Southern Empire Resources : Management Discussion and Analysis

Management's Discussion and Analysis

For the three and six months ended April 30, 2022

Dated: June 28, 2022

Southern Empire Resources Corp.

Management's Discussion & Analysis

For the Three and Six Months Ended April 30, 2022

NOTE TO READER

This Management's Discussion and Analysis ("MD&A") focuses on the financial condition and results of operation of Southern Empire Resources Corp. ("Southern Empire", the "Company", "we", "our", "its" or "us") and is a narrative explanation of how we performed during the period covered by the associated financial statements, and of our future prospects.

This MD&A is based upon information available as at June 27, 2022, and supplements but does not form part of the financial statements of Southern Empire and as such, should be read in conjunction with the condensed interim consolidated financial statements and the notes thereto as at and for the three and six months ended April 30, 2022 and the audited consolidated financial statements and the notes thereto as at and for the years ended October 31, 2021 and 2020.

Our financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"), as established by the International Accounting Standards Board ("IASB"). Management is responsible for the preparation and integrity of these financial statements, including the maintenance of appropriate information systems, procedures and internal controls to ensure that information used internally or disclosed externally, including the MD&A, is complete and reliable.

All financial data in this MD&A is reported in Canadian dollars unless otherwise noted.

Additional information concerning Southern Empire is available on the Canadian Securities Administrators' System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com, and on our website at www.smp.gold.

FORWARD-LOOKINGINFORMATION

Caution Regarding Forward-Looking Information:

Certain information contained in this MD&A may constitute forward-looking information, which is information regarding possible events, conditions or results of operations of Southern Empire that is based upon assumptions about future economic conditions and courses of action and which is inherently uncertain. All information other than statements of historical fact may constitute forward-looking information. Forward- looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words or phrases (including negative variations) suggesting future outcomes or statements regarding an outlook. Forward-looking information contained in this MD&A includes, without limitation, our expectations regarding anticipated investment activities and results and financing activities and other factors regarding our operating results, and the performance of global capital markets and interest rates.

Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. Southern Empire believes the expectations reflected in the forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and readers are cautioned not to place undue reliance on forward-looking information contained in this MD&A. Some of the risks and other factors that could cause results to differ materially from those expressed in the forward-looking information contained in this MD&A include, but are not limited to: risks relating to investment performance and our ability to generate taxable income from operations, market fluctuations, fluctuations in prices of commodities underlying our interests and equity investments, the strength of the Canadian, U.S. and other economies, foreign exchange fluctuations, political and economic conditions in the countries in which the interests of Southern Empire's investments are located, and other risks included elsewhere in this MD&A under the headings "Risks and Uncertainties" and "Financial Instruments and Risk Management" and in

Southern Empire Resources Corp.

Management's Discussion & Analysis

For the Three and Six Months Ended April 30, 2022

other public disclosure documents filed with certain Canadian securities regulatory authorities and available under Southern Empire's profile on the Canadian Securities Administrators' System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com.

Readers are cautioned that the foregoing lists of factors are not exhaustive. Although Southern Empire has attempted to identify important factors that could cause actual events and results to differ materially from those described in the forward-looking information, there may be other factors that cause events or results to differ from those intended, anticipated or estimated. Southern Empire undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as otherwise required by law. All of the forward-looking information contained in this MD&A is expressly qualified by this cautionary statement.

INTRODUCTION

Nature of Our Business:

Southern Empire Resources Corp. is in the business of acquiring, exploring and developing metal and mineral resource properties.

Southern Empire was incorporated pursuant to the Business Corporations Act of British Columbia on September 27, 2017.

Southern Empire's exploration projects include the Pedro Gold Project in Durango State, México, the VLM Project in México, the Oro Cruz Project in California and the Eastgate Gold Project in Nevada, U.S.A. Please refer to the "Mineral Properties and Exploration" discussion below for acquisition and other project details.

OVERVIEW, HIGHLIGHTS AND DEVELOPMENTS

For more details regarding the following highlights and developments, please refer to the news releases available on Southern Empire's websiteand on SEDAR.

Performance Summary and Significant Events:

Since inception, Southern Empire:

• Started trading on the TSX Venture Exchange with the trading symbol "SMP" on March 24, 2020.
• Commenced trading on the Frankfurt Börse with the trading symbol "5RE".
• Became quoted on the OTC Pink markets and subsequently upgraded to the OTCQB Venture Market in January 2022 with the symbol "SMPEF".
• Completed a private placement raising a total of $4,021,515 through the issuance of 8,043,861 common shares a price of $0.50 per share.
• Entered into an option agreement to earn a further 25% interest in the Oro Cruz Project allowing for the acquisition of a 100% interest upon exercise of all option agreements.
• Completed a first-phase drill program totalling 906 metres (2,972 feet) of HQ-sized core on the Eastgate Gold Project.

Southern Empire Resources Corp.

