SPUR VENTURES INC.
MANAGEMENT DISCUSSION & ANALYSIS FOR
THE SIX MONTHS ENDED JUNE 30, 2004

Dated: August 27, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

The following discussion of the financial position of Spur Ventures Inc. (the "Company") and the results of operations for the six months ended June 30, 2004 are to be read in conjunction with the unaudited financial statements for the six months ended June 30, 2004, the audited consolidated financial statements and related notes for the year ended December 31, 2003, and the management discussion and analysis of the period then ended.

The accompanying unaudited consolidated financial statements and related notes are presented in accordance with Canadian generally accepted accounting principles. These statements together with the following management's discussion and analysis, dated August 27, 2004, are intended to provide investors with a reasonable basis for assessing the financial performance of the Company as well as certain forward-looking statements relating to the potential future performance. Additional information on the Company can be found in the Company's Form 20-F, filed with Canadian regulators on SEDAR at www.sedar.com and with the United States Securities and Exchange Commission at www.sec.gov .

All of the financial information presented herein is expressed in Canadian dollars, unless otherwise indicated.

1.     Acquisition of YSC and YMC

On April 20, 2004, the Company's interest in Yichang Spur Chemicals Ltd. (YSC) was finalized based on closing adjustments as at December 31, 2003 and final negotiations. The Company's interest has been agreed at 72.18%, an increase from the previously announced 65%. YSC was formerly called Xinyuan Chemicals Ltd., but has been renamed and converted into a Sino-foreign joint venture company to accommodate the Company's participation. Chinese government approval for the conversion was received in 2003.

The YSC joint venture owns a fertilizer plant in Yichang. The fertilizer plant has been operating substantially below its rated capacity of 100,000 tonnes per annum (tpa) of NPK production since being commissioned in 2000 due to shortages of phosphoric acid, a key ingredient for NPK fertilizer production. To earn its 72.18% interest in YSC, the Company agreed to contribute US$2,500,000 for construction of a 60,000 tpa phosphoric acid plant (the "acid plant"), and agreed to undertake the expansion of the fertilizer plant to 300,000 tpa. The Company paid US$2,500,000 ($3,351,934) to acquire its interest in YSC. These funds will be used for the construction of the acid plant. The budget for construction of the acid plant is US$2,500,000, but the joint venture is considering increasing the size of certain of the equipment and infrastructure to accommodate future expansions, at an additional cost of approximately US$1.5 million. No decision has been made on any expansion of the fertilizer plant, other than construction of the acid plant, which will supply enough phosphoric acid for a 300,000 tpa fertilizer plant. Until the acid plant is commissioned, the YSC joint venture is not expected to be profitable. The Company also has agreed to pay interest on the existing debt of one of its partners for 5 years of approximately US$128,307 per year. However, the Company has no obligation to the repayment of debt of its partner.

As a result of the acquisition of an interest in the YSC joint venture, the terms of the original Yichang Maple Leaf Chemicals Ltd. (YMC) joint venture were renegotiated since the new concept has the fertilizer plant being held and initially expanded under YSC. On April 20, 2004, the

- 2 -

Company finalized the restructuring of the YMC joint venture, with the Company's interest in YMC adjusted to 78.72% with YPCC (a government-owned company) holding 21.28% . The original development plan for YMC called for Spur to earn a 90% interest in YMC by financing and developing a 1.0 million tpa fertilizer plant integrated with the phosphate mine, originally estimated to cost approximately US$325 million.

Since a fertilizer plant has been acquired under YSC, the terms of the original YMC joint venture were re-negotiated. The remaining principal assets of YMC are therefore the phosphate deposits and the associated mine development. Due to the need to maintain the nature and scope of the YMC joint venture contract consistent with previous government approvals, the Company agreed that the development of the phosphate deposits and any expansion beyond 300,000 tonnes in annual capacity of the fertilizer plant be undertaken under the YMC joint venture. Consequently, the estimated investment for the development of 700,000 tpa of additional fertilizer plant capacity (the other 300,000 tpa to be undertaken by YSC at the same site), plus the mine development and associated infrastructure has been reduced. The restructuring of the YMC joint venture was completed on April 20, 2004. Final government approval for the restructuring is expected shortly.

