Western Resources Corp. — Interim / Quarterly Report 2021

May 14, 2021

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MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

CONTENTS

FORWARD-LOOKING STATEMENTS .................................................................................................................. 3 DESCRIPTION OF BUSINESS ............................................................................................................................... 4 OVERVIEW ......................................................................................................................................................... 4 SUMMARY OF QUARTERLY RESULTS ................................................................................................................ 6 REVIEW OF QUARTERLY FINANCIAL RESULTS .................................................................................................. 7 LIQUIDITY AND CAPITAL RESOURCES ............................................................................................................... 9 MILESTONE PROJECT ....................................................................................................................................... 11 COMMITMENTS AND CONTRACTUAL AGREEMENTS .................................................................................... 13 PAYABLE ON LEGAL SETTLEMENT ................................................................................................................... 14 CONTINGENCIES .............................................................................................................................................. 14 OUTSTANDING SHARE DATA .......................................................................................................................... 15 SEGMENTED INFORMATION ........................................................................................................................... 16 FINANCIAL INSTRUMENTS .............................................................................................................................. 17 CRITICAL ACCOUNTING ESTIMATES ................................................................................................................ 17 ADOPTION OF NEW AND AMENDED IFRS PRONOUNCEMENTS ................................................................... 18 OFF-BALANCE SHEET ARRANGEMENTS .......................................................................................................... 18 RISKS AND UNCERTAINTIES ............................................................................................................................ 18 DISCLOSURES CONTROLS & PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING ....... 22

Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

The following is Management’s Discussion and Analysis (“MD&A”) of the financial condition and results of operations for Western Resources Corp. (“the Company” or “WRX”) for the three and six months ended March 31, 2021. It has been prepared as of May 14, 2021 and includes financial and other information up to the date of this report. The MD&A should be read in conjunction with the unaudited condensed consolidated interim financial statements for the three and six months ended March 31, 2021 and the audited consolidated financial statements and notes thereto of the Company for the year ended September 30, 2020. All financial information in this MD&A is prepared in accordance with International Financial Reporting Standards (“IFRS”), and all dollar amounts are expressed in Canadian dollars. For additional information, readers should also refer to Company information filed on www.sedar.com.

All dollar amounts in this MD&A are expressed in Canadian dollars, unless otherwise specified. United States dollars is referred to as “US$” and Brazilian Real is referred to as “BRL$”.

FORWARD-LOOKING STATEMENTS

Statements contained in this MD&A that are not historical facts are forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements with respect to the future price of mineral resources; the estimation of mineral reserves and resources, the realization of mineral reserve estimates; the timing and amount of estimated future production, costs of production, and capital expenditures; costs and timing of the development of new deposits; success of exploration activities, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on insurance coverage and the timing and possible outcome of pending litigation. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or 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 the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and other factors include, among others, risks related to the integration of acquisitions; risks related to operations; risks related to joint venture operations; actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral resources; possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, uncertainties and market price fluctuation of real estate investment industry, as well as those factors discussed in the sections entitled “Risks and Uncertainties” in this MD&A. Although the Company has attempted to identify important factors that could affect the Company and may 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 not to be as anticipated, estimated or intended. 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, readers should not place undue reliance on forward-looking statements.

The forward-looking statements in this MD&A speak only as of the date hereof. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events. Forward-looking statements and other information contained herein concerning the mining industry and general expectations concerning the mining industry are based on estimates prepared by the Company using data from publicly available industry sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

industry which the Company believes to be reasonable. However, this data is inherently imprecise, although generally indicative of relative market positions, market shares and performance characteristics. While the Company is not aware of any misstatements regarding any industry data presented herein, the industry involves risks and uncertainties and is subject to change based on various factors.

DESCRIPTION OF BUSINESS

The Company was incorporated on January 16, 2017 under the British Columbia Business Corporations Act.

The Company is a resource company mainly focused on the development of its Milestone potash project (the “Milestone Project”) in Canada owned by its wholly owned subsidiary, Western Potash Corporation (“Western Potash”). The Milestone Project is located in Southern Saskatchewan. The Company’s objectives are to successfully complete Phase I of the Milestone Project (“Phase I”) to prove a new mining technology, which will then be applied to Phase ll and Phase lll to ultimately develop a world-class potash deposit on an environmentally friendly basis and at a competitive cost. The Company currently has no mineral production that yields any revenues.

The Company also invested in real estate development projects in the Greater Vancouver area.

OVERVIEW

The major use of potash is in the fertilizer industry where is it usually blended with nitrogen and phosphorous and used as a crop and plant nutrient. Globally, potash prices have fluctuated since 2000, which is the direct result of changes in potash supply and demand, as well as of the global economic situation and unstable market trend in oil and other commodities. Potash prices increased steadily starting from the second half year of 2020 as the demand outlook continued to improve and outpaced new capacity additions. The import demand in both China and India remained strong in 2020. Management remains positive with respect to the potash industry, as well as in the medium to long-term potash fundamentals. While new projects are anticipated, the increase in production is likely to be absorbed by the marketplace without a disruption to prices. The global potash market is expected to increase due to continued population growth and increased demand for more intensive farming in several industries including the organic food sector.

In terms of Phase I, management believes that it has favorable project development conditions when compared to other competitors. Western has signed a binding off-take agreement with Archer Daniels Midland (“ADM”) to sell all of the Phase I potash product in the North American market. From an overall cost perspective, the Phase I capital expenditure (“CAPEX”) projection is below other recent new potash mines. The Selective Solution Mining technology being developed at the Phase I project uses less energy, water and processing requirements than conventional solution mining and therefore the operational costs even at a small scale are competitive on a cost per tonne of production basis.

Saskatchewan is one of the best regions in the world for mining, with large high-quality resources, a stable government, good infrastructure and a highly skilled and available workforce. The 2020 edition of the Mining Journal Intelligence World Risk Report ranks Saskatchewan among the very top jurisdictions globally for doing business in the mining sector. Thus, the Company continues to believe that even in this competitive market there is an opportunity for an innovative potash producer, provided that the operating costs are comparatively low and the right marketing strategy is adopted. The Company’s strategy to optimize development of the World Class Phase I deposit is to adjust the plan to market, with a staged approach to the Phase I (146,000 tonnes of potash per year) to prove the innovative solution mining technology, followed by Phases II and III when market conditions are right. These are the first intentionally developed horizontal solution mining potash caverns in Saskatchewan. The Phase I Project signifies a new and improved method of extracting potash in the province.

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

On May 14, 2020 the Company delayed planned completion of construction for the balance of the Phase I plant due to delays in completing the final tranche of funding as previously planned. The Company continues to work with potential investors to complete the final tranche of funding, as well as pursuing alternative sources of financing for the completion of the remaining construction. Nevertheless, Western Potash will continue its hot mining operation to increase the size of the caverns and to build up potash in the crystallization pond. Once financing is secured, Phase I construction will resume immediately with a plan to complete within approximately eight months from fully mobilized construction restart.

