AZUCAR MINERALS LTD.

MANAGEMENT'S DISCUSSION AND ANALYSIS

March 31, 2022

INTRODUCTION

This Management's Discussion and Analysis ("MD&A") for Azucar Minerals Ltd. ("Azucar" or the "Company") has been prepared based on information known to management as of May 19, 2022. This MD&A is intended to help the reader understand the condensed consolidated interim financial statements of Azucar.

Management is responsible for the preparation and integrity of the condensed consolidated interim financial statements, including the maintenance of appropriate information systems, procedures and internal controls. Management also ensures that information used internally or disclosed externally, including the condensed consolidated interim financial statements and MD&A, is complete and reliable.

The Company's board of directors follows recommended corporate-governance guidelines for public companies to ensure transparency and accountability to shareholders. The board's audit committee meets with management regularly to review the condensed consolidated interim financial statements, including the MD&A, and to discuss other financial, operating and internal- control matters.

All currency amounts are expressed in Canadian dollars unless otherwise noted.

FORWARD-LOOKING STATEMENTS

Information set forth in this MD&A may involve forward-looking statements under applicable securities laws. Forward-looking statements are statements that relate to future, not past, events. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as "anticipate", "believe", "consider", "attempt", "plan", "estimate", "expect", and "intend", statements that an action or event "may", "might", "could", "should", or "will" be taken or occur, or other similar expressions. All statements, other than statements of historical fact, included herein including, without limitation, statements about the size, timing, and likelihood of success of future exploration on and the development of the Company's properties, statements about INAH clearance, detailed archeological investigations and any archeological salvage plan, statements about the completion of data compilation and targeting to assist future drill programs, statements about the impact of the Plan of Arrangement (as defined below) on Azucar, statements about the Company's belief that the Company's cash resources are sufficient to meet its working capital and mineral exploration requirements for its next fiscal years, and the Company's objectives and expectations regarding its capital resources are forward-looking statements. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: the need for additional financing; operational risks associated with mineral exploration; fluctuations in commodity prices; title matters; environmental liability claims and insurance; political risk in Mexico; crime and violence in Mexico; corruption; mineral reserves and resources; reliance on key personnel; community relations; the volatility of the Company's common share price and volume and other factors beyond the Company's control. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable securities laws.

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There can be no assurance that such statements will prove to be accurate, and future events and actual results could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from management's expectations are disclosed in the Company's documents filed from time to time via SEDAR with the Canadian regulatory agencies to whose policies the Company is bound. Investors are cautioned against attributing undue certainty to forward-looking statements.

The users of this information, including but not limited to investors and prospective investors, should read it in conjunction with all other disclosure documents available under the Company's profile on SEDAR (www.sedar.com) and/or on the Company's website at www.azucarminerals.com.

HIGHLIGHTS

During the quarter, the Company conducted field activities in order to prepare for a drill program. On April 6, 2022, the Company announced that it had commenced drilling the large area of lithocap alteration coincident with the focus area resulting from the mineral chemistry porphyry vectoring study (see Figure below). Key points regarding this new target area included the following:

  • Mineral vectoring study was completed at the CODES Analytical Laboratory of the University of Tasmania and utilized chlorite and epidote samples collected from the El Cobre project earlier this year;
  • Published studies show the effectiveness of this method around the world such as at the giant El Teniente Chile, Resolution, Arizona and Batu Hijau, Indonesia porphyry systems;
  • Study indicates that the El Cobre district likely contains a fertile medium to large sized porphyry system;
  • Most prospective area is located in the centre of the project where there has been little previous exploration drilling;
  • This area coincides with a deep IP geophysical anomaly which does not crop out, within an area of moderate magnetic response. The deep IP anomaly is the deep core to the broad near surface anomaly which encompasses all the currently known areas of porphyry mineralisation on the project;
  • The closest hole to this deep core IP anomaly, which did not test the anomaly, intersected intense quartz pyrite sericite (QSP) phyllic alteration which provides further support to this new target representing a possible porphyry centre;
  • The area also overlaps with a large area of mapped pyrophyllite, an alteration mineral often observed overlying porphyry copper-gold mineralisation;
  • New spectral mineral mapping in this area from sampling during the quarter has further defined a strong alteration signature with clear zoning including a central diaspore- pyrophyllite-shallow alunite/dickite and concentric halos of paragonitic and muscovitic white mica and inner propylitic epidote halo (Figure below);
  • Observed illite crystallinity shows consistent high crystallinity over the entire target. Iron oxide rockchip mapping shows a hematite core zone and a goethite halo as well;
  • The central zones of diaspore are associated with a large 700 metre (E-W) x 550 metre (N-S) pyrophyllite anomaly with sporadic halos of dickite, minor alunite (shallow level) and

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a significant halo (up to 900 metres) of paragonitic illite grading to a circular muscovitic alteration halo bordering the inner epidote propylitic alteration halo.

Background to Mineral Vectoring Study Results

The mineral vectoring study was completed at the CODES Analytical Laboratory of the University of Tasmania and utilized chlorite and epidote samples collected from the El Cobre project earlier this year. The technique employed uses trace element chemistry of epidote and chlorite to detect the likely location of porphyry copper systems in a large altered area. Published studies show the effectiveness of this method around the world such as at the giant El Teniente Chile, Resolution, Arizona and Batu Hijau, Indonesia porphyry systems.

The results of the El Cobre study indicate that the district likely contains a fertile medium to large sized porphyry system. The vectoring was performed using proximitor equations from the Batu Hijau, Ujina, Northparkes and El Teniente porphyry deposits. While the vectoring identified some

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of the known areas of porphyry mineralisation such as Norte, it provided a clear indication that the most prospective area is located in the centre of the project where there has been little previous exploration drilling.

This area coincides with the location of a deep IP geophysical anomaly within an area of moderate magnetic response. The deep IP anomaly is the deep core to the broad near surface anomaly which encompasses all the known outcropping porphyry targets on the project. The closest hole to this deep core IP anomaly, which did not test the anomaly, intersected intense quartz pyrite sericite (QSP) phyllic alteration which provides further support to this new target representing a possible porphyry centre.

At the same time, fluid inclusion work and geologic observations indicate that the level of exposure on the project is at the top of the porphyry environment, indicating potential for improved grades and deep porphyry mineralisation as yet undiscovered on the project. These observations include the identification of a large area of pyrophyllite alteration through previous geologic mapping. Pyrophyllite is an alteration mineral that is formed in porphyry systems and often overlies porphyry Cu-Au mineralisation.

Past drilling campaigns have returned significant porphyry copper and gold assays from multiple targets around this new undrilled target area. The previously tested and known porphyry mineralisation, including the Norte deposit on which the Company has developed a resource (see Recent Updates section, below), appear to mantle and surround this new target area in a roughly arcuate zone of high magnetic response. High grade intersections from these targets highlight the potential for significant mineral endowment and for higher grade porphyry mineralisation include the following (see Figure 1 for locations):

Norte Zone

Hole

From (m)

To (m)

Interval (m)

Au (g/t)

Cu (%)

EC-17-018

222.40

334.50

112.10

1.35

0.48

EC-17-026

543.45

609.90

66.45

2.41

0.61

Including

543.45

569.45

26.00

4.15

1.00

EC-17-029

204.15

314.15

110.00

1.87

0.48

Including

208.15

240.15

32.00

2.57

0.57

and

264.15

300.15

36.00

2.02

0.51

Raya Tembrillo (1.8km South of Norte)

Hole

From (m)

To (m)

Interval (m)

Au (g/t)

Cu (%)

EC-17-037

302.00

320.00

18.00

1.25

0.52

Primo Zone (1.4km South of Raya Tembrillo)

Hole

From (m)

To (m)

