Royalties Inc. — Management Reports 2021

May 1, 2021

XTIERRA INC.

MANAGEMENT DISCUSSION AND ANALYSIS

For the year ended December 31, 2020

Dated April 29, 2021

(Expressed in US Dollars, except per share amounts)

(Form 51-102F1)

XTIERRA INC. Management Discussion and Analysis For the year ended December 31, 2020 (Expressed in US Dollars)

Date: April 27, 2021

General

This Management’s Discussion and Analysis (MD&A) reviews the activities of Xtierra Inc. (“Xtierra” or the “Company”) and compares the financial results for the year ended December 31, 2020.

For a more complete understanding of the Company’s financial condition and results of operations, this MD&A should be read together with the audited consolidated financial statements and the accompanying notes for the years ended December 31, 2019 and 2018, a copy of which is filed on the SEDAR website.

All monetary amounts are in US dollars unless otherwise stated.

Company Overview

Xtierra is a natural resource company which holds mineral exploration properties located in the Central Silver Belt of Mexico in the State of Zacatecas and is also pursuing new opportunities, including mineral exploration and development projects, and the potential acquisition of mineral and other royalties.

Xtierra is pursuing a strategy for realizing some value on its Bilbao and other Mexican projects in the context of the current resource cycle, as well as identifying and evaluating new potential royalty acquisitions.

Xtierra, through its Mexican subsidiaries, currently holds a 100% interest in the Bilbao zinc-silver-lead-copper project, in the southeastern part of the State of Zacatecas, on which an independent Technical Report in accordance with NI 43-101 containing an updated resource estimate and preliminary economic assessment (PEA) was completed in 2014.

The Company has maintained the Bilbao mineral concessions and title to the property in good standing and with the much improved outlook for silver prices, now plans to undertake a process to solicit interest in the Bilbao project from operating silver producers with the objective of converting an asset, in which Xtierra invested over $22 million, into cash flowing royalties in order to maximize value for shareholders.

During the year ended December 31, 2020, the Company raised Cdn$1,000,000 through the issue of 20,000,000 shares at an issue price of Cdn$0.05 per share.

Mineral Royalty Interests

On July 31, 2019, the Company acquired, indirectly through a wholly owned subsidiary, a 1.5% net smelter royalty and all legal interests of the vendors and Minera Portree de Zacatecas, S.A. de C.V in the four mining concessions comprising the bulk of the Bilbao property, previously held by four individuals, for $76,829 (Cdn$100,000), paid as to Cdn$51,000 in cash and Cdn$49,000 by the issue of 980,000 common shares of the Company.

On August 13, 2019, the Company signed a letter of intent, to acquire Minera Portree De Zacatecas, S.A. de C.V (“Minera Portree”), subject to due diligence and final agreement on price, terms and conditions. On April 22, 2020, the Company entered into an agreement to acquire 88% of the shares of Minera Portree in consideration of the payment of Cdn$56,000, less the deposit of $20,000 previously paid, with the remaining Cdn$30,000 payable subject to certain conditions, and the issue to the vendors of 2,000,000 shares of the Company. The shares were issued and Cdn$30,000 has been fully paid.

Minera Portree holds various legal or royalty interests in certain mineral properties in Mexico, including the Company’s Bilbao property and an asserted claim to a 2% net smelter royalty on six mining concessions located adjacent to the Cozamin Mine in Zacatecas operated by Capstone Mining Corp. (TSX:CS), five of which were acquired

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XTIERRA INC. Management Discussion and Analysis For the year ended December 31, 2020 (Expressed in US Dollars)

by Capstone from a third party in 2017 and 2019. The transfer of three of these mining concessions to Capstone are pending registration with the Public Registry of Mining since August 2019. The third-party had acquired the six mining concessions from Minera Portree in 2002, subject to a 2% net smelter royalty retained by Minera Portree. The entitlement of Minera Portree to the royalty may be contested by the third party and/or Capstone.

The Cozamin Mine is an operating polymetallic copper-silver underground mine, located 3.6 km north-northwest of Zacatecas City, currently operating at 3,780 tonne per day milling capacity, which is expected to produce 51.2 million pounds of copper and 1.6 million ounces of silver per year over the ten year period 2021-2030.

Based on public disclosure, Capstone reported that during the third quarter of 2019 Cozamin acquired the Portree claim block that laid within the Mala Noche Footwall Zone area. The claim block is surrounded by high grade Inferred Mineral Resources and provides access to continuously infill drill and eventually mine the Portree area.

