SCANDIUM INTERNATIONAL MINING CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

The following discussion of the operating results, corporate activities and
financial condition of Scandium International Mining Corp. (hereinafter referred
to as "we", "us", "Scandium International", "SCY", or the "Company") and its
subsidiaries provides an analysis of the operating and financial results between
December 31, 2021 and March 31, 2022 and a comparison of the material changes in
our results of operations and financial condition between the three-month period
ended March 31, 2021 and the three-month period ended March 31, 2022. This
discussion should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations included in our Annual
Report on Form 10-K for the year ended December 31, 2021.



This discussion and analysis contains forward-looking statements that involve
risks, uncertainties and assumptions. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including, but not limited to, those set forth under the heading "Risk
Factors and Uncertainties" in our Annual Report on Form 10-K for the year ended
December 31, 2021, and elsewhere in this Quarterly Report on Form 10-Q.



The interim statements have been prepared in accordance with US Generally
Accepted Accounting Principles, as required under U.S. federal securities laws
applicable to the Company, and as permitted under applicable Canadian securities
laws. The Company is a reporting company under applicable securities laws in
Canada and the United States. The reporting currency used in our financial
statements is the United States Dollar.

The information contained within this report is current as of May 16, 2022, unless otherwise noted. Additional information relevant to the Company's activities can be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Technical information in this Form 10Q, including the MD&A, has been reviewed and approved by John Thompson, a Qualified Person as defined by Canadian National Instrument 43-101 ("NI 43-101").

Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates

The Company uses Canadian Institute of Mining, Metallurgy and Petroleum
definitions for the terms "proven reserves", "probable reserves", "measured
resources" and "indicated resources." U.S. investors are cautioned that while
these terms are recognized and required by Canadian regulations, including
National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI
43-101"), the U.S. Securities and Exchange Commission ("SEC") does not recognize
them. Canadian mining disclosure standards differ from the requirements of the
SEC under SEC Industry Guide 7, and reserve and resource information referenced
in this Form 10-Q may not be comparable to similar information disclosed by
companies reporting under U.S. standards. In particular, and without limiting
the generality of the foregoing, the term "resource" does not equate to the term
"reserve." Under United States standards, mineralization may not be classified
as a "reserve" unless the determination has been made that the mineralization
could be economically and legally produced or extracted at the time the reserve
determination is made. The SEC's disclosure standards normally do not permit the
inclusion of information concerning "measured mineral resources" or "indicated
mineral resources" or other descriptions of the amount of mineralization in
mineral deposits that do not constitute "reserves" by U.S. standards in
documents filed with the SEC. Disclosure of "contained ounces" in a resource
estimate is permitted disclosure under Canadian regulations; however, the SEC
normally only permits issuers to report mineralization that does not constitute
"reserves" by SEC standards as tonnage and grade without reference to unit
measures. The requirements of NI 43-101 for identification of "reserves" are
also not the same as those of the SEC, and reserves in compliance with NI 43-101
may not qualify as "reserves" under SEC standards.




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Cautionary Note Regarding Forward-Looking Statements

Certain statements made in this Quarterly Report on Form 10-Q may constitute
forward-looking statements about the Company and its business. Forward-looking
statements are statements that are not historical facts and include, but are not
limited to, reserve and resource estimates, estimated value of the project,
projected investment returns, anticipated mining and processing methods for the
project, the estimated economics of the project, anticipated scandium
recoveries, production rates, scandium grades, estimated capital costs,
operating cash costs and total production costs, planned additional processing
work and environmental permitting. The forward-looking statements in this report
are subject to various risks, uncertainties and other factors that could cause
the Company's actual results or achievements to differ materially from those
expressed in or implied by forward-looking statements. These risks,
uncertainties and other factors include, without limitation, risks related to
uncertainty in the demand for scandium and pricing assumptions; uncertainties
related to raising sufficient financing to fund the Nyngan Scandium Project in a
timely manner and on acceptable terms; changes in planned work resulting from
logistical, technical or other factors; the possibility that results of work
will not fulfill expectations and realize the perceived potential of the
Company's properties; uncertainties involved in the estimation of scandium
reserves and resources; the possibility that required permits may not be
obtained in a timely manner or at all; the possibility that capital and
operating costs may be higher than currently estimated and may preclude
commercial development or render operations uneconomic; the possibility that the
estimated recovery rates may not be achieved; risk of accidents, equipment
breakdowns and labor disputes or other unanticipated difficulties or
interruptions; the possibility of cost overruns or unanticipated expenses in the
work program; risks related to projected project economics, recovery rates, and
estimated NPV("Net Present Value") and anticipated IRR("Internal Rate of
Return") and other factors identified in the Company's SEC filings and its
filings with Canadian securities regulatory authorities. Forward-looking
statements are based on the beliefs, opinions and expectations of the Company's
management at the time they are made, and other than as required by applicable
securities laws, the Company does not assume any obligation to update its
forward-looking statements if those beliefs, opinions or expectations, or other
circumstances, change.

Scandium International Corporate Overview

Scandium International is a specialty metals and alloys company focused on developing the production and sale of scandium and other specialty metals. The Company intends to utilize its knowhow and, in certain instances, patented technologies to maximize opportunities in scandium and other specialty metals.

The Company was formed in 2006, under the name Golden Predator Mines Inc. As
part of a reorganization and spin-out of the Company's precious metals portfolio
in March 2009, the Company changed its name to EMC Metals Corp. In order to
reflect our emphasis on mining for scandium minerals, effective November 19,
2014, we changed our name to Scandium International Mining Corp. The Company
currently trades on the Toronto Stock Exchange under the symbol "SCY".



Our focus of operations is the exploration and development of the Nyngan
scandium deposit located in New South Wales ("NSW"), Australia ("Nyngan" or the
"Nyngan Scandium Project.") We also hold exploration-stage properties in
Australia, known as the "Honeybugle Scandium Property", and in Finland, known as
the "Kiviniemi Scandium Property."



We acquired a 100% interest in the Nyngan Scandium Project in June of 2014
pursuant to the terms of a settlement agreement with Jervois Mining Ltd. of
Melbourne, Australia. The project is held through our Australian subsidiary, EMC
Metals Australia Pty Ltd. ("EMC Australia"), which also holds the Honeybugle
Scandium Property.



During the third quarter of 2015, the Company converted a $2,500,000 loan from
Scandium Investments LLC ("SIL"), an unrelated investment company, into a 20%
minority interest in EMC Australia. As a result, from the third quarter 2015
until October 2017, the Company held an 80% equity interest in EMC Australia,
with SIL holding a 20% interest. EMC Australia was operated as a joint venture
between SIL and SCY with SIL holding a carried interest in the Nyngan Scandium
Project until the Company met certain development milestones. The Company
completed the development milestones during May 2017 and triggered a limited
period option whereby SIL had a right to convert the fair market value of its
20% interest in EMC Australia into an equivalent value of SCY common shares, at
then prevailing market prices.




