DFR Gold : June 30, 2023 – Q2 2023 Report (MDA)

Management's Discussion and Analysis of Financial Condition and Results of Operations

For the second quarter and six-months period ended June 30, 2023 Date of release August 29, 2023

(All amounts are expressed in United States dollars unless otherwise stated)

DFR GOLD INC. (formerly Diamond Fields Resources Inc.) Management's Discussion and Analysis

For the second quarter and six-months ended June 30, 2023

(All amounts are expressed in U.S. dollars except where otherwise indicated)

1. INTRODUCTION

This Management Discussion and Analysis (''MD&A") for the second quarter and six-months period ended June 30, 2023, has been prepared as at August 29, 2023, and contains certain "forward-looking statements" under the Canadian securities laws. All statements, other than statements of historical fact included herein, including without limitation statements regarding potential mineralization, exploration results, plans and objectives of DFR Gold Inc. ("DFR Gold", "DFR" or "the Company" or together with its subsidiaries, "the Group"), are forward-looking statements that involve various risks, uncertainties and assumptions. The MD&A should be read in conjunction with the condensed consolidated financial statements of DFR.

The Company changed its name from Diamond Fields Resources Inc. to DFR Gold Inc. effective January 30, 2023, and is referred to as DFR Gold Inc. throughout this report.

1. Geopolitical and political situation

The geopolitical situation in Eastern Europe intensified on February 24, 2022, with Russia's invasion of Ukraine. In addition to the human toll, the war is increasingly affecting economic and global financial markets and exacerbating ongoing economic challenges, including issues such as rising inflation and global supply-chain disruption. Additionally, the Countries where the Company conducts exploration in West Africa and the nearby region continue to experience civil unrest and/or warfare including civilians attacks.

Though the Company's activities have so far not been significantly affected by the situation in eastern Europe and in Burkina Faso, management believes that the nature and duration of uncertain and unpredictable events, such as attacks on civilians and further military action in Burkina Faso, additional sanctions on Russia and reactions to ongoing developments by global financial markets may have implications on the Company's activities.

The Company is continuously evaluating its direct and indirect exposures to the impacts of the local and regional events as well as consequences of the Russia-Ukraine conflict on its operation. Although the Company does not have direct exposure to Ukraine or Russia, it is likely to be affected by the overall economic uncertainty and any impact on the global economy and major financial markets arising from the war.

1. Material events following the end of the reporting period

The Company did not record any material following the end of the reporting period, which would require disclosure in this MD&A.

1. Management's responsibility for financial reporting

The condensed consolidated interim financial statements have been prepared by management who, when necessary, have made informed judgements and estimates of the outcome of events and transactions, with due consideration given to materiality. Management acknowledges its responsibility for the fairness, integrity and objectivity of all information in the consolidated financial statements.

As a means of executing its responsibility, management relies on the Company's system of internal control. This system has been established to ensure, within reasonable limits, that the assets are safeguarded, transactions are properly recorded and are executed in accordance with management's authorization. In addition, the system ensures that the accounting records provide a solid foundation from which to prepare the consolidated financial statements.

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DFR GOLD INC. (formerly Diamond Fields Resources Inc.) Management's Discussion and Analysis

For the second quarter and six-months ended June 30, 2023

(All amounts are expressed in U.S. dollars except where otherwise indicated)

1. INTRODUCTION (CONTINUED)

1. Management's responsibility for financial reporting (continued)

The Board of directors carries out its responsibility for the condensed consolidated financial statements principally through its Audit Committee, consisting solely of non-management directors. This committee makes its recommendations to the Board of directors. Based on those recommendations, the Board of directors approves the condensed consolidated financial statements.

2. OVERVIEW

1. Description of business

DFR Gold Inc., formerly Diamond Fields Resources Inc., announced changing its name to DFR Gold Inc. effective January 30, 2023. DFR is a British Columbia governed company listed on the TSX Venture Exchange. On June 28, 2022, the Company completed the acquisition and restructuring of Moydow Holdings Limited ("Moydow"), a BVI company owning a portfolio of gold assets in West Africa. Moreover, DFR sold its Namibian diamond assets on November 28, 2022, as such, the Group started reporting the results of Moydow as from June 28, 2022 and reporting the 2022 comparatives for Namibia as discontinued operations. The Company is actively engaged in the development of its existing assets whilst continuing assessing additional mineral projects around the world to identify new opportunities.

The Company's trading symbol on the TSX Venture Exchange is DFR.

1. Principal Assets

Approval of disclosure of technical information

Mr. David J. Reading, M.Sc., FIMM, Fellow of the Society of Economic Geologists (SEG), a director to the Company and a Qualified Person as defined under Canadian National Instrument 43 101 - Standards of Disclosure for Mineral Projects ("NI 43 101"), has reviewed and approved the technical information contained in this report.

Cascades (Gold) - Burkina Faso.

The Company's recently acquired 80% controlled subsidiary, Moydow, holds two exclusive options for the Cascades project, until year 2024, to purchase 100% of the license holder's interest in the WUO Land 1 and WUO Land 2 exploration licenses covering 304 km2 of ground in the Banfora greenstone belt in southwest Burkina Faso. The license area contains a mineralised corridor 30km long and 5km wide containing a number of auriferous quartz shears.

Data for over 65,000 meters of historical drilling has been acquired by the Company from previous option holders. The Company's subsidiary undertook a confirmatory twin and infill drilling campaign, consisting of 4,739 metres reverse circulation ("RC") drilling in 2021, following which a maiden resource statement was published. DFR completed 4,975 meters of RC drilling program in August 2022, started by Moydow prior to its acquisition by DFR and further 5,641 meters of RC drilling during the first semester of 2023.