The overall project progress has surpassed 85% (based on total incurred cost of engineering, procurement, infrastructure and construction) with only building erection, mechanical, electrical and instrument installation, compaction and storage areas, construction of all the load-out facilities and final site grading remaining to be completed.

As of March 31, 2021, Western Potash’s Phase I project team has taken over operations of the hot mining system with the submerged combustion brine heating system fully operational pumping into the caverns. Hot mining recirculates brine through the caverns and preferentially extracts the potassium chloride (“KCl”) leaving the sodium chloride in place underground. During the hot mining operations, potash is being built up in the crystallization pond. When the processing plant is complete, potash will be extracted from the pond with a dredge, processed and transported off site. While there have been a number of startup issues, all equipment involved with hot mining is now fully operational, and the mining is progressing well. All other site infrastructure projects (gas, power, water, roads, telecommunication) are complete.

The Company has received all required administrative and construction permits from the Saskatchewan Ministry of Environment (“SMoE”) as well as the Regional Municipality (“RM”) of Lajord for hot mining operation. Additional regulatory approvals and permits will be processed as required. An Environmental Management Plan, Conceptual Decommissioning and Reclamation plan in support of reclamation bonds, and an Annual Environmental Report for 2020 were also submitted to the Ministry of Environment.

The Company is encouraged by the continued broad support for the project and continues to actively engage the local community, the Saskatchewan government, the Rural Municipality of Lajord, local businesses, and local landowners. However, these community engagement activities have been reduced in the 2020 and 2021 fiscal years due to COVID-19, but will resume when allowed by provincial policy.

Management is encouraged with the overall project progress and budget control, especially the positive result of cavern operation and the construction and operation of hot mining infrastructure. The success of Phase I Plant at the small scale, positions Phases II and III very favorably with economies of scale in comparison to other producers.

Since 2017, the Company has invested its cash in real estate projects to earn a higher return than bank deposits. The Company has partnered with Formwerks Boutique Investments Ltd. (“Formwerks”), and Alabaster Holdings Corp. (“Alabaster”), both real estate developers in the Greater Vancouver area, to develop real estate projects. The Company has interests in five existing limited partnerships with Formwerks and a limited partnership with Alabaster. The Company continues to have approximately $20 million in equity investments in real estate projects. The Company is seeking investors to participate in the Company’s interest in its real estate partnerships or to sell the Company’s interest in these partnerships to fund the Milestone Project and to fund general and administrative expenses.

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

COVID-19

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn.

It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business and results of operations. Potential impacts could include further delay in completing of construction due to inability to obtain additional financing, a temporary cessation of construction due to a localized outbreak at the Milestone Project or in Company’s supply chain, the impact and potential impairments in the value of our long-lived assets, including our real estate investments, or potential decreases in future revenue to the extent potash prices are impacted.

SUMMARY OF QUARTERLY RESULTS

The following table reports selected financial information for the most recent eight quarters.

		Three months ended	Three months ended
	March 31, 2021	December 31, 2020	September 30, 2020	June 30, 2020
	$	$	$	$
Operating expenses	401,551	422,372	716,889	389,340
Other income (expense)	(50,773)	(75,660)	(608,791)	(35,005)
Income tax expense	(26,656)	-	-	-
Net loss and comprehensive loss	(478,980)	(498,032)	(1,325,680)	(424,345)
Lossper share - basic and diluted	(0.00)	(0.00)	(0.00)	0.00
		Three months ended
	March 31, 2020	December 31, 2019	September 30, 2019	June 30, 2019
	$	$	$	$
Operating expenses	523,681	536,835	369,236	414,144
Other income (expense)	(1,689,002)	176,322	(481,773)	277,801
Deferred tax recovery	373,836	2,283,910	-	-
Net income (loss) and comprehensive income (loss)	(1,838,847)	1,923,397	(851,009)	(136,343)
Lossper share - basic and diluted	(0.01)	0.01	(0.00)	(0.00)

1. The December 31, 2019 and March 31, 2020 quarterly amounts in fiscal 2020 have been recast to reflect an adjustment made at September 30, 2020 with respect to a deferred income tax recovery.

Quarterly net income (loss) fluctuates primarily as a result of changes in other income (expense), income tax expense related to the financing arrangement and deferred tax recovery. Other income (expense) is impacted by the Company’s finance expenses from borrowings. The deferred tax recovery recorded during the quarters in Fiscal 2020 relate to temporary differences which arose as a result of the accounting treatment for a below interest loan received from the Company’s majority shareholder.

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

REVIEW OF QUARTERLY FINANCIAL RESULTS

For the three months ended	For the three months ended
March 31, 2021 March 31, 2020	Increase/(Decrease)
$ $	$
EXPENSES
Consulting fees 91,250 119,296	(28,046)
Depreciation 35,726 50,849	(15,123)
Office and miscellaneous expenses 121,311 89,600	31,711
Professional fees 84,699 163,009	(78,310)
Salaries, wages and benefits 60,565 65,509	(4,944)
Share-basedpayments(recovery) 8,000 35,418	(27,418)
Loss before other(income) expenses 401,551 523,681	(122,130)

For the six months ended	For the six months ended
March 31, 2021 March 31, 2020	Increase/(Decrease)
$ $	$
EXPENSES
Consulting fees 205,466 245,296	(39,830)
Depreciation 71,321 100,828	(29,507)
Office and miscellaneous expenses 203,724 159,291	44,433
Professional fees 235,337 329,222	(93,885)
Salaries, wages and benefits 117,840 148,685	(30,845)
Share-basedpayments(recovery) (9,765) 77,194	(86,959)
Loss before other(income) expenses 823,923 1,060,516	(236,593)

Operating Expenses

Major changes to loss before other income for the three and six months ended March 31, 2021 were due to decreases in consulting fees, depreciation, professional fees and share-based payments recovery, which was partially offset by increases in office and miscellaneous expenses.

Consulting fees decreased for the three and six months ended March 31, 2021 primarily due to fewer consultants employed and less bonus paid to consultants.

Depreciation decreased for the three and six months ended March 31, 2021 as some of the Company’s property and office equipment have been fully amortized.

Professional fees include accounting and legal fees. Professional fees decreased for the three and six months ended March 31, 2021 as a legal settlement has been reached with Amarillo resulting in a reduction in legal fees incurred as compared to the three and six months ended March 31, 2020.

Salaries, wages and benefits decreased for the three and six months ended March 31, 2021 primarily due to a decrease in bonuses paid to Company staff.

