Anaconda Mining : Q2 2021 MD&A

Management Discussion and Analysis

For the three and six months periods ended June 30, 2021 and June 30, 2020 (Expressed in Canadian Dollars)

ANACONDA MINING INC.

Q2 2021 MANAGEMENT DISCUSSION AND ANALYSIS

This management discussion and analysis ("MD&A") dated July 29, 2021 of Anaconda Mining Inc. ("Anaconda" or the "Company") provides a discussion of the Company's consolidated financial position and the results of its consolidated operations for the three and six months ended June 30, 2021. This MD&A should be read in conjunction with the Company's condensed interim consolidated financial statements and the related notes for the three and six months ended June 30, 2021 and June 30, 2020, which were prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to the preparation of interim financial statements, including International Accounting Standard ("IAS") 34, Interim Financial Reporting. Since the condensed interim consolidated financial statements do not include all disclosure required by IFRS for annual statements, they should be read in conjunction with the Company's audited consolid ated financial statements as at and for the year ended December 31, 2020. This MD&A should also be read in conjunction with the risk factors described in the "Risk Factors" section at the end of this document. Additional information, including the condensed interim consolidated financial statements for the three and six months ended June 30, 2021, the audited annual financial statements for the year ended December 31, 2020, the Company's Annual Information Form for the year ended December 31, 2020, and press releases, have been filed through the System for electronic Document Analysis and Retrieval ("SEDAR") and are available online under the Anaconda Mining Inc. profile at www.sedar.com.

All amounts presented are in Canadian Dollars unless otherwise stated.

Certain non-IFRS measures are included in this MD&A, including operating cash cost per ounce and all-in sustaining costs ("AISC") per ounce. In the gold mining industry, these are common performance measures but may not be comparable to similar measures presented by other issuers. Anaconda believes that these measures, in addition to that information prepared in accordance with IFRS, provides investors with useful information to evaluate the Company's performance and ability to generate cash flow from its operations . Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For further information, refer to the "Non-IFRS Measures" section of this MD&A.

Company Overview

Anaconda Mining is a TSX and OTCQX-listed gold mining, development, and exploration company, focused in the top-tier Canadian mining jurisdictions of Newfoundland and Nova Scotia. The Company is advancing the Goldboro Gold Project in Nova Scotia, a significant growth project subject to an ongoing Feasibility Study, with Measured and Indicated Mineral Resources of 1.9 million ounces (16.0 million tonnes at 3.78 grams per tonne ("g/t")) and Inferred Mineral Resources of 0.8 million ounces (5.3 million tonnes at 4.68 g/t) (please see The Goldboro Gold Project Technical Report dated March 30, 2021). Anaconda also operates mining and milling operations in the prolific Baie Verte Mining District of Newfoundland which includes the fully-permitted Pine Cove Mill, tailings facility and deep-water port, as well as ~15,000 hectares of highly prospective mineral property, including those adjacent to the past producing, high-grade Nugget Pond Mine at its Tilt Cove Gold Project.

Anaconda's common shares trade on the Toronto Stock Exchange ("TSX") under the symbol "ANX" and on the OTCQX under the symbol "ANXGF". Anaconda Mining Inc. is incorporated under the laws of Ontario, with its registered head office located at 20 Adelaide Street East, Suite 915, Toronto, ON M5C 2T6. Further information about Anaconda Mining can be found in the Company's regulatory filings, including the Annual Information Form, available on SEDAR at www.sedar.com and on the Company's website at www.anacondamining.com.

COVID-19 Pandemic and Preparedness

As of the date of this MD&A, Point Rousse continues to operate and the robust health and safety protocols, including social distancing and wearing masks, remain in place and are continually reviewed based on recommendations from medical authorities.

At this point, production activities have not been impacted by the COVID-19 pandemic, and a number of strict health and safety protocols have been established to minimize risk to our employees and contractors. All work-related travel is being limited to essential travel with all employees following all applicable provincial public health regulations. Anaconda will continue to closely monitor the situation and will provide updates as they become available.

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ANACONDA MINING INC.

Q2 2021 MANAGEMENT DISCUSSION AND ANALYSIS

Corporate Update

On June 23, 2021, the Company announced the results of the Preliminary Economic Assessment ("PEA") prepared in accordance with National Instrument 43-101 ("NI 43-101") for the Goldboro Gold Project. Based on the significantly expanded Mineral Resource announced on February 22, 2021, the PEA demonstrates the potential for strong economics from both open pit and underground mine operations over an estimated 17.6 year life of mine, with continued opportunity for growth as the Goldboro Deposit remains open in all directions. The PEA reported after-tax Net Present Value at a 5% discount rate ("NPV 5%") of $547 million and an after-tax Internal Rate of Return ("IRR") of 24.4%, with an after-tax payback of 3.2 years based on a gold price of $2,000 per ounce (US$1,550 at an exchange rate of 1.29 C$/US$).

