of the securities commissions across Canada, the Chief Executive Officer and Chief Financial Officer of the Company will file a Venture Issuer Basic Certificate with respect to financial information contained in the unaudited interim financial statements and the audited annual financial statements and respective accompanying Management’s Discussion and Analysis. The Venture Issue Basic Certification does not include representations relating to the establishment and maintenance of disclosure controls and procedures and internal control over financial reporting, as defined in NI52-109.

Other MD&A Requirements

Additional disclosure of the Company’s technical reports, material change reports, news releases and other information can be obtained on SEDAR at www.sedar.com.

Disclosure for Venture Issuers without Significant Revenue

A breakdown of the components of the Company’s general and administrative expenses is disclosed in the interim condensed consolidated financial statements for the year ended September 30, 2020 to which this MD&A relates. A breakdown of the components of the exploration and evaluation assets of the Company is disclosed in the interim condensed consolidated financial statements for the year ended September 30, 2020 to which this MD&A relates.

Risks and Uncertainties

The operations of the Company are speculative due to the high-risk nature of its business which includes the acquisition, financing, exploration, development and operation of mining properties. There are a number of factors that could negatively affect the Company’s business and the value of its common shares, including the factors listed below. The following information pertains to the outlook and conditions currently known to the Company that could have a material impact on the financial condition of the Company. Other factors

may arise that are not currently foreseen by management of the Company that may present additional risks in the future. Current and prospective security holders of the Company should carefully consider these risk factors, as they could materially affect the Company’s future operations and could cause actual events to differ materially from those described in forward-looking statements relating to the Company.

The more significant risks, as they relate to the Company’s interim condensed consolidated financial statements for the year ended September 30, 2020 and this MD&A, include the following. COVID-19

At the time of publication of this MD&A, the COVID-19 pandemic continues to rapidly evolve on a global scale. The unprecedented nature and heightened uncertainty surrounding the pandemic mean that the nature and extent of the risks posed by COVID-19 to Regulus cannot be known, quantified or predicted with any certainty. Global phenomena such as COVID-19 increase the risk of significant labour force disruption (including the supply of labour or site/country access) and the potential loss (permanent/temporary) of personnel. Our operations are located in remote locations and represent concentrations of personnel working and sometimes residing in close proximity to one another. COVID-19 has the potential to spread rapidly and place the Company’s workforce at risk. The Company believes that it has identified and implemented all reasonable and appropriate steps and precautions to protect its workforce and its operations in Peru from the risks and potential adverse impacts of the pandemic. The Company continues to actively monitor the situation and may take additional measures, if and to the extent warranted, as matters develop. There can be no assurance, however, that such steps and measures will be sufficient to fully mitigate all such risks and potential adverse impacts.

Exploration and Development Risk

The Company’s properties are in the exploration stage and are without a known body of commercial ore. Exploration for Mineral Resources involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. The risks and uncertainties inherent in exploration activities include but are not limited to: legal and political risk arising from operating in certain developing countries, civil unrest, general economic, market and business conditions, the regulatory process and actions, failure to obtain necessary permits and approvals, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events and management’s capacity to execute and implement its future plans. Discovery of mineral deposits is dependent upon a number of factors, not the least of which are the technical skills of the exploration personnel involved and the capital required for the programs. The cost of conducting programs may be substantial and the likelihood of success is difficult to assess. There is no assurance that the Company’s mineral exploration activities will result in any discoveries of new bodies of commercial ore. There is also no assurance that even if commercial quantities of ore are discovered that a new ore body would be developed and brought into commercial production. 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, metallurgy and proximity to infrastructure and labour), the interpretation of geological data obtained from drilling and sampling, feasibility studies, the cost of water and power; anticipated climatic conditions; cyclical metal prices; fluctuations in inflation and currency exchange rates; higher input commodity and labour costs, commodity prices, government regulations, including regulations relating to prices, taxes, royalties, land tenure and use, allowable production, importing and exporting of minerals, and environmental protection. Most of the above factors are beyond the control of the Company. Development projects will also be subject to the successful completion of final feasibility studies, issuance of necessary permits and other governmental approvals and receipt of adequate financing. The exact effect of these factors cannot be accurately predicted, but the combination of any of these factors may adversely affect the Company’s business.

