Goldsource Mines : GXS 2022 Q2- MDA

GOLDSOURCE MINES INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

QUARTERLY HIGHLIGHTS

JUNE 30, 2022

GOLDSOURCE MINES INC.
INTERIM MANAGEMENT'S DISCUSSION AND ANALYSIS - QUARTERLY HIGHLIGHTS
QUARTER ENDED JUNE 30, 2022	TSX.V:GXS

1. OVERVIEW

Goldsource Mines Inc. (the "Company" or "Goldsource") is a Canadian resource company engaged in exploration activities. It is headquartered in Vancouver, BC, and its common shares trade on the TSX Venture Exchange ("TSX‐V") under the symbol "GXS" and on the OTCQX under the symbol "GXSFF". This Interim Management's Discussion and Analysis - Quarterly Highlights ("Interim MD&A") is an overview of all material information about the Company's operations, liquidity, and capital resources for the three and six months ended June 30, 2022. The Interim MD&A should be read in conjunction with the unaudited condensed consolidated interim financial statements for the three and six months ended June 30, 2022 and 2021 and the related notes contained therein which have been prepared under International Accounting Standard 34 - Interim Financial Reporting as issued by the International Accounting Standards Board. The following should also be read in conjunction with the audited consolidated financial statements for the years ended December 31, 2021 and 2020 and the related notes contained therein. Additional information related to the Company is available for view on SEDAR at www.sedar.comand on the Company's website www.goldsourcemines.com.

The first, second, third, and fourth quarters of the Company's fiscal years are referred to as "Q1", "Q2", "Q3", and "Q4", respectively.

The effective date of this Interim MD&A is August 24, 2022. This Interim MD&A contains forward looking information. Reference to "7. Cautionary Statements and Disclaimers" is advised.

All amounts are in Canadian dollars unless noted.

2. HIGHLIGHTS

The Company's key events and highlights during the first half ("H1") of 2022 and to date include the following:

1. Eagle Mountain Gold Project Overview

The Company's focus is the Eagle Mountain Gold Project ("Eagle Mountain" or "Project") for which it has a 100% interest in the Eagle Mountain Prospecting License ("EMPL") and the Kilroy Mining Permit (collectively the "Property"), save and exempt all claims lawfully held and occupied. The Property consists of an area of approximately 5,050 hectares (12,480 acres) in central Guyana, South America. 4,784 hectares (11,860 acres) of the Eagle Mountain Property relate to the Eagle Mountain Prospecting License while 266 hectares (660 acres) relate to the Medium Scale Mining Permit held by Kilroy Mining Inc. ("Kilroy"), a Guyanese Company, on which Stronghold Guyana Inc. ("Stronghold"), a wholly‐owned subsidiary of Goldsource, has a long‐term lease with a 2% net smelter return royalty. Within the EMPL there are third‐party small‐scale claims ("Artisanal Claims") that predate the Company's Property. The Artisanal Claims that are licensed or recommended for license total approximately 123 hectares (305 acres). Additionally, one medium scale permit (referred to as Bishop Growler) is located in the central part of the EMPL northeast of the Eagle Mountain resource area. This was under an option and purchase agreement by Goldsource in 2018/19 that has since expired. Goldsource constantly reassesses the size of its land package as exploration work is completed.

On April 7, 2022, the Company announced an updated Mineral Resource Estimate ("2022 MRE"). The 2022 MRE reflected the Company's infill and expansion drilling completed in 2021 and is comprised of an estimated 31.1 million tonnes ("Mt") grading 1.18 grams per tonne ("gpt") gold for 1,183,000 oz of gold in Indicated Resources, and 18.4 Mt grading 0.98 gpt gold for 582,000 oz of gold in Inferred Resources. The 2022 MRE includes the Eagle Mountain and Salbora deposits in addition to the Toucan and Powis prospects. Eagle Mountain and Salbora, in particular, feature gold mineralization starting at surface in saprolite (soft rock, meaning the weathered, oxidized layer) and extending into the underlying fresh rock. The 2022 MRE was estimated at 0.30 gpt gold cut‐off grade for saprolite and 0.50 gpt gold cut‐off grade for fresh rock. It was defined by a total of 772 core holes for 75,430 metres drilled, which includes infill and exploration drilling up to December 31, 2021.

