Stroud Resources Ltd.

FORM 51-102FI

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE SIX MONTHS ENDED JUNE 30, 2021

August 30, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS (“MD&A”) FOR THE SIX MONTHS ENDED JUNE 30, 2021

The following discussion of the results of operations of Stroud Resources Ltd. (“the Company” or "Stroud"), dated August 30, 2021, for the six months ended June 30, 2021 should be read in conjunction with the Company’s consolidated financial statements for the six months ended June 30, 2021 and for the year ended December 31, 2020.

All amounts are presented in Canadian dollars, unless otherwise noted. Additional information relating to the Company is available on SEDAR at www.sedar.com .

1. Overview

Stroud Resources Ltd. (the “Company” or “Stroud”) is a junior resource company involved in the acquisition, exploration and development of mineral properties. The Company is listed on the TSX Venture Exchange as a Tier 2 company and trades under the stock symbol "SDR". Stroud is exploring properties hosting silver and gold mineralization in Jalisco, Mexico; and has interests in natural gas producing wells in Alberta, Canada.

Management's strategy for building Stroud and maximizing shareholder value is to acquire and explore properties with the potential to host significant economic deposits within prolific mining districts in Mexico, with the objective of enhancing the value of these properties either by direct exploration or through joint ventures with third parties.

The Company was incorporated on March 18, 1983 and is in the development stage. The Company is in the process of exploring its mineral properties and has not yet determined whether these properties contain ore reserves that are economically recoverable. The recoverability of the carrying values of these interests is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain necessary financings to complete the development thereof, and the future profitable production therefrom or alternatively upon the Company’s ability to dispose of its interests on an advantageous basis. Changes in future conditions could require material write-downs of the carrying values. Future quarterly results, in terms of both corporate and exploration expenditures, may be constrained by difficult market conditions and lack of financing available to junior mining companies.

Mining Industry

The exploration for and development of mineral deposits involves significant risk, which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of a mineral deposit may result in substantial rewards, few properties that are explored are ultimately developed into producing mines. Major expenses may be required to locate and establish mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that the exploration programs planned by the Company will result in a profitable commercial mining operation. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as size; grade and proximity to infrastructure; metal prices; and government regulations, including regulations relating to prices; taxes; royalties; land tenure; land use; permitting; importing and exporting of minerals, and environmental protection. The exact effect of these factors cannot be accurately predicted but the combination of these factors may result in the Company not receiving an adequate return on investment.

Forward-Looking Statements

This management’s discussion and analysis may contain statements that are “Forward-looking Statements”. These include statements about the Company’s expectations, beliefs, plans, objectives and assumptions about future events or performance. These statements are often, but not always, made through the use of words or phrases such as “will likely result”, “are expected to”, “will continue”, “anticipate”, “believes”, “estimate”, “intend”, “plan”, “would”, and “outlook” or statements to the effect that actions, events or results “will”, “may”, “should” or “would” be taken, occur or be achieved. Statements and estimates concerning mineral resources may also be deemed to be forward-looking statements in that they involve estimates, based on certain assumptions, regarding the mineralization that would be encountered if and when a mineral deposit were to be developed and mined. Forward-looking statements are not historical facts and are subject to a number of risks and uncertainties beyond the Company’s control. Accordingly, the Company’s actual results could differ materially from those suggested by these forward-looking statements for various reasons discussed throughout this analysis. Forward-looking statements are made on the basis of the beliefs, opinions and estimates of the Company’s management on the date the statements are made, and the Company does not undertake any obligation to update forward-looking statements if the circumstances or management’s beliefs, opinions or estimates should change. Readers should not place undue reliance on forward-looking statements.

COVID-19

The Company’s operations have been significantly adversely affected by the effects of a widespread global outbreak of a contagious disease, including the recent outbreak of respiratory illness caused by COVID-19. The Company’s drilling permits were delayed about 5 months with delays associated with shutdowns related to Covid-19. The Company cannot accurately predict the impact COVID-19 will have on future operations and the ability of others to meet their obligations with the Company, including uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected countries. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries resulting in an economic downturn that could further affect the Company’s operations and ability to finance its operations.

