US Copper Corp — Interim / Quarterly Report 2020

Oct 22, 2020

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MANAGEMENT’S DISCUSSION AND ANALYSIS – QUARTERLY HIGHLIGHTS

September 30, 2020

INTRODUCTION

The following Management Discussion & Analysis – Quarterly Highlights (“Quarterly Highlights”) of Crown Mining Corp. (the “Company” or "Crown") has been prepared to provide material updates to the business operations, liquidity and capital resources of the Corporation since its last management discussion & analysis, being the Management Discussion & Analysis (“Annual MD&A”) for the fiscal year ended December 31, 2019. This Quarterly Highlights does not provide a general update to the Annual MD&A, or reflect any non-material events since the date of the Annual MD&A.

This Quarterly Highlights has been prepared in compliance with the requirements of section 2.2.1 of Form 51-102F1, in accordance with National Instrument 51- 102 – Continuous Disclosure Obligations. This discussion should be read in conjunction with the Annual MD&A, the audited consolidated financial statements of the Company for the years ended December 31, 2019 and 2018 and the unaudited interim consolidated financial statements for the three and nine month periods ended September 30, 2020 and 2019, together with the notes thereto. Results are reported in Canadian dollars, unless otherwise noted. In the opinion of management, all adjustments (which consist only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results for the three and nine month periods ended September 30, 2020 are not necessarily indicative of the results that may be expected for any future period. Information contained herein is presented as at October 22, 2020 unless otherwise indicated.

The unaudited interim consolidated financial statements for the three and nine month periods ended September 30, 2020 and 2019, have been prepared using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and interpretations of the IFRS Interpretations Committee. The unaudited interim financial statements have been prepared in accordance with International Standard 34, Interim Financial Reporting.

External auditors, appointed by the shareholders, have not audited or reviewed the unaudited interim consolidated financial statements for the three and nine month periods ended September 30, 2020 and 2019 and did not perform the tests deemed necessary to enable them to express an opinion on these unaudited interim consolidated financial statements.

For the purposes of preparing this Quarterly Highlights, management, in conjunction with the Board of Directors, 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 Crown’s common shares; or (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 of Directors, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.

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ADDITIONAL INFORMATION

Additional information is accessible at the Company’s website www.crownminingcorp.com or through the Company’s public filings at www.sedar.com.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Highlights includes "forward-looking statements", within the meaning of applicable securities legislation, which are based on the opinions and estimates of management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words suggesting future outcomes or statements regarding an outlook. In the event that the Company is able to acquire a suitable mining property, such risks and uncertainties include, but are not limited to, risks associated with the mining industry (including operational risks in exploration development and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections in relation to production, costs and expenses; the uncertainty surrounding the ability of the Company to obtain all permits, consents or authorizations required for its operations and activities; and health safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the ability of Crown to fund the capital and operating expenses necessary to achieve the business objectives of Crown, the uncertainty associated with commercial negotiations and negotiating with foreign governments and risks associated with international business activities, as well as those risks described in public disclosure documents filed by the Company. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in securities of the Company should not place undue reliance on these forward-looking statements.

Readers are cautioned that the foregoing lists of risks, uncertainties and other factors are not exhaustive. The forward-looking statements contained in this Quarterly Highlights are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or in any other documents filed with Canadian securities regulatory authorities, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws. The forward-looking statements are expressly qualified by this cautionary statement.

UPDATE ON COVID-19

As the global pandemic related to the Coronavirus disease 2019 (“ COVID-19 ”) continues, Crown has implemented a plan to protect the health and safety of its stakeholders. The Company has implemented alternative working arrangements for all consultants to work from home and placed its mineral properties on care and maintenance.

The Company’s operational activities are particularly affected due to the inability of staff to travel because of the non-essential travel restrictions. Furthermore, suppliers of services to the Company are also similarly affected and this may lead to delays in the provision of data and services to the Company’s operational efforts.