A description of the resource methodology for the 2022 MRE is detailed in the Company news release dated April 7, 2022, and in a report titled "Eagle Mountain Gold Project, Potaro - Siparuni Region Guyana, NI 43‐101 Technical Report", dated May 24, 2022 with an effective date of April 5, 2022 located on the Company's website and on SEDAR.

The 2022 MRE will be used as a basis for a Pre‐Feasibility Study ("PFS") focusing on establishing shallow, low strip open‐pittable mineral reserves. Opportunities for a phased development plan will be evaluated, specifically with initial and baseline production provided by soft‐ rock saprolite material followed by an expansion to incorporate the fresh rock mineralization. The PFS is expected to be delivered in H1, 2023.

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GOLDSOURCE MINES INC.
INTERIM MANAGEMENT'S DISCUSSION AND ANALYSIS - QUARTERLY HIGHLIGHTS
QUARTER ENDED JUNE 30, 2022	TSX.V:GXS

The 2022 program includes drilling and generative exploration activities as well as a significant increase in technical work to progress the pre‐feasibility study. The Company's 2022 exploration and engineering objectives include:

1. An initial 11,000‐metre drilling program ("2022 ‐ Phase 1"), which will include testing of known target areas along the Salbora‐Powis trend; and infill drilling of the Eagle Mountain deposit to upgrade new inferred mineralization.
2. The re‐initiation of a generative exploration program, inclusive of geochemistry, and trenching, among other techniques, to add to the pipeline of prospective greenfield gold targets for follow‐up drilling.
3. Complete and compile additional engineering data, including metallurgical, hydrogeology, geotechnical, and environmental to support the completion of a prefeasibility study focusing on establishing potential reserves in shallow and low strip ratio open pits.

Generative exploration has seen a lesser focus in recent years as the Company's activities centred on expanding the mineral resources of the Eagle Mountain and Salbora deposits. Consequently, there remains a number of under‐explored areas, including several with historical artisanal workings on the western and eastern sides of the EMPL. The eastern side of the property has seen little historical exploration by Goldsource and prior operators. A Phase‐2 drill program in 2022 will be devised based on success with the Phase‐1 program and the results of generative exploration.

Based on the 2022 MRE1 announced on April 7, 2022, the Company's mineral resources at the Eagle Mountain Project are as follows:

Classification	Tonnes (000 t)		Gold (gpt)		Ounces Au (oz)
		Indicated
Saprolite & Transition	12,400		1.04		417,000
Fresh rock	18,700		1.28		766,000
Total	31,100		1.18		1,183,000
		Inferred
Saprolite & Transition	6,100		0.71		139,000
Fresh rock	12,300		1.12		443,000
Total	18,400		0.98		582,000

• Estimated at 0.30 gpt gold cut‐off grade for the saprolite and 0.50 gpt gold cut‐off grade for the fresh rock, unchanged from the MRE announced on February 22, 2021.
• Numbers have been rounded to reflect the precision of a Mineral Resource estimate. Totals may vary due to rounding.
• Gold cut‐off has been calculated based on a gold price of US$1,600/oz, mining costs of US$1.5/tonne ("t") for saprolite‐transition and US$2.0/t for fresh rock, processing costs of US$6.0/t for saprolite‐transition and US$12.0/t for fresh rock, and mine‐site administration costs of US$3.0/t. Metallurgical recoveries of 95% are based on prior test work of Eagle Mountain deposit composite samples.
• Mineral Resources conform to National Instrument 43‐101 ("NI 43‐101"), and the 2019 CIM Estimation of Mineral Resources & Mineral Reserves Best Practice Guidelines and 2014 CIM Definition Standards for Mineral Resources & Mineral Reserves.
• The Company is not aware of any environmental, permitting, legal, title, taxation, socio‐economic, marketing or political factors that might materially affect these Mineral Resource estimates.
• Mineral Resources are not Mineral Reserves as they do not have demonstrated economic viability. The quantity and grade of reported Inferred Resources in this Mineral Resource estimate are uncertain in nature and there has been insufficient exploration to define these Inferred Resources as Indicated or Measured Resources, however, it is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.