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DFR GOLD INC. (formerly Diamond Fields Resources Inc.) Management's Discussion and Analysis

For the second quarter and six-months ended June 30, 2023

(All amounts are expressed in U.S. dollars except where otherwise indicated)

2. OVERVIEW (CONTINUED)

1. Principal Assets (continued)

Cascades (Gold) - Burkina Faso (continued)

Taking into consideration the historic drilling data, and drilling performed by Moydow/DFR from 2021 to date, the Company now has in excess of 80,000 meters of drilling on the Cascades project. A NI 43- 101 compliant technical report announced by the Company on October 25, 2021, and amended on April 20, 2022, reported:

• Indicated resource of 5.41 million tonnes at an average grade of 1.52 g/t AU for a total 264,000 ounces of gold; and,
• Inferred resource of 6.93 million tonnes at an average grade of 1.67 g/t Au for a total of 371,000 ounces of gold.

Kalaka (Gold) - Mali.

The Company acquired, on June 28, 2022, a 40% indirect interest in the Kalaka license in Mali (as part of the Moydow transaction). The Kalaka gold project is located 260km South-East of Bamako in South Mali, 80km south of the 8 million Ounces Morila gold mine owned by Barrick/AngloGold Ashanti and 85km northwest of the 6 million ounces Syama gold mine owned by Resolute. Previous works at Kalaka indicate a large, low-grade zone mineralization with multiple drill intersections. A drilling programme has commenced on the Kalaka project on July 10, 2023.

Gurara, Nigeria (Gold).

The Company acquired, in June 2022, a 25.5% indirect interest in various gold exploration projects in Nigeria (as part of the Moydow transaction), where historically very little systematic, modern exploration has been undertaken. The projects are located within the gold-bearing ("Schist Belt") terrain of the Benin-Nigeria Shield, which has broad similarities to the Birimian of the Man Shield of West Africa.

Beravina (Zircon)

The Company through its Madagascar-based subsidiary, Compagnie Générale des Mines de Madagascar ("CGMM"), owns a Mining License (Permis d'Exploitation PE 8096) for the exploration and mining of the Beravina deposit, valid until June 22, 2055. The project is located in Western Madagascar within the Melaky region, covering 625 hectares and is approximately 220km east of the port of Maintirano, near a state road. A NI 43-101 compliant technical report filed by the Company on January 29, 2019, reported an Inferred Mineral Resource Estimate of 1.5 million tonnes grading 22.7% Zircon (ZrSiO4) (equivalent to 15.3% ZrO2).

1. Highlights

The Group posted net losses of $1,611,664 and $2,920,766 (2022: $14,355,488 and $14,939,271) for the second quarter and six-months period ended June 30, 2023. The net loss for the six-months is made up principally of: exploration and evaluation expenditures (arising mainly as a result of the drilling on Cascades Project) to an extent of $1,341,656 (2022: $14,139,716), administrative expenses to an extent of $797,742 (2022: $774,726), share based compensation to an extent of $533,106 (2022: $nil) and interest expense to an extent of $213,219 (2022: $nil).

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DFR GOLD INC. (formerly Diamond Fields Resources Inc.)

Management's Discussion and Analysis

For the second quarter and six-months ended June 30, 2023

(All amounts are expressed in U.S. dollars except where otherwise indicated)

2. OVERVIEW (CONTINUED)

1. Highlights (Continued)

Overall operation updates and performance

On May 25, 2023, DFR announced the completion of the first phase of a 10,000 meters drilling program (the "Drilling Program" consisting of 5,641 meters of reverse circulating drilling on the Cascades Project in Burkina Faso, West Africa, started during the first quarter of 2023. The Drilling Program confirmed significant new zones with result potential.

Corporate activities

On April 6, 2023, DFR announced a private placement of unsecured convertible debentures (the "Debentures"), with insiders and management, for gross total proceeds in an aggregate amount of US$1,705,750. The Debentures will mature on February 29, 2024 (the "Maturity date") and, together with interest thereon, convert into equity, unless converted earlier in accordance with their terms. The Debentures bear interest at a rate of 12.5% per annum, which is payable on the Maturity Date, unless the Debentures are converted earlier.

3. RESULTS OF OPERATIONS

Review of selected financial and operating results Selected year ends financial and non-financial information

		Three-months ended	six-months ended
		June 30	June 30	June 30	June 30
		2023	2022*	2023	2022*
				$	$
Exploration and evaluation expenses*	(632,937)	(14,012,414)	(1,341,656)	(14,139,716)
General and administrative expenses*	(466,912)	(329,808)	(797,742)	(774,626)
Share based compensation	(268,026)	-	(533,106)	-
Interest expense	(213,219)		(213,219)
Interest (expense) / income	3,310	3	7,614	4
Foreign exchange (loss) / gain	(13,652)	(4,006)	1,036	(3,292)
Share of loss of joint venture	(20,228)	-	(43,693)	-
Loss from discontinued operation*	-	(9,263)	-	(21,641)
Net loss for the period	(1,611,664)	(14,355,488)	(2,920,766)	(14,939,271)
Exchange difference on translation of	8,977		(11,157)
foreign operations	2,230	(762)
Total comprehensive loss	(1,602,687)	(14,353,258)	(2,931,923)	(14,940,033)
Comprehensive Loss attributable to:	(1,488,513)		(2,666,947)
-	Equity shareholders	(14,353,258)	(14,940,033)
-	Non-controlling interest	(114,714)	-	(264,976)	-
Weighted average number of shares	181,670,852		181,670,852
outstanding	80,262,329	80,053,489
Loss per share - basic and diluted	(0.01)	(0.18)	(0.02)	(0.19)

• Expenses pertaining to the Namibian operations for the comparative period have been reclassified to discontinued operations.

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