KWG Resources : MANAGEMENT’S DISCUSSION AND ANALYSIS – FOR THE YEAR ENDED DECEMBER 31, 2023

MANAGEMENT'S DISCUSSION AND ANALYSIS

This Management's Discussion and Analysis (the "MD&A") should be read in conjunction with the 2023 annual and the interim quarterly financial statements of KWG Resources Inc. ("KWG" or the "Company") all of which are available on the System for Electronic Document Analysis and Retrieval (`SEDAR+`) and can be accessed through the internet at www.sedarplus.ca.

DATE

This MD&A for the year ended December 31, 2023, is dated as of April 26, 2024.

COMPANY OVERVIEW

KWG Resources Inc. (CSE: CACR and CACR.A), which carries on business as The Canadian Chrome Company ("KWG" or the "Company") (The Canadian Chrome Company is an Ontario registered business style of KWG), is an exploration stage company focussed on the acquisition of interests in, and the exploration, evaluation and development of, large-scale mineral deposits of chromite and other base metals and minerals.

The Company is participating in and consolidating the acquisition, delineation and development of large-scale mineral deposits, including chromite deposits, approximately 280 km north of Nakina, in the James Bay Lowlands of Northern Ontario, including 1,024 hectares covered by four unpatented mining claims which contain the Black Horse chromite deposit (the "Koper Lake Project") and 1,241 hectares covered by seven unpatented mining claims which contain the Big Daddy chromite deposit (the "Big Daddy Project"). These deposits are globally significant sources of chromite which may be reduced into metalized iron and chrome or refined into ferrochrome, a principal ingredient in the manufacture of stainless steel. KWG has been active in exploring the James Bay Lowlands since 1993 and discovered diamond-bearing kimberlite pipes near Attawapiskat and five pipes near the Ring of Fire area in 1994. This led to the discovery of the McFaulds Lake copper-zinc volcanogenic sulphide deposits in 2002, which precipitated a staking rush that defined the "Ring of Fire".

Bold Ventures Inc. ("Bold") entered into an option agreement with Fancamp Exploration Ltd. ("Fancamp") entitling Bold to acquire up to 100% of the Koper Lake Project. Through a subsequent option agreement (the "Option Agreement") with Bold, KWG obtained the right to acquire: (i) up to an 80% interest in respect of chromite contained in the Koper Lake Project and (ii) up to a 20% interest in respect of the non-chromite minerals contained in the Koper Lake Project. In 2016, KWG became vested in a 50% operator's interest in the Koper Lake Project which KWG renamed the Black Horse Joint Venture (also known as the Black Horse Project). The 50% joint venture interest includes 10% thereof in respect of chromite and 40% in respect of non-chromite minerals, of which Bold (for itself and its co-participant) is the beneficial owner as KWG funded that share of exploration and development expenses as a carried interest recoverable by capital payback from future production.

Through an agreement with Fancamp, on September 1, 2022, KWG acquired all of the rights, title and interests beneficially owned by Fancamp in and adjacent to the "Koper Lake-McFaulds" mineral properties, subject to Bold's rights under the Option Agreement. For Fancamp's interest in the Koper Lake Project plus $1,500,000 in cash received from Fancamp, KWG (a) delivered to Fancamp a secured convertible promissory note (the "Secured Convertible Promissory Note") in the principal amount of $34.5 million (the "Principal Amount"); (b) issued to Fancamp 4,044,453 warrants (the "Consideration Warrants") to purchase multiple voting shares of KWG ("MVS") at an exercise price of $4.6916 per MVS prior to September 1, 2023, at $4.4783 per MVS from September 1, 2023 until August 31, 2024 or at $4.2651 per MVS (the "Base Conversion Price") thereafter until the expiry date of September 1, 2027; and (c) granted to Fancamp a 2.0% net smelter return royalty (one-quarter of which may be purchased by KWG at any time for $5 million and the next one-quarter of which will be subject to a right of first refusal in favour of KWG) on any direct or indirect interest in the mining claims held by KWG on and after the closing date (the "Royalty").

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MANAGEMENT'S DISCUSSION AND ANALYSIS

The Company also has a 30% joint venture interest in the Big Daddy Project and a 100% interest in 1,033.6 hectares covered by 80 unpatented mining claims (the "Hornby Property") adjoining the southerly boundary of the Big Daddy Project, as well as interests in other mining exploration claims in northern Ontario, most of which are in the Ring of Fire area.

