Tsodilo Resources Limited — Management Reports 2021

Feb 10, 2021

==> picture [217 x 69] intentionally omitted <==

Management’s Discussion and Analysis For the Year Ended October 31, 2020

This Management’s Discussion and Analysis (“MD&A”) of Fox River Resources Corporation (“Fox River” or the “Company”) is dated February 10, 2021 and provides an analysis of the Company’s performance and financial condition for year ended October 31, 2020, as well as an analysis of future prospects. This MD&A should be read in conjunction with the Company’s audited consolidated financial statements for the year ended October 31, 2020 and the audited consolidated financial statements for the year ended October 31, 2019 and the notes thereto, that have been prepared in accordance with International Financial Reporting Standards (“IFRS”). These documents, along with others published by the Company, are available on the Canadian System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com or the Company’s website at www.fox-river.ca.

All amounts referred to in this MD&A are prepared in accordance with IFRS and presented in Canadian dollars, unless otherwise indicated.

Company Information

Fox River Resources Corporation was incorporated pursuant to the Canada Business Corporations Act (the “CBCA”) under the name “9508309 Canada Inc.” on November 12, 2015. Articles of amendment were subsequently filed on December 7, 2015 to change the name of the Company to “Fox River Resources Corporation”. The registered office of the Company is located at 350 Bay Street, Suite 700, Toronto, Ontario M5H 2S6. The Company has one wholly owned subsidiary: Baltic Resources Inc. (“Baltic”).

Overview

Fox River is engaged in the exploration and evaluation of the Martison phosphate project. As at the date of this MD&A, the Company’s primary assets are cash and cash equivalents and a 100% interest in the Martison phosphate project.

The Company’s strategy is to create shareholder value through the further exploration and evaluation of the Martison Project, either by itself or in conjunction with a strategic partner, and through the potential acquisition, exploration, advancement and development of other mineral properties.

Recent Activity

On February 2, 2016, Fox River became a standalone entity by way of an arrangement (the “Arrangement”) entered into among PhosCan Chemical Corp. (“PhosCan"), Petrus Resources Ltd. (“Petrus”), Petrus Acquisition Corp. (“New Petrus”) and the Company.

On April 1, 2016, the Company issued 2,200,000 share purchase options exercisable at $0.05 per share for a period of five years to officers and directors of the Company.

On April 6, 2016, the Company issued 1,331,250 common shares, with an aggregate value of $53,249, to extinguish a liability relating to the payment of fair value to a dissenting PhosCan shareholder under the Arrangement.

• 1 -

Fox River Resources Corporation Management’s Discussion and Analysis

Year Ended October 31, 2020

On April 11, 2016, the Company re-issued the NI 43-101 Technical Report on the Martison Phosphate Project.

On April 20, 2016, the Company closed a non-brokered private placement of 6,000,000 common shares at a price of $0.035 per share for gross proceeds of $210,000.

On February 6, 2018, the Company entered into a binding agreement with an arm’s length third party to sell the 71 acres of land the Company owned in the City of Brandon, Manitoba for gross proceeds of $1,000,000 before transaction costs.

On March 20, 2018, the Company closed the sale of land in the City of Brandon, Manitoba.

On August 19, 2019, Elizabeth Leonard was appointed to the Company’s Board of Directors and granted 500,000 share options exercisable at $0.07 per share for a period of five years.

Summary of Quarterly Results

The following is a summary of the Company’s financial results for the previous four quarters:

	Aug. 1, 2020	May 1, 2020	Feb. 1, 2020	Nov. 1, 2019
	to	to	to	to
($)	Oct. 31, 2020	Jul. 31, 2020	Apr. 30, 2020	Jan. 31, 2020
Total revenues	-	-	-	-
Net income (loss)	(71,888)	(44,892)	(68,580)	(85,800)
Net income(loss) per share	(0.00)	(0.00)	(0.00)	(0.00)
Total assets	648,981	698,209	755,711	818,788
Long-term debt	-	-	-	-
Shareholder’s equity	619,233	691,121	736,013	804,593
Cash dividends declared per
common share	-	-	-	-

Results of Operations

For the year ended October 31, 2020, the Company incurred a loss of $271,160, or a basic and diluted loss of $0.007 per share. During the year ended October 31, 2019, the Company incurred a loss of $264,794 or basic and diluted loss of $0.006 per share.

