Zonte Metals Inc. — Management Reports 2020

May 27, 2020

ZONTE METALS INC.

MANAGEMENT DISCUSSION & ANALYSIS

FOR THE YEAR ENDED

January 31, 2020

Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

BACKGROUND

The Management Discussion and Analysis (“MD&A”) of Zonte Metals Inc. (“Zonte” or the “Company”) provides an analysis of the results for the year ended January 31, 2020 (the “Period”). The MD&A should be read in conjunction with the accompanying unaudited condensed interim financial statements of the Company for the Period and the audited financial statements of the Company for the years ended January 31, 2020 and 2019. The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”). All amounts are in Canadian dollars unless otherwise specified. Additional information regarding the Company is available on SEDAR at www.sedar.com.

FORWARD-LOOKING INFORMATION

Certain statements in this MD&A are forward-looking statements or information (collectively “forward-looking statements”). The Company is hereby providing cautionary statements identifying important factors that could cause the actual results to differ materially from those projected in the forward-looking statements. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as “may”, “is expected to”, “anticipates”, “estimates”, “intends”, “plans”, “projection”, “could”, “vision”, “goals”, “objective” and “outlook”) are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.

By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes may not occur or may be delayed. The risks, uncertainties and other factors, many of which are beyond the control of the Company, that could influence actual results include, but are not limited to: limited operating history; exploration and development risks; regulatory risks; substantial capital requirements and liquidity; financing risks and dilution to shareholders; competition; reliance on management and dependence on key personnel; fluctuating mineral prices and marketability of minerals; title to properties; local resident concerns; no mineral reserves or mineral resources; environmental risks; governmental regulations and processing licenses and permits; conflicts of interest of management; uninsurable risks; exposure to potential litigation; dividends; and other factors beyond the control of the Company.

Further, any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by applicable law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors and to assess in advance the impact of each such factor on the business of the Company or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. See “Risk Factors” below.

1.1 DATE OF REPORT

This report is prepared as of May 26, 2020.

1.2 OVERALL PERFORMANCE and COMPANY OVERVIEW

Zonte is a junior mineral exploration company primarily focused on gold. The Company’s common shares are listed and trade on the TSX Venture Exchange (the “TSX-V” or the “Exchange”) under the symbol “ZON”.

The Company has no producing operations and accordingly no operating income or cash-flow. The Company is dependent on accessing capital markets to raise the funds necessary to continue exploration on its existing properties, acquire new properties, and meet its ongoing working capital requirements. As of the date of this report, no mineral reserves or resources have been delineated on any properties in which the Company has an interest and, accordingly, the Company remains at a relatively early stage.

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

During the year ended January 31, 2020 (“F-2020”), the Company incurred a net loss and comprehensive loss of $156,981 a decrease of $426,359, approximately 73%, from the net loss and comprehensive loss of $583,340 incurred for the year ended January 31, 2019 (“F-2019”) with the decrease primarily attributable to Deferred income tax recoveries of $259,114 in F-2020 (F-2019 - $25,129) related to flow-through expenditures incurred during the period. As a result of the Company’s limited financial resources and challenging financial markets in the junior resource sector over the past several years, the Company implemented a series of cost management strategies focused on minimizing cash operating costs and continues to manage its cash operating expenditures diligently.

During December 2019, the Company completed a private placement financing (the “2019 Private Placement”) and issued 1,157,935 units (the “2019 Units”) at a price of $0.23 and 4,183,167 flow through shares (the “2019 FT Shares”) at a price of $0.30 (together, the “2019 Private Placement”) for total proceeds of $1,521,275. Each Unit was comprised of one common share and one-half common share purchase warrant (the “2019 Warrants”) with each 2019 Warrant entitling the holder thereof to acquire one common share of the Company at a price of $0.35 at any time prior to June 20, 2021 (the “Warrant Term”). In connection with the 2019 Private Placement, the Company issued 299,517 Finder Warrants (the “2019 Finder Warrants”), paid cash finders’ fees aggregating $86,389 and incurred other issuance costs of $7,500. Each 2019 Finder Warrant entitles the holder to purchase one common share of the Company at an exercise price of $0.35 per share during the Warrant Term. If the closing share price of the Company’s common shares on the TSX Venture Exchange is greater than $0.50 per common share for a period of 20 consecutive trading days at any time during the Warrant Term, the Company may accelerate the expiry date of the Warrant Term by issuing a press release announcing the reduced warrant term whereupon the 2019 Warrants and 2019 Finder Warrants will expire on the 30[th] calendar day after the date of the press release. The proceeds of the financing will be used for working capital and funding of exploration expenditures on the Company’s exploration properties.

During November 2018, the Company completed a private placement financing (the “2018 Private Placement”) and issued 3,636,000 units (the “2018 Units”) at a price of $0.25 and 2,783,333 flow through shares (the “2018 FT Shares”) at a price of $0.30 (together, the “2018 Private Placement”) for total proceeds of $1,744,000. Each Unit was comprised of one common share and one-half common share purchase warrant (the “2018 Warrants”) with each 2018 Warrant entitling the holder thereof to acquire one common share of the Company at a price of $0.40 at any time prior to May 21, 2020 (the “Warrant Term”). In connection with the 2018 Private Placement, the Company issued 418,227 Finder Warrants (the “2018 Finder Warrants”) and paid cash finders’ fees aggregating $113,890. Each 2018 Finder Warrant entitles the holder to purchase one common share of the Company at an exercise price of $0.38 per share during the Warrant Term. If the closing share price of the Company’s common shares on the TSX Venture Exchange is greater than $0.70 per common share for a period of 20 consecutive trading days at any time during the Warrant Term, the Company may accelerate the expiry date of the Warrant Term by issuing a press release announcing the reduced warrant term whereupon the 2018 Warrants and 2018 Finder Warrants will expire on the 30[th] calendar day after the date of the press release. The proceeds of the financing were used for working capital and funding of exploration expenditures on the Company’s exploration properties.