Share-based payments decreased for the three and six months ended March 31, 2021 as a result of the reversal of share-based payments from options cancelled or forfeited during the period.

Major changes to the office and miscellaneous expenses for the three and six months ended March 31, 2021 and 2020 include:

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Western Resources Corp.

Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

For the three months ended	For the three months ended
March 31, 2021 March 31, 2020	Increase/(Decrease)
$ $	$
Charged to office & miscellaneous expenses
Bank charges and interest 751 2,247	(1,496)
Filing and regulatory fees 26,716 35,519	(8,803)
Insurance 5,695 3,902	1,793
Investor relations 892 12,341	(11,449)
Office and miscellaneous 34,392 22,489	11,903
Rent 36,026 5,835	30,191
Telephone 9,446 1,442	8,004
Travel 7,393 5,825	1,568
121,311 89,600	31,711

For the six months ended	For the six months ended
March 31, 2021 March 31, 2020	Increase/(Decrease)
$ $	$
Charged to office & miscellaneous expenses
Bank charges and interest 2,191 3,741	(1,550)
Filing and regulatory fees 38,423 48,954	(10,531)
Insurance 10,702 7,582	3,120
Investor relations 4,600 15,572	(10,972)
Office and miscellaneous 58,719 41,487	17,232
Rent 60,567 13,462	47,105
Telephone 17,371 3,512	13,859
Travel 11,151 24,981	(13,830)
203,724 159,291	44,433

Office expenses, rent, and telephone expenses increased during the three and six months ended March 31, 2021 as certain expenses were no longer capitalized to development costs as certain construction activities were suspended. Filing and regulatory fees and investor relations decreased as a result of management’s efforts to reduce such costs; travel decreased for the six months ended March 31, 2021 due to covid-19 travel restrictions in place.

Other income and expenses

For the three months ended	For the three months ended
March 31, 2021 March 31, 2020	Increase/(Decrease)
$ $	$
Other income (expenses)
Finance costs (249,190) (41,842)	(207,348)
Share of income from investment in associates 44,851 310,164	(265,313)
Interest income 26,264 41,342	(15,078)
Loss on legal settlement - (1,624,214)	1,624,214
Other income(expenses) 127,302 (374,452)	501,754
(50,773) (1,689,002)	1,638,229

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

For the six months ended	For the six months ended
March 31, 2021 March 31, 2020	Increase/(Decrease)
$ $	$
Other income (expenses)
Finance costs (526,925) (60,356)	(466,569)
Share of income from investment in associates 30,123 310,164	(280,041)
Interest income 58,692 114,106	(55,414)
Loss on legal settlement - (1,624,214)	1,624,214
Other income(expenses) 311,677 (252,380)	564,057
(126,433) (1,512,680)	1,386,247

Finance costs increased during the three and six months ended March 31, 2021 mainly from interest expense accrued on promissory notes, interest expense from financing arrangement and interest on legal settlement payable.

Share of income from investment in associates for the six months ended March 31, 2021 was due to estimated income distribution from FB Burrard LP, which was offset by legal fees incurred by WGP Investment LP, whereas share of income from investment in associates was recognized in the six months ended March 31, 2020 from estimated income distribution from FB Burrard LP.

Interest income decreased for the three and six months ended March 31, 2021. The decrease is mainly due to reduction of cash balances and term deposits.

Other income increased for the three and six months ended March 31, 2021. The change in other income is mainly due to fluctuations in foreign exchange gains from currency conversion and a revaluation gain on marketable securities at period-end for the three and six months ended March 31, 2021.

LIQUIDITY AND CAPITAL RESOURCES

	March 31, 2021	September 30, 2020
	$	$
Current assets	6,391,771	11,168,038
Current liabilities	61,898,312	57,081,910
Working capital deficit	(55,506,541)	(45,913,872)
Total assets	269,558,385	264,768,537
Total liabilities	101,376,998	95,595,191
Net assets	168,181,387	169,173,346

The Company’s unaudited condensed interim consolidated financial statements for the three and six months ended March 31, 2021 have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge liabilities in the normal course of business.

At March 31, 2021, the Company does not have significant sources of revenues and has not generated positive cash flow from operations. On May 14, 2020, the Company’s wholly owned subsidiary, Western Potash Corp. (“Western Potash”) delayed the completion date of construction of the Phase I Milestone Potash Project (“Milestone Project”) plant in order to seek additional funding to complete construction. Western Potash has entered into various capital expenditure commitments for the procurement and construction of the Milestone Project with a remaining committed amount of $15,400,000 (Note 21). As at March 31, 2021, the Company has a working capital deficit of $55,506,541 including cash of $2,632,930. Furthermore, various vendors have filed builders’ liens for up to $33,182,310 against Western Potash as a result of its delayed payment on the outstanding payables related to

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

mineral property, out of which a few vendors have also filed legal claims against Western Potash (Note 10). The Company’s legal counsel is currently working directly with the vendors on a temporary solution to mitigate legal action. Based on its current cash flow forecast and its existing obligations and commitments, the Company will require further funds for the completion of construction, to successfully commission the Milestone Project and to fund its general and administrative expenses for the remainder of the 2021 fiscal year.

These conditions indicate the existence of a material uncertainty that may cast significant doubt on Company’s ability to continue as a going concern. These unaudited condensed interim consolidated financial statements do not reflect any adjustments to the carrying values and classifications of its assets and liabilities that would be necessary if the going concern assumption was not appropriate. Such adjustments could be material.

The Company continues to work with potential investors to complete the final tranche of funding, as well as pursuing alternative sources of financing including equity and debt financing, and seeking investors to participate in the Company’s interest in its real estate partnerships or to sell the Company’s interest in these partnerships in order to complete the remaining construction activities, to commission the Milestone Project and to fund general and administrative expenses. However, there are no assurances that the Company will be successful in obtaining such equity or debt financing. In the longer term, additional financing may be required to expand the mining operation at the Milestone Project if the cash flows of the Phase I Milestone Project plant are not sufficient to fund such expansion. Furthermore, as the Company has not yet completed construction or commenced commissioning of the Phase I plant, there are no guarantees that the Phase I plant will operate as expected, or that the Company will be able to complete construction of the plant based on the revised timelines and on budget. Material cost overruns, should they occur, may also require additional financing. The ability of the Company to continue as a going concern and the recoverability of amounts shown for mineral property, plant and equipment is dependent upon the ability of the Company to obtain necessary financing to complete the development and upon future profitable production from the Milestone Project and the recoverability of investments in real estate projects.

Cash resources and liquidity

At March 31, 2021, the Company did not have significant sources of revenues and generated an operating cash outflow. During the six months ended March 31, 2021, the Company incurred a cash outflow of $424,689 from operating activities. As at March 31, 2021, the Company has a working capital deficit of $55,506,541 including cash of $2,632,930.

