Management’s Discussion & Analysis Q2 2024

INTER-ROCK MINERALS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

For the Three and Six Months Ended June 30, 2024

August 12, 2024

INTER-ROCK MINERALS INC.

MANAGEMENT'S INTERIM DISCUSSION AND ANALYSIS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

NOTES TO READER

References to "Inter-Rock" and the "Company" in this discussion refer to Inter-Rock Minerals Inc. and its subsidiaries taken as a whole.

The following management discussion and analysis ("MD&A") provides an analysis of the financial condition of Inter-Rock at June 30, 2024 and compares it to the financial condition of the Company on December 31, 2023. The MD&A also analyzes the Company's results of operations for the three and six months ended June 30, 2024 and compares those results to the results for the comparable periods in 2023.

This MD&A has been prepared in compliance with the requirements of National Instrument ("NI") 51-102 - Continuous Disclosure Obligations. This discussion should be read in conjunction with the unaudited consolidated interim financial statements for the three and six months ended June 30, 2024 and with the audited consolidated financial statements and the related notes for the year ended December 31, 2023. The Company's financial statements and MD&A have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB").

All monetary amounts are expressed in United States dollars unless otherwise indicated.

This MD&A is prepared as of August 12, 2024.

Inter-Rock uses earnings before interest, taxes and depreciation and amortization ("EBITDA"), a non-IFRS performance measure in this MD&A as it believes this generally accepted industry performance measure provides a useful indication of the Company's financial performance. This non-IFRS performance measure does not have a standardized meaning defined by IFRS and may not be comparable to information in the reports and filings of comparable companies. Accordingly, it should not be considered in isolation or as a substitute for performance measures prepared in accordance with IFRS.

For further information and a detailed reconciliation, refer to the section entitled "Non-IFRS Performance Measures" in this MD&A.

DESCRIPTION OF THE BUSINESS

Inter-Rock is domiciled in Canada and is continued under the Business Corporations Act (Ontario). The Company's office is located at 2 Toronto Street, Suite 500 Toronto, Ontario, M5C 2B6, Canada. The Company's shares are traded on the TSX Venture Exchange under the symbol "IRO".

Inter-Rock owns two operating businesses in the United States: Papillon Agricultural Company Inc. ("Papillon") and MIN-AD Inc. ("MIN-AD"). Papillon develops, markets and distributes toll manufactured premium dairy feed nutritional supplements, including MIN-AD's products. MIN- AD is engaged in the production and marketing of dolomite and clay products primarily for the animal feed industry.

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SECOND QUARTER 2024 RESULTS SUMMARY

• Gross profit of $3.3 million, 26% higher than the same period in 2023 and higher than the rolling four quarter average of $3.0 million.
• Generated EBITDA of $1.4 million.
• Volume gains of 13% in sales of Papillon's protein products as compared with the same quarter in 2023.
• Sound liquidity with working capital of $9.8 million at June 30, 2024.

OPERATIONS REVIEW

Papillon Agricultural

Papillon develops and produces premium specialty nutritional products for dairy consultants, feed suppliers and dairy producers in the United States. Papillon has its own line of high quality proteins and rumen probiotic products that are produced under toll manufacturing agreements. In addition, Papillon distributes MIN-AD products and a clostridia control product for dairy cows (clostridia are bacteria naturally found in the environment and in the gastrointestinal tracts of dairy cows and calves, which under certain conditions can form toxins that result in reduced growth performance and digestive disorders).