Pursuant to an option agreement entered in November 2017, the Company is acquiring a 100% interest in the Cross Hills Iron Oxide Copper Gold Project (the “Cross Hills Project”), on the island portion of Newfoundland and Labrador. The property is comprised of 509 claims covering 12,725 hectares including 90 claims optioned from the property vendor and an additional 419 claims map staked by the Company, including 16 claims staked in May 2019. The option agreement provides Zonte with the option to acquire a 100% interest in the project by making payments of $55,000 and issuing 1.5 million common shares over three years (the “Cross Hills Agreement”). The claims are subject to a 3% NSR, 2/3rds of which can be purchased for $2,000,000. During the Period and throughout fiscal 2019, the Company’s exploration efforts were primarily focussed on the Cross Hill Project and included ground exploration, comprised of high-resolution ground magnetometer, deep penetrating Induced Polarization and Gravity surveys prospecting, mapping as well as completion of an initial 1,421 metre drill program during the first quarter of Fiscal 2020 and commencement of a follow-up drill program during the fourth quarter of Fiscal 2020. Up to 5,000 metres of drilling are planned for the follow-up drill program, with approximately 1,472 metres completed during the Period.

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

Zonte holds a 100% interest in the MJ Project. The MJ Project is located in the Tintina Gold Belt in the Yukon Territory and is comprised of 172 claims totaling approximately 3,371 hectares. During June 2019, the Company amended the terms of the McConnells Jest property option agreement (the “MJ Agreement”) wherein it agreed to make a final payment of $25,000 and issue 83,333 common shares in order to acquire a 100% interest in the property. Zonte acquired its 100% interest in the project by issuing a total of 1,583,333 common shares of the Company and making payments of $125,000 between January 2017 and June 2019. The Company completed an initial exploration program on the MJ Project during Fiscal 2018 that included mapping, sampling and approximately 1,000 metres (“m”) of drilling.

During Fiscal 2019, the Company staked an additional 33 claims covering 825 hectares increasing the size of its 100% owned Wings Point Project to approximately 2,525 hectares. The Wings Point Project is located on the island portion of Newfoundland and Labrador, about 30 kilometres (“km”) north of Gander.

In Fiscal 2014, Zonte, in collaboration with strategic partners (together the “Applicants”), made applications for three exploration licenses in Colombia covering areas believed to be highly prospective. The areas were confirmed as open ground on the Government of Colombia’s website and the Applicants’ applications have been confirmed as the first received following commencement of the application process. The applications, made to the Agencia Nacional de Mineria (ANM), were followed up with the required supporting documentation but as of this date have not been issued to the Applicants. One of the applications covers areas located between titles covering the Gramalote Deposit which is understood to be held through a joint venture between AngloGold Ashanti (NYSE:AU) and B2Gold (TSX:BTO, NYSE:BTG). The Applicants have completed various steps required to proceed to “Special Court” in order to challenge the Secretaria de Minas, who has not titled the exploration application submitted by the Applicants in July 2013. As reported in a press release dated February 21, 2017, The Special Court has accepted the Applicant’s case as presented and the case will now proceed through the court process. While the Applicants remain committed to pursuing their rights under the application, the timing and outcome of the Special Court process remains unknown as of this date. Upon receipt of the titles by the Applicants and subject to board and regulatory approvals, Zonte can acquire each of the mineral concessions from the Applicants for a specified number of Zonte common shares.

The Company’s objective remains the identification and acquisition of projects that add value while minimizing dilution and maintaining an attractive equity structure that will benefit shareholders as the Company moves forward.

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

1.3 SELECTED ANNUAL INFORMATION

The following table outlines selected financial information for the years ended January 31, 2020, 2019 and 2018. The financial information is extracted from the Company’s audited financial statements which have been prepared in accordance with IFRS.

All amounts are expressed in thousands of Canadian dollars, except per share amounts:

	Year ended January 31	Year ended January 31
	2020	2019	2018
	$	$	$
Revenue	-	-	-
Net loss and comprehensive loss	157	583	594
Basic and diluted loss per share	-	0.01	0.01
Working capital (deficiency)	1,576	1,456	643
Total assets	5,123	3,738	2,045
Non-current financial liabilities	1,064	988	858

The Company has no producing operations and expects to record losses until such time as an economic resource is identified, developed and exploited on one or more of the Company’s properties or the properties are otherwise disposed of at a profit. The Company’s future operations will depend on its ability to access additional equity financing and future losses and asset values will be significantly impacted by any impairment write-downs or abandonment of any resource properties.

1.4 RESULTS OF OPERATIONS - YEAR ENDED JANUARY 31, 2020

During F-2020, the Company incurred a net loss and comprehensive loss of $156,981 a decrease of $426,359, approximately 73%, below the net loss and comprehensive loss of $583,340 incurred for F-2019 with the decrease primarily attributable to Deferred income tax recoveries of $259,114 in F-2020 (F-2019 - $25,129) related to flowthrough expenditures incurred during the period. The Company has no producing operations and its only revenue was interest income of $20,420 and $1,757 earned in F-2020 and F-2019, respectively. The Company’s Operating expenses totaled $440,369 in F-2020, a decrease of $130,702, approximately 23%, over F-2019 expenses of $571,071. The material break-down of Operating expenses for the year ended F-2020 and F-2019 is presented in the following table:

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

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31-Jan 31-Jan
2020 2019
$ $
Operating expenses:
Management and consulting fees 132,660 252,678
Office & general 4,294 2,364
Transfer agent, listing & filing fees 31,510 32,468
Insurance 8,623 8,821
Travel & entertainment - 776
Communications 3,291 4,831
Investor relations &
shareholder communications 8,101 32,944
Legal & audit 22,818 14,029
Depreciation 9,303 5,284
General exploration and due diligence 6,995 4,980
Part XII.6 Tax 5,638 -
Stock based compensation 207,136 211,896
440,369 571,071
----- End of picture text -----

The most significant operating cost expenditures and variances over the prior year are as follows:

• Management and consulting fees of $132,660 represented a decrease of $120,018, approximately 47% below management and consulting fees of $252,678 in F-2019 as the Company maintained minimum staff levels and capitalized $120,000 as exploration expense based on the number of management’s days on-site at the Company’s projects (F-2019 $nil). Payment of a portion of Management and consulting fees continues to be deferred and included in Due to Related Party balances – see section 1.9 ;

• Office and general costs of $4,294 increased by $1,930 over expenditures of $2,364 in F-2019, an 82% increase, over F-2019, as the Company incurred additional incidental expenses while continuing to keep discretionary spending to a minimum, including operating out of rent-free premises since October 2013;

• Transfer agent, listing and filing fees of $31,510 decreased by $958 or 3% over expenditures of $32,468 in F-2019, with fees arising for the approval of the amendment to the MJ Agreement in June 2019 more than offset by reductions in costs related to the exercise of warrants and options in F-2019;