Through Canada Chrome Corporation ("CCC"), a wholly owned subsidiary, the Company has also staked and currently holds numerous mining claims (the "CCC Claims") in Northern Ontario along a 330 km route (the "Transportation and Utility Corridor") from the Ring of Fire area (which includes the Black Horse Project and the Big Daddy Project) to Aroland near Nakina, Ontario where there is access to existing road, railroad and electricity systems that connect to the rest of North America. The CCC Claims were staked in 2009 and 2010 with a view to exploring for, delineating and developing aggregate and other minerals, as well as identifying what KWG believes to be the optimal route for the development and construction of electricity transmission lines to serve the area and a proposed railway, tramway or other form of haulage system. These efforts were also undertaken to assist with Aboriginal consultations including to provide information to affected First Nations communities to help them understand the proposed projects and how those and other projects would affect the communities' asserted and established Aboriginal and treaty rights.

Following staking the CCC Claims, CCC undertook airborne surveys, drilling and other exploration activities over the CCC Claims, spending approximately $16.8 million on such activities and, although

1. did not discover any base metal or precious metal deposits, it did identify numerous prospective deposits of aggregate at various locations within the CCC Claims along the Transportation and Utility Corridor.

In and around that time, Cliffs Chromite Far North Inc. and its affiliates ("Cliffs"), participants in the Big Daddy and other mineral interests in the area, filed an application under the Public Lands Act (Ontario) (the "Public Lands Application") for an easement or right-of-way along much of the same route as the Transportation and Utility Corridor and over parts of the CCC Claims for the development of mines in the Ring of Fire area including the transportation of mine production to existing railroad systems in the Nakina area. Through various affiliates, Cliffs also filed applications under the Aggregate Resources Act (Ontario) for approximately 120 permits for authorization to extract aggregate from pits and quarries along the route. CCC contested the Public Lands Application seeking recognition of CCC's superior pre-emptive rights under the Mining Act (Ontario) to obtain surface rights for access over those lands, other Crown lands and third party lands for the development of mining activities. In conjunction with the foregoing, in 2012, CCC filed 32 applications under the Aggregate Resources Act (Ontario) for permits for a series of aggregate pits and quarries located in various places all along the

1. Claims from the south end near Nakina to the north end near the Ring of Fire area for the extraction of aggregate at various locations along the full length of the route to provide local sources of aggregate with minimized shipping costs for, among other uses, the development of transportation and electricity transmission facilities along the route of the Transportation and Utility Corridor.

After a series of hearings and appeals, it was ultimately determined that Cliffs had the right to apply for such an easement or right-of-way but such surface rights could only be granted with CCC's consent or, after a hearing on notice to CCC to give CCC an opportunity to oppose and/or seek terms and conditions, subject to such terms and conditions as may be ordered accordingly. Following those rulings, Cliffs did not pursue its Public Lands Application and, after CCC demanded and obtained an opportunity to review Cliffs' applications for aggregate permits, Cliffs withdrew its aggregate permit applications, leaving CCC with the CCC Claims and its 32 aggregate permit applications. Eventually, Cliffs sold its interests in the Ring of Fire area. On the other hand, KWG continues to hold interests in the Koper Lake Project and the Big Daddy Project and CCC continues to hold both mineral exploration claims along the route and CCC's 32 aggregate permit applications.

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MANAGEMENT'S DISCUSSION AND ANALYSIS

With those results, a number of principal objectives of KWG having CCC stake the CCC Claims was fulfilled - (i) to identify what KWG believes to be the optimal route for transportation and electricity transmission facilities to serve the Ring of Fire and communities of the area, (ii) to identify local sources of aggregate along the route for the development of those facilities and (iii) to ensure that

1. has the right to receive notice of and to participate in any applications for surface rights over the route. As well, the process confirmed that, with KWG holding interests in the Koper Lake Project and Big Daddy Project, KWG has the same rights as Cliffs had to make applications under the Public Lands Act (Ontario) for surface rights between its mining properties in the Ring of Fire and existing road, railroad and electricity systems in the Nakina area that connect to the rest of North America.
   In addition to seeking to identify mineral and aggregate resources along the CCC Claims, a benefit of CCC holding those claims was to maintain superior surface rights under the Mining Act (Ontario) - the usefulness of which was borne out in the litigation and other forms of contests with Cliffs a decade ago as described above. However, in the intervening years, the Ontario government withdrew that area from further staking under the Mining Act (Ontario) so no new claims could be staked in that area, although existing claims, including the CCC Claims, continued to be valid. Accordingly, even if CCC were not to hold all of those CCC Claims, no one else could stake mining claims over any part of the area, including the area covered by the aggregate permit applications, to gain such superior surface rights over those proposed pit and quarry locations covered by CCC's aggregate permit applications.