Second quarter 2024 review

Papillon's operational and financial performance in the second quarter of 2024 reflects higher sales volumes of protein products and sales of MIN-AD. The increase in sales of MIN-AD products is due to amending the distribution agreement between Papillon and MIN-AD. Prior to the second quarter of 2024, Papillon acted as the distributor of MIN-AD's products only in certain geographic areas of the United States. In regions not covered by the distribution agreement, Papillon acted as a sales agent for MIN-AD's products and earned a commission for tons sold under a sales agent agreement. To take full advantage of Papillon's marketing and sales expertise and geographic reach, the distribution agreement was modified, so that, starting in the second quarter, Papillon acts as the exclusive distributor for all of MIN-AD's sales to the dairy industry throughout the U.S. Under the distribution agreement, MIN-AD products are purchased by Papillon and then sold by Papillon to dairy feed manufacturers. There is no longer a sales agent, commission based, arrangement.

Papillon recorded revenue of $24.6 million in the second quarter of 2024, up approximately 19% from $20.7 million in the year earlier period. Gross profit increased to $2.7 million in the second quarter of 2024 from $2.3 million in the same period in 2023. Gross profit in the second quarter was similar to the first quarter of the year (Q1 2024 gross profit: $2.6 million). The increase in gross profit was attributable to higher sales volumes and improved gross profit margins. The gross profit margin in the second quarter of 2024 was 10.8%, up from 8.9% in the same period in 2023. Sales of protein products were 13% higher than the prior year period and, due to the change in the MIN-AD distribution agreement, sales of MIN-AD more than doubled. Protein products continue to account for almost 70% of gross profits.

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Cash flow from operating activities (before working capital changes) in the second quarter of 2024 increased to $1.1 million as compared with $799,000 in the second quarter of 2023. Higher cash flow was attributed to higher sales and gross profit, while SG&A expenses were largely unchanged.

Six months 2024 review

Revenue in the first six months of 2024 was $50.9 million, up from $41.5 million in the year earlier period. Gross profit for the first half of 2024 increased to $5.2 million as compared with $4.7 million in the first half of 2023. The increase in gross profit in the first half of the current year was due to an increase in total tons sold, which more than offset lower gross profit margins. Year-to- date cash flow from operating activities was $2.1 million as compared with $1.7 million for the same period in 2023.

MIN-AD

MIN-AD quarries, processes, and markets dolomite and clay products for dairy and beef cattle feed. The dolomite is used as a source of magnesium and calcium and as a rumen acid buffer. MIN-AD's clay business produces products for use in anti-caking and toxin control applications. MIN-AD's operations are located in northern Nevada near the town of Winnemucca. Approximately 95% of sales are in the United States, while the other 5% are in Alberta and British Columbia.

MIN-AD's sales and marketing activities are managed by Papillon, (with the exception of MIN- AD's sales to an industrial customer). As noted above, commencing in the second quarter of 2024, Papillon acts as the exclusive distributor of MIN-AD's products for all dairy related sales. In the second quarter of 2024, 86% of MIN-AD's sales revenue was attributed to inter-company sales to Papillon.

Second quarter 2024 review

MIN-AD recorded revenue (including freight and fuel charged to customers) of $2.1 million in the second quarter of 2024, down from $2.4 million in the prior year period. Tons sold in the current quarter were similar to volumes in the corresponding quarter in 2023. Revenue in the second quarter of 2024 was similar to that recorded in the first quarter of the year.

Cash flow from operations (before working capital changes) was $219,000 in the second quarter of 2024, as compared with $399,000 for the same period in 2023. Payments for rail car leases (recorded as financing payments, consequently not netted against cash flow from operations) totalled approximately $52,000 in the second quarter of 2024, up from $45,000 in the prior year period.

MIN-AD incurred capital expenditures of $214,000 in the second quarter of 2024 (Q2 2023: $680,000). Higher capital expenditures in the prior year quarter were due to the purchase of equipment to transload MIN-AD bulk material from rail cars to trucks and for expenditures on automatic bagging equipment for the MIN-AD plant.

Six months 2024 review

For the first six months of 2024, MIN-AD's sales volume and revenue were below levels recorded in the prior year period by 5% and 16% percent respectively. In the first half of 2024, MIN-AD recorded revenue of $4.2 million, as compared with $5.0 million first half of 2023.

