Trinity One Metals Ltd. — Interim / Quarterly Report 2021

Nov 26, 2021

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MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

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The following interim Management’s Discussion & Analysis (“MD&A”) of Aranjin Resources Ltd. (the “Company” or “Aranjin”) for the nine months ended September 30, 2021 has been prepared to provide material updates to the business operations, liquidity and capital resources of the Company since its last management’s discussion & analysis, being the Management’s Discussion & Analysis (“December 2020 MD&A”) for the year ended December 31, 2020. This interim MD&A does not provide a general update to the December 2020 MD&A, or reflect any non-material events since the date of the December 2020 MD&A.

This MD&A has been prepared in compliance with section 2.2.1 of Form 51-102F1, in accordance with National Instrument 51102 – Continuous Disclosure Obligations. This discussion should be read in conjunction with the December 2020 MD&A, consolidated financial statements of the Company for the year ended December 31, 2020 together with the notes thereto, and unaudited condensed interim consolidated financial statements of the Company for the nine months ended September 30, 2021, together with the notes thereto. Results are reported in Canadian dollars, unless otherwise noted. The Company’s unaudited condensed interim consolidated financial statements and the financial information contained in this MD&A are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and interpretations of the IFRS Interpretations Committee (“IFRIC”). The unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, information contained herein is presented as of November 26, 2021, unless otherwise indicated.

For the purposes of preparing this MD&A, management, in conjunction with the Board of Directors (the “Board”), considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of Aranjin common shares; (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. Management, in conjunction with the Board, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.

Further information about the Company and its operations can be obtained from the offices of the Company or from www.sedar.com.

Caution Regarding Forward-Looking Statements

This MD&A contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as “forward-looking statements”). These statements relate to future events or the Company’s future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “continues”, “forecasts”, “projects”, “predicts”, “intends”, “anticipates” or “believes”, or variations of, or the negatives of, such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forwardlooking statements. The forward-looking statements in this MD&A speak only as of the date of this MD&A or as of the date specified in such statement.

The following table outlines certain significant forward-looking statements contained in this MD&A and provides the material assumptions used to develop such forward-looking statements and material risk factors that could cause actual results to differ materially from the forward-looking statements.

Forward-looking statements	Assumptions	Risk factors
The Company will be able to continue its business activities.	The Company has anticipated all material costs and the operating activities of the Company, and such costs and activities will be consistent with the Company’s current expectations; the Company will be able to obtain equity funding when required.	Unforeseen costs to the Company will arise; any particular operating cost increase or decrease from the date of the estimation; and capital markets not being favourable for funding resulting in the Company not being able to obtain financing when required or on acceptable terms.

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The Company will be able to carry out anticipated business plans.	The operating activities of the Company for the nine months ending September 30, 2021, will be consistent with the Company’s current expectations.	Sufficient funds not being available; increases in costs; the Company may be unable to retain key personnel; government regulations will change in a negative manner towards exploration activities for junior miningcompanies.

Inherent in forward-looking statements are risks, uncertainties and other factors beyond the Company’s ability to predict or control. Please also make reference to those risk factors referenced in the “Risk Factors” section below. Readers are cautioned that the above chart does not contain an exhaustive list of the factors or assumptions that may affect the forward-looking statements, and that the assumptions underlying such statements may prove to be incorrect. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this MD&A.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from any of its future results, performance or achievements expressed or implied by forward-looking statements. All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forwardlooking statements, no inference should be drawn that it will make additional updates with respect to those or other forwardlooking statements, unless required by law.

Description of Business

The Company was incorporated on November 14, 2012 under the Business Corporations Act (British Columbia).

The records and registered office of the Company is located at 595 Howe St, Suite 704, Vancouver, British Columbia V6C 2T5. The Company has five subsidiaries; FSD Holdings Limited (incorporated in the British Virgin Islands), FSD Brazil Limited (incorporated in the British Virgin Islands), Aranjin Resources LLC (incorporated in Mongolia), 1030301 BC Ltd (incorporated in Canada) and Diamond Blockchain Limited (incorporated in Canada).