Moreover, so long as CCC holds a few strategic claims along the route, CCC would have the right to receive notice of any applications by any third parties for surface rights over those strategic claims and

1. would have the opportunity to negotiate with those third parties or, through the hearing process regarding those surface rights applications, seek an order to include terms and conditions for access and other rights for CCC and KWG regarding use of the surface and extraction of the aggregate. As well, KWG continues to have the right pursuant to the Mining Act (Ontario) to apply on its own under the Public Lands Act (Ontario) for surface rights between its mining properties in the Ring of Fire and the existing road, railroad and electricity transmission systems in the Nakina area that connect to the rest of North America.

For more than a decade, KWG has been advocating concepts of utilizing the CCC Claims and the transportation and utility systems like those proposed to be developed on the CCC Claims along the Transportation and Utility Corridor for the benefit of the local communities and sharing with the affected First Nations of the benefits and ownership of the Ring of Fire's mineral resources. To pursue these concepts, the Company continues its consultations with elders and current and former leaders of First Nations in the James Bay Lowlands area which includes the Ring of Fire where its principal mineral assets are located.

In addition to its mineral claims and aggregate permit applications, KWG has also acquired intellectual property interests, including a method for the direct reduction of chromite to metalized iron and chrome using natural gas and an accelerant. KWG subsidiary, Muketi Metallurgical LP, has acquired two chromite-refining patents in Canada and one in each of the USA, Kazakhstan and South Africa and is prosecuting an application in Turkey.

HIGHLIGHTS

During and subsequent to the year ended December 31, 2023:

• On January 3, 2023, KWG announced the closing on December 30, 2022 of a non-brokered private placement of 66,667 flow-through units (each a "Flow-Through Unit") at a price of $2.25 per Flow-Through Unit for aggregate gross proceeds of $150,000.75. Each Flow-Through Unit is comprised of MVS and one multiple voting share purchase warrant of the Company, with each such warrant enabling the holder to acquire one MVS upon payment of $2.75 at any time before December 30, 2027.

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MANAGEMENT'S DISCUSSION AND ANALYSIS