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Cash flow from operations (before working capital changes) was $306,000 in the first six months of 2024, down from $521,000 in the prior year period. The decrease in cash flow in the current six- month period is due to lower gross profits as a result of lower sales, and higher general and administrative expenses. Rail car lease finance payments were $99,000 in the first half of 2024, up from $89,000 in the prior year period.

MIN-AD incurred capital expenditures of $850,000 in the first six months of the year (six months of 2023: $906,000). The majority of the expenditures were related to the new automatic bagging equipment at the MIN-AD mill. Installation of the automatic bagging equipment was completed in the second quarter and the equipment is now in operation.

CONSOLIDATED FINANCIAL REVIEW

1. Cash flow is after working capital changes.
2. See Non-IFRS Performance Measures

Review of Second Quarter and Year-to-Date Financial Results

Second quarter 2024 review

Inter-Rock recorded consolidated revenue of $24.9 million for the quarter ended June 30, 2024, as compared with $21.9 million in the corresponding period of 2023. (Papillon's revenue for its principal products fluctuates with the cost of input ingredients, accordingly, gross profit can be more indicative of financial performance than revenue).

Gross profit in the second quarter of 2024 rose to $3.3 million, up 27% from the prior year quarter (Q2 2023: $2.6 million). Higher gross profit at Papillon, due to an increase in tons sold, offset lower gross profits at MIN-AD. The Company's consolidated gross profit margin in the second quarter of 2024 was 13.1%, as compared to 11.8% in the same period in 2023.

Selling, general and administrative, ("SG&A") costs decreased to $1.8 million in the second quarter of 2024, down from about $2.0 million in the corresponding period in 2023. The decrease in SG&A is primarily due to lower corporate expenses, which includes foreign exchange gains. SG&A costs include all administrative, sales and marketing costs for the Company's two operating subsidiaries, as well as Toronto office general and administrative costs.

Interest expense comprises interest on debt and interest recognized on lease liabilities. In the second quarter of 2024, interest expense was $51,000, as compared with $14,000 in the year earlier quarter. The increase in interest expense is due to higher debt at MIN-AD related to financing the purchase of automatic bagging equipment.

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Inter-Rock recorded net income of $891,000 in the second quarter of 2024, as compared with $309,000 in the prior year period. The current period net income reflects higher gross profits, partially offset by a higher income tax provision.

Six months 2024 review

Revenue for the first half of 2024 was $52.2 million, as compared with $44.0 million in the year earlier period. Gross profit improved 17% to $6.3 million in the first half of 2024, up from $5.4 million in the same period last year, reflecting higher gross profit at Papillon, which more than offset a 12% reduction in MIN-AD's gross profits. The Company's consolidated gross profit margin was 12.2% for the first half of 2024, as compared with 13.3% for the first six months of 2023. The reduction in margins was primarily a result of lower margins on the sale of protein products.

Year-to-date SG&A expense was $4.1 million, an 11% increase over the first six months of 2023 (six months 2023: $3.7 million). The majority of the increase is attributable to higher spending by Papillon on compensation, quality control and research and development.

Interest expense for the first half of 2024 was $78,000, up from $29,000 for the same period in 2023. The increase is due to higher debt in the current period.

The Company reported net income for the first six months of 2024 of $1.4 million, as compared with $966,000 in the first half of 2023. Higher net income in the first half of 2024 is largely attributable improved gross profits, which more than offset higher interest expense and a larger provision for current income tax expense.

Summary of Quarterly Results

After reaching a multi year high in the second quarter of 2022, milk prices steadily declined over the quarters tabled above, until the second quarter of 2024. Milk prices in the second quarter of 2024 were supported by a reduced supply of milk, which was attributed to hot weather, (which can reduce milk production) a shortage of heifers and strong domestic and export demand for dairy products. Dairy farmers are also benefitting from lower feed costs. Typically, lower feed costs rapidly stimulate milk production increases, however, the hot weather in some regions and reduced supply of heifers have constrained milk production.