During the fourth quarter of 2019, Cozamin started drilling into the Portree claim block. Prior to this, Portree was an untested inlier within Cozamin’s land position covering the Mala Noche Footwall Zone area. Portree is surrounded by high grade Inferred Mineral Resources that future drilling is expected to increase to Indicated categorization. Capstone has reported that mining has already started within the Portree claim.

In the first quarter of 2020, Capstone reported that drilling of the Mala Noche Footwall Zone, associated with infilling or stepping out from regions of Inferred Mineral Resource category of the Mineral Resource estimate, was undertaken with 5 surface and 1 underground diamond drilling rigs.

On June 11, 2020, Capstone announced the results of an updated Mineral Resource estimate reporting that the Measured and Indicated Resource for Vein 20, the principal zone in the Mala Noche Footwall Zone, increased by 118% to 13.1 million tonnes at 2.35% Cu and 52 g/t Ag.

Capstone also stated that “this new Resource Estimate has exceeded our expectation to upgrade Vein 20, the principal zone in the Mala Noche Footwall Zone, to Indicated Class, previously estimated as Inferred in 2018. We also extended high grades into a previously undrilled area, thus adding unexpected tonnage in a key part of our development plan. We believe there is additional exploration potential, and we are making plans to test new stepout targets in H2 2020”.

Capstone reported that the current Mineral Reserves at the MNFWZ are primarily located in the principal vein, Vein 20, with some additional material within an adjacent structure called Vein 10, that are actively being mined. These two veins, of the eight MNFWZ veins modeled, are best suited to the current mining method and are the principal target of an upcoming mineral reserve estimate predicated on the large increase in Indicated Class Mineral Resources. The potential of the remaining six veins represent a future exploration opportunity.

Bilbao Silver-Zinc-Lead-Copper Project

Xtierra, through its Mexican subsidiaries, currently holds a 100% interest in the Bilbao zinc-silver-lead-copper project located approximately 500km northwest of Mexico City in the southeastern part of the State of Zacatecas, Bilbao is a polymetallic, replacement-style, silver-lead-zinc-copper, skarn-type replacement sulphide deposit with a deeply weathered oxide cap.

In 2014 Runge Pincock Minarco (Canada) Limited (RPM) delivered an independent Technical Report in accordance with NI 43-101 containing an updated resource estimate and preliminary economic assessment (PEA) on the Bilbao Project based on 3 year trailing average prices of: Zinc US$0.94/lb, Lead US$1.01/lb and Silver US$30.24/ounce. This compares to current, August 2020, spot prices of: Zinc US$1.31/lb, Lead US$0.94/lb and Silver US$26/ounce.

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XTIERRA INC. Management Discussion and Analysis For the year ended December 31, 2020 (Expressed in US Dollars)

The mine plan incorporated in the PEA targeted the extraction of only the lower, unoxidized, sulphide zone based on a production rate of 2,000 tonnes per day, or 720,000 tonnes per year with an average grade of 2.1%, 1.4% and 63.96 g/t of zinc, lead and silver, respectively, over a mine life of approximately 8 years.

The mineral processing plant described in the PEA proposes the treatment of the silver-lead-zinc sulphide ore at a design throughput rate of 2,000 tonnes per day, which would thereby project on average, 16,913 dry tonnes per year of silver-rich lead concentrate, and 26,966 dry tonnes per year of zinc concentrate, constituting an average combined total of approximately 20 million pounds of zinc, 17 million pounds of lead, and one million ounces of silver, per year.

In 2015, the Company conducted a desktop analysis of an alternative development scenario of extracting only the high grade portion of the Bilbao resources and milling of the ore mined from Bilbao at an existing mill within a reasonable trucking distance. By focusing only on the higher grade portion of the resource, this alternative development scenario would necessarily reduce the projected mining and processing rate, as well as subsequent metal concentrate production but maintain an eight year mine life. This scenario would also reduce the projected capital costs by reducing the amount of mine development required and eliminating the proposed mill at Bilbao.

In 2016, the Company focused its field exploration activities on the identification of additional resource potential at ten (10) favorable target sites on the wider Bilbao property. Activities carried out included ground magnetometer and associated topographic surveys aimed at further identification and location of potential drill targets outside the immediate limits of the existing Bilbao deposit. The results confirmed there is potential for additional vein and skarntype potential mineralization on the property.