• On March 30, 2023, KWG announced that it had received from Quantec Geoscience Limited ("Quantec") its final report (the "Quantec Report") on the magnetotelluric survey recently completed over portions of KWG's Black Horse chromite project in the Ring of Fire area of northern Ontario. The Quantec Report, as well as the Summary thereof, were filed by the Company on its profile on SEDAR. The magnetotelluric survey was conducted over project areas including (i) one line over a target one kilometer to the northeast of the Black Horse chromite deposit and (ii) on a grid consisting of four northwest trending, 5km long lines covering a target area 2 to 4 kilometers to the northeast of the Black Horse chromite deposit postulated to contain the fault offset twin of the Black Thor chromite deposit. Those grid lines cover a northeast strike distance of 1.5 km at the confluence of the Koper Lake project claims, the Big Daddy claims and the adjoining 100% KWG-owned Hornby claims to a depth of 2.5 km. Each of these lines delineated distinct domains of low resistivity rock, similar to that found containing the Black Horse chromite deposit. They are capped by the lowest resistivity, which is likely associated with hydrothermal alteration and shearing. The upper surface of these domains ranges from 250 to 900 metres in depth, with width ranging from 1 to 2 km. This is the same range of width as the Ring of Fire intrusion at its northern extremity which contains the Black Thor and Black Label chromite deposits, confirming that these areas of low resistivity (the "Black Horse Targets") comprise viable chromite deposit targets that should be investigated further.
• On April 24, 2023, KWG completed the first tranche of a private placement (the "Private Placement") of up to $3,000,000 of convertible debentures (the "Debentures"). This first tranche was comprised of an aggregate of $959,590 of Debentures. The Debentures are convertible into units (each a "Unit") with a deemed value of $3.00 per Unit at the holder's option at any time prior to payment in cash. The Debentures mature on April 24, 2026 (the "Maturity Date") and bear interest at 5% per annum, accruing daily, compounding annually on the date on which the first Debenture of the Series CD-2023 Debentures is issued (the "Date of First Issuance") and payable on each anniversary of the Date of First Issuance and at the Maturity Date or conversion, such payment to be made at the Company's option either (i), by payment in cash (other than in the event of a conversion) or (ii) by the issuance of Units at a deemed value of $3.00 per Unit. Each Unit will be comprised of one (1) KWG multiple-voting share and one (1) share purchase warrant enabling its holder to acquire one further KWG multiple-voting share from treasury upon payment of $3.00 exercisable at any time on or before the earlier of (i) the third anniversary of the Maturity Date or (ii) two (2) business days after completion of a take- over bid or a merger, amalgamation, arrangement or other form of business combination as a result of which the shareholders of the Company immediately prior to such bid or business combination do not own a majority of votes attaching to the voting securities of the Company or of the resulting issuer or do not have the power to elect a majority of the directors of the Company or of the resulting issuer, as the case may be, after completion of such bid or business combination. On maturity, the Company may pay the principal of the Debentures in cash or, at the Company's option, in replacement debentures having the same terms as the Debentures except (a) the maturity date of the replacement debentures will be the earlier of (i) two (2) years after the maturity date of the Debentures and (ii) two business days after a change of control of the Company, (b) the expiry date of the warrants comprising part of the units issuable for payment of interest or on conversion will be the maturity date of the replacement debentures, and (c) the conversion rate for the replacement debentures will be the lesser of (i) $3.00 per unit and (ii) the 30-day (ending on the maturity date of the Debentures) volume-weighted average trading price of the MVS and the Company's SVS on the Canadian Securities Exchange and any other securities exchange where such SVS and MVS are listed and posted for trading as of the maturity date of the Debentures (the SVS adjusted for the then applicable exchange ratio between SVS and MVS, currently 100 SVS for each MVS). The Corporation paid a finder's fee of 5% of the aggregate of Debentures sourced by finders payable in Units at deemed price of $3.00 per Unit. The proceeds received by the Corporation

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MANAGEMENT'S DISCUSSION AND ANALYSIS

from the sale of the Debentures will be used for the costs and fees associated with the Private Placement, for general corporate overhead expenses including paying current debts and liabilities and for payment of exploration and other operating expenses. All of the securities to be issued pursuant to this tranche of the Private Placement are subject to a four (4) month hold period.

• On May 26, 2023, KWG announced the closing of the second and final tranche of its previously announced private placement of convertible debentures, the first tranche of which closed on April 24, 2023. This second tranche was comprised of an aggregate of $1,414,000 of debentures, of which an aggregate of $1,350,000 of debentures closed in escrow pending receipt of necessary consents and other matters, bringing the total principal amount of debentures issued under the first and second tranches of the private placement to $2,373,590. The terms of the second tranche are identical to those of the first tranche.
• On June 21, 2023, KWG announced the closing of the third and final tranche of its previously announced private placement of convertible debentures, the first tranche of which closed on April 24, 2023. This third tranche was comprised of an aggregate of $15,000 of Debentures, bringing the total principal amount of Debentures issued under the first, second and third tranches of the private placement to $2,388,590. The terms of the third tranche are identical to those of the first tranche.
• On July 28, 2023 the Company announced that it agreed to acquire (the "Acquisition") all of the issued and outstanding special shares of The Magpie Mines Inc. ("Magpie Mines"). A majority of the special shares have the right to elect a majority of the Board of Directors of Magpie Mines. As a term of the Acquisition, metallurgical researcher and advisor Fouad Kamaleddine, Ph.D., and renowned exploration pioneer Peter H. Smith, Ph.D, will continue their incumbency as the directors of Magpie Mines at the pleasure of the Company to supervise the management of the business and affairs of Magpie Mines, including with respect to the activities of the Operator or a new Operator to be appointed, on development of the four known deposits and on development of the metallurgy for recovering the ultra-high-strengthstrategically critical minerals hosted in the deposits. The four deposits are contained within one project located approximately 130 km northnorthwest of Havre St. Pierre in the North Shore area of the St.
  Lawrence River in the Province of Quebec. Rio Tinto's Lac Tio Mine is in the same general area, being approximately 43 kilometers northeast of Havre St. Pierre in Quebec.
• Drs. Smith and Kamaleddine (each a "Vendor") have each agreed to exchange their Magpie Mines special shares for consideration payable in two parts. Initially on the first closing date, KWG will pay $1,000,000 to each Vendor payable, at the option of each Vendor, in (a) convertible debentures having a maturity date (the "Maturity Date") of the earlier of (i) five (5) years after the first closing date and (ii) the date of completion of a Change of Control of KWG, bearing interest on the unpaid principal at the rate of 5% per annum with interest payable annually at KWG's option in cash or units at a value of $3.00 per unit (each unit (a "Unit") being comprised of one multiple voting share in the capital of the Company (each a "MVS") and one warrant to acquire an additional MVS for $3.50 on or before the Maturity Date), payable (principal plus interest) in cash by the Company at any time after the first anniversary of the first closing date on 30 days' notice and convertible (interest and principal) in whole or in part into Units at a rate of $3.00 per Unit (i) at any time at the option of the holder prior to payment in cash or (ii) at the option of KWG on or after the first anniversary of the first closing date or completion of a Change of Control of KWG; (b) 333,333 Units of the Company, or (c) conditional on KWG obtaining consent from Fancamp Exploration Ltd. ("Fancamp") for the creation of Series A Special Shares in the authorized capital of KWG, 333,333 Series A Special Shares of KWG (each a "Series A Special Share") issued at $3.00 per share, each Series A Special Share having a redemption price of $3.00 per share, such redemption price payable in

