---

|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

T A B L E   O F   C O N T E N T S

|1.1  | DATE                                                      | 2                                                                           
|---- | --------------------------------------------------------- | ----------------------------------------------------------------------------
|     |                                                           |                                                                             
|1.2  | OVERVIEW                                                  | 2                                                                           
|     |                                                           |                                                                             
|     | 1.2.1                                                     | IVANHOE PROPERTY, NEVADA, USA                                               
|     |                                                           |                                                                             
|     | 1.2.2                                                     | BURNSTONE GOLD PROPERTY, MPUMALANGA PROVINCE, SOUTH AFRICA                  
|     |                                                           |                                                                             
|     | 1.2.3                                                     | CASINO PROPERTY, YUKON, CANADA                                              
|     |                                                           |                                                                             
|     | 1.2.4                                                     | MARKET TRENDS                                                               
|     |                                                           |                                                                             
|     | 1.2.5                                                     | ACTIVITIES                                                                  
|     |                                                           |                                                                             
|1.3  | SELECTED ANNUAL INFORMATION                               | 15                                                                          
|     |                                                           |                                                                             
|1.4  | SUMMARY OF QUARTERLY RESULTS                              | 16                                                                          
|     |                                                           |                                                                             
|1.5  | RESULTS OF OPERATIONS                                     | 17                                                                          
|     |                                                           |                                                                             
|1.6  | LIQUIDITY                                                 | 17                                                                          
|     |                                                           |                                                                             
|1.7  | CAPITAL RESOURCES                                         | 18                                                                          
|     |                                                           |                                                                             
|1.8  | OFF-BALANCE SHEET ARRANGEMENTS                            | 18                                                                          
|     |                                                           |                                                                             
|1.9  | TRANSACTIONS WITH RELATED PARTIES                         | 18                                                                          
|     |                                                           |                                                                             
|1.10 | FOURTH QUARTER                                            | 19                                                                          
|     |                                                           |                                                                             
|1.11 | PROPOSED TRANSACTIONS                                     | 19                                                                          
|     |                                                           |                                                                             
|1.12 | CRITICAL ACCOUNTING ESTIMATES                             | 19                                                                          
|     |                                                           |                                                                             
|1.13 | CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION | 21                                                                          
|     |                                                           |                                                                             
|1.14 | FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS               | 21                                                                          
|     |                                                           |                                                                             
|1.15 | OTHER MD&A REQUIREMENTS                                   | 21                                                                          
|     |                                                           |                                                                             
|     | 1.15.1                                                    | ADDITIONAL DISCLOSURE FOR VENTURE ISSUERS WITHOUT SIGNIFICANT
      REVENUE.
|     |                                                           |                                                                             
|     | 1.15.2                                                    | DISCLOSURE OF OUTSTANDING SHARE DATA                                        

- 1 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

1.1          
Date

This Management Discussion and Analysis ("MD&A") should be
read in conjunction with the audited consolidated financial statements of Great
Basin Gold Ltd. ("Great Basin", or the "Company") for the year ended December
31, 2005. All dollar amounts herein are expressed in Canadian Dollars unless
stated otherwise.

This MD&A is prepared as of March 21, 2006.

|This discussion includes certain statements
        that may be deemed "forward-looking statements". These forward-looking
        statements constitute "forward-looking statements" within the meaning
        of Section 27A of theSecurities Act of 1933and
        Section 21E of the Securities Exchange Act of 1934.All
        statements in this discussion, other than statements of historical facts,
        that address future production, reserve potential, exploration drilling,
        exploitation activities and events or developments that the Company expects
        to take place in the future are forward-looking statements. Although the
        Company 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 market prices, exploitation and exploration successes, continued
        availability of capital and financing and general economic, market or
        business conditions. Investors are cautioned that any such statements
        are not guarantees of future performance and actual results or developments
        may differ materially from those stated herein.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

1.2           
  Overview

Great Basin Gold Ltd. ("Great Basin" or the "Company") is a
mineral exploration company that is currently focused on two advanced stage
projects. These are: the Hollister Development Block Project on the Ivanhoe
Gold-Silver Property on the Carlin Trend in Nevada, USA and the Burnstone Gold
Project in the Witwatersrand goldfield in South Africa.

The Hollister Development Block constitutes approximately 5% of
the Ivanhoe Property. Advancement of the Hollister Development Block Project is
the subject of an August 2002, four year Earn-in Agreement between Great Basin
and its subsidiary and Hecla Mining Company (Hecla), whereby Hecla has the
right to earn a 50% working interest by completing a two-stage program, leading
to the feasibility study and a production decision. The 2002 Earn-in Agreement
was modified subsequent to December 31, 2005 in February 2006 (see below).

After receiving the requisite permits in mid 2004, the
underground exploration and development program began at the Hollister
Development Block. Site facilities were established and development of the
decline to access the gold-silver vein systems began in October 2004.

In the fourth quarter of fiscal 2005, the decline intersected
the Gwenivere vein  one of three high grade gold-silver vein systems on the
Hollister Development Block  at about 2,720 ft (830 m) from the portal of the
decline. Excellent gold and silver values over substantial widths were reported
from sampling of the vein material, including 8.2 ft grading 3.17 ounces per ton
(oz/t) gold and 28.3 oz silver per ton and 15.3 ft grading 0.49 oz/t gold and
7.9 oz/t silver. Development of underground staging sites for diamond drilling
was also completed during the quarter. The 50,000-ft (15,240 m) drilling
program, designed to upgrade the mineral resources in the Hollister Development
Block to mineral reserves, began in February 2006.

- 2 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

Great Basin retains a 100% interest, subject to royalties, in
the remaining 95% of the Ivanhoe property, which the Company believes has
excellent exploration potential. The Company plans to carry out further
exploration elsewhere on the Ivanhoe property, once activities have advanced on
the Hollister Development Block.

The Burnstone Gold Project is located in the South Rand area of
the Witwatersrand goldfield. Since 2003, Great Basin has completed extensive
drilling and engineering studies on the project. A 2004 pre-feasibility study
indicated positive returns for an underground mine for the Area 1 deposit, one
portion of the main gold trend on the Burnstone property.

In 2005, the Company initiated a Feasibility Study for the
Burnstone Gold Project. Various sub-studies for the feasibility study were
completed at year end. Review of the results and compilation of the final
feasibility report was ongoing in the first quarter of fiscal 2006. This work is
expected to be completed in the second quarter.

The Company also holds 100% interest in the Casino property in
Yukon, Canada, subject to a 5% net profits interest on some of the claims. The
property hosts a porphyry copper-gold deposit. The Company has not done any work
at Casino for several years, and optioned portions of the property to other
companies in 2000 and 2002 (see details below).

