Santa Barbara Resources Ltd V.SBL

Status, last MD&A

[stockeditor]

Overview Santa Barbara is a Canadian mineral resource company engaged in the acquisition and exploration of mineral resource properties in Latin America. The principal mineral resource property of Santa Barbara at the present time is its interest in the Sancos exploration project located in Peru. The Company also holds the Surapata exploration project in Peru. Sancos Project, Peru The Sancos project in Southern Peru is the Company’s flagship project. It is an epithermal highsulphidation gold project located 45 kilometres south-southeast of Puquio in the mining friendly Ayacucho Region of Peru. The property hosts a large high-sulphidation epithermal gold-silver mineralized system. To date, three gold mineralized areas, Sancos West, Sancos Central and Sancos East, have been identified by Santa Barbara’s systematic sampling in trench and outcrop exposures. All target zones show significant gold content associated with the presence of pathfinder elements to high-sulphidation epithermal mineralization. On June 24, 2013, the Company executed a definitive agreement with Rio Alto Mining Limited (“Rio Alto”) to supersede a non-binding letter of intent entered into on February 5, 2013 (the “LOI”) whereby the Company granted Rio Alto an option to earn and acquire up to a 66% interest in the Sancos project in Peru. Rio Alto paid the Company $250,725 (US$250,000) on signing of the LOI which is first recorded as a recovery of exploration and evaluation assets ($30,098) with the remainder ($220,627) recorded as a gain on exploration and evaluation assets on the statement of loss and comprehensive loss. In addition, the Company paid an option payment to Barrick Gold Corporation (“Barrick”) of $99,914 (US$100,000) during the current fiscal year and this amount was recovered from Rio Alto. Under the terms of the agreement, Rio Alto could earn an initial 51% interest in the Sancos project within a three year period by incurring US$4,500,000 of exploration expenditures at the minimum rate of US$1,500,000 a year. Completion of the first year’s expenditures, including a minimum 5,000 metre drilling program, was a firm commitment. Both the first year commitment of US$1,500,000 and the 5,000 metre drill program were met. The Company was the operator of the Sancos project and charged a 10% management fee of certain costs incurred during the option period. SANTA BARBARA RESOURCES LIMITED MANAGEMENT DISCUSSION AND ANALYSIS (Expressed in Canadian dollars) For the three months ended March 31, 2014 - 2 - On February 5, 2014, the Company regained the right to 100% of the Sancos project when Rio Alto notified the Company of its election to withdraw from the option agreement. On November 12, 2013, the Company announced the results from 27 holes drilled on the Sancos project in September and October 2013. Drill holes returned gold intercepts of 50 m @ 1.10 grams per tonne (g/t) gold, including 24 m @ 1.71 g/t gold at shallow depth, 98 m @ 0.51 g/t gold near surface, 140 m @ 0.36 g/t gold from surface and 108 m @ 0.38 g/t gold from surface. Drill hole SARC 040 with the drill intercept of 50 m @ 1.10 g/t gold is located approximately 120 m north of and at similar altitudes to the area of highest grade trench results obtained from surface in prior work programs. The other drill holes, in conjunction with the results of the first drill campaign which included 154 m @ 0.45 g/t gold and 94 m @ 0.47 g/t gold from surface as well as seven other adjacent drill holes, form a coherent cluster of drill intercepts within the central breccia zone of Sancos Central in an area measuring 500 m by 160 m. The gold mineralization in this zone remains open at depth. In addition, nine out of twelve of the other drill holes intersected anomalous gold values throughout Sancos Central ranging from 14 m @ 0.19 g/t gold to 116 m @ 0.17 g/t gold. The 2 m @ 2.35 g/t gold intersection in SARC 033 may indicate the presence of a potential feeder structure at Sancos Northeast. The results received from the recent drill program define the extent of a potential better grade gold zone that will require a follow-up drill program. Santa Barbara is currently seeking another partner to fund and further explore the Sancos project. Surapata Project, Peru The 100% owned Surapata gold project is located 30 kilometres southeast of Puquio, Peru. The Surapata project is considered to be a geological twin to the Sancos project. A mapping and geochemical sampling program identified alteration confirming the presence of a high sulphidation epithermal gold system. A geophysical survey will be the next step to bring the property to a drill ready status. The priority and timing of the survey will depend on the results achieved at the Sancos project as well as the availability of financing. Qualified Person The technical content in this MD&A has been reviewed by Stewart Wallis, P. Geo, a Qualified Person and consultant to the Company. Results of Operations for the three months ended March 31, 2014 The Company incurred a net loss for the three months ended March 31, 2014 of $164,988 (2013 – income of $80,235). The more significant differences between the two comparative periods are as follows: Exploration and evaluation expenditures for the three months ended March 31, 2014 aggregated $107,993, which, net of $47,525 recovered from advances by joint venture funding partner Rio Alto, were $60,468 (2013 - $33,275). All exploration and evaluation expenditures were spent on the Company’s Sancos project in Peru. On February 5, 2014, the Company regained the right to 100% of the Sancos project when Rio Alto notified the Company of its election to withdraw from the option agreement. Exploration and evaluation recoveries for the three months ended March 31, 2014 were $Nil (2013 - $220,627). Rio Alto paid the Company $250,725 (US$250,000) on signing of the LOI. In accordance with the Company’s accounting policy, the option payment was first applied to the remaining balance of exploration and evaluation assets as a recovery ($30,098) with the remainder ($220,627) recorded as exploration and evaluation expense recoveries. SANTA BARBARA RESOURCES LIMITED MANAGEMENT DISCUSSION AND ANALYSIS (Expressed in Canadian dollars) For the three months ended March 31, 2014 - 3 - Salaries