Southern Arc Minerals : MD&A – December 31, 2020

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2020 AND 2019

(Unaudited- Expressed in Canadian dollars)

SOUTHERN ARC MINERALS INC.

Management's Discussion and Analysis

For the six months ended December 31, 2020 and 2019

This Management's Discussion and Analysis ("MD&A"), prepared as of March 1, 2021, should be read in conjunction with the unaudited condensed interim financial statements of Southern Arc Minerals Inc. ("Southern Arc", or the "Company") for the six months ended December 31, 2020 and the audited consolidated financial statements for the year ended June 30, 2020 and related notes thereto, which have been prepared in accordance with International Financial Reporting Standards ("IFRS"). All amounts are stated in Canadian dollars unless otherwise indicated. Additional information related to the Company can be found on SEDAR atwww.sedar.comand on the Company's website at www.southernarcminerals.com.

Statements in this MD&A that are not historical facts are "forward-looking statements" that are subject to risk factors set out in a cautionary note contained herein. Readers are cautioned not to put undue reliance on forward-looking statements.

COMPANY OVERVIEW

Southern Arc Minerals Inc. ("Southern Arc" or "the Company") was incorporated in British Columbia, Canada on August 19, 2004. The Company is a Canadian company focused on creating value through project generation and strategic investments in mineral resource companies with a focus on gold and copper-gold. The Company's head office is located at Suite 650 - 669 Howe Street, Vancouver, British Columbia, Canada, V6C 0B4.

The Company is listed on the NEX board of the TSX Venture Exchange under the symbol "SA.H". To date, the Company has not generated revenues from operations and is focused on creating value through project generation and strategic investments in mineral resource companies with a focus on gold and copper-gold.

On March 11, 2020, the novel coronavirus outbreak ("COVID-19") was declared a pandemic by the World Health Organization. The situation is dynamic and the ultimate duration and magnitude of the impact on the economy and the Company's business are not known at this time. These impacts could include an impact on the Company's ability to obtain debt and equity financing to fund ongoing investing activities as well as our ability to conduct business. These conditions result in significant uncertainties that may cast substantial doubt about the Company's ability to continue as a going concern. These financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.

FINANCIAL SNAPSHOT

December 31, 2020

June 30, 2020

June 30, 2019

Total assets Working capital Total liabilities Net income

$

• 3,889,258 $

1,969,548

15,328,170 1,393,436

$

17,455,389 471,347

57,283

169,515 1,589,773

6,107,873

53,467 4,622,204

Net income attributable to the Company Basic income per share

6,107,873

53,467 5,442,472

Diluted income per share

$ $

0.32

0.32

$ $

0.00 $ 0.38

0.00 $ 0.35

At the date of this MD&A, the Company had approximately $1.9 million in working capital, which includes the Company's investments in shares of PT Ancora Tbk, Japan Gold Corp., Rise Gold Corp. and its investment in warrants of Rise Gold Corp.

and Adriatic Metals Plc.

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SOUTHERN ARC MINERALS INC.

Management's Discussion and Analysis

For the six months ended December 31, 2020 and 2019

RECENT EVENTS

In October 2020, the Company completed a return of capital transaction (the "Transaction") by way of a court approved plan of arrangement under the Business Corporations Act (British Columbia). Pursuant to the plan of arrangement, the Company exchanged each of its outstanding common shares for one new Class A common share and one redeemable share of the Company. The Class A common shares have similar rights as the old common shares and are listed on the NEX board of the TSX Venture Exchange. The redeemable shares were immediately redeemed in exchange for the distribution of the following securities to the shareholders of the Company on a pro-rata basis:

Carrying value

# of	- October 16,
securities	2020
Common shares of Japan Gold Corp.	40,250,000	$ 7,388,531
Common shares of Rise Gold Corp.	2,750,000	2,667,500
Common shares of Adriatic Metals Plc	1,664,668	3,246,103
$13,302,134

For each common share of Southern Arc, a shareholder of Southern Arc received:

• - 1 Class A of Southern Arc (NEX: SA.H),

• - 1.7577751 common shares of Japan Gold Corp. (TSXV: JG),

• - 0.12009743 common shares of Rise Gold Corp. (CSE: RISE),

• - 0.0726999 ordinary shares of Adriatic Metals plc. (LSE: ADT1)

As the Company held 130,000 of its own shares in treasury, it received distribution of 228,510 common shares of Japan Gold Corp., 15,612 common shares of Rise Gold Corp., and 9,481 ordinary shares of Adriatic Metals plc.