Management's Discussion & Analysis

For the Three and Six Months Ended April 30, 2022

• Pursuant to a Purchase and Sale Agreement and subject to Exchange acceptance (received on March 4, 2021), acquired additional mineral dispositions for the Oro Cruz Project by purchasing mining claims overlying the former gold producing American Girl Mine (see Southern Empire news release dated September 14, 2020) for cash consideration of US$330,000. Highlights of this acquisition were:

1. Gained 100% ownership of seven privately-owned, patented lode mining claims and ten

federally-administered claims

1. The addition of contiguous holdings totaling 116 ha (287 acres) that include much of the formerly producing American Girl gold mine operations that produced more than 500,000 oz

gold from four underground and four open pit deposits

• 1. Allows additional exploration potential for underground high-grade, oxide gold mineralization o The acquired claims are subject to no royalty interests
     o The acquired claims partially cover historical mine waste dumps which may, at current gold prices, present an opportunity to develop a resource
• Completed a 925 line-kilometre,low-level magnetic and radiometric airborne survey over the Oro Cruz property.
• Completed an initial 20-hole sonic drilling program; ten holes each on the American Girl and Padre y Madre historical heap leach pads at the Oro Cruz Project.
• Completed a 75 square kilometer airborne LiDAR survey of the Oro Cruz Project.
• Completed a safety survey of the Oro Cruz Cross Mine underground workings.
• Completed a drone-borne LiDAR survey of the Oro Cruz Cross Mine underground workings.
• Completed a 10 line-kilometre Induced Polarization (IP) geophysical survey over the Oro Cruz gold deposit by Zonge International.
• Announced the appointments of Andrew Davidson, Alex Heath and P.E. (Ted) Kavanagh to the Board of Directors.
• Announced the appointment of Larry Kornze, an expert in epithermal and Carlin-style gold deposits, as an Advisor.
• Granted an additional 1,250,000 incentive stock options to Directors, Officers and Consultants and cancelled 400,000 options issued to former consultants; each option exercisable for the purchase of one common share for a period of five years at a price of $0.30 per share.
• Exercised all remaining warrants in Augusta Gold Corp., and now holds approximately 2.8% of the common shares of Augusta.
• Initiated a complete review and compilation of the geophysical, LiDAR and geological databases by Condor Consultants and identified a number of previously untested gold targets along the southeast plunging extension of the Oro Cruz zone.
• Initiated extractive metallurgical test work on sonic drill samples collected from the historical Padre y Madre and American Girl heap leach pads

Southern Empire Resources Corp.

Management's Discussion & Analysis

For the Three and Six Months Ended April 30, 2022

• Entered into an option agreement with Commander Resources Ltd. on July 23, 2021, allowing Southern Empire to acquire a 100% beneficial interest in the Pedro Gold Project in northeastern Durango State, México
• Completed significant archaeological, biological and cultural field studies at the Oro Cruz Project, as required for the Exploration Plan of Operations ("EPO"), the National Environmental Protection Act ("NEPA") and the California Environmental Quality Act ("CEQA") permitting prior to the start of surface and underground exploration including extensive planned drill programs.
• Submitted the EPO for the Oro Cruz Project to the United States Department of the Interior, Bureau of Land Management("BLM") on September 28, 2020. the.
• On November 16, 2021, received a positive decision letter from the BLM determining that the Oro Cruz Project EPO was administratively and technically complete and consistent with U.S. federal regulations, allowing for initiation of the NEPA environmental review process.
• Contracted Terraquest Ltd. to complete a 384 line-kilometre airborne magnetic and radiometric geophysical survey of the Pedro Gold Project in December 2021.
• Completed a private placement, raising a total of $1,000,000 through the issuance of 10,000,000 Units, with each Unit consisting of one common share and one common share purchase warrant entitling each warrant holder to purchase one additional common share for a period of three years from the date of issue (expiry December 2, 2024) at an exercise price of $0.15 per common share.
• In December 2021, entered into an option agreement with Riverside Resources Inc. to acquire a 100% interest in the VLM Project, located in northwestern México in exchange for cash payments totalling $137,500 and issuing a total of 1,625,000 common shares over a period of two years from January 12 2022, the filing approval date for the option agreement by the Exchange.
• Completed six core holes totalling 856.3 metres at the Pedro Gold Project in January and February of 2022.
• Regarding the Oro Cruz Project, the BLM published a notice of intent in the U.S. federal register and issued a press release on March 4, 2022 related to environmental permitting of Southern Empire's proposed surface exploration activities. These BLM actions officially notified the public of the BLM's intent to complete an environmental review that will analyze potential impacts to the natural, cultural and recreation resources from the proposed exploration activities and initiate federal NEPA permitting processes. In addition, as required by CEQA, the Imperial County Planning Department (ICPD) has formally started analysis of the Oro Cruz project through the preparation of an initial study (IS).
• For the Pedro Gold Project, Condor Consulting, Inc. of Denver, Colorado compiled and analyzed all the geophysical data available (2019 Direct Current Induced Polarization (DCIP) and 2021 airborne magnetic, radiometric and VLF surveys), providing finished products in June 2022.
• To assist in the assessment and understanding of the Pedro gold deposit, on April 27, 2022, Southern Empire has contracted LISA CAN Analytical Solutions Inc. of Saskatoon, Saskatchewan, in collaboration with Western University, to objectively determine similarities and differences between samples from the Pedro project and Carlin-type deposits by utilizing X-Ray Fluorescence ("XRF") and Electron Probe Micro Analysis ("EPMA") to analyze gold-mineralized Pedro drill core (Sample 643048, P22-02: 46.00 - 47.04m). This work is ongoing.