14






In June of 2017, the Company entered into a share exchange agreement with SIL
for the purchase of SIL's 20% interest in EMC Australia in exchange for
57,371,565 common shares of SCY as well as an additional 1,459,080 common shares
as a royalty adjustment payment. Closing of the purchase of the EMC Australia
shares was subject to shareholder approval, which the Company obtained at a
special meeting of shareholders held on September 11, 2017. The transaction
subsequently closed on October 9, 2017. Under the terms of the share purchase
agreement, on closing SIL was granted the right to nominate two individuals to
the board of the Company for so long as SIL held at least 15% of Scandium's
issued and outstanding shares, and one director for so long as SIL held at least
5% but less than 15% of Scandium's issued and outstanding shares. Pursuant to
the nomination rights, Peter Evensen and R. Christian Evensen were appointed as
directors to the SCY Board on closing of the transaction.



Corporate activity during the first quarter of 2022 focused on the completion of
an internal review of its portfolio of assets and projects. The purpose of this
review was to determine the appropriate allocation of capital between the
Company's scandium activities and the recently announced initiatives on Critical
Metals Recovery (CMR) and High Purity Alumina (HPA). The board decided and
announced on April 18 that the best return on invested capital for its
shareholders is to prioritize the Company's portfolio of scandium assets
including the Nyngan Scandium Project that already holds a mining license and
will idle its CMR and HPA initiatives. As a result of the review, leadership
changes were also made with the appointment of an interim CEO and CFO and a
downsizing of the board to 4 directors.



Our plan of operation for the remainder of 2022 is to increase the liquidity of
the Company by completing the C$3 million equity private placement that was
announced on April 19, reduce staffing level and expenses, and position the
Company to benefit from the growing market adoption of Scandium. This includes
moving forward with our patent portfolio and filing a new mine lease application
to re-establish the original Mining License, giving access to the full scandium
resource at Nyngan.

Principal Properties Review

Nyngan Scandium Project (NSW, Australia)

Nyngan Property Description and Location

The Nyngan Scandium Project site is located approximately 450 kilometers
northwest of Sydney, NSW, Australia and approximately 20 kilometers due west of
the town of Nyngan, a rural town of approximately 2,900 people. The general area
can be characterized as flat countryside and is classified as agricultural land,
used predominantly for wheat farming and livestock grazing.




15

Figure 1: Location of Nyngan Project

                       [[Image Removed: scy_10qimg5.jpg]]

Note: None of the Existing Mines identified in Figure 1 produce scandium.

16






 Figure 2: Location of the Exploration Licenses and Mining Lease for the Nyngan
                                Scandium Project



                      [[Image Removed: scy_10qimg14.jpg]]

Note: All Exploration Licenses and Leases described in Figure 2 are held 100% by EMC-A.

Nyngan Feasibility Study



On April 18, 2016, the Company announced the results of an independently
prepared feasibility study on the Nyngan Scandium Project. The technical report
on the feasibility study entitled "Feasibility Study - Nyngan Scandium Project,
Bogan Shire, NSW, Australia" is dated May 4, 2016, and was independently
compiled pursuant to the requirements of NI 43-101 (the "Feasibility Study" or
the "DFS"). The report was filed on May 6, 2016 and is available on SEDAR
(www.sedar.com), on the Company's website (www.scandiummining.com) and the SEC's
website (www.sec.gov). A full discussion on the technical report was provided in
the Company's Form 10Q for the quarterly period ending March 31, 2016, as filed
with the SEC and on SEDAR on May 13, 2016.




17






The Feasibility Study concluded that the Nyngan Scandium Project has the
potential to produce an average of 37,690 kilograms of scandium oxide (scandia)
per year, at grades of 98.0%-99.8%, generating an after-tax cumulative cash flow
over a 20 year Project life of US$629 million; with an NPV10% of US$177 million.
The average process plant feed grade over the 20 year Project life is 409ppm of
scandium.

The financial results of the Feasibility Study are based on a conventional flow
sheet, employing continuous high pressure acid leach (HPAL) and solvent
extraction (SX) techniques. The flow sheet was modeled and validated from METSIM
modeling and considerable bench scale/pilot scale metallurgical test work
utilizing Nyngan resource material. A number of the key elements of this
flowsheet work have been protected by the Company under US patent applications,
four of which have been granted, with two of those four directly applicable in
the flowsheet applied to the current Feasibility Study.



The Feasibility Study has been developed and compiled to an accuracy level of
+15%/-5% by a globally recognized engineering firm that has considerable
expertise in laterite deposits and process facilities, as well as in smaller
mining and processing projects, and has excellent familiarity with the Nyngan
Scandium Project location and environment.

Nyngan Scandium Project Highlights

· Capital cost estimate for the Project is US$87.1 million,

· Annual scandium oxide product volume averages 37,690 kg per year over 20

years,

· Annual revenue of US$75.4 million (oxide price assumption of US$2,000/kg),

· Operating cost estimate for the Project is US$557/kg scandium oxide,

· Project Constant Dollar NPV10% is US$177 million, NPV8% is US$225 million,

    ·   Project Constant Dollar IRR is 33.1%,
    ·   Oxide product grades of 98-99.8% based on customer requirements,
    ·   Project resource increases by 40% to 16.9 million tonnes, grading 235ppm
        Sc, at a 100ppm cut-off in the measured and indicated categories, and
    ·   Project Reserve totaling 1.43 million tonnes, grading 409ppm Sc was
        established on part of the resource.

DFS Conclusions and Recommendations

The production assumptions in the Feasibility Study are backed by solid
independent flow sheet test work on the planned process for scandium recovery
and consolidate a significant amount of metallurgical test work and prior study
on the Nyngan Scandium Project. The entire body of work demonstrates a viable,
conventional process flow sheet, utilizing a continuous-system HPAL leaching
process, and good metallurgical recoveries of scandium from the resource. The
metallurgical assumptions are supported by various bench and pilot scale
independent test work programs that are consistent with known outcomes in other
laterite resources. The continuous autoclave configuration, as opposed to batch
systems explored in previous flow sheets, is also a more conventional and
current design choice.



The level of accuracy established in the Feasibility Study substantially reduces
the uncertainty levels inherent in earlier studies. The greater confidence
intervals around the Feasibility Study were achieved by reliance on significant
project engineering work, a capital and operating cost estimate supported by
detailed requirements and vendor pricing, plus one conditional offtake agreement
and an independent marketing assessment, both supportive of the marketing
assumptions on the business.