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MANAGEMENT'S DISCUSSION AND ANALYSIS

cash or in Units, with the holder being entitled to require KWG to redeem the Series A Special Shares for Units at any time prior to payment in cash, and KWG being able to redeem the Series A Special Shares for cash at any time on 30 days' notice or for Units at any time after the first anniversary of the first closing date and KWG being required to redeem the Series A Special Shares for cash or Units on the earlier of (i) five years after the first closing date or (ii) the date of completion of a Change of Control of KWG. For these purposes, a Change of Control will occur on completion of a take-over bid or a merger, amalgamation, arrangement or other form of business combination as a result of which the shareholders of the Company immediately prior to such bid or business combination do not own a majority of votes attaching to the voting securities of the Company or of the resulting issuer or do not have the power to elect a majority of the directors of the Company or of the resulting issuer, as the case may be, after completion of such bid or business combination.

• Each of the Vendors has also agreed to continue as a director of Magpie Mines at the pleasure of the Company. In the event that the Company does not acquire direct or indirect ownership of a majority of the common shares of Magpie Mines within one year after the first closing date of the Acquisition, each of the Vendors has retained the right to tender the consideration received by the Vendor on the first closing date back to the Company within 30 days after such one-year anniversary in exchange for his special shares of Magpie Mines.
• In the event that the Company is able to complete the acquisition of all of the common shares of Magpie and the 2% royalty held by Fancamp on Magpie's project (the "Magpie Royalty") or is able to complete a business combination with or the acquisition of the shares of Fancamp (and, accordingly, indirectly acquire a majority of the common shares of Magpie Mines), in each case on terms and conditions satisfactory to the Company, the Company's agreement with the Vendors provides for a second closing of the Acquisition in which the Company will pay an additional $4,000,000 to each of the Vendors (the "Additional Payment") payable, at the option of each of the Vendors, in (i) convertible debentures of the Company, (ii) units issued by the Company comprised of MVS and warrants or (iii) Series B Special Shares, in each case having substantially the same terms as those available on the first closing date but adjusted to reflect the then current trading price of the MVS of the Company. In addition, the Company will transfer the Magpie Royalty or cause it to be transferred on terms which will result in one quarter of the Royalty being held by each Vendor and one half of the Royalty being held by the Innu of Ekuanitshit First Nation.
• In the event that the Company does not acquire direct or indirect ownership of a majority of the common shares of Magpie Mines within five (5) years after the date of the agreement for the Acquisition, each of the Vendors has retained the right to tender the consideration received by the Vendor on the first closing date back to the Company within 30 days prior to such five-year anniversary in exchange for his special shares of Magpie Mines (each a "Put Right"). In the event that the Company has not completed a direct or indirect acquisition of a majority of the common shares of Magpie Mines prior to such five-year anniversary and the Vendors do not exercise their Put Rights, the Company will retain ownership of the special shares of Magpie Mines without having the obligation to pay the Additional Payments to the Vendors.
• On September 22, 2023, the Company announced it had received from the Ministry of Mining, Exploration Permit PR-23-000242 for the conduct of further drilling at the Black Horse Project. The permit will have a term of 3 years from its issue on September 15, 2023.

