Tarachi Gold : MD&A for the period ended January 31 2022

MANAGEMENT DISCUSSION ANALYSIS

FOR THE SIX MONTHS ENDED

JANUARY 31, 2022

TARACHI GOLD CORP.

MANAGEMENT DISCUSSION AND ANALYSIS FOR THE SIX MONTHS ENDED JANUARY 31, 2022

BASIS OF DISCUSSION & ANALYSIS AND DATE

This Management Discussion and Analysis ("MD&A") of the financial position and results of Tarachi Gold Corp. (the "Company" or "Tarachi") has been prepared by management as of March 30, 2022. This MD&A should be read in conjunction with the Company's condensed interim consolidated financial statements for the six months ended January 31, 2022, and audited consolidated financial statements for the year ended July 31, 2021. The MD&A was prepared to conform to National Instrument 51-102F1 and was approved by the Board of Directors prior to its release. Readers are cautioned that the MD&A contains forward-looking statements and that actual events may vary from management's expectations. Readers are encouraged to read the Forward-Looking Statement disclaimer included with this MD&A.

The condensed interim consolidated financial statements and audited consolidated financial statements and MD&A are presented in Canadian dollars, unless otherwise indicated, and have been prepared in accordance with International Financial Reporting Standards ("IFRS"). The statements and any summary of results presented in the MD&A were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). Please consult the condensed interim consolidated financial statements for the six months ended January 31, 2022, and audited financial statements for the years ended July 31, 2021, for more complete financial information.

All the Company's public disclosure filings, including its most recent management information circular, material change reports, press releases and other information, may be accessed viawww.sedar.comand readers are urged to review these materials, including the technical reports filed with respect to the Company's mineral properties.

Date

This MD&A has been prepared based on information available to the Company as of March 30, 2022.

OVERALL PERFORMANCE

NATURE OF BUSINESS

Tarachi Gold Corp. was incorporated as Kal Minerals Corp. under the Business Corporations Act (British Columbia) on February 19, 2016. On April 7, 2020, the Company changed its name to Tarachi Gold Corp. The shares of the Company are trading on the Canadian Securities Exchange under the symbol "TRG". The Company's principal business activity is the exploration of mineral properties. The Company currently conducts its operations in Mexico.

The head office and principal address of the Company is located at Suite 700, 1090 West Georgia Street, Vancouver, B.C. V6E 3V7.

The Company has no substantial revenue and supports its operations through the sale of equity or assets such as mineral properties. The value of any mineral property is dependent upon the existence or potential existence of economically recoverable mineral reserves. See section related to "Risk Factors" in this statement.

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TARACHI GOLD CORP.

MANAGEMENT DISCUSSION AND ANALYSIS FOR THE SIX MONTHS ENDED JANUARY 31, 2022

PROJECT ACQUISITION

On February 8, 2021, the Company signed a purchase agreement (the "APA Agreement") with Manto Resources S.A. de C.V. ("Manto") to acquire Magistral del Oro mill and tailings project ("Magistral") located in the State of Durango, Mexico. The acquisition was closed on March 17, 2021 (the "Closing Date").

On March 23, 2022, the Company signed a new land lease, water rights and tailings purchase agreements with the local Magistral Ejido community. These new agreements will allow the Company to continue with Magistral's development in 2022 with the goal of producing gold at Magistral in 2023.

Pursuant to the APA Agreement, 100% interest in Magistral project was acquired and the consideration is composed of the following:

•  4,000,000 common shares issued respectively upon execution and 60 days after the Closing Date of the APA Agreement; (issued at the fair value of $2,560,000)

•  US$1,179,500 upon execution of the APA Agreement; (paid)

•  Certain obligations have been assumed by the Company

  • - US$1,245,230 has been paid and 2,594,728 common shares with fair value of $670,868 have been issued during the year ended July 31, 2021;

  • - US$314,940 (C$392,478) has been paid in cash and US$333,333 (C$383,243) of the Company's common shares has been issued at 15% discount to the 10-day volume weighted average trading price (2,038,528 shares at $0.188) on November 10, 2021;

