Anaconda Mining : Q1 2021 MD&A

Management Discussion and Analysis

For the three month periods ended March 31, 2021 and 2020 (Expressed in Canadian Dollars)

ANACONDA MINING INC.

Q1 2021 MANAGEMENT DISCUSSION AND ANALYSIS

This management discussion and analysis ("MD&A") dated May 5, 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 months ended March 31, 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 months ended March 31, 2021 and March 31, 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 consolidated 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 months ended March 31, 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 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), and which is subject to an ongoing Feasibility Study. 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. The Company's corporate office remains closed for the foreseeable future, and where possible, employees across the Company, including those in the corporate office, are working from home.

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.

Q1 2021 MANAGEMENT DISCUSSION AND ANALYSIS

Corporate Update

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 National Instrument 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. In addition to the ongoing Feasibility Study to be announced in Q4 2021, the Company has initiated a Preliminary Economic Assessment ("PEA") for Goldboro which will incorporate the results of the updated Mineral Resource, allowing the Company to demonstrate and discuss the economic potential of this significantly larger project. The Company filed the related technical report prepared in accordance with National Instrument 43-101 ("NI 43- 101") on March 30, 2021.

In April 2021, the Company announced that it had entered into an agreement with Raymond James Ltd. ("Raymond James") for a marketed offering of up to $8.5 million by way of private placement of flow-through common shares ("FT Shares") in the capital of the Company (the "Offering"). Up to 10,241,000 FT Shares will be offered under the Offering at a price of $0.83 per FT Share. There can be no assurance as to whether or when the Offering may be completed, or as to the actual final size of the Offering. The Offering is expected to close on or about May 20, 2021, or such other date as agreed between the Company and Raymond James.

Consolidated Results Summary

Financial Results	Three months ended	Three months ended
March 31, 2021	March 31, 2020
Revenue ($)	7,359,908	10,535,021
Cost of operations, including depletion and depreciation ($)	8,661,537	6,901,599
Mine operating (loss) income ($)	(1,301,629)	3,633,422
Net (loss) income ($)	(2,496,850)	1,471,399
Net (loss) income per share ($/share) - basic and diluted	(0.02)	0.01
Cash generated from operating activities ($)	536,039	4,380,125
Capital investment in property, mill and equipment ($)	786,169	659,342
Capital investment in exploration and evaluation assets ($)	2,826,542	1,096,630
Average realized gold price per ounce*	US$1,862	US$1,526
Operating cash costs per ounce sold*	US$2,052	US$867
All-in sustaining cash costs per ounce sold*	US$2,724	US$1,151
	March 31, 2021	December 31, 2020
Working capital* ($)	11,295,448	13,938,471
Total assets ($)	83,469,058	81,396,971
Non-current liabilities ($)	7,083,886	7,529,640

*Refer to Non-IFRS Measures section for reconciliation

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ANACONDA MINING INC.

Q1 2021 MANAGEMENT DISCUSSION AND ANALYSIS

	Three months ended	Three months ended
Operational Results	March 31, 2021	March 31, 2020
Ore mined (t)	59,157	103,222
Waste mined (t)	551,706	561,763
Strip ratio	9.3	5.4
Ore milled (t)	92,533	113,136
Grade (g/t Au)	1.01	1.57
Recovery (%)	84.9	87.4
Gold ounces produced	2,540	4,997
Gold ounces sold	3,119	5,132