On May 15, 2014, Five Star Diamonds Limited (“FSD BVI”), was incorporated under the laws of the British Virgin Islands. FSD BVI has two subsidiaries; FSD Brazil Limited (incorporated in the British Virgin Islands) and Five Star Mineração Ltda. (incorporated in Brazil) with a focus on the business of mining, mineral and resource exploration and development in Brazil. FSD BVI had one material project, the Catalão Diamond Project, located in the State of Goiás, Brazil. FSD BVI entered into agreement to divest all its Brazil diamond interests to a private investor group for future consideration on July 17, 2020.

On September 9, 2016, FSD BVI signed a definitive merger agreement (“Merger Agreement”) with Turquoise Capital Corp. (“Turquoise”), a company listed on the TSX Venture Exchange (“TSX-V”) with one subsidiary; 1030301 BC Ltd.

On April 20, 2017, Turquoise Capital Corp., FSD BVI and FSD Holdings Limited (a wholly owned subsidiary of FSD BVI) finalised the Merger Agreement. All of the ordinary shares of FSD BVI outstanding immediately prior to the merger were cancelled and in exchange the holders of the cancelled ordinary shares received one common share in the capital of FSD BVI for every share previously held. An aggregate of 101,287,345 common shares were issued to the former shareholders of FSD BVI. The resulting merged entity of FSD Holdings Limited became a wholly-owned subsidiary of FSD BVI. As a result of the merger, FSD BVI was subsequently struck off.

In connection with the completion of the Transaction, the Company completed a private placement (the "Offering") of 17,815,480 common shares at a price of $0.30 per share for aggregate gross proceeds of $5,344,644. In connection with the Offering, the Company provided compensation to registered brokers, registered dealers and other finders comprised of an aggregate of $403,185 in cash and an aggregate of 1,343,960 non-transferable common share purchase warrants, with each whole warrant entitling holder to acquire one Common Share at a price of $0.30 per share for a period of two years from the date of issuance. Following completion of the Transaction and the Offering, the Company has 128,777,096 common shares issued and outstanding

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and securities convertible into an aggregate of 1,543,950 additional common shares.

The Company’s common shares commenced trading on the TSX-V under the symbol “STAR” on April 25, 2017. Upon the name change of the Company to Aranjin Resources Ltd, the trading symbol on the TSX-V changed to “ARJN” on June 12, 2020.

With the divestment of the Brazil diamond interests in 2020, the Company is now primarily engaged in the exploration and development of mineral properties in Mongolia.

Corporate Highlights

During the nine months ended September 30, 2021 and as at November 26, 2021, the following corporate activities had occurred:

On February 24, 2021, the Company announced the commencement of an exploration program at its BU Project. Over $10m worth of historical drilling and associated analysis at the BU project has now been reviewed. Due to COVID restrictions this program was limited in 2021.

On February 24, 2021, the Company announced that Mr. Gizman Abbas has resigned as a director of the Company.

On May 19, 2021, the Company entered into an agreement to acquire the highly prospective Sharga Copper Project (“Sharga Project”. The Sharga Project is located in the Gobi Altai region of Mongolia near the Chinese border and is comprised of one Mineral Exploration License covering over 9,000 hectares.

On August 10, 2021, the Company closed a $1,814,400 unsecured convertible debenture into escrow and on August 30, 2021, the Company issued the convertible debenture to Steppe Gold Ltd (“Steppe”) upon receiving TSXV approval on the transaction. The proceeds of the debenture are used to fund the cash consideration of Sharga Project acquisition. The debenture has a term of 12 months and bear interest at a rate of 15% per annum to be accrued and paid at maturity in cash, or at the option of the Company, in common shares. The principal amount of the debenture is convertible at any time during the term into common shares of the Company at a price of $0.055 per share. In addition, the Company has agreed to grant the debenture holder a 1% net smelter returns royalty over the Sharga Project.