The Feasibility Study delivered a positive result on the Nyngan Scandium
Project, and recommended the Nyngan Scandium Project owners seek finance and
proceed to construction. Recommendations were made therein for additional
immediate work, notably to complete some optimizing flow sheet studies, and to
initiate as early as possible detailed engineering required on certain long-lead
capital items. The Company has subsequently completed certain confirmatory flow
sheet studies and test results, but intends to defer cost on detailed project
engineering until such time as long-term offtake agreements for scandium product
have been secured.




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Confirmatory Metallurgical Test Results

On June 29, 2016, we announced the results of a confirmatory metallurgical test
work report from Altrius Engineering Services (AES) of Brisbane, Australia. The
test work results directly relate to the list of recommended programs included
in the Feasibility Study. AES devised and supervised these test work programs at
the SGS laboratory in Perth, Australia and at the Nagrom laboratory in Brisbane,
Australia.



The project DFS recommended that a number of process flowsheet test work
programs be investigated prior to commencing detailed engineering and
construction. Those study areas included pressure leach ("HPAL"),
counter-current decant circuits, solvent extraction ("SX"), and oxalate
precipitation, with specific work steps suggested in each area. This latest test
work program addressed all of these recommended areas, and the results confirmed
recoveries and efficiencies that either meet or exceed the parameters used in
the DFS. Highlights of the testing were:



    ·   Pressure leach test work achieved 88% recoveries, from larger volume
        tests,

· Settling characteristics of leach discharge slurry show substantial

        improvement,
    ·   Residue neutralization work meets or exceeds all environmental
        requirements as presented in the DFS and the environmental impact
        statement,
    ·   Solvent extraction circuit optimization tests generated improved
        performance, exceeding 99% recovery in single pass systems, and
    ·   Product finish circuits produced 99.8% scandium oxide, completing the
        recovery process from Nyngan ore to finished scandia product.

Engineering, Procurement and Construction Management Contract

On May 30, 2017, the Company announced that its subsidiary EMC Australia signed
an Engineering, Procurement and Construction Management ("EPCM") contract with
Lycopodium Minerals Pty Ltd ("Lycopodium"), to build the Nyngan Scandium Project
in New South Wales, Australia. The EPCM contract also provides for start-up

and
commissioning services.

The EPCM contract appoints Lycopodium (Brisbane, QLD, Australia) to manage all
aspects of project construction. Lycopodium was the principal engineering firm
involved with the DFS. Lycopodium's continued involvement in project
construction and commissioning ensures valuable technical and management
continuity for the project during the construction and start-up of the project.



On October 19, 2017, we announced that Lycopodium has been instructed to
initiate critical path engineering for the Nyngan Scandium Project. Lycopodium
commenced work on select critical path components for the project, including
design and specification engineering on the high-pressure autoclave unit,
associated flash and splash vessels, and several specialized high-pressure input
pumps. The engineering work was completed in 2018 and will enable final supplier
selection, firm component pricing and delivery dates for these key process
components.

Environmental Permitting/Development Consent/Mining Lease

On May 2, 2016, the Company announced the filing of an Environmental Impact
Statement ("EIS") with the New South Wales Department of Planning and
Environment (the "Department") in support of the planned development of the
Nyngan Scandium Project. The EIS was prepared by R.W. Corkery & Co. Pty.
Limited, on behalf of the Company's subsidiary, EMC Australia, to support an
application for Development Consent for the Nyngan Scandium Project. The EIS is
a self-contained set of documents, which includes a Specialist Consultants'
Study Compendium, and is considered the foundational environmental document used
to seek a Development Consent.




19






EIS Highlights:



    ·   The EIS finds residual environmental impacts represent negligible risk.
    ·   The proposed development design achieves sustainable environmental
        outcomes.

· The EIS finds net-positive social and economic outcomes for the community.

· Nine independent environmental consulting groups conducted analysis over

five years, and contributed report findings to the EIS.

· The Nyngan Project development is estimated to contribute A$12.4M to the

local and regional economies, and A$39M to the State and Federal

economies, annually.

· The EIS is fully aligned with the DFS and with a NSW Mining License

        Application for the Nyngan Project.

The conclusion statement in the EIS reads as follows: "In light of the conclusions included throughout this Environmental Impact Statement, it is assessed that the Proposal could be constructed and operated in a manner that would satisfy all relevant statutory goals and criteria, environmental objectives and reasonable community expectations."

Development Consent:

The Development Consent is considered the key approval required to build a mine
facility in Australia. As the Nyngan Scandium Project is considered a State
Significant Project (capital cost + A$30 million), the Minister of Planning and
Environment is designated to manage the investigation and approval process for
any granting of a Development Consent.



On November 10, 2016, the Company announced that the Development Consent had
been granted. This Development Consent represents an approval to develop the
Nyngan Scandium Project and is based on facts and findings contained in the EIS.
The Development Consent follows an in-depth review of the EIS, the project plan,
community impact studies, public EIS exhibition and commentary, and economic
viability, and involved more than 12 specialized governmental agencies and

groups.



Mining Lease:



During July 2019, EMC Australia received notice of approval for its most current
mining lease (ML) application. The ML (ML 1792) overlays select areas previously
covered by exploration licenses and represents the final major development
approval required from the NSW Government to begin construction on the project.
The ML 1792 grant is issued for a period of 21 years and is based on the
development plans and intent submitted in the ML application. The ML can be
modified by NSW regulatory agencies, as requested by EMC Australia over time, to
reflect changing operating conditions.



In addition to these two key governmental approvals, other required licenses and
permits must be acquired but are considered routine and require only compliance
with fixed standards and objective measurements. These remaining approvals
include submittal of numerous plans and reports supporting compliance with the
Development Consent and Mining Lease. In addition, the following water, roads,
dam and electrical access reviews and arrangements must be finalized:

· State and local approval for construction of the intersection of the Site

Access Road and Gilgai Road,
    ·   An approval from the NSW Dams Safety Committee for the design and
        construction of the Residue Storage Facility, and
    ·   A high voltage connection agreement with Essential Energy.





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The 2019 ML 1792 grant covers 810 acres (370 hectares) of surface area fully
owned by the Company, an area adequate to construct and operate a scandium mine
of a scale outlined in the definitive Feasibility Study. The Company had
originally filed a mining lease application (MLA 531) covering an area of 874
hectares, which was granted in 2017 as a mining lease (ML 1763), and later ruled
invalid. At that time, it was unknown, to both the Department and the Company,
that a local landowner had filed a prior, timely and valid objection to the
granting of that mining lease. The reduction in area between the initial 2017 ML
1763 and the replacement 2019 ML 1792 represented acreage protested in an
"Agricultural Land" objection lodged by a local landowner. The landowner holds
freehold surface ownership over a portion of the original grant that was
previously covered by the 2017 ML 1763.