Administration expenses of $48,163 (2019 - $39,917) were in line with management’s expectation and included rent, utilities, bank charges, corporate secretarial and insurance. In addition, in the 2020 fiscal year administration expenses also included a minor amount of corporate development costs. Consulting fees of $102,000 (2019 - $102,000) consisted of remuneration to the Company’s CEO and CFO. During the year, the Company incurred $21,739 in professional fees (2019 - $24,561), which included both audit costs and legal fees. Exploration and evaluation expenditures for the year totaled $88,232, which was higher than most periods, as the Company engaged in a due diligence process (2019 - $44,478). Shareholder information expense of $28,713 consisted primarily of CSE listing fees, transfer agent fees, filing fees, and costs for the annual meeting of shareholders. These costs were similar to the $30,679 incurred in the prior year. The Company had no share based payment expenses in the current year, but incurred $29,000 in the prior year. During the year ended October 31, 2020, the Company earned $7,159 in interest income, down from $17,391 in the comparative year due to lower interest rates and decreased

• 2 -

Fox River Resources Corporation Management’s Discussion and Analysis

Year Ended October 31, 2020

cash balances. In addition, the Company had a gain on the change in fair value of marketable securities of $10,528 (2019 – loss of $11,550).

Liquidity and Financial Position

As at October 31, 2020, Fox River had $614,233 in working capital (October 31, 2019 - $885,393), including cash and cash equivalents of $592,666 (October 31, 2019 - $867,400) and no debt. The Company estimates that its corporate and general costs to maintain the Martison Project and the requirements of a reporting issuer for the next twelve months will total approximately $260,000. The Company currently has sufficient working capital to fund its corporate and general costs over the next twelve months. The Company may seek to monetize its interest in its asset or raise additional capital in the next year.

In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period. The Company's ability to continue operations and fund its mining interest expenditures is dependent on management's ability to secure additional financing. Management is actively pursuing such additional sources of financing, and while it has been successful in doing so in the past, there can be no assurance it will be able to do so in the future. Management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern. Accordingly, the Company’s financial statements do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the financial statements.

Share Capital

During the year ended October 31, 2020, no additional common shares of the Company were issued.

On November 12, 2015, 1 common share was issued on incorporation.

On February 2, 2016, 33,947,276 common shares were issued pursuant to the closing of the Arrangement.

On April 1, 2016, the Company granted 2,200,000 incentive stock options, exercisable at $0.05 per share for a period of five years, to officers and directors of the Company.

On April 6, 2016, the Company issued 1,331,250 common shares, with an aggregate value of $53,249, to extinguish a liability relating to the Arrangement.

On April 20, 2016, the Company closed a non-brokered private placement of 6,000,000 common shares at a price of $0.035 per share or gross proceeds of $210,000. In connection with the private placement, the Company incurred legal fees of $10,026.

On August 19, 2019, the Company issued 500,000 incentive stock options, exercisable at $0.07 per share for a period of five years, to a director of the Company.

• 3 -

Fox River Resources Corporation Management’s Discussion and Analysis

Year Ended October 31, 2020

As at February 10, 2021, the Company’s share capital consisted of:

Common shares outstanding:	41,278,527
Stock options outstanding:	2,200,000

Exploration and Evaluation Expenditures

During the year ended October 31, 2020, the Company incurred a total of $88,232 in exploration and evaluation expenditures relating to the Martison Phosphate Project.

A breakdown of the exploration expenditures by category for the previous four quarters is provided below:

	Aug. 1, 2020 to	May 1, 2020 to	Feb. 1, 2020 to	Nov. 1, 2019 to
($)	Oct. 31, 2020	Jul. 31, 2020	Apr. 30, 2020	Jan. 31, 2020
Leases and property
taxes	-	12,767	420	2,719
Storage and rent	5,400	5,400	10,260	6,943
Technical and consulting	-	-	1,100	35,132
Travel and transportation	-	-	-	8,091
Consultation	-	-	-	-
Total expenditures	5,400	18,167	11,780	52,885

Martison Phosphate Project

The Martison phosphate project (the “Project”) is located about 70 kilometers northeast of the town of Hearst, in north-central Ontario and is close to rail, power, highway, and other infrastructure. The Project contains a major carbonatite (igneous carbonate-rich) pipe capped by a residual deposit (residuum) enriched in phosphate and niobium minerals. The Project mining leases and claims cover a contiguous area of approximately 8,256 ha. Additional information can be found at www.fox-river.ca or under Fox River’s profile on SEDAR, including the NI 43-101 Technical Report dated April 11, 2016.