1.2.1      Ivanhoe Property,
Nevada, USA

The Ivanhoe property is located in the northeastern part of the
Carlin Trend, approximately 80 kilometers (50 miles) from Elko, Nevada. Great
Basins exploration efforts at Ivanhoe resulted in the discovery and delineation
of several high-grade gold-silver vein systems, as well as the identification of
a number of other exploration targets, including evidence for Carlin-style gold
mineralization at depth.

The Companys activities at Ivanhoe in 2005 focused on
monitoring the underground exploration and development activity by Hecla at the
Hollister Development Block Project.

Hollister Development Block  Property Agreements

In August 2002, Great Basin and Hecla finalized Earn-In and Joint
  Operating Agreements, whereby Hecla could vest in a 50% working interest in
  the Hollister Development Block ("HDB"), subject to a purchase price
  royalty in favor of Great Basin, providing that Hecla funds a US$21.8 million,
  two-stage, advanced exploration and development program (or otherwise achieves
  commercial production) and issues 4 million Hecla share purchase warrants to
  Great Basin (of which 2 million have been issued to date). Concurrent with and
  in proportion to the Hecla warrants, Great Basin was to issue 2 million share
  purchase warrants to Hecla of which 1 million have been issued to date.

Since 2002, Hecla has conducted engineering and permitting work
in furtherance of an underground development program and obtained the necessary
permits to complete the Stage 1 underground development, drilling, and
pre-feasibility work. The program budget for Stage 1 was agreed in the Earn-In
Agreement to cost US$10.3 million, with work to be completed in the
approximately 12-month period

- 3 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

after the required work permits were issued. Such permits were
issued in May 2004. Hecla commenced physical work on the site in October 2004,
and the decline reached the first vein system in October 2005. To vest its 50%
working interest, Hecla must, upon completion of Stage 1, elect to proceed to
Stage 2 within 60 days. Following such an election, the Stage 2 program of
US$11.5 million is required to be completed over the ensuing approximately 12
months and consists of underground production development and procurement of
production equipment and surface facilities, with an overall goal to develop the
Hollister Development Block to the point of commercial production. Under the
Earn-In Agreement, Hecla is the operator during the Stage 1 and Stage 2 work
programs, and would continue to be the operator of the mine if a positive
production decision is made.

Alternatively, subject to completing Stage one, Hecla may
timely make a payment to the Hecla/Great Basin joint venture (50:50) of the
difference between $21.8 million and the actual costs of stage one (excluding
stage one cost overruns in excess of 10%) certain share purchase warrants would
also be exchanged between Great Basin and Hecla.

A sliding scale royalty on Heclas share of production is
payable in cash or in kind by Hecla to Great Basin. At a cash operating profit
per ounce of gold equivalent in the range of US$100-200 per ounce, the royalty
is equal to US$50 per ounce. The royalty would become payable by Hecla once it
has recovered 115% of its Stage 1 and 2 pre-production expenditures.

The 2002 Earn-in Agreement was modified subsequent to year-end
in February 2006. The main modifications are as follows:

- Hecla commits to complete and fund 100% of the remaining Stage I earn-in
    activities by March 31, 2007.
- Hecla is to fund Great Basins share of any Stage 2 activities until
    such time that a feasibility study has been delivered to Great Basin. Upon
    such time, Great Basin will reinburse its share of Stage 2 costs to Hecla.
    Stage 2 activities are those which consist primarily of the development of
    the HDB into a mining operation, and lead to commercial production.
- If the decision is made to develop and operate a mine, Hecla must achieve
  commercial production by August 2, 2009, as a condition of earning a 50%
  working interest in the project.
- Hecla is entitled to the proceeds of the first 50,000 ounces of gold (or
  equivalent) up to the actual costs of Stage I activities, not to exceed $25.07
  million, from pre-production Stage 1 activities. Thereafter any pre-production
  revenues will be equally shared.
- Hecla and Great Basin agree to terminate the litigation between themselves
    and execute mutual releases from any action or claim arising to February 28,
    2006 in connection with the 2002 Earn-in Agreement. The litigation was initiated
    in April 2005 when Hecla applied for a declaratory judgement in connection
    with the 2002 Earn-in Agreement and which application Great Basin was opposing.

Hollister Development Block - Property Activities

|Cautionary Note to
        U.S. Investors concerning estimates of Inferred Resources
      The following section uses the term inferred resources.
        The Company advises investors that while this term is recognized and required
        by Canadian regulations, the U.S. Securities and Exchange Commission does
        not recognize them. Inferred resources have a great amount
        of uncertainty as to their existence, and great uncertainty as to their
        economic and legal feasibility. It cannot be assumed that all or any part
        of a mineral resource will ever be upgraded to a higher category. Under
        Canadian rules, estimates of Inferred Mineral Resources may not form the
        basis of economic studies, except in rare cases. Investors are cautioned
        not to assume that any part or all of an inferred resource exists, or
        is economically or legally mineable.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

The Clementine, Gwenivere and South Gwenivere vein systems were
discovered by Great Basin through extensive drilling programs from 1998-2001.
Inferred mineral resources, estimated to be 719,000 tons at an average grade of
1.29 ounces of gold per ton and 7.0 ounces of silver per ton at a 0.25 oz/t
cut-off1, were outlined.

The Stage 1 underground exploration program on the Hollister
Development Block consists of about 5,600 feet of decline and underground
development to access the three vein systems, including associated cross-cuts
and diamond drill stations. Mining of approximately 5,000 tons of bulk sample
from the different veins within the system is planned, along with an estimated
55,000 feet of diamond drilling from underground locations.

Hecla advises that it expects to have spent between US$8-US$10
million on exploration activities in 2005. According to Hecla, approximately
$9.6 million had been spent to the end of December 2005.

Underground Development

From October 2004 when underground development was initiated to
the end of December 2005, the total project advance is 4,226 ft (1,288 m).
Development has advanced more slowly that expected because of variable ground
conditions and affects by inclement weather. As a result, costs are about 9%
over budget.

A total of 4,041 ft (1,232 m) of underground development was
completed during the 2005 fiscal year. A breakdown of the development during the
fourth quarter, the entire 2005 fiscal year and the total advance for the
project to the end of December 2005, is tabulated below:

HEADING
    2005 Q4 Advance
      (feet)
    2005 Year Advance
      (feet)
    Project to Date
      Advance (feet)Portal
    
    
    66Decline
    438
    2,645
    2,764Lateral
    499
    499
    499Diamond Drill Stations
    285
    287
    287Miscellaneous Openings
    35
    610
    610Total Advance
    1,257
    4,041
    4,226


The decline intersected the Gwenievere vein system on November
3 at 2,720 feet (830 m) along the decline. On the east side (rib) of the
decline, the mineralized zone consists of a massive quartz vein with breccia
(broken wallrocks in a matrix of kaolinite and silica) on its footwall that has
a true width of 13 ft (4 m). On the west rib, the structure is characterized by
broken lenses quartz and kaolinite, with trace amounts of sulphide
mineralization, over a true width of eight ft (2.4 m).

