NGEx Minerals : Third Quarter Report - Sept 30, 2022

NGEX MINERALS LTD.

2022 THIRD QUARTER REPORT

Management's Discussion and Analysis

and

Condensed Interim Consolidated Financial Statements

For the Nine Months Ended September 30, 2022

(UNAUDITED)

NGEX MINERALS LTD.

MANAGEMENT'S DISCUSSION AND ANALYSIS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

(Amounts in Canadian Dollars unless otherwise indicated)

The following management's discussion and analysis ("MD&A") of NGEx Minerals Ltd. ("NGEx Minerals" or the "Company") should be read in conjunction with the unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2022 and related notes therein. The financial information in this MD&A is reported in Canadian dollars unless otherwise indicated and is derived from the Company's condensed interim consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board, applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting. The effective date of this MD&A is November 25, 2022. Additional information about the Company and its business activities is available on SEDAR at www.sedar.com and the Company's website www.ngexminerals.com.

Some of the statements in this MD&A are forward-looking statements that are subject to risk factors set out in the cautionary note contained herein.

CORE BUSINESS

NGEx Minerals is a mineral exploration company with copper-gold and gold exploration projects in Argentina and Chile. The Company's strategy is to create value for its shareholders through prudent management and deployment of its capital resources, by expanding and increasing the quality of its mineral resources through successful exploration and acquisitions and by advancing the engineering and other studies that are required to prepare its projects for eventual development by the Company and its partners or by third parties. The overall objective is to position the Company as a top tier mineral exploration-development investment opportunity.

The Company has a strong management team and board with extensive experience in the resource sector, particularly in Chile and Argentina. The board and management team have an appropriate mix of geological, engineering, financial, and business skills to advance the Company's projects and to generate value for its shareholders.

The Company's current flagship asset is its Los Helados copper-gold deposit, located in Region III of Chile. The Company is the majority partner and operator of the Los Helados Project, which is subject to a Joint Exploration Agreement (the "JEA") with its partner, Nippon Caserones Resources Co. Ltd. ("NCR"). NCR became the Company's partner on April 1, 2020 when Pan Pacific Copper ("PPC") transferred its interest in Los Helados to NCR. NCR is a subsidiary of JX Nippon Mining and Metals Corporation, a Tokyo-based mining and smelting company that also owns the Caserones Mine, located approximately 15km from Los Helados.

The JEA stipulates that when a party (the "first party") thereto funds less than its pro rata share of expenditures related to Los Helados, resulting in the other party (the "second party") funding in excess of its respective pro rata share, the first party's interest shall be reduced with a corresponding increase to the second party's interest. Accordingly, due to NCR having funded less than its pro rata share of expenditures related to Los Helados, as at September 30, 2022, the Company's interest therein has increased to approximately 69%.

The Company's most recent Mineral Resource estimate for the Los Helados Project, with an effective date of April 26, 2019, is summarized in the following table:

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Los Helados Mineral Resource (0.33% CuEq Cutoff)

	Tonnage		Resource Grade			Contained Metal
	(million	Cu		Au	Ag	CuEq	Cu		Au	Ag
Class		(billion		(million	(million
tonnes)	(%)		(g/t)	(g/t)	(%)
		lbs)		oz)	oz)
Indicated	2,099	0.38	0.15	1.37	0.48	17.6	10.1		92.5
Inferred	827	0.32		0.10	1.32	0.39	5.8		2.7		35.1

The key assumptions, parameters, and methods used to estimate the mineral resources are contained in the 43-101 technical report for the project, entitled "Technical Report on the Los Helados Porphyry Copper-GoldDeposit, Chile", dated August 6, 2019 and authored by F. Devine, P.Geo., G. Zandonai, RMCMC, and G. Di Prisco, P.Geo. This report is available on the Company's website at www.ngexminerals.com or under the Company's profile at www.sedar.com.

The Company's common shares are listed on the TSX Venture Exchange under the symbol "NGEX".

