BRAZIL MINERALS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

The following discussion of our financial condition and results of operations
should be read in conjunction with our unaudited consolidated financial
statements and the notes to those financial statements appearing elsewhere in
this Report.

This Quarterly Report contains forward-looking statements. Forward-looking
statements for Brazil Minerals, Inc. reflect current expectations, as of the
date of this Quarterly Report, and involve certain risks and uncertainties.
Actual results could differ materially from those anticipated in these forward-
looking statements as a result of various factors. Factors that could cause
future results to materially differ from the recent results or those projected
in forward-looking statements include: unprofitable efforts resulting not only
from the failure to discover mineral deposits but also from finding mineral
deposits that, though present, are insufficient in quantity and quality to
return a profit from production; market fluctuations; government regulations,
including regulations relating to royalties, allowable production, importing and
exporting of minerals, and environmental protection; competition; the loss of
services of key personnel; unusual or infrequent weather phenomena, sabotage,
government or other interference in the maintenance or provision of
infrastructure as well as general economic conditions.

Description of Business

We are a U.S. mineral exploration and mining company with projects and
properties in essentially all battery metals to power the Green Energy
Revolution – lithium, rare earths, nickel, cobalt, graphite, and titanium. Our
current focus is on developing our hard-rock lithium project located in a
premier pegmatitic district in Brazil – as lithium is essential for batteries in
electric vehicles. Additionally, through subsidiaries, we participate in iron,
gold, and quartzite projects. We also own multiple mining concessions for gold,
diamond, and industrial sand.

All of our mineral projects and properties are located in Brazil and, as of the
date of this Report, our mineral rights portfolio for battery metals includes
approximately 60,077 acres (243 km2) for lithium, 30,009 acres (121 km2) for
rare earths, 57,900 acres (234 km2) for nickel, 22,050 acres (89 km2) for
titanium, and 14,507 acres (59 km2) for graphite. We believe that we have one of
the largest battery metals exploration footprints among publicly listed
companies.

Currently we are primarily focused on advancing and developing our hard-rock
lithium project located in the state of Minas Gerais, Brazil, where some of our
high-potential mineral rights are adjacent to or near large lithium deposits
that belong to a large, publicly traded competitor. Our Minas Gerais Lithium
Project is our largest endeavor and consists of 44 mineral rights spread over
45,456 acres (184 km2) and predominantly located within the Brazilian Eastern
Pegmatitic Province which has been surveyed by the Brazilian Geological Survey
and is known for the presence of hard rock formations known as pegmatites which
contain lithium-bearing minerals such as spodumene and petalite. In general,
lithium derived from pegmatites is less costly to purify for uses in high
technology applications than lithium obtained from brine. Such applications
include the battery supply chain for electric vehicles (“EVs”), an area of
expected high growth for the next several decades.

We also own 44.41% of the common shares of Apollo Resources Corporation,
(“Apollo Resources”), a private company currently primarily focused on the
development of its initial iron mine, expected to start operations and revenues
in early 2023. We also own approximately 24.56% of Jupiter Gold Corporation
(“Jupiter Gold”), a company focused on the development of gold projects and of a
quartzite mine, and whose common shares are quoted on the OTCQB under the symbol
“JUPGF.” The quartzite mine is expected to start operations and revenues in
2022. The results of operations from both Apollo Resources and Jupiter Gold are
consolidated in our financial statements under accounting principles generally
accepted in the United States (“U.S. GAAP”).

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As the self-titled “Mineral Resources Company for the Green Energy Revolution,”
we are deeply committed to Environmental, Social, and Corporate Governance
(“ESG”) causes. We have an ESG Chief who coordinates our efforts in these
important matters. Within the last few years, we planted more than 6,000 trees
of diverse types for the benefit of local populations in areas in which we
operate and constructed over 1,000 small retention walls to preserve and enhance
dirt access roads used by such communities. Separately, many of our work needs
have been specifically delegated to firms owned or managed by women and
minorities.

We are an exploration stage company and we have no “reserves” as such term is
defined by Regulation S-K, Subpart 1300 (“S-K 1300”).

Operational Update

During the first quarter of 2022 and continuing to date, we have been primarily
focused on the geological exploration and advancement of one of our mineral
rights within our Minas Gerais Lithium Project. Within this one claim, our
exploration team has identified three distinct pegmatitic ore bodies with
spodumene, a mineral which contains lithium. Recent geochemical analysis of
spodumene samples from one drill hole included a reading of 2.86% Li2O. We have
two qualified persons under S-K 1300 who are responsible for the technical
advancement of the project.

After the end of the first quarter of 2022, we increased the size of our nickel
exploration footprint with the addition of another 11 mineral rights in the
Brazilian state of Goiás.

On March 16, 2022, we terminated the Consulting Services Agreement with Jason
Baybutt, who served as our Chief Financial Officer, Principal Accounting
Officer, and Treasurer from December 29, 2021 to March 16, 2022.