Regional Geology

The Martison phosphate deposit lies in a geological province referred to as Precambrian volcanic and metamorphic rock sequences, which are over one billion years in age. The occurrence of carbonatite deposits is the result of late magmatic injections of carbon dioxide gases, calcium and magnesium carbonate solutions, including associated crystalline apatite, magnetite and mica minerals, through conduits into volcanic vents. The subsequent exposure of the carbonatite rock for long periods of time to erosion and chemical weathering has resulted in the thick accumulation of a palaeo-soil residue called a “residuum” which has concentrations of relatively insoluble minerals such as phosphate bearing apatite, lying on top of the competent and largely unweathered surface of the carbonatite.

The Martison carbonatite is one of 50 known locations of the Central Ontario Carbonatite Complex found on the Kapuskasing structural high (located 110 km east of the Martison Project) to the Albany Forks structural high, (located 260 km west of the Martison Project). Almost all of the carbonatite bodies occur along recognisable major tectonic features.

• 4 -

Fox River Resources Corporation Management’s Discussion and Analysis

Year Ended October 31, 2020

A number of complexes have been examined for their mineral potential. They all contain apatite in the carbonatite phase between 5% to 25%, and some contain significant enrichments of apatite through leaching out of carbonates. Such enrichment occurs on the Cargill Limited complex, located on a branch structure off the Kapuskasing structural high and at the Martison phosphate deposit.

Property Geology

Differential weathering of the Martison Carbonatite Complex has resulted in an irregular weathered ‘karst’ type surface of carbonatite, the depth of which varies greatly over short distances. Depressions in this carbonate rich surface are filled with the weathered breakdown product of the carbonatite, the ‘Residuum’. This apatite rich Residuum represents the bulk of the phosphatic material of economic interest. Above the residuum lies a less consistent layer of lateritic material containing niobium mineralisation also at levels of economic interest. More recent glacial deposits, typical of the James Bay Lowlands, form a blanket of glacial till over the residuum / laterite sub-outcrop reaching up to 80 m in depth.

Mineralization

Apatite is the principal phosphate bearing mineral of economic interest within the residuum. The laterite is enriched in niobium, typically found in the form of pyrochlore, its occurrence is also of economic interest. Both the phosphate and the niobium have been the subject of significant drilling and metallurgical test work to establish if they may be extracted economically.

Capital Management

In managing its capital, the Company’s primary objective is to ensure the entity can continue as a going concern as well as to provide optimal returns to its shareholders, in the long term. The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and development of properties for the mining of minerals that are economically recoverable. The Board of Directors does not establish quantitative returns on capital criteria for management due to the nature of the industry, but rather relies on the expertise of the Company’s management to sustain future development of the business.

The Company considers its capital to be equity, which is comprised of share capital, reserves and accumulated deficit, which at October 31, 2020 totaled $619,233 (October 31, 2019 - $890,393).

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the Company’s relative size, is reasonable. The Company is not subject to externally imposed capital requirements.

Outlook, Risks and Uncertainties

There are a number of risks that may have a material and adverse impact on the future operating and financial performance of Fox River and could cause Fox River’s operating and financial performance to differ materially from the estimates described in forward looking statements related to Fox River. These include widespread risks associated with any form of business and specific risks associated with Fox River’s business and its involvement in the mineral exploration and development industry. An investment in the Fox River Shares, as well as Fox River’s prospects, are highly speculative due to the high risk nature of its business and the present stage of its operations. Fox River Shareholders may lose their entire investment. The risks described below are not the only ones facing Fox River. Additional risks not currently known to Fox River, or that Fox River currently deems immaterial, may also impair Fox River’s

• 5 -

Fox River Resources Corporation Management’s Discussion and Analysis

Year Ended October 31, 2020

business or operations. If any of the following risks actually occur, Fox River’s business, financial condition, operating results and prospects could be adversely affected.

Martison Phosphate Project

The Company believes it is prudent to continue to preserve its cash until it has reasonable confidence that it can secure suitable financing to proceed with the exploration and evaluation of the Project and develop it to commercial production. However, there can be no assurance that the Company will proceed with exploration, evaluation and development of the Project, that the Company will be able to obtain adequate debt and equity financing to explore, evaluate and develop the Project, or that the terms of such financing will be favourable. Failure to obtain additional financing could result in the delay or indefinite postponement of further advancement of the Project.

No History of Profitability

The Company is an exploration and evaluation stage company with no history of revenues or profitability. There can be no assurance that the operations of Fox River will be profitable in the future. The Company will require additional financing to further explore, develop, acquire, and achieve commercial production on its property interests and, if financing is unavailable for any reason, Fox River may become unable to acquire and retain its property interests and carry out its business plan.