Inter-Rock continued to generate cash flow and maintain profitability over the quarters of falling milk prices, (the net loss in the fourth quarter of 2022 is attributable to a large provision for income tax expense, including tax associated with the gain on the sale of Mill Creek). The Company's results are due largely to Papillon's efforts to generate sales in new locations and the promotion of research and development results.

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FINANCIAL CONDITION

1 Lease obligations and total debt are included in total liabilities.

The Company's financial position is strong, with working capital of $9.8 million at June 30, 2024, including $6.2 million of cash. Consolidated debt at the end of the second quarter of 2024 was just over $1.0 million, up from $513,000 at year end 2023. The increase was due to additional borrowing to finance the automatic bagging equipment at the MIN-AD processing plant.

Debt Facilities

At June 30, 2024, the Company's debt comprised the following:

Debt facilities at June 30, 2024:

1. MIN-AD$500,000 revolving credit facility: a one-year, revolving credit facility bearing interest at the U.S. bank prime rate plus 1.00% per annum. The facility matures on May 25, 2025. The Company renews the facility annually. At June 30, 2024 the outstanding balance was $430,000. The line is secured by MIN-AD's assets and is guaranteed by both the Company and its subsidiary, Secret Pass Gold Inc.
2. MIN-ADterm loan: an equipment financing facility of up to $800,000 with a nine-month drawdown period, which ended March 2, 2024, followed by a 57-month amortization period that commenced April 2, 2024. Proceeds of the loan were used to partially fund the purchase and installation of automatic bagging equipment at MIN-AD. A total of $692,000 was advanced and, with the expiration of the drawdown period, no additional funds are available. Only interest was paid during the drawdown period at a rate equal to the U.S. prime rate plus 50bps. During the amortization period, the interest rate is fixed at 6.75%. The loan is secured by the equipment and is guaranteed by Secret Pass Gold Inc. and the Company.

The Company is in full compliance with the terms of its loans as of the date of this MD&A.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity refers to a company's ability to access cash. Sources of liquidity generally include operating cash flow, proceeds from the issuance of debt and equity, availability under credit

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facilities and proceeds from asset sales. The Company's strategy is to generate positive operating cash flow to fund its operating, financing and capital requirements.

At June 30, 2024, the Company had consolidated cash of $6.2 million. Additional liquidity is provided by operating cash flow, a $1.0 million revolving credit facility available to Papillon and a $500,000 revolving credit facility available to MIN-AD. At the end of the second quarter 2024, Papillon's facility was undrawn and MIN-AD had $70,000 available under its facility.

The Company's most significant liquidity requirements over the next twelve months are scheduled principal and interest repayments of bank debt and lease payments, which total approximately $1.1 million, (including $430,000 due at maturity in May 2025 under the MIN-AD revolving credit facility, which the Company intends to renew). In the opinion of management, the Company's liquidity comprising cash, cash flow from operations and availability under the revolving credit facilities is sufficient to meet normal capital and operating requirements and financing commitments.

Cash Flows

The change in the Company's cash balance during the first six months of 2024 is reconciled as follows: ($,000):

Cash Flow Provided by Operating Activities

In the second quarter of 2024, consolidated cash flow from operations after working capital changes was $1.2 million, down from $2.3 million for the same period in 2023. The decrease in cash flow from operations is largely attributable to greater positive working capital changes in the prior year quarter. EBITDA of $1.4 million in the second quarter of 2024 exceeded $621,000 of EBITDA recorded in the second quarter of 2023. EBITDA improved in the current quarter as a result of higher gross profits and lower SG&A expenses. (EBITDA for the second quarter of 2023 was previously reported as $1.1 million; however, an expense of $478,000, initially recorded for the period ending June 30, 2023 as an inventory writedown that did not impact EBITDA, was

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reallocated to cost of sales at year end 2023. For comparative purposes, CGS for the three and six month periods of 2023 have been adjusted to include the additional expense of $478,000).