  - 4,000,000 common shares to be issued respectively on 180 days (issued on Jan 28, 2022, at $0.145) and 365 days after the Closing Date (recorded as shares to be issued with fair value of $1,200,000 as at the Closing date and revaluated to $560,000 on January 31, 2022. The gain of $640,000 has been recorded in the fair value gain of shares issued)

•  Contingent considerations to be paid upon achieving certain milestones:

  • - 15% net profits royalty on the earnings before interest and taxes ("EBIT");

  • - US$500,000 respectively on 180 days and 365 days after commercial production which was defined as the EBIT exceeds $100,000 in a calendar month; and

  • - US$1,000,000 upon revenue equaling or exceeding US$15,000,000.

On January 21, 2022, the Company has completed the Preliminary Economic Assessment ("PEA") to assess whether the Company can bring the project into commercial production. For the six months ended January 31, 2022, a probability weighted expected value calculation was utilized to value the contingent consideration. The calculation was based on the management's best estimate on the assumptions used in EBIT projection. The probability weightings assigned were based on the likelihood of occurrence of different scenarios. The Company has revalued the estimated royalty and recalculated the contingent considerations based on the available results from the PEA.

The pre-tax discount rate applied to EBIT projection is 12.4%, which represent the current market assessment of the risk specific to the Company, taking into consideration of the time value. A 1% decrease/increase in the discount rate would increase/decrease the contingent consideration balance as at January 31, 2022, by approximately $93,000.

As at the Closing Date, the contingent considerations were fair valued at $6,844,797. The provision has been revaluated to $5,598,060 on January 31, 2022, the gain of $977,037 has been recorded in the contingent consideration revaluation gain.

In addition, the Company has issued a finder's fee of 1,000,000 common shares with fair value of $270,000 related to the Magistral acquisition.

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TARACHI GOLD CORP.

MANAGEMENT DISCUSSION AND ANALYSIS FOR THE SIX MONTHS ENDED JANUARY 31, 2022

OVERALL PERFORMANCE (Continued)

FINANCING

On October 28, 2021, the Company completed a private placement (the "Private Placement") whereby the Company issued a total of 4,396,667 common shares at a price of $0.15 per share for gross proceeds of $659,500. The Company paid cash finder's fees equal to $9,000 and issued 60,000 broker warrants of the Company, exercisable at any time on or before October 28, 2022, at an exercise price of $0.35. The fair value of the finders' warrants is $4,902.

On March 11, 2022, the Company has closed the non-brokered private placement financing for 23,227,005 units at a price of C$0.18 per Unit for gross proceeds of $4,180,861. Each Unit is comprised of one common share of the Company and one-half of one common share purchase warrant. Each Warrant entitles the holder to purchase one common share of the Company at an exercise price of C$0.30 for a period of 24 months. The Company paid cash finder's fees equal to C$81,796 and issued 454,422 broker warrants of the Company at the same terms as the warrants described above.

EXPLORATION PROJECTS

Juliana and Las Moritas

On September 3, 2020 ("Effective Date"), the Company entered into an option agreement to acquire a 100% interest, subject to a 3% NSR, in the group of mining concessions known as the Juliana, Juliana No.1, Juliana No.2 and Las Moritas Mining Concessions. The 4 concessions cover a total surface area of 1,148.42 hectares and are located in the Sierra Madre Gold Belt of Eastern Sonora, Mexico. The Company can earn 100% in the project by paying staged cash payments of US$2.1 million and issuing 4 million common shares of the Company over a period of four year.

Based on the channel sampling results of 6.34 grams/tonne gold over 62.55 metres at the historic La Dura mine announced on August 19, 2020, the company optioned these four concessions due to their close proximity immediately to the north and on trend with the felsic volcanic pile hosting the La Dura gold mineralization.

Geologically, mineralization is generally associated with high sulphidation epithermal mineralization contained within felsic volcanic piles typically of rhyodacitic composition. Higher grade gold concentrations are typically associated within silicified zones containing vuggy silica and breccias hosting hematite and specularite. Native gold has been observed along late-stage fracture coatings associated with barite.