OUTLOOK

The purchase of all of the rights, title and interests beneficially owned by Fancamp in and adjacent to the "Koper Lake-McFaulds" mineral properties (also known as the Black Horse Project), located within

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MANAGEMENT'S DISCUSSION AND ANALYSIS

the "Ring of Fire" in the Province of Ontario, advances the consolidation and ownership and control of the chromite interests in that property. Although Bold and its participants continue to hold a small interest in the Black Horse Project, those efforts toward consolidation should make the project more attractive to investors and should facilitate the further exploration and development of the project.

KWG was invited on August 9, 2019, by the Canadian Environmental Assessment Agency (the Agency) to comment on its acceptance of a Project Description for the Marten Falls Community Access Road Project (the Project) submitted by Marten Falls First Nation (the proponent), to which the Company made the following response:

To ensure the economic feasibility of our interests in the chromite discoveries in the Ring of Fire in northern Ontario (by enabling their access to markets), we staked contiguous claims from locations near Nakina, Ontario, to the Ring of Fire, which was completed prior to the Far North Act's promulgation. Our consent to the use of those claims will be forthcoming to any application that enhances and does not frustrate that purpose. The Supreme Court of Canada declined to interfere with the Ontario Court of Appeal's finding that we may not withhold consent to uses not offending our rights under the Mining Act, leaving intact the requirement for our consent to uses which could offend our rights under the Mining Act.

To properly assess that purpose, it is imperative for you to fully understand the results of the research undertaken by CanmetMINING and a study completed for us by China Railway First Survey & Design Institute Group (FSDI) relating to the economics of constructing and operating a railroad line on our claims from Nakina to the Ring of Fire in connection with development of chromite mines in the Ring of Fire.

The prospect for the development of these mines will provide for you important parts to an understanding of the global economic context of the rationale for Ontario providing the Webequie First Nation with a road to them, and the Marten Falls First Nation with bridges across the Ogoki and Albany Rivers for a road link south to Ontario's transportation network, in addition to the ostensible utility for the inhabitants of those communities.

That context is absent from the material filed to date.

Without that holistic context, your consideration of the Project is missing a significant and substantive reason, not being completely informed of an ultimate goal of these disparate and uncoordinated activities that may appear otherwise to be economically unsound but, with that holistic context, have a sound economic basis.

That substantive reason should absolutely command your consideration of the Project, in our view. That substantive reason is that Canada has been demonstrated to host in the Ring of Fire in northern Ontario an extremely high-grade and very thick chromite mineral occurrence of historic proportions which may be beneficiated to supply ferrochrome to a global market for many, many years, even generations and, with our country's wealth of natural gas, be able to do so at a tremendous cost advantage. Only your agency can properly weigh the profound economic imperative that these national endowments may visit on the global order for the benefit of many generations. Only your agency can rationally balance that international strategic currency of our land and people in considering the effect of its exploitation on its locale's society and biosphere.

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MANAGEMENT'S DISCUSSION AND ANALYSIS

Responsible extrapolations from available data suggest that, at current metal prices, there is a staggering value of chromium in situ in the Ring of Fire, that the FSDI railroad design can deliver from it, quantities greater than 100% of the world's present chromium consumption, and that a Canadian gas reduction patented process can produce ferrochrome from those deposits at significantly lower cost than all other sources.

As the world's nascent preference for non-corroding steel increasingly displaces corroding steels in rebar, structural steel and other aspects of infrastructure and building construction, Canada's chromium can become a most important international trade commodity. How that may occur, and the international trade considerations that will accompany that, must form part of your consideration.

These developments, combined with previously published resource estimates, support management's opinion that the chromite deposits of the Ring of Fire may have a very long combined production life. Management believes that this will enable the depreciation and amortization of the cost of an infrastructure asset such as a railroad, tramway or utility corridor over a very long time. When that term is combined with the present historic low cost of the capital required to construct such an undertaking, the unit cost for projected usage can be quite modest when compared to all available alternatives. The test work done to date on the conversion of the Black Horse chromite into a metalized chrome and iron alloy using natural gas continues to encourage KWG's management that an opportunity to create a substantial and globally significant export industry in this key industrial commodity appears achievable. In this context, the creation of the Canada-USA Critical Minerals Task Force can be anticipated to bring attention to not only this export potential, but also to the capacity of these domestic resources to guarantee Canadian and United States national security in chromium and its alloys.

