BACANORA MINERALS LTD.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED JUNE 30, 2013

DATE – OCTOBER 28, 2013

The following Management’s Discussion and Analysis ("MD&A") should be read in

conjunction with Bacanora Minerals Ltd. ("Bacanora" or the "Company") audited consolidated
financial statements for the year ended June 30, 2013, together with the accompanying notes.
The following discussion and analysis provides information that management believes is
relevant to the assessment and understanding of the Company’s results of operations and
financial position. In the opinion of management, all adjustments consisting of normal
recurring adjustments, considered necessary for a fair presentation of the Company's financial
position, results of operations and funds flow, have been included. Additional information
relating to Bacanora is available on SEDAR at www.sedar.com.

THE COMPANY

The Company is a public company engaged in the exploration and development of mineral
deposits in Mexico. The Company is in various stages of exploration on all of its properties.
On July 17, 2009, the Company entered into a binding letter of agreement regarding the
acquisition of Mineramex Limited (“Mineramex”), a British Virgin Islands company whose sole
assets consist of 99.9% of the issued and outstanding shares of Minera Sonora Borax, S.A.
de C.V. ("MSB"), and 60% of the issued and outstanding shares of Minerales Industriales
Tubutama, S.A. de C.V. ("MIT"). MSB and MIT are Mexican corporations that hold certain
exploration and development stage borate and lithium claims in the Magdalena and Tubutama
regions in the northern Sonora State of Mexico. On April 9, 2010, The Company completed
its qualifying transaction by way of a reverse takeover of Mineramex. The Company was
listed on the Exchange as a Tier 2 issuer and the trading of the Company’s shares under the
revised symbol, "BCN" commenced on April 20, 2010. Recently, the Company established a
subsidiary, Mexilit S.A. de C.V. (“Mexilit”) to hold certain claims related the the Joint Venture
with Rare Earth Minerals plc (“REM”).

The following diagram illustrates the Company’s corporate legal structure.

Bacanora Minerals Ltd.

(Canada)

Mexilit S.A. de C.V. 70% 100% Mineramex Limited

(Mexico) (BVI)

60% Minerales Industriales

Minera Sonora Borax, 99.9%
Tubutama S.A. de
S.A. de C.V. (Mexico)
C.V.(Mexico)

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 BACANORA MINERALS LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013

MINERAL PROPERTIES

As a result of the reverse takeover of Mineramex, the Company indirectly holds the assets of
MIT and MSB, including borate mining claims in the Magdalena and Tubutama regions in the
northern Sonora State of Mexico. The specific descriptions of such claims are as follows:

Tubutama Borate

Originally referred to as the Carlos Project, Tubutama Borate project consists of six mining
concessions with a total area of 1,661 hectares. The concessions are located 15 kilometres
from the town of Tubutama, and are owned 100% by MIT.

Magdalena Borate

Originally referred to as San Francisco and El Represo projects, the Magdalena Borate project
consists of seven concessions, with a total area of 15,508 hectares. The concessions are
located 15 kilometres from the city of Magdalena and the city of Santa Ana, and are 100%
owned by MSB.

The borate properties (Tubutama and Magdalena) are subject to a 3% gross overriding royalty
payable to a director of the Company, and a 3% gross overriding royalty payable to the
original concessioners on sales of products produced from these properties.

Sonora Lithium

The Company, through its subsidiary MSB, acquired all rights, title and interests in certain
lithium claims from a related party. As consideration for the assets, the Company issued
600,000 common shares at a price of $0.25 per share. In addition, the Company paid cash
payments of US$40,000 to reimburse the vendors for acquisition and preliminary assessment
costs. The Sonora Lithium Project consists of the La Ventana, La Ventana 1 and the San
Gabriel concessions, which are owned 100% by Bacanora’s subsidiary Mexilit, along with the
contiguous El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions, which are owned
70% by Bacanora’s subsidiary Mexilit. The Lithium property is subject to a 3% gross
overriding royalty payable to a director of the Company on sales of products produced from
this property.

EXPLORATION ACTIVITIES

The Company is in the exploration stage with respect to all of its properties, and has not
commenced generating any cash flows from said properties.