1 The 2022 MRE was prepared by CSA Global Consultants Canada Ltd. in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Definition. Mineral Resources are not Mineral Reserves as they do not have demonstrated economic viability. Refer to the 2022 MRE news release, dated April 7, 2022.

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GOLDSOURCE MINES INC.
INTERIM MANAGEMENT'S DISCUSSION AND ANALYSIS - QUARTERLY HIGHLIGHTS
QUARTER ENDED JUNE 30, 2022	TSX.V:GXS

Eagle Mountain Project Activities - 2022

During the six months ended June 30, 2022, the Company incurred $2.5 million of exploration and evaluation expenses for the Eagle Mountain Gold Project (please refer to section 3 below - Results of Operations and Financial Condition). As at June 30, 2022, the Company's cumulative exploration and evaluation expenditures, including acquisition costs, on the Eagle Mountain Gold Project totaled $39.7 million, of which $33.0 million is related to exploration activities.

Generative Exploration

In 2022, the Company commenced its generative exploration program, which focused on underexplored areas outside of both the 2022 MRE outline and the Salbora‐Powis trend with the aim of locating additional mineralized areas and corridors within the EMPL. During Q2, 2022, the Company completed 10,950 metres of auger lines sampled at 25‐metre intervals, following up on stream sediment anomalies detected in Q1, 2022. In addition to auger sampling, 177 metres of trenching was completed in Q2, 2022. Analytical results received to date in 2022 for auger and trenching work, which represent the majority of samples taken, have not led to the identification of new near‐surface gold anomalies outside of the 2022 MRE outline or known prospect areas. Assay results are pending for the remainder of the auger lines on the east and west sides of the EMPL.

Drilling

On March 11, 2022, the Company announced drill results for the Soca Prospect area of the Eagle Mountain Prospecting License. Reported results represented 20 core holes totaling 3,126 metres drilled in late 2021. Drilling intersected mineralization along an estimated 250 metres of strike and down to 170 metres depth, with high‐grade gold intervals as well as broader zones of lower grade mineralization. Drill hole EMX21‐010 intersected 6.0 meters grading 18.31 gpt gold at 130 metres vertical depth. This included a higher‐grade sub‐interval of

1. metres grading 69.96 gpt gold. Additionally, drill hole EMX21‐012 intersected 9.0 meters grading 9.29 gpt gold at 103 metres vertical depth, EME21‐167 intersected 21.0 metres grading 3.13 gpt gold at 105 metres vertical depth, EME21‐171 intersected 36.0 metres grading

1. gpt gold at 77.0 metres vertical depth, and EME21‐161 intersected 13.5 metres grading 4.70 gpt gold within a wider zone of 54.0 metres grading 1.31 gpt gold at 55.0 metres vertical depth. While Soca shares certain characteristics with the Eagle Mountain and Salbora deposits, the Soca mineralization is associated more directly with quartz saturation alteration and quartz veining, thereby providing a new style of mineralization for consideration along the Salbora‐Powis trend.

Since January 1, 2022, the Company has completed approximately 6,366 metres of core drilling. During H1, 2022, the Company completed 5,648 metres of core drilling, with exploration and tight‐spaced variography drilling accounting for 4,146 metres and 1,502 metres, respectively.

• The exploration drilling was focused on early‐stage target areas, including to the east and southeast of the Saddle area of the Eagle Mountain deposit to test for lateral extensions of the sub‐horizontal mineralized zones on the opposite side of the topographic ridge formed by dolerite dykes and sills; a north‐south striking geophysical anomaly to the southeast of the Salbora deposit; and follow‐up drilling in the Ann prospect area to test for lateral extensions of mineralized zones. These areas did not produce significant mineralization. While continuation of the structures controlling mineralization was observed in the Saddle and Ann areas, dolerite and porphyritic intrusions constrained the potential for lateral extensions.
• Tight‐spaced variography drilling comprised 24 holes at 5‐metre spacing for 1,502 metres in the Eagle Mountain deposit. Geological and geostatistical studies of the data are planned to assess continuity of mineralization in the saprolite and fresh rock and derive definition and recommendations of Modifying Factors for mineral reserve estimation as part of prefeasibility study work.
• Through the remainder of 2022, exploration drilling will focus on the delineation of known prospects along the Salbora‐Powis trend, including Toucan, Powis and other targets, and infill drilling of the Eagle Mountain deposit with targets to be derived from ongoing geostatistical work of the 2022 MRE and drill database.