Nature of Mineral Exploration and Development

Fox River is engaged in the business of exploring and evaluating the Martison Project, which is a highly speculative endeavour. Fox River’s viability and potential success lie in its ability to explore and evaluate, develop, exploit and generate revenue out of the Martison Project. The exploration and evaluation and development of mineral deposits involve significant financial risks over a significant period of time which even a combination of careful analyses, experience and knowledge may not eliminate. While discovery of a mine may result in substantial rewards, few properties which are explored are ultimately developed into producing mines. Major expenses may be required to establish reserves by drilling and to construct mining and processing facilities at a site. It is impossible to ensure that the current or any future programs on the Martison Project will result in a profitable commercial mining operation.

Fluctuating Prices

Factors beyond the control of Fox River may affect the marketability of any products produced. The prices for phosphate concentrate, phosphoric acid and phosphate fertilizers have fluctuated widely and are affected by numerous factors beyond Fox River’s control. The effect of these factors cannot be accurately predicted.

Competition

The chemical and fertilizer business is competitive in all of its phases. Fox River competes with numerous other companies and individuals, including competitors with greater financial, technical and other resources than Fox River, in the development of the Martison Project, and in the search for markets for any products which may be produced. There is no assurance that Fox River will continue to be able to compete successfully with its competitors in developing the Martison Project or finding markets for the products which may be produced.

• 6 -

Fox River Resources Corporation Management’s Discussion and Analysis

Year Ended October 31, 2020

Conflicts of Interest

Certain of the directors and officers of Fox River also serve as directors and/or officers of other companies involved in natural resource exploration and development and consequently there exists the possibility for such directors and officers to be in a position of conflict. Any decision made by any of such directors and officers involving Fox River should be made in accordance with their duties and obligations to deal fairly and in good faith with a view to the best interests of Fox River and its shareholders. In addition, each of the directors is required to declare and refrain from voting on any matter in which such directors may have a conflict of interest in accordance with the procedures set forth in the CBCA and other applicable laws.

Disruption of Business

Conditions or events including, but not limited to, those listed below could disrupt Fox River’s operations, increase operating expenses, resulting in delayed performance of contractual obligations or require additional expenditures to be incurred: (i) extraordinary weather conditions or natural disasters such as hurricanes, tornadoes, floods, fires, earthquakes, etc.; (ii) a local, regional, national or international outbreak of a contagious disease, including the COVID-19 coronavirus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, or any other similar illness could result in a general or acute decline in economic activity (see also, “Public Health Crises”); (iii) political instability, social and labour unrest, war or terrorism; or (iv) interruptions in the availability of basic commercial and social services and infrastructure including power and water shortages, and shipping and freight forwarding services including via air, sea, rail and road.

Public Health Crises

Fox River’s business, operations and financial condition could be materially adversely affected by the outbreak of epidemics or pandemics or other health crises beyond our control, including the current outbreak of COVID-19. On January 30, 2020, the World Health Organization declared the COVID-19 outbreak a global health emergency. Many governments have likewise declared that the COVID-19 outbreak in their jurisdictions constitutes an emergency. Reactions to the spread of COVID-19 have led to, among other things, significant restrictions on travel, business closures, quarantines and a general reduction in consumer activity. While these effects are expected to be temporary, the duration of the business disruptions and related financial impact cannot be reasonably estimated at this time. Such public health crises can result in volatility and disruptions in the supply and demand for various products and services, global supply chains and financial markets, as well as declining trade and market sentiment and reduced mobility of people, all of which could affect interest rates, credit ratings, credit risk and inflation. The risks to Fox River of such public health crises also include risks to employee health and safety and a slowdown or temporary suspension of operations in geographic locations impacted by an outbreak. At this point, the extent to which COVID-19 may impact Fox River is uncertain; however, it is possible that COVID-19 may have a material adverse effect on the Company’s business, results of operations and financial condition.

• 7 -

Fox River Resources Corporation Management’s Discussion and Analysis

Year Ended October 31, 2020

Related Party Transactions

Through the normal course of business, the following related party transactions occurred during the year ended October 31, 2020:

• The Company paid consulting fees of $3,500 per month to Fraser Laschinger, the Chief Financial Officer, for a total of $42,000.

• The Company paid consulting fees of $5,000 per month to Stephen Case, the Chief Executive Officer and a Director, for a total of $60,000.

Financial Instruments

As at October 31, 2020, Fox River’s financial instruments primarily consisted of cash and Canadian dollar-denominated short-term fixed-income instruments such as GICs and high-interest savings accounts.