Operations

On July 30, 2020, the Company issued 7,500,000 units at $0.40 per unit for gross proceeds of $3,000,000. Each Unit consists of one common share and one-half common share purchase warrant. Each full warrant is exercisable to purchase one common share at a price of $0.60 until July 31, 2021. The shares were acquired by 2176423 Ontario Ltd., a control person of the Company. The control person now owns 20,833,333 Common shares and 8,194,444 Warrants representing 42% of the issued and outstanding shares of the Company on a non-diluted basis and approximately 52% on a partially diluted basis. The Company issued 525,000 broker warrants in conjunction with the financing. Each warrant is exercisable to purchase one common share at a price of $0.60 until July 31, 2022.

The Company has sufficient funds to conduct a drilling program on its Santo Domingo Silver Property (the “Property”) in Jalisco Mexico that is designed to reach beyond the near surface drilling previously completed. The Company received its drilling permit subsequent to the end of the year and is currently drilling on the Property.

The Company has sufficient cash to complete additional drilling in 2021 and expects to be able to produce an updated 43-101 Technical Report on the Property and Preliminary Economic Assessment.

An updated National Instrument 43-101 Technical Report on the Santo Domingo Property was issued November 20, 2017. The 2017 Technical report increased measured and indicated mineral resources on the Property by 71%.

The Company incurred a net loss of $972,638 [2020 – $237,041] and a net comprehensive loss of $972,638 [2020 – $237,041] for the six months ended June 30, 2021. Oil and gas revenues increased by 76.9% in the first half of 2021 from the levels in the first half of 2020, to $16,465 [2020 - $9,308], reflecting improved prices and natural gas production. Oil and gas operating expenses decreased by 12.4% in the first six months of 2021 from the same period of 2020 to $11,180 (2020 - $12,578). The Company incurred $852,542 [2020 – $131,357] in exploration related costs on its mineral properties in 2021. In 2021, administrative expenses increased to $134,736 from $107,063 in 2020. The change reflects increased management fees and professional fees, and additional business development expenses. The Company earned interest income of $9,355 (2020 – $4,829) during the six months ended June 30, 2021.

The Company had positive working capital of $3,345,272 at June 30, 2021 compared to working capital of $4,317,909 at December 31, 2020. The Company has sufficient funds to conduct a drilling program but will need further financing to fund its ongoing general and administrative expenses and to complete further exploration programs. The Company’s future performance will be dependent upon its ability to raise additional funds.

2. New accounting standards and interpretations

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing on or after January 1, 2021. Many are not applicable or do not have a significant impact to the Company and have been excluded.

IFRS 10 – Consolidated Financial Statements (“IFRS 10”) and IAS 28 – Investments in Associates and Joint Ventures (“IAS 28”) were amended in September 2014 to address a conflict between the requirements of IAS 28 and IFRS 10 and clarify that in a transaction involving an associate or joint venture, the extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business. The effective date of these amendments is yet to be determined however early adoption is permitted.

IAS 1 – Presentation of Financial Statements (“IAS 1”) was amended in January 2020 to provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. The amendments clarify that the classification of liabilities as current or noncurrent is based solely on a company’s right to defer settlement at the reporting date. The right needs to be unconditional and must have substance. The amendments also clarify that the transfer of a company’s own equity instruments is regarded as settlement of a liability, unless it results from the exercise of a conversion option meeting the definition of an equity instrument. The amendments are effective for annual periods beginning on January 1, 2023.

3. Mineral Properties and Deferred Costs and Oil and Gas Interests

The Company reviewed its policy for capitalizing long lived assets and is adopting a policy of expensing exploration costs as incurred for the financial statements ended December 31, 2020. The change in accounting policy better reflects the nature of the Company’s exploration expenditures and the stage of development of its Santo Domingo project. The policy is applied retrospectively starting January 1, 2019.