The Company maintains the Bilbao mineral concessions and title to the property in good standing while at the same time examining strategic alternatives for further exploring and /or development of the property. Exploration programs carried out in 2016 and 2017 confirmed the potential for the identification of additional resources at ten favorable target sites on the wider Bilbao property. Examination of previous metallurgical studies and the evaluation of potential solutions to increase viable tonnage and improve metal recovery at the Bilbao deposit continued intermittingly within limited financial resources.

A review of prior exploration reports and drill results from 2010-2013, identified 8 targets for potential satellite mineralization around the main Bilbao deposit, two of which stand out with high grade silver potential and therefore merit drilling, especially with the much improved outlook for silver prices, approaching the US$30 per ounce level used in the 2014 RPM PEA. Xtierra invested over $22 million into Bilbao and would like to monetize this asset into a cash flowing royalty and enable the company to focus royalty acquisitions in order to maximize value for shareholders.

On August 27, 2020, Xtierra announced its intention to re-assess the Bilbao deposit based on the recent rise in silver prices which have approached the level estimated in the PEA which combined with the 2010-2013 drill results which outlined the potential to expand tonnage and the unexplored high grade vein systems.

In late 2020, Xtierra commenced a drilling program to further explore the high grade silver potential at Bilbao in 2 areas. After receiving its drilling permit on the area located adjacent to and west of the main Bilbao Silver-Lead-Zinc deposit, called the Victor vein, the company drilled 5 holes over the December to February period for a total of 1800 meters. This high grade silver zone runs north-south over a strike length of approximately 500 meters. The objective of drilling two holes into this silver zone was to confirm the continuity of the high grade silver values to the northwest between earlier drill holes X42 and X75 and to the south between drill holes X84B and X96, which are separated by 100 meters.

The drill results on all five drill holes were positive as follows.

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XTIERRA INC. Management Discussion and Analysis For the year ended December 31, 2020 (Expressed in US Dollars)

The objective of the first hole, X4B, located at the southern end of the Victor vein, was to establish continuity of the mineralization with high silver values at different elevations and along strike from two prior drill holes spaced 100 meters apart: between drill hole X96 which intersected 2 meters of 373 g/t Ag and drill hole X84B which intersected 3.25 meters of 412 g/t Ag.

Drill hole X4B was 395.1 meters in length with 92% recovery and intersected five different levels of mineralization as follows:

Drill Hole	From	To	Metres	True Width (m)	g/t Ag	Pb%	Zn%	Cu%	Pb + Zn%
X4B	270.20	274.00	3.80	3.72	59.34	2.04	1.30	0.14	3.34
	285.60	295.50	9.90	8.98	89.69	3.37	3.22	0.20	6.59
including	285.60	287.90	2.30	2.09	175.50	6.13	0.66	0.58	6.79
	325.90	326.05	0.15	0.14	91.00	4.68	4.83	0.15	9.51
	327.75	331.90	4.15	4.14	130.60	6.05	8.51	0.18	11.57
	332.80	334.00	1.20	1.10	125.98	6.12	3.76	0.68	9.88

The objective of the second hole, X5B, located at the northern end of the approximately 500 meters strike length of the Victor vein was to confirm the continuity of high-grade silver mineralization between earlier drill holes X42 which intersected 1 meter of 182 g/t Ag and X75 which intersected 0.7 meters of 2,047 g/t Ag.

Drill hole X5B with a total depth of 337.55 meters and a recovery of 96% also intersected mineralization at five levels of elevation as follows:

Drill Hole	From	To	Metres	True Width (m)	g/t Ag	Pb%	Zn%	Cu%	Pb + Zn%
X5B	173.95	175.80	1.85	1.84	101	6.25	2.67	0.21	8.92
	190.15	191.25	1.10	1.01	32	1.89	0.57	0.11	2.46
	195.95	198.85	2.90	2.70	16	0.99	0.65	0.07	1.64
	208.80	213.20	4.40	3.48	28	1.66	0.78	0.06	2.44
	271.67	271.90	0.23	0.21	324	2.02	0.19	0.67	2.21

The objective of the third hole, X6B, was to test the continuity between the two best drill hole results from the 20102013 exploration work in which X26 intersected 6.0 meters of 847 Ag/t at 381 meters depth and X40-1 with 2.45 meters of 1623 Ag/t at 424 meters depth. Drill hole X6B was 459.05 meters in length with 97% core recovery and intersected six different levels of silver/base metal mineralization but exhibiting weaker mineralization southwest of X26, as follows:

Drill Hole	From (m)	To (m)	Interval (m)	True Width(m)	Ag g/t	Pb%	Zn%	Cu%	Pb + Zn%	AgEq **g/t **
X6B	227.35	228.50	1.15	1.148	108	0.31	0.08	0.03	0.39	120
	282.00	284.00	2.00	1.97	16	0.41	0.15	0.13	0.56	42
	285.25	286.35	1.10	1.09	10	0.49	0.08	0.01	0.57	25
	289.00	291.55	2.55	2.52	11	0.79	0.69	0.01	1.48	52
	391.25	392.30	1.05		18	0.02	0.11	0.00	0.13	22
	393.45	394.30	0.85		32	0.03	0.21	0.00	0.24	39

The objective of the fourth hole, X7B was to test the continuity between X5B at the northern end of the Victor vein structure and X6B. Drill hole X7B with a total depth of 308.7 meters a core recovery of 93% also intersected Silver and Lead, Zinc, Copper mineralization at two levels of elevation, as follows:

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XTIERRA INC. Management Discussion and Analysis For the year ended December 31, 2020 (Expressed in US Dollars)

Drill Hole	From (m)	To (m)	Interval (m)	True Width (m)	Ag g/t	Pb%	Zn%	Cu%	Pb + Zn%	AgEq g/t
X7B	139.20	140.05	0.85	0.76	56	0.05	0.09	0.01	0.14	60
	265.85	278.85	13.00	9.37	61	5.50	4.41	0.08	9.91	336
including	265.85	266.70	0.85	0.61	82	6.79	6.98	0.29	13.77	486
	268.90	269.40	0.50	0.36	63	5.99	6.43	0.08	12.42	412
	270.13	271.10	0.97	0.70	119	13.60	11.40	0.01	25.00	795
	277.05	277.75	0.70	0.50	107	8.23	6.91	0.54	15.14	566

The fifth drill hole, X8B, was 300 meters in length with 95% recovery and drilled just north of the southernmost previous drill hole X100 which intersected 1 meter of 810 g/t Ag to test the extension of the Victor vein where it intersects a manto stockwork area.

Drill Hole	From (m)	To (m)	Interval (m)	True Width (m)	Au g/t	Ag g/t	Pb%	Zn%	Cu%	Pb + Zn%	AgEq g/t
X8B	250.50	250.90	0.40	0.35	0.54	40	0.03	0.59	0.17	0.62	75
	279.80	280.10	0.30	0.25	0.02	23	0.23	0.49	0.09	0.72	52
	280.30	280.60	0.30	0.25	0.01	41	0.41	0.93	0.10	1.34	89

The goal of exploring the silver potential in the area surrounding the main Bilbao deposit, was based on an internal review of the prior drilling of 113 holes which identified 74 holes with higher silver values suggesting a potential additional three to four million tonnes with a probable grade in the range of 200-240 g/t Ag, plus lead, zinc and copper by-product. The combination of the existing deposit, the high grade silver mineralization outside and just west of the deposit plus the zone, called El Cabezon which is a former silver mine operated by the Frisco Industrial Group, located 1.5 km south of Bilbao leads to the potential of a much larger silver resource and an area play. The potential quality and grade is conceptual in nature; there has been insufficient exploration to define a mineral resource and it is uncertain if future exploration will result in the target being delineated as a mineral resource.

Overall, the drill results on the five holes on the Victor vein demonstrated both consistency and continuity of the mineralization which should add to the economics of the Bilbao deposit. Furthermore, the results extend the thesis that the surrounding veins are a completely different mineralization than the skarn in the main Bilbao deposit and therefore there is believed to be considerable unexplored potential.

The permit to drill the El Cabezon vein has not yet been received as it requires a change of use in land. This area to the south of Bilbao is exposed over 600 meters so the objective is to drill 2 holes in search of the continuity of the mineralization of the silver vein below the old mine where 3 levels were exploited. A third hole is planned to seek the continuity 400 meters to the northwest of the first drill hole and is located in the Bilbao 2 concession. As previously reported, this area has potential to offer additional tonnage based on similar results from trenching, sampling and soil geochemistry.

Qualified Person

Scientific and technical information disclosed in this MDA was prepared under the supervision of, and approved by, Gerry J. Gauthier, P. Eng., a Director and former President of the Company, and a ‘Qualified Person’ within the meaning of NI 43-101.