• Insurance expenditures of $8,623 represented a small decrease of $198, approximately 2%, below insurance expenditures of $8,821 in F-2019;

• Travel and entertainment expenditures of $nil decreased by $776 over F-2019, and Investor relations and shareholder communications expenditures of $8,101 decreased by $24,843, a 75% decrease over F-2019 as the Company maintained a minimum level of discretionary travel and investor relations activities while it focused on the exploration program at Cross Hills;

• Legal and audit expenses of $22,818 in F-2020 represented an increase of $8,789, approximately 63%, over F-2019 expenditures of $14,029 as the Company’s more complex financing activities and increased expenditure volumes have resulted in additional audit fees;

• General exploration and due diligence costs increased to $6,995 an increase of $2,015 approximately 40%, over F-2019 expenditures of $4,980 as the Company incurred additional costs supporting the Applicants Special Court proceedings in connection with their Colombia license applications;

• Part XII.6 tax of $5,638 for F-2020 arose from the November 2018 flow-through financing (F-2019 $nil); and

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

• Stock options granted in January 2018, October 2018 and January 2019 resulted in Stock-based compensation expense of $207,136 during F-2020 as compared to $211,896 during F-2019. All the aforementioned stock options vest over an 18-month period over which the value of the stock options is expensed.

1.5 SUMMARY OF QUARTERLY RESULTS

A summary of quarterly results for the most recent eight quarters is included in the table below. The financial information is extracted from or derived from the Company’s unaudited interim financial statements and conform with IFRS. All amounts are expressed in thousands of Canadian dollars, except per share amounts:

Revenue Net loss (income) Net loss (income) per share - basic and diluted Total assets	Fiscal 2020	Fiscal 2020	Fiscal 2020	Fiscal 2020	Fiscal 2019	Fiscal 2019	Fiscal 2019	Fiscal 2019
	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
	Jan-20 - 4 - $ 5,123 $	Oct-19 - (57) - $ 3,649 $	Jul-19 - 119 $ 0.01 $ 3,587 $	Apr-19 - 92 $ - $ 3,660 $	Jan-19 - 157 $ - $ 3,738 $	Oct-18 - 111 $ - $ 1,907 $	Jul-18 - 159 $ 0.01 $ 1,948 $	Apr-18 - 156 $ - $ 2,021 $

As previously noted, the Company has no producing operations and expects to record losses until such time as an economic resource is identified, developed and exploited on one or more of the Company’s properties or the properties are otherwise disposed of at a profit. The Company’s future operations will depend on its ability to access additional equity financing and future quarterly results will be significantly impacted by any impairment write-downs or abandonment of any resource properties as well as the value of stock-based compensation related to the vesting of options in any particular period.

1.6 LIQUIDITY AND CASH FLOWS

On March 11, 2020, the World Health Organization declared a pandemic following the emergence and rapid spread of a novel strain of coronavirus (“COVID-19”). The continued spread of COVID-19 and the actions being taken by governments, businesses and individuals may adversely impact the Company’s operations, including the Company’s ability to raise financing. This has resulted in significant economic uncertainty, of which the potential impact on the Company’s future financial results is difficult to reliably measure.

Liquidity

At January 31, 2020, the Company had cash of $1,877,804 (January 31, 2019 $1,728,925) including cash with banks and on hand of $84,011 (January 31, 2019 - $50,212) and $1,793,793 in cashable guaranteed investment certificates (January 31, 2019 - $1,678,713). The Company had working capital of $1,576,702 as at January 31, 2020 an increase of $120,819 over the Company’s working capital of $1,455,883 at January 31, 2019.

As a mineral exploration company, the Company has no present sources of revenue. During the period, the Company paid its administrative costs, the costs of acquiring exploration properties, and other normal course expenditures, out of the proceeds of the issuance of common shares in previous periods. For the foreseeable future, the Company will remain dependent on the issuance of additional shares to raise funds to continue the exploration on and evaluation of its properties and to fund ongoing operating costs.

Management anticipates that the Company will require additional funds to meet the Company's obligations and budgeted expenditures over the foreseeable future. The anticipated funding shortfall may be met in a number of

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

ways including, but not limited to, the sale of equity or debt securities, further expenditure reductions, asset sales and/or the introduction of joint venture partners. There is, however, no assurance that these sources of funding or initiatives will be available to the Company, or that they will be available on terms which are acceptable to the Company. The ability to raise additional funds through the sale of shares will depend on the state of the gold and other commodity markets and on the state of equity markets in general, as well as the exploration results achieved on the Company’s properties.

Operating Activities

The Company’s cash used in operating activities was $297,394 and $294,520 for F-2020 and F-2019, respectively. During both F-2020 and F-2019, the Company maintained minimum staffing levels and continued its efforts to manage expenditures as explained in the Results of Operations herein. Included in cash used in operating activities are deferrals of related party salaries which provided cash of $80,800 and $91,000 in F-2020 and F-2019, respectively, as well as Accretion of discounted amounts due to related parties which used cash of $3,903 in F-2020 and provided cash of $39,151 in F-2019 as well as changes in working capital which used cash of $154,264 during F-2020 and used cash of $31,629 during F-2019.

During the quarter ended January 31, 2020 (“Q4-20”), the Company’s cash used by operating activities was $115,282 compared to $138,758 used in operating activities during the quarter ended January 31, 2019 (“Q4-19”). Included in cash used in operating activities are deferrals of related party salaries which provided cash of $19,750 in each of Q4-20 and Q4-19 as well as Accretion of discounted amounts due to related parties which used cash of $11,440 and $10,669 in each Q4-20 and Q4-19, respectively, as well as changes in working capital which used cash of $112,314 during Q4-20 and $38,242 during Q4-19.

Financing Activities

The Company’s financing activities provided cash of $1,447,705 during F-2020 while in F-2019 financing activities provided cash of $1,638,204. The December 2019 Private Placement provided net proceeds of $1,427,386 while the November 2018 Private Placement provided proceeds of $1,630,108. Interest expense of $49 arose from a late payment interest charge in the period (F-2019 - $4) while in F-2019, proceeds from the exercise of warrants provided cash of $8,100 (F-2020 - $nil).

During Q4-20 and Q4-19, the Company’s financing activities provided cash of $1,447,723 and $1,630,104, respectively, primarily from proceeds of the December 2019 and November 2018 Private Placements.