Santo Domingo Silver-Gold Project

Stroud holds its interest in its Santo Domingo Silver Property through its wholly owned subsidiary, Compañia Minera San Diego y La Espanola S.A. de C.V. ("Compañia Minera"), which holds prospecting and exploration permits for the Property. Compañia Minera holds rights to the Santo Domingo II and Nombre de Dios mining concessions, located approximately 80 km northwest of Guadalajara, the capital city of the State of Jalisco, Mexico. The concessions occur in the Hostotipaquillo Mining District, which includes a number of established silver-gold epithermal mineral occurrences, including the well- known Monte del Favor, La Cabrera and Cinco Mines.

The Mexican Mining Law was amended by a Congress Decree dated February 22, 2005, published at the Office Daily of the Federation on April 28, 2005. Under this amendment, exploitation mining concessions are now valid for 50 years and all existing exploration and mining concessions were automatically converted into exploitation mining concessions from January 1, 2006. Compania Minera has leased surface rights from Ejido of Santo Domingo de Guzman to cover the mining concessions and the surrounding area.

On November 20, 2017, the Company issued an updated NI 43-101 Technical Report on the Santo Domingo Property. The report is available online at SEDAR and on the Company’s website.

Highlights from the report include:

Measured and indicated mineral resources increased to 25.74M silver equivalent ounces from 15.05M.
Inferred mineral resources increased to 13.39M silver equivalent ounces from 10.68M.
La Rayas vein indicates a mineralized zone, 35 metres wide by 300 metres deep and over 700 metres along strike.
Guadalupe vein is typically 15 to 30 metres wide.
Five additional veins have been identified for future exploration, deeper into the hillside.

The Report confirms Measured and Indicated, and Inferred Mineral Resources as set out in the table below:

Classification	Tonnes	Goldg/t	Silverg/t	Silver Eq. g/t	Ounces Gold	Ounces Silver	Ounces Ag Eq.
Measured	3,148,834	0.51	107.40	144.21	51,370	10,136,145	13,952,515
Indicated	2,932,967	0.43	94.07	124.93	40,242	8,874,620	11,785,663
Measured and Indicated	6,081,801	0.47	100.97	134.91	91,612	19,010,765	25,738,178

Inferred	3,482,160	0.39		119.56	43,228	10,083,932	13,387,222

Cut-off grade was 45 grams per tonne silver equivalent over a three metre true width and a gold-silver ratio of 72:1 Continuity of mineralization was established by drilling on 50 metre centres, and using a specific gravity of 2.65

The Company initiated its drilling program on the Property in April 2021.

The Company was obligated to pay Eagle Graphite Incorporated (formerly Amerix Precious Metals Corporation) ["Eagle"] a royalty fee of 5% from any of the Company's net proceeds of sale of minerals to a maximum of CAD $1,000,000. In August 2019, the Company paid Eagle $100,000 and the royalty was reduced to 2.5% of net proceeds to a maximum of CAD $500,000. The Company has the right to purchase this royalty for $300,000 any time prior to August 21, 2021. The Company did not exercise the option.

An additional amount of US $2,450,000 was to be paid in quarterly installments to a prior owner, if and when revenue is generated from minerals extracted by Compañia Minera, commencing three months after the start of commercial production. Each quarterly installment will be equal to 0.5% of the net smelter return (defined as revenue received by Compañia Minera from the sale of smelter minerals). In 2011, the Company paid US $100,000 to the prior owner and the owner agreed to reduce the additional amount to be paid to US $2,325,000. In September 2014, the Company paid US $30,000 to the prior owner and the owner agreed to reduce the additional amount to be paid to US $2,285,000.

The Company re-negotiated the terms of the royalty with the owner in September 2019. Under the new agreement, the total royalties outstanding are US $1,160,000. The Company has the right to purchase the royalty for US $685,000 any time prior to September 7, 2021. The Company paid US $25,000 and an additional US $210,000, in January 2020.

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 expenditures and pay fees semi-annually to the Secretaria de Economia in Mexico. 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. Management believes that all payments made are appropriate and current.

The Company has signed a new agreement with the owners of the surface rights on the Santo Domingo Silver Property. The new agreement extends for 5 years and requires Stroud to make payments of approximately US $6,000 per annum.

Hislop Gold Project

The Company holds a net smelter royalty (“NSR”) of 0.5% on properties located in Hislop Township, Ontario. The Property owner of the Hislop Project may purchase the royalty for $1,000,000.