Financing activities

On December 15, 2020, the Company received an additional $20,000 COVID-19 relief line of credit from the Canada Small Business Financing Program as support for businesses impacted by COVID-19.

On December 15, 2020 Seaton LP drew an additional $920,000 from a secondary mortgage of up to $4,500,000. As of March 31, 2021, total of $3,146,602 had been drawn. The interest rate is the greater of 10% per annum, or RBC Prime rate plus 6% per annum, payable monthly, with the principal amount payable at maturity date August 1, 2021 and a renewal option at maturity for an additional six-months extension.

On January 15, 2021, Seaton LP renewed an existing mortgage with principal amount of $1,300,000, interest rate of prime plus 1.75% per annum, and extended the maturity date to January 22, 2022.

On February 25, 2021, FB Burrard Development Limited Partnership (“FB Burrard LP”) repaid loans receivable from associate of $525,764 to the Company. As of March 31, 2021, there are no other loans receivable from investment in associates outstanding.

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

On March 12, 2021, 180,000 stock options with exercise price of $0.12 per commons shares were exercised for total proceeds of $21,600.

Subsequent to March 31, 2021, the Company received $2,000,000 in promissory note from WGP Seaton. The principal amount is due on May 26, 2021 and the promissory note is non-interest bearing.

Investment activities

The Company through its subsidiary, Western Potash, has entered into various capital expenditure commitments for the procurement and construction of Phase I Milestone Project with a remaining committed amount of approximately $15,400,000. The carrying value of mineral property, plant and equipment totaled $223,636,503 as at March 31, 2021, compared to $214,118,951 as at September 30, 2020. The increase reflects the Company’s development and construction activities at its Milestone Project in Saskatchewan where $9,499,254 in mineral interest, development and construction costs were incurred. In addition, increases to property, plant and equipment included $86,619 in mineral interest costs, and $3,000 in property and office equipment costs were incurred during the six months ended March 31, 2021.

The Company through its subsidiaries has interest in a number of arrangements with Formwerks and Alabaster, both Vancouver based real estate development companies, to develop real estate projects.

During the three and six months ended March 31, 2021

• The Company has made total capital contributions of $62,100 to investment vehicle WGP Investment Limited Partnership (“WGP LP”), which holds 10.125% interest in FB 234 Third Avenue Development Limited Partnership (“FB Third LP”) and 36% interest in Alabaster (Spires 2) Limited Partnership (“Alabaster LP”).

• The Company has made total capital contribution of $247,200 to FB Robinson Development Limited Partnership (“FB Robinson LP”), which the company have 80% interest in.

• The Company received return of capital of $1,501,622 from FB Burrard LP on February 25, 2021.

Based on its current cash flow forecast, its existing obligations and commitments and the Credit Facility Agreement, the Company will require additional funds in the fiscal year 2021 in order to complete construction and successfully commission Phase I and to fund its real estate investments and general and administrative expenses. Management is currently exploring other financing arrangements, including equity and debt financing, in order to complete construction activities, commission Phase I and fund general and administrative expenses. However, there are no assurances that the Company will be successful in obtaining such equity or debt financing.

MILESTONE PROJECT

The Company is focused on building what it believes will be Canada's most efficient potash solution mine at its 100% owned Milestone property located 35 kilometers southeast of Regina, Saskatchewan, a region with some of the largest producing potash solution mines in the world. The Company has initiated the construction of Phase I of the potash mine in an ecologically sustainable, economically efficient and socially responsible manner. This is expected to be the first potash mine in the world that will leave no salt tailings on the surface, thereby significantly reducing water consumption and long-term environmental liabilities.

Land and Minerals

The Milestone Project includes 84,557 acres of Crown held Mineral Leases, and 65,305 acres of acquired Freehold Leases. The renewable, 21-year Crown lease was granted by the Government of Saskatchewan under a Ministerial Order and provides the Company with full and exclusive power and right to mine Crown owned subsurface minerals,

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

including potash, subject to the provisions outlined by the Saskatchewan Subsurface Mineral Regulations (1960) and the Subsurface Mineral Tenure Regulations (2015). The Company has completed the drilling of eleven potash exploration wells on the property, acquired several hundred-line kilometers of 2D seismic study, and conducted a 3D seismic study during the exploration program. The leases are adjacent to potash permits held by other multinational mining companies.

The Company has signed a Unitization Agreement with the Ministry of Energy and Resources and all included freeholder mineral owners, to unitize the four mineral sections around the Phase I site providing mineral resources for the 12-year life of the plant. The agreement outlines the royalty payments in proportion to their percentage ownership of the Unitized Area once production commences.

Permits

Western Potash previously investigated the full-scale Phases II and III 2.8 million-tonnes per year Milestone Project by completing multiple Resource and Reserve Estimates (2010, 2011, 2012, and 2013), a Scoping Study (2011), a Prefeasibility Study (2011), and a Feasibility Study (2012) on the Milestone Project. The SMoE issued Environmental Assessment Approval (“EAA”) for the Milestone Project in March of 2013. The original 2013 approval was amended in 2015 to include the new mining methodology and the scale of the Phase I plant. Following the conclusion of the AMEC Phase I Pilot Study, a second EAA amendment application was submitted detailing the final engineering and location of the Phase I plant, and approval was received in 2017 and again updated in 2019 with the SNC-Lavalin engineering. A Development Agreement with the Rural Municipality of Lajord No. 128 was initially signed in 2015, and updated with the Project design in 2017 and 2019.

Western has received numerous permits and approvals for the Phase I development and operation of the hot mining. Additional permits will be received as the project continues to progress.

Process Overview

The Phase I pilot plant uses selective solution mining of the Milestone deposit, starting with a smaller, low capital cost pilot project. The Phase I project is designed to produce 146,000 tonnes per year of potash (or “KCI”) over a project life of 12 years. To achieve this production a total of six caverns are planned. Three caverns have been developed and will be in operation for 6 years followed by an additional 3 caverns during years 6-12 of production. Each of the caverns are injected with sodium chloride (“NaCl”) saturated brine through one well to selectively dissolve KCl leaving the NaCl underground. The KCl rich brine is then brought to surface through a production well and sent to a pond where the cool ambient temperature allows precipitation and settlement of the KCl. The KCl from the pond will be harvested with a dredge and the resulting KCl rich slurry will be pumped to the process plant. In the process plant the slurry will be de-brined and the KCl cake will be dried, compacted and then sent for storage and load-out.