Q3 2022 OPERATING HIGHLIGHTS AND OUTLOOK

2022 Drill Program Confirms Multiple High-grade Centres at Los Helados; Extension Drill Campaign Now Underway

The Company's 2022 drill program at Los Helados was undertaken between February and June 2022 and successfully:

• Expanded, and demonstrated continuity of, mineralization associated with the high-grade breccia phase at the core of the current Mineral Resource at Los Helados, now called the Condor Zone. The Condor Zone was the main target of the Company's 2022 program, and drilling sought to confirm continuity of the high-grade mineralization through infill drilling, and test the potential for extension as guided by a recent reinterpretation of the Los Helados geological model;
• Confirmed the existence of a second high-grade centre to the Los Helados deposit, the Fenix Zone, located at the western edge of the current Mineral Resource. The Fenix Zone remains open at depth, towards the surface, and laterally. Most importantly, the identification and confirmation of the Fenix Zone as a separate and distinct mineralized feature from the Condor Zone validates the Company's recently revised geological interpretation, which hypothesizes that the Los Helados deposit contains multiple centres of high-grade mineralization and that elevated grades may not necessarily dissipate towards the edges of the deposit;
• Discovered a third distinct, high-grade centre to the Los Helados deposit, the Alicanto Zone, located 550m north of the Condor Zone, which further affirms the Company's reinterpretation of the geological model. The Alicanto Zone was discovered by drillhole LHDH078, which returned 474.8m at 0.61% copper equivalent1 ("CuEq") (0.55% Cu, 0.08 g/t Au, 1.7 g/t Ag), including 100.0m at 1.20% CuEq (1.10% Cu, 0.14 g/t Au, 2.1 g/t Ag). This newly discovered zone of high-grade mineralization remains open in all directions, and will be a high priority drill target for the Company's 2022-2023 drill campaign currently underway.

The results from the Company's 2022 drill campaign at Los Helados have demonstrated the potential to add significantly more high-grade material at Los Helados, through continued expansion of the known zones and the discovery of new high-grade satellite structures, like the Fenix and Alicanto Zones. In addition, the results from this program have provided validation of the Company's current geological interpretation of the Los Helados deposit, which will form the basis for future exploration including the 2022-2023 drill campaign now underway.

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• CuEq for drill intersections is calculated based on US$ 3.50/lb Cu, US$ 1,700/oz Au and US$ 20/oz Ag, with metallurgical recoveries of 88% for copper, 76% for gold and 60% for silver based on a comprehensive program of metallurgical testwork. The formula is: CuEq % = Cu % + (0.6117 * Au g/t) + (0.0057 * Ag g/t).

The 2022-2023 drill campaign at Los Helados launched in early November 2022, and will focus on testing for extensions of the high-grade mineralization intercepted in the Fenix and Alicanto Zones. The drill program plans to use directional drilling to optimize drilling efficiency and reduce the number of total metres required to effectively test the targets at depth. Directional drilling uses specialized down hole tools to direct the drill bit toward multiple target areas from a single pilot hole, allowing for different targets to be tested from a single drill collar.

As of the date of this MD&A, the program is operating with four diamond drill rigs, and is expected to continue into the first quarter of 2023. In November 2022, the Company extended its agreement with the owners of the surface rights covering Los Helados to allow for access by the Company to the end of 2023.

Completion of Earn-in at Valle Ancho

During the third quarter of 2022 and the subsequent period thereto, the Company prepared requisite reports and made its formal submissions to the Province of Catamarca to evidence its completion of the minimum expenditure requirement to earn into the Valle Ancho and Interceptor properties (collectively, the "Valle Ancho Properties"), located in Catamarca, Argentina. An agreement between the Company and the Province of Catamarca granted the Company the option to earn a 100% interest in the Valle Ancho Properties by making US$8.0 million in qualifying exploration expenditures prior to December 31, 2022.

The Company's submission is now under review by the Province of Catamarca.

Q3 2022 CORPORATE HIGHLIGHTS

Credit Facility

On September 28, 2022, the Company obtained an unsecured US$3.0 million credit facility (the "2022 Facility") from Zebra Holdings and Investments S.à.r.l ("Zebra") and Lorito Holdings S.à.r.l. ("Lorito") to provide financial flexibility to fund ongoing exploration and for general corporate purposes. Zebra and Lorito are companies controlled by a trust settled by the late Adolf H. Lundin. Zebra and Lorito report their respective security holdings in the Company as joint actors, as the term is defined by Canadian securities regulations, and are related parties by virtue of their combined shareholding in the Company in excess of 20%.