Due to the short-term nature and high liquidity of the fixed-income instruments, the Company estimates that the fair values are equal to their carrying values and classifies these financial instruments as cash and cash equivalents within current assets.

The material risk associated with the Company’s financial instruments is counterparty risk. The Company manages its counterparty risk by monitoring the credit worthiness of its Canadian financial institution counterparts to ensure they meet the minimum investment-grade criteria.

Off-Balance Sheet Transactions

The Company has not entered into any off-balance sheet arrangements.

Proposed Transactions

The Company is not a party to any proposed transactions.

Critical Accounting Policies and Estimates

Mineral Properties and Exploration Expenditures

The Company expenses all costs relating to the acquisition of, exploration for and development of mineral claims and credits all revenues received against the exploration expenditures. Such costs include, but are not limited to geological, geophysical studies, exploratory drilling and sampling.

Once a project has been established as commercially viable and technically feasible, related development expenditures are capitalized; this includes costs incurred in preparing the site for mining operations. Capitalization ceases when the mine is capable of commercial production, with the exception of development costs that give rise to a future benefit.

Share Based Payments

The share option plan allows the Company’s employees and consultants to acquire shares of the Company. The fair value of options granted is recognized as a share based payment expense with a corresponding increase in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a

• 8 -

Fox River Resources Corporation Management’s Discussion and Analysis

Year Ended October 31, 2020

direct employee. The fair value is measured at grant date and each tranche is recognized on a gradedvesting basis over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest.

Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The areas involving accounting estimates for the Company are as follows: share based payments, going concern, deferred taxes and accrued liabilities.

Changes in Accounting Policies

The Company adopted the following standard during the year ended October 31, 2020.

IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining Whether an Arrangement Contains a Lease, SIC-15 Operating Leases - Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 introduces a single lessee accounting model that requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Lease assets and liabilities are initially recognized on a present value basis and subsequently, similarly to other non-financial assets and financial liabilities, respectively. The lessor accounting requirements are substantially unchanged and, accordingly, continue to require classification and measurement as either operating or finance leases. The new standard also introduces detailed disclosure requirements for both the lessee and lessor. The effective date for the application of IFRS 9 was November 1, 2019. The Company's adoption of IFRS 16 did not have a material impact upon the condensed interim consolidated financial statements.

Future Accounting Changes

As at October 31, 2020, no future accounting changes are currently contemplated.

Disclosure Controls and Internal Controls Over Financial Reporting

The Company’s management is responsible for the preparation and fair presentation of the consolidated financial statements and MD&A. Accordingly, the Company’s management has established systems, controls and procedures to collect, record, process, summarise and report necessary financial data in its financial statements and MD&A on a timely basis.

The Company’s Chief Executive Officer and Chief Financial Officer (the “Officers”) are responsible for establishing and maintaining disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”). The Officers have:

• Designed DC&P, or caused it to be designed under their supervision, to provide reasonable assurance that material information relating to the Company is made known and information required to be disclosed in its consolidated financial statements and MD&A are filed under securities legislation and recorded, processed, summarized and reported within the time periods specified in securities legislation; and

• 9 -

Fox River Resources Corporation Management’s Discussion and Analysis

Year Ended October 31, 2020

• Designed ICFR, or caused it to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

The Officers evaluate the Company’s internal controls on a regular basis.

Forward-looking Statements

This MD&A contains “forward-looking information” which may include, but is not limited to, statements with respect to the future financial or operating performances of Fox River; the Project; the future supply, demand, inventory, production and price of phosphate and other commodities; the estimation of mineral reserves and resources; the realization of mineral reserve estimates; the timing and amount of estimated future production, costs of production, capital, operating and exploration expenditures; requirements for additional capital for the Project; government regulation, including permitting, of mining and chemical operations; environmental risks, reclamation and rehabilitation expenses; title disputes, claims and First Nations agreements; limitations of insurance coverage and the timing and possible outcome of litigation and regulatory matters; the ability to attract and retain personnel; labour relations; the ability to engage and retain outside contractors, experts and other advisors and their efforts and abilities; and currency exchange rates, in particular the Canadian dollar relative to the U.S. dollar. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes”, or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might”, or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Fox River to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, those factors discussed in the section entitled “ Outlook, Risks and Uncertainties ” in this MD&A. Although Fox River has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this MD&A based on the opinions and estimates of management, and Fox River disclaims any obligation to update any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, potential investors should not place undue reliance on forward-looking statements.

• 10 -