Operations

Western Potash has successfully started hot mining with the permanent plant system. Hot mining involves heating and recirculating the brine into the caverns and preferentially extracting the KCl (leaving the NaCl in place underground). Potash is being accumulated in the crystallization pond and there will be enough to dredge as soon as the plant is complete. The hot mining system is pumping via the submerged combustion brine heating system. Additional heating was brought on-line using the natural gas fired glycol heating unit. Hot mining commenced in Q2 of calendar 2020 and continued through the remainder of the year. Hot mining will continue in calendar 2021 while the remainder of the Phase I project is awaiting completion.

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

Construction

The construction of the process plant, drying and product load-out facilities is currently on hold. Approximately 85% of the total project has been completed based on incurred costs for all activities including engineering, procurement, infrastructure and construction. The project construction will resume immediately after financing is secured and is expected to take around 8 months to complete once fully re-mobilized. During calendar year 2020, construction by Stuart Olson focused on establishing facilities to allow hot mining activities and they erected the structural steel for the process and compaction plant.

All of the bulk material has been purchased and is on-site, as well as over 85% of the equipment. The storage building has foundations only; the process and compaction areas require building erection, mechanical, electrical and instrument installation; and the pump-house building is currently temporary and final site grading remains to be completed. All other site infrastructure projects (gas, power, water, roads, telecommunication) are complete.

Community

The Company is committed to maintaining good relationships with the community, government and business, through open and transparent communication, feedback and ongoing engagement with all parties (to the extent capable under continuing COVID-19 conditions) as well as bringing benefits to the local community. Regular virtual meetings with all levels of government have continued to confirm strong support for the project.

Qualified Persons

The in-house qualified person who has reviewed and approved the disclosure of technical and scientific information included in this MD&A is Greg Vogelsang, P.Eng., P.Geo., FGC, FEC.

COMMITMENTS AND CONTRACTUAL AGREEMENTS

• Western Potash entered into a water supply agreement with respect to the Milestone Project which provides Western Potash a preferential right to access a maximum of up to 25,000 cubic meters of water at a rate of $0.2628/cubic meter (increasing by a multiplier every year) per day of recycled water for an agreed term of 40 years from the start of water flow. Prior to water usage commencing, the Company is required to pay annual standby fees. A total of $nil in standby fees were made during the six months ended March 31, 2021 (September 30, 2020 - $110,726). Half of the commitment fee and the standby fees will be credited against the annual water usage fees if water usage commences on or before December 31, 2025. If the Company does not commence usage on or before December 31, 2025, all credits accrued until that date will no longer be creditable against the annual usage fees. Furthermore, the Company will be required to pay a standby fee of $500,000 annually after December 31, 2025 until the earlier of the date water usage commences and the term of the agreement which is defined in the agreement as 40 years after connection to the Regina water system has ended. Both the City of Regina and the Company have the option to terminate the contract on or after December 3, 2025 if usage has not commenced by that date.

• On October 25, 2018, Western Potash signed an off-take agreement with a North American company in the business of selling agricultural fertilizers to purchase an annual production of 146,000 metric tons of product from Western Potash once production at the Milestone Project reaches the designed capacity, for a duration of 10 years commencing no later than May 31, 2021. The Commencement Date for product delivery was extended to November 30, 2022 on January 13, 2021. Under the new terms, if the new Commencement Date is not established by the extended date, but daily production rate is above that necessary to achieve 50% of the total

Page 13 of 23

Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

committed annual capacity, the Commencement Date deadline shall be further extended for one more year, until November 30, 2023.

• Western Potash has entered into various capital expenditure commitments for the procurement and construction of Phase I of the Milestone Project. As of March 31, 2021, total capital expenditure commitments are approximately $15,400,000.

• As of March 31, 2021, the Company has non-exclusive financial advisory agreements with various third parties to assist in raising money for the purpose of completing the Milestone Project. Pursuant to these agreements, the Company is required to pay to an introduced investor, upon the completion of an equity or debt financing, a mutually agreed success fee.

PAYABLE ON LEGAL SETTLEMENT

Amarillo Gold Corporation (“Amarillo”)

On April 15, 2020, Western Potash entered into a legal settlement agreement with Amarillo Gold Corporation (“Amarillo”) to resolve the disputes in respect of certain taxes and penalties related to exploration permits Amarillo has become liable to pay as a result of Amarillo’s Brazilian subsidiary taking potash claims in Brazil during 2008 on behalf of Western Potash.

The payable on legal settlement and a corresponding loss on settlement of legal claim was recognized as of March 31, 2021:

	$
As at September 30, 2020	1,045,494
Payments made during the period	(150,000)
Interest expense	30,774
Effect of changes in foreign currencyexchange	(29,673)
As at March 31, 2021	896,595
Currentportion ofpayable on legal settlement	543,873
Non-currentportion ofpayable on legal settlement	352,722

CONTINGENCIES

The Company is involved in various claims and other matters in the ordinary course of business. In addition to the legal claims and builders’ liens against Western Potash related to the delayed payment of outstanding payables disclosed in Note 10 of the unaudited condensed consolidated interim financial statements for the six months ended March 31, 2021, the Company has the following contingency:

Lockwood Financial Ltd.

By an agreement dated September 1, 2010, the Company retained Lockwood Financial Ltd. (“Lockwood”) to provide certain services. That agreement provided for various potential payments from the Company to Lockwood if specific triggering events occurred. A notice of civil claim has been filed by Lockwood seeking payment in an amount of $1,439,056 for a success fee and additional service fee allegedly owed to it. It is the position of the Company that none of the triggering events occurred and that no amount is currently payable to Lockwood. The matter is on hold due to the withdrawal of Lockwood’s legal counsel on March 8, 2019. The Company, in consultation with its legal counsel, has assessed as at March 31, 2021 that Lockwood’s claim will not be successful.

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

Builders’ Liens

As of March 31, 2021, various vendors had filed builders’ liens for up to $33,182,310 against Western Potash as a result of its delayed payment on the outstanding payables related to mineral property, plant and equipment. Certain of these vendors have also filed legal claims against Western Potash in amounts totaling $4,460,429. All of these amounts have already been recorded in trade payable related to mineral property and no additional provisions have been made. Certain liens filed by the contractors were duplicated by their subcontractors, resulting in a higher lien amount than actual payables. The Company’s legal counsel is currently working directly with the vendors on a temporary solution to mitigate legal action.

OUTSTANDING SHARE DATA

Common shares

On March 12, 2021, 180,000 stock options with exercise price of $0.12 per commons shares were exercised for total proceeds of $21,600. As of March 31, 2021, the Company had 187,054,220 common shares (September 30, 20210 - 186,874,220 common shares) issued and outstanding with a carrying value of $231,106,466. 777,400 common shares with a carrying value of $762,520 are classified as treasury shares which the Company reacquired from its shareholders but has not retired.