On May 28, 2021, the Company completed the flow-through private placement under an agreement with Raymond James Ltd. announced on April 28, 2021, and later upsized on April 30, 2021. As a result, the Company issued 10,241,000 flow- through common shares in the capital of the Company for aggregate gross proceeds of $8,500,030.

On February 22, 2021, the Company announced an updated and significantly expanded Mineral Resource Estimate ("Mineral Resource") for the Goldboro Gold Project, prepared in accordance with NI 43-101. The updated Mineral Resource includes Measured and Indicated Mineral Resources of 1,946,100 ounces of gold and Inferred Mineral Resources of 798,100 ounces of gold. The Company filed the related technical report prepared in accordance with NI 43-101 on March 30, 2021.

Consolidated Results Summary

	Three months	Three months	Six months	Six months
Financial Results	ended	ended	ended	ended
June 30, 2021	June 30, 2020	June 30, 2021	June 30, 2020
Revenue ($)	6,940,004	8,356,088	14,299,912	18,891,109
Cost of operations, including depletion and depreciation	8,216,647	5,926,361	16,878,184	12,827,960
Mine operating income ($)	(1,276,643)	2,429,727	(2,578,272)	6,063,149
Net income (loss) ($)	(2,202,251)	1,981,864	(4,699,101)	3,453,263
Net income (loss) per share ($/share) - basic and diluted	(0.01)	0.01	(0.03)	0.03
Cash generated from operating activities ($)	(1,817,960)	1,443,864	(1,281,921)	5,823,989
Capital investment in property, mill and equipment ($)	1,519,300	530,983	2,305,469	1,190,325
Capital investment in exploration and evaluation assets ($)	4,141,340	1,391,057	6,967,882	2,487,687
Average realized gold price per ounce*	US$1,789	US$1,624	US$1,827	US$1,565
Operating cash costs per ounce sold*	US$1,746	US$991	US$1,901	US$918
All-in sustaining cash costs per ounce sold*	US$2,577	US$1,320	US$2,652	US$1,221

	June 30, 2021	December 31, 2020
Working capital* ($)	11,759,914	13,938,471
Total assets ($)	87,229,035	81,396,971
Non-current liabilities ($)	7,022,939	7,529,640

*Refer to Non-IFRS Measures section for reconciliation

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ANACONDA MINING INC.

Q2 2021 MANAGEMENT DISCUSSION AND ANALYSIS

	Three months	Three months	Six months	Six months
	ended	ended	ended	ended
Operational Results	June 30, 2021	June 30, 2020	June 30, 2021	June 30, 2020
Ore mined (t)	29,558	111,167	88,715	214,388
Waste mined (t)	581,001	561,950	1,132,707	1,123,714
Strip ratio	19.7	5.1	12.8	5.2
Ore milled (t)	117,030	118,333	209,563	231,469
Grade (g/t Au)	0.98	1.11	0.99	1.34
Recovery (%)	86.4	86.4	85.7	87.0
Gold ounces produced	3,201	3,657	5,741	8,654
Gold ounces sold	3,156	3,712	6,275	8,843

Second Quarter 2021 Highlights

• Anaconda sold 3,156 ounces of gold in Q2 2021, generating metal revenue of $6.9 million at an average realized gold price* of $2,197 (US$1,789) per ounce sold.
• Point Rousse produced 3,201 ounces of gold in Q2 2021, a 26% increase from the first quarter of 2021, driven by higher throughput and stronger average recovery. Gold production is expected to increase further in the second half of 2021 as accelerated waste development provides increased access to higher grade ore.
• Mine operations moved 29,558 tonnes of ore during Q2 2021 from Argyle, approximately 50% lower than Q1 2021, as operations focused on mine development to increase access to ore, as demonstrated by the strip ratio of 19.7 waste tonnes to ore tonnes.
• The Pine Cove Mill processed 117,030 tonnes during Q2 2021, a 26% increase from the first quarter of 2021 when the mill was impacted by unplanned maintenance relating to the ball mill and the jaw crusher. During Q2 2021, the mill was consistently above planned target for throughput, recovery, and availability.
• Operating cash costs per ounce sold* at Point Rousse in Q2 2021 were $2,144 (US$1,746), driven by lower production from lower mined grade and higher operating costs.
• All-insustaining cash costs per ounce sold*, including corporate administration and sustaining capital expenditures, was $3,164 (US$2,577) for Q2 2021, which reflects increased mine development and the continued advancement of
  Stog'er Tight.
• The Company invested $4.1 million to advance its growth programs in Q2 2021, including $2.9 million on the Goldboro Gold Project relating to the PEA, Feasibility Study, and permitting to support the advancement of the significantly expanded Mineral Resource.
• Net loss for the three months ended June 30, 2021 was $2.2 million, or $0.01 per share, compared to net income of $2.0 million or $0.01 per share, for the three months ended June 30, 2020, driven predominantly by lower production and higher operating costs.
• On May 28, 2021, the Company completed a flow-through private placement under an agreement with Raymond James for gross proceeds of $8.5 million which will accelerate its highly prospective exploration programs in Atlantic Canada.
• The Company continued to announce encouraging drill results from its infill drill program at the Stog'er Tight Deposit, which are being incorporated into pit designs and a resource estimate in anticipation of a potential development scenario at Stog'er Tight.
• As of June 30, 2021, the Company had a cash balance of $14.6 million and working capital* of $11.8 million. In July 2021, the Company further strengthened its liquidity with a $3 million revolving credit facility with the Royal Bank of Canada, supported by ongoing cash flows from Point Rousse and providing further financial flexibility.