On September 10, 2020, the Company announced receipt of a final determination
letter from the Deputy Secretary, Department of Regional NSW, Division of
Mining, Exploration and Geoscience resolving the outstanding objection filed by
the landowner in 2016.



Written advice from the Department to the Company makes clear that all required
independent investigative processes, and all affected party comment periods,
were completed, and the Department's decision in this dispute matter is final.
There are further state courts of appeal available to the landowner, but the
facts supporting this final decision are confirmed by the NSW Department of
Primary Industry and follow governing law.



This Final Determination from the NSW Government will again allow all measured
and indicated resource included in the Nyngan Scandium Project DFS to be
reinstated in a new mining lease grant, which will require the filing of a new
mine lease application. The Company intends to file this application in 2022.



Downstream Scandium Products

In February 2011, we announced the results of a series of laboratory-scale tests
investigating the production of aluminum-scandium master alloys directly from
aluminum oxide and scandium oxide feed materials. The overall objective of this
research was to demonstrate and commercialize the production of
aluminum-scandium master alloy using impure scandium oxide as the scandium
source, potentially significantly improving the economics of aluminum-scandium
master alloy production. In October 2019, the Company was granted Patent No.
10450634, titled "Scandium-Containing Master Alloys And Method For Making The
Same."



During the 2015-2017 timeframe, we continued our own internal laboratory-scale
investigations into the production of aluminum-scandium master alloys,
furthering our understanding of commercial processes, and achievable recoveries.
We also advanced our abilities to make a commercial-grade 2% scandium master
alloy product.

On March 2, 2017, we announced the signing of a Memorandum of Understanding
("MOU") with Weston Aluminium Pty Ltd. ("Weston") of Chatswood, NSW, Australia.
The MOU defines a cooperative commercial alliance to jointly develop the
capability to manufacture aluminum-scandium master alloy. The intended outcome
of this alliance will be to develop the capability to offer Nyngan Scandium
Project aluminum alloy customers scandium in form of Al-Sc master alloy, should
customers prefer that product form.



The MOU outlines steps to jointly establish the manufacturing parameters,
metallurgical processes, and capital requirements to convert Nyngan Scandium
Project scandium product into Master Alloy, at Weston's existing production site
in NSW. The MOU does not include a binding contract with commercial terms at
this stage, although the intent is to pursue the necessary technical elements to
arrive at a commercial contract for conversion of scandium oxide to master
alloy, and to do so prior to first mine production from the Nyngan Scandium

Project.




21

On March 5, 2018, the Company announced that it had initiated a small scale
pilot program (4kg scale) at the Alcereco Inc. metallurgical research facilities
in Kingston, Ontario, to confirm and refine previous lab-scale work on the
manufacture of aluminum-scandium 2% master alloy (MA). The program advanced the
process understanding for commercial scale upgrade of Nyngan scandium oxide
product to master alloy product.



The 2018 pilot program consisted of 5 separate trials on two MA product types,
production of MA in various forms, and dross analysis to ascertain scandium
recoveries to product. The mass of master alloy and product variants produced in
the program totaled approximately 20kg and was completed in December of 2018.
The results of the program included the successful production of 2% grade MA,
with recoveries of scandium to product of 85%.



A second phase of the small-scale pilot program was initiated in the first half
of 2019, again at 4kg scale, building on the work done in phase I. The results
of this second program included successful production of 2% grade MA, with
improvements in form of rapid kinetics, and recoveries of scandium to product of
+90%.



On March 5, 2018, the Company also announced that it filed for patent protection
on certain process refinements for master alloy manufacture that it believes are
novel methods, and also on certain product variants that it believes represent
novel forms of introducing scandium more directly into aluminum alloys. In April
of 2021, the Company was granted Patent No. 10,988,830, titled "Scandium Master
Alloy Production."

Master Alloy Capability Demonstrated

On February 24, 2020, the Company announced the completion of a three year, three stage program to demonstrate the capability to manufacture aluminum-scandium master alloy (Al-Sc2%), from scandium oxide, using a patent pending melt process involving aluminothermic reactions.

This master alloy capability will allow the Company to offer scandium product
from the Nyngan Scandium Project in a form that is used directly by aluminum
alloy manufacturers globally, either major integrated manufacturers or smaller
wrought or casting alloy consumers.



Research Highlights:



    ·   Program achieved full 2% target product quality requirement,
    ·   Sc recoveries from oxide exceeded target, demonstrated in final tests,
    ·   The microstructure and metal quality meet major alloy producers'
        specifications,
    ·   Rapid kinetics achieved, important for commercial viability,
    ·   Individual testing batches done at 4kg scale, and

· Successful program testing forms a basis for a larger scale demonstration

facility, supporting large scale samples required for industrial aluminum

        alloy trials.

Focus on Aluminum Alloy Applications for Scandium Products

Our focus is on the use of scandium as an alloying ingredient in aluminum-based
products. The specific scandium product forms we intend to sell from the Nyngan
project include both scandium oxide (Sc2O3) and aluminum-scandium master alloys
(Al-Sc 2%).



Scandium as an alloying agent in aluminum allows for aluminum metal products
that are much stronger, more easily weldable and exhibit improved performance at
higher temperatures than current aluminum-based materials. This means lighter
structures, lower manufacturing costs and improved performance in areas that
aluminum alloys do not currently compete.




22

Aluminum Alloy Research Partner - Alcereco

In 2015, the Company entered into a memorandum of understanding ("MOU") with
Alcereco Inc. of Kingston, Ontario ("Alcereco"), forming a strategic alliance to
develop markets and applications for aluminum alloys containing scandium. This
MOU represented keen mutual interest in foundry-based test work on aluminum
alloys containing scandium, based on understandings that Alcereco's team had
gained from prior work with Alcan Aluminum, and based on SCY's twin goals of
understanding and identifying quality applications for scandium, and also
understanding the scandium value proposition for customers.



The Company subsequently sponsored considerable research work with the Alcereco
team. This work has developed and documented the improvement in strength
characteristics scandium can deliver to aluminum alloys without degrading other
key properties. The Alcereco team has run multiple alloy mix programs with
varied scandium loading, in order to look at response to scandium additions on a
cost/benefit basis. This work has been done in the context of industries and
applications where these alloys are suitable for application today. The programs
focused on 1000 series, 3000 Series, 5000 Series and 7000 Series Al-Sc alloys,
and have served to make independent data and volume samples available for sales
efforts.



