Anacortes Mining : MD&A for the quarter ended June 30, 2022

ANACORTES MINING CORP.

(formerly First Light Capital Corp.)

MANAGEMENT DISCUSSION & ANALYSIS

For the three and six months ended June 30, 2022 and 2021 (Expressed in Canadian dollars)

General

On October 6, 2021, the Company changed its corporate name from First Light Capital Corp. to Anacortes Mining Corp. The Company is listed on the TSX Venture Exchange under the symbol 'XYZ.V' and is a reporting issuer in Ontario, Alberta and BC. The Company is also listed on the OTC Markets Group (OTCQX) under the symbol 'XYZFF'.

The following Management's Discussion and Analysis ("MD&A") is intended to assist the reader to assess material changes in financial condition and results of operations of Anacortes Mining Corp. ("Anacortes" or the "Company") as at June 30, 2022 and December 31, 2021 and for the three and six months ended June 30, 2022 and 2021.

This MD&A should be read in conjunction with the unaudited interim consolidated financial statements and the notes thereto as at and for the three and six months ended June 30, 2022. These unaudited interim consolidated financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

All dollar amounts are expressed in Canadian dollars unless otherwise indicated. Note that additional information relating to the Company is available on SEDAR at www.sedar.com. This MD&A contains forward-looking statements. Please refer to the cautionary language at the end of this document.

The effective date of this MD&A is August 23, 2022.

Contents of the MD&A

1. Highlights for the three and six months ended June 30, 2022 and outlook for 2022
2. Overview
3. Tres Cruces Project
4. Results of operations for the three and six months ended June 30, 2022 and 2021
5. Selected annual and quarterly information
6. Liquidity and capital resources
7. Outstanding share data
8. Transactions between related parties
9. Off-balancesheet transactions
10. Proposed transactions and subsequent events
11. Use of accounting estimates and judgments
12. Financial instruments

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ANACORTES MINING CORP.

(formerly First Light Capital Corp.)

MANAGEMENT DISCUSSION & ANALYSIS

For the three and six months ended June 30, 2022 and 2021 (Expressed in Canadian dollars)

13. Risk factors

1. Financial
2. Industry

13.3 Metal prices

1. 1. Political risk
   2. Environmental and governmental regulations
   3. COVID-19global pandemic
2. Cautionary statement on forward-looking information
3. Approvals and additional information

1. Highlights for the three and six months ended June 30, 2022 and outlook for 2022

• During the three months ended June 30, 2022 ("Q2 2022"), the Company incurred a net loss of $590,047 compared to $327,497 in the three months ended June 30, 2021 ("Q2 2021").
• During the six months ended June 30, 2022, the Company incurred a net loss of $1,225,038 compared to $582,314 in the six months ended June 30, 2021.
• The Company spent $2,896,546 in the six months ended June 30, 2022 on a preliminary economic assessment ("PEA") which was completed and filed in March 2022 and on the Phase 1 drilling program which commenced in May 2022 at its Tres Cruces project in Peru.

1. The PEA estimated an after-tax net present value (at 5%) of US$165.9 million using a price of gold of US$1,700.

• 1. The Company commenced its Phase I drilling program at Tres Cruces in May 2022 and released its first drilling results on July 19 and August 4, 2022. This program will provide further information to support the Company's planned feasibility study at Tres Cruces as well as to test the deep sulphide potential suggested by a number of holes previously drilled by Barrick which ended in high-grade mineralization.
• In the six months ended June 30, 2022, the Company received $258,000 as a result of the exercise of stock options and $24,955 as a result of the exercise of warrants.
• As at June 30, 2022, the Company had a cash position of $9,823,690 (December 31, 2021 - $12,862,013.

2. Overview

On October 6, 2021, the Company closed a transaction with New Oroperu Resources Inc. ("New Oroperu") pursuant to a definitive arrangement agreement entered into by both parties on June 16, 2021 to combine and create Anacortes Mining Corp. Anacortes intends to focus on continued exploration and advancement of New Oroperu's Tres Cruces project located in Peru, in addition to seeking further growth opportunities in the Americas with the goal of creating the next mid-tiermulti-asset gold producer.