*Refer to Non-IFRS Measures section below for reconciliation.

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ANACONDA MINING INC.

Q2 2021 MANAGEMENT DISCUSSION AND ANALYSIS

2021 Guidance

As a result of lower grade mined in Q1 2021 and a downward adjustment to its top-cut parameter to better reflect the actual results from mining and the resulting mill reconciliation, Anaconda revised its 2021 guidance on April 22, 2021 downward to 16,000 to 17,000 ounces of gold, from 18,000 and 19,000 ounces of gold in 2021. Mill feed will continue to be predominantly from mining at Argyle, with accelerated development in Q2 and Q3 2021 allowing for greater access to ore in the second half of the year. Throughput will be maintained with supplemental ore feed from Pine Cove and marginal stockpiles, although the Company continues to investigate opportunities to defer marginal ore feed. Operating cash costs per ounce for the full year are expected to be between $1,625 and $1,675 per ounce of gold sold (US$1,225 - US$1,275 at an approximate exchange rate of 0.775), up from $1,425 and $1,475 per ounce of gold sold, reflecting the impact of operating cash costs per ounce sold in the first half of 2021 and the expected grade profile from Argyle over the remainder of the year. The operating cash costs for the second half of the year are expected to be between $1,450 and $1,500 (US$1,125 - US$1,175 at an approximate exchange rate of 0.775). The Company still anticipates grade to increase towards the end of 2021 at Argyle which, along with a decrease in the stripping ratio, will lead to a decrease in operating cash costs per ounce sold.

The Company expects to incur approximately $5,500,000 of sustaining capital expenditures for the mine and mill operations in 2021, a decrease from $6,600,000, as accelerated development in Q2 and Q3 2021 results in a lower allocation of mining costs to capital in the second half of the year. Looking further ahead at Point Rousse, the Company continues to see positive results from infill and expansion drilling at the Stog'er Tight extension and has advanced baseline permitting activities, given its strong potential to extend the life of mine of the Point Rousse operation.

Second Quarter 2021 Operating and Financial Review

Operational Performance - Gold production of 3,201 ounces was 12% lower than Q2 of the previous year due to lower grade from the initial benches at Argyle, however, it marked a 26% improvement from Q1 2021 due to better throughput and average recovery.

After the challenges encountered in the first quarter when commencing production at Argyle, particularly in shallowly dipping areas of the deposit, the Point Rousse operation has doubled production drill sampling to provide better grade definition on each bench and increased delineation drilling where drill density is lower. This has enabled an optimized preferential mining approach to minimize mining dilution. The top-cut parameter was also revised downward to better reflect the actual results from mining and the resulting mill reconciliation, enabling a better prediction of grade in the mine plan.

During Q2 2021, the mine operations moved 29,558 tonnes of ore which was approximately 50% lower than Q1 2021 as focus was on mine development to enhance access to higher-grade Argyle ore while awaiting a permit to modify Argyle Pond, located within the hanging wall of the deposit and within the open pit design, which has now been received. Mined ore was 73% lower than the corresponding period of 2020, when mine operations were focused in the higher-tonnage Pine Cove Pit. The strip ratio of 19.7 waste tonnes to ore tonnes reflects continued mine development, which is expected to remain elevated into the third quarter now that the Company has received the permit to modify Argyle Pond and continue pit development.

The Pine Cove Mill processed 117,030 tonnes during Q2 2021, a 26% increase compared to the first quarter of 2021 when the mill was impacted by unplanned maintenance relating to the ball mill and the jaw crusher. Availability and throughput returned to normal levels during the second quarter, consistent with the performance in the comparative period of 2020. The average grade during Q2 2021 of 0.98 g/t reflected the use of low-grade ore stockpile to supplement throughput. Despite the lower grade processed, the mill achieved an average recovery rate of 86.4%, an increase over the first quarter of 2021 and consistent with the corresponding quarter of 2020.

Financial Performance - Anaconda sold 3,156 ounces of gold during the second quarter of 2021, generating gold revenue of $6.9 million at an average realized gold price of C$2,197 per ounce (US$1,789).

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