Fortune Bay Corp.


Year ended December 31, 2021

Dated: April 21, 2022

Management's Discussion and Analysis

December 31, 2021

Fortune Bay Corp.

Year ended December 31, 2021


This Management's Discussion and Analysis ("MD&A") provides a review of the performance of Fortune Bay Corp. (the "Company" or "Fortune Bay" or "Spinco") and should be read in conjunction with the audited consolidated financial statements of Fortune Bay (the "Financial Statements") for the years ended December 31, 2021 and 2020, which have been prepared in accordance with International Financial Reporting Standards ("IFRS").

The information presented in this MD&A is as of April 21, 2022. The reporting currency for the Company is the Canadian dollar. All of the financial information presented herein is expressed in Canadian dollars, unless otherwise stated. United States dollars are indicated by the symbol "US$".

This MD&A contains "forward-looking statements" and "forward-looking information" within the meaning of applicable Canadian securities laws that are subject to risk factors set out herein. For further details see the sections in this MD&A titled "Cautionary Note regarding Forward-Looking Statements and Information" and "Risk Factors".


The Company was incorporated on February 4, 2016 as 9617337 Canada Limited under the laws of the Canada Business Corporations Act as part of the transaction (the "Transaction") between kneat.com, inc. ("kneat.com"), Kneat Solutions Limited and the Company. Fortune Bay began trading on the TSX Venture Exchange ("TSX-V") as a new public company on July 4, 2016 under the symbol FOR. As at December 31, 2021, the Company's principal activity is the acquisition, exploration and development of mineral interests. To date, the Company has not generated any revenues from operations and is considered to be in the exploration stage.

On June 27, 2016, the Company completed the Transaction with kneat.com and Kneat Solutions Limited, pursuant to which kneat.com's resource properties and other net assets were spun-out to the Company by way of a court-approved plan of arrangement in Ontario (the "Arrangement").

Pursuant to the Arrangement, shareholders of kneat.com as at the close of business on June 24, 2016 received one and one half common shares of Spinco (a "Spinco Share") in exchange for each three common shares of kneat.com held by them. Upon closing of the Transaction on June 27, 2016, shareholders of kneat.com as at the close of business on June 24, 2016 held 100% of the issued and outstanding Spinco Shares. The assets spun-out to Spinco consisted mainly of the interests in the Goldfields Project, the Ixuatán Project, the Huizopa Net Smelter Royalty ("NSR") in Mexico, and the NSR obtained from the sale of the Dominican Republic properties in 2014 (collectively, "The Exploration Properties Business of Fortune Bay").


Goldfields Project, Canada

The 100% owned Goldfields Project is the Company's most advanced property located in northern Saskatchewan, approximately 13 kilometres south of Uranium City, and approximately 60 kilometres south of the Saskatchewan and Northwest Territories provincial boundary. The Goldfields Project is host to the Box and Athona gold deposits and numerous other gold prospects and occurrences. The Goldfields Project is comprised of 12 mineral dispositions, covering approximately 5,000 hectares, which are in good standing and protected from expiry with assessment credits until at least 2025. Work completed during 2021 will be


Management's Discussion and Analysis

December 31, 2021

filed for assessment to extend the expiry dates. The Goldfields Project is endowed with established infrastructure including existing roads, powerline, and nearby facilities and an airport at Uranium City.

The Goldfields Project has a history of gold production (64,000 oz produced between 1939 to 1942), numerous exploration drilling campaigns (over 1,000 drill holes) and various historical mining studies (including the 2007 Feasibility Study for the Box deposit and the 2011 Pre-Feasibility Study for the Box and Athona deposits that were both prepared in accordance with NI 43-101). The proposed Box open-pit mine and mill development is permitted having received Ministerial approval under the Environmental Assessment Act in May 2008. Goldfields presents numerous exploration opportunities, including the potential to expand the Box and Athona deposits and discover additional mineral resources at several other gold prospects and occurrences.

A new Mineral Resource Estimate ("MRE") was reported for the Goldfields Project with an effective date of March 15, 2021. The new MRE replaces the historical MRE, as outlined in the historical 2011 Pre-Feasibility Study ("2011 PFS") and serves to classify current mineral resources for the Goldfields Project in accordance with National Instrument 43-101 ("NI 43 101").


