Cornish Metals : Earnings Document

Form 51-102F1

Interim Management's Discussion and Analysis ("MD&A")

for

Cornish Metals Inc. ("Cornish Metals" or the "Company")

Containing information up to and including June 21, 2023

Description of business

Cornish Metals Inc. ("Cornish Metals" or the "Company") is a Canadian incorporated mineral exploration and development company focused on its mineral projects in Cornwall, United Kingdom. The Company's flagship projects are the past producing South Crofty underground tin mine which is being advanced through to the delivery of a Feasibility Study, and the exploration of mineral properties at United Downs and other localities. The Company acquired rights for its mineral projects in Cornwall in July 2016.

The Company also maintains an interest in exploration properties which are prospective for tin, tungsten and silver in Alaska and nickel in Northwest Territories, Canada, in addition to holding a royalty on two tungsten assets (non- producing) located in the Northwest Territories and Yukon, Canada. Shares of the Company trade on the TSX Venture Exchange ("TSX-V") and the AIM market of the London Stock Exchange Plc ("AIM") under the symbol CUSN.

The following discussion and analysis of the Company's financial condition and results of operations for the three months ended April 30, 2023, should be read in conjunction with the consolidated condensed interim financial statements of the Company for the three months ended April 30, 2023 and April 30, 2022, together with notes thereto. These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and specifically, in accordance with International Accounting Standards 34, Interim Financial Reporting ("IAS 34"). This Interim MD&A contains forward-looking statements that are based on certain estimates and assumptions and involve risks and uncertainties. Actual results may vary materially from management's expectations. Refer to the "Forward-Looking Statements" section which appears later in this MD&A.

Unless otherwise noted, all currency amounts are stated in Canadian dollars ($).

Disclosure of a scientific or technical nature which appears in this MD&A was prepared under the supervision of Mr. Owen Mihalop, CEng, MIMMM. Mr. Mihalop is the Company's COO and a "Qualified Person" as that term is defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") and a Competent Person as defined under the JORC Code (2012).

Highlights for the three months ended April 30, 2023 and for the period ending June 21, 2023

• Drill program nearing completion at South Crofty to collect samples for metallurgical testwork as part of the Feasibility Study, with drilling expected to be finished by the end of June 2023;
• Construction of the water treatment plant ("WTP") substantially complete with commencement of dewatering expected later in summer 2023 at a construction cost estimated to be between £6.5 million and £7.0 million ($11.1 million and $11.9 million at quarter end exchange rate);
• First submersible pump currently being installed in New Cook Kitchen's shaft with the second pump expected to commence installation by the end of June 2023;
• Two single drum winders have been ordered for the shaft re-access work, with the main winder due on site in October 2023 and the emergency winder due for delivery in August 2023;
• Remedial work underway on the south headframe above New Cook Kitchen's shaft in readiness for the installation of the main winder;
• Work on the Feasibility Study continues with completion planned by the end of 2024; and
• Further digitization of historic assay information and data from the metallurgical drilling program is being incorporated into an updated Mineral Resource Estimate with a targeted release date for the end of September 2023.

Cornish Metals Inc.

Interim Management Discussion & Analysis

Strategic review of business

Cornwall mineral properties - background

The Company holds extensive mineral rights in a highly prospective historic mining region in the United Kingdom. These mineral rights cover an area of approximately 15,000 hectares throughout Cornwall, covering many past producing mines, including those located at the South Crofty tin project and at neighboring exploration projects. Through these mineral rights, the Company has exposure to three essential battery / technology / "green" metals: tin, copper and lithium, the latter via a free carried interest with Cornish Lithium on any lithium in brine production from mineral rights owned by the Company.

Southwest England has a rich history in mining high-grade tin lodes, with over 450,000 tonnes of tin being produced from the central mining district (the towns of Redruth, Pool, and Camborne in Cornwall), the majority of which was produced from the South Crofty mine. However, whilst there are over 2,000 documented mines in Cornwall, there has been little modern exploration applied to this region, with the most recent period being in the 1960s when four new mines were discovered and put into production. The recent discovery of high-grade copper and tin mineralization at Carn Brea and United Downs is testament to the exploration potential of the region.

There is strong community and local government support for the development of new mines in Cornwall as evidenced by the grant of the Company's planning permissions and the recent expansion of mining projects in the area. Furthermore, management believes that there has been a recent shift in policy at local and central government levels which has seen growth in support for new mining projects in the UK, as demonstrated by the development of Anglo American's Woodsmith project in North Yorkshire.