On August 30, 2021, the Company completed the acquisition of the Sharga Project through the purchase of all of the issued and outstanding equity interests in Silkroad Mining Trade LLC (“Silkroad”), the 100% owner of the Sharga Project. As consideration for the acquisition, the Company paid a total of US$1.5 million in cash in instalments and would issue 30 million common shares in instalments, provided the issuance would not result in the vendor owning over 9.9% of the issued and outstanding common shares of the Company. At the closing, the Company issued 26,653,822 to the vendor representing 9.9% of the issued and outstanding common shares on an undiluted basis. The balance of 3,346,178 common shares will be issued when the issuance will not result in the vendor owning more than 9.9% of the issued and outstanding common shares, The vendor is an arm’s length party to the Company. The common shares issued pursuant to the acquisition are subject to a statutory hold period of four months and one day in accordance with applicable securities laws.

The Company’s plans to acquire the Baruun Tal (“BT”) Project have been delayed due to issues outside the Company’s control but including the COVID-19 pandemic. The Company expects to have an update on the potential acquisition of the Baruun Tal in due course.

Trends

Management regularly monitors economic conditions and estimates their impact on the Company’s investments and incorporates these estimates in both short-term operating and longer-term strategic decisions. During the nine months ended September 30, 2021 and to the date of this MD&A, equity markets in the junior resource sector, particularly the TSXV, have been extremely volatile and this was compounded by the COVID-19 pandemic. However, companies with good projects continue to access the capital markets to fund their operations.

The COVID-19 pandemic has resulted in significant disruption to the Company’s operations during the financial year. The

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Company has been experienced adverse impacts on license acquisitions as well as the Company’s exploration program. This issue continues to impact the timing of exploration work. Preventative measures are in place to ensure the well-being of contractors and no risks were noted at the end of the reporting period. Management is monitoring the business environment as a result to ensure minimal disturbances to business operations.

Apart from these factors and the risk factors noted under the heading "Risk Factors" below, management is not aware of any other trends, commitments, events or uncertainties that would have a material effect on the Company’s business, financial condition or results of operations.

Financial Highlights

The following tables set forth selected audited and unaudited consolidated financial information of the Company as at and for the periods indicated.

This financial information is derived from, and should be read in conjunction with, the consolidated financial statements of the Company for the year ended December 31, 2020 and nine months ended September 30, 2021 and the notes thereto.

Financial information presented below is prepared in accordance with accounting policies in accordance with IFRS unless otherwise stated.

Balance sheet review

alance sheet review
Total Assets Cash Current Liabilities Total Liabilities Shareholders’ Equity	As at
	September 30, 2021 $5,256,080 $918,152 $2,362,974 $3,100,963 $2,155,117	December 31, 2020
		$808,459 $481,144 $715,204 $1,427,179 $(618,720)

As at September 30, 2021, the Company’s total assets were $5,256,080 (December 31, 2020: $808,459), mainly comprising of cash balance of $918,152 (December 31, 2020: $481,144) and deferred exploration and evaluation expenditures related to the Sharga Project and BU Project of $4,281,052 (December 31, 2020: $290,440). Key movements on the balance sheet are as follows:

• An increase in assets resulted mainly from acquisition of Sharga Project for $3,572,970 including the cash consideration of $2,069,568 inclusive of tax and share based consideration of 26,653,822 common shares issued and 3,346,178 common shares to be issued which had a fair value of $1,493,520.

• An increase in current liabilities mainly driven from the fair value of the conversion feature of the debentures issued to Steppe using the Black Scholes pricing model which is $1,357,961.

Income statement review

ncome statement review
	Three months	ended	Nine months	ended
	September 30,	September 30,	September 30,	September 30,
	2021	2020	2021		2020
Net Loss for the period	(294,310)	(374,045)	(776,668)		(1,184,330)

Three months ended September 30, 2021 compared to three months ended September 30, 2020

During the three months ended September 30, 2021, the Company incurred a net loss of $294,310 (three months ended September 30, 2020: $374,045). The expenses for the three months ended September 30, 2021, include the following material items:

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• The Company recognised $122,895 financing cost comprising accretion expense related to convertible debentures issued to Steppe of $88,959 and to R&R Venture of $33,935 compared with $Nil and $32,349 for the same period in 2020, respectively.

• Marketing expense increased to $38,500 compared with $Nil in the same period in 2020 as the Company hired consultants to build investor relationships in certain market areas.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020

During the nine months ended September 30, 2021, the Company incurred a net loss of $776,668 (nine months ended September 30, 2020: $1,184,330). The expenses for the nine months ended September 30, 2021, include the following material items:

• Consultants and directors’ fees increased in the nine months ended September 30, 2021, to $249,900 compared with $164,758 for the same period in 2020.