Excellent gold and silver values over substantial widths were
received from sampling. The results, tabulated below, represent the weighted
average of two channel samples, collected at chest and knee height, on either
side of the 14-ft (4.3 m) wide decline.

__________________________________________1
Resource estimated by Great Basin and audited by James A. Currie, P.Eng., of
Behre Dolbear & Company in 2001.

- 5 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

Width (feet)
    Gold (oz/t)
    Silver (oz/t)WEST RIBBreccia
    2.0
    0.53
    9.8Quartz vein & breccia
    3.3
    7.47
    50.0Breccia
    2.9
    0.16
    16.8Entire length
    8.2
    3.17
    28.3EAST RIBBreccia
    3.7
    0.09
    1.5Banded quartz vein
    8.9
    0.77
    9.94Breccia
    2.6
    0.12
    10.0Entire length
    15.2
    0.49
    7.9


Diamond drilling

The contract for the program has been awarded to Connors
Diamond Drilling. Mobilization will begin in the first quarter of fiscal 2006.
The planned program consists of 55,000 ft (16,765 m) of underground diamond
drilling. The drill holes will be short, less than 700 ft (215 m) in length, and
closely-spaced. The objective of the drilling program is to upgrade the inferred
resource previously identified by Great Basin for the three vein systems and
convert it to a reserve. Drilling began subsequent to the end of the year in
February 2006.

Engineering and Feasibility Studies

Geotechnical and metallurgical studies were underway during the
quarter to provide information for the feasibility study. Pre-engineering and
permitting activities also continued in preparation for Stage 2 work.

A geotechnical consultant visited the site to help crews plan
to take appropriate data during logging procedures in order to characterize the
geotechnical characteristics of the deposit.

A firm specializing in cemented backfill was retained to assess
whether the waste material can be used for cemented backfill. The backfill
specialist issued a report documenting the proposed backfill-testing program.
Material from the site will be forwarded to the laboratory in January.

Topographic surveys were undertaken to assess volumes for waste
rock facilities.

Plans for 2006

Underground drilling and feasibility studies will continue
through 2006. It is expected that the stage 1 program will be completed by March
30, 2007 and the feasibility study shortly thereafter, at which time a
production decision can be made and the Stage 2 program initiated. Stage 2
consists of an underground development program that would prepare the project
for commercial production.

- 6 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

1.2.2      Burnstone Gold Property,
Mpumalanga Province, South Africa

The Burnstone Gold Property is located approximately 80
kilometers (50 miles) southeast of Johannesburg, near the town of Balfour. The
property lies in open, rolling countryside that has excellent infrastructure,
including paved highways, railroads and power lines. Gold occurs within the
Kimberley Reef, a gold-bearing conglomerate unit that is one of four main
gold-bearing horizons in the Witwatersrand Basin.

In 2005, the Company initiated a Feasibility Study. Various
sub-studies for the feasibility study were completed at year end. Review of the
results and compilation of the final feasibility report began in the first
quarter of fiscal 2006. This work is expected to be completed in the second
quarter.

Exploration continued in 2005, directed toward both the main
trend and outlying portions of the property.

Property Agreements

In November 2002, Great Basin entered into an option agreement
(the Option to Purchase Agreement) with Southgold Exploration (Proprietary)
Limited (Southgold) and the then shareholders of Southgold (the Legacy
Southgold Shareholders) to purchase on a staged basis, up to 100% of Southgold.
Southgold is a private South African company that, at the time, held rights to
acquire a 100% interest in the Burnstone Gold Property. Any future mining will
be subject to government legislation that provides for Historically
Disadvantaged South Africans (HDSA) to earn an interest in mining
developments.

Pursuant to the Option to Purchase Agreement, Great Basin
completed its purchase of Southgold by making an initial US$1.25 million
($2,007,561) payment, by conducting a US$1.5 million work program in early 2003,
and by making cash, share and share purchase warrant payments to the Legacy
Southgold Shareholders in two staged tranches. The first tranche of the
acquisition was made in April 2003 and the second tranche was made in January
2004, completing Great Basins acquisition of a full interest in the
property.

On October 10, 2003, pursuant to a prospecting agreement (the
Prospecting Agreement) dated October 17, 2000 between GFL Mining Services
Limited (GFL), Randex Limited (Randex), and Southgold, Southgold elected to
purchase certain mineral rights held by GFL and Randex totaling 11,563 hectares
within the Burnstone Property which were not covered under Southgold's
then-existing rights, for ZAR 35 million ($6,695,598) subject to a net smelter
return royalty ranging from 1% to 2% (tiered to the gold price), and payable to
GFL. The Company funded Southgold's purchase of these rights. Current South
African legislation abolishes private ownership of mineral rights (and,
possibly, royalties which are bound with those rights) and replaces them with a
system which vests mineral tenure in the State. Under the terms of the
Prospecting Agreement, in the event of a change in the mineral rights regime in
South Africa, the parties agreed to negotiate amendments to the Prospecting
Agreement, if possible without causing undue hardship to each of the
parties.

- 7 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

In April 2005, Great Basin signed a Heads of Agreement (the
"HoA") with Tranter Investments (Proprietary) Limited (Tranter), a
closely-held black economic empowerment (BEE) company, in relation to the
Burnstone Gold Project. The HoA creates a framework for Great Basin to fulfill
the HDSA requirements by way of participation by a BEE entity in the mineral
project as a condition to ongoing security of mineral tenure.

The HoA sets out the terms whereby Tranter may, subject to
certain conditions, acquire an interest in Southgold. Such interest is to be
acquired at a consideration yet to be determined and Great Basin may provide
certain financial assistance to Tranter in relation to the acquisition.

As a condition of completion of the transaction, Tranter must
undertake a restructuring of its current shareholding to ensure more broad-based
BEE participation by various historically disadvantaged groups. The HoA
contemplates that certain on-going restrictions will apply to Tranter, which
restrictions are designed to ensure that Tranter will continue to qualify as a
BEE company as defined under the legislation.

Completion of the transaction is also subject to a number of
conditions precedent, including the negotiation of definitive agreements, the
approval of the transaction by the boards of Tranter and Great Basin, and South
African and Canadian regulatory and securities approvals, including compliance
with related party transaction requirements which may apply by virtue of the
interests of two of the Great Basin directors in the transaction. Further
details of the transaction will be released upon the signing of the relevant
definitive agreements.

Concurrently, Great Basin is preparing and filing applications
to convert its old order rights to new order rights on the Burnstone
property.