Along with the signing of the MOU in 2015, the parties also signed an offtake
agreement for scandium sales from the Nyngan Scandium Project. The 2015 offtake
agreement specified product prices, annual delivery volumes, and timeframes for
commencement of delivery of scandium oxide product. This offtake agreement
expired in late 2017 and was renewed on similar price/volume terms, although the
sale product was redefined to an aluminum-scandium 2% master alloy. Neither of
these offtake agreements contained a mandatory annual minimum purchase volume of
scandium product by Alcereco, nor any requirement for payment in lieu of
purchase.



The 2017 Alcereco offtake agreement expired in December 2020 and was not renewed
by the parties. Alcereco was seeking new company sponsorship at that time, was
financially distressed, and the parties could see no benefit to renew under
those circumstances. Alcereco had notified SCY of a planned closure of
operations in December, with future re-start possibilities unknown. Alcereco
halted operations in late December, at which time all current programs with

SCY
were completed.

The results of our research work with Alcereco are positive, and consistent with
the body of published literature available today on aluminum scandium alloys. We
are observing noteworthy strengthening effects with scandium additions at and
above 0.1%, and dramatic strengthening improvements with additions of 0.3%,
while preserving or enhancing other alloy properties and characteristics. We
have also demonstrated that alloy hardening process techniques can have
significant effect on the final alloy properties, offering the opportunity to
tune alloy characteristics to suit specific applications. These findings belong
to SCY and can continue to be shared with select potential customers, as is
deemed relevant to their specific areas of commercial interest.



Letters of Intent

During 2018 and 2019, the Company announced that it entered into letter of
intent ("LOI") agreements with nine unrelated partnering entities. In each LOI,
we have agreed to contribute scandium samples, either in form of scandium master
alloy product, or aluminum-scandium alloy product, for trial testing by the
partners in their downstream manufacturing applications. Each of the parties to
the LOI agreements have agreed to report the parameters and general results of
the testing program utilizing these scandium-containing alloys, upon completion
of testing.



These formal LOI agreements, with distinct industry segment leaders, represent a
key marketing program demonstrating precisely how scandium will perform in
specific products, and in production-specific environments. Potential scandium
customers insist on these sample testing opportunities, directly in their
research facilities or on their shop floor, to ensure their full understanding
of the impacts, benefits, and costing implications of introducing scandium into
their traditional aluminum feedstocks.




23

The partnering entities in these formal 2018-2019 LOI agreements are set out below:

Austal Ltd. ("Austal") headquartered in Henderson, Western Australia,
(Australia). Austal is a public corporation, listed on the Australian Stock
Exchange (ASB.ASX), with shipbuilding facilities in Perth, Australia, Mobile,
Alabama (USA), Vung Tau, Vietnam and Balamban, Cebu (Philippines). The company
maintains a focus on research and development of emerging maritime technologies
and cutting-edge ship designs and is a recognized world leader in the design and
construction of large aluminum commercial and defense vessels. Austal continues
to test and report on material samples, both plate and wire, under this program.



Impression Technologies Ltd. ("ITL"), based in Coventry, UK. ITL is a
privately-held technology company, developing and licensing its advanced
aluminum forming technology, Hot Form Quench ("HFQ®"), to automotive, aerospace,
rail and electronics industries, globally. ITL manufactures custom parts for
customers with its patented HFQ® technology, which enables the single-pass
forming of complex, lightweight, high-strength aluminum parts that cannot
otherwise be similarly formed today. ITL has completed their samples testing and
no further testing is planned at this time.



PAB Coventry Ltd. ("PAB"), based in Coventry, UK. PAB is a privately-held
manufacturing and prototyping company offering specialty metal parts and design
capabilities, serving the automotive, aerospace, defense and HVAC industries.
PAB has been a well-known parts and forms supplier to the premium market segment
of the British automotive industry for decades. PAB has completed their samples
testing and no further testing is planned at this time.



Eck Industries Inc. ("Eck"), based in Manitowoc, Wisconsin, USA. Eck is a
privately-held manufacturer of precision sand cast parts, and engineering
services. Eck Industries operates a 210,000 sq. ft. facility with over 250
employees, and 110 customers. Customer segments include commercial aircraft
parts, automotive and trucking cast parts, military drivetrain casings, marine
propulsion system castings, and military aerospace components. ECK continues to
test and report on scandium material samples, and to employ both scandium and
cerium in samples they cast for their external customers.



Grainger & Worrall Ltd. ("GW"), based in Shropshire, UK. GW is a privately-held
manufacturer of precision sand cast parts, and engineering services. GW is a
well-recognized precision air-set sand cast parts manufacturer in the UK,
specializing in low to intermediate volume cast parts for commercial automotive,
motorsports/racing, defense, marine, and aerospace applications. GW has
completed their samples testing and no further testing is planned at this time.



Gränges AB ("Gränges"), based in Stockholm, Sweden. Gränges is a public company,
traded on the NASDAQ Stockholm Stock Exchange (GRNG:OMX), and a large global
player in the rolled aluminum products business, with production assets in
Europe, USA, and China, and a worldwide customer base, majority concentrated in
the USA. Gränges is focused on advanced aluminum materials and holds a leading
global position in rolled products for brazed heat exchangers, which it
estimates at 20%. Granges has completed their samples testing and no further
testing is planned at this time.



Ohm & Häner Metallwerk GmbH & Co. GK ("O&H"), based in Olpe, Germany. O&H is a
privately-held manufacturer of sand cast and gravity die cast parts, using metal
alloys, servicing a significant, global customer base. O&H produces over 3,000
individual cast parts, and currently works with over 40 different alloys,
primarily aluminum and copper-based alloys. O&H has completed their samples
testing and no further testing is planned at this time.



AML Technologies ("AML"), an Adelaide, Australia based start-up company with
proprietary technology for applying aluminum alloys to additive layer
manufacturing processes, also commonly referred to as 3D printing. AML continues
to test and report on scandium wire samples, under this program.




24

Bronze-Alu Group ("BAL"), based in La Couture-Boussey, northern France. BAL is a
privately-held manufacturer of precision high-pressure die cast parts, and
offers prototyping, machining, finishing and engineering services, employing
both aluminum and copper-based alloys. BAL exports approximately 80% of its
products to customers outside of France. BAL has completed their samples testing
and no further testing is planned at this time.



