Josemaria Resources : Third Quarter Report - Sept 30, 2021

2021 THIRD QUARTER REPORT

Management's Discussion and Analysis

and

Condensed Interim Consolidated Financial Statements

For the Nine Months Ended September 30, 2021

(UNAUDITED)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

This management's discussion and analysis ("MD&A") of the results of operations and financial condition for Josemaria Resources Inc. ("the Company", "Josemaria Resources") has been prepared as of November 15, 2021 and should be read in conjunction with the Company's unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2021 and the related notes therein (the "2021 Financial Statements"); the Company's annual audited consolidated financial statements for the year ended December 31, 2020 and the related notes therein ("2020 Financial Statements"); and the MD&A for the year ended December 31, 2020 ("2020 MD&A"). The 2020 Financial Statements are prepared in accordance with International Financial Reporting Standards ("IFRS") and the 2021 Financial Statements are prepared in accordance with IFRS applicable to the preparation of interim financial statements, including International Accounting Standard 34, Interim Financial Report. This MD&A focuses on significant factors that have affected the Company and its subsidiaries and such factors that may affect its future performance. All dollar amounts expressed throughout this report are in Canadian dollars, unless otherwise indicated.

This MD&A contains forward-looking statements that are subject to risk factors as set out in the "Cautionary Note Regarding Forward Looking Information and Statements" on Page 17. Additional information about the Company and its business activities is described on the Company's annual information form (the "2020 AIF"). The 2020 AIF is available on SEDAR at www.sedar.com and on the Company's website at https://www.josemariaresources.com.

CORE BUSINESS

Josemaria Resources is a Canadian natural resources company focused on advancing the development of its wholly-owned Josemaria copper-gold-silver project located in San Juan Province, Argentina (the "Josemaria Project" or "Project"). The Company is a reporting issuer in all provinces and territories of Canada and its corporate head office is in Vancouver, B.C. The Company trades under the ticker symbol of "JOSE" on the TSX and on the NASDAQ Stockholm Stock Exchange ("OMX"), and under the ticker symbol of "JOSMF" on the OTCQB Venture Market.

The Company is committed to responsible and sustainable mining development in the jurisdictions within which it works and operates, and to create meaningful value for its shareholders and stakeholders, alike. All aspects of the Company's operations and engagements are founded on a core set of environmental, social and governance commitments.

OUTLOOK

The Company continues to advance the Josemaria Project following completion of the Feasibility Study in the fourth quarter of 2020 and submission of the Environmental and Social Impact Assessment ("ESIA") in February 2021. The Company is planning to execute a 65,000-metre drilling program, commencing in Q4 2021, aimed primarily at providing development/infill geo-metallurgical data and acquiring additional site geotechnical information for key Project infrastructure and detailed mine planning. The Company has also commenced Basic Engineering, which is expected to be completed in the first half of 2022, the procurement process of long-lead equipment and the preparation of early works activities focused on providing engineering, planning and financial details. Active engagement also continues with federal and San Juan provincial authorities in Argentina, including discussions aimed at finalizing and securing commercial and fiscal terms applicable to the Project and ESIA approval.

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MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

2021 HIGHLIGHTS

• The Company continues to advance toward sanctioning construction of the Josemaria Project. Highlights during 2021 include:

1. Project Engineering has made significant advancements to de-risk and optimize the process flowsheet with improvements in the crushing/conveying, grinding and flotation circuits and tailings facilities. An area of significant progress is the grinding circuit, where the size of the SAG mills has been reduced from 42 to 40 feet in diameter, achieved through the implementation of a 2-stage pebble crushing circuit while maintaining the 150 kilo-tonnes per day design throughput. The Project has commenced Basic Engineering with the goal of completion during the first half of 2022;