Borate Properties

At the Tubutama project, the Company has drilled a total of 1,882 metres in 8 NQ-core
drillholes and 1,478 lineal metres of trenches have been conducted in the northern portion of
the project area, with an estimated resource of 2.5 Mt of colemanite, with 7% of B2O3, and
although these values are considered modest for a high grade operation, the Company has
decided to maintain the properties in order to perform metallurgical tests on the low-grade ore,
and for possible use of the ore at the Company’s full scale plant.

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 BACANORA MINERALS LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013

At the Magdalena project, the Company has completed four rounds of drilling on its borate
properties. In May of 2010, the Company drilled 3,483 metres in 25 holes at the Magdalena
and Represo basins, with approximately 1,033 core samples taken. Three main borate zones
have been located on the Magdalena project area: El Cajon, Bellota and Pozo Nuevo. Of the
main borate zones, the El Cajon deposit is most advanced, with a total of 28 holes drilled,
identifying 3 separate colemanite horizons (Unit A, B, and C). According to the NI43-101
report filed by the Company in June of 2011, the El Cajon deposit contains an inferred
resource of 7.3 million tonnes averaging 9.3% B2O3 in Unit A, and indicated resources totaling
11.1 million tonnes averaging 9.9% B2O3 in Units B and C. In September of 2011, the
Company completed an in-fill drilling program of 8,663 metres in 57 holes on the El Cajon
deposit, 2,616 samples were taken as part of the in-fill drilling.

During the second quarter of 2012, the Company announced that it had successfully achieved
marketable grades of colemanite concentrate after extensive laboratory testing of borates
samples from its El Cajon deposit. Bench scale testing has yielded product with grades
upwards of 40% B2O3, which is considered as the industry benchmark grade for commercial
production of colemanite concentrate. Based on this testing, the Company has refined its pilot
plant flow sheet, and has finalized construction of the pilot plant and is currently in the
commissioning phase. The Company is also proceeding with full scale mine plan and pit
design. Mining permit applications have been finalized and all applicable documents are
ready for filing with the Secretary of Environment for the State of Sonora.

On January 4, 2013, the Company released the Preliminary Economic Assessment (“PEA”)
for its El Cajon deposit. Net Present Value (“NPV”) for the project is estimated at $US113
million, discounted at 8%. This estimate is based on a potential mining rate of 231,100 tonnes
of ore averaging 10.5% B2O3 per annum, yielding 50,000 tonnes of 40-42% colemanite
concentrate over 25 year mine life. Based on estimated average colemanite concentrate
sales price of $US500 per tonne, and average operating costs of $US170 per tonne, the
Company stands to realize estimated revenue of $US25 million per year for an Internal Rate
of Return (“IRR”) of 25% and a payback period of 4 years. Capital costs for the colemanite
mine are estimated at $US7.25 million. The preliminary PEA includes forward looking
information including, but not limited to, assumptions concerning colemanite prices, cash flow
forecasts, project capital and operating costs, commodity recoveries, mine life and production
rates. Readers are cautioned that actual results may vary from those presented. Further
testing will need to be undertaken to confirm economic feasibility of the El Cajon deposit.
Readers are further cautioned that mineral resources that are not mineral reserves do not
have demonstrated economic viability.

Lithium Property

The Company initiated exploration on the lithium property during the second quarter of 2010,
when it conducted its first drilling campaign on the La Ventana concession within the Sonora
lithium project. The drilling provided an initial test of a 400 by 200 metre section of the
southernmost portion of a 3,000 by 300 metre target area. The four hole, 458.4 metre,
diamond drill program was designed to test a Tertiary age volcano-sedimentary sequence. All
of the drillholes intersected lithium-bearing clays (hectorite) including zones with lithium
enrichment. Other elements such as Cesium, Boron, Potassium, Magnesium, etc. are
considered highly anomalous as well. The second round of drilling at La Ventana was
completed in December of 2011. The Company drilled a total of 1,465 metres in 8 holes.

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 BACANORA MINERALS LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013

The two rounds of drilling on the La Ventana concession located two lithium-bearing clay units
that average 41 and 22 metres in thickness. Based on the updated NI43-101 Technical
Report prepared by the Company, the inferred resource for both upper and lower clay units is
estimated to be 60,153,000 tonnes, bearing an average grade of 3,000 Li ppm at 1.6%
Lithium Carbonate Equivalent (“LCE”) for a total of 930,000 tonnes of LCE. Investors are
cautioned that the resource estimate does not mean or imply that an economic lithium deposit
exists at the La Ventana concession. Further testing will need to be undertaken to confirm
economic feasibility. Readers are further cautioned that mineral resources that are not
mineral reserves have not demonstrated economic viability.