Investing Activities

The Company had a net outflow from investing activities of $1,001,432 during F-2020 compared to a net outflow of $308,596 in F-2019. The Company incurred expenditures on exploration and evaluation projects of $1,028,884 in F- 2020, an increase of $755,271, approximately 276% over expenditures of $273,613 in F-2019. Expenditures on Exploration and evaluation expenditures related primarily to exploration on the Cross Hills project during both F- 2020 and F-2019. Property and equipment additions used cash of $4,818 in F-2020, a decrease of $31,922, approximately 87%, over Property and equipment additions of $36,740 in F-2019. Interest income was $20,420 and $1,757 in F-2020 and F-2019 respectively.

During Q4-20, the Company had a net outflow from investing activities of $313,050 an increase of $195,975 over cash outflows from investing activities of $117,075 in Q4-19. The Company incurred expenditures on exploration and evaluation projects of $ 324,046 in Q4-20 an increase of $243,711, approximately 303% over expenditures of $80,335 in F-2019. Property and equipment additions used cash of $4,818 in Q4-19, a decrease of $31,922, approximately 87%, over Property and equipment additions of $36,740 in Q4-19. Interest income was $3,964 and $nil in Q4-20 and Q4-19 respectively.

1.7 CAPITAL RESOURCES AND GOING CONCERN

The Company is in the exploration stage and is subject to the risks and challenges similar to other companies in a comparable stage of exploration. The Company's continuing operations and the underlying value and recoverability of the amounts invested in exploration and evaluation assets are dependent upon the existence of economically

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its exploration property interests, and on future profitable production or proceeds from the disposition of the exploration property interests. To date, the Company has not earned any revenue.

During F-2020 and Q4-20, the Company incurred losses of $157,379 and $3,390, respectively (F-2019 - $583,340; Q4-19 - $157,637) and as at January 31, 2020 had an accumulated deficit of $4,643,360 (January 31, 2019 - $4,485,981). The Company has no income or cash flows from operations and at January 31, 2020 had working capital of $1,576,702 (January 31, 2019 - $1,455,883). The ability of the Company to fulfill its commitments, meet its planned business objectives and continue as a going concern is dependent upon the ability of the Company to raise additional financing and upon successful results from its mineral property acquisitions and exploration activities. There is no assurance that these initiatives will be successful.

In June 2019, the Company amended the remaining terms of the MJ Agreement and made a final cash payment of $25,000 and issued 83,333 common shares in order to acquire a 100% interest in the project. The remaining terms of the Cross Hills Agreement required the Company to issue 900,000 shares of the Company as of January 31, 2020, (400,000 of which were issued in February 2020 and an additional 500,000 by January 2021) and make a final payment of $25,000 by January 2021 in order to acquire a 100% interest in the project. The Company holds a 100% interest in Wings Point. property with minimal holding costs to maintain its interest – see section 1.12 Exploration Properties.

In connection with the issuance of the 2019 FT Shares, the Company is required to incur and renounce an additional $1,132,576 of qualifying expenditures prior to December 31, 2020.

1.8 OFF BALANCE SHEET ARRANGEMENTS

The Company is not a party to any off balance sheet arrangements or transactions.

1.9 TRANSACTIONS WITH RELATED PARTIES

Each of the President and Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) have contractually agreed to an interest free long-term deferral of a portion of their salary or fees and have also voluntarily agreed to an interest free short-term deferral of a further portion of their salary or fees. The salary deferral component extends to a date to be mutually agreed upon between the CEO, the CFO and the Board of Directors and may be settled through a combination of cash and shares. The salary deferral components owed are considered to be interest-free loans provided to the Company.

Included in amounts due to related parties at January 31, 2020 is $812,975 (2019 - $757,975) payable to the CEO, related to a long-term deferral agreement and included in long-term liabilities.

Included in amounts due to related parties at January 31, 2020 is $317,050 (2018 - $279,250) payable to a company controlled by the CFO, including $303,250 (2019 - $267,250) related to a long-term deferral agreement and included in long-term liabilities and $13,800 (2019 - $12,000) related to current amounts due and included in current liabilities.

Notwithstanding the contractual terms of these arrangements, the amounts subject to the long-term deferral agreement are not expected to be paid for a period of approximately one year. Accordingly, these loans have been re-measured to reflect the fair value resulting in a decrease to the liability of $52,723 and a corresponding gain on revaluation of amounts due to related parties, net of accretion expense, in the amount of $3,903 during the year (2019 – Loss of $39,151). The difference between the carrying value and the principle value of amounts due to related parties will be

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

accreted to interest expense over the term of the loans using the effective interest rate method with an implied interest rate of 5%. Each of the President and Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) have contractually agreed to an interest free long-term deferral of a portion of their salary or fees and have also voluntarily agreed to an interest free short-term deferral of a further portion of their salary or fees. The salary deferral component extends to a date to be mutually agreed upon between the CEO, the CFO and the Board of Directors and may be settled through a combination of cash and shares. The salary deferral components owed are considered to be interest-free loans provided to the Company.

1.10 RESULTS OF OPERATIONS – FOURTH QUARTER

During Q4-20, the Company incurred a net loss and comprehensive loss of $2,992 a decrease of $154,645 approximately 98%, over the net loss and comprehensive loss of $157,637 incurred during Q4-19 with the decrease attributable, in part, to Deferred income tax recoveries of $57,033 in Q4-20, an increase of $31,904, approximately 127% over Deferred income tax recoveries of $25,129 in Q4-19, both arising from flow-through expenditures incurred during the respective periods. The Company has no producing operations and its only revenue was interest income of $3,964 and $nil earned in Q4-20 and Q4-19, respectively. The Company’s Operating expenses totaled $52,518 in Q4-20, a decrease of $119,575, approximately 69%, over Q4-19 expenses of $172,093. The material break-down of Operating expenses for the Q4-20 and Q4-19 periods are presented in the following table:

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31-Jan 31-Jan
2020 2019
$ $
Operating expenses:
Management and consulting fees (13,477) 62,764
Office & general 1,213 931
Transfer agent, listing & filing fees 11,828 14,001
Insurance 2,268 2,143
Travel & entertainment - (74)
Communications 958 778
Investor relations &
shareholder communications 2,053 30,099
Legal & audit 10,696 5,729
Depreciation 2,476 2,657
General exploration and due diligence 4,361 3,895
Part XII.6 Tax 2,818 -
Stock based compensation 27,324 49,170
52,518 172,093
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The most significant operating cost expenditures and variances over the prior year are as follows:

• Management and consulting fees of ($13,477) represented a decrease of $76,241, approximately 121%, over Q4-19 as the Company maintained minimum staff levels and capitalized $75,750 as exploration expense based on the number of management’s days on-site at the Company’s projects in F-2020 including an adjustment of $45,750 related to previous quarters in F-2020. A portion of Management and consulting fees continues to be deferred and is included in Due to Related Party balances – see section 1.9 ;

• Office and general costs of $1,213 increased by $282 over expenditures of $931 in Q4-19, a 30% increase, over Q4-19, as the Company incurred additional incidental expenses while continuing keep discretionary spending to a minimum, including operating out of rent-free premises since October 2013;

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

• Transfer agent, listing and filing fees of $11,828 in Q4-20 represented a decrease of $2,173 or 16% over Q4-19 expenditures of $14,001. The decrease in the quarter was primarily attributable to timing differences;

• Investor relations and shareholder communications expenditures of $2,053 decreased by $28,046, 93% over Q4-19 expenditures of $30,099, as the Company’s level of discretionary travel and investor relations activities remained minimal during the period while the Company’s senior management focused their efforts on the field exploration program at the Cross Hills Project. During Q4-19, the Company carried out a discretionary, on-line marketing campaign to increase awareness of the Company’s activities;

• Legal and audit expenses of $10,696 in Q4-20 represented an increase of $4,967, approximately 87%, over F-2019 expenditures of $5,729 as the Company’s more complex financing activities and increased expenditure volumes resulted in increased audit fees;

• Part XII.6 tax of $2,818 for Q4-20 arises from the November 2018 flow-through financing (Q4-19 $nil); and

• Stock options granted in October 2018 and January 2019 resulted in Stock-based compensation expense of $27,324 during Q4-20 as compared to $49,170 during Q4-19. All the aforementioned stock options vest over an 18-month period over which the value of the stock options is expensed.

1.11 PROPOSED TRANSACTIONS

The Company continues to evaluate various mineral properties with a view to acquiring a strategic property in an established mining “friendly” jurisdiction.

As discussed previously herein, during F-2014, Zonte identified and, in collaboration with the Applicants, made applications for three exploration licenses in Colombia, covering areas believed to be highly prospective. The areas were confirmed as open ground on the Government of Colombia’s website and the Applicants’ applications were confirmed as the first received following commencement of the application process. The applications, made to the ANM were followed up with the required supporting documentation but as of this date have not been issued to the Applicants. One of the applications covers areas, confirmed by the Company to be open, located between titles covering the Gramalote Deposit which is understood to be held through a joint venture between AngloGold Ashanti (NYSE:AU) and B2Gold (TSX:BTO, NYSE:BTG). The Applicants intend to continue pursuit of appropriate legal remedies and upon receipt of the titles by the Applicants, and subject to board and regulatory approvals, Zonte can acquire each of the mineral concessions from the Applicants for a specified number of Zonte common shares.

1.12 EXPLORATION PROPERTIES

Wings Point

The Wings Point Project (the “Project”) consists of four mineral exploration licenses covering 101 claims and an area of approximately 2,525 hectares located in the Province of Newfoundland and Labrador in Canada, including 33 claims, approximately 825 hectares , staked in April 2018. The Company’s interests in the Project are summarized as follows:

Name Wings Point North Wings Point Extension	Claims 30 71	Hectares 750 1,775	Ownership interest Direct Direct

The Company acquired a 100% interest in the Wings Point North claims pursuant to an option agreement entered into in December 2010 and amended on October 8, 2013 and June 27, 2014 (the "Wings Point North Option"). The Wings Point North claims are covered by Newfoundland Exploration License 016270M which consists of 30

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

Mineral Exploration claims covering 750 hectares and are subject to a 3% Net Smelter Royalty ("NSR") on production from the Wings Point North License, two-thirds of which can be bought back by the Company for $2,000,000.

Pursuant to the Wings Point North Option agreement, if the Company is able to identify one million ounces of gold, in the Measured and Indicated categories of a NI 43-101report, within the Wings Point North License, an additional 300,000 common shares of the Company will be issued and $6,638 finders' fees will be paid and if the Company is able to identify two million ounces of gold, in the Measured and Indicated categories of a NI 43-101 report, within the Wings Point North License, an additional 400,000 common shares of the Company will be issued and $8,850 finders' fees will be paid.

The Company plans to carry out a four to six-hole drill program on the project during Fiscal 2021 with drilling commencing during May 2020.

The Wings Point Extension is not subject to the NSR arising from the Wings Point North Option Agreement.

McConnell’s Jest Project

The McConnell's Jest Project ("MJ Project") is located in the Yukon Territory about 65 km northeast of the town of Mayo and is comprised of 172 contiguous quartz claims (2019 – 172) covering approximately 3,371 hectares (2019 – 3,371). In June 2019, the Company amended the remaining terms of the MJ Option Agreement and made a final cash payment of $25,000 and issued 83,333 common shares in order to acquire a 100% interest in the project. The following are the amended terms pursuant to which the Company acquired its 100% interes:

• Making aggregate cash payments of $125,000;

• Issuing 1,583,333 common shares of the Company; and

• Paying a 3% NSR on production from the MJ Project, two-thirds of which can be bought back by the Company for $2,000,000.

The MJ Option Agreement was subject to a 10% Finder's Fee. The Finders’ Fee was agreed to be paid out 10% in cash and 90% in common shares. Common shares are to be issued on a 5-day volume weighted average price of the Company's shares preceding the date of the cash payment. During January 2017, 2018 and 2019, the Finder was issued 74,550 common shares, 62,860 common shares and 62,200 common shares respectively. Cash payments to the Finder for January 2017, 2018 and 2019 were nil, $600 and $400 respectively. The Finder also received a cash payment of $250 and 17,708 common shares related to the final option payment in June 2019.

During April 2017, the Company filed the initial National Instrument 43-101 Technical Report for the MJ Project. The Report titled “Geology, Mineralization, Geochemical Survey, and Environmental Survey on the McConnells Jest Intrusion-Related Gold Property”, was completed by Andy Randell, P.Geo who is the qualified person as defined by NI 43-101 and is responsible for the preparation of the Report and the technical disclosures therein. The report is available on www.sedar.com.

At the MJ Project in the Yukon Territory, an initial five-hole Phase 1 drill program was completed in July 2017. The results showed a discovery at the Two-Four target where drill hole MJ-04 interested mineralization in two distinct zones, at the top and bottom of the core including; 20.44 m of 0.72 g/t Au and 20.28m of 0.69 g/t Au, respectively (see October 6, 2017 press release). Mineralization is characterized by parallel quartz veining hosting arsenopyrite +/- pyrite within a granodorite.