Crown Mining Corp. Interim MD&A – Quarterly Highlights Page 2 of 7 Three and nine month period ended September 30, 2020

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The Company will continue to monitor the COVID-19 related situation and will only fully resume regular activities when there are clear indications that its consultants are able to return to work in a safe environment and in accordance with the advice and requirements provided by all the regulatory authorities from a local to national level.

CORPORATE OVERVIEW AND OUTLOOK

The shares of the Company are listed on the TSX Venture Exchange and trade under the symbol CWM. Crown is a Canadian-based junior mining and exploration company incorporated under the Canada Business Corporations Act which currently owns a 100% interest of an advanced mining exploration exploration property in California, USA as well as holding a portfolio of exploration stage projects in Ontario, Canada and Nevada, USA.

In 2019, the Company designed two drill programs at both Moonlight and Engels part of the Moonlight-Superior property to define higher grade starter pits that will improve the economics in our recent Moonlight Preliminary Economic Assessment (PEA). The Company plans to focus all its exploration and development activities and advancements on its Moonlight-Superior property in California.

The Company will also, if conditions are favourable, seek to raise additional funds through a private or public offering of securities or debt as required.

The Company’s prospects are tied to the global demand for Copper and the availability of financing to fund ongoing operations. The recent global pandemic has had a negative impact on both the availability of financing and the current price of Copper.

OBJECTIVES AND MILESTONES

The objectives of the Company is to advance the Moonlight-Superior property in California to the production stage.

COMPANY HIGHLIGHTS

• On July 27, 2020, completed a private placement of 7,000,000 units at a price of $0.05 per unit for gross proceeds of $350,000.

• On April 27, 2020, completed a private placement of 6,100,000 units at a price of $0.025 per unit for gross proceeds of $152,500.

• On June 17, 2019, completed a private placement of 2,600,000 units at a price of $0.06 per unit for gross proceeds of $156,000.

• On January 18, 2019, completed a private placement of 1,600,000 units at a price of $0.10 per unit for gross proceeds of $160,000.

• Completed a PEA regarding the Company’s Moonlight Copper Project. PEA highlights included (using a US$3.15 copper price):

  • Pre-tax Net Present Value (NPV): US$ 237M at 8% discount rate

  • Pre-Tax Internal Rate of Return (IRR): 16.4%

  • Pre-tax Payback Period: 4.8 years

  • After-tax NPV of US$179M and after tax IRR of 14.6% for the base case

Crown Mining Corp. Interim MD&A – Quarterly Highlights Page 3 of 7 Three and nine month period ended September 30, 2020

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OVERALL PERFORMANCE

The Company does not currently have a producing property. Recovery of the cost of mining assets is subject to the discovery of economically recoverable reserves, the ability to obtain the financing required to pursue the exploration and development of its properties, and profitable future production or the proceeds from the sale of its properties. The Company must periodically obtain new funds in order to pursue its activities. While it has always succeeded in doing so to date, it is not possible to predict whether financing efforts will be successful and management cannot provide assurance that it will be able to obtain the required financing.

The net loss and comprehensive loss for the nine month period ended September 30, 2020 was $324,324 ($0.01 per share) as compared to $303,335 ($0.01 per share) for the nine month period ended September 30, 2019. The Company’s operations are consistent with the prior year period, except for the following:

Decrease in exploration and evaluation expenditures to $127,048 compared to $155,249 in 2019 as a result of lower annual mining tax payments due to the Company dropping 75 unpatented mining claims that were viewed as unnecessary.

Increase in share based compensation expense to $73,000 compared to $25,200 in 2019. Stockbased compensation expenses are booked based on the valuation of options using the BlackScholes model. The expense varies based on the number of options issued and the underlying assumptions used in the model.

Increase in promotion and travel costs to $49,126 compared to $28,968 in 2019 as a result of increased investor relations to heavily marketed itself to investors and potential investors in an effort to complete its proposed financing in October 2020. These costs are expected to increase in the coming quarter.

