Starmet Ventures — Management Reports 2023

Apr 20, 2023

STARMET VENTURES INC. MANAGEMENT’S DISCUSSION AND ANALYSIS FOR YEAR ENDED DECEMBER 31, 2022

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The Management’s Discussion and Analysis (“MD&A”), prepared April 20, 2023, should be read in conjunction with the operating results and financial position and cash flows for the year ended December 31, 2022, and related notes (the "audited financial statements") of Starmet Ventures Inc. (“Starmet” or the “Company”), which were prepared in accordance with International Financial Reporting Standards (“IFRS”). All dollar amounts referred to in this MD&A are expressed in Canadian dollars, unless otherwise noted. Readers are cautioned that this MD&A contains certain forward-looking information. Please see the "Forward Looking Statements" section below for a discussion of the use of such information in this MD&A.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this document constitute “forward-looking statements”. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “propose”, “anticipate”, “believe”, used by any of the Company’s management, are intended to identify forward-looking statements. Such statements reflect the Company’s forecasts, estimates and expectations, as they relate to the Company’s current views based on their experience and expertise with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward- looking statements. The Company does not intend, and does not assume any obligation, to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments unless required by law.

COVID-19

The outbreak of COVID-19 has spread across the globe and is impacting worldwide economic activity. Conditions surrounding COVID-19 continue to rapidly evolve and government authorities have implemented emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures may have an adverse impact on global economic conditions as well as on the Company's business activities. The extent to which COVID19 may impact the Company's business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in Canada and other countries to contain and treat the disease. These events are highly uncertain and as such, the Company cannot determine their financial impact at this time.

DESCRIPTION OF BUSINESS

Starmet Ventures Inc. (formerly SaveCann Solutions Inc.) is a company domiciled in Canada. The Company was incorporated under the Business Corporations Act (British Columbia) on March 19, 2019. The address of the Company’s registered and head office is Suite 501 – 3292 Production Way, Burnaby, British Columbia, V5A 4R4. The Company is in the business of the exploration and development of natural resource properties in the USA. This MD&A will be made available on SEDAR at www.sedar.com.

The common shares of the Company commenced trading on October 18, 2022 on the Canadian Securities Exchange under the trading symbol STAR.

OVERALL PERMORANCE

The Company was incorporated on March 19, 2019. The Company's principal business activities include the exploration of mineral resource properties with an emphasis on the Property located in Esmeralda County, Nevada. The Company’s objective is to identify and develop economic mineral resource properties of merit and to conduct exploration programs thereon.

The Company intends to fund the exploration of the Property using the proceeds of its prior private placement financings.

As at December 31, 2022, the Company had accumulated deficits of $795,255. The Company's exploration activities and operating loss and working capital needs may require that it obtain additional capital to continue its operation. Such outside capital may include the sale of additional common shares. There can be no assurance that capital will be available as necessary to meet the Company’s needs or, if the capital is available, that it will be on terms acceptable to the Company. The issuances of additional equity securities by the Company may result in a significant dilution in the equity interests of its current shareholders

SELECTED FINANCIAL INFORMATION

The Company’s date of its fiscal year end is December 31.

The following selected financial data is derived from the financial statements of the Company prepared within acceptable limits of materiality and are in accordance with IFRS. As at the date of this MD&A, the Company has not recorded any revenues, and depends upon share issuances and its cash on hand to fund its expenses. The Company's expenditures mainly include exploration costs and costs to maintain its public company status in good standing.

Item	Year Ended December 31, 2022 (CAD$)	Year Ended December 31, 2021 (CAD$)
Total Assets	388,932	301,233
Total Liabilities	138,354	90,000
WorkingCapital	74,500	70,064
Net Loss	(447,738)	(24,437)
Shareholders’ Equity	250,578	211,233
Number of Common Shares Outstanding at period end	16,436,774	12,205,774

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SHARE CAPITAL

Authorized

The Company is authorized to issue an unlimited number of common shares without par value.

Issued

During the year ended December 31, 2022:

• a) The Company cancelled 500,000 common shares issued in exchange for consulting services during the year ended December 31, 2020.

• b) On April 1, 2022, the Company issued 1,500,000 common shares at $0.10 per share to its two directors and an officer in exchange for consulting services.