Negative Operating Cash Flow

The Company is an exploration stage company and has not generated cash flow from operations. The Company is devoting significant resources to the development and acquisition of its properties; however there can be no assurance that it will generate positive cash flow from operations in the future. The Company expects to continue to incur negative consolidated operating cash flow and losses until such time as it achieves commercial production at a particular project. The Company currently has negative cash flow from operating activities.

Mineral Resource Estimates

The Company’s reported Mineral Resources are estimations only. No assurance can be given that the estimated Mineral Resources will be recovered. By their nature, Mineral Resource estimations are imprecise and depend, to a certain extent, upon statistical inferences, which may ultimately prove unreliable because, among other factors, they are based on limited sampling, and, consequently, are uncertain because the samples may not be representative. Mineral Resource estimations may require revision (either up or down). There are numerous uncertainties inherent in estimating Mineral Resources, including many factors beyond the Company’s control. Such estimation is a subjective process, and the accuracy of any Mineral Resource estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation. There can be no assurance that recoveries in small scale laboratory tests will be duplicated in larger scale tests under on-site conditions. In particular, factors that may affect Mineral Resource estimates include:

changes in interpretations of mineralization geometry and continuity of mineralization zones;
input parameters used in the Whittle shell that constrains the Mineral Resources amenable to open pit mining methods;
metallurgical and mining recoveries;
operating and capital cost assumptions;
metal price and exchange rate assumptions;
confidence in modifying factors, including assumptions that surface rights to allow infrastructure to be constructed will be forthcoming;
delays or other issues in reaching agreements with local or regulatory authorities and stakeholders;
changes in land tenure requirements or permitting requirements from those discussed in the report; and
• changes in the environmental regulations or laws governing the property.

Changes in key assumptions and parameters could result in a restatement of Mineral Resource estimates. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and there is no assurance that they will ever be mined or processed profitably. Due to the uncertainty which may attach to Mineral Resources, there is no assurance that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. Any material reductions in estimates of Mineral Resources could have a material adverse effect on the Company’s results of operations and financial condition.

Title Risk

The Company has investigated its right to explore and exploit its properties and, to the best of its knowledge, those rights are in good standing. The results of the Company’s investigations should not be construed as a guarantee of title. Other parties may dispute the title to a property, or the property may be subject to prior unregistered agreements or liens and transfers or land claims by aboriginal, native, or indigenous peoples. The title may be affected by undetected encumbrances or defects or governmental actions. The Company has not conducted surveys of all of its properties, and the precise area and location of claims or the properties may be challenged and no assurances can be given that there are no title defects affecting such properties. Any defects in the title to the Company’s properties could have a material and adverse effect on the Company.

No assurance can be given that applicable governments will not revoke or significantly alter the conditions of the applicable exploration and mining authorizations nor that such exploration and mining authorizations will not be challenged or impugned by third parties. Although the Company has not had any problem renewing its licenses in the past there is no guarantee that it will always be able to do so. Inability to renew a license could result in the loss of any project located within that license.

Foreign Operations Risk

The Company conducts exploration activities in Peru. Operating in a foreign country exposes the Company to risks that may not otherwise be experienced if all operations were located in Canada. The risks vary from country to country and for Peru in particular include, but are not limited to, civil unrest or war, terrorism, illegal mining, changing political conditions, fluctuations in currency exchange rates, expropriation or nationalization without adequate compensation, changes to royalty and tax regimes, high rates of inflation, labour unrest and difficulty in understanding and complying with the regulatory and legal framework respecting ownership and maintenance of mineral properties. Changes in mining or investment policies or shifts in political attitudes may also adversely affect Corporation’s existing assets and operations. Real and perceived political risk may also affect Corporation’s ability to finance exploration programs and attract joint venture or option partners, and future mine development opportunities.