Support Extension Agreement and Reduction of Debt

By an Extension Agreement dated as of February 7, 2020, as amended by an Amending Agreement dated April 30, 2020, the term of the Support and Standstill Agreement (“Support Agreement”) with Buchans Resources Limited to

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XTIERRA INC. Management Discussion and Analysis For the year ended December 31, 2020 (Expressed in US Dollars)

defer repayment of principal and accrued interest, was extended for an additional period to April 30, 2021, in consideration of the issue to Buchans of 13,000,000, non-transferable warrants, each warrant entitling Buchans to purchase one common share of Xtierra for Cdn$0.05 per share for a term to April 30, 2021.

On April 27, 2021, Xtierra reduced the notes due to Buchans by the payment of $600,000 and by a Second Extension Amendment Agreement dated April 27, 2021, the Support Agreement between Buchans and the Company was further amended to provide that interest on the remaining balance of the notes due to Buchans in the amount of $196,000 will resume to accrue at the rate of 5% per annum effective May 1, 2021 until paid, and the Term was extended for a further period to April 30, 2023. See Notes 8 and 10 to the Financial Statements for the year ended December 31, 2020.

The Company’s operations could be significantly adversely affected by the effects of the global spread of the contagious coronavirus, causing the outbreak of COVID-19 respiratory disease which was declared a pandemic by the World Health Organization on March 11, 2020. The Company cannot predict the impact the COVID-19 pandemic will have on its operations, including the impact on schedules and timelines for planned operations or exploration programs and the length of travel and quarantine restrictions imposed by governmental authorities. The Federal Government of Mexico, as part of its nationwide effort to slow the spread of the COVID-19 virus, issued a Decree requiring non-essential businesses, including mining and mineral exploration, to suspend all activities.

In addition, this COVID health crisis has adversely affected the economies and financial markets, resulting in an economic downturn that could further affect the Company’s operations and ability to finance its operations.

Exploration and Evaluation Expenditures

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December 31, Additions December 31, Additions December 31,
2020 2019 2018
$ $ $ $ $
Bilbao 22,968,264 129,566 22,838,698 104,508 22,734,190
Laguna 7,281,000 - 7,281,000 - 7,281,000
Total 30,249,264 129,566 30,119,698 104,508 30,015,190
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Results of Operations

The Company recorded no revenue for the year ended December 31, 2020 or 2019.

For the three-month period ended December 31, 2020, the Company recorded a loss of $181,767 ($0.001 per share), which included share-based payment expense of $42,557 and exploration expenditures of $120,512.

For the year ended December 31, 2020, the Company recorded a loss of $563,338 ($0.004 per share), which included warrants valuation expense of $186,492, share-based payment expense of $127,671 and exploration expenditures of $148,021.

For the three-month period ended December 31, 2019, the Company recorded a loss of $75,522 ($0.000 per share). The main component being exploration expense of $67,837.

For the year ended December 31, 2019, the Company recorded a loss of $167,667 ($0.001 per share). The main component being exploration expense of $104,508, which included $76,829 investment on the acquisition of the 1.5% royalty on the Bilbao property which was expensed to exploration and evaluation costs as incurred as the carrying value of the Bilbao had been impaired in earlier accounting periods.

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XTIERRA INC. Management Discussion and Analysis For the year ended December 31, 2020 (Expressed in US Dollars)

The Company has minimized its administrative and holding costs to maintain its properties, while examining strategic alternatives for realizing some value on its Bilbao and other Mexican projects and identifying and evaluating new potential royalty acquisitions.

Selected Annual Results

The following selected annual information has been derived from the financial statements of the Company, which have been prepared in accordance with International Financial Reporting Standards.

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Year ended Year ended Year ended
Dec. 31, 2020 Dec. 31, 2019 Dec. 31, 2018
$000's $000's $000's
Loss before other items 271 164 286
Net and comprehensive loss for the period 563 168 882
Net Loss per common share 0.004 0.001 0.007
Total assets 765 61 12
Cash and cash equivalents 524 38 4
Other liability 2,000 2,000 2,000
Shareholders deficiency (2,174) (2,803) (2,825)
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Summary of Quarterly Results

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Dec. 31 Sept 30 June 30 Mar. 31 Dec. 31 Sept 30 June 30 Mar. 31
2020 2020 2020 2020 2019 2019 2019 2019
$000's $000's $000's $000's $000's $000's $000's $000's
Net loss 182 101 257 23 75 38 31 22
Net loss 0.001 0.001 0.002 0.000 0.000 0.000 0.000 0.000
per share
Total assets 765 800 242 34 61 120 119 15
Working Capital (2,362) (2,190) (2,728) (2,846) (2,823) (2,805) (2,734) (2,853)
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• The fourth quarter of 2019 included the investment of Cdn$100,000 ($76,829) to acquire a royalty on the Bilbao project which was expensed to exploration and evaluation costs as incurred and was included in the statement of operations.