For the first six months of 2024, cash flow from operations after working capital changes was $2.2 million, as compared with $3.2 million for the same period in 2023. Similar to the second quarter, cash flow from operations for the first half of 2024 was below the year earlier period as a result of smaller positive changes in working capital. EBITDA for the first half of 2024 improved to $2.3 million, up 35% from $1.7 million in the first half of 2023, as higher gross profits more than offset higher SG&A expenses.

Cash Flow Provided by (used in) Financing Activities

During the second quarter of 2024, net cash used in financing activities was $103,000, with payments of $183,000 for debt service and lease payments more than offsetting $80,000 proceeds from borrowing.

For the first six months of 2024, net cash provided by financing activities was $235,000, as proceeds from borrowings of $609,000 exceeded financing related payments for debt, leases and preferred share dividends.

Cash Flow Used in Investing Activities

The Company incurred capital expenditures of $214,000 at MIN-AD in the second quarter of 2024, as compared with $720,000 in the second quarter of 2023. Capital expenditures in the first half of 2024 were $850,000, (six months of 2023: $945,000). Expenditures in the first half of both years are primarily related to MIN-AD's purchase of automatic bagging equipment, while the prior year period also includes the purchase of trans loading equipment.

FINANCIAL COMMITMENTS

The Company incurs financial commitments in the normal course of operations and financing activities. Financial commitments include payments due under bank loans, rail car leases and equipment financing loans, among other commitments.

At June 30, 2024, the Company had the following undiscounted financial commitments:

Debt repayments represent the principal only. The lease obligations in the table above may not agree with the amounts disclosed in the balance sheet as the figures above represent the contractual undiscounted amount of the commitments. Additionally, the lease balances in the table may include rail car leases that are under negotiation for renewal at the end of the reporting period and are expected to become effective shortly after the end of the reporting period.

In accordance with the terms of a protein manufacturing agreement, Papillon has committed to purchasing a minimum annual value of protein products over a five-year period, with an aggregate value over the five years of $1.0 million. If the value of the protein purchased is less than $1.0

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million, Papillon must pay the difference between the minimum required and the value of the actual amount purchased. The manufacturer can choose to reconcile the account annually or carry forward any differences.

OFF BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

OUTSTANDING SHARE DATA

As of the date of this MD&A, the Company had 21,961,811 common shares and 17,136,980 preferred shares issued and outstanding.

The Company does not have equity compensation plans nor a stock option plan.

RELATED PARTY TRANSACTIONS

There were no related party transactions in the first six months of 2024.

NORMAL COURSE ISSUER BID

The Company's normal course issuer bid ("NCIB") expired on January 15, 2024. Under the NCIB, the Company had approval to purchase for cancellation up to 1,000,000 common shares, representing approximately 4.5% of the issued and outstanding common shares of the Company. The Company purchased a total of 341,500 shares at an average price of $0.70/share. All shares purchased by the Company have been cancelled.

SUBSEQUENT EVENTS

The Board of Directors of the Company declared a preferred share dividend of $72,832 for the second quarter of 2024 (second quarter 2023: $70,690).

NON-IFRS PERFORMANCE MEASURE

Earnings before interest, taxes and depreciation and amortization ("EBITDA") is a non-IFRS performance measure. EBITDA deducts from net income (loss) items including interest expense, income taxes and depreciation and amortization. The Company uses EBITDA as one indicator of Inter-Rock's ability to generate cash flow to fund working capital, debt service, lease obligations and capital expenditures. EBITDA should not be considered as a substitute for performance measures calculated in accordance with IFRS. EBITDA excludes cash tax payments and the effects of working capital changes and therefore is not necessarily indicative of cash from operations as determined by IFRS. The following table provides a reconciliation of net income in the Company's consolidated statement of income to EBITDA:

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