Bluestone Resources : 2022 2nd Quarter MD&A

BLUESTONE RESOURCES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL POSITION AND RESULTS OF OPERATIONS FOR

THE THREE AND SIX MONTHS ENDED JUNE 30, 2022

The following Management's Discussion and Analysis ("MD&A") of the financial condition and results of operations of Bluestone Resources Inc. ("Bluestone" or the "Company") constitutes management's review of the factors that affected the Company's financial and operating performance for the three and six months ended June 30, 2022. The MD&A was prepared as of August 16, 2022, and should be read with the unaudited condensed interim consolidated financial statements and related notes for the three and six months ended June 30, 2022, which can be found along with other information of the Company on SEDAR at www.sedar.com. All figures are in United States ("U.S.") dollars unless otherwise stated. References to C$ are to Canadian dollars. The financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting of International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS").

Forward-Looking Statements

This MD&A contains "forward-looking information" within the meaning of Canadian securities legislation and "forward- looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking statements"). All statements, other than statements of historical fact, that address activities, events, or developments that the Company believes, expects, or anticipates will or may occur in the future including, without limitation: the anticipated approval of an environmental permit amendment by the end of the year and expected project timelines; expectations relating to social acceptance of the Cerro Blanco Project ("Cerro Blanco" or the "Project") and the nature of community opposition; the Company's intention to hire and train local employees and the initiation of training programs; the Project's expected economic benefits to Guatemala; the expected timing of the completion of offsite infrastructure and potential benefits; and the estimated value of the Project.. These forward-looking statements reflect the current expectations or beliefs of the Company based on information currently available to Bluestone and often use words such as "expects", "plans", "anticipates", "estimates", "intends", "may", or variations thereof or the negative of any of these terms.

All forward-looking statements are made based on Bluestone's current beliefs as well as various assumptions made by Bluestone and information currently available to Bluestone. Generally, these assumptions include, among others: the presence of and continuity of metals at the Cerro Blanco Project at estimated grades; the availability of personnel, machinery, and equipment at estimated prices and within estimated delivery times; currency exchange rates; metals sales prices and exchange rates assumed; appropriate discount rates applied to the cash flows in economic analyses; tax rates and royalty rates applicable to the proposed mining operations; the availability of acceptable financing; the impact of the novel coronavirus (COVID-19); anticipated mining losses and dilution; success in realizing proposed operations; and anticipated timelines for community consultations and the impact of those consultations on the regulatory approval process.

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Bluestone Resources Inc.

Management's Discussion & Analysis

For the three and six months ended June 30, 2022

Forward-Looking Statements (cont'd)

Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of Bluestone to differ materially from those discussed in the forward-looking statements and, even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, Bluestone. Factors that could cause actual results or events to differ materially from current expectations include, among other things: risks related to increasing community opposition to the Project and its effect on permitting and Project timelines; potential changes to the mining method and the current development strategy; risks and uncertainties related to expected production rates; timing and amount of production and total costs of production; risks and uncertainties related to the ability to obtain, amend, or maintain necessary licenses, permits, or surface rights; risks associated with technical difficulties in connection with mining development activities; risks and uncertainties related to the accuracy of mineral resource estimates and estimates of future production, future cash flow, total costs of production, and diminishing quantities or grades of mineral resources; changes in Project parameters as plans continue to be refined; title matters; risks associated with geopolitical uncertainty and political and economic instability in Guatemala; risks related to global epidemics or pandemics and other health crises, including the impact of the novel coronavirus (COVID-19); risks and uncertainties related to interruptions in production; risks related to Project working conditions, accidents or labour disputes; the possibility that future exploration, development, or mining results will not be consistent with Bluestone's expectations; uncertain political and economic environments and relationships with local communities and governmental authorities; risks relating to variations in the mineral content and grade within the mineral identified as mineral resources from that predicted; variations in rates of recovery and extraction; developments in world metals markets; and risks related to fluctuations in commodity prices and currency exchange rates. For a further discussion of risks relevant to Bluestone, see "Risk Factors" in the Company's annual information form for the year ended December 31, 2021, available on the Company's SEDAR profile at www.sedar.com.