Numerous countries have introduced changes to mining regimes that reflect increased government control or participation in the mining sector, including, but not limited to, changes of law affecting foreign ownership, mandatory government participation, taxation and royalties, exploration licensing, export duties, and repatriation of income or return of capital. There can be no assurance that industries, which are deemed of national or strategic importance in countries in which the Company has assets, including mineral exploration, will not be nationalized. There is a risk that further government limitations, restrictions or requirements, not presently foreseen, will be implemented. Changes in policy that alter laws regulating the mining industry could have a material adverse effect on the Company. There can be no assurance that the Company’s assets in these countries will not be subject to nationalization, requisition or confiscation, whether legitimate or not, by an authority or body.

In addition, in the event of a dispute arising from foreign operations, the Company may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in Canada. The Company also may be hindered or prevented from enforcing its rights with respect to a governmental instrumentality because of the doctrine of sovereign immunity. It is not possible for the Company to accurately predict such developments or changes in laws or policy or to what extent any such developments or changes may have a material adverse effect on the Company.

Metal Price Risk

The Company’s portfolios of properties and investments have exposure to predominantly copper, gold, and silver. Commodity prices fluctuate widely and are affected by numerous factors beyond the Company’s control, such as the sale or purchase of metals by various central banks and financial institutions, interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand, and the political and economic conditions of major metalsproducing and metals-consuming countries throughout the world. The prices of these metals greatly affect the value of the Company, the

price of the common shares of the Company and the potential value of its properties and investments. This, in turn, greatly affects its ability to form joint ventures, option agreements and the structure of any joint ventures formed. This is due, at least in part, to the underlying value of the Company’s assets at different metals prices.

Commodity prices, and in particular copper prices, may be significantly affected by both demand and supply-side disruptions as a result of COVID-19 and its continuing impact on economies around the world.

Uncertainty of Funding

The exploration and development of mineral properties requires a substantial amount of capital and may depend on the Company’s ability to obtain financing through joint ventures, debt financing, equity financing or other means. General market conditions, volatile metals prices, a claim against the Company, a significant disruption to the Company’s business, or other factors may make it difficult to secure the necessary financing. There is no assurance that the Company will be successful in obtaining required financing as and when needed on acceptable terms. Failure to obtain any necessary additional financing may result in delaying or indefinite postponement of exploration or development or even a loss of property interest. If the Company needs to raise additional funds, such financing may substantially dilute the interests of shareholders of the Company and reduce the value of their investment.

Recent economic events including US-China trade disputes and the COVID-19 global pandemic have created further uncertainty in global financial and equity markets and may adversely impact the Company’s share price and ability to raise capital.

Future Offerings of Debt or Equity Securities

The Company will require additional funds to finance further exploration, development and production activities, or to take advantage of unanticipated opportunities. If the Company raises additional funds by issuing additional equity securities, such financing would dilute the economic and voting rights of the Company’s shareholders. Since the Company’s capital needs depend on market conditions and other factors beyond its control, it cannot predict or estimate the amount, timing or nature of any such future offering of securities. Thus, holders of common shares of the Company bear the risk of any future offerings reducing the market price of the common shares and diluting their shareholdings in the Company.

Currency Risk

The Company will transact business in a number of currencies including but not limited to the Canadian Dollar, the US Dollar, and the Peruvian Nuevo Sol. Fluctuations in exchange rates may have a significant effect on the cash flows of the Company. Future changes in exchange rates could materially affect the Company’s results in either a positive or a negative direction. The Company does not currently engage in foreign currency hedging activities.

Social License

The ability to carry out exploration programs on our mineral claims in Peru is conditional on the Company obtaining all the necessary permits, which usually requires the Company to engage with the local communities to obtain their consent. There can be no assurance that the Company will always be able to obtain these consents when requested. Even when all necessary consents are obtained, there is still a risk that local opposition might arise which could effect the Company's ability to carry out its intended exploration programs. The Company attempts to mitigate these risks by following all required protocols and by maintaining a robust program of engagement with local communities, which often includes social benefit programs funded by the Company.