Property Activities

|Cautionary Note to
        Investors Concerning Estimates of Measured and Indicated Resources
      This section use the terms measured resources
        and indicated resources. The Company advises investors that
        while those terms are recognized and required by Canadian regulations,
        the U.S. Securities and Exchange Commission does not recognize them. Investors
        are cautioned not to assume that any part or all of mineral deposits in
        these categories will ever be converted into reserves.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Burnstone goldfield is defined by an 18-km (11-mi) long
mineralized corridor. The central portion of the corridor and gold deposit areas
have been uplifted by two northwesterly trending sub-parallel faults, and, as a
result, lie at relatively shallow depths of 250-750 meters. Over 125,000 m
(410,000 ft) of drilling in 193 holes had been done on the project to February
2005, distributed over four areas (Areas 1, 2, 3, and 4). Prior to June 2004,
most of this work had been focused on Area 1. A pre-feasibility study2of an underground operation for Area 1 was carried out in 2004, indicating
positive returns for an underground mine with an average annual production of
236,000 oz over a 12-year mine life.

__________________________________________
  2D. Dodd, B.Sc., SAIMM, and J. Edwards, B.Sc., SAIMM, of MDM Ferroman
  (Pty) Ltd. were responsible for the metallurgical section and R.J. Scheurenberg,
  Pr.Eng., of Knight Piesold (Pty) Ltd. completed the environmental and permitting
  sections. A.D. Pooley, Pr.Eng., of Turgis (Pty) Ltd. is the independent qualified
  person for work completed by Turgis on mine planning and design, estimation
  of the mineral reserve and the independent review of the cash flow and other
  economic analyses.

- 8 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

The Companys technical experts believe that the gold
occurrences along the main Burnstone gold trend are one deposit with several
areas of gold concentration and completed an estimate of all the resources
within the main gold trend. Measured and indicated resources are 45.8 million
tonnes grading 4.93 g/t gold and inferred resources are 14 million tonnes
grading 10.37 g/t gold at a 350 cmg/t cut-off3. The mineral resources
utilized for the 2004 pre-feasibility study comprise approximately 64% of these
resources.

Feasibility Study

Following the positive pre-feasibility results, a full
feasibility study was initiated for the Burnstone Project in 2005. Consultants
responsible for carrying out the various sub-studies for the Feasibility Study
are listed below:

| | Turgis Consulting (Pty) Ltd.  | Mining and Engineering   
| | ----------------------------- | -------------------------
| | MDM Ferroman (Pty) Ltd.       | Metallurgy and Processing
| | Knight Piesold (Pty) Ltd.     | Environmental            
| | Naledi Development (Pty) Ltd. | Socioeconomic            

All sub-reports were completed during the fourth quarter,
following which a review of all the information was initiated by the Companys
engineers, prior to providing it to the independent consulting firm that will
complete the overall opinion and feasibility report. This review was ongoing in
the first quarter of 2006.

Metallurgy and Process Plant Design

Following the completion of detailed test work in the third
quarter, mill and circuit design was completed. A twostage semi autogenous
grinding followed by ball milling circuit is planned.

The process flow sheet and plant footprint and design were
finalized in the third quarter. The plant operating costs were finalized and a
final report received in the fourth quarter.

Mining and Infrastructure

Detailed mining layouts for the project indicate that the
optimum access method is a combination of a decline for moving personnel and
material and a vertical shaft for rock hoisting. The planned primary development
is by mechanized equipment and on-reef mining by conventional mining methods
commonly employed in the South African industry for narrow Witwatersrand ore
bodies.

Geotechnical holes data was used in the final placing and
design of the infrastructure. A detailed surface layout has also been completed
for the proposed operation.

__________________________________________
  3 E. Siepker, Pr.Sci.Nat., of Global Geo Services (Pty) Ltd and G.J. van
  der Heever, Pr.Sci.Nat., of GeoLogix (Pty) Ltd also completed these resource
  estimates. Details are provided in a February 2005 technical report filed on
  www.sedar.com.

- 9 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

Design of infrastructure and services was also compiled during
the quarter. Enquiry documents have been issued to shaft sinking contractors for
the sinking of the vertical shaft. The Electricity Supply Commission ("ESCOM")
is in the process of finalizing the design of the electricity supply. Capital
cost estimates were reviewed in the first quarter of 2006.

Tailings, Water and Waste Rock Management

The tailings storage facility has been designed and its
position has been finalized. The waste rock dump design and location has also
been determined. A decision matrix system was developed and used to determine
the optimum locations for these facilities.

A groundwater inflow study was undertaken and the results
utilized in the final water balance calculations. It is estimated that the
groundwater inflow to the mine will increase from a rate of 690 cubic metres per
day in the initial stages of mining to 3,800 cubic metres per day during full
scale operations.

Environmental and Socioeconomic Baseline Studies

The environmental baseline monitoring was completed in the
third quarter. This work includes surface and groundwater monitoring, dust
monitoring, and fauna, flora and aquatic ecosystem surveys. An environmental
report was received from Knight Piesold. An Environmental Impact Assessment has
been completed but public and authority reviews of these reports must still take
place.

Human Resources

Information from a survey of ten South African mining companies
was compiled and used for a workshop to develop a reward philosophy for the
Burnstone project. Planning was finalized during the quarter and a report, with
cost estimates, was received.

A report on the potential impact of HIV and AIDs on operations
at Burnstone was received.

Community Engagement

Consultation in local communities is ongoing, with the
objective of identifying potential issues that can be taken into consideration
during mine planning.

Exploration

Exploration in 2005 was mainly focused on the surrounding
mineral claims, with the objective of finding new deposits and, in particular,
outlining near-surface mineralization that could be used as early mill feed
while underground development is being completed.

- 10 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

In addition, five holes, totaling 4,754 m (15,597 ft) were
drilled on the main Burnstone gold trend for engineering purposes. These holes
tested the structural integrity of rock units in the area of the proposed
decline and shaft.

Geological reconnaissance work located a number of old workings
in the area. A combination of grab and chip samples of old dumps, tailings and
outcrop material were collected in the area of the workings at the old
Roodepoort-Kildare mine. Some anomalous results were received and were followed
up by trenching and drilling in the third and fourth quarters.

An infill auger sampling program was carried out in the fourth
quarter to follow up on interesting results from preliminary sampling of
tailings material. Fifteen trenches were excavated, mapped and 429 samples
(including rock chip and overburden) taken; 36 short holes, totaling 3,484 m
(11,430 ft), were drilled; and chip sampling in the underground workings was
also done. Chip samples from underground workings range from 284 cmg/t (9.45 g/t
over 0.3 m) to 2,650 cmg/t (106 g/t over 0.25 m).

Plans for 2006

Feasibility Study work is expected to be completed in the
second quarter of fiscal 2006.

Further exploration work is planned for the outlying portions
  of the property, including the Rietfontein, Roodepoort-Kildare and Rietbuilt
  areas. At Rietbuilt, access will be established to additional areas in old underground
  workings so that sampling can be completed. Additional surface mapping and sampling
  will also be undertaken. Similarly, access will be established to additional
  areas in old underground workings so that sampling can be completed at Roodepoort-Kildare,
  and 3,500 m of diamond drilling is also planned for the latter part of 2006.
  Additional trenching, rehabilitation and underground sampling have already been
  initiated at Rietfontein, and drilling is also planned.