Leckie Gold Project

The Company holds a 1% NSR on the Leckie Project. Temagami Gold Inc. (“Temagami”), the property owner of the Leckie Project can purchase the NSR for $500,000 for each 0.5% of royalty. The Company holds 750,000 common shares of Temagami. As at December 31, 2020, Temagami is a privately held corporation and a market price for its shares could not be established. The Company attributed a value of $nil to the shares of Temagami which it holds.

Oil and Gas Interests

The Company generates cash flow through a 3.75% interest in six natural gas wells in central Alberta. The properties are operated by Gain Energy Inc. The Company's proportionate share of the revenue from these properties, net of operating expenses, is received from the operator on a monthly basis.

4. Results of Operations

5. Liquidity and Capital Resources

The Company had positive working capital of $3,345,272 at June 30, 2021 compared to working capital of $4,317,909 at December 31, 2020.

The Company expects it has sufficient cash to complete a drilling program on its Santo Domingo Silver Property. To continue its operations for the foreseeable future, the Company will require additional financing which, if not raised, would result in the curtailment of activities or the sale, option or joint venturing of assets, to the extent appropriate counterparties can be found. The Company's ability to continue to meet its obligations and carry out its planned exploration activities is uncertain and dependent upon its ability to obtain further funds. There can be no assurances that the Company will be able to raise sufficient financing or on terms acceptable to management. The outcome of these matters cannot be predicted at this time and, accordingly, these matters create a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern. If the going concern assumption is not appropriate, adjustments will be necessary to carrying amounts and classification of assets, liabilities and expenses in the consolidated financial statements. Such adjustments could be material.

6. Off-Balance Sheet Arrangements

As of the date of this filing, the Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect upon its results of operations or financial condition, including, and without limitation, such considerations as liquidity and capital resources.

7. Transactions with Related Parties

In accordance with IAS 24, key management personnel are those having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and nonexecutive) of the Company. The remuneration of directors and key management of the Company for the six months ended June 30, 2021 and 2020 was as follows:

Administrative and professional fees Director fees	2021 2020
	$ 30,000 $ 30,000 30,000 22,500
	$60,000 $52,500

8. Proposed transactions

The Company has not entered into any significant transactions, nor is it currently reviewing any such transaction, which requires board approval, shareholder approval or regulatory approval.

9. Critical Accounting Estimates

The Company’s significant accounting policies are presented in Note 3 of the consolidated financial statements for the six months ended June 30, 2021.

10. Financial Instruments

A discussion of the Company’s financial instruments can be found in Notes 3 and 4 of the consolidated financial statements for the six months ended June 30, 2021.

11. Disclosure of Outstanding Share Data as at August 30, 2021

	Number or Principal Amount Outstanding	Maximum Number of Common Shares Issuable
Common Shares outstanding Warrants outstanding Stock Options outstanding	49,504,449 1,458,333 1,255,000	N/A 1,458,333 1,255,000
Maximum common shares issuable 52,217,782

12. Other MD&A Disclosure

The following table sets forth, for the quarter indicated, information relating to the Company’s revenue, net loss and loss per common share for the eight most recently completed fiscal quarters.

	Revenues	Net Income (Loss)	Basic Net Income (Loss) per Share	Diluted Net Income (Loss) per Share
September 30, 2019 December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021	8,222 5,474 5,270 4,038 5,992 6,067 7,732	(297,183) 504,065 (123,032) (114,009) (111,117) (100,120) (334,164)	(0.0015) 0.022 (0.006) (0.003) (0.003) (0.002) (0.007)	(0.0015) 0.018 (0.006) (0.003) (0.003) (0.002) (0.006) (0.013)
June 30,2021	8,733	(638,474)	(0.013)

Additional information relating to the Company, including its annual and quarterly financial statements, is available on SEDAR at www.sedar.com, and on the Company’s website at www.stroudsilver.com.

13. CONTINGENCIES

The Company’s exploration and evaluation activities are subject to laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company believes its activities are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.

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Stroud Resources Ltd. Management Reports 2021

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