Tres Cruces is one of the highest-grade oxide deposits globally and hosts oxide plus sulphide indicated resources of 2,474,000 ounces at 1.65 g/t gold, inclusive of 630,000 ounces of high-grade leachable gold at 1.28 g/t gold and inferred resources of 104,000 ounces at 1.26 g/t gold. The recently released PEA on the leachable resource at Tres Cruces indicates a robust open-pit, heap leach project. Anacortes is well

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ANACORTES MINING CORP.

(formerly First Light Capital Corp.)

MANAGEMENT DISCUSSION & ANALYSIS

For the three and six months ended June 30, 2022 and 2021 (Expressed in Canadian dollars)

capitalized and intends to aggressively advance the Tres Cruces Oxide Project through feasibility, permitting and to production as quickly as possible.

3. Tres Cruces Project

The Tres Cruces Oxide Project is strategically located in a highly prospective geological belt that hosts significant gold deposits such as Lagunas Norte (which is located within 10 km), Yanacocha and Pierina. Tres Cruces is underexplored with oxide and sulphide resource growth potential. Until the commencement of the Phase I drilling program in May 2022, it had not been drilled since 2008 when gold prices were approximately US$850/oz, and several of the best drill intercepts from the previous drilling campaign are below and outside of the current pit-constrained mineral resource.

The Company released its Preliminary Economic Assessment (PEA) on Tres Cruces in March 2022. Highlights of the PEA are:

PEA ASSUMPTIONS AND RESULTS

Description	Units
Net Present Value (NPV 5%) Pre-Tax	US$ (million)	$294.3
Net Present Value (NPV 5%) After-Tax	US$ (million)	$165.9
After-Tax Internal Rate of Return (IRR)	%	33.0
Payback Period	Years	2.1
LOM Cumulative Cash Flow	US$ (million)	$235.6
LOM All-In Sustaining Costs (AISC)	US$/oz	$786
Pre-Production CAPEX	US$ (million)	$125.2
Sustaining CAPEX (LOM)	US$ (million)	$5.2
Mine Life	Years	7
Average Processing Rate	Tonnes/day	5,800
LOM Strip Ratio		2.89:1
Average Gold Recovery	%	81.7
Average Annual Gold Production	Oz/year	68,000
Total LOM Gold Production	Ounces	481,000

This PEA was prepared in accordance with National Instrument 43-101 ("NI 43-101") and evaluates the economics of mining the Tres Cruces Oxide Gold Deposit through conventional open pit mining and heap leach processing for gold recovery to doré. The study was prepared by M3 Engineering and Technology of Tucson, Arizona and Lima, Peru, in cooperation with Nilsson Mine Services of Pitt Meadows, BC, Transmin Ltd., of Lima, Peru, Advantage Geoservices Ltd. of Osoyoos, BC, and Jeffrey Rowe of Surrey, BC.

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ANACORTES MINING CORP.

(formerly First Light Capital Corp.)

MANAGEMENT DISCUSSION & ANALYSIS

For the three and six months ended June 30, 2022 and 2021 (Expressed in Canadian dollars)

For more information on the PEA, including gold price sensitivity analysis, please see the press release dated March 8, 2022.The complete PEA can also be found on SEDAR and the Company's website.

The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no guarantee that the inferred mineral resources can be categorized as Indicated or Measured mineral resources or mineral reserves, and as such there is no guarantee that the project and the economics of that project as described in this report can be achieved.

The Company released the results of its first four drill holes on July 19, 2022 and on August 4, 2022. The following is a tabular summary of those results. For more information, please refer to the above-dated news releases.