Stock options

On November 16, 2020, an additional 400,000 stock options with an exercise price of $0.17 and expiry date of November 15, 2025 were granted to a director which vest 30% in the first three years with the remainder vesting on the fourth anniversary date.

On March 15, 2021, an additional 800,000 stock options with an exercise price of $0.165 and expiry date of March 14, 2026 were granted to directors which vest 30% in the first three years with the remainder vesting on the fourth anniversary date. The Company determined the fair value of these stock options to be $87,680 using the BlackScholes option pricing model with the following assumptions: risk-free interest rate of 0.79%, expected life of 5 years, 0% forfeiture rate, expected volatility of 81% and dividend rate of 0%.

As of May 14, 2021, the Company had the following stock options outstanding:

		Weighted average exercise price
	Number outstanding	($)
March 31, 2021	11,920,000	0.159
Balance, Date of MD&A	11,920,000	0.159
RELATED PARTY TRANSACTIONS

Payments to key management personnel

The Company’s key management personnel include the Company’s Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and members of the Board of Directors. Payments to key management personnel included in the net income (loss) and mineral property, plant and equipment are as follows:

Page 15 of 23

Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

	For the six months ended	For the six months ended
	March 31, 2021	March	31, 2020
	$		$
Charged to the statement of loss
Consulting fees	173,347		171,161
Share-basedpayments(recovery)	(5,255)		71,378
	168,092		242,539
Capitalized mineral property, plant and equipment
Consulting fees	-		60,000
Salaries and wages	120,000		120,923
Bonus	20,000		36,000
Share-basedpayments	43,475		85,463
	183,475		302,386
Totalpayments to key managementpersonnel	351,567		544,925

Other related party transactions

• On September 12, 2019, the Company entered into a Credit Facility Agreement for an aggregate amount of $40,000,000 from the Company’s majority shareholder of which $35,000,000 was advanced and outstanding from the Credit Facility Agreement (Note 14). During the six months ended March 31, 2021, interest payable of $691,220 related to the Credit Facility Agreement was included in accounts payable and accrued liabilities (September 30, 2020 - $1,171,923).

• As of March 31, 2021, the Company had promissory notes with a total face value of $4,020,000 issued to the Company’s majority shareholder and officer (Note 11). Additional related interest of $176,515 was accrued and included in accounts payable and accrued liabilities during the six months ended March 31, 2021 (September 30, 2020 - $194,393).

• Accounts payable at March 31, 2021 includes $115,119 in outstanding fees payable to its directors (September 30, 2020 - $88,334).

All related party transactions are in the normal course of operations and have been measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties except for the amount borrowed under the Credit Facility Agreement which was recognized at fair value on the issuance date.

SEGMENTED INFORMATION

The Company operates in two reportable operating segments, being the acquisition, exploration and development of mineral properties and the investment in real estate projects in Canada. Segmented information is as follows:

Page 16 of 23

Western Resources Corp.

Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

Real estate Mineral properties	Total
$ $	$
For the six months ended March 31, 2021
Operating expenses (68,397) (755,526)	(823,923)
Interest and other income (expense) (164,473) 38,040	(126,433)
Income tax expense - (26,656)	(26,656)
Net loss for the period (232,870) (744,142)	(977,012)
For the six months ended March 31, 2020
Operating expenses (126,715) (933,801)	(1,060,516)
Interest and other income (expense) 286,537 (1,799,217)	(1,512,680)
Deferred tax recovery - 2,657,746	2,657,746
Net income(loss)for theperiod 159,822 (75,272)	84,550
As at March 31, 2021
Total assets 20,756,661 248,801,724	269,558,385
Non-current assets 20,446,613 242,720,001	263,166,614
Current assets 310,048 6,081,723	6,391,771
Total liabilities (18,734,618) (82,642,380)	(101,376,998)
Non-controlling interest (2,496,000) -	(2,496,000)
As at September 30, 2020
Total assets 36,840,635 227,927,902	264,768,537
Non-current assets 35,360,152 218,240,347	253,600,499
Current assets 1,480,483 9,687,555	11,168,038
Total liabilities (17,559,896) (78,035,295)	(95,595,191)
Non-controllinginterest (2,589,000) -	(2,589,000)

Net loss for the six months ended March 31, 2021 increased significantly for the real estate segment mainly due to increase in interest expense accrued on promissory notes. For the mineral properties segment, net loss increased for the six months ended March 31, 2021 as there was no deferred tax recovery to offset losses. During the six months ended March 31, 2020, a deferred tax recovery was recognized resulting from the accounting treatment for a low interest loan received from the Company’s majority shareholder.

FINANCIAL INSTRUMENTS

In the normal course of business, the Company is inherently exposed to certain financial risks, including market risk, credit risk and liquidity risk, through the use of financial instruments. The timeframe and manner in which the Company manages these risks varies based upon management’s assessment of the risk and available alternatives for mitigating risk. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes. All transactions undertaken are to support the Company’s operations. These financial risks and the Company’s exposure to these risks are provided in various tables in the Risks and Uncertainties section of this MD&A and Note 23 of the unaudited condensed consolidated interim financial statements for the three and six months ended March 31, 2021 and Note 23 of the audited consolidated financial statements for the year ended September 30, 2020. For a discussion on the significant assumptions made in determining the fair value of financial instruments, refer also to Note 2 of the audited consolidated financial statements for the year ended September 30, 2020.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our consolidated financial statements requires management to use judgment and make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amount of expenses during the period. Actual results could materially differ from these estimates. Significant judgements made by management relate to the

Page 17 of 23

Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

Company’s ability to continue as a going concern (see Note 1 to the unaudited condensed interim consolidated financial statements for the three and six months ended March 31, 2021).

Significant judgement made by management relate to the Company’s determination that certain leases related to the Milestone Project are not within the scope of IFRS 16, and these are leases that granted the Company the right to explore, develop, produce or otherwise use the mineral resource contained in that land. Areas of critical estimates include the economic recoverability and probability of future economic benefit of mineral, property, plant and equipment, the valuation of investments in associates and real estate properties under development, the determination of asset retirement obligations, and the determination of the fair value of financial instruments. For more details, refer to Note 2 and 3 of the audited consolidated financial statements for the year ended September 30, 2020 for a more detailed discussion of the critical accounting estimates and judgments.

ADOPTION OF NEW AND AMENDED IFRS PRONOUNCEMENTS

Accounting Standards Issued but Not Yet Effective

IAS 16 – Property, Plant and Equipment

On May 14, 2020, the IASB published a narrow scope amendment to IAS 16 Property, Plant and Equipment - Proceeds Before Intended Use. The amendment prohibits deducting from the cost of property, plant and equipment amounts received from selling items produced while preparing the asset for its intended use. Instead, amounts received will be recognized as sales proceeds and related cost in profit or loss. The effective date is for annual periods beginning on or after January 1, 2022. The amendment does not currently impact the consolidated financial statements, but the Company is assessing the effect that the narrow scope amendment may have on the accounting for the future commencement of production at the Milestone Project.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements in place.