Any forward-looking statement speaks only as of the date on which it was made, and except as may be required by applicable securities laws, Bluestone disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results, or otherwise. Although Bluestone believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance, and accordingly, undue reliance should not be put on such statements due to their inherent uncertainty. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements.

Qualified Person

The scientific and technical disclosure in this MD&A has been reviewed and approved by David Cass, P.Geo., Vice President Exploration, who is a Qualified Person as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("N.I. 43-101").

Overview

Bluestone is a Canadian-based precious metals exploration and development company focused on opportunities in Guatemala. The Company's flagship asset is Cerro Blanco, a near surface mine development project located in Southern Guatemala in the department of Jutiapa. The Company's head and registered office is located at 2000 - 885 West Georgia Street, Vancouver, BC, V6C 3E8. The Company trades under the symbol "BSR" on the TSX Venture Exchange ("TSXV") and "BBSRF" on the OTCQB.

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Bluestone Resources Inc.

Management's Discussion & Analysis

For the three and six months ended June 30, 2022

Highlights for the Three Months Ended June 30, 2022

• On June 6, 2022, the Company provided the market with an update on Cerro Blanco, which adjusted previously communicated development timelines. Cerro Blanco activities were reduced to preserve capital until the environmental permit amendment is received, which is more reflective of a traditional approach to development projects.
• On April 6, 2022, the Company filed the N.I. 43-101 Technical Report and Feasibility Study on Cerro Blanco. The Company also announced the appointment of Mr. Robert Gill, P.Eng. as Vice President and Managing Director, Guatemala.

Project Updates

Cerro Blanco Gold Project

The Company has one principal mining property interest, namely Cerro Blanco. Elevar Resources, S.A. ("Elevar"), formerly Entre Mares de Guatemala S.A., a wholly-owned subsidiary of the Company, is the 100% owner of Cerro Blanco. An exploitation license for Cerro Blanco was granted in 2007. The Company is in the process of amending Cerro Blanco's environmental permit to capture the change to a surface mining method.

Permit amendment application

The Company submitted the permit amendment application for the change in mining method in November 2021. The amendment application is a comprehensive document that covers all aspects of Cerro Blanco in detail, building on the historical data and the previously approved 2007 Environmental Impact Assessment, to incorporate the open pit mining method. While aspects of Cerro Blanco's layout have increased in size, fundamental design characteristics remain unchanged,

including the processing plant, filtered "dry stack" tailings, water management infrastructure and other facilities. During the

three months ended June 30, 2022, meetings were held with Guatemalan national authorities to discuss the progress of the permit amendment application. The Company anticipates receiving the approval of the environmental permit amendment by the end of the year.

Project timelines

The Company has progressed project finance discussions with streamers, commercial banks, and private equity groups. Based

on the initial indications that have been received, the availability of funding is contingent on the approval of the environmental permit amendment. As a result, the Company will wait to receive the permit amendment before committing capital to long-lead items, detailed engineering and further training programs for the construction phase.

Community relations

Progress to date from site development activities and the advancement of the environmental permit amendment has resulted in a continued increase in anti-mining activity, which is not uncommon in Guatemala. This anti-mining opposition is primarily based from outside of the region of the project and it is the Company's view that in some circumstances their activities lack legal basis. The Company does not believe that these anti-mining and anti-development groups represent the underlying local stakeholder sentiment toward the project. The Company will continue to advance its community engagement and socialization efforts to safeguard social acceptance for the development of Cerro Blanco. The Company is committed to demonstrating responsible mining practices and formalizing social acceptance to continue advancing the project. Maintaining and building social acceptance in support of achieving the environmental permit amendment by year-end remains the main objective of the Company.

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Bluestone Resources Inc.

Management's Discussion & Analysis

For the three and six months ended June 30, 2022

Project Updates (cont'd)

Bridge

Environmental, forestry, and construction permits for the new bridge were received from the Guatemalan authorities. Construction of the new bridge is underway with earthworks and pile installation nearing completion. Unfortunately, a severe weather incident occurred in June and washed out the existing bridge along with five other bridges in Guatemala. In addition to six bridges being totally destroyed, there was much destruction to infrastructure around the country, including nine other bridges being severely damaged.