Highlights for the Three Months Ended March 31, 2021

• Anaconda sold 3,119 ounces of gold in Q1 2021, generating metal revenue of $7.4 million at an average realized gold price* of $2,358 (US$1,862) per ounce sold.
• Point Rousse produced 2,540 ounces of gold in Q1 2021, a 49% decrease compared to Q1 2020, driven mainly by lower mined grade from the initial benches of Argyle and lower mill throughput.
• Mine operations moved 59,157 tonnes of ore during the first quarter from Argyle, ahead of plan for 2021, however mined grade was 35% lower than the mine plan due to higher mining dilution, particularly in shallow dipping areas of the deposit.
• Point Rousse has now implemented programs to increase grade definition and ore delineation drilling and has adopted preferential mining methods for shallowly dipping areas of the Argyle Deposit.
• 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, the Company has revised its 2021 guidance downward to 16,000 to 17,000 ounces of gold produced.
• The Pine Cove Mill processed 92,533 tonnes during Q1 2021 and achieved a recovery rate of 84.9%, a decrease in throughput of 18% compared to Q1 2020, the result of unplanned maintenance relating to the ball mill and the jaw crusher. As at the date of this MD&A, throughput is running at budgeted levels.
• Operating cash costs per ounce sold* at the Point Rousse Project in Q1 2021 were $2,597 (US$2,052), driven by lower production from lower mined grade and higher operating costs.
• The operating cash costs per ounce* for the remainder of the year (Q2 through Q4) are expected to be between $1,450 and $1,500 (US$1,125 - US$1,175). Operating cash costs per ounce* for the full year are now expected to be between $1,625 and $1,675 per ounce of gold sold (US$1,225 - US$1,275) (based on an exchange rate of 0.775).
• All-insustaining cash costs per ounce sold*, including corporate administration and sustaining capital expenditures, was $3,449 (US$2,724) for Q1 2021.
• In Q1 2021, the Company invested $2.8 million in its exploration and development projects, including $1.5 million on the Goldboro Gold Project in Nova Scotia relating to the Feasibility Study, permitting, and ongoing diamond drilling to support the advancement of the significantly expanded Mineral Resource.
• Net loss for the three months ended March 31, 2021 was $2,496,850, or $0.02 per share, compared to net income of $1,471,399, or $0.01 per share, for the three months ended March 31, 2020, driven predominantly by lower production and higher operating costs, including a write-down of inventory of $2.5 million.
• In April 2021, the Company announced it had entered into an agreement with Raymond James for a marketed offering of up to $8.5 million by way of private placement of flow-through common shares ("FT Shares"), expected to close in May 2021, to accelerate its highly prospective exploration programs in Atlantic Canada.
• Ongoing drilling at the Stog'er Tight Deposit continues to provide encouraging results, both from an infill and expansionary perspective. Based on these results, the Company is updating its internal pit designs and resource estimates in anticipation of potential development at Stog'er Tight.
• As of March 31, 2021, the Company had a cash balance of $14.5 million and working capital* of $11.3 million.

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

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ANACONDA MINING INC.

Q1 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 has revised its 2021 guidance 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 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 now 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 Q1 2021 and the expected grade profile from Argyle over the remainder of the year. The operating cash costs for the remainder of the year (Q2 through Q4) 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 marked decrease in operating cash costs per ounce sold.

The Company now 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 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.

First Quarter 2021 Operating and Financial Review

Operational Performance - Gold production of 2,540 ounces was 49% lower than Q1 2020, predominantly driven by lower mined grade from certain benches at Argyle and lower mill throughput.

During Q1 2021, the mine operations moved 59,157 tonnes of ore which was higher than plan for the quarter, however a decrease of 43% compared to the comparable period of 2020 when Point Rousse was mining in the higher-tonnage Pine Cove Pit. The strip ratio of 9.3 waste tonnes to ore tonnes was lower than planned for the first quarter, due to a combination of earlier development in Q4 2020 and an expected acceleration of mine development in Q2 2021, when the strip ratio will increase to provide increased access to ore in Q3 and Q4 of 2021. However, the impact of a 35% lower mine grade significantly impacted production, particularly in shallowly dipping areas of the Argyle Deposit.

To improve production moving forward, the mine operations have doubled production drill sampling to provide better grade definition on each bench and increased delineation drilling where drill density is lower. This will enable an optimized preferential mining approach, especially for shallower dipping areas of the Argyle Deposit, to minimize mining dilution. Point Rousse has also revised its top-cut parameter downward to better reflect the actual results from mining and the resulting mill reconciliation to provide a better prediction of grade in the mine plan.

The Pine Cove Mill processed 92,533 tonnes during Q1 2021, a decrease of 18% compared to the first quarter of 2020, due to unplanned maintenance relating to the ball mill and the jaw crusher. Operating risk mitigation plans were executed successfully and while COVID-19 did impact the delivery and timing of certain equipment, throughput has returned to budgeted levels. The average grade during Q1 2021 of 1.01 g/t reflected in part by the mining challenges noted above, which had an attendant impact on the average recovery rate of 84.9%, reflecting a decrease of 3% compared to the first quarter of 2020.

Financial Performance - Anaconda sold 3,119 ounces of gold during the first quarter of 2021, generating gold revenue of $7.4 million at an average realized gold price of C$2,358 per ounce (US$1,862).

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