Tin, copper and lithium are fundamental to growth in the technology sector and the transition to a low carbon economy with tin being defined as a critical mineral by the UK, US and Canadian governments. There is no primary production in Europe or North America. Independent market analysts forecast growing deficits for the tin, copper and lithium markets.

Tin and copper have shown strong price increases through the past few years as investors anticipate renewed investment into infrastructure, especially electrification of various sectors. These price gains have been scaled back in the past eighteen months, with increased geopolitical uncertainty surrounding events in Russia / Ukraine and China / Taiwan leading to fears of a global recession. It is management's view that this slowdown in demand will only serve to exacerbate the supply side constraints when the global economy recovers.

The Company's 100% interest in the Cornwall mineral projects is held indirectly through South Crofty Limited, which is a wholly-owned subsidiary of Cornish Metals Limited, itself a wholly-owned subsidiary of the Company. The Company's mineral rights in Cornwall are held indirectly through Cornish Minerals Limited (Bermuda), which is a wholly-owned subsidiary of Cornish Metals Limited.

South Crofty tin project - background

The South Crofty tin project is the primary focus for the Company at the present time. South Crofty comprises an underground permission (mine permit) area that covers 1,490 hectares, an area which includes twenty-six past producing mines, allowing potential future operations to a working depth of 1,500 meters below surface. The earliest recorded mine production dates back to 1592, with full-scale mining activities commencing in the mid-17th century. South Crofty closed in 1998 as a result of the tin price collapse of 1985.

The underground permission for the South Crofty tin project was granted in 2013 and is valid until 2071. The Company also holds full planning permission to construct a new process plant which could serve as a central processing facility for any mining project located within reasonable transport distance, including Carn Brea and United Downs. The site is well serviced by power, road and rail infrastructure which will benefit the construction and operation of any future process plant.

An updated JORC (2012) compliant Mineral Resource Estimate was published in June 2021. Furthermore, completion of the 'proof of concept' drill program during 2020 demonstrates management's belief in the exploration potential at South Crofty to materially increase the existing Mineral Resource base.

The proceeds from the £40.5 million fundraise completed in May 2022 which was cornerstoned by Vision Blue Resources (the "Offering"), are being used to advance South Crofty to a potential construction decision expected in around 30 months from closing of the Offering, as described more fully below.

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Cornish Metals Inc.

Interim Management Discussion & Analysis

Planning activities related to the dewatering of South Crofty

The South Crofty mine workings are presently flooded and dewatering activities are required prior to the potential reopening of the mine. In March 2017, a water treatment trial was successfully completed at South Crofty. In October 2017 the Company received, from the Environment Agency, a mine waste permit with water discharge consent that will allow treatment and discharge of up to 25,000m3/day of mine-water, following commissioning of a new WTP which is expected during the summer of 2023. Mine dewatering is expected to take around 18 months after commissioning of the WTP through to the end of 2024.

Treated mine water from the newly constructed WTP will be discharged into the Red River via the Dolcoath Deep Adit. Since South Crofty closed in 1998, untreated mine water has directly entered the river. Dewatering the mine and treating the mine water will therefore have a positive effect on the quality of the Red River.

In previous years, submersible camera surveys of New Cook's Kitchen ("NCK") Shaft (the main access shaft at South Crofty) have been successfully completed demonstrating that the shaft is open to the bottom. The existing guiderails within the shaft have been shown to be sufficiently robust to allow them to be used for the lowering of equipment when dewatering activities commence.

United Downs exploration project

The United Downs exploration project is a near-surface,high-gradecopper-tin discovery, surrounded by four former producing mines located within the historic Gwennap copper and tin mining district in Cornwall. Gwennap was the richest copper producing region in Cornwall (and the world) in the 18th and early 19th centuries, and at that time was referred to as "the richest square mile in the world."

The Company's initial exploration program at United Downs was funded from the proceeds from the AIM listing in February 2021. The program was completed between April 2021 and May 2022 and involved 26 holes being drilled totaling 10,159 meters. Four targets were drill-tested: UD Lode (copper - tin - silver), United Mines (copper - tin - silver), Mount Wellington (zinc - tin - silver) and Trenares Lode (zinc - tin). All assay results have been reported.