1.2.3      Casino Property,
Yukon, Canada

Great Basin also holds the Casino copper-gold property, located
in the Yukon Territory, Canada. The Company conducted exploration on the
property in the 1990s.

Farmout Agreement

The Company owns a group of 161 mineral claims, some of which
are subject to a 5% net profits from production royalty. During May 2000, the
Company granted an option whereby Wildrose Resources Ltd., the optionee, could
earn the right to purchase 55 claims for $1 on the 20th anniversary of the
option agreement. As consideration, the optionee agreed to incur all annual
filing fees and assessment work on the 55 claims under option and 83 other
claims. Alternatively, the optionee may purchase the 55 claims for a one time
payment of $200,000 without further obligation in respect of the Companys 83
claims. Should the optionee acquire the 55 claims, the optionee would be subject
to a further 5% net profits interest, payable to the Company.

On July 15, 2002, the Company agreed to option the Casino
Property to Lumina Copper Corp. ("Lumina") (formerly CRS Copper Resources Ltd.),
subject to existing net profits royalty agreements and the Wildrose option
agreement on a portion of the Casino property. Under the terms of the agreement,
Great Basin granted Lumina an option (the "Option") to purchase 100% of Great
Basins interest in the claims and interests comprising the property for
$1,000,000 (plus applicable taxes), payable at the option

- 11 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

of Lumina in cash or Lumina common shares, provided that Lumina
shares are listed on a recognized stock exchange and have certain minimum
trading volumes.

The Option may be exercised at any time to July 15, 2007,
subject to written notice and confirmation that the terms of the Option have
been met. Lumina was required to make interim option payments to Great Basin at
the time that Lumina is listed on a stock exchange, of warrants to purchase
100,000 shares for a period of two years at an exercise price which reflects the
maximum discount for the prevailing Lumina market price permitted by the
policies of the relevant stock exchange. Lumina would issue further warrants on
each anniversary date thereafter to a maximum of warrants to purchase 300,000
Lumina shares.

In June 2003, Lumina listed on the TSX Venture Exchange and
accordingly, the Company received a first tranche of warrants to purchase
100,000 shares at an exercise price of $1.80 until May 23, 2005. In May 2004,
the Company received a second tranche of warrants to purchase 100,000 shares at
an exercise price of $5.80 until May 21, 2006. In March 2005, the Company
received from Lumina a third tranche of warrants to purchase 100,000 shares at
an exercise price of $9.22 until March 14, 2007.

In May 2005, Lumina completed a statutory plan of arrangement
to reorganize Lumina into four separate companies (Regalito Copper Corp.,
Northern Peru Copper Corp., Lumina Resources Corp., and Global Copper Corp.), of
which all except Global Copper Corp. are listed on the TSX. Pursuant to the
terms of the Lumina plan of arrangement, upon exercise of each warrant the
Company will receive one common share of each of the four companies. The
exercise price remained unchanged. On February 14, 2006, the Company and
Regalito Copper Corp. (Regalito), the successor company to Lumina, agreed to
cancel these warrants and replace them with the following, which each may be
exercised until March 14, 2007:

- 100,000 warrants of Northern Peru Copper Corp. exercisable at a price of
  $0.06 per share
- 100,000 warrants of Lumina Resources Corp. exercisable at a price of $0.07
  per share
- 100,000 warrants of Global Copper Corp. exercisable at a price of $0.31
  per share

Also pursuant to the February 14, 2006 agreement, the Company
and Regalito agreed that in the event, at any time prior to March 14, 2007, the
shares of Regalito are purchased by a third party pursuant to a takeover bid or
a similar acquisition for an amount greater than $8.78 per share, Regalito will
pay to the Company, the cash difference between such price and $8.78 multiplied
by 100,000.

Lumina has the right to conduct exploration work on, or in
respect of, the Casino Property at its cost, or to make payments in lieu to keep
the property in good standing during the period of the Option. If Lumina elects
to terminate the agreement without exercising the Option or allows it to lapse,
Lumina must pay to Great Basin a "break fee" of $25,000 (plus applicable taxes).
If the Option is not exercised and is terminated, Lumina is required to pay
property holding costs for a minimum period of two years from the effective date
of termination.

In the event the Option is exercised and a decision is made to
put the Casino Property into commercial production, Lumina agreed to pay Great
Basin $1 million (plus applicable taxes) within 30 days of that decision.

- 12 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

1.2.4        Market
Trends

Gold prices have been increasing over the past two years, and
this uptrend has accelerated since September 2005. Overall, the gold price
increased from US$410/oz in 2004 to US$445/oz in 2005. The gold price has also
increased in 2006, averaging US$549/oz in January.

1.2.5        Activities

As detailed in Items 1.2.1 through 1.2.3 above, during the year
ended December 31, 2005, the Company:

- Monitored activities on the Hollister Development Block Project in Nevada
- Explored surrounding areas at the Burnstone Project in South Africa; and
- Continued work on the Burnstone feasibility study.

- 13 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

1.3           
Selected Annual Information

In thousands of Canadian dollars, except per-share figures and
number of shares. Small differences arise from rounding.

|                                                             |   | As at and for the years ended |  
|------------------------------------------------------------ | - | ----------------------------- | -
|                                                             |   | December 31                   |  
|                                                             |   | 2005                          |  
|                                                             |   |                               |  
|                                                             |   |                               |  
|Current assets                                               | $ | 17,990                        |  
|Mineral properties                                           |   | 98,630                        |  
|Other assets                                                 |   | 69                            |  
|Total assets                                                 |   | 116,689                       |  
|                                                             |   |                               |  
|Current liabilities                                          |   | 700                           |  
|Future income taxes                                          |   | 19,364                        |  
|Shareholders equity                                          |   | 96,625                        |  
|Total liabilities and shareholders equity                   |   | 116,689                       |  
|                                                             |   |                               |  
|Working capital                                              |   | 17,290                        |  
|                                                             |   |                               |  
|Expenses                                                     |   |                               |  
|Conference and travel                                        |   | 336                           |  
|Exploration                                                  |   | 3,885                         |  
|Financial advisory and finders' fees                         |   | -                             |  
|Foreign exchange loss (gain)                                 |   | (3,114                        | )
|Interest and other                                           |   | (480                          | )
|Legal, accounting and audit                                  |   | 503                           |  
|Office and administration                                    |   | 1,222                         |  
|Recovery of accounts receivable
      previously written off |   | -                             |  
|Stock-based compensation - exploration                       |   | 19                            |  
|Stock-based compensation - office and administration         |   | 457                           |  
|Shareholder communications                                   |   | 284                           |  
|Trust and filing                                             |   | 86                            |  
|Loss before the under noted and income taxes                 |   | 3,198                         |  
|Loss (gain) on sale of investments                           |   | 193                           |  
|Mark-to-market
      adjustment on investments               |   | 166                           |  
|Loss before income taxes                                     |   | 3,557                         |  
|Future
      income tax recovery                             |   | (1,993                        | )
|Loss for the year                                            | $ | 1,564                         |  
|                                                             |   |                               |  
|Basic and diluted loss per share                             | $ | (0.02                         | )
|                                                             |   |                               |  
|Weighted average number of common shares                     |   |                               |  
|outstanding                                                  |   | 91,908,700                    |  