These LOI agreements are part of a developing strategy by the Company to engage
with innovative, research-capable partners, willing to test scandium in their
applications. The Company also has similar agreements with other research
capable partners who do not wish to be publicly named at this time. We are
selecting and approaching these specific partners because we have an
understanding, from our commissioned alloy mixing programs, that scandium
additions can make value-added contributions to their specific products, and we
have the alloy samples to enable an expedient uptake on that validation. The
scandium market for aluminum alloys needs to be built, and that construction
should be seen as underway in the most direct sense.

Cerium-Scandium Aluminum Alloy Program Agreement

On February 27, 2020, the Company announced signing a Program Agreement with Eck
Industries ("ECK") located in Manitowoc, Wisconsin, to pursue novel alloy
development of a combined cerium-scandium aluminum alloy, based on previous work
done independently by the companies in this area.



The companies intend to pursue alloy refinements in both wrought and cast alloy
applications, specifically targeting property improvements related to strength,
corrosion resistance, and heat-working tolerance, principally in A5000 series
alloys.



Program Highlights:

· Joint economic and technical support to alloy design,

· Joint sharing of previous data, and new data produced from this program,

    ·   Samples production for customer trials, either as cast products, or
        wrought sample shapes for various potential customers and alloy
        manufacturers,

· Initial high value application expected to be in marine applications, and

    ·   Program work is protected by existing patent applications filed by ECK.

Use Of Scandium In Lithium-Ion Batteries

On September 24, 2020, the Company announced the filing of a provisional patent
application with the US Patent Office seeking patent rights on various
applications of scandium in lithium-ion batteries. The patent application covers
a number of scandium enhancements, including doping potential for both anodes
and cathodes, and for solid electrolytes.

Patent Application Highlights:

· US Patent Application filed for use of scandium in lithium-ion battery

applications.

· Scandium doping applications are explained for anodes, cathodes and

electrolytes.

· Scandium offers conductivity advantages as a dopant, over other options,

and

· Scandium in other aluminum components offers numerous property

improvements, including conductivity, strength and corrosion resistance.

25

Patent Application Discussion:

Rechargeable lithium-ion batteries (LIBs) are a staple of everyday life. The
search for improved performance through design and materials advances is intense
today. Considerable effort is being expended in developing next-generation
materials for LIBs that will make batteries safer, lighter, more durable, faster
to charge, more powerful, and more cost-effective. A sampling of some these
efforts are as follows:

· Minimizing or removing cobalt from cathode materials, based on cost,

supply and geographic sourcing issues.

· Improving the durability of liquid electrolytes with dopants, or

substitution with safer and higher performing liquid or solid electrolyte

systems.

· Designing for higher voltage potential by utilizing different anode or

        cathode materials.
    ·   Determining combinations of metals that can better withstand harsh
        internal conditions.

Scandium, along with other specialty metals, has a clear role to play in each of these areas.

One particularly promising area for scandium contributions is in a lithium
nickel manganese oxide (LNMO) battery. The cathode in this design substitutes
manganese for cobalt and supports a higher nickel content as well. The
substitution then delivers higher working potentials (voltage), higher energy
densities, and faster charge/discharge rates, all of which offer the promise of
improved battery performance.



Delivering on that promise requires a number of improvements, including
employing a dopant for stabilization of the manganese in the LNMO cathode,
potential stabilization of lithium titanate (LTO) anode materials as well, and
use of dopants to improve the conductivity of both these anode and cathode
materials. Conventional liquid electrolytes may see improved function and
longevity with the improved cathode and anode conductivity. Scandium represents
a suitable and effective dopant in each of these applications.



Solid state electrolytes (SSEs) represent another potential break-through
improvement in LIBs. They will handle higher voltages, higher temperatures,
greater power densities, are potentially easier to package, and are considered
safer in use. Scandium represents a suitable and effective dopant in these
applications, analogous to the use of scandium to stabilize solid zirconia
electrolytes in solid oxide fuel cells. Recently technical papers (available
upon request) covering the use of Lithium Super Ion Conductors (LiSICON) for
SSEs have indicated that primary compounds containing scandium, such as
Li3Sc2(PO4)3, LiScP2O7 and Li3Sc(BO3)2, LiScO2 as well as certain doped
compounds such as Li1.33ScSi0.33P1.67O7,
Li3.375Mg0.375Sc0.625(BO3)2, Li1.5Al0.33Sc0.17Ge1.5(PO4)3, etc. can provide
desirable crystal structural frameworks for solid state electrolytes. Non-oxide
LiSICON fast conductors have also been identified recently, such as some lithium
cryolite types: Li3ScCl6, as well as its fluoride counterpart Li3ScF6.

Lithium-ion batteries employ aluminum in a number of areas, specifically in cathode structure, current connectors, and in general battery structure. Aluminum-scandium alloys represent an enhanced aluminum alloy option, based on their combination of conductivity and strength.

The intent of this SCY patent filing was to advise the battery industry that
scandium is a prospective dopant choice for enhanced performance of LIBs, both
under existing design parameters and in particular for next-generation LNMO
batteries. We want to ensure that battery research and design groups consider
scandium additions, amongst their various materials choices, as they race to
build a better lithium-ion battery.



Other Properties Review

Honeybugle Scandium Property (NSW, Australia)

On April 2, 2014, the Company announced that it had secured a 100% interest in
an exploration license (EL 7977) covering 34.7 square kilometers in New South
Wales, Australia. The license area we call the 'Honeybugle Scandium Property' is
located approximately 24 kilometers west-southwest from the Company's Nyngan
Scandium Project and approximately 36 kilometers southwest from the town of

Nyngan, NSW.




26

Exploration rights for the Honeybugle Scandium Property include certain minimum expenditure requirements. The Company intends to fulfill those minimum expenditure requirements.

Honeybugle Drill Results

On May 7, 2014, the Company announced completion of an initial program of 30 air
core ("AC") drill holes on the property, specifically at the Seaford anomaly,
targeting scandium (Sc). Results on 13 of these holes are shown in detail, in
the table below. These holes suggest the potential for scandium mineralization
on the property similar to Nyngan.

Highlights of initial drilling program results include the following:

    ·   The highest 3-meter intercept graded 572 ppm scandium (hole EHAC 11).

· EHAC 11 also generated two additional high grade scandium intercepts,

grading 510 ppm and 415 ppm, each over 3 meters.

· The program identified a 13-hole cluster which was of particular interest;

        intercepts on these 13 holes averaged 270 ppm scandium over a total 273
        meters, at an average continuous thickness of 21 meters per hole,
        representing a total of 57% (354 meters) of total initial program
        drilling.
    ·   The 13 holes produced 29 individual (3-meter) intercepts over 300 ppm,
        representing 31% of the mineralized intercepts in the 273 meters of
        interest.