Results from the United Downs exploration program confirm management's belief in the potential to develop a Mineral Resource in the United Downs project area, especially the down dip section of the United Mine where high- grade copper, tin and silver grades were encountered. The Company is considering the next steps for advancing the United Downs project.

Carn Brea exploration project

Also using the proceeds from the AIM listing, a further target, Carn Brea, was drill tested between October 2021 and March 2022. Carn Brea is located along the southern boundary of the South Crofty underground permission area. At Carn Brea, eight holes were drilled totaling 2,501 meters. The drill holes confirmed up-dip,near-surface, extensions of the historic Great Flat Lode and discovered tin mineralization in a new target called the 'Wide Formation', inferred to lie parallel to, north of, and beneath the Great Flat Lode. The Great Flat Lode was mined historically over a five kilometer strike length. All assay results have been reported (refer press release dated January 10, 2023).

Management is of the view that there is merit in further exploring the Wide Formation as this discovery is immediately adjacent to the South Crofty tin project. A follow-up drill program is being planned to determine the continuity of mineralization and to better define the geometry and extent of the Wide Formation. This follow-up program is expected to commence at the beginning of July 2023, as soon as the metallurgical drill program as described below is completed.

Agreement with Cornish Lithium

The Company also has exposure to Cornwall's lithium and geothermal potential through its agreement with Cornish Lithium whereby Cornish Lithium has the right to explore the Company's mineral rights in Cornwall for lithium contained in hot spring brines and associated geothermal energy. The Company retains the rights to any hard rock mineralization. Pursuant to these arrangements, the Company receives:

• annual share issuances to the value of US$100,000 in January of each year until January 2026, after which the share payments would increase to US$500,000 per year if Cornish Lithium elects to continue with the lease agreement;
• a 25% free carried interest, up to Bankable Feasibility Study, on Cornish Lithium's first project located on the Company's mineral right areas;
• a 10% free carried interest, up to Bankable Feasibility Study, on any subsequent projects located on the Company's mineral right areas; and

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Cornish Metals Inc.

Interim Management Discussion & Analysis

• a 2% gross revenue royalty from any production of metals from brines by Cornish Lithium and from any geothermal energy produced and sold to the national grid or other system produced from within any of the Company's mineral rights.

Activities update for the three months ended April 30, 2023 and for the period ending June 21, 2023

Construction progress of water treatment plant at South Crofty

Construction progress of the WTP at South Crofty has included various enabling works, including completion of the treated water discharge duct from the WTP and the concrete foundation pad for the WTP itself. The pipelines carrying water from the submersible pumps in NCK shaft to the WTP are also complete.

The WTP comprises nine reaction tanks for increasing and decreasing the pH to precipitate the various metals in solution, and six inclined plate settling tanks (lamella clarifiers) to remove the precipitated solids. All the tanks and clarifiers have been installed, as have the structural steel supports and walkways which provide access to the WTP.

The installation of mechanical, electrical and instrumentation equipment is expected to be completed in the first half of August 2023. Reagent storage, make-up and dosing equipment have been supplied as complete packages from specialist manufacturers.

The building housing the high voltage power supply/sub-station and the variable speed drives required to operate the pumps is complete, and the 11kV power supply is scheduled to be in place by the end of June 2023. A turbine will be added ahead of the discharge point that will generate up to 15% of the electricity required to operate the WTP.

Wet commissioning of the WTP is expected to commence in August 2023, with commencement of mine dewatering expected shortly thereafter.

Overall, the cost of construction for the WTP is expected to be between £6.5 million and £7.0 million ($11.1 million and $11.9 million at quarter end exchange rate).

Installation of submersible pumps

Two submersible pumps manufactured by KSB in Germany are being installed in NCK shaft for the first stage of the two-stage mine dewatering program. The pumps are specialist high head, vertical pumps that will be controlled by variable speed drives to enable the 25,000m3/day pumping rate to the WTP to be maintained as the water level drops and the pumping head increases.

The first pump is being installed in NCK shaft with the second pump expected to commence installation by the end of June 2023.

The pumps will be initially lowered to immediately below the 195 fathom level (360 meters below surface) and suspended from 120 three meter long pipes that will form the temporary rising main. When the water level reaches the 195 fathom level, a permanent set of pumps will be installed at that level. The submersible pumps will then be lowered to the 400 fathom level (approximately 700 meters below surface) for the second stage of dewatering.