• The Company recognised $188,492 financing cost comprising accretion expense related to convertible debentures issued to Steppe $88,959 and to R&R Venture $99,533 compared with $92,802 for the same period in 2020.

• As a result of warrants exercise at a price of $0.05 per common share when the Company’s spot price of the share was $0.06 per common share, it recognised a loss on warrants exercise of $148,354 in the second quarter of 2021.

• Accounting, audit and tax fees decreased in the nine months ended September 30, 2021, to $39,490 compared with $97,865 for the same period in 2020, due to the disposal of the Brazilian subsidiary.

• During the nine months ended September 30, 2020, the Company wrote off certain tangible assets with book value of $728,841 due to the Company’s decision to focus on advancing Mongolian projects.

Cash Flow

Net cash used in operating activities for the nine months ended September 30, 2021 was $135,344 (nine months ended September 30, 2020: $324,729). Operating activities were mostly impacted by payments to the suppliers.

Net cash used in investing activities during the nine months ended September 30, 2021, was $2,490,612 comprising the Sharga Project acquisition consideration and BU Project license payments (nine months ended September 30, 2020: $Nil).

Net cash generated from financing activities was $3,062,964 for the nine months ended September 30, 2021 (nine months ended September 30, 2020: $1,004,392). The financing activities include the proceeds from the exercise of warrants of $1,322,083 and convertible debentures issued to Steppe of $1,814,400 less interest paid on existing convertible debentures of $73,519.

Liquidity and Financial Position

The activities of the Company, principally the acquisition and exploration of prospective mineral properties are financed through the completion of equity transactions such as equity offerings and the exercise of warrants and stock options. There is no assurance that future equity capital will be available to the Company in the amounts or at the times desired by the Company or on terms that are acceptable to it, if at all. See “Risk Factors” below.

The Company has no operating revenues and therefore must utilize its current cash reserves, funds obtained from the issuance of share capital, exercise of warrants and stock options and other financing transactions to maintain its capacity to meet ongoing operating activities. As of September 30, 2021, the Company had 269,230,529 common shares issued and outstanding and 14,850,000 options that would raise $2,017,500 if exercised in full.

The current liabilities increased to $2,362,974 as at September 30, 2021, compared to $715,204 as at December 31, 2020 due to convertible debentures issued to Steppe.

The Company’s cash balance of $918,152 as at nine months ended September 30, 2021 is not sufficient to pay the current liabilities. The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing, to commence profitable operations in the future, and repay its liabilities arising from normal business operations as they become due.

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As at September 30, 2021, the Company had a working capital deficit of $1,387,946, compared to a working capital deficit of $197,185 as at December 31, 2020, an increase of $1,190,761. The Company had cash and cash equivalents of $918,152 as at September 30, 2021, compared to $481,144 as at December 31, 2020, an increase of $437,008.

The Company’s liquidity risk from financial instruments is minimal as excess cash is held in current bank accounts.

The Company has reviewed its discretionary administrative overhead for the following twelve months and anticipates the requirement to be approximately $0.4 million. In addition, the Company estimates the exploration work programs at its projects to cost approximately $0.4 million.

The Company will continue to monitor its working capital requirements closely to ensure the Company meets its commitments and continues to move forward on development. Although the Company has been successful in raising funds to date, there can be no assurance that adequate funding will be available in the future, or under terms favourable to the Company. See “Risk Factors” below and “Forward Looking Statements” above.

The following liquidity and financing measures have been undertaken in order to manage the Company working capital and funding requirements.

Debt for Equity Settlement

On February 26, 2020 the Company announced that it has issued Common Shares in payment of drilling services provided to the Company pursuant to a drilling for shares arrangement previously announced on April 17, 2018. The Company settled an aggregate amount of $484,698 owing to the drilling contractor for drilling completed on the Company’s Brazilian diamond properties through the issuance of 9,693,960 Common Shares at a deemed issuance price of $0.05 per Common Share, all in accordance with the drilling contract entered into between the Company and the drilling contractor.