· This initial 30-hole AC exploratory drill program generated a total of 620

        meters of scandium drill/assay results, over approximately 1 square
        kilometer on the property.

Kiviniemi Scandium Property (Eastern Finland Province, Finland)

On September 25, 2017, the Company announced that its wholly-owned subsidiary
company, Scandium International Mining Corp., Norway AS, was granted a
reservation on an Exploration License for the Kiviniemi Scandium property in
central Finland from the Finnish regulatory body governing mineral exploration
and mining in Finland. The exploration license was subsequently granted during
August 2018.

The Geological Survey of Finland ("GTK") conducted airborne survey work on the
area in 1986, conducted exploration drilling on the property in 2008-2010, and
published those program results on their public GTK website in 2016. The
Company's Exploration License area is approximately 24.6 hectares (0.25 square
kilometer), identical to the historic GTK exploration license on the property.



Highlights

· Kiviniemi property previously identified for scandium and explored by GTK.

· Property is a high iron content, medium grade scandium target, located on

surface, with on-site upgrade potential.

· Early resource upgrade work done for GTK promising, confirmed by SCY.

· Property is all-weather accessible, close to infrastructure.

· Finland location is mining-friendly and ideally suited to EU customer

        markets.





27








Kiviniemi Summary



The Kiviniemi property represents a medium grade scandium resource target that
has remained unrecognized and overlooked by exploration work, largely due to the
absence of the more commonly sought-after minerals in the region, specifically
copper, nickel and cobalt. We believe that Kiviniemi is Europe's largest
underdeveloped primary scandium resource.



The target has benefited significantly from valuable early exploration work by
the GTK, which has advanced the property to a stage where successful
metallurgical investigations may prove value that offsets grade concerns. SCY
estimates roughly US$2M of work value has been directed at this property to
date, including field work, drilling programs, assay work, overheads, and
metallurgical upgrade studies, but firm numbers are not available.

Operating results - Revenues and Expenses

The Company's results reflect lower operating costs. Cash expenditures were down
by $69,622 due to lower contractor and consulting fees. In the current quarter,
we took a one-time accrual reversal on contractor fees.



Summary of quarterly results

A summary of the Company's quarterly results is shown below at Table 10.

                   Table 10. Quarterly Results Summary (US$)



                 2022                                 2021                                                 2020
                  Q1             Q4             Q3             Q2             Q1             Q4             Q3             Q2
Net Sales              -                             -              -              -              -              -              -
Net Income
(Loss)
attributable
to Scandium
Mining Corp.     522,946       (215,111 )     (278,704 )     (761,080 )     (312,137 )     (706,306 )     (265,057 )     (270,463 )
Basic and
diluted Net
Income
(Loss) per
share
attributable
to Scandium
Mining Corp.       (0.00 )        (0.00 )        (0.00 )        (0.00 )        (0.00 )        (0.00 )        (0.00 )        (0.00 )





28

Results of Operations for the three months ended March 31, 2022

The net profit for the quarter was $522,946, an increase of $835,083 from a loss
of $312,137 in the same quarter of the prior year. Details of the individual
items contributing to the increased net loss are set out below at Table 11:



                    Table 11. Variance Analysis for Net Loss



                         Q1 2022 vs. Q1 2021 - Variance Analysis
                       Variance
                    Favourable /
     Item          (Unfavourable)                          Explanation
Accrual                                  In the current quarter, the Company wrote down
reversal                                 the accrued liabilities for certain staff who
                                         are no longer with the Company.  No such item
                             780,444     was incurred in the comparable quarter in 2021.
General and                              The decrease in Q1 2022 when compared to the
administrative                           same period one year ago is due to property tax
                                         accruals in Australia.  No such accruals took
                 $            43,986     place in the current quarter.
Salaries and                             This favorable variance is due to the
benefits                                 resignation of senior staff in the current
                 $            25,713     quarter,
Consulting                               The resignation of a consultant in 2021 led to
                 $             8,096     this favorable variance.
Insurance                                Lower fees were negotiated in Q4 2021 resulting
                                         in lower costs in the current quarter when
                 $             1,050     compared to Q1 2021.
Amortization                             The slightly lower expense is attributable to a
                 $                52     lower depreciable asset base in Q1 2022.
Exploration                              Costs for the HPA/CMR program continued into Q1
                                         2022 while in Q1 2021 only the costs for
                 $            (3,935 )   scandium-related activities were incurred.
Professional                             Audit fees have been increased resulting in this
fees             $            (5,287 )   unfavorable variance when compared to Q1 2021.
Foreign                                  The US dollar has continued to weaken against
exchange                                 the Canadian dollar resulting in this
                                         unfavorable variance in Q1 2022.  The opposite
                 $           (15,035 )   was true in the comparative period of 2021.







29

Cash flow discussion for the three-month period ended March 31, 2022, compared to March 31, 2021

The cash outflow for operating activities was $47,024, a decrease of $100,423
(March 31, 2021 - $147,447), due mainly to property taxes paid in Australia

in
Q1 2021.

Cash inflows from financing activities of $Nil reflect the fact that there were
no shares issued from private placements or options being exercised in the
current three-month period when compared to the three- month period ended March
31, 2021, in which there were $227,064 of options exercised.



Financial Position



Cash

The Company's cash position decreased during the three-month period by $47,024 to $46,870 (December 31, 2021 - $93,894) due mainly ongoing operating costs.

Prepaid expenses and receivables

Prepaid expenses and accounts receivable decreased by $7,486 to $27,556 during
the three-month period due to the expensing of the prepaids without additional
funds being added to the prepaid accounts (December 31, 2021 - $35,042).



Property and equipment

Property and equipment consist of computer equipment at the Nevada office. The
decrease of $419 to $2,513 (December 2021 - $2,932) is due to amortization of
that computer equipment in the quarter.



Mineral interests

Mineral interests remained the same at $704,053.

Accounts payable, accrued liabilities and accounts payable with related parties

Accounts payable has decreased by $996,008 to $731,706 (December 2021- $1,727,714) due to the reclassification and write off of certain salary deferrals.

Long-term liabilities

Certain salaries owed to individuals were reclassed to be paid over a three-year period. The portion that is owed past one year of $418,133 was reclassified here.

Capital Stock

Capital stock remained at $110,149,177 (December 31, 2021 - $110,149,177.

Additional paid-in capital remained at $6,891,510 (December 31, 2021 - $6,891,510).

Liquidity and Capital Resources

At March 31, 202, the Company had a working capital of $(657,280) including cash
of $46,870, as compared to a working capital of $(1,598,778) including cash of
$93,894, at December 31, 2021.