In July, 2021, KWG and its subsidiary, CCC, (a) engaged Rail-Veyor Technologies Global Inc. for the preparation of a design engineering feasibility proposal to construct an ore haulage system to facilitate the direct transport of mine production from underground, across the surface of mining claims staked and assessed in part for that purpose by CCC along a 330-kilometer corridor from the Company's Black Horse project and Big Daddy project area to Aroland (near Nakina, Ontario) where there are road and rail systems that connect to the rest of North America and (b) engaged Cormorant Utility Services Ltd. for the preparation of a design engineering feasibility proposal to construct electrical power transmission lines along the same corridor from Aroland (where there are electrical transmission lines that are part of the Ontario power grid) to the Ring of Fire including transmission lines connecting to several contiguous remote communities.

The power line proposal enabled the Rail-Veyor ore haulage proposal to be prepared on the basis of electricity being supplied at Hydro One power-grid electricity rates, rather than the very-high-costdiesel-generated alternative. The Rail-Veyor ore haulage system will facilitate the direct transport of chromite and other ores from proposed underground mines in the Ring of Fire area, across the surface of mining claims staked and assessed for that purpose by CCC along a distance of 330 kilometers to Aroland (near Nakina, Ontario) where there is access to existing railroad systems that connect to the rest of North America.

In accordance with KWG's instructions, the study of the proposed electricity system was designed to include transmission lines connecting the Ontario Power Grid to several remote communities in the area, as well as to the Ring of Fire area. The transportation study also provides a base for opportunities to expand the transportation facilities to not only move mining production out of the Ring of Fire area but also to move materials and equipment into both the Ring of Fire area and indigenous communities of the area and to include moving people by rail or by road into and out of both the Ring of Fire area and the indigenous communities of the area. These studies were designed and have

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MANAGEMENT'S DISCUSSION AND ANALYSIS

been used to assist with Aboriginal consultations by providing information to help affected First Nations communities understand and consider KWG's proposed projects in the Ring of Fire and how those projects might affect the communities' asserted and established Aboriginal and treaty rights as part of the consultation process.

KWG is very pleased to see the discovery areas directly affected First Nations continue to propound the Environmental Assessments for the transportation infrastructure which, in addition to servicing local communities, is needed for development of the resources in the Ring of Fire area. KWG's management is also very encouraged that the support for the development previously pledged by the governments of Ontario and Canada is now being acted on by the Province of Ontario to underwrite the planning cost of community access roads and a proposed link between them.

In that regard, the Company has proposed that utility corridor assets may be sold to and vested in a trust or other entity for the benefit of members of affected indigenous communities of the area in order that those utility assets can be operated by and for the beneficiaries whose traditional territories host this infrastructure so the provision of this Ring of Fire's mining transportation and electrification requirements can become a substantial and independent indigenous enterprise whose revenues can be used to further develop infrastructure and services for the communities of the area.

KWG's wholly owned subsidiary, CCC, continues to hold the mineral exploration claims along the route which it believes is best suited for the transportation facilities and electrification systems to connect the Ring of Fire area and several First Nations communities in the James Bay Lowlands to the road and railroad systems passing through Nakina and the Ontario power grid also passing through Nakina. CCC also continues to have 32 aggregate permit applications in place for the planned production of aggregate at various locations along that route for the construction of such transportation and electrification systems and other infrastructure developments to serve the local communities. As the electrification and transportation studies were prepared to assist with Aboriginal consultations by providing information to help affected First Nations communities understand and consider KWG's proposed projects in the Ring of Fire and how those and other projects might affect the communities' asserted and established Aboriginal and treaty rights as part of the consultation process, KWG believes that the cost of those studies should qualify for assessment credits with the Ministry of Mines to extend the life of CCC's mineral exploration claims, some of which would otherwise expire at various times throughout this current year. However, there is some doubt whether those costs will be accepted by the Ministry on that basis. To address such possibilities, CCC has requested that some of the CCC Claims which require additional assessment credits to extent their continuity be placed on hold without the requirement to file annual assessment credits. However, as noted above, even if that request is not successful and some of those CCC Claims are lost due to the lack of exploration assessment credits, their utility has been fulfilled, including to identify and, though aggregate permit applications, make available local sources of aggregate along the proposed utility corridor. As well, other CCC Claims will continue into future years and, accordingly, will require that notice be given to CCC of any applications for surface rights over them.

Selected Consolidated Financial Information(1)

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