- 14 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

1.4           
Summary of Quarterly Results

In thousands of Canadian dollars, except per-share figures and
  number of shares. Small differences may arise due to rounding.

|                              |   |         |   |   |         |   |   | As at and for the quarter ended                                   |   |   |         |   |   |         |  
|----------------------------- | - | ------- | - | - | ------- | - | - | ----------------------------------------------------------------- | - | - | ------- | - | - | ------- | -
|                              |   | Dec 31  |   |   | Sep 30  |   |   | Jun 30                                                            |   |   | Mar 31  |   |   | Dec 31  |  
|                              |   | 2005    |   |   | 2005    |   |   | 2005                                                              |   |   | 2005    |   |   | 2004    |  
|                              |   |         |   |   |         |   |   | (restated) (restated) (restated) (restated) (restated) (restated) |  
|Current assets                |   | 17,990  |   |   | 17,724  |   |   | 20,068                                                            |   |   | 21,844  |   |   | 17,839  |  
|Mineral properties            |   | 98,630  |   |   | 98,630  |   |   | 98,630                                                            |   |   | 98,630  |   |   | 98,630  |  
|Other assets                  |   | 69      |   |   | 69      |   |   | 71                                                                |   |   | 65      |   |   | 65      |  
|Total assets                  |   | 116,689 |   |   | 116,423 |   |   | 118,769                                                           |   |   | 120,539 |   |   | 116,534 |  
|                              |   |         |   |   |         |   |   |                                                                   |   |   |         |   |   |         |  
|Current liabilities           |   | 700     |   |   | 359     |   |   | 662                                                               |   |   | 1,297   |   |   | 752     |  
|Future income taxes           |   | 19,364  |   |   | 19,720  |   |   | 19,998                                                            |   |   | 21,520  |   |   | 24,596  |  
|Shareholders equity           |   | 96,625  |   |   | 96,344  |   |   | 98,109                                                            |   |   | 97,722  |   |   | 91,186  |  
|Total liabilities             |   | 116,689 |   |   | 116,423 |   |   | 118,769                                                           |   |   | 120,539 |   |   | 116,534 |  
|                              |   |         |   |   |         |   |   |                                                                   |   |   |         |   |   |         |  
|Working capital               |   | 17,290  |   |   | 17,365  |   |   | 19,406                                                            |   |   | 20,547  |   |   | 17,087  |  
|                              |   |         |   |   |         |   |   |                                                                   |   |   |         |   |   |         |  
|Expenses                      |   |         |   |   |         |   |   |                                                                   |   |   |         |   |   |         |  
|Conference and travel         |   | 184     |   |   | 99      |   |   | 34                                                                |   |   | 20      |   |   | 32      |  
|Exploration                   |   | 954     |   |   | 1,271   |   |   | 883                                                               |   |   | 777     |   |   | 1,319   |  
|Financial advisory & finders' |   |         |   |   |         |   |   |                                                                   |   |   |         |   |   |         |  
|fees                          |   |        |   |   |        |   |   |                                                                  |   |   |        |   |   | (101    | )
|Foreign exchange loss (gain)  |   | 118     |   |   | 288     |   |   | (1,659                                                            | ) |   | (1,861  | ) |   | 2,090   |  
|Interest and other            |   | (130    | ) |   | (115    | ) |   | (121                                                              | ) |   | (114    | ) |   | 77      |  
|Legal, accounting and audit   |   | 157     |   |   | 140     |   |   | 142                                                               |   |   | 64      |   |   | 66      |  
|Office and administration     |   | 233     |   |   | 407     |   |   | 283                                                               |   |   | 299     |   |   | 229     |  
|Shareholder communications    |   | 47      |   |   | 58      |   |   | 99                                                                |   |   | 80      |   |   | 46      |  
|Stock-based compensation     |   |         |   |   |         |   |   |                                                                   |   |   |         |   |   |         |  
|exploration                   |   | 27      |   |   | 2       |   |   | (13                                                               | ) |   | 3       |   |   | (938    | )
|Stock-based compensation     |   |         |   |   |         |   |   |                                                                   |   |   |         |   |   |         |  
|office and administration     |   | 367     |   |   | 121     |   |   | (32                                                               | ) |   | 1       |   |   | 970     |  
|Trust and filing              |   | 7       |   |   | 6       |   |   | 5                                                                 |   |   | 67      |   |   | 2       |  
|Loss (income) before under-   |   |         |   |   |         |   |   |                                                                   |   |   |         |   |   |         |  
|noted and taxes               |   | 1,964   |   |   | 2,277   |   |   | (379                                                              | ) |   | (664    | ) |   | 3,792   |  
|Loss on sale of investments   |   |        |   |   |        |   |   |                                                                  |   |   | 193     |   |   |        |  
|Mark-to-market adjustments    |   | 121     |   |   | (93     | ) |   | 138                                                               |   |   | -       |   |   | -       |  
|Loss before taxes             |   | 2,085   |   |   | 2,184   |   |   | (241                                                              | ) |   | (471    | ) |   | 3,792   |  
|Future income tax expense     |   |         |   |   |         |   |   |                                                                   |   |   |         |   |   |         |  
|(recovery)                    |   | (463    | ) |   | (296    | ) |   | (191                                                              | ) |   | (1,043  | ) |   | (456    | )
|Loss (income) for the period  |   | 1,622   |   |   | 1,888   |   |   | (432                                                              | ) |   | (1,514  | ) |   | 3,336   |  
|                              |   |         |   |   |         |   |   |                                                                   |   |   |         |   |   |         |  
|Basic and diluted income      |   |         |   |   |         |   |   |                                                                   |   |   |         |   |   |         |  
|(loss)
      per share        | $ | (0.02   | ) | $ | (0.02   | ) | $ | 0.00                                                              |   | $ | 0.02    |   | $ | (0.04   | )
|                              |   |         |   |   |         |   |   |                                                                   |   |   |         |   |   |         |  
|Weighted average number of    |   |         |   |   |         |   |   |                                                                   |   |   |         |   |   |         |  
|common shares outstanding     |   |         |   |   |         |   |   |                                                                   |   |   |         |   |   |         |  
|(thousands)                   |   | 92,318  |   |   | 92,113  |   |   | 92,113                                                            |   |   | 91,074  |   |   | 86,523  |  

During the period ended September 30, 2005, the Company made
  certain retroactive adjustments to the estimates of its accounting and tax temporary
  differences. Such adjustments resulted in restatement of prior quarterly results
  shown above.