• c) On June 28, 2022, the Company completed a non-brokered private placement financing wherein it raised $250,000 via the issuance of 2,500,000 common shares at a price of $0.10 per share.

• d) On August 18, 2022, the Company issued 120,000 common shares at $0.10 per share to a director in exchange for consulting services.

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During the period ended December 31, 2021:

• a) The Company cancelled 200,000 common shares issued in exchange for consulting services performed during the year ended December 31, 2020. The Company recorded a recovery of $13,000 on the statement of loss and comprehensive loss.

The Company had 16,436,774 shares issued and outstanding as at December 31, 2022.

Special Warrants

On April 21, 2022, the Company issued 411,000 Special Warrants (“Special Warrants”) for proceeds of $41,100 at $0.10 per Special Warrant. Each Special Warrant will automatically convert into one common share of the Company (i) at any time, at the discretion of the Company or (ii) upon the issuance, by a Canadian securities regulatory authority, of a final receipt for the final prospectus qualifying the issuance of shares upon conversion of the Special Warrants, or (iii) at that date that is eighteen months from the date that the Special Warrants were issued.

As compensation, the Company issued 200,000 special warrants to the agent. Each compensation special warrant entitles the agent to acquire one common share of the Company at no additional costs, and has the same conversion terms as those of the Special Warrants. The fair value of $20,000 ascribed to the compensation special warrants will be accounted for as warrant issuance costs.

In relation to the issuance, the Company incurred $3,868 in additional warrant issuance costs, which included a portal fee of 5% of the aggregate amount of the gross proceeds, as well as payment processing fees and legal expenses.

Stock Options

During the year ended December 31, 2020, the Company adopted a stock option plan providing for the grant to the Company’s officers, directors, employees and permitted consultants and management company employees of options to purchase common shares of the Company. Under the Stock Option Plan, the Company may grant options to purchase up to 10% of the issued and outstanding shares of the Company.

On June 28, 2022, the Company granted a director 500,000 stock options exercisable at a price of $0.10 for five years from the date of listing of the Company’s common shares on the Canadian Securities Exchange. No amount for compensation has been recorded as no shares have vested.

RESULTS OF OPERATIONS

Year ended December 31, 2022

During the year ended December 31, 2022, the Company recorded a net loss of $447,738. The loss is mainly due to consulting fees of $298,200, accounting and audit fees of $48,325 and legal fees of $37,973.

During the year ended December 31, 2021, the Company recorded a loss of $24,437. The loss is mainly due to consulting fees of $17,000 and accounting and audit fees of $5,250.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents on December 31, 2022 was $209,812 compared to $160,051 as of December 31, 2021. Working capital increased to $74,500 as of December 31, 2022 compared to $70,064 as of December 31, 2021, mainly due to $250,000 raised via the issuance of 2,500,000 common shares in a private placement.

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Cash used in operating activities for the year ended December 31, 2022 (December 31, 2021 – Cash provided by operating activities $13,259), was $202,562, which was attributed to the loss during the year of $447,738 (December 31, 2021 – $24,437), partially offset by consulting fees paid by issuance of common shares of $162,000, Sharebased payments of $37,851 and the change in working capital items which were increase in dues to related parties of $37,000 and an increase in trade payables and accrued liabilities of $11,354.

Cash used in investing activities for the year ended December 31, 2022 (December 31, 2021 - $41,752), was $34,909 due to exploration and evaluation activities

Cash provided by financing activities for the year ended December 31, 2022, was $287,232 due to issuance of 2,500,000 common shares at a price of $0.10 for proceeds of $250,000 and issuance of special warrants for $37,232.

The Company’s ability to continue on a going concern basis depends on its ability to successfully raise additional financing. Although the Company has been successful in the past in obtaining financing, there can be no assurance that it will be able to obtain adequate financing in the future or that the terms of such financing may be favorable. As of December 31, 2022, the Company had no material cash contractual obligations.

RELATED PARTY TRANSACTIONS

During the year ended December 31, 2022, the Company incurred $60,000 (2021 - $15,000) in consulting fees to a company controlled by a former director. As at December 31, 2022, the Company owed $60,000 (December 31, 2021 - $45,000) to this company.

During the year ended December 31, 2022, the Company incurred $60,000 (2021 - $15,000) in consulting fees to a former director and officer of the company. As at December 31, 2022, the Company owed $60,000 (December 31, 2021 - $45,000) to this director.