Other events

On March 9, 2020, the Company advanced an unsecured, non-interest-bearing loan to Japan Gold in the principal amount of $1,000,000. This loan had a six-month term maturing on September 9, 2020. In consideration for the loan, the Company received a cash fee of 5% of the amount of the loan ($50,000) and 500,000 non-transferable share purchase warrants of Japan Gold. Each warrant entitles the Company to purchase one common share of Japan Gold at $0.40 per share until March 9, 2021. The fair value of these warrants was determined to be $35,609 using the Black-Scholes pricing model and the following weighted average assumptions: Risk-free interest rate - 1.58%; expected volatility - 75%; share price of $0.32 and strike price - $0.40; expected life of warrants - 1 year.

On May 22, 2020 and June 1, 2020, Japan Gold completed private placements of a total of 34,278,000 units at a price of $0.25 per unit. Each unit consisted of one common share of Japan Gold and one half of a transferable common share purchase warrant exercisable at $0.40 per share for a period of 24 months. Of the units issued by Japan Gold, 4,000,000 units were issued to the Company in exchange for the settlement of the $1,000,000 loan. The Company recognized a gain on the settlement of the loan of $156,813 as the fair value of the shares and warrants received exceeded the carrying value of the loan.

On January 6, 2020, the Company closed the second and final tranche of a non-brokered private placement. The Company sold 850,000 common shares at a price of $0.35 per share for gross proceeds of $297,500 which were all purchased by John Proust, the Company's CEO and Chairman.

On November 1, 2019, the Company closed a non-brokered private placement through the issuance of 2,150,000 common shares at a price of $0.35 per share for gross proceeds of $752,500. No finder's fees were paid in connection with the financing and proceeds were used for working capital. An Individual/entities related to John Proust, the Company's Chairman and CEO, purchased 1,150,000 shares ($402,500) of the private placement. Morris Kid, a director of the Company, purchased 155,050 shares ($54,268) of the private placement.

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SOUTHERN ARC MINERALS INC.

Management's Discussion and Analysis

For the six months ended December 31, 2020 and 2019

PROPERTY REVIEW AND OUTLOOK

Indonesia - PT Ancora Indonesia Resources, Tbk

On December 12, 2017, the Company completed the sale of its 90% owned West Lombok Property (the "Property") to PT Ancora Indonesia Resources, Tbk ("PT Ancora"), in consideration for a cash payment of US$2,000,000 and a granting of a 3% Net Smelter Return royalty. Under the terms of the agreement, PT Ancora has the right to buy back the NSR from the Company at any time by paying an additional US$2 million. The Company used the cash proceeds from the sale to acquire 100 million shares of PT Ancora (5.66% of PT Ancora's issued and outstanding) from third parties in a private transaction.

PT Ancora is an Indonesian company listed on the Indonesia Stock Exchange (OKAS:IJ).

SUMMARY OF QUARTERLY RESULTS

December 31,	September 30, 2020	June 30, 2020	March 31,
2020	2020
Total assets	$3,889,258	$17,254,533	$ 15,328,170	$ 12,930,662
Working capital	1,969,548	1,467,298	1,393,436	2,035,814
Net income (loss)	5,993,058	114,815	(54,536)	(703,993)
Net income (loss) attributable to the Company	5,993,058	114,815	(54,536)	(703,993)
Basic income (loss) per share	0.27	0.01	(0.00)	(0.04)
Diluted income (loss) per share	0.27	0.01	(0.00)	(0.04)
December 31,	September 30,	June 30, 2019	March 31, 2019
2019	2019
Total assets	$ 15,656,601	$16,896,929	$17,455,389	$23,223,746
Working capital	3,340,517	1,846,582	471,347	9,956,132
Net income	(980,680)	1,792,676	275,120	5,209,720
Net income attributable to the Company	(980,680)	1,792,676	169,455	5,209,720
Basic income per share	(0.06)	0.12	0.02	0.36
Diluted income per share	(0.06)
0.12	0.01	0.26

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2020

During the three-month period ended December 31, 2020, the Company had a net income of $5,993,058 compared to a net loss of $980,680 for the three-month period ended December 31, 2019. Significant fluctuations occurred in the following categories:

• a) During the quarter ended December 31, 2020, the Company completed the return of capital and recorded a gain of $6,698,969.

• b) The Company recognized a realized and unrealized loss on its investments of $414,592 prior to the return of capital (December 31, 2019: $778,230).

• c) The Company also recorded its share of the loss in its investment in Japan Gold of $35,992 prior to the return of capital (December 31, 2019: $250,081).

• d) During the quarter ended December 31, 2020, the Company recorded a gain on fair value adjustment on derivative liability of $Nil (December 31, 2019: gain of $297,611). This difference resulted from the reversal of the derivative liability upon the termination of the call option Augusta had on 5,000,000 of the Company's common shares of Tethyan.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2020

During the six-month period ended December 31, 2020, the Company had a net income of $6,107,873 compared to $811,996 for the six-month period ended December 31, 2019. Significant fluctuations occurred in the following categories:

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