MINERAL EXPLORATION PROPERTIES

None of the Company’s properties are at or near production. As at October 22, 2020, the Company had the following mineral properties under exploration:

Moonlight-Superior

Effective June 28, 2013, the Company purchased a 100% interest in in the Superior Project, subject to an underlying production royalty, which included 132 unpatented mining claims and a lease on 36 patented claims in Plumas County, California. The Company has a right to purchase the leased patented claims and, if purchased, the leased patented claims will be subject to an annual royalty payment schedule. During the year ended December 31, 2015, the Company restaked the area in a more efficient way resulting in title to 47 unpatented claims. During the year ended December 31, 2016, the Company staked 57 additional claims. During the year ended December 31, 2018, the Company staked an additional 6 claims adjacent to the Superior Mine and an additional 35 new federal mining claims adjacent to the Engels Mine.

On February 26, 2016, the Company entered into an option agreement with Canyon Copper Corp. ("Canyon") to acquire a 100% interest in their Moonlight Property, subject to an underlying production royalty, which is adjacent to the Company’s Superior copper project in California (the “Agreement”). On February 29, 2018, the completed its requirements under the option

Crown Mining Corp. Interim MD&A – Quarterly Highlights Page 4 of 7 Three and nine month period ended September 30, 2020

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agreement for the Moonlight Property and on March 12, 2018 the Moonlight Property was transferred into Crown’s name.

In addition, the advanced royalty holders, being Lester Storey and Metamin Enterprises Inc., (the “Advanced Royalty Holders”) have approved the following: (i) elimination of the advanced royalty payments, (ii) an increase in each of the Advance Royalty Holder’s net smelter returns from 1.0% to 1.25%.

During the nine month period ended September 30, 2020, the Company elected to not renew 75 unpatented claims and now holds a total of 282 unpatented claims and a lease on 36 patented claims.

On March 2, 2018, the Company announced the results of its PEA on the Moonlight Deposit, part of the Moonlight-Superior Project. A full copy of the PEA can be found on the Company’s profile on www.sedar.com. Highlights of the PEA Include (using a US$3.15 copper price):

• Pre-tax Net Present Value (NPV): US$ 237M at 8% discount rate.

• Pre-Tax Internal Rate of Return (IRR): 16.4%

• Pre-tax Payback Period: 4.8 years

• After-tax NPV of US$179M and after tax IRR of 14.6% for the base case

• Initial Capital Cost: US$513M, including a contingency provision in the amount of US$71M

• Plant Processing Rate: 60,000 tons per day (STPD)

• Average Copper Recovery: 86.0%

• Copper concentrate Production: Averaging 163,000 tons per year (STPY) with an average grade of 28%.

• Mine Life: 17 years, based on the existing Mineral Resource estimate

• Projected Direct Employment: 332 employees (163 process and G&A; 169 mining)

• Life of mine copper production of 1.5 billion pounds

The Company plans to continue to advance the development of the Moonlight-Superior project.

Timore

The Company owns a 100% interest in patented claims covering 1 property near Timmins, Ontario and 1 property near Red Lake, Ontario. The properties are subject to a 3% net smelter royalty (“NSR”), one half of which can be purchased for $1,000,000.

The Timore properties are gold prospects that require healthier financial markets for continued exploration.

Black Warrior

On May 20, 2008, the Company acquired a 100% interest in 2 patented claims for US$25,000.

The Black Warrior properties are silver prospects that require healthier financial markets for continued exploration.

Warren Whiteside

On January 29, 2008, the Company acquired a 100% interest in 14 patented mining claims in Whiteside Township in Ontario (the “Warren Properties”). The vendors retain a 1.5% NSR on the Warren Properties, of which the Company has the option to purchase half for $1,000,000.

Crown Mining Corp. Interim MD&A – Quarterly Highlights Page 5 of 7 Three and nine month period ended September 30, 2020

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The Warren Whiteside properties are copper-nickel prospects that require healthier financial markets for continued exploration.