Along with the drilling on La Ventana, exploration activities such as mapping and systematic
sampling continue on other concessions (Buenavista, San Gabriel, El Sauz and Fleur).
Currently, the Company is carrying out metallurgical tests on the samples before planning the
next stage of the drilling program on La Ventana. As announced on May 22, 2013, the
Company has started drilling on the El Sauz and Fleur concessions.

On January 25, 2013, the Company released the PEA for its La Ventana lithium deposit. NPV
for the project is estimated at $US848 million, discounted at 8%. This estimate is based on a
potential annual mining rate of 2,735,000 tonnes of ore averaging 0.3% Li, yielding 35,000
tonnes of battery grade lithium carbonate per annum over 20 year mine life. Based on
estimated average lithium carbonate sales price of $US6,000 per tonne, and average
operating costs of $US1,958 per tonne, the Company stands to realize estimated revenue of
$US210 million per year for an IRR of 138% and a payback period of 1.9 years. Capital costs
for the lithium mine are estimated at $US114 million.

During the year ended June 30, 2013, the Company entered into a formal agreement with
REM, a London Stock Exchange listed company (AIM:REM), pursuant to which it has granted
REM certain rights to participate in drilling and project evaluation of the El Sauz and Fleur
Lithium concessions (the “Concessions”). The Concessions are adjacent to and along strike
from the Company’s La Ventana concession. As of the date of this MD&A, REM has made
the required $2,250,000 payment in order to acquire 30% in the Company’s subsidiary Mexilit
holding the El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 lithium concessions.

As of the date of this MD&A, the Company has completed the first phase of drilling at the El
Sauz and Fleur concessions. The drilling program consisted of 1,476 metres and 10 holes.
Significant lithium-bearing intervals were intersected in all of the drill holes. Over the 4
kilometre interval drilled, the average length of intercepts for the Upper Clay Unit is 28.10
metres and for the Lower Clay Unit is 30.51 metres. On August 24, 2013, the Company
announced the initial inferred lithium resource estimate of total inferred resources in the
amount of 88,271,000 tonnes bearing an average grade of 3,163 Li ppm or 1.68% Lithium
Carbonate Equivalent LCE for 1,486,000 tonnes of LCE1 for the Fleur and El Sauz
concessions. With its partner’s approval, the Company has commenced stage 2 of the
exploration program on the concessions. The Company’s plan consists of a series of
diamond drill holes targeting between 3,000 and 3,500 metres. The objectives of the drilling
are to complete infill holes required to upgrade the known resource; and to conduct step-out
drilling to test for extensions of the known resources, particularly onto newly staked
concessions.

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 BACANORA MINERALS LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013

Investors are cautioned that the resource estimate does not mean or imply that an economic
lithium deposit exists at the La Ventana concession. Further testing will need to be
undertaken to confirm economic feasibility.

The Company capitalizes all exploration costs subsequent to obtaining the right to explore
related to the projects in Mexico to exploration and evaluation assets. Below is a summary of
expenditures made for the year ended June 30, 2013 and 2012.

Tubutama Magdalena Sonora

Borate Borate Lithium Total
Balance, June 30, 2011 $ 1,084,797 $ 1,324,428 $ 333,450 $ 2,742,675
Additions:
Concession tax $ 10,891 $ 207,063 $ 4,371 $ 222,325
Acquisition - - 1,267 1,267
Exploration 30,878 342,043 2,924 375,845
Drilling 12,553 625,868 196,752 835,173
Analysis and assays 1,795 135,538 24,649 161,982
Technical services 4,741 45,442 10,038 60,221
Travel 970 63,411 3,810 68,191
Office and
miscellaneous 6,679 140,114 69,551 216,344
Total additions $ 68,507 $ 1,559,479 $ 313,362 $ 1,941,348
Balance, June 30, 2012 $ 1,153,304 $ 2,883,907 $ 646,812 $ 4,684,023
Additions:
Concession tax $ 4,756 $ 330,370 $ 12,919 $ 348,045
Acquisition - - - -
Exploration - 713,409 6,075 719,484
Drilling - 161,084 37,229 198,313
Analysis and assays - 77,740 2,344 80,084
Technical services - 164,094 151,018 315,112
Travel 43,523 41,857 27,372 112,752
Office and
miscellaneous - 357,424 33,912 391,336
Total additions $ 48,279 $ 1,845,978 $ 270,870 $ 2,165,126
Balance, June 30, 2013 $ 1,201,583 $ 4,729,885 $ 917,682 $ 6,849,149

OUTLOOK

The Company continues to focus on the development of its borate and lithium deposits in
Sonora, Mexico. To support the continued evaluation of the projects in a technically
disciplined and measured manner, a number of activities are underway or planned for the
remainder of 2013:

Borates

• Finalize construction, commissioning and continued testing of the pilot plant.