On March 16, 2022, we appointed Gustavo Pereira de Aguiar as our Chief Financial
Officer, Principal Accounting Officer, and Treasurer. From 2016 until March 15,
2022, Mr. Aguiar was the Controller of Jaguar Mining, Inc., a Canadian publicly
traded company with two producing gold mines in the state of Minas Gerais in
Brazil and current market capitalization of approximately $270 million. From
2013 to 2016, Mr. Aguiar was Controller at Grupo Orguel, an enterprise in the
construction equipment rental sector in Brazil which received funding from
Carlyle, a U.S. private equity group, and from 2010 to 2013, Mr. Aguiar worked
at Mirabella Mineração, which at the time was developing its nickel project in
the state of Bahia in Brazil. From 2006 to 2010, Mr. Aguiar was an auditor with
Deloitte in Brazil. Mr. Aguiar has undergraduate degrees in Business
Administration and in Accounting from Universidade FUMEC in Brazil. He has an
executive MBA and further post-graduate education in finance from Fundação Dom
Cabral in Brazil. Mr. Aguiar is fluent in Portuguese and English and is a
licensed accountant in Brazil.

Results of Operations

The Three Months Ended March 31, 2022 Compared to the Three Months ended March
31, 2021

Revenue for the three months ended March 31, 2022 totaled $477, compared to
revenue of $4,459 during the three months ended March 31, 2021 representing a
decrease of 89%. This revenue comes from sales of industrial sand during the
raining season. Industrial sand is a residual business line as the Company is
primarily focused on its lithium exploration as described above.

Cost of goods sold for the three months ended March 31, 2022 totaled $9,855, as
compared to cost of goods sold of $22,989 during the three months ended March
31, 2021 representing a decrease of 57.13%. Cost of goods sold is primarily
comprised of labor, fuel, and repairs and maintenance on our mining equipment.
The decrease is explained by reduced production activities and mining costs
partially attributable to our exploratory efforts.

Gross loss for the three months ended March 31, 2022 totaled $9,378, compared to
gross loss of $18,530 during the three months ended March 31, 2021, representing
an improvement of 49.4%.

Operating expenses for the three months ended March 31, 2022 totaled $827,317,
compared to operating expenses of $1,112,296 during the three months ended March
31, 2021, representing a decrease of 25.6%. The decrease was mostly due to lower
general and administrative expenses related to public company costs and
stock-based compensation from issuances of stock options to officers and
directors.

As a result, we incurred a net loss attributable to our stockholders of
$531,490, or $0.00 per share, for the three months ended March 31, 2022,
compared to a net loss attributable to our stockholders of $716,022, or $0.00
per share, during the three months ended March 31, 2021.

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Liquidity and Capital Resources

As of March 31, 2021, we had cash and cash equivalents of $54,230 and a working
capital deficit of $822,917.

Net cash used by operating activities totaled $506,071 for the three months
ended March 31, 2022, compared to net cash generation of $488,711 during the
three months ended March 31, 2021 representing a decrease in cash of $994,782 or
203.5%. Net cash used in investing activities totaled $152,998 for the three
months ended March 31, 2022, compared to net cash used of $939,927 during the
three months ended March 31, 2021, representing a decrease in cash used of
$786,929 or 83.7%. Net cash provided by financing activities totaled $622,999
for the three months ended March 31, 2022, compared to $466,249 during the three
months ended March 31, 2021, representing an increase in cash provided of
$156,750 or 33.62%.

We have limited working capital, have historically incurred net operating
losses, and have not yet received material revenues from the sale of products or
services. These factors create substantial doubt about our ability to continue
as a going concern.

Our primary sources of liquidity have been derived through proceeds from the (i)
issuance of debt and (ii) sales of our equity and the equity of one of our
subsidiaries. Our ability to continue as a going concern is dependent upon our
capability to generate cash flows from operations and successfully raise new
capital through debt issuances and sales of our equity. We have no plans for any
significant cash acquisitions in the foreseeable future.

Currency Risk

We operate primarily in Brazil which exposes us to currency risks. Our business
activities may generate intercompany receivables or payables that are in a
currency other than the functional currency of the entity. Changes in exchange
rates from the time the activity occurs to the time payments are made may result
in us receiving either more or less in local currency than the local currency
equivalent at the time of the original activity.

Our condensed consolidated financial statements are denominated in U.S. dollars.
Accordingly, changes in exchange rates between the applicable foreign currency
and the U.S. dollar affect the translation of each foreign subsidiary’s
financial results into U.S. dollars for purposes of reporting in the
consolidated financial statements. Our foreign subsidiaries translate their
financial results from the local currency into U.S. dollars in the following
manner: (a) income statement accounts are translated at average exchange rates
for the period; (b) balance sheet asset and liability accounts are translated at
end of period exchange rates; and (c) equity accounts are translated at
historical exchange rates. Translation in this manner affects the shareholders’
equity account referred to as the foreign currency translation adjustment
account. This account exists only in the foreign subsidiaries’ U.S. dollar
balance sheets and is necessary to keep the foreign subsidiaries’ balance sheets
in agreement.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our financial instruments consist of cash and cash equivalents, loans to a
related party, accrued expenses, and an amount due to a director. The carrying
amount of these financial instruments approximates fair value due either to
length of maturity or interest rates that approximate prevailing market rates
unless otherwise disclosed in our financial statements. If our estimate of the
fair value is incorrect at March 31, 2022, it could negatively affect our
financial position and liquidity and could result in our having understated our
net loss.

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Recent Accounting Pronouncements

Our consolidated financial statements are prepared in accordance with U.S. GAAP.
Our significant accounting policies are described in Note 1 of the financial
statements. We have reviewed all recent accounting pronouncements issued to the
date of the issuance of these financial statements, and we do not believe any of
these pronouncements will have a material impact on us.

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