On September 8, 2021, 1,000,000 of shares were issued pursuant to the option agreement to acquire the Juliana and Las Moritas property.

STOCK OPTIONS AND WARRANTS

On January 25, 2022, The Company has granted 1,500,000 options to directors, officers, and consultants under the Company's stock option plan. The options have an exercise price of $0.16 and will vest immediately. They are exercisable for a period of five years from the date of the grant.

On March 24, 2022, the Company has granted 200,000 options to the new Vice President of Operations under the Company's stock option plan. The options have an exercise price of $0.165 and will vest immediately. They are exercisable for a period of five years from the date of the grant.

On August 11, 2021, 100,000 stock options were exercised for total proceeds of $7,500.

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TARACHI GOLD CORP.

MANAGEMENT DISCUSSION AND ANALYSIS FOR THE SIX MONTHS ENDED JANUARY 31, 2022

RESULTS OF OPERATION

MAGISTRAL

Since acquiring the Magistral Project, Tarachi engaged Ausenco Engineering ("Ausenco") to conduct a preliminary economic assessment of the project and provide an NI 43-101 compliant resource estimate for the tailings' material that Tarachi has access to. Tarachi plans to process the tailings material through the Magistral mill to produce gold and other recoverable metals beginning in 2023. The preliminary economic assessment ("PEA") was completed in December 2021.

An auger drill rig was mobilized to Magistral at the end of March 2021 to conduct sampling work as part of the preliminary economic assessment. A total of 37 auger holes were completed in the tailings basin. Drilled samples will be used for metallurgical test work and analyzed for metal content at a lab in Canada.

The existing permits for the Magistral project are currently being audited by consultants in Mexico to determine their current status and what requirements need to be met to ensure that the project is in compliance and fully permitted before the mill is commissioned in 2023.

Engineers were sent to Magistral on March 18, 2021, to review the existing equipment in the mill and to provide an opinion of the mill's current status and capabilities. After a review of the electrical equipment at Magistral, a team of electricians was sent to site in 2021 to upgrade and replace various electrical installations to ensure all electrical equipment met local safety regulations. This upgrade was done in anticipation of the mill being inspected in early 2022 as part of the process to apply for the mill to get connected to the local power grid.

Metallurgical work overseen by Ausenco in the second half of 2021 demonstrated approximately 80% of the gold contained in the tailings material at Magistral could be recovered via cyanide leaching without the need for regrinding (see press release dated November 2, 2021). These metallurgy results were incorporated into the PEA.

Results from the PEA were released on December 13, 2021 (see press release of same date) with the final report filed on SEDAR on January 21, 2022. The PEA outlined a potential mining scenario of 1,000 tonnes per day feed rate of tailings into the Magistral mill to produce an average of 16,000oz of gold per year with a copper concentrate by-product. The PEA envisioned the addition of a SART (sulphidation, acidification, recycling, and thickening) circuit to manage the presence of cyanide-soluble copper contained in the tailings feed material. The new SART circuit would produce a high-grade copper concentrate by-product and the existing Merril Crowe equipment would produce gold precipitate that would be smelted on site to produce saleable gold dore. The scenario presented in the PEA, using a gold price of $1,600/oz, demonstrated robust economics with an after-tax internal rate of return of 85%, after-tax pay back period of 1 year and all-in sustaining costs of production of $705/oz of gold after accounting for expected silver and copper by-product credits.

Tarachi plans to commence final metallurgical test work needed to support engineering and design of the modifications and additions to the existing Magistral mill in March and April of 2022. Upon successful final met testing and financing of the capital required to develop Magistral, Tarachi will use the remainder of 2022 and first quarter of 2023 to complete the recommended additions to the mill, upgrades to the tailing storage facility and updating of existing operating permits.

As part of the PEA, an updated NI 43-101 compliant mineral resource estimate was provided. That resource estimate contained 1.26 million tonnes of tailings with an average grade of 1.93g/t Au and 0.17% Cu with 85% of those resources contained in the Measured category. Tarachi is currently seeking out other local tailings material that could potentially provide additional feed to the Magistral mill and extend the life of the operation. There is no guarantee that Tarachi will be successful in securing additional material.

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