On November 17, 2020, the Company settled $700,976 in residual amounts owing to certain past and current officers, directors and service providers of the Company through issuing total of 7,009,763 common shares of the Company. The Company obtained disinterested shareholder approval to settle debts in Common Shares on the same terms.

On August 30, 2021, the Company issued 26,653,822 common shares to the vendor of Sharga Project, representing 9.9% of the issued and outstanding common shares on an undiluted basis, in accordance with the Sharga Project purchase agreement. The balance of 3,346,178 common shares will be issued when the issuance will not result in the vendor owning more than 9.9% of the issued and outstanding common shares. Issued common shares are valued at the spot market price of C$0.05. The remaining shares to be issued was recorded as equity reserves in the condensed interim consolidated financial position.

Additional Financing & Convertible Debenture Units

In August 2018, the Company completed non-brokered private placement of 653 convertible debenture units (the “Convertible Debenture Units”) at a price of $1,000 per Convertible Debenture Unit with its largest shareholder, R&R Venture Partners (“R&R) (the “Offering”). Each Convertible Debenture Unit consisted of: (i) one $1,000 principal amount of 12% unsecured convertible debenture (a “Convertible Debenture”); and (ii) 500 Common Share purchase warrants (each, a “Warrant”) of the Company.

The Convertible Debentures bear interest from the date of closing at 12% per annum, calculated and payable quarterly in arrears on March 31, June 30, September 30 and December 31 in each year, and will mature on August 2, 2023 (the “Maturity Date”). On August 2, 2020, the date that is 24 months from the date of issuance, interest payable on the outstanding principal amount of the Convertible Debentures was capitalized and the Company started paying interest on the outstanding principal accordingly.

The Convertible Debentures are unsecured obligations of the Company and rank pari passu in right of payment of principal and interest with all other Convertible Debentures issued under the Offering. The obligations of the Company under the Convertible Debentures will be jointly and severally guaranteed by the Company’s material subsidiaries.

The Convertible Debentures are convertible at the option of the holder into Common Shares at any time prior to the close of business on the Maturity Date at a conversion price of $0.20 per Common Share (the “Conversion Price”). Each Warrant will be

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exercisable to acquire one Common Share (a “Warrant Share”) at an exercise price of $0.20 per Warrant Share for a period of 36 months following issuance, subject to customary adjustments in certain events.

On July 3, 2020, the Company completed the second and final tranche of its previously announced non-brokered private placement issuing 66,666,666 units of the Company at a price of $0.015 per unit for gross proceeds of $1,000,000. Each unit is comprised of one common share of the Company and one common share purchase warrant with each warrant exercisable for one common shares at a price of $0.05 per share for a period of 12 months from closing. Refer warrants exercise above.

On June 15, 2021, 26,441,666 of private placement warrants have been exercised for cash proceeds of $1,322,083 and the remaining 40,225,000 warrants have expired.

On August 2, 2021, 326,500 warrants issued to R&R Venture in relation to the long term convertible debentures expired.

On August 10, 2021, the Company closed $1,814,400 unsecured convertible debenture (“Steppe Debenture”) into escrow and on August 30, 2021, the Company issued the convertible debentures to Steppe. upon receiving TSXV approval on the transaction. The proceeds of the Steppe Debenture were used to fund the cash consideration of Sharga Project acquisition. The Steppe Debenture has a term of 12 months and bear interest at a rate of 15% per annum to be accrued and paid at maturity in cash, or at the option of the Company, in common shares. The principal amount of Steppe Debenture is convertible at any time during the term into common shares of the Company at a price of $0.055 per share. In addition, the Company has agreed to grant Steppe Debenture holder a 1% net smelter returns royalty over the Sharga Project.

Related Party Transactions

Related party transactions conducted in the normal course of operations are measured at the exchange value (the amount established and agreed to by the related parties). The terms and conditions of the transactions with key management personnel and their related parties were no more favourable than those available, or which might reasonably be expected to be available, to similar transactions to non-key management personnel related entitles on an arm’s length basis.

Related parties include members of the board of directors, close family members and enterprises that are controlled by these individuals as well as certain persons performing similar functions.