1. The Company is actively preparing to execute a 65,000-metre drill program aimed primarily at providing development/infill geo-metallurgical data and acquiring additional site geotechnical information for key Project infrastructure and detailed mine planning. Life of mine hydrogeology and aquifer modelling will be updated with additional water well and piezometer drilling. It is anticipated that up to 8 rigs will be active at the peak of the drilling program. Management has a high degree of confidence that drilling will lead to an expansion of Indicated resources, and potentially reserves, as Inferred material is better defined and reclassified. At the Project site, camp expansion activities are ahead of schedule, and drilling is expected to commence in Q4 2021. Regional exploration program plans are being finalized to test targets outside the current resource but adjacent to the Project;

1. Following the submission of the ESIA in February 2021, the Company continues to engage with the San Juan authorities in their evaluation process;

1. Offsite infrastructure including access road, electrical power, and logistics studies are ongoing, aimed at finalizing plans for integration into the design of the Project during Basic Engineering; and

• 1. The Company has continued to aggressively recruit the team that will ultimately be responsible for constructing and commissioning the Project, including Mr. Phil Brumit who has been appointed to the role of Executive Vice President Projects and Operation and Mr. Reece Fuller who has been appointed to the role of Senior Vice President Projects. Mr. Brumit and Mr. Fuller both have decades of international mining, engineering, construction and senior leadership experience.
• During the third quarter 2021, the Company announced the securing of two credit facilities, evidenced by debentures, totaling US$20.0 million (collectively the "2021 Facilities"), one with Lorito Holdings S.à.r.l. ("Lorito") for US$10.0 million (the "Lorito 2021 Facility") and one with Zebra Holdings and Investments S.à.r.l. ("Zebra") for US$10.0 million (the "Zebra 2021 Facility"), each of which has a term of 18 months ending March 7, 2023. The Company concurrently announced the extension of the maturity dates of all previously announced debentures to March 7, 2023.
• During the second quarter 2021, the Company successfully closed a private placement of 58,708,900 common shares of the Company at a price (the "Offering Price") of $0.69 per common share for gross proceeds of $40.5 million. Concurrently, the Company also closed a public offering (the "Offering") pursuant to which a syndicate of underwriters purchased, on a

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MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

bought deal basis, 14,500,000 common shares at the Offering Price for gross proceeds of $10.0 million, plus an over-allotment option at the Offering Price of an additional 2,175,000 common shares for gross proceeds of $1.5 million, for total combined gross proceeds of $52.0 million. The Company incurred related share issuance costs of $1.4 million for net proceeds of $50.6 million.

JOSEMARIA PROJECT FEASIBILITY STUDY

On October 19, 2020, the Company announced the results of the Feasibility Study for the Josemaria Project prepared by a team of engineering and consulting service providers led by Fluor Canada Ltd. with key sections prepared by SRK Consulting (Canada) Inc. and Knight Piésold Ltd. plus input from a variety of independent consultants and qualified persons, and in accordance with the disclosure standards of National Instrument 43-101 ("NI 43-101").

The Technical Report summarizing the results of the Feasibility Study, titled "NI 43-101Technical Report, Feasibility Study for the Josemaria Copper-GoldProject, San Juan Province, Argentina" and dated effective September 28, 2020, was prepared under NI 43-101 Standards for Disclosure for Mineral Projects and filed on November 5, 2020. The Technical Report is available under the Company's profile on SEDAR (www.sedar.com).

SUMMARY OF QUARTERLY RESULTS

Financial Data for 8 Quarters

(In thousands $ except for per share amounts)(i)

Three Months Ended	Sep-21	Jun-21	Mar-21	Dec-20	Sep-20	Jun-20	Mar-20	Dec-19
(3rd qtr)	(2nd qtr)	(1st qtr)	(4th qtr)	(3rd qtr)	(2nd qtr)	(1st qtr)	(4th qtr)
Exploration and project	15,781	6,324	5,223	3,588	2,544	4,447	19,355	10,510
investigation
Additions to Equipment and	14,268	5	3	5	121	-	4	4
Other Fixed Assets
Unrealized foreign exchange	233	(250)	(357)	(1,489)	(1,240)	(1,811)	2,968	(413)
(gain) / loss
Foreign exchange and trading
gains realized on equity	(8,053)	(866)	(831)	(1,500)	(657)	(2,296)	(2,037)	-
investments
(Gain) / loss on net monetary	282	57	60	71	8	195	114	(88)
position
Net (income)/loss	10,374	7,121	7,950	3,266	2,693	2,318	22,959	11,097
Total basic and diluted	0.03	0.02	0.03	0.01	0.01	0.01	0.09	0.04
(income)/loss per share(i)
(i) As a result of rounding the sum of the quarterly amounts may differ from the year to date