The target type at the MJ Project is an Intrusion Related Gold System (IRGS) where mineralization is characterized by vertically parallel gold bearing veins which form a low-grade, high-tonnage target. The project is adjacent to the Dublin Gulch Project of Victoria Gold (VIT-V) where construction of the Eagle Mine is in progress and expected to

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

be in production during the second half of 2019. The Eagle Deposit hosts a mineral reserve of 2.66M ounces of gold at 0.67 g/t Au and is characterized as an IRG System (Victoria Gold’s webpage). Zonte’s MJ Project is similar in age, geology, structural profile and geochemistry to Victoria Gold’s Dublin Gulch project. A well known IRGS is being mined at the Fort Knox deposit in Alaska which is owned by Kinross Gold (K-TSX) and has been in production since 1996. As of December 31, 2014, it still contained a Proven and Probable Mineral Reserve of 2.398M ounces contained within 163.8 Mt at 0.46 g/t Au with cut off grades between 0.19 and 0.35 g/t Au (Kinross’s webpage). The McConnell’s Jest project is an early stage exploration project and currently there’s sufficient evidence to indicate mineralization hosted on the Company’s property is similar to that hosted by either the Dublin Gulch or Fort Knox deposits.

Cross Hills Project

The Cross Hills Project (“Cross Hills”) is located on the island portion of Newfoundland and Labrador, approximately 20 kilometres from the town of Terrenceville and is comprised of 509 claims (January 31, 2019 – 493) covering approximately 12,725 hectares (January 31, 2019 - 12,375), including 90 claims (2018 – 90) optioned from the property vendor and 419 claims (January 31, 2019 – 419) staked by the Company. The Company entered into an option agreement related to the project in November 2017 (“the Cross Hill Agreement”) with an effective date of January 27, 2018 when regulatory approvals for the agreement were obtained. The Company can earn a 100% interest in the Project pursuant to the Cross Hill Agreement by:

• Making aggregate cash payments of $55,000 over a three-year period of which, $30,000 has been paid and $25,000 is payable on or before January 27, 2021;

• Issuing 1,500,000 common shares of the Company over a three-year period of which, 600,000 common shares have been issued, 400,000 common shares were issued February 26, 2020 and 500,000 common shares are due by January 27, 2021; and

• Granting a 3% NSR on production from the Cross Hills Project, two-thirds of which can be bought back by the Company for $2,000,000.

Cross Hills hosts an Iron Oxide Copper Gold system (IOCG) covering 25km along a regional structure break called the Cross Hills lineament. Geologically the area is underlain by series of intrusives, volcanics and sediments. Historical exploration programs were limited; however, the data set provides a solid base to work from. Among the compiled data sets is a previous geophysical interpretation of Geological Survey airborne surveys which highlighted five targets that need detailed ground follow up. In addition, since acquiring the project, Zonte was successful in identifying alteration patterns within the IOCG system as well as confirming a newly discovered large albitite breccia not previously known to exist on the Property.

During the first quarter of fiscal 2020, the Company completed a Phase 1, five-hole, 1,421 m drill program, on the Cross Hills property. Final results from the Phase 1 drill program were announced in June 2019 and were highlighted by Drill hole CH-19-004 which confirmed mineralization peripheral to the magnetic high Dunns Mountain target and included 14% Cu, 15.8 g/t Au and 352 g/t Ag within a 0.43 m interval sitting within a 2.76 m interval which averaged 2.89% Cu, 2.65 g/t Au and 73.3 g/t Ag. As part of an ongoing and aggressive exploration program on the property, additional induced polarization and resistivity surveying was performed to extend the previous gridded area over the area of mineralization intersected in hole CH-19-04 and to the east. Three lines of data were collected confirming multiple anomalies located near mineralization in hole CH-19-004. Further to these results a gravity survey was completed in Q4-20 which identified large gravity anomalies at both the Dunns Mountain and Big K targets. Subsequent to the Period, the Company mobilized a drill to the property and initiated a drill program expected to test K6 as well as follow up on previous drilling at Dunns Mountain. The Company has planned a 2000 metre drill program beginning in the fourth quarter and extending into 2020. Drilling was suspended early April due to the spring thaw. The project experienced significant snow accumulations this past winter and the snow melt necessitated a suspension until the ground conditions improve. A total of three drill holes were completed

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

with the fourth in progress when the drill operations were shut down. The drill rig remains on site and will be restarted shortly when the ground conditions allow. All cores have been sampled and sent to the lab. Results will be released when the data has been received and compiled.

Exploration Property Expenditures

The Company’s Exploration property expenditures for the periods ended January 31, 2020 and January 31, 2019 are summarized below:

	Wings Point McConnel's Jest Cross Hill Total $ $ $
Beginning balance, February 1, 2018 Additions during the period: Acquisition costs Assays & analysis Consulting fees Drilling Exploration support Field supplies Transportation	410,270 846,768 35,000 1,292,038 2,697 209,689 167,071 379,457 274 5,355 8,690 14,319 2,250 - 69,757 72,007 - - 47,668 47,668 - - 37,338 37,338 - - 29,486 29,486 - - 34,628 34,628
	5,221 215,044 394,638 614,903
Ending balance, January 31, 2019 Beginning balance, February 1, 2019 Additions during the period: Acquisition costs Assays & analysis Consulting fees Drilling Exploration support Field supplies Geophysics Transportation & travel Refund of Security Deposits Mineral Incentive Program - Junior Exploration Assistance	415,491 1,061,812 429,638 1,906,941 415,491 1,061,812 429,638 1,906,941 3,558 48,489 18,290 70,337 19,965 4,300 51,514 75,779 - - 64,390 64,390 - - 420,378 420,378 6,983 1,066 320,953 329,002 - - 30,071 30,071 700 - 127,481 128,181 - - 81,849 81,849
	31,206 53,855 1,114,926 1,199,987 - - (11,850) (11,850) - - (103,168) (103,168)
	31,206 53,855 999,908 1,084,969
Endingbalance,January31,2020	446,697 1,115,667 1,429,546 2,991,910

1.13 NEW ACCOUNTING STANDARDS ADOPTED IN THE YEAR

IFRS 16, Leases (“IFRS 16”)

IFRS 16 is effective for annual periods beginning on or after January 1, 2019. IFRS 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessees and lessors. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is twelve months or less or the underlying asset has a low value. As a lessee, an entity recognizes a right-of-use asset representing its right-to-use the underlying asset and a lease liability representing its obligation to make lease payments.