LIQUIDITY

Operating Activities

Cash flow used by operating activities during the nine month period ended September 30, 2020 was $244,322 compared to cash flow used of $295,663 during the same period in 2019.

Financing Activities

During the nine month period ended September 30, 2020, cash flow provided in financing activities was $529,838 (year ended December 31, 2019 – $310,920) mainly as a result of 13,100,000 (year ended December 31, 2019 - 4,200,000) shares issued through private placements for net cash proceeds after share issuance costs of $489,838 (year ended December 31, 2019 – $310,920). These financings were completed to allow the Company to acquire and advance its mineral exploration projects.

Liquidity Outlook

Crown had cash of $287,939 available as at September 30, 2020, an increase of $285,516 from the balance at December 31, 2019 of $2,416.

The current cash as at September 30, 2020, will be used to pay existing liabilities, continue exploration programs at Crown's Moonlight-Superior property in California, as well as for general working capital purposes and other property commitments. The Company will look to complete private placement financings or the sale of mineral property assets to help fund ongoing operations in 2020 and 2021.

Notwithstanding success to date in acquiring equity financing on acceptable terms, there is no guarantee of obtaining future equity financings or on what terms any such equity capital may be available to the Company and, as such, alternative funding programs are also being pursued by the Company.

The Company must utilize its current cash reserves, funds obtained from the exercise of options and warrants, if any, and other financing transactions to maintain the Company’s capacity to meet working capital requirements, and ongoing discretionary and committed exploration programs, and to fund any further development activities. The Company anticipates that it will raise additional capital when and if the opportunity arises.

The Company believes that it will be able to raise funds in the short-term. Management will monitor the current market situation and make prudent business decisions as they are required.

PROPOSED TRANSACTIONS

On October 16, 2020, the Company announced a proposed brokered private placement to issue up to 30,000,000 units at a price of $0.05 per unit for proceeds of up to $1,500,000. Each unit would consist of one common share and one common share purchase warrant, with each warrant entitling the holder to purchase one additional common share for $0.10 for three years from the date of closing.

Crown Mining Corp. Interim MD&A – Quarterly Highlights Page 6 of 7 Three and nine month period ended September 30, 2020

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RELATED PARTY DISCLOSURES

Certain corporate entities and consultants that are related to the Company’s officers and directors provide consulting and other services to Crown. All transactions were conducted in the normal course of operations and are measured as follows:

As at,Amount included in trade and other payables, due to directorsand/or officers	September 30,2020December 31,2019
	$ 50,000 $38,000

Amounts due to directors and officers are non-interest bearing and have no set terms of repayment.

Transactions during the nine month period endedSeptember 30,Balances:Short-term benefitsShare based compensationTotal compensation paid to key management	20202019
	$ 45,000$ 45,00048,60016,400
	$ 93,600 $61,400

During the nine month period ended September 30, 2020, certain officers, directors or companies controlled by them participated in the Company’s private placements as described in Note 11 (a) and subscribed for 2,700,000 (year ended December 31, 2019 - 1,375,000) units, for total gross proceeds to the Company of $67,500 (year ended December 31, 2019 - $94,500).

CONTINGENCIES AND COMMITMENTS

Outside of annual lease and property tax payments on the Company’s mineral properties, there are no outstanding contingencies or commitments as of the date of this MD&A. See Note 14 to the unaudited interim consolidated financial statements for the three and nine month periods ended September 30, 2020 and 2019 for more detailed disclosure regarding possible contingencies or commitments.

RISKS AND UNCERTAINTIES

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 and Uncertainties" in the Company’s Annual MD&A for the fiscal year ended December 31, 2019, available on SEDAR at www.sedar.com.

Stephen Dunn President and CEO October 22, 2020

Crown Mining Corp. Interim MD&A – Quarterly Highlights Page 7 of 7 Three and nine month period ended September 30, 2020