Changes in net losses and cash flow used in operating activities for the quarter are primarily affected by the level of exploration and project investigation activity during that period. Camp activities, including drilling, are generally not carried out during the winter season in South America and, as such, exploration and project investigation expenditures and cash flow used in operations are typically lower during the

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MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

second and third quarter of each year compared to other quarters, however Q2 and Q3 2021 were impacted by ongoing engineering and related studies on the Project. During the third quarter of 2021, the Company incurred significant additions of fixed assets related to the expansion of its camp facilities at the Josemaria Project. The facilities will house field and administrative teams during the field season planned to commence in Q4 2021. The amount of cash resources available and timing of financing also affect the extent of exploration and project investigation programs and the costs incurred in a given period.

QUARTERLY RESULTS

The Company's net loss for the three and nine months ended September 30, 2021 was $10.4 million and $25.4 million, respectively, compared to $2.7 million and $28.0 million, respectively, for the same periods in 2020. The increase in net loss for the three months ended September 30, 2021 as compared to the same period in 2020 mainly reflects the Company having conducted an increased level of engineering, environmental and other key studies focused on furthering the Josemaria Project towards development. The net loss for the nine months ended September 30, 2021 is slightly lower than the net loss for the same period in 2020 as the Company had conducted a field program during Q4 2019 into Q1 2020 which included reserve definition drilling and advanced ongoing environmental studies in support of the Feasibility Study for the Josemaria Project, which was published in October 2020.

Exploration and project investigation expenses of $15.8 million and $27.3 million were incurred during the three and nine months ended September 30, 2021, as compared to $2.5 million and $26.3 million incurred during the comparative periods, respectively, in 2020. During the nine months ended September 30, 2021, the Company's primary exploration and project investigation expenses consisted of engineering and optimization studies, expenditures associated with supporting the ongoing ESIA approval process in Argentina, commercial and fiscal studies and negotiations, environmental baseline studies, roadwork and related studies, and community relations.

General and administrative ("G&A") costs for the three and nine months ended September 30, 2021 totaled $1.8 million and $6.2 million, respectively, compared to $1.1 million and $4.1 million, respectively, over the same periods in 2020. The increase was mainly the result of higher salaries and benefits due to voluntary salary reductions for the senior management group not being in place during the comparative 2021 period and higher discretionary management bonuses, and higher share-based compensation expenses due to a larger number of options having been granted as recruitment of personnel has increased. Share-based compensation is a non-cash charge reflecting the expense associated with the vesting of outstanding stock options during the period.

During the three and nine months ended September 30, 2021, the Company added $14.3 million of fixed assets related to the planned field season commencing in Q4 2021 (no such additions in the prior comparative periods). The fixed assets consist of modular buildings that will house the field and administrative teams carrying out field activities and the drill program.

From time to time, as part of the capital funding process from the Canadian parent to the Argentinian subsidiary, the Company will purchase equity instruments via a third-party investment broker. The equity instruments are transferred from the parent to the subsidiary and held for a pre-determined period, typically five business days, and then sold. The Company conducts such transactions on an intra-period basis and does not hold the equity instruments at period end. For the three months ended September 30, 2021, the Company realized a trading loss, including transaction fees, of $1,441,065 (2020 - $679,619) and a foreign exchange gain of $9,511,348 (2020 - $1,265,499) as a result of holding the equity instruments for a net realized gain of $8,070,283 (2020 - $585,880). For the three months ended

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