• Refine the process to produce colemanite concentrates and test for boric acid suitability.
• Develop a full-scale mine plan.

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 BACANORA MINERALS LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013

• Further market analysis and evaluation of end user requests for product.

In addition to the work being completed on the borate deposits, work continues to be
undertaken to advance the Company’s lithium deposits including:

• Drilling of the Stage 2 program on the joint venture lands with REM.
• Infill drilling at La Ventana
• Continue mapping, sampling and possibly drilling of other potential areas.
• Continued analysis of assay results.
• Solubility and precipitation tests of the lithium clays from La Ventana and Sauz target
areas.

The Company expects that cash raised in the last equity financing in combination with funds
from the recently announced agreement with REM will fully fund the contemplated programs
and general operations.

LIQUIDITY AND CAPITAL MANAGEMENT

Working Capital

The Company is not in commercial production on any of its resource properties and
accordingly, it does not generate cash from operations. The Company finances its activities
by raising capital through equity issues. As at June 30, 2013, the Company had a working
capital surplus of $3,252,300 (2012 – $3,885,784). The current working capital is dedicated
towards the completion of the Mexican exploration program started in October along with work
on the pilot plant. At June 30, 2013, the Company does not have any bank debt and does not
plan on securing any long-term debt. The Company intends on meeting its financial
commitments through further equity financings.

Capital structure

The Company's objectives in managing capital are to safeguard its ability to operate as a
going concern while pursuing opportunities for growth through identifying and evaluating
potential acquisitions or businesses. The Company defines capital as the Company's
shareholders equity excluding contributed surplus and non-controlling interest, of $10,287,514
at June 30, 2013 (2012 - $8,028,304). The Company sets the amount of capital in proportion
to risk and corporate growth objectives. The Company manages capital structure and makes
adjustments to it in light of changes in economic conditions and the risk characteristics of the
underlying assets. The Company is not subject to any externally imposed capital
requirements other than as described in Note 1 to the Company’s annual consolidated
financial statements. The Company does not expect to enter into any debt financing at this
time. The Board of Directors does not establish a quantitative return on capital criteria for
management; but rather promotes year over year sustainable growth of the Company’s
projects. The Company will be meeting its objective of managing capital through its detailed
review and preparation of both short-term and long-term cash outflows, and monthly review of
financial results.

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 BACANORA MINERALS LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013

Equity instruments

On March 26, 2013, the Company completed a private placement of 11,666,667 units of the
Company at a price of $0.30 per unit for aggregate gross proceeds of $3,500,000. Each unit
consists of one common share and one-half of one common share purchase warrant, with
each whole warrant being exercisable into one common share at a price of $0.45 for a period
of five (5) years. The Company paid a total of $196,130 in legal and commission fees.

The following tables summarize the outstanding securities issued by the Company as at June
30, 2013, and as of the date of this MD&A.

October 28, 2013 June 30, 2013

Common shares 63,290,812 63,290,812
Stock options 3,900,000 2,950,000
Warrants 12,890,214 12,890,214
Total equity instruments outstanding 80,081,026 79,131,026

The following table summarizes the outstanding options as at June 30, 2013.