• The second quarter of 2020 included warrants valuation expense of $186,492 and share-based payment expense of $42,557.

• The third quarter of 2020 included a share-based payment expense of $42,557 and marketing expenses in the amount of $31,839.

• The fourth quarter of 2020 included $120,512 exploration expenditures and share-based payment expense of $42,557.

Liquidity and Capital Resources

The book value of total assets at December 31, 2020 was $765,277 compared to $60,990 at December 31, 2019. The Company has invested $22,986,719 on its Bilbao mineral project, which in accordance with the Company’s accounting policies has been fully impaired.

During June and July 2020, the Company raised Cdn$1,000,000 through the issue of 20,000,000 new shares.

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XTIERRA INC. Management Discussion and Analysis For the year ended December 31, 2020 (Expressed in US Dollars)

At December 31, 2020, the Company had cash of $523,651 to settle current liabilities of $143,168, excluding $796,477 due to Buchans and $2,000,000 contingent liability of a subsidiary. See Notes 8 and 10 to the Consolidated Financial Statements for the year ended December 31, 2020.

By an Extension Agreement dated as of February 7, 2020, as amended by an Amending Agreement dated April 30, 2020, the term of the Support and Standstill Agreement (“Support Agreement”) with Buchans Resources Limited to defer repayment of principal and accrued interest, was extended for an additional period to April 30, 2021, in consideration of the issue to Buchans of 13,000,000, non-transferable warrants, each warrant entitling Buchans to purchase one common share of Xtierra for Cdn$0.05 per share for a term to April 30, 2021.

Subsequent to year end, on April 27, 2021, Xtierra reduced the notes due to Buchans by the payment of $600,000 and by a Second Extension Amendment Agreement dated April 27, 2021, the Support and Standstill Agreement between Buchans and the Company was further amended to provide that interest on the remaining balance of the notes due to Buchans in the amount of $196,000 will resume to accrue at the rate of 5% per annum effective May 1, 2021 until paid, and the Term was extended for a further period to April 30, 2023. See Notes 8 and 10 to the Financial Statements for the year ended December 31, 2020.

Related Party Transactions

The Company has entered into various funding agreements or arrangements with its major shareholder, see Note 10 to the Consolidated Financial Statements for the year ended December 31, 2020.

No fees were paid by the Company to directors and key management personnel for their services as directors and officers of the Company in the year ended December 31, 2020.

Included in accounts payable and accruals at December 31, 2020 is $41,348 due to Steenberg law Professional Corporation, a company controlled by Neil J. F. Steenberg, Secretary, for legal fees. These balances are due on demand, unsecured and non-interest bearing.

Commitments and Contingencies

In order to maintain the Company’s mineral concessions and titles in good standing, the Company is required to maintain a prescribed minimum of annual exploration expenditure and pay fees semi-annually to the Secretaria de Economia in Mexico. Minimum expenditure commitments and concession payments totaling approximately $62,000 (MXN $1,228,000) are required annually.

Critical Accounting Estimates

The Company’s financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and require management to make estimates and assumptions about future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Risk and Uncertainties

The risk factors and uncertainties associated with the Company’s business are described in detail in the Company’s Management’s Discussion and Analysis for the year ended December 31, 2019, as well as in the Company’s Annual Financial Statements (under the headings “Nature of Operations and Going Concern” and “Significant Accounting Policies” and elsewhere within that document), all as filed on the SEDAR website at www.sedar.com. Such risks and uncertainties could have a material adverse effect on the Company’s business, financial condition and/or results of operations, and on the trading price of the Company’s shares.

In conducting its business, the Company faces a number of risks common to the mining and exploration industry. These are summarized below.

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XTIERRA INC. Management Discussion and Analysis For the year ended December 31, 2020 (Expressed in US Dollars)

Failure to Obtain Additional Financing – Going Concern

The continuing operations of the Company in the short term are dependent upon continued support from its major shareholder and its ability to raise adequate working capital to continue as a going concern.

