THEMAC Resources : Earnings Document

THEMAC Resources Group Limited

Form 51-102F1

Management's Discussion & Analysis (MD&A)

For the year ended June 30, 2022

Dated: October 28, 2022

Suite 1500 - 409 Granville Street

Vancouver, BC

Canada V6C 1T2

THEMAC RESOURCES GROUP LIMITED

Management Discussion & Analysis

For the year ended June 30, 2022

This report covers financial and technical information related to the year ended June 30, 2022 and other relevant information available up to the date of this report. This report should be read in conjunction with the audited consolidated financial statements for the year ended June 30, 2022 and 2021 and the related notes.

Financial results are prepared in accordance with International Financial Reporting Standards ("IFRS"). All amounts are stated in Canadian dollars unless otherwise indicated.

Additional information related to THEMAC Resources Group Limited ("THEMAC" or the "Company") is available for view on the Company's website at www.themacresourcesgroup.comand under the Company's profile on SEDAR at www.sedar.com.

Cautionary Note on Forward-Looking Statements

When used in this document, words such as 'estimate', 'expect', 'anticipate', 'believe', and similar expressions are intended to identify forward-looking statements. Such statements are used to describe management's future plans, objects, and goals for the Company, and, therefore, involve inherent risks and uncertainties.

Shareholders and prospective investors should be aware that the forward-looking statements are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking information. By its nature, forward- looking information involves numerous assumptions, inherent risk, and uncertainties, both general and specific, which contribute to the possibility that the predictions, forecasts, projections, and various future events will not occur. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking information whether as a result of new information, future events, or such factors which affect this information, except as required by law.

Description of business and project update

The Company was incorporated on February 24, 1997, under the Business Corporations Act (Yukon), Canada. The Company is in the business of developing its Copper Flat Mine in New Mexico ("Copper Flat" or the "Mine") through its subsidiary New Mexico Copper Corporation ("NMCC").

The Company is a reporting issuer in the provinces of British Columbia and Alberta, Canada, and trades its shares on the TSX Venture Exchange ("TSX-V") under the symbol MAC.

COVID-19

COVID-19 continues to threaten public health and potential disruptions of business operations. The Company remains committed to the safety and health of its employees, their families and their communities, and the Company continues actions to comply with public health orders and recommended best practices.

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THEMAC RESOURCES GROUP LIMITED

Management Discussion & Analysis

For the year ended June 30, 2022

About the Copper Flat Mine

Substantially all the Company's business efforts since the acquisition of Copper Flat have been focused on geologic and engineering studies, securing water rights, and permitting the Mine with a view to bringing it to commercial production.

Copper Flat is a former producing mine located in the Hillsboro Mining District of Sierra County, New Mexico. The mine property is located approximately 150 miles (242 kilometers (km)) south of Albuquerque, New Mexico, and 20 miles (32 km) southwest of Truth or Consequences, New Mexico. The mine property consists of 28 patented lode mining claims, 4 patented placer mining claims, 202 unpatented lode mining claims, 41 unpatented placer mining claims, 9 unpatented mill sites, and 16 fee land parcels in contiguous and non-contiguous land parcels and claim blocks. The surface area of the Company's contiguous and non-contiguous land parcels and mining claims at Copper Flat totals approximately 5,076 acres (1,918 hectares) and the Company controls 100% of the property located within the approximate 2,054 acre (886 hectare) mine area. The project site is characterized as a "brownfields" site as numerous roads, power lines, placer and concentrator tailings, and other surface infrastructure dating from prior mine operations exist on the property.

The Copper Flat deposit is a polymetallic porphyry deposit containing copper, molybdenum, gold, and silver. The mineral grade and recovery have been demonstrated by historic production and metallurgical test work, and through additional assays obtained from the Company's exploration drilling programs. Existing project infrastructure in place at Copper Flat includes a pre-stripped open pit, power lines, water supply well field and freshwater pipeline, access roads, diversion channels, site grading, building foundations, and a tailings storage facility that is planned for replacement. Regional infrastructure in the area surrounding Copper Flat includes interstate and state highways, rail lines, power and communication lines, and several communities. For more information, visit www.themacresourcesgroup.com.

Quintana Minerals Corporation ("Quintana") operated the Mine during the first half of 1982, ending in June 1982 when operations were curtailed due to falling copper prices. During this period, Quintana mined and processed 1.48 million short tons (Mst) of ore to yield 7.4 million pounds ("Mlbs") of copper, 2,301 ounces ("Oz") of gold, and 55,966 Oz of silver. A salable molybdenum product was planned but a molybdenum production circuit was not constructed due to Quintana's short operating period.

The Company carried out exploration activities at Copper Flat from 2009 to 2012 to confirm, characterize, and expand the known extent of the Copper Flat mineralization. NMCC's exploration program included drilling, geologic mapping, geophysical surveys, sampling for mineral content, metallurgical testing, geochemical characterization, geotechnical analysis, and re-assay of samples from prior exploration programs. During this period, the Company completed 47,500 feet of drilling in 48 drill holes. The Company has not performed further exploration activities at Copper Flat after conclusion of the 2012 exploration program.