Under the revised terms of the YMC joint venture, the Company is required to make a US$3,834,000 capital contribution into YMC within three months of receipt of Chinese government approval for the restructuring. This amount represents the estimated cost of commissioning a mining facility capable of producing sufficient phosphate rock to supply at least a 100,000 tpa NPK fertilizer facility. The Company has already advanced $700,000 of this amount for costs associated with the issue of the mining license, engineering and design work.

The total investment to be made by the Company in YMC is US$25,561,000 million over 5 years, of which only the initial US$3,834,000 is a firm commitment. The balance of the US$25,561,000 is to be invested over five years on a best efforts basis, as follows:

• a cumulative total of US$8,946,000 within two years of receipt of approval for the restructured agreement;
• a cumulative total of US$16,614,000 within four years;
• the balance of US$25,561,000 within five years.

The US$25,561,000 represents the estimated minimum equity required to finance the total investment over the next five years to develop the phosphate mine and to expand the fertilizer plant from 300,000 tpa to 1.0 million tpa, estimated at US$93 million. The cost of mine development to supply a 1.2 million tpa mining rate is estimated at USD$29.8 million, including the value of YPCC's contribution of the phosphate deposits, working capital and contingencies over the 5 year development period. The estimated capital cost of expanding the fertilizer plant from 300,000 tpa capacity to 1.0 million tpa is approximately US$49.8 million, plus working capital, contingencies and capitalized interest during construction over the next 5 years for a total of US$63.1 million. The balance above the equity to be contributed by the Company is anticipated to be financed though debt and cash flow.

If there is a conflict between the investment circumstances or market conditions and the investment schedule, the Company shall be entitled to make necessary adjustment to the investment schedule.

2.     Overall Performance

During the three months ended June 30, 2004, the Company focused on developing an integrated fertilizer business in China. Through two Sino Foreign Joint Ventures, Spur plans to build a business capable of producing 1.0 million tpa of S-NPK fertilizer in planned stages. During the three months ended June 30, 2004, the Company finalized the acquisition of YSC, and has consolidated the financial results of YSC effective April 20, 2004.

- 3 -

Accordingly, as of June 30, 2004, the Company had revenue from the production of phosphate fertilizer from the YSC operations. During the three months ended March 31, 2004, the Company raised $390,000 by the issuance of shares for option and warrant exercises, and during the three months ended June 30, 2004, the Company raised an additional $15,446,084 net cash through a brokered private placement.

Set forth below is a discussion of the operations and financial condition of the Company for the applicable period.

3.     Results of Operations

Three months ended June 30, 2004 compared to three months ended June 30, 2003

During the three months ended June 30, 2004, the Company completed the acquisition of a 72.18% interest in YSC on April 20, 2004. The results of operation of YSC have been consolidated since the date of acquisition. The loss of $299,849 during the period increased from $101,590 during Q1 2003 due primarily to the consolidation of the result of operations of YSC. Certain expenses were increased: consulting fees increased from $36,182 in 2003 to $60,962 in Q2 2004, and stock-based compensation expenses increased to $54,143 during the period in accordance with new Stock Based Compensation Accounting Standards. The increase in consulting fees is due to the acquisition of YSC and the renegotiation of the YMC joint venture. The increase in other expenses was mainly due to the incorporation of the operational results of YSC since date of acquisition. The Company's earnings from interest income decreased from $12,325 in Q2 2003 to $7,844 in Q2 2004.

The operational results of YSC attributable to Spur Ventures Inc. from the date of acquisition (April 20, 2004) to June 30, 2004 are summarized as follows:

- 4 -

Currently, the fertilizer plant of YSC has been operating at approximately 30% of its total production capacity due to the unstable supply of phosphate acids and fluctuating prices. The gross profit margin for Q2 2004 was low as the cost of sales included depreciation of $81,466. Until the acid plant is commissioned, the YSC joint venture is not expected to be profitable.

Six months ended June 30, 2004 compared to Six months ended June 30, 2003

During the six months ended June 30, 2004, the loss of $569,880 during the period increased from $191,719 during the same period in 2003 primarily due to an increase in consulting fees from $70,727 in 2003 to $165,962 in 2004 and $186,377 in stock-based compensation expenses during the period in accordance with new Stock Based Compensation Accounting Standards. The increase in consulting fees is due to the acquisition of YSC and the renegotiation of the YMC joint venture and the engagement of additional officers and directors as the Company expands towards its objectives. The increase in other expenses was mainly due to the incorporation of the operational results of YSC since the date of acquisition. The Company's earnings from interest income increased from $12,325 in 2003 to $21,184 in 2004.