Mr. Matthew Wood, Chief Executive Officer and Director incurred fees of $56,221 (September 30, 2020: $60,791) for the nine months ended September 30, 2021. There was no outstanding balance owing to Mr. Wood as at nine months ended September 30, 2021.

Mr. Jeremy South, Chief Financial Officer and Director, and his director fees are paid to Helston Capital Corp, a personal services company which Mr. South is a Director. Helston Capital Corp, incurred fees of $63,000 (September 30, 2020: $62,000) for the nine months ended September 30, 2021. There was no outstanding balance to Mr. South as at nine months ended September 30, 2021.

Mr. Bataa Tumur-Ochir, Director incurred fees of $56,221 (September 30, 2020: $39,420) for the nine months ended September 30, 2021. There was no outstanding balance owing to Mr. Tumur-Ochir as at nine months ended September 30, 2021.

Ms. Solongo Gunsendorj, Director incurred fees of $36,000 (September 30, 2020: $24,000) for the nine months ended September 30, 2021. There was no outstanding balance owing to Ms. Gunsendorj as at nine months ended September 30, 2021.

On November 17, 2020, the Company issued a total of 7,009,763 Common Shares in settlement of $700,976 owed to past and current directors and consultants, resulting in a gain on settlement of debt totalling $385,337 included in the statement of loss and comprehensive loss.

During the year ended December 31, 2020, the Company entered into a non-binding term sheet with Steppe to sell a 50% interest in all gold contained in a prospective exploration license. As part of the agreement, Steppe advanced a non-refundable

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initial deposit of US$50,000 to Aranjin. Bataa Tumur-Ochir and Matthew Wood are also directors of the board of Steppe and Jeremy South is also the CFO of Steppe. This transaction is still pending as the acquisition of the relevant license has not closed.

On August 30, 2021, the Company issued $1,814,400 unsecured convertible debentures to Steppe. The proceeds were used to pay the cash portion of Sharga Project acquisition consideration. The debenture has a term of 12 months and bear interest at a rate of 15% per annum to be accrued and paid at maturity in cash, or at the option of the Company, in common shares. The principal amount of the debenture is convertible at any time during the term into common shares of the Company at a price of $0.055 per share.

Outlook

The Company is focused on developing its existing mineral interests in Mongolia as well as acquiring new licences. It has recently completed a short exploration program at the Sharga project with results pending. This initial work has identified further targets for drilling and we expect an active and extensive program to commence in Spring 2022. The Company has started preliminary work at its 100% owned Bayan Undur project and it plans to continue exploration activity at Bayan Undur in 2022. The Company is actively reviewing additional prospective licences and will update shareholders on these activities periodically.

Although there can be no assurance that additional funding will be available to the Company, management is of the opinion that the market will be favourable, and hence it may be possible to obtain additional funding for its projects.

Notwithstanding, the Company is mindful that the market could fall with little or no warning. Accordingly, its plans for the near term are to recommence drilling programs at its projects, to monitor market fundamentals, and to ensure that the Company is well positioned to weather any possible resurgence of a market downturn. See “Risk Factors”.

Risk Factors

An investment in the securities of the Company is highly speculative and involves numerous and significant risks. Such investment should be undertaken only by investors whose financial resources are sufficient to enable them to assume these risks and who have no need for immediate liquidity in their investment. Prospective investors should carefully consider the risk factors that have affected, and which in the future are reasonably expected to affect, the Company and its financial position. Please refer to the section entitled "Risk Factors" in the Company’s December 2017 MD&A for the fiscal year ended December 31, 2017, available on SEDAR at www.sedar.com.

Disclosure of Internal Controls

Management has established processes to provide them with sufficient knowledge to support representations that they have exercised reasonable diligence to ensure that (i) the consolidated financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the consolidated financial statements; and (ii) the consolidated financial statements fairly present in all material respects the financial condition, financial performance and cash flows of the Company, as of the date of and for the periods presented.

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”), the Venture Issuer Basic Certificate filed by the Company does not include representations relating to the establishment and maintenance of disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as defined in NI 52-109. In particular, the certifying officers filing such certificate are not making any representations relating to the establishment and maintenance of:

• i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

• ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with the issuer’s generally accepted accounting principles (IFRS).

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The Company’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in such certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost-effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

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