Management's Discussion and Analysis

December 31, 2021

Highlights of the new MRE include:

  • Indicated mineral resources of 975,000 ounces of gold (22.6 million tonnes at an average grade of
    1. g/t);
  • Inferred mineral resources of 176,000 ounces of gold (6.0 million tonnes at an average grade of
    1. g/t);
  • Reported at a cut-off grade of 0.3 g/t gold and constrained within a conceptual open-pit shell using a gold price of USD$1,600/oz;
  • Based on verified historical drilling data and new geological and mineralization models that incorporate structural controls on gold mineralization;
  • Reconciles to within 1% of historical mine production at the Box deposit;
  • Indicated mineral resources comprise 85% of the estimate, with the remaining 15% classified at an inferred level of confidence;
  • Confirms resource expansion opportunities at both the Box and Athona deposits, and resource upside through further infill and confirmatory drilling.

Franco-Nevada Corporation has a 2% NSR royalty for the Box and Athona deposits. The royalty covers an area of interest 16 kilometres from the external property boundaries of the Box, Athona, Fish Hook and Nicholson Bay claims. The Box area is also subject to a 1.5% NSR on all production beneath the 50 metres below mean sea level elevation on the original Cominco mining claims. This royalty does not apply to the 2011 PFS Box mine plan as the open pit designed does not extend to this depth.

During the year ended December 31, 2021, the Company incurred resource property expenditures of $2,158,486 on the Goldfields Project, primarily related to the Phase 1 resource expansion drilling program. The program commenced in mid-March and was completed in mid-September 2021, including a one-month hiatus during spring break-up. A total of 5,238 metres were completed in 13 drill holes utilizing a diamond drilling rig. Assay results to date have been reported in the Company's related news releases.

During the first quarter of 2022, the Company completed a Phase 2 exploration drilling program at Goldfields. The primary objectives of the program were to test gold exploration targets within the hinge zone of the Goldfields Syncline, between the Box and Athona gold deposits, with the objective of making a new discovery. A total of four drill holes totalling 1,343 metres were completed during January and February between Box and Athona. An additional drill hole was completed at Box in early March, totalling 429 metres, to test a large gap in the historical drill coverage down-dip of the known mineralization, and outside the extents of the current mineral resources. Assay results from the five drill holes are expected during the second quarter of 2022.

On April 11, 2022, the Company announced commencement of a Preliminary Economic Assessment ("PEA") for Goldfields, with results expected early in the fourth quarter of 2022. The Company has appointed Ausenco Engineering Canada Inc. to lead the Study, with SRK Consulting (Canada) Inc. to complete an updated Mineral Resource Estimate ("MRE") and Moose Mountain Technical Services to undertake mine design and mine planning. The PEA aims to define the optimal development path for the Project before initiating further resource delineation drilling and/or development work in support of a possible future Pre-Feasibility Study.

Additional information related to the Goldfields Project, and details regarding the current 2021 MRE, are provided within the National Instrument 43-101 ("NI 43-101") Technical Report titled "Technical Report: Resource Estimate for the Goldfields Project" with an effective date of May 4, 2021. The Technical Report


Management's Discussion and Analysis

December 31, 2021

was authored by Mr. Cliff Revering, P. Eng., and Dr. Ron Uken, PhD, P. Geo. of SRK, both of whom are Independent Qualified Persons in accordance with the requirements of NI 43-101. The Technical Report supports the 2021 MRE for Goldfields, which includes the Box and Athona gold deposits, and is available on SEDAR and the Company's website.

Strike Uranium Project, Canada

The Strike Uranium Project ("Strike") is located in northern Saskatchewan, approximately 25 kilometres west of Uranium City and the Company's flagship Goldfields Project. Strike comprises four mineral dispositions covering an area of approximately 10,000 hectares. The mineral dispositions are in good standing and protected from expiry until at least July 2023.

Clean-energy hydro power stations are available within 10 kilometres of Strike to the north, and regional airports are available at Uranium City and Camsell Portage. Fortune Bay expects to base operations out of Uranium City where the Company has existing operational capabilities, including vehicles, field equipment, storage buildings and core logging and sampling facilities.

Previous work (from the 1950's to 2008) and historical datasets support the Strike's potential for high- grade unconformity-related,basement-hosted uranium deposits in accordance with current exploration models for these types of deposits.

The first recorded uranium exploration in the area was carried out during the 1950's by numerous junior mining companies. This initial work consisted primarily of prospecting and trenching, and numerous uranium occurrences were discovered. One of these occurrences, known as the Tena Occurence, was


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Fortune Bay Corp. published this content on 21 June 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 June 2022 13:04:05 UTC.