-15-



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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

1.5           
Results of Operations

For the year ended December 31, 2005, the Company incurred a
  loss of $1,564,000 compared to a loss of $12,166,000 in fiscal 2004, due mainly
  to lower exploration-related costs on the Companys Burnstone and Ivanhoe
  properties and lower stock-based compensation. In addition, the Company had
  a foreign exchange gain of $3,114,000 for the year ended December 31, 2005,
  due mainly to the translation of the future income tax liability arising from
  mineral properties that are South African rand-denominated, as compared with
  an exchange loss of $2,410,000 in fiscal 2004. This was offset by higher office
  and administration costs of $1,222,000 in fiscal 2005 compared to $893,000 in
  fiscal 2004. This increase is due in part to the establishment of an office
  in South Africa during 2005. The Company also incurred a loss on sale on investments
  of $193,000 and write down on its investments of $166,000, as a result of mark-to-market
  adjustments, in the year ended December 31, 2005.

Of the exploration costs, excluding stock-based compensation,
for the year ended December 31, 2005, $2,991,088 (2004  $7,108,929) was spent
on Burnstone and $389,985 (2004  $739,046) was spent on Ivanhoe, which includes
the Hollister Development Block ("HDB") and the Ivanhoe property outside of the
HDB. At Ivanhoe, the main costs were $66,935 for engineering (2004  $76,174),
$109,781 for geological (2004  $83,253) and $153,856 for property fees (2004 
$258,716). The aforementioned fees include a maintenance payment from Hecla of
approximately US$64,340 ($84,000) for the HDB.

At Burnstone, the main exploration expenses were drilling (2005
 $472,917; 2004  $4,368,621); geological (2005  $439,310; 2004  $1,208,134),
for planning, core logging and supervision of the drilling program; engineering
(2005  $1,216,433; 2004  $625,221), for metallurgical and other engineering
work supporting the feasibility study being conducted for the Burnstone Project;
site activities (2005  $221,127; 2004  $286,888), for running the field office
and carrying out other support activities associated with the drilling program,
environmental, socio-economic and land work (2005 $376,843; 2004  $84,237),
for the feasibility study and assays and analysis of drill core samples (2005
$83,601; 2004  $199,979).

In addition to activities at Burnstone and Ivanhoe, $286,412 in
drilling and $215,786 in geological costs were incurred during the year ended
December 31 2005 on exploration activities on new properties adjacent to
Burnstone.

1.6           
Liquidity

Historically the Company's sole source of funding has been the
issuance of equity securities for cash, primarily through private placements to
sophisticated investors and institutions. The Company has issued common share
capital in each of the past few years, pursuant to private placement financings
and the exercise of warrants and options. The Company's access to exploration
financing when the financing is not transaction-specific is always uncertain.
There can be no assurance of continued access to significant equity funding.

During the year ended December 31, 2005, 5.5 million warrants
were exercised, for proceeds of approximately $5.0 million, which funds were
used for the furtherance of the Company's exploration and administrative
activities.

- 16 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

At December 31, 2005, the Company had working capital of
approximately $17.3 million, which is sufficient to fund its proposed 2006
exploration programs, and its operating costs and working capital during 2006.
As the Company chooses to proceed on its exploration programs and feasibility
studies, it will need to raise additional funds for such expenditures from time
to time.

The Company has no long term debt, capital lease obligations,
operating leases or any other long term obligations, other than maintenance
payments on the mineral properties and routine office leases.

The Company has no "Purchase Obligations" defined as any
agreement to purchase goods or services that is enforceable and legally binding
on the Company that specifies all significant terms, including: fixed or minimum
quantities to be purchased; fixed, minimum or variable price provisions; and the
approximate timing of the transaction.

1.7           
Capital Resources

At December 31, 2005, Great Basin had working capital of
approximately $17.3 million, as compared to $17.1 million at December 31, 2004,
and $21.2 million at December 31, 2003. The Company has no long term debt.

At December 31, 2005, the Company had approximately 93.7
million common shares issued and outstanding. There have been no material
changes to the number of shares outstanding as at the date of this MD&A.

1.8           
Off-Balance Sheet Arrangements

None.

1.9           
Transactions with Related Parties

Hunter Dickinson Inc. ("HDI") is a private company owned
equally by nine public companies, one of which is the Company. HDI has certain
directors in common with the Company and provides geological, corporate
development, administrative and management services to, and incurs third party
costs on behalf of, the Company and its subsidiaries on a full cost recovery
basis pursuant to an agreement dated December 31, 1996. During the year ended
December 31, 2005, the Company paid HDI $1,104,875 compared to $1,002,431 during
the year ended December 31, 2004, for these services and exploration programs to
evaluate data on the Ivanhoe Property, to prepare for an underground exploration
program and to continue exploration and development work, including the
conducting of a feasibility study on the Burnstone Project.

Hunter Dickinson Group Inc. is a private company with certain
directors in common that provides consulting services to the Company. During the
year ended December 31, 2005, the Company paid $9,600 (2004  $12,800) to Hunter
Dickinson Group Inc. for such services.

- 17 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

During the year ended December 31, 2005, the Company paid
$242,198 (2004  $102,372) to a private company owned by a director, for
engineering and project management services at market rates.

The Company paid $105,091 (2004  $135,143) to a private
company of which a director of the Company is an officer, for certain accounting
and administrative services at rates negotiated while the officer was dealing at
arms length with the Company.

1.10           
Fourth Quarter

Loss for the quarter ended December 31, 2005 was $1,622,000 compared
  to a loss of $3,336,000 for the corresponding quarter in fiscal 2004. The quarter
  saw lower exploration activity on the Burnstone Property, a mark-to-market adjustment
  on investments and higher stock-based compensation costs as compared to fiscal
  2004. As well, in the quarter ended December 31, 2004, there was a large foreign
  exchange loss related to rand-denominated future income tax liabilities.

Exploration costs were $954,000 for the current quarter
compared to $1,320,000 for the corresponding quarter of fiscal 2004. The main
exploration costs for the current quarter were for engineering (2005 $425,357;
2004  $54,367), geological (2005  $175,010; 2004  $262,845), site activities
(2005 $87,159; 2004  $110,427) and environmental (2005  $80,012; 2004 
$6,156). Less drilling was done at Burnstone as activities were focused towards
the completion of the feasibility study.

The lower exploration costs for the current quarter were partly
offset by higher legal, accounting and audit costs, which increased to $157,000
for the quarter ended December 31, 2005 compared to $66,000 for the
corresponding quarter of fiscal 2004, due to greater compliance and reporting
activities.

Conference and travel increased in the current quarter to
$184,000 from $32,000 in the same quarter of fiscal 2004 due to the increased
travel for the feasibility study.