Interval (m)

Au (g/t)

Cu (%)

EC-19-086

868.40

918.00

49.60

0.99

0.61

Including

878.40

914.40

36.00

1.10

0.68

Porvenir Zone (2.5 km SE of Norte, 1.0 km west of Primo

Hole

From (m)

To (m)

Interval (m)

Au (g/t)

Cu (%)

EC-17-040

243.00

255.00

12.00

2.43

0.82

EC-18-056

381.50

408.00

26.50

1.72

0.34

All work at El Cobre is being conducted in strict compliance with health and safety regulations, and with a constant focus on protecting the health and safety of employees and protecting and supporting local communities.

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COVID-19 UPDATE

As announced on April 1, 2020, from the early days of the outbreak of the COVID-19 pandemic, the Company has been proactive in working with its employees and consultants to limit the spread of the virus. Azucar's ongoing activities at El Cobre are being conducted in strict compliance with health and safety regulations, and with a constant focus on protecting the health and safety of its employees and protecting and supporting the communities in which it operates. The Company has implemented protocols to enhance its testing capacity, maintain its transparent communication with employees and limit the spread of the virus.

Azucar will continue to maintain high standards and strive to provide a healthy and safe working environment at El Cobre. The Company will continue to monitor the situation closely to respond promptly as needed.

OVERALL PERFORMANCE

Background

The Company is a mineral exploration and development company listed on the TSX Venture Exchange under the symbol "AMZ" and quoted on the OTCQB market place under the symbol "AXDDF". The Company was incorporated on April 10, 2015 under the laws of the Province of British Columbia.

On May 18, 2018, Azucar closed a statutory plan of arrangement (the "Plan of Arrangement") under which its early stage exploration projects, royalty interests and certain other non-core assets (the "Spin-out Assets") were transferred to Almadex Minerals Ltd. (formerly 1154229 B.C. Ltd.) ("Almadex"). Pursuant to the Plan of Arrangement, Azucar shareholders exchanged their existing Azucar common shares and received one "new" common share of Azucar and one common share of Almadex.

In conjunction with the Plan of Arrangement, the Company entered into a subscription agreement and an Investor Rights Agreement with Newcrest Canada Holdings Inc., a wholly owned subsidiary of Newcrest Mining Limited ("Newcrest"). Pursuant to the subscription agreement on May 18, 2018, Newcrest acquired 14,391,568 common shares of Azucar by way of a non-brokered private placement for aggregate gross proceeds of $19,074,425 (the "Newcrest Private Placement") to own 19.9% of the Company. The Investor Rights Agreement provides, among other things, a standstill and lock-up on customary terms and conditions, participation and top-up rights in favour of Newcrest to maintain its pro-rata interest in Azucar, and the right of Newcrest to designate one nominee to the Board of Directors of Azucar.

On October 17, 2018 and April 12, 2019, Newcrest exercised its top-up rights to acquire a further 222,834 and 59,654 common shares of Azucar at a price of $0.5581 and $0.3274 per share respectively. Azucar has not issued any shares from treasury since mid-2019.

Azucar's management team has been focused on exploration and discovery in Mexico, the United States and Canada for the past 35 years. Traditionally, management has managed risk by forming joint ventures in which partner companies explore and develop projects in return for the right to earn an interest in them. This approach has exposed shareholders to discovery and capital gains without as much funding and consequent share dilution as would be required through sole development of exploration properties. In some cases, projects were advanced further when they were considered of such merit that the risk/reward ratio favored that approach. In other cases, if a property was optioned out with unsatisfactory results and returned to management but considered by management to still have merit, the property rights were retained in order to demonstrate further potential. This is the fashion in which the El Cobre Project discovery was made by Azucar, as the underlying project was optioned to four different partners prior to Azucar drilling the higher grade areas at the Norte target in 2016.

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Azucar Minerals Ltd. published this content on 19 May 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 May 2022 21:54:02 UTC.