Weighted
Number Average Number
Outstanding Remaining Exercisable
at June 30, Exercise Contractual at June 30,
Grant date 2013 Price Life (Years) Expiry date 2013
May 1, 2009 400,000 $ 0.20 0.9 May 1, 2014 400,000
December 8, 2010 1,050,000 0.24 2.5 Dec. 8, 2015 1,050,000
March 25, 2011 100,000 0.50 2.8 Mar. 25, 2016 100,000
June 19, 2011 350,000 0.44 3.1 Jun. 19, 2016 350,000
July 19, 2011 900,000 0.50 3.1 July 19, 2016 900,000
September 28, 2012 150,000 0.25 4.3 Sept. 28, 2017 150,000
2,950,000 2,950,000

SELECTED ANNUAL INFORMATION

The Company is in the exploration stage, and does not have any mining operations and has
not earned any revenue, except for interest income. While the information set out in the
tables below is mandated by National Instrument 51-102, it is management’s view that the
variations in financial results that occur from year to year and quarter to quarter are not
particularly helpful in analyzing the Company’s performance. It is in the nature of the business
of junior exploration companies that unless they sell a mineral interest for a sum greater than
the costs incurred in acquiring such interest, they have no significant net sales or total
revenue. Because the majority of their expenditures consist of exploration costs that are
capitalized, exploration companies’ annual and quarterly losses usually result from costs that
are of a general and administrative nature.

Significant variances in the Company’s reported loss from year to year and quarter to quarter
most commonly arise from several factors that are difficult to anticipate in advance or to

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 BACANORA MINERALS LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013

predict from past results. These factors include: (i) decisions to write off deferred exploration
costs when management concludes there has been an impairment in the carrying value of a
mineral property, or the property is abandoned, (ii) the vesting of incentive stock options,
which results in the recording of amounts for stock based compensation expense that can be
quite large in relation to other general and administrative expenses incurred in any given
period, and (iii) fluctuations in foreign exchange rates.

For the year ended June 30, 2013, the Company recorded a loss of $1,256,238 (2012 -
$990,309). During 2013, the Company recorded $21,715 (2012 - $272,439) in stock based
compensation expense. The Company general and administrative expenses for 2013 were
$745,542 (2012 - $585,125).

For the year For the year For the year

ended June 30, ended June 30, ended June 30,
($, except shares amounts) 2013 2012 2011
Interest income (expense) 10,917 27,177 4,689
Total expenses (includes foreign
exchange loss/gain) 759,680 974,717 843,734
Comprehensive loss 1,061,417 838,646 1,171,123
Comprehensive loss per share –
basic and diluted 0.01 0.02 0.03
Funds provided (used) in operations (588,314) (571,085) (943,167)
Total assets 12,382,206 9,022,692 9,511,551
Total liabilities 1,482,617 434,956 357,608
Exploration and evaluation costs 6,849,149 4,684,023 1,123,765
General and administrative costs 745,542 585,125 546,545

During the year ended June 30, 2013, the Company’s general and administrative expenses
increased by $160,417.

General and administrative expenses for the years ended June 30, 2013 and 2012 were as
follows:

For the year ended, June 30, 2013 June 30, 2012
Management fees $ 129,850 $ 145,338
Legal and accounting fees 279,889 236,509
Engineering fees 10,350 -
Investor relations 204,050 149,009
Office expenses 71,036 36,698
Miscellaneous 50,367 17,571
Total $ 745,542 $ 585,125

SUMMARY OF QUARTERLY RESULTS

The Company is in the early stages of exploration, and does not have any producing
operations and has not earned any revenue.
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 BACANORA MINERALS LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013

During the quarter ended June 30, 2013, the Company realized a comprehensive loss of
$952,974, incurred $544,146 on exploration activities and $60,135 on equipment for the pilot
plant, as well as $153,967 on general and administrative expenses.

Comprehensive
Comprehensive earnings/(loss) per basic
Three month period ended income/(loss) ($) and diluted share ($)
June 30, 2013 (525,763) (0.01)
March 31, 2013 281,692 0.00
December 31, 2012 (183,475) (0.00)
September 30, 2012 (206,660) (0.00)
June 30, 2012 236,264 (0.00)
March 31, 2012 (160,297) (0.00)
December 31, 2011 (408,427) (0.01)
September 30, 2011 (506,186) (0.01)

SEGMENTED INFORMATION

The Company currently operates in one operating segment, the exploration and development
of mineral properties in Mexico. Management of the Company makes decisions about
allocating resources based on the one operating segment. A geographic summary of profit
and loss and identifiable assets by country is as follows:

Mexico Canada Consolidated

June 30, June 30, June 30, June 30, June 30, June 30,
2013 2012 2013 2012 2013 2012
Property and equipment $ 1,511,759 $ 210,533 $ - $ - $ 1,511,759 $ 210,533
Exploration and
evaluation assets $ 6,849,149 $ 4,684,023 $ - $ - $ 6,849,149 $ 4,684,023