RISKS AND UNCERTAINTIES

Risk Factors Relating to The Company’s Business

The Company’s ability to finance and develop the Milestone Project to production and to generate revenues and profits from its natural resource properties, or any other resource property that it may acquire, currently or in the future, is dependent upon a number of factors. For a detailed discussion of these factors faced by the Company, please refer to the Company’s most recent Annual Information Form dated December 23, 2020.

Readers are cautioned that the projected mining method, potential production profile as well as plan and mine plan referred to in the Pilot Study completed by AGAPITO in 2016 are conceptual in nature and additional technical studies will be required in order to fully assess their viability. There is no certainty that a potential mine will be realized or that a production decision will be made. A mine production decision that is made without a feasibility study carries additional potential risks that include, but are not limited to, the inclusion of inferred mineral resources, which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Mine design and mining schedules, metallurgical flow sheets and process plant designs will require additional detailed work and economic analysis and internal studies to ensure satisfactory operational conditions and decisions regarding future targeted production. The Pilot Study is a preliminary economic assessment, is preliminary in nature and includes inferred mineral resources, which are considered too speculative geologically to have the economic considerations applied to them that would enable

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

them to be categorized as mineral reserves. There is no certainty that inferred resources will be converted to the measured and indicated categories, that the measured and indicated resources will be converted to the proven and probable mineral reserve categories and there is no certainty that the Pilot Study will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability; the estimate of mineral resources in the Pilot Study may be materially affected by environmental, permitting, legal, title, taxation, social-political, marketing, or other relevant issues.

Going concern risk

The core business of the Company is to develop its Milestone Project. The recoverability of the amounts shown for mineral property, plant and equipment is dependent upon the ability of the Company to obtain the necessary financing to complete the development of its property, and upon future profitable production. The Company’s ability to continue its operations is dependent on its ability to secure additional 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. In order to continue developing its Milestone Project, management is actively pursuing such additional sources of financing; however, in the event this does not occur, there is doubt about the ability of the Company to continue as a going concern.

Environmental Risks and Hazards

All phases of the Company’s mineral operations are subject to environmental regulation in the various jurisdictions in which it operates. Environmental legislation is evolving in a manner which may require stricter or changing standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulations, laws and permits, if any, will not adversely affect the Company’s operations. Environmental hazards may exist on the properties on which the Company holds interests which are unknown to the Company at present, and which may have been caused by previous or existing owners or operators of the properties. The Company may become liable for those environmental hazards even where it has attempted to contractually limit its liability. Government approvals and permits are currently, and may in the future be, required in connection with the Company’s operations. To the extent such approvals are required and not obtained, the Company may be curtailed or prohibited from proceeding with planned exploration or development of mineral properties. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Commodity price risk

The Company is exposed to commodity price risk. Commodity price risk is defined as the potential impact on earnings and economic value due to commodity price movements and volatilities. The Company closely monitors prices of potash, individual equity movements, and equity markets to determine the appropriate course of action to be taken by the Company. The Company’s future profitability and viability of development depends upon the world market price of potash. Potash prices have fluctuated widely in recent years. There is no assurance that, even if commercial quantities of potash are produced in the future, a profitable market will exist for them. A decline in the market price of potash may also result in the Company reducing its mineral resources, which could have a material and adverse effect on the Company’s value. The Company is not a potash producer as of March 31, 2021. Therefore, commodity price risk may affect the completion of future equity transactions such as equity offerings and the exercise of stock options and warrants. This may also affect the Company’s liquidity and its ability to meet its ongoing obligations.

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

Project risks

The Phase I Milestone Project is a demonstration plant, and as such there are a number of technical and economic risks. The most significant risk is lower than expected potash sales prices, which has the largest effect on project economics. Although there are exchange rate and tariff risks, these are expected to be somewhat mitigated by the effect of the potash sales price.

There are a number of technical and construction risks associated with the innovative use of selective horizontal solution mining. In particular, the risks include drilling the cavern, long-term potash recovery rates, construction CAPEX costs, sustaining and operating costs. The Company is working with a number of construction strategies to plan for strict control of the construction costs, and engaging leading engineering firms to leverage their experience. To maintain potash recovery rates, additional well drilling is planned during operations and drilling costs have been included in the sustaining CAPEX. However, actual conditions in the caverns (including geological, flow and dissolution) may be overestimated in the cavern production models. This risk is partially mitigated by early hot mining which will build up potash in the crystallization pond and prove actual mining rates.

Weather conditions (including snow and flooding) may affect both the construction schedule and operations (in particular road restrictions may reduce the ability to ship product off-site). The Company has developed contingency plans to minimize the risk associated with weather events, including flexibility in construction schedules, contingencies, appropriate productivity factors, and product shipping plans. These include on-site storage and conducting an annual plant maintenance shutdown during the period of spring road bans. The COVID-19 pandemic could cause further disruptions to operations, construction and supplies. Management has taken measures including pre-screening, limiting to key personnel, cleaning & disinfection and social distancing to minimize on-site impact.

The development of the Phase I Milestone Project will include the construction and operation of mines, processing plants and related infrastructure. As a result, the Company is and will continue to be subject to all of the risks associated with establishing new mining operations, including risks relating to the availability and cost of skilled labour, mining equipment, fuel, power, materials and other supplies; the ability to obtain all necessary governmental approvals and permits; potential opposition from non-governmental organizations, environmental groups or local residents; and the availability of funds to finance construction and development activities. It is common for new mining operations to experience unexpected costs, problems and delays during construction, development, and mine start-up. Accordingly, the Company cannot provide assurance that its activities will result in profitable mining operations at the Phase I plant. In the event of significant delays in Phase I Milestone Project completion and commercial production on consistent basis, or a significant increase in its capital costs over estimates, these could have a significant adverse effect on the Company’s results of operation, cash flow from operations and financial condition.

Risks of Financial Instruments

In the normal course of business, the Company is inherently exposed to certain financial risks, including market risk, credit risk and liquidity risk, through the use of financial instruments. The timeframe and manner in which the Company manages these risks varies based upon management’s assessment of the risk and available alternatives for mitigating risk. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes. All transactions undertaken are to support the Company’s operations. These financial risks and the Company’s exposure to these risks are provided in various tables in Note 23 of the unaudited condensed interim consolidated financial statements for the three and six months ended March 31, 2021. For a discussion on the significant assumptions made in determining the fair value of financial instruments, refer also to Note 23 of the audited consolidated financial statements for the year ended September 30, 2020.