The Company's activities during the quarter were primarily directed towards finalizing the acquisition of YSC, the restructuring of the YMC joint venture and the construction of a 60,000 tpa phosphoric acid plant under the YSC joint venture.

- 5 -

4.     Liquidity and Capital Resources

The Company has financed its operations principally through the sale of common shares and warrants. Starting from Q2 2004, the Company generates revenue through phosphate fertilizer production and earns interest income from amounts on deposit. Income earned is dependent on the amount of funds available for deposit or investment and changes in interest rates and return on the investment. The Company's management expect that the amount of interest or dividend income will be decreased as the Company continues investment in its joint ventures in China, unless 1): the Company is able to obtain additional funds through the sales of its equity securities. 2): the Company's joint ventures start making positive cash flow from production and sales.

During the reporting period, the Company raised an additional $15,446,084 net cash through a brokered private placement. As at June 30, 2004, the Company had a net working capital of $19,077,264, compared to $5,283,056 at December 31, 2003. During the period, an advance of $500,000 was made to the YMC joint venture, which, together with an advance of $200,000 made in a prior period, is reflected in the attached Balance Sheet as current assets as the funds have been placed in segregated accounts controlled by the Company for release on approved YMC expenditures. Upon the approval of the restructuring of YMC and the completion of the capital structures, these funds will be contributed as registered capital and in the future will be represented as a long term investment for accounting purposes. The success of the Yichang projects will depend on management's ability to raise more capital and/or bank or private loan facilities. Depending upon the timing of expansion plans for its projects and the receipt of approvals for the restructuring of YMC and the availability of bank financing in China, the current working capital and cash position of the Company should provide sufficient liquidity to meet the Company's year 2004 operating requirements. See "Outlook".

The cash held in Canada is in term deposits with a Canadian chartered bank.

5.     Change in Accounting Policy

Effective January 1, 2004, the Company adopted the new requirements of the Canadian Institute of Chartered Accountants Standard 3870 which requires an expense to be recognized in the financial statements for all forms of employee stock-based compensation, including stock options. Previously, the Company did not record any compensation cost on the granting of stock options to employees and directors as the exercise price was equal to or greater than the market price at the date of the grants.

Accordingly, compensation expense was recorded on a retroactive basis to the opening deficit to show the effect of compensation expense associated with stock option grants to employees and directors from January 1, 2002 to December 31, 2003, which amounted to $1,468,865, and an increase of $94,600 to share capital and $1,374,265 to stock options.

6.     Mineral Properties

As of June 30, 2004, the Company had recorded $1,879,211 as Mineral Properties on the balance sheet, compared to $1,846,045 as of December 31, 2003. The $33,166 increase was due primarily to the capitalizing of certain travel and consulting costs. In addition, the Company made advances of $700,000 to the YMC joint venture. The funds are to be used by YMC for development expenses, and are held in China in segregated accounts controlled by the Company for release on approved YMC expenditures.

Since 1996, the Company has been working on the YMC project with its joint venture partner Yichang Phosphorous Chemical Industries Group Co. (YPCC), a state enterprise owned by the Chinese government. Through the YMC joint venture, the Company has exclusive rights to develop certain phosphate deposits located near Yichang, China. YPCC is an equity partner in both the YMC and YSC joint ventures in China.

- 6 -

7.     Transactions with Related Parties

During the three-month period ended June 30, 2004, the Company paid consulting fees of $124,462 (2003: $21,192) to a director and 4 companies controlled by directors (2003: 1). The Company also paid consulting fees of $2,000 (2003: $nil) to a company controlled by an officer. The Company paid management fees of $nil (2003: $15,333) to a company controlled by a director and legal fees of $14,639 (2003: $nil) to an officer.

During the six-month period ended June 30, 2004, the Company paid consulting fees of $206,462 (2003: $40,727) to a director and 4 companies controlled by directors (2003: 1). The Company also paid consulting fees of $17,500 (2003: $nil) to a company controlled by an officer. The Company paid management fees of $nil (2003: $27,833) to a company controlled by a director and legal fees of $14,639 (2003: $nil) to an officer.