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

The Company adopted IFRS 16 as of February 1, 2020. As of the transition date, the Company had no leases in place and therefore, there was no impact to the financial statements.

1.14 FINANCIAL INSTRUMENTS AND RISK FACTORS

Market risk

(i) Foreign exchange risk

The Company is not exposed to foreign exchange risk at this time.

(ii) Interest rate risk

The Company’s accounts payable and accrued liabilities are non-interest bearing and have contractual maturities of 30 days or less. As at January 31, 2020, the Company’s interest-bearing assets are cash equivalents. The Company’s cash equivalents are cashable Guaranteed Investment Certificates (“GICs”) that earn interest at prevailing short-term interest rates and are reinvested as they mature. During F-2020, the Company earned interest income of $20,420 (F-2019 – $1,757). A plus or minus 1% change in interest rate would not have a material impact on the Company’s statement of loss and comprehensive loss.

(iii) Price risk

The Company is not exposed to any direct price risk other than that associated with commodities and how fluctuations impact companies in the mineral exploration and mining industries as the Company has no significant revenues.

Credit risk

Credit risk is the risk that a customer or third party to a financial instrument fails to meet its commercial obligations.

The carrying amount of financial assets represents the maximum credit exposure. The Company manages credit risk by holding the majority of its cash and cash equivalents with AA rated banks in Canada, where management believes the risk of loss to be low.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due.

The Company manages liquidity risk by maintaining sufficient cash and cash equivalent balances to meet liabilities when due. As at January 31, 2020, the Company had cash and cash equivalents of $1,877,804 (January 31, 2019 - $1,728,925) available to settle current liabilities of $518,970 (January 31, 2019 - $339,157).

Fair value

The recorded value of the Company’s financial assets and liabilities approximate their fair values due to their demand nature and their short term to maturity.

1.15 SHARE CAPITAL

a) Common Shares

The Company has authorized an unlimited number of common shares without par value.

At January 31, 2020, the Company had issued and outstanding 57,209,961 common shares with a recorded value of $6,504,635. At May 26, 2020, the Company had issued and outstanding 57,609,961 common shares with a recorded value of $6,632,635 following the issuance of 400,000 common share of the Company on February 26, 2020 pursuant to the Cross Hills Agreement.

• b) Warrants

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

At January 31 and May 26, 2020, the Company had 3,114,712 warrants issued and outstanding, exercisable into common shares of the Company at an average exercise price of $0.38 per share and subject to an acceleration of the expiry date should the Company’s share price close above a specified minimum share price on the TSX Venture Exchange for a period of 20 consecutive days as follows:

Minimum 20 Day Share Price	Number of Warrants	Maximum Expiry Date	Average Exercise Price
$0.50	878,845	June 20, 2021	$0.35
$0.70	2,236,227	May21,2020	$0.40

In the event the acceleration threshold is met, the expiry date for the warrants impacted will become 30 days following the issuance of a press release by the Company announcing the accelerated expiry.

c) Stock Options

At January 31 and May 26, 2020, the Company had 4,955,000 stock options outstanding, exercisable into common shares of the Company at an average exercise price of $0.20 per share, expiring between December 2020 and January 2024

1.16 RISKS & UNCERTAINITIES

The following are certain factors relating to the business of the Company and are not the only risks and uncertainties facing the Company. Additional risk and uncertainties not currently known to the Company, or that the Company deems immaterial, may also impair the operations of the Company. If any such risks actually occur, the financial condition, liquidity and results of operations of the Company could be materially adversely affected and the ability of the Company to implement its growth plans could be adversely affected.

The following is a description of certain risks and uncertainties that may affect the business of the Company.

Limited Operating History

The Company is a relatively new company with limited operating history and no history of business or mining operations, revenue generation or production history. The Company was incorporated in July 2009 and has yet to generate a profit from its activities. The Company will be subject to all of the business risks and uncertainties associated with any new business enterprise, including the risk that it will not achieve its growth objective. The Company anticipates that it may take several years to achieve positive cash flow from operations.

Exploration and Development Risks

The exploration for and development of minerals involves significant risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. Few properties which are explored are ultimately developed into producing mines. There can be no guarantee that the estimates of quantities and qualities of minerals disclosed will be economically recoverable. With all mining operations there is uncertainty and, therefore, risk associated with operating parameters and costs resulting from the scaling up of extraction methods tested in pilot conditions. Mineral exploration is speculative in nature and there can be no assurance that any minerals discovered will result in an increase in the Company’s resource base.

Substantial Capital Requirements and Liquidity

Substantial additional funds for the establishment of the Company’s current and planned exploration and development programs will be required. No assurances can be given that the Company will be able to raise the additional funding that may be required for such activities, should such funding not be fully generated from operations. Mineral prices, environmental rehabilitation or restitution, revenues, taxes, transportation costs, capital expenditures, operating expenses and geological results are all factors which will have an impact on the amount of additional capital that may be required. To meet such funding requirements, the Company may be required to undertake additional equity financing, which would be dilutive to shareholders. Debt financing, if available, may also involve restrictions on financing and operating activities. There is no assurance that additional financing will

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

be available on terms acceptable to the Company or at all. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its exploration and development programs.

Fluctuating Mineral Prices

The economics of mineral exploration is affected by many factors beyond the Company’s control, including changing production costs, the supply and demand for minerals, the rate of inflation, the inventory of mineral producing Companies, the international economic and political environment, changes in international investment patterns, global or regional consumption patterns, costs of substitutes, currency availability and exchange rates, interest rates, speculative activities in connection with minerals, and increased production due to improved mining and production methods. The metals industry in general is intensely competitive and there is no assurance that, even if commercial quantities and qualities of metals are discovered, a market will exist for the profitable sale of such metals.

Commercial viability of precious and base metals and other mineral deposits may be affected by other factors that are beyond the Company’s control including particular attributes of the deposit such as its size, quantity and quality, the cost of mining and processing, proximity to infrastructure and the availability of transportation and sources of energy, financing, government legislation and regulations including those relating to prices, taxes, royalties, land tenure, land use, import and export restrictions, exchange controls, restrictions on production, as well as environmental protection. It is impossible to assess with certainty the impact of various factors which may affect commercial viability so that any adverse combination of such factors may result in the Company not receiving an adequate return on invested capital.