There is no assurance that the Company will be successful in obtaining the required financing. It cannot be guaranteed that such financing will be available on a timely basis or on acceptable terms. Failure to secure additional financing would result in delaying or indefinite postponement of development or production of the Company’s properties. There can be no assurance that such additional financing will be available when needed or that, if available, the terms of such financing will be on terms favorable to the Company.

The Company’s operations could be significantly adversely affected by the effects of the global spread of the contagious coronavirus, causing the worldwide outbreak of COVID-19 respiratory disease which was declared a pandemic by the World Health Organization on March 11, 2020. In addition, this widespread health crisis has adversely affected the economies and financial markets of many countries, resulting in an economic downturn that could further affect the Company’s ability to finance its operations.

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than Policy 2.5 of the TSX Venture Exchange (“TSXV”) which requires adequate working capital or financial resources of the greater of (i) Cdn$50,000 and (ii) an amount required in order to maintain operations and cover general and administrative expenses for a period of 6 months.

Exploration, Development and Operating Risk

Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits that, though present, are insufficient in quantity and quality to return a profit from production. The marketability of minerals acquired or discovered by the Company may be affected by numerous factors that are beyond the control of the Company and that cannot be accurately predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting minerals and environmental protection, the combination of which factors may result in the Company not receiving an adequate return of investment capital. Many of the mining claims in which the Company has an interest are in the exploration stage only and are without a known body of commercial ore. Development of the subject mineral properties would follow only if favourable exploration results are obtained and a positive study is completed.

The business of exploration for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines. There is no assurance that the Company’s mineral exploration and development activities will result in any discoveries of commercial bodies of ore. The long-term profitability of the Company’s operations will in part be directly related to the costs and success of its exploration and development programs, which may be affected by a number of factors.

Substantial expenditures are required to establish reserves through drilling and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis.

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XTIERRA INC. Management Discussion and Analysis For the year ended December 31, 2020 (Expressed in US Dollars)

No Assurance of Production

Mineral exploration is highly speculative in nature, involves many risks, and frequently does not lead to the discovery of commercial reserves of minerals. While the rewards can be substantial if commercial reserves of minerals are found, there can be no assurance that the Company’s past or future exploration efforts will be successful, that any production therefrom will be obtained or continued, or that any such production which is attempted will be profitable.

The Company has limited experience in placing resource properties into production, and its ability to do so will be dependent upon using the services of appropriately experienced personnel or entering into agreements with other major resource companies that can provide such expertise. There can be no assurance that the Company will have available to it the necessary expertise when and if the Company places its resource properties into production and whether it will produce revenue, operate profitably or provide a return on investment in the future.

Government Regulation and Permitting

The current or future operations of the Company, including development activities and commencement of production on its properties, require permits from various federal, state and local governmental authorities in Mexico, and such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, water use, environmental protection, land claims of local people, mine safety and other matters.

Mexico is considered among the desirable regions of the world for exploration and mining, according to results of a survey conducted by The Fraser Institute, an independent Canadian research organization. The country’s desirability for mining companies results from a combination of factors including a strong mining culture, excellent geology, relative political stability and favourable tax and permitting structures. Under the country’s foreign ownership laws, non-Mexican companies can maintain 100% ownership of their properties and reap the benefits of successful exploration.

Such operations and exploration activities are also subject to substantial regulation under applicable laws by Mexican governmental agencies that will require the Company to obtain permits, licences and approvals from various governmental agencies. There can be no assurance, however, that all permits, licences and approvals that the Company may require for its operations and exploration activities will be obtainable on reasonable terms or on a timely basis or that such laws and regulations will not have an adverse effect on any mining project which the Company might undertake.

In order to maintain the Company’s mineral concessions and titles in good standing, the Company is required to maintain a prescribed minimum of annual exploration expenditure and pay fees semi-annually to the Secretaria de Economia in Mexico. Minimum expenditure commitments and concession payments totaling approximately $62,000 are required annually. Failure to make the annual concession payments or incur the minimum annual exploration expenditures, to the satisfaction of the Mexican authorities, or a determination that the expenditures incurred are not qualifying expenditures, may result in the cancellation or forfeiture of the mineral concessions.

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

Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases

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XTIERRA INC. Management Discussion and Analysis For the year ended December 31, 2020 (Expressed in US Dollars)

in exploration expenses, capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.