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

Credit Risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfil its payment obligations. The Company's credit risk is primarily attributable to cash and cash equivalents, term deposits, other current assets and loan receivable from associate, the carrying value of which represents the Company’s maximum exposure to credit risk. Cash and cash equivalents and term deposits are held with reputable Canadian financial institutions, from which management believes the risk of loss is minimal. The Company’s credit risk relating to its other current assets, which is primarily comprised of goods and services taxes recoverable from the Government of Canada for which minimal credit risk exists. As at March 31, 2021, the Company’s primary credit risk relates to other current assets. Details regarding the other current assets are included in Note 5 and 23 of the unaudited condensed interim consolidated financial statements for the three and six months ended March 31, 2021.

Liquidity risk

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at March 31, 2021, the Company had cash of $2,632,930 and a credit facility with an undrawn amount of $5,000,000 (Note 14). The Company’s major liabilities and obligations mature as follows:

	1 Year	2 Year	3 Year
	$	$	$
Accounts payable and accrued liabilities	42,976,537	-	-
Mortgage on real estate properties under development	13,977,262	-	-
Loans payable	-	40,000	35,000,000
Promissory notes	4,320,000	-	-
Payable on legal settlement	543,873	301,976	50,746
Financingarrangement	-	-	9,700,000
Total undiscounted value	61,817,672	341,976	44,750,746
Carry value as of March 31, 2021	61,817,672	334,434	35,441,717

The Company will need to raise additional funds to meet its obligations. The Company will exercise its option to extend its terms on the mortgage on real estate properties under development (Note 8). The Company’s operating cash requirements including amounts projected to complete its existing capital expenditure program are continuously monitored and adjusted as input variables change. These variables include but are not limited to, available credit facilities, changes in commodity prices, cost overruns on capital projects and changes to government regulations relating to prices, taxes, royalties, land tenure, allowable production and availability of markets. As these variables change, liquidity risks may necessitate the need for the Company to pursue equity issuances, obtain project or debt financing, or enter into joint arrangements. There is no assurance that the necessary financing will be available in a timely manner.

Interest rate risk

Interest rate risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s cash and cash equivalents are held mainly in high yield saving accounts and term deposits and therefore there is currently minimal interest rate risk. Because of the short-term nature of these financial instruments, fluctuations in market rates do not have a significant impact on estimated fair values as of March 31, 2021. The Company’s loan payable and promissory notes are not subject to interest rate risk as they are not subject to a variable interest rate. The Company is exposed to interest rate risk through the mortgages on real estate properties under development, which bear interest at a variable rate. Based on the outstanding amount as of March 31, 2021, an increase or decrease in the prime rate by 100 basis points would result in an approximately $139,000 change to the Company’s interest expense on an annual basis.

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

Foreign currency risk

The Company is exposed to currency risk to the extent that monetary assets and liabilities held by the Company are not denominated in Canadian dollars (“CAD”).

The Company has not entered into any foreign currency contracts to mitigate this risk. The Company’s cash and accounts payable and accrued liabilities are held in CAD, United States dollars (“USD”), and Brazilian Real (“BRL”); therefore, USD and BRL accounts are subject to fluctuation against the CAD.

As at March 31, 2021, the Company had the following balances in foreign currency which were subject to foreign exchange risk:

exchange risk:
	US$	BRL$
Cash	3,966	-
Term deposits, including restricted cash	42,674	-
Accounts payable and accrued liabilities	(2,949,858)	-
Payable on legal settlement	-	(2,918,348)
	(2,903,218)	(2,918,348)
Rate to convert to$1.00 CAD	1.2575	0.2212
Equivalent to CAD	(3,650,797)	(645,539)

Based on the above net exposures as at March 31, 2021, and assuming that all other variables remain constant, a 1% change of the CAD against the USD and BRL would change profit or loss by approximately $42,000.

Risk of global outbreaks and contagious diseases

The risk of global outbreaks, including COVID-19, have the potential to significantly and adversely impact the Company’s operations and business. On March 11, 2020, the World Health Organization recognized COVID-19 as a global pandemic. The Company is continuously evaluating the uncertainty and impact of the outbreak on the Company and its ability to operate due to employee absences, the length of travel and quarantine restrictions imposed by governments of affected countries, disruption in the Company’s supply chains, information technology constraints, government interventions, market volatility, overall economic uncertainty and other factors currently unknown and not anticipated.

There can be no certainty that COVID-19, or other infectious illness, and the restrictive measures implemented to slow the spread of the virus, will not materially impact the Company’s operations or personnel in the coming weeks and months. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business, results of operations or ability to raise funds at this time.

DISCLOSURES CONTROLS & PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

The Chief Executive Officer and Chief Financial Officer of the Company have assessed or caused to be assessed the effectiveness of the Company’s disclosure control procedures (“DC&P”) and internal control over financial reporting (“ICFR”), which have been designed or caused to be designed under their supervision in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Management has relied upon certain informal procedures and communication to maintain the effectiveness of disclosure controls and procedures and to continually improve and upgrade the design and evaluation of its DC&P and ICFR. However, there can be no assurance that the risk of a material misstatement in the annual financial statements can be reduced to less than a remote likelihood.

The Company’s management is responsible for establishing and maintaining adequate internal controls over financial reporting. Management, including the Chief Executive Officer and Chief Financial Officer, conducted an

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Western Resources Corp. Management Discussion and Analysis For the three and six months ended March 31, 2021 (Expressed in Canadian Dollars)

evaluation of ICFR as at September 30, 2020. In conducting this evaluation, the Company used the criteria set forth by the Committee of Sponsoring Organization of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013). Based on its evaluation, the Company’s Chief Executive Officer and Chief Financial Officer as at September 30, 2020 concluded that the Company’s ICFR and DC&P was not effective as at September 30, 2020 because of a material weakness identified in the design of a control relating to the identification and recording of expenditures as mineral property, plant and equipment and the related payable. Specifically, a review of hold-back provisions provided by a few vendors was not recorded as mineral property, plant and equipment and the related payable obligations and invoices related to the year ended September 30, 2020 that were received and/or approved subsequent to year end were not accrued for.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The Company responded to the material weakness by implementing a more rigorous review process related to the identification of hold-back provisions and related recording as mineral property, plant and equipment and accounts payable. This included highlighting all vendor agreements with hold-back provisions and ensuring the related holdback amounts are recorded based on the underlying invoices. In addition, cut-off testing will ensure all relevant items will be recorded in the appropriate period. Follow-up testing of these controls occurred as part of the closing procedures for the quarter ending March 31, 2021. As at March 31, 2021, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the corrected design and operation of ICFR and DC&P are effective.

Because of inherent limitations, internal control over financial reporting and disclosure controls can provide only reasonable assurances and may not prevent or detect misstatements. Furthermore, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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