1.11           
Proposed Transactions

There are no proposed assets or business acquisitions or
dispositions, other than those in the ordinary course, which are before the
board of directors for consideration.

1.12           
Critical Accounting Estimates

The Company's accounting policies are presented in note 3 of
the accompanying consolidated financial statements. The preparation of
consolidated financial statements in accordance with generally accepted
accounting principles requires management to select accounting policies and make
estimates. Such estimates may have a significant impact on the financial
statements. These include:

- the estimation of mineral resources and reserves, and
- the carrying values of mineral properties,
- the carrying values of property, plant and equipment, and
- the valuation of stock-based compensation expense.

- 18 -

---

|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

Actual amounts could differ from the estimates used and,
accordingly, affect the results of operations.

Mineral resources and reserves, and the carrying values of
mineral properties, and of property, plant and equipment

Mineral resources and reserves are
estimated by professional geologists and engineers in accordance with recognized
industry, professional and regulatory standards. These estimates require inputs
such as future metals prices, future operating costs, and various technical
geological, engineering, and construction parameters. Changes in any of these
inputs could cause a significant change in the resources and reserves determined
which in turn could have a material effect on the carrying value of property,
plant and equipment.

The carrying value of mineral
properties is also dependant on the valuation used for the common shares and
warrants of the Company issued for the acquisition of mineral properties. The
value of the common shares issued is the fair market value, based on the trading
price of the shares at the agreement and announcement date, pursuant to the
terms of the relevant agreement. The Company uses the Black-Scholes pricing
model to estimate a value for the warrants issued upon the acquisition of a
property. This model, and other models which are used to value options and
warrants, require inputs such as expected volatility, expected life to exercise,
and interest rates. Changes in any of these inputs could cause a significant
change in the carrying value initially recorded for mineral properties.

Site restoration costs

Upon the completion of any mining
activities, the Company will ordinarily be required to undertake environmental
reclamation activities in accordance with local and/or industry standards. The
estimated costs of these reclamation activities are dependent on labour costs,
the environmental impacts of the Company's operations, the effectiveness of the
chosen reclamation techniques, and on applicable government environmental
standards. Changes in any of these factors could cause a significant change in
the reclamation expense charged in a period.

Stock-based compensation expense

From time to time, the Company may
grant share purchase options to directors, employees, and service providers. The
Company uses the Black-Scholes option pricing model to estimate a value for
these options. This model, and other models which are used to value options,
require inputs such as expected volatility, expected life to exercise, and
interest rates. Changes in any of these inputs could cause a significant change
in the stock-based compensation expense charged in a period.

- 19 -

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

1.13           
Changes in Accounting Policies including Initial Adoption

Variable interest entities

Effective January 1, 2005, the Company
  adopted the Canadian Institute of Chartered Accountants (CICA) Accounting
  Guideline 15, "Consolidation of Variable Interest Entities" ("AcG15") on a prospective
  basis. AcG15 prescribes the application of consolidation principles for entities
  that meet the definition of a variable interest entity (VIE). An
  enterprise holding other than a voting interest in a VIE could, subject to certain
  conditions, be required to consolidate the VIE if it is considered its primary
  beneficiary whereby it would absorb the majority of the VIE's expected losses,
  receive the majority of its expected residual returns, or both. The adoption
  of this new standard had no effect on the consolidated financial statements
  as the Company does not have any VIE's.

1.14           
Financial Instruments and Other Instruments

None.

1.15           
Other MD&A Requirements

Additional information relating to the Company, including the
Company's Annual Information Form, is available on SEDAR at www.sedar.com.

1.15.1       
 Additional Disclosure for Venture Issuers without Significant
Revenue

Not applicable. The Company is a non-venture issuer.

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|                                          
|------------------------------------------
|YEAR ENDED DECEMBER 31, 2005              
|MANAGEMENT'S
      DISCUSSION AND ANALYSIS

1.15.2        Disclosure
of Outstanding Share Data

The following details the share capital structure as at March
21, 2006, the date of this MD&A. These figures may be subject to minor
accounting adjustments prior to presentation in future consolidated financial
statements.

Exercise
    NumberEquity type
    Expiry
      date
    price
    granted
    TotalCommon shares
    
    
    
    93,972,379Share purchase options
    November 30, 2006
    $ 1.59
    50,000November 30, 2006
    $ 1.75
    410,000November 30, 2006
    $ 1.62
    85,000September 28, 2007
    $ 1.15
    652,000December 20, 2007
    $ 1.17
    963,000December 14, 2007
    $ 1.14
    15,000December 19, 2008
    $ 1.62
    2,100,000December 31, 2010
    $ 1.14
    680,000
    4,955,000Warrants
    
    
    
    None


Cautionary Comments

The following are the principal risk factors and
  uncertainties which, in management's opinion, are likely to most directly affect
  the ultimate feasibility of the Companys projects. Certain of the mineralized
  material at the Companys projects is currently classified as a measured
  and indicated resource, and a portion of it qualifies under Canadian mining
  disclosure standards as a proven and probable reserve, but readers are cautioned
  that no part of the Companys projects' mineralization is considered to
  be a reserve under US mining reporting standards. For US mining reporting standards,
  full feasibility studies would be required, which would likely require additional
  drilling and metallurgical studies, supplementary process tests and other engineering
  and geologic work. Additionally, all necessary mining permits are required in
  order to classify the projects' mineralized material as an economically exploitable
  reserve. There can be no assurance that any of this mineralized material will
  become classifiable as a reserve and there is no assurance as to the amount,
  if any, that might ultimately qualify as a reserve or what the grade of such
  reserve amounts would be. Final feasibility work has not been done to confirm
  the mine design, mining methods and processing methods assumed by the Company
  in its Burnstone pre-feasibility study. Future feasibility studies could determine
  that the assumed mine designs, mining methods and processing methods are not
  correct. Construction and operation of mines and processing facilities depend
  on securing environmental and other permits on a timely basis. No permits have
  been applied for and there can be no assurance that required permits can be
  secured or secured on a timely basis.

The Companys projects will require major
  financing, probably a combination of debt and equity financing. Interest rates
  are at historically low levels. There can be no assurance that debt and/or equity
  financing will be available on acceptable terms, or not at all. A significant
  increase in costs of capital could materially adversely affect the value and
  feasibility of constructing the Companys projects. Other general risks
  include those ordinary to very large construction projects, including the general
  uncertainties inherent in engineering and construction costs, the need to comply
  with generally increasing environmental obligations, and the accommodation of
  local and community concerns.

Further, South African mineral tenure laws require
  that significant economic ownership in the Companys South African projects
  be held by historically disadvantaged peoples, and for which ownership rights
  the Company may not be sufficiently, or at all, compensated. The economics of
  the Companys projects are sensitive to the Canadian Dollar, US Dollar
  and South African Rand exchange rates and these rates have been subject to large
  fluctuations in the past several years.

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