Management

The success of the Company is currently largely dependent on the performance of its directors and officers. There is no assurance the Company can maintain the services of its directors and officers, or other qualified personnel required to operate its business. The loss of the services of these persons could have a material adverse effect on the Company and its prospects. Some of the directors and officers also serve as directors and/or officers of other companies which are engaged and will continue to be engaged in the search for additional business opportunities on behalf of other companies, and situations may arise where these directors and officers will be in direct competition with the Company. Conflicts, if any, will be dealt with in accordance with the relevant provisions of applicable corporate and securities laws.

Price Volatility of Publicly Traded Securities

Securities of exploration 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 relative attractiveness of particular industries. The Company’s share price is also likely to be significantly affected by short-term changes in metal prices or in the Company’s financial condition or results of operations.

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

Fluctuating Metal Prices

Metal prices are subject to significant fluctuations and are affected by several factors which are beyond the control of Buchans. The principal factors include: diminished demand, which may arise if economic growth in China, North America, and/or Europe is not sustained: increases in supply resulting from the discovery and the development of new sources of metals; and supply interruptions, due to changes in government policies, war, or international trade disputes or embargos. The effect of these factors on the future price of metals and their effect on the Company’s operations cannot be predicted.

Foreign Currency Exchange

Exchange rate fluctuations may affect the costs that the Company incurs in its operations. The Company’s financing activities have been denominated in Canadian Dollars, while the expenditures to be incurred by the Company on its mineral exploration projects in Mexico will be denominated in US Dollars or Mexican Pesos. The Company also has certain liabilities denominated in US Dollars. The appreciation of the US Dollar against the Canadian Dollar would result in increased costs of the Company’s activities in Mexico in Canadian Dollar terms, and currency movements may have a significant impact on the Company’s financial position and results of operations in the future. Fluctuations in the exchange rates between the Canadian Dollar and the Mexican Peso or US Dollar may have an adverse or positive effect on the Company.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements.

Financial Instruments

All financial instruments included in current assets are classified as loans and receivables, which are measured at amortized cost. Accounts payable and accruals, notes payables and other liability of subsidiary are classified as other financial liabilities, which are measured at amortized cost. As at December 31, 2020, the carrying and fair value amounts of the Company’s financial instruments are the same because of the limited term of the instruments.

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XTIERRA INC. Management Discussion and Analysis For the year ended December 31, 2020 (Expressed in US Dollars)

The Company is subject to foreign exchange risk as some of its operating, investing and financing activities are transacted in currencies other than the US Dollar. The Company’s operations are carried out in Mexico and Canada and cash is held in Canadian Dollars and Mexican Pesos as well as in US Dollars, the Company is therefore subject to gains and losses due to fluctuations in these currencies.

Outstanding Share Capital

The Company has unlimited authorized share capital of a single class of common shares of which, at December 31, 2020, 162,693,057 shares were issued and outstanding, and also at April 29, 2021.

At December 31, 2020 there were 13,000,000 warrants outstanding, expiring April 30, 2021, entitling Buchans Resources to purchase 13,000,000 common shares at CDN$0.05 per share, which were exercised for CDN$650,000 on April 29, 2021.

At April 29, 2021, there were 13,600,000 share options outstanding, pursuant to the Company’s Stock Option Plan.

Additional Information

Additional information about the Company is available under the Company’s profile on SEDAR at www.sedar.com and on the Company’s website.

Forward-Looking Statements

This management’s discussion and analysis contains certain forward-looking statements relating to, but not limited to, the Company’s expectations, intentions, plans and beliefs. Forward-looking information can often be identified by forward-looking words such as “anticipate”, “believe”, “expect”, “goal”, “plan”, “intend”, “estimate”, “may” and “will” or similar words suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance.

Forward-looking information may include reserve and resource estimates, estimates of future production, unit costs, costs of capital projects and timing of commencement of operations, and is based on current expectations that involve a number of business risks and uncertainties. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, failure to establish estimated resources and reserves the grade and recovery of ore which is mined varying from estimates, capital and operating costs varying significantly from estimates, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, delays in the development of projects changes in exchange rates, fluctuations in commodity prices, inflation and other factors.

Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from expected results. Shareholders and prospective investors should be aware that these statements are subject to known and unknown risks uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. Shareholders are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur.

The Company undertakes no obligation to update publicly or otherwise revise any forward-looking information whether as a result of new information, future events or other such factors which affect this information, except as required by law.

Date: April 29, 2021

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