Due to the impact of the storm event, the construction of the new bridge has been put on hold until design specifications can be validated for the current conditions. Additional studies and reviews are expected to be completed in Q3 2022 to determine a path forward. This is not expected to impact the Cerro Blanco project timeline.

Procurement and engineering

Procurement activities progressed during the three months ended June 30, 2022, with firm pricing being received for major equipment such as the mining fleet, grinding mills, and filter presses. Pricing received to date has been in line with the capital estimates in the Feasibility Study. With the work achieved to date, the Company is positioned to initiate detailed engineering once the permit amendment has been approved.

Mita Geothermal

The Company owns a 100% interest in Mita Geothermal through its wholly-owned subsidiary, Geotermia Oriental de Guatemala, S.A. ("Geotermia"). Mita Geothermal is a geothermal energy resource located adjacent to Cerro Blanco and is 7 kilometers from the Pan American Highway near the town of Asuncion Mita, in the region of Jutiapa in Guatemala. In November of 2015, the Government of Guatemala granted Geotermia a 50-year license to build and operate up to a 50- megawatt geothermal plant.

In line with Bluestone's commitment to responsible development and reducing our carbon footprint with the development of the mine, the Company undertook additional work on the Mita Geothermal project in 2021. The Company completed a scoping study that incorporated a review of the historical data and testwork completed on the project. An updated reservoir calculation was completed that estimated a reserve capacity of over 20 MW. The scoping study focused on several different sizing scenarios ranging from 5 MW to 20 MW, and the results highlighted an economic project with an after-tax internal rate of return of over 15%. Additional work included geological and geophysical surveys to further refine injection well locations alongside the proven production wells.

It is currently forecasted that Guatemala's energy matrix will transition to a more renewable mix as Guatemala has stated it is

promoting more renewable energy usage and expanding the regional market. It is expected that greater private sector engagement will carry out projects of generation and transmission through the development of public-private partnerships. The Company continues to evaluate advancement options for Mita Geothermal as these developments occur.

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Bluestone Resources Inc.

Management's Discussion & Analysis

For the three and six months ended June 30, 2022

Results of Operations for the Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021

The Company's net loss for the three months ended June 30, 2022, totaled $8,317,451 or $0.06 per share as compared to a net loss of $7,537,260 or $0.05 per share for the three months ended June 30, 2021. Significant expenditures and variances are as follows:

	Three Months Ended	Three Months Ended	(Increase) Decrease in
	June 30, 2022	June 30, 2021	Net Loss
Exploration and evaluation expenses (1)	$5,745,900	$5,158,765	($587,135)
General and administration
Advertising and promotion	45,818	69,497	23,679
Corporate listing and filing fees	17,509	13,080	(4,429)
Office and general	378,642	320,997	(57,645)
Professional fees	247,670	108,669	(139,001)
Salaries and wages	873,399	779,708	(93,691)
Share-based compensation	229,370	481,061	251,691
	(7,538,308)	(6,931,777)	(606,531)
Interest income	62,343	103,473	(41,130)
Finance expenses	(78,265)	(4,858)	(73,407)
Accretion expense	(112,185)	(105,254)	(6,931)
Other expenses	(106,743)	(21,385)	(85,358)
Foreign exchange loss	(153,318)	(469,303)	315,985
Loss before income tax	(7,926,476)	(7,429,104)	(497,372)
Income tax expenses	(390,975)	(108,156)	(282,819)
Net loss	($8,317,451)	($7,537,260)	($780,191)

1. Exploration and evaluation expenses for the three months ended June 30, 2022 and 2021, were for the following:

	Three Months Ended Three Months Ended June
	June 30, 2022	30, 2021
Cerro Blanco general and exploration expenditures	$3,473,451	$2,750,417
Cerro Blanco Feasibility Study, preliminary economic
assessment and pre-development expenditures	1,759,664	1,968,715
Corporate social responsibility and community relations	424,939	362,544
Mita Geothermal evaluation	4,821	11,464
Depreciation	83,025	65,625
	$5,745,900	$5,158,765

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