Regulatory Requirements

The current or future operations of the Company require permits from various governmental authorities, and such operations are and will be governed by laws and regulations governing exploration, development, production, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, site safety and other matters. Companies engaged in the exploration and development of mineral properties generally experience increased costs and delays in development and other schedules as a result of the need to comply with applicable laws, regulations and permits. There can be no assurance that all permits which the Company may require for the facilities and conduct of exploration and development operations will be obtainable on reasonable terms or that such laws and regulation would not have an adverse effect on any exploration and development project which the Company might undertake.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions, 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 exploration and development operations may be required to compensate those suffering loss or damage by reason of the exploration and development activities and may have civil or criminal fines or penalties imposed upon them for violation of applicable laws or regulations. Amendments to current laws, regulation and permits governing operations and activities of mineral companies, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in capital expenditures or exploration and development costs or require abandonment or delays in the development of new properties.

Financing Risks and Dilution to Shareholders

The Company has limited financial resources and no revenues. If the Company’s exploration program on its exploration properties is successful, additional funds will be required for the purposes of further exploration and development. There can be no assurance that the Company will be able to obtain adequate financing in the future or that such financing will be available on favourable terms or at all. It is likely such additional capital will be raised through the issuance of additional equity, which will result in dilution to the Company’s shareholders.

Title to Properties

Acquisition of title to mineral properties is a very detailed and time-consuming process. Title to, and the area of, mineral properties may be disputed. The Company cannot give an assurance that title to its exploration properties will not be challenged or impugned. Mineral properties sometimes contain claims or transfer histories that examiners cannot verify. A successful claim that the Company does not have title to its exploration properties could

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

cause the Company to lose any rights to explore, develop and mine any minerals on that property, without compensation for its prior expenditures relating to such property.

Requirement for Permits and Licenses

A substantial number of permits and licenses will be required to conduct an exploration and development program, such licenses and permits may be difficult to obtain and may be subject to changes in regulations and in various operational circumstances. It is uncertain whether the Company will be able to obtain all such licenses and permits.

Competition

There is competition within the mining industry for the discovery and acquisition of properties considered to have commercial potential. The Company competes with other mining companies, many of which have greater financial, technical and other resources than the Company, for, among other things, the acquisition of minerals claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees and other personnel.

Reliance on Management and Dependence on Key Personnel

The success of the Company will be largely dependent upon on the performance of its directors and officers and the ability to attract and retain key personnel. The loss of the services of these persons may have a material adverse effect on the Company’s business and prospects. The Company will compete with numerous other companies for the recruitment and retention of qualified employees and contractors. There is no assurance that the Company can maintain the service of its directors and officers or other qualified personnel required to operate its business. Failure to do so could have a material adverse effect on the Company and its prospects.

No Mineral Reserves or Mineral Resources

There have been no mineral reserve or mineral resource estimates prepared in respect of the Property to which the Company holds title. Mineral reserves are, in the large part, estimates and no assurance can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery will be realized. Reserve estimates for properties that have not yet commenced production may require revision based on actual production experience. Market price fluctuations of metals, as well as increased production costs or reduced recovery rates, may render mineral reserves containing relatively lower grades of mineralization uneconomic and may ultimately result in a restatement of reserves. Moreover, short-term operating factors relating to the mineral reserves, such as the need for orderly development of the ore bodies and the processing of new or different mineral grades, may cause a mining operation to be unprofitable in any particular accounting period.

Environmental Risks

The Company’s exploration and appraisal programs will, in general, be subject to approval by regulatory bodies. Additionally, all phases of the mining business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of international conventions and federal, provincial and municipal laws and regulations. Environmental legislation provides for, among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in association with mining operations. The legislation also requires that wells and facility sites be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities. Compliance with such legislation can require significant expenditures and a breach may result in the imposition of fines and penalties, some of which may be material. Environmental legislation is evolving in a manner expected to result in stricter standards and enforcement, larger fines and liability and potentially increased capital expenditures and operating costs.

Governmental Regulations and Processing Licenses and Permits

The activities of the Company are subject to Canadian and provincial approvals, various laws governing prospecting, development, land resumptions, production taxes, labour standards and occupational health, mine safety, toxic substances and other matters. Although the Company believes that its activities are currently carried out in accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail production or development. Amendments to current laws and regulations governing operations and activities of exploration and mining, or more stringent implementation thereof, could have a material adverse impact on the business, operations and financial performance of the Company. Further, the mining licenses and permits issued in

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Zonte Metals Inc. Management Discussion & Analysis For the year ended January 31, 2020

respect of its projects may be subject to conditions which, if not satisfied, may lead to the revocation of such licenses. In the event of revocation, the value of the Company’s investments in such projects may decline.

Local Resident Concerns

Apart from ordinary environmental issues, work on, or the development and mining of the Property could be subject to resistance from local residents that could either prevent or delay exploration and development of the Property.

Conflicts of Interest

Certain of the directors and officers of the Company are engaged in, and will continue to engage in, other business activities on their own behalf and on behalf of other companies (including mineral resource companies) and, as a result of these and other activities, such directors and officers of the Company may become subject to conflicts of interest.

Uninsurable Risks

Exploration, development and production operations on mineral properties involve numerous risks, including unexpected or unusual geological operating conditions, rock bursts, cave-ins, fires, floods, earthquakes and other environmental occurrences. It is not always possible to obtain insurance against all such risks and the Company may decide not to insure against certain risks as a result of high premiums or other reasons. Should such liabilities arise, they could have an adverse impact on the Company’s results of operations and financial condition and could cause a decline in the value of the Company’s shares. The Company does not intend to maintain insurance against environmental risks.

Litigation

The Company and/or its directors may be subject to a variety of civil or other legal proceedings, with or without merit.

COVID-19

On March 11, 2020, the World Health Organization declared a pandemic following the emergence and rapid spread of a novel strain of coronavirus (“COVID-19”). The continued spread of COVID-19 and the actions being taken by governments, businesses and individuals may adversely impact the Company’s operations, including the Company’s ability to raise financing and incur sufficient qualifying expenditures within the required timeline for the purposes of its flow-through share commitments. This has resulted in significant economic uncertainty, of which the potential impact on the Company’s future financial results is difficult to reliably measure.

1.17 OTHER INFORMATION

Additional information regarding the Company is available on SEDAR at www.sedar.com and on the Company’s website at www.zontemetals.com.

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