The Company completed a Feasibility Study in 2013, for restarting the Mine (the "Study").The Study, prepared by M3 Engineering and Technology Corporation ("M3") with input from Independent Mining Consultants and Golder Associates, is summarized in a Canadian Securities Administrators National Instrument 43-101 ("NI 43-101") compliant technical report titled "Copper Flat Project - Form 43-101 Technical Report Feasibility Study", which was issued on November 21, 2013, and is available at www.sedar.com(SEDAR). The Company issued an updated NI 43- 101 compliant technical report on April 9, 2020, to update the project economics and project status

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THEMAC RESOURCES GROUP LIMITED

Management Discussion & Analysis

For the year ended June 30, 2022

(the "Updated Study"). The 2020 report, titled "Copper Flat Project, Form NI 43-101F1 Technical Report Project Feasibility Study Update" is posted on SEDAR.

The Updated Study includes financial analysis on two metal price scenarios: 1) The base case using a long-term copper price of $3.25/lb; and 2) a price upside case using a long-term copper price of $3.60/lb. All other metal prices are held constant between the two scenarios.

The financial return table below is after tax, unlevered and with no escalation in commodity prices.

Base Case: Copper $3.25/lb, Moly $10.50/lb, Gold $1,300/oz; Silver $16.00/oz

Upside Sensitivity: Copper $3.60/lb, Moly $10.50/lb, Gold $1,300/oz; Silver $16.00/oz

With the Updated Study completed, the Company is satisfied Copper Flat continues to demonstrate robust economics which support ongoing advancement of the permitting and development processes.

The Company has identified the following principal steps needed to bring the Copper Flat Mine into commercial production:

Secure Additional Water Rights

Receive Federal Approvals: EIS; Plan of Operations Approval; CWA 404 (list complete subject to conclusion of financial assurance for reclamation and closure)

Receive State Permits: Air Quality; Groundwater Discharge; Mining; Tailings Dam (Air Quality and Groundwater Discharge Permits complete)

Complete Detail Engineering Hire a Work Force Construct Facilities Commence Operations Achieve Commercial Production

During the year ended June 30, 2022, the Company continued to focus efforts on securing a sufficient water supply along with Federal and State approvals to construct, operate, and reclaim the Copper Flat Mine.

Water

Water resources are carefully managed and controlled in the Western United States; in New Mexico, the appropriation of water rights is managed by the New Mexico Office of the State Engineer ("NMOSE").

The Company's hydrogeology consultants have prepared a detailed groundwater model to determine how pumping from the Company's wells might affect the local groundwater table and the Rio Grande over time (the "Hydrogeologic Model"). The Hydrogeologic Model has been reviewed by NMOSE hydrologists and Agency comments have been incorporated into the Hydrogeologic Model. Effects on the level of water in neighboring wells, which is not the same as

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THEMAC RESOURCES GROUP LIMITED

Management Discussion & Analysis

For the year ended June 30, 2022

impairment, have also been projected by the Hydrogeologic Model. Neither the Hydrogeologic Model nor evidence given during the 2016 water rights adjudication hearing indicate any material injury to any other well will occur because of the planned pumping of the Company's water wells. Furthermore, the Company committed in the EIS process to ensure that any well user with demonstrated well impairment will be provided with an alternative water supply at no cost; whether through well deepening (at the cost of the Company) or other appropriate measures.

On September 9, 2010, the Company entered into an option agreement to acquire the water rights related to Copper Flat which comprised of vested and inchoate water rights (collectively, the "Water Rights"). The Company paid US$1,500,000 at the time of the agreement and paid a final amount of US$700,000 in the year ended June 30, 2019. All amounts paid to date relate to vested water rights only, no value was attributed to the inchoate water rights. In addition, as part of the acquisition of the Copper Flat property, the Company also received certain vested and inchoate water rights (collectively, the "Stock Water Rights"). In 2017, the State of New Mexico Third District Court ruled that inchoate Water Rights controlled by the Company were invalid and extinguished as the result of non-use and the failure to pursue a continuous plan of development by prior owners of the water rights; leaving the Company with approximately 862 acre feet of vested Water Rights plus a limited amount of Stock Water Rights. The Company filed an appeal of this decision in March 2018. At the same time, parties opposing the Company's water rights filed cross appeals protesting the Court recognized water rights. The State Court of Appeals, in a ruling issued in September 2021, affirmed the lower court's rulings on the Water Rights and remanded the decision on the Stock Water Rights to the lower court for reconsideration. The Company and other parties to this ruling have elected to not pursue further appeal the State Court of Appeals decision. Written briefings have been filed by all parties in response to the Court of Appeals Mandate for Reconsideration and the Court heard arguments from the parties in June 2022. A decision from the Court on this matter is pending.

Company actions to supplement the vested water rights include acquiring a lease from the Jicarilla Nation to release 3,000 AF of water per annum into the Rio Grande for use in offsetting groundwater pumping effects projected to reach the Rio Grande. The Jicarilla lease has been authorized and approved by the United States Department of Interior and the United States Bureau of Reclamation, however approval from the State is required before the plan may be implemented.

In April 2019, an agreement to lease 2,400 AF of existing water right for use at the Copper Flat Mine was executed. The water is currently permitted in the Lower Rio Grande ("LRG") Basin for multiple purposes, including commercial and industrial use. An application to NMOSE to change the point of diversion to the Copper Flat production wells and the place and purpose of use to the Copper Flat Mine was filed in August 2019. The application has been protested and a hearing on the application has been docketed by the NMOSE Administrative Hearing Unit. The parties to this matter have completed written and oral briefings and hearings on motions and the application are pending.

The Company continues to review options for addressing appeals to existing applications and for securing additional water rights. The Company will continue to make appropriate and timely disclosures as developments occur.

Permitting

Efforts to achieve federal and state approvals for the mine continued throughout the year ended June 30, 2022.

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