Preparation for re-accessing the NCK shaft

Two single drum winders have been ordered for the shaft re-access work, with the main winder being supplied by Siemag Tecberg and an emergency winder being provided by Zitron. The winders are due on site in October 2023 and August 2023, respectively. These winders will enable the NCK shaft to be re-accessed once dewatering activities are underway.

Conveyance and rope attachment packages for both winders are being tendered for design and fabrication, and new winding ropes have been ordered for both machines.

Both sheave wheels and bearing blocks have been removed from the south headframe sitting above NCK shaft. The eastern sheave wheel has been split and the shafts and bearings are now ready for testing.

Pump and pipe handling infrastructure has also been installed around the headframe for the lowering of the pumps and pipes and subsequent dewatering activities. The above water timber compartments in the shaft have been inspected down to No.1 Level, with most sets found to be in good condition.

Metallurgical study drill program underway at South Crofty

A drill program as part of the Feasibility Study was started in July 2022. The drill program is anticipated to require approximately 10,300 meters of drilling and is expected to be completed by the end of June 2023.

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Cornish Metals Inc.

Interim Management Discussion & Analysis

Three drill rigs have been contracted from Priority Drilling Limited, under the supervision of the Company's geological team. Two rigs are drilling from surface and one rig is drilling from underground, collecting samples from the North Pool Zone (eastern section of Mineral Resource), the No. 4 and No. 8 Lodes (central part of the Mineral Resource), Roskear and Dolcoath South (western part of the Mineral Resource). These five main lodes / mineralized zones contain the majority of the mineralized material anticipated to be processed during the first six years of mine life.

All mineralized sample material has been collected and initial metallurgical studies have commenced. The metallurgical studies are expected to be substantially completed by the end of 2023 for inclusion in the Feasibility Study planned for completion by the end of 2024.

The program is designed to collect samples for various metallurgical studies, including XRT ore sorting, flowsheet optimisation and paste backfill studies, as well as collecting assay data to complement the current Mineral Resource Estimate. This testwork should allow acceleration of the Feasibility Study in advance of dewatering the mine and will provide key information for the mineral processing flowsheet.

Preparation of Feasibility Study

Work on the Feasibility Study has been underway since June 2022. In addition to the metallurgical testwork program noted above, the Feasibility Study continues to advance with the following activities:

• Fairport Engineering has been engaged to design the process plant and provide estimated capital and operating costs for the process plant;
• A site investigation for the process plant has been completed by AGS Ground Solutions;
• Numerical modelling of the proposed underground mining methods and stope designs has been completed by MiningOne;
• Geotechnical televiewing has been completed on the majority of mining areas by RobertsonGeo, validating previous known structural data;
• Paterson & Cooke has started concept engineering on paste backfill options as well as undertaking paste backfill testwork;
• Entech Mining has been engaged to provide a study on the refurbishment and recommissioning of NCK and Roskear shafts; and
• Piteau Associates have been engaged to provide hydrogeological studies.

It is planned that the Feasibility Study will be completed by the end of 2024.

Update to Mineral Resource Estimate

The Company's geological team continues to digitize and incorporate historic assay data into the Mineral Resource model. Recent work has focused on No. 1 and No. 2 Lodes, and a new Mineral Resource Estimate including these lodes together with data from the metallurgical drilling program noted above, is targeted for release at the end of September 2023.

The work between now and the end of the summer will concentrate on the "MING" zone, located immediately south of No. 1 and No. 2 Lodes, which comprises the Main, Intermediate, North and Great Lodes, also for inclusion in the Mineral Resource update.

Next steps for the Cornwall mineral properties

As described above, the proceeds raised from the Offering completed in May 2022 are being used to advance the South Crofty tin project to a potential construction decision within 30 months from closing of the Offering (December 2024). The planned use of the proceeds from the Offering is to complete the dewatering program and Feasibility Study at South Crofty, evaluate downstream beneficiation opportunities and commence potential early works on-site in advance of a potential construction decision.

Within 30 months from the closing of the Offering, the Company's plans are as follows:

• Construct WTP and commence dewatering during summer 2023 and thereafter complete the dewatering of the mine within 18 months;
• Complete a drill program for metallurgical studies and to produce an updated JORC (2012) compliant Mineral Resource estimate for a Feasibility Study;
• Complete a Feasibility Study using all reasonable commercial efforts by the end of 2024; and

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