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GOLDSOURCE MINES INC.
INTERIM MANAGEMENT'S DISCUSSION AND ANALYSIS - QUARTERLY HIGHLIGHTS
QUARTER ENDED JUNE 30, 2022	TSX.V:GXS

2022 MRE

The 2022 MRE, reported on April 7, 2022, comprises:

• 31.1 Mt grading 1.18 gpt gold for 1,183,000 oz of gold contained in Indicated Resources; and
• 18.4 Mt grading 0.98 gpt gold for 582,000 oz of gold in Inferred Resources.

The MRE includes the Eagle Mountain and Salbora deposits as well as the earlier‐stage Toucan and Powis prospects. Gold mineralization starts at surface in saprolite with the base of the saprolite marked by a narrow transition zone and extending into the underlying fresh rock. Overall, the saprolite and transition contain 35% of the gold in Indicated Resource and 24% in Inferred Resource.

The Indicated Resource, representing 67% of the gold in the 2022 MRE, is laterally extensive and generally shallow. At the Eagle Mountain deposit the Indicated Resource extends from surface to a maximum depth of 150 metres and has an average depth of 35 metres. 75% of the Indicated Resource is within 50 metres of surface. At the Salbora deposit the Indicated Resource extends from surface to a maximum depth of 156 metres and has an average depth of 49 metres, and 58% of the Indicated Resource is within 50 metres of the surface.

Eagle Mountain Prospecting License

Pursuant to the Mining Act, the term of prospecting licenses is three years with two rights of renewal of one year each, for a total of five years. After five years, the license may be further renewed through submission of a new license application. The Company was granted all previous renewals and new license applications. The three‐year term for the EMPL is due to expire on October 18, 2022. In Q2, 2022, the Company submitted an application for the renewal of the existing license. On August 19, 2022, the Guyana Geology and Mines Commission approved the first one‐year renewal of the EMPL, which will expire on October 18, 2023.

Ann Mining Claim Option‐Purchase Agreement

On August 8, 2022, the Company and the optionor amended the terms of the option agreement to acquire 100% interest in the Ann Mining Claim, at the Minnehaha Creek area. Pursuant to the amended terms, the Company and the optionor agreed to extend the option period for two additional years, expiring on October 20, 2024, for a total additional consideration of US$40,000. All other terms of the agreement remain unchanged, including the right to terminate the agreement at any time without any further liabilities. The remaining payments are scheduled as follows:

• US$20,000 in October 2022;
• US$20,000 in October 2023; and
• US$250,000 upon the exercise of the option. b. Corporate

During the six months ended June 30, 2022, corporate highlights include the following:

• 20,000 stock options with exercise prices ranging from $0.80 to $1.30 per common share were forfeited, and 172,500 stock options with exercise prices ranging from $1.30 to $1.70 per common share expired unexercised.
• 348,478 warrants with exercise prices of $1.10 per common share expired unexercised.
• In November 2019, Kilroy received a demand for foregone customs duty and taxes of $419,272 ($73,056,644 Guyanese dollars) from the Guyana Revenue Agency ("GRA"). The GRA alleged that the joint venture agreement between Kilroy and Stronghold had breached the terms of the customs duty and tax exemption granted to Kilroy during 2015 and 2016 on the purchase of mining equipment. In March 2022, the Company received a court judgement stating that Kilroy was indebted to the GRA for the customs and duty taxes in the amount of $73,056,644 Guyanese dollars. On June 14, 2022, the Company entered into a settlement agreement with the GRA for the amount of $84,337 ($14,695,437 Guyanese dollars). The settlement deemed the case fully settled and released the Company from all claims arising from this matter.
• On June 20, 2022, the Company held its Annual General Meeting, whereby shareholders voted in favor of all items of business, including the re‐election of each director, re‐appointment of its auditors and approval of the amended and restated "rolling 10%" stock option plan. At the Board of Directors meeting following the AGM, the Board re‐appointed all executive officers and committee members.

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