For both periods, the increase in consulting fees is due to the acquisition of YSC and the renegotiation of the YMC joint venture and the engagement of additional officers and directors as the Company expands towards its objectives.

8.     Subsequent Events

On July 23, 2004, the Company announced that John Van Brunt joined the Board of Directors of the Company. Until October 2003, Mr. Van Brunt was Chief Executive Officer of Agrium Inc., a leading global producer and marketer of crop nutrients. Mr. Van Brunt had been with Agrium's former parent company, Cominco Ltd. (now Teck Cominco Limited), since 1965 and led the initial public offering when Agrium was sold by Cominco in 1993. Mr. Van Brunt is actively involved in a number of international fertilizer associations and organizations, and is currently the President of the International Fertilizer Industry Association headquartered in Paris. Gordon Ewart resigned from the Board on the same date to accommodate the appointment.

9.     Outlook

The key focus of activities in Q3 2004 include construction of the phosphoric acid plant at YSC which is scheduled to be commissioned late in December 2004, detailed engineering studies for the expansion of the YSC fertilizer plant to 300,000 tpa, and the development of the phosphate mine and associated plant on a staged basis consistent with the planned fertilizer plant expansion. The Company is also engaging in an executive search to augment the management team both in Canada and in China at the YSC plant.

YSC operations are not expected to be profitable until commissioning of the phosphoric acid plant. As part of the Company's agreement with the Chinese government, certain residents adjacent to the YSC plant were to be relocated to provide land for the phosphoric acid plant and future fertilizer plant expansions. This relocation was delayed by approximately 2 months, but has now been completed. Unfortunately this may impact the original commissioning date of the phosphoric acid plant, however management is making all efforts to commission by late December 2004.

10.     Outstanding Share Data

As of August 27, 2004, the Company had the following shares, warrants and options outstanding:

- 7 -

11.     Forward Looking Statements

This Management Discussion and Analysis contains certain statements that may be deemed to be "forward-looking statements" regarding the timing and content of upcoming programs. Although Spur Ventures believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include phosphate and potash prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions.

12.     Risk Factors

The Company's business is in China, which despite recent government policy changes carries high risk for foreign owned operations.

China has an evolving legal structure . Many laws and regulations dealing with economic matters in general, and foreign investment in particular, have been promulgated, including changes to the Constitution of China to authorize foreign investment and to guarantee "the lawful rights and interests" of foreign investors in China. Nevertheless, China does not have a comprehensive system of laws, and the legal and judicial systems in China in respect of commercial laws are rudimentary. In addition, enforcement of existing laws may be uncertain and sporadic, and may be subject to domestic politics.

China has a volatile economy. Although the Chinese economy has experienced significant growth in the recent past, such growth has been uneven among various sectors of the economy and geographic regions. The central government has recently implemented measures to control inflation, which is intended to have the effect of significantly restraining economic expansion. Consequently, there can be no assurance that the government's pursuit of economic reforms will not be curtailed. It is also possible that inflation in China will cause the cost of the Company's products to be uneconomic for the rural farming community making up the Company's market.

Investment in China can be adversely affected by significant political, economic and social uncertainties. Any change in laws and policies by the Chinese government could adversely affect the Company's investment in China. The Chinese Government has been pursuing economic reform and open door policies since 1978. The general development pattern in the last 25 years shows that the political environment in China has been improving gradually. Circumstances such as a change in leadership, social or political disruption or unforeseen circumstances may affect significantly or encumber the Chinese government's abilities to pursue such policies.

Mineral and fertilizer prices have historically fluctuated substantially , and are affected by numerous factors beyond the Company's control, including international, economic and political

- 8 -

trends, expectations for inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and world wide production levels. The effects of these factors can not be accurately predicted. The economics of mining and fertilizer production are also affected by operating costs, variation in the grade of mined mineralized material and fluctuation in the price of fertilizer products.

Additional risk factors can be found in the Company's Form 20-F, and filed with Canadian regulators on SEDAR at www.sedar.com and with the United States Securities and Exchange Commission at www.sec.gov .