Internal Controls

Internal controls over financial reporting are procedures designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly recorded and reported. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with respect to the reliability of financial reporting and financial statement preparation.

Information Systems and Cyber Security

The Company's operations depend on information technology (“IT”) systems. These IT systems could be subject to network disruptions caused by a variety of sources, including computer viruses, security breaches and cyberattacks, as well as disruptions resulting from incidents such as cable cuts, damage to physical plants, natural disasters, terrorism, fire, power loss, vandalism and theft. The Company's operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre-emptive expenses to mitigate the risks of failures. Any of these and other events could result in information system failures, delays and/or increase in capital expenses. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact the Company's reputation and results of operations. Although to date the Company has not experienced any material losses relating to cyber attacks or other information security breaches, there can be no assurance that the Company will not incur such losses in the future. The Company's risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of

controls, processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority. As cyber threats continue to evolve, the Company may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.

Corruption and Bribery

The Company is required to comply with anti-corruption and anti-bribery laws, including the Extractive Sector Transparency Measures Act, the Canadian Corruption of Foreign Public Officials Act and the U.S. Foreign Corrupt Practices Act, as well as similar laws in the countries in which the Company conducts its business. If the Company finds itself subject to an enforcement action or is found to be in violation of such laws, this may result in significant penalties, fines and/or sanctions imposed on the Company resulting in a material adverse effect on the Company. The Company has adopted a comprehensive Anti-Corruption Policy in order to mitigate this risk.

Competition

There is aggressive competition within the mining industry for the discovery and acquisition of properties considered to have commercial potential, as well as the necessary labour and supplies required to develop such properties. The Company competes with other exploration and mining companies, many of which have greater financial resources, operational experience and technical capabilities than the Company, for the acquisition of mineral claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees and other personnel. The Company may not be able to maintain or acquire attractive mining properties on terms it considers acceptable, or at all. Consequently, its financial condition could be materially adversely affected.

Uninsurable Risks

Exploration, development and production operations on mineral properties involve numerous risks, including unexpected or unusual geological operating conditions, rock bursts, cave-ins, fires, floods, earthquakes and other environmental occurrences, as well as political and social instability. It is not always possible to obtain insurance against all such risks and the Company may decide not to insure against certain risks because of high premiums or other reasons. Should such liabilities arise, they could reduce or eliminate any further profitability and result in increasing costs and a decline in the value of the securities of the Company. The Company does not maintain insurance against political risks.

Environmental Risks

It is possible that future regulatory developments, such as increasingly strict environmental protection laws, climate change policies, regulations and enforcement policies, and claims for damages to property and persons resulting from the Issuer’s operations, could result in additional costs and liabilities, restrictions on or suspension of the Issuer’s activities and delays in the exploration of and development of its properties

The physical effects of climate change, which may include extreme weather events, resource shortages, changes in rainfall and storm patterns, water shortages and extreme weather events, may have an adverse effect on our operations. Events or conditions such as flooding or inadequate water supplies could disrupt exploration activities and rehabilitation efforts, could create resource shortages and could damage our property or equipment and increase health and safety risks on our properties. Such events or conditions could also have other adverse effects on our operations, our workforce and on the local communities surrounding our properties, such as an increased risk of food, water scarcity and civil unrest.

Tax

The Company runs its business in different countries and strives to run its business in as tax efficient a manner as possible. The tax systems in certain of these countries are complicated and subject to changes. For this reason, future negative effects on the result of the Company due to changes in tax regulations cannot be excluded. Repatriation of earnings to Canada from other countries may be subject to withholding taxes. The Company has no control over withholding tax rates.