As consideration for the 2022 Facility, Zebra and Lorito received 12,500 common shares upon execution thereof (the "Commitment Shares"), and shall receive an additional 200 common shares each month, for every US$50,000 in principal outstanding, prorated accordingly for the number of days outstanding. The 2022 Facility matures on September 28, 2023, and no interest is payable in cash during its term.

All common shares issued in conjunction with the facilities are subject to a four-month hold period under applicable securities laws.

RESULTS FROM OPERATIONS

NGEx Minerals is a junior exploration company and, as such, its net losses are largely driven by its exploration and project investigation activities and there is no expectation of generating operating profits until it identifies and develops a commercially viable mineral deposit.

Key financial results for the last eight quarters are provided in the table below.

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Three Months Ended	Sep-22	Jun-22	Mar-22	Dec-21	Sep-21	Jun-21	Mar-21	Dec-20
Exploration costs ($000's)	4,539	9,765	8,582	3,518	1,390	356	402	563
Operating loss ($000's)	6,243	10,497	9,296	4,213	1,863	810	833	1,303
Net loss ($000's)	6,068	9,651	8,676	2,390	1,491	784	793	1,302
Net loss per share, basic and	0.04	0.06	0.06	0.01	0.01	0.01	0.01	0.01
diluted ($)

Due to the geographic location of the Company's mineral properties, the Company's business activities generally fluctuate with the seasons, through increased exploration activities during the summer months in South America. As a result, a general recurring trend is the increase in exploration expenditures, and therefore net losses, for the fourth quarter and first quarter of a fiscal year, relative to the second and third quarters. In addition, other relevant factors, such as the financial position of the Company, other corporate initiatives, as well as the type and scope of planned exploration/project work, could affect the level of exploration activities and net loss in a particular period.

NGEx Minerals incurred net losses of $6.1 million and $24.4 million, respectively, for the three and nine months ended September 30, 2022 (2021: $1.5 million and $3.1 million), including respective operating losses of $6.2 million and $26.0 million (2021: $1.9 million and $3.5 million). Exploration and project investigation costs are the most significant expenditure category of the Company and for the three and nine months ended September 30, 2022 accounted for approximately 73% and 88% of the respective operating losses (2021: 75% and 61%). This is reflective of the Company's accounting policy to expense its exploration costs through the consolidated statement of comprehensive loss, except for mineral property option payments and mineral property acquisition costs, which are capitalized.

Exploration and project investigation costs for the three and nine months ended September 30, 2022 were $4.5 million and $22.9 million, respectively (2021: $1.4 million and $2.1 million). The increase for the three months ended September 30, 2022 is due primarily to the Company's efforts in maintaining road accesses to enable safe recovery of supplies and samples, and demobilization of equipment, following the conclusion of its 2022 drill campaign at the Los Helados properties with the onset of winter weather conditions in June 2022. In addition, technical consultation and analysis of the data generated by the 2022 Los Helados drill program continued through the third quarter of 2022, in preparation for the resumption of drilling, as discussed in the Q3 2022 Operating Highlights and Outlook section above. By comparison, during the three months ended September 30, 2021, the Company's exploration focus was primarily on making preparations for its 2021/2022 drill campaign for Valle Ancho.

In addition to the foregoing, the increase in exploration and project investigation costs for the nine months ended September 30, 2022, is also due to the Company's undertaking of simultaneous field and drill programs at Los Helados and the Valle Ancho properties, whereas during the 2021 comparative period, the Company did not undertake any substantial field activity and had only began preparations for the 2021/2022 drill program at Valle Ancho.

Excluding share-based compensation, administration costs for the three and nine months ended September 30, 2022 totaled $0.5 million and $1.4 million, respectively (2021: $0.3 million and $1.0 million). Share-based compensation, a non-cash cost, reflects the amortization of the estimated fair value of options over their vesting period and is based to a large degree on the Company's share price and its volatility. The actual future value to the option holders may differ materially from these estimates as it depends on the trading price of the Company's shares if and when the options are exercised. In addition, as the granting of options and their vesting is at the discretion of the Board, the related expense is unlikely to be uniform across quarters or financial years.

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