At March 31, 2022, the Company had a total of 30,215,000 stock options
exercisable between C$0.065 and C$0.30 that have the potential upon exercise to
generate a total of C$4,494,000 in cash over the next four years. There is no
assurance that these securities will be exercised. The Company's continued
development is contingent upon its ability to raise sufficient financing both in
the short and long term. There are no guarantees that additional sources of
funding will be available to the Company; however, management is committed to
pursuing all possible sources of financing in order to execute its business
plan. The Company continues its cost control measures to conserve cash to meet
its operational obligations.




30






Outstanding share data



At the date of this report, the Company has 317,157,595 issued and outstanding
common shares and 30,215,000 stock options currently outstanding at a weighted
average exercise price of C$0.15.

Off-balance sheet arrangements

At March 31, 2022, the Company had no material off-balance sheet arrangements
such as guarantee contracts, contingent interest in assets transferred to an
entity, derivative instruments obligations or any obligations that trigger
financing, liquidity, market or credit risk to the Company.

Transactions with related parties

During the 3-month period, the Company reclassed $418,133 owed to related
parties to long-term liabilities. These long-term liabilities are unsecured,
non-interest bearing, and due in instalments - 33% in one year, 33% in two
years, and 33% in three years. Also, the Company reversed $418,133 of accruals
to related parties. No such transactions occurred in Q1 2021.



During the 3-month period ended March 31, 2022, the Company expensed a
consulting fee of $17,000 to one of its directors. During the 3-month period
ended March 31, 2021, the Company expensed a consulting fee of $25,500 to one of
its directors.

As at March 31, 2022, the Company owed $831,205 to various directors and officers of the Company. (December 31, 2021 - $1,159,713)

Proposed Transactions

There are no proposed transactions outstanding other than as disclosed.

Critical Accounting Estimates



The preparation of financial statements in conformity with generally accepted
accounting policies requires management of the Company to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. These estimates are based on past
experience, industry trends and known commitments and events. By their nature,
these estimates are subject to measurement uncertainty and the effects on the
financial statements of changes in such estimates in future periods could be
significant. Actual results will likely differ from those estimates.



Stock-based compensation



The Company uses the Black-Scholes option pricing model to calculate the fair
value of stock options and compensatory warrants granted. This model is subject
to various assumptions. The assumptions the Company makes will likely change
from time to time. At the time the fair value is determined, the methodology the
Company uses is based on historical information, as well as anticipated future
events. The assumptions with the greatest impact on fair value are those for
estimated stock volatility and for the expected life of the instrument.



Future income taxes



The Company accounts for tax consequences of the differences in the carrying
amounts of assets and liabilities and their tax bases using tax rates expected
to apply when these temporary differences are expected to be settled. When the
future realization of income tax assets does not meet the test of being more
likely than not to occur, a valuation allowance in the amount of the potential
future benefit is taken and no future income tax asset is recognized. The
Company has taken a valuation allowance against all such potential tax assets.




31

Mineral properties and exploration and development costs

The Company capitalizes the costs of acquiring mineral rights at the date of
acquisition. After acquisition, various factors can affect the recoverability of
the capitalized costs. The Company's recoverability evaluation of our mineral
properties and equipment is based on market conditions for minerals, underlying
mineral resources associated with the assets and future costs that may be
required for ultimate realization through mining operations or by sale. The
Company is in an industry that is exposed to a number of risks and
uncertainties, including exploration risk, development risk, commodity price
risk, operating risk, ownership and political risk, funding and currency risk,
as well as environmental risk. Bearing these risks in mind, the Company has
assumed recent world commodity prices will be achievable. The Company has
considered the mineral resource reports by independent engineers on the Nyngan
Scandium Project in considering the recoverability of the carrying costs of the
mineral properties. All of these assumptions are potentially subject to change,
out of our control, however such changes are not determinable. Accordingly,
there is always the potential for a material adjustment to the value assigned to
mineral properties and equipment.

Recent Accounting Pronouncements

Accounting Standards Update 2021-04 - Earnings Per Share (Topic 260), Debt
Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock
Compensation (Topic 718), and Derivatives and Hedging Contracts in Entity's Own
Equity (Subtopic 815-40). This update is to provide clarity around earnings per
share calculations and is effective for fiscal years beginning after December
15, 2021, including interim periods within those fiscal years. The Company has
reviewed this standard and concluded that there is no impact on its financial
statements.

Financial instruments and other risks

The Company's financial instruments consist of cash, receivables, accounts
payable, accounts payable with related parties, accrued liabilities and
promissory notes payable. It is management's opinion that the Company is not
exposed to significant interest, currency or credit risks arising from its
financial instruments. The fair values of these financial instruments
approximate their carrying values unless otherwise noted. The Company has its
cash primarily in three commercial banks: (i) one in Vancouver, British
Columbia, Canada, (ii) one in Mackay, Queensland, Australia, and (iii) one in
Chicago, Illinois, United States.

Information Regarding Forward-Looking Statements

This Management's Discussion and Analysis of Financial Condition and Results of
Operations contain certain forward-looking statements. Forward-looking
statements include but are not limited to those with respect to the prices of
metals, the estimation of mineral resources and reserves, the realization of
mineral reserve estimates, the timing and amount of estimated future production,
costs of production, capital expenditures, costs and timing of the development
of new deposits, success of exploration activities, permitting time lines,
currency fluctuations, requirements for additional capital, government
regulation of mining operations, environmental risks, unanticipated reclamation
expenses, title disputes or claims and limitations on insurance coverage and the
timing and possible outcome of pending litigation. In certain cases,
forward-looking statements can be identified by the use of words such as
"plans", "expects" or "does not expect", "is expected", "estimates", "intends",
"anticipates" or "does not anticipate" or "believes" or variations of such words
and phrases, or statements that certain actions, events or results "may",
"could", "would", or "will" be taken, occur or be achieved. Forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance, or achievements of Scandium
International to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. Such risks
and uncertainties include, among others, the actual results of current
exploration activities, conclusions or economic evaluations, changes in project
parameters as plans continue to be refined, possible variations in grade and or
recovery rates, failure of plant, equipment or processes to operate as
anticipated, accidents, labor disputes or other risks of the mining industry,
delays in obtaining government approvals or financing or incompletion of
development or construction activities, risks relating to the integration of
acquisitions, to international operations, and to the prices of metals and risks
relating to the COVID-19 pandemic. While Scandium International has attempted to
identify important factors that could cause actual actions, events or results to
differ materially from those described in forward-looking statements, there may
be other factors that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly, readers
should not place undue reliance on forward-looking statements. Scandium
International expressly disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.




32

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