FALCON PROJECT

In June 2016, the Company entered into a binding letter agreement (the “Falcon Agreement”) with Falcon Metais Ltda. (“Falcon”) pursuant to which Falcon granted to Emerita an option (the “Option”) to acquire a 100% interest in the Falcon Litio MG Project (the “Falcon Project”). After having not been successful in liquidating the project in some form, the Company has now relinquished the Falcon project. Going forward, the Company will not have any costs associated with its legacy assets in Brazil other than costs associated with winding down its subsidiaries in Brazil. The Company is now solely focused on its assets in Spain.

Falcon Project – Description In June 2016, the Company entered into a binding letter agreement (the “Falcon Agreement”) with Falcon Metais Ltda. (“Falcon”) pursuant to which Falcon granted to Emerita an option (the “Option”) to acquire a 100% interest in the Falcon Litio MG Project (the “Falcon Project”). The Falcon Project is adjacent to Brazil’s only lithium mining operation owned by Companhia Brasileira de Lítio (“CBL”) and the northwestern property boundary of the Falcon Project is just 500 meters from the CBL mine. The Falcon Project is comprised of five exploration permits and one application for an exploration permit. Pegmatite dykes similar to the mineralized dykes on the adjacent property have been identified during the initial field reconnaissance of the area. Lithium mineralization in the area is associated with Neoproterozoic granitic intrusions that have deposited lithium mineralization with minor contents of rare metals such as thallium, niobium and tin in the apical aureole of these intrusions. Mineralization is hosted by pegmatite dykes with widths varying from 5 to 30 meters and strike in excess of 1 kilometre. The mineralized pegmatite dyke system is structurally controlled by a framework of NW and NE crosscutting faults and fractures, and locally is characterized by stockwork systems or sets of sub-paralleled sheeted dykes. The main lithium mineral at the adjacent operation is spodumene with minor amounts of petalite. To acquire the Option, Emerita issued 100,000 common shares to Falcon in June 2016, at a price per share of $0.775. An additional 100,000 common shares were issued on August 28, 2017 at a price per share of $0.60 based on the estimated market value of the shares on the date of issuance. The Company issued the third and final tranche of 100,000 common shares to Falcon on September 12, 2018 at a price per share EMERITA RESOURCES CORP. Management’s Discussion and Analysis For the three months ended December 31, 2020 and 2019 (in Canadian dollars, unless otherwise noted) 8 of $0.20, based on the quoted market value of the shares on the date of issuance. Falcon will retain a transferable 2% net smelter royalty on all commercial sales from the Litio Project. In addition, if a “mineral resource”, as defined in NI 43-101, of at least 20 million tonnes with a grade of at least 1.3% LiO2 is delineated at the Falcon Project, Emerita shall either, (i) pay CAD$5 million in cash to Falcon or, by its sole discretion, (ii) issue CAD$5 million worth (to be determined on a reasonable volume weighted average price basis) of common shares to Falcon (the “Resource Consideration”). The Resource Consideration shall only be paid by Emerita if (i) the mineral resource is verified by a “qualified person”, as such term is defined in NI 43-101, who is independent of Emerita and Falcon, and (ii) at least 50% of the mineral resource is categorized as an “indicated mineral resource” or “measured mineral resource”, as defined in NI 43-101. Falcon Project – Outlook The Falcon Project provides an opportunity for the Company to add value at a low cost. Further updates will be provided as they become available