During the year ended December 31, 2022, the Company incurred $11,200 (2021 - $Nil) in consulting fees to a director and officer of the company. As at December 31, 2022, the Company owed $Nil (December 31, 2021 - $Nil) to this director.

During the year ended December 31, 2022, the Company incurred $24,425 (2021 - $Nil) in accounting fees to a company controlled by an officer of the Company. As at December 31, 2022, the Company owed $5,000 (December 31, 2021 - $Nil) to this company.

During the year ended December 31, 2022, the Company incurred $5,000 (2021 - $Nil) in consulting fees to a company controlled by a director of the Company. As at December 31, 2022, the Company owed $2,000 (December 31, 2021 - $Nil) to this company.

During the year ended December 31, 2020, the Company incurred $32,500 (2021 - $Nil) in consulting fees to a former director of the Company. The amount was paid via the issuance of 500,000 common shares of the Company at a price of $0.065 per share. These common shares were cancelled on February 8, 2022 due to the director’s inability to serve as an officer of the Company.

During the year ended December 31, 2020, the Company incurred $13,000 in consulting fees to a former director and officer of the Company. The amount was paid via the issuance of 200,000 common shares of the Company at a price of $0.065 per share. These common shares were cancelled on January 31, 2021 due to the director’s inability to serve as an officer of the Company.

During the year ended December 31, 2022, the Company granted 500,000 stock options to a director valued at $37,851.

During the year ended December 31, 2022, the Company issued 120,000 common shares at $0.10 per share to a director in exchange for consulting services.

During the year ended December 31, 2022, the Company issued 1,500,000 common shares at $0.10 per share to its two directors and an officer in exchange for consulting services.

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OFF-BALANCE SHEET ARRANGEMENTS

The Company has no material undisclosed off-balance sheet arrangements that have or are reasonably likely to have, a current or future effect on our results of operations or financial condition.

LEGAL PROCEEDINGS

The Company has not been a party to any legal proceedings since inception.

COMMITMENTS

The Company has no long-term commitments.

RISKS AND UNCERTAINTIES

Capital Management

The Company’s capital currently consists of common shares and special warrants and its principal source of cash is from the issuance of common shares and special warrants. The Company’s capital management objectives are to safeguard its ability to continue as a going concern and to have sufficient capital to be able to acquire and explore mineral property assets. The Company does not have any externally imposed capital requirements to which it is subject. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares or special warrants.

As the Company’s mineral property is in the exploration stage, the Company is dependent on external financing to fund its activities. In order to carry out its operations, the Company will spend its existing working capital and raise additional amounts as needed.

Financial Risks

The Company's risk exposures and the impact on its financial instruments are summarized below:

Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting its financial obligations. The Company currently settles its financial obligations out of cash. The ability to do this relies on the Company raising equity financing in a timely manner and by maintaining sufficient cash in excess of anticipated needs and to meet the Company’s liabilities. The $11,354 of accounts payable and accrued liabilities are due within one year.

Credit Risk

Credit risk is the risk of a loss associated with a counterparty's inability to fulfill its payment obligations. Financial instruments that potentially subject the Company to concentrations of credit risks consist principally of cash. To minimize the credit risk the Company places these instruments with a high credit quality financial institution, or in a trust account with legal counsel.

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MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL INFORMATION

The Company’s financial statements and the other financial information included in this MD&A are the responsibility of the Company’s management and have been examined and approved by the Board of Directors. The financial statements were prepared by management in accordance with generally accepted Canadian accounting principles and include certain amounts based on management’s best estimates using careful judgment. The selection of accounting principles and methods is management’s responsibility. Management recognizes its responsibility for conducting the Company’s affairs in a manner to comply with the requirements of applicable laws and established financial standards and principles, and for maintaining proper standards of conduct in its activities. The Board of Directors supervises the financial statements and other financial information through its audit committee, which is comprised of a majority of non-management directors. This audit committee’s role is to examine the financial statements and recommend that the Board of Directors approve them, to examine the internal control and information protection systems and all other matters relating to the Company’s accounting and finances. In order to do so, the audit committee meets annually with the external auditors, with or without the Company’s management, to review their respective audit plans and discuss the results of their examination. This committee is responsible for recommending the appointment of the external auditors or the renewal of their engagement.

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