Cautionary Note Forward Looking Statements

Certain statements made and information contained herein in the MD&A constitutes “forward-looking information” and forward-looking statements” within the meaning of applicable securities legislation (collectively, “forward-looking information” or “forward-looking statements”) concerning the business, operations, financial performance and condition of the Company. The forward-looking information contained in this MD&A is based on information available to the Company as of the date of this MD&A. Except as required under applicable securities legislation, the Company does not intend, and does not assume any obligation, to update this forward-looking information. Generally, any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance, (often, but not always, identified by words or phrases such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", “projects” , “estimates”, “budgets”, “scheduled”, “forecasts”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”, “possible”, "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events, conditions or results

“will”, "may", "could", "would", “should”, "might" or "will be taken", "will occur" or "will be achieved" or the negative connotations thereof and similar expressions) are not statements of historical fact and may be forward-looking statements.

All statements other than statements of historical fact may be forward-looking statements. Forward-looking information is necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: risks and uncertainties relating to, among other things, the inherent uncertainties regarding mineral resource estimates, cost estimates, changes in commodity prices, currency fluctuation, financings, unanticipated resource grades, infrastructure, results of exploration activities, cost overruns, availability of materials and equipment, timeliness of government approvals, taxation, political risk and related economic risk and unanticipated environmental impact on operations, the impact of COVID-19 on the Company’s operations, personnel, ability to finance and outlook, as well as other risks, and uncertainties and other factors, including, without limitation, those referred to in the “Risks and Uncertainties” section of the MD&A, and elsewhere, which may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information.

The Company believes that the expectations reflected in the forward-looking statements and information included in this MD&A are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements and information should not be unduly relied upon. This statement and information is as of the date of the MD&A. In particular, this MD&A contains forward-looking statements or information pertaining to the assumptions used in the mineral resources estimates for the AntaKori Project, including, but not limited to, geological interpretation, grades, metal price assumptions, metallurgical and mining recovery rates, geotechnical and hydrogeological conditions, as applicable; ability to develop infrastructure; assumptions made in the interpretation of drill results, geology, grade and continuity of mineral deposits; expectations regarding access and demand for equipment, skilled labour and services needed for exploration and development of mineral properties, the impact of COVID-19 on the Canadian and worldwide economy, the Company’s workforce, world wide demand for commodities and the Company’s business generally; and that activities will not be adversely disrupted or impeded by exploration, development, operating, regulatory, political, community, economic and/or environmental risks. In addition, this MD&A contains forward-looking statements or information pertaining to the anticipated timing or ability to secure additional financing and/or the quantum and terms thereof; exploration and development plans and expenditures; the timing and nature of studies and any potential development scenarios; opportunities to improve project economics; the success of future exploration activities; potential for resource expansion; potential for the discovery of new mineral deposits; ability to build shareholder value; expectations with regard to adding to mineral resources through exploration; expectations with respect to the conversion of inferred resources to an indicated resources classification; ability to execute the planned work programs; estimation of commodity prices, mineral resources, costs, and permitting time lines; ability to obtain surface rights and property interests; currency exchange rate fluctuations; requirements for additional capital; government regulation of mining activities; environmental risks; unanticipated reclamation expenses; title disputes or claims; limitations on insurance coverage; and other risks and uncertainties.

Forward-looking information is based on certain assumptions that the Company believes are reasonable, including that the current price of and demand for commodities will be sustained or will improve, the supply of commodities will remain stable, that the general business and economic conditions will not change in a material adverse manner, that financing will be available if and when needed on reasonable terms and that the Company will not experience any material labour dispute, accident, or failure of plant or equipment. These factors are not, and should not be construed as being, exhaustive. Although the Company has attempted to identify important factors that would cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated, or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. All of the forward-looking information contained in this document is qualified by these cautionary statements. Readers are cautioned not to place undue reliance on forward-looking information due to the inherent uncertainty thereof. Statements relating to "mineral resources" are deemed to be forward looking information, as they involve the implied assessment, based on certain estimates and assumptions, that the mineral resources described can be profitably produced in the future.