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

This note presents information about the Company’s exposure to credit, liquidity and market risks
arising from its use of financial instruments and the Company’s objectives, policies and processes for
measuring and managing such risks.

i) Credit risk

Credit risk arises from the potential that a counter party will fail to perform its obligations. Financial
instruments that potentially subject the Company to concentrations of credit risk consist of accounts and
related party receivables. The Company believes that the amount due from related party is collectible,
however as the amount has not been collected subsequent to year end its recoverability is uncertain.
Any changes in management’s estimate of the recoverability of the amount due will be recognized in
the period of determination and any adjustment may be significant. The carrying amount of accounts
and related party receivables represents the maximum credit exposure.

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 BACANORA MINERALS LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013

The Company’s cash is held in major Canadian and Mexican banks, and as such the Company is
exposed to the risks of those financial institutions. The Company has no sales, therefore the Company
is only exposed to the risks associated with changes in foreign exchange rates.

The Board of Directors monitors the exposure to credit risk on an ongoing basis and does not consider
such risk significant at this time. The Company considers all of its accounts receivables fully collectible.

ii) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they are
due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses. The carrying value of accounts payable and accrued liabilities and due
to related parties approximates fair value due to their relatively short period to maturity.

iii) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, commodity prices,
and interest rates will affect the value of the Company’s financial instruments. The objective of market
risk management is to manage and control market risk exposures within acceptable limits, while
maximizing long-term returns.

The Company conducts exploration projects in Mexico. As a result, a portion of the Company’s
expenditures, accounts receivables, accounts payables and accrued liabilities are denominated in US
dollars and Mexican pesos and are therefore subject to fluctuation in exchange rates. As at June 30,
2013, a 1% change in the exchange rate between the Canadian dollar, and US dollar would have an
approximate $7,000 (2012 - $13,000) change to the Company’s total comprehensive loss.

iv) Fair values

The carrying value approximates the fair value of the financial instruments due to the short
term nature of the instruments.

RELATED PARTY TRANSACTIONS

a. Related party expenses

The Company’s related parties include directors and officers and companies which have directors in
common. Transactions made with related parties are made in the normal course of business and are
measured at the exchange amount, which is the amount of consideration established and agreed to by
the related parties.

During the year ended June 30, 2013, management fees in the amount of $467,931 (2012 - $332,550)
were incurred by directors and officers of the Company. Of this amount, $166,850 (2012 - $83,534) was
capitalized to exploration and evaluation assets, and $301,081 (2012 - $249,016) was expensed as
general and administrative costs. Of the total amount paid as management fees and expenses, $89,775
(2012 – $69,179) remains in accounts payables and accrued liabilities.

A Company with common directors and shareholders made payments on behalf of the Company with
respect of an office sublease and other general and administrative expenses in the amount of $25,548
(2012 - $45,046). The advances are non-interest bearing, unsecured, with no specific terms of
repayment.

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 BACANORA MINERALS LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013

The Company was repaid advances of $596 (2010 – made advances of $107,599) to a company with
common directors and officers. The advances are non-interest bearing, unsecured, with no specific
terms of repayment.

b. Key management personnel compensation

Key management of the Company are directors and officers of the Company and their remuneration
includes the following:

For the year ended June 30, 2013 June 30, 2012
Short-term benefits (1) $ 467,931 $ 332,550
Stock-based compensation 21,715 272,439
Total remuneration $ 489,646 $ 604,989
(1) Short-term benefits include consulting fees.

COMMITMENTS AND CONTINGENCIES

The Company has commitments for lease payments for field office and camp with no specific expiry
dates. The total annual financial commitment resulting from these agreements is $16,500.

The properties in Mexico are subject to spending requirements in order to maintain title of the
concessions. The capital spending requirement for 2014 is $312,083. The properties are also subject to
semi-annual payments to the Mexican government for concession taxes.

SUBSEQUENT EVENTS

On September 11, 2013, the Company announced that a total of 950,000 stock options to purchase
common shares of the Company have been granted to directors, officers and consultants. The options
are immediately exercisable at a price of $0.30 and expire on September 21, 2018.

Subsequent to June 30, 2013, the Company has received additional payments of $1,750,000 pursuant
to the agreement with REM (Note 8), and is in the process of issuing 30% of equity in its Mexican
subsidiary holding the El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions to REM.

11