Hole	Azimuth / dip	From (m)	To (m)	Interval	Lithology /	Gold
	(degrees) / Final			(m)	Alteration	(g/t)
	depth (m)
ATC-500		8.00 m	43.90 m	35.90 m	Andesite /	0.64
					Massive
					Silica
ATC-500	10° / -55° / 150.0 m	49.20 m	73.00 m	23.80 m	Andesite /	1.75
					Argillic
ATC-500		85.00 m	150.00 m	65.00 m	Andesite /	0.66
					Argillic
ATC-501					Andesite /
		28.35 m	110.90 m	82.55 m	Massive	1.62
					Silica
ATC-501		115.50 m	238.60 m	123.10 m	Andesite /	2.11
		Argillic
ATC-501	270°/ -85°/ 496.30 m	326.10 m	330.50m	4.40 m	Andesite /	0.70
		Argillic
ATC-501		415.75 m	418.60 m	2.85 m	Andesite /	0.50
		Argillic
ATC-501		454.20 m	458.65 m	4.45 m	Andesite /	0.34
		Argillic
ATC-502	165° / -60° / 120.0 m	0.90 m	9.90 m	9.00 m	Dacite and	0.44
					Andesite /
					Massive
					Silica
ATC-502		15.85 m	19.30 m	3.45 m	Dacite /	0.55
					Silica
ATC-502		44.10 m	46.85 m	2.75 m	Andesite /	0.52
					Argillic
ATC-504	0°/ -90°/ 256.80 m	40.50 m	183.40 m	142.90 m	Dacite and	1.43
					Andesite /
					Massive
					Silica and
					Argillic
ATC-504		190.0 m	192.35 m	2.35 m	Andesite /	0.92
					Argillic
ATC-504		194.20 m	233.60 m	39.40 m	Andesite /	1.45
					Argillic

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ANACORTES MINING CORP.

(formerly First Light Capital Corp.)

MANAGEMENT DISCUSSION & ANALYSIS

For the three and six months ended June 30, 2022 and 2021 (Expressed in Canadian dollars)

4. Results of Operations for the three and six months ended June 30, 2022

The table below sets forth selected results of operations for the Company for the three and six months ended June 30, 2022 and 2021:

	Three months ended June 30,	Six months ended June 30,
		2022		2021		2022		2021
Expenses
Consulting fees	$	30,720	$	69,081	$	52,722	$	119,081
Directors' fees		28,750		10,500		57,500		24,000
General and administration		6,556		6,208		9,894		12,658
Salaries and benefits		186,872		-		387,028		-
Insurance		7,813		6,250		15,625		12,500
Legal and audit		49,789		214,971		105,021		227,481
Property investigations		176,242		-		211,507		-
Regulatory fees		28,821		12,171		62,572		26,848
Travel		12,000		-		20,526		-
Shareholder communications		99,357		4,212		201,243		41,522
Share-based payments		(5,507)		-		167,199		115,761
		621,413		(323,393)		1,290,837		(579,851)
Other
Interest income		(29,513)		-		(42,912)		-
Foreign exchange gain		(1,853)		(4,104)		(22,887)		(2,463)
Net loss	$	590,047	$	(327,497)	$	1,225,038	$	(582,314)
Basic and diluted loss per share	$	0.01	$	(0.01)	$	0.03	$	(0.02)
Consolidated statements of
financial position		June 30,				December 31,
		2022				2021
Total assets	$	16,598,483		$	16,396,316
Total liabilities	$	1,218,218		$	274,784

4.1 Results of operations for the three months ended June 30, 2022 and 2021

The Company's net loss for the three months ended June 30, 2022 ("Q2 2022") was $590,047 (three months ended June 30, 2021 ("Q2 2021") - $327,497). The loss for the period was comprised primarily of property investigation costs of $176,242, salaries and benefits of 186,872, shareholder communications of $99,357 and other costs of $164,449.

In Q2 2022, the Company incurred $186,872 in salaries and benefits (Q2 2021 - $nil) representing amounts paid to officers and employees of the Company who were hired during the quarter ended December 31, 2021. In Q2 2021, the Company had no employees and its officers were paid consulting fees. The portion of consulting fees relating to the Tres Cruces project were recorded in exploration and evaluation properties.

Legal and audit costs decreased from $214,971 in Q2 2021 to $49,789 in Q2 2022 as the Company started to incur significant legal costs in Q2 2021 related to the transaction with New Oroperu Resources Inc.

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