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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

|1.1  | DATE                                              | 2                                                          
|---- | ------------------------------------------------- | -----------------------------------------------------------
|     |                                                   |                                                            
|1.2  | OVERVIEW                                          | 3                                                          
|     |                                                   |                                                            
|     | 1.2.1                                             | HOLLISTER PROPERTY, NEVADA,
      USA                      
|     |                                                   |                                                            
|     | 1.2.2                                             | BURNSTONE PROPERTY, MPUMALANGA
      PROVINCE, SOUTH AFRICA
|     |                                                   |                                                            
|     | 1.2.3                                             | GANES CREEK PROPERTY, ALASKA,
      USA                    
|     |                                                   |                                                            
|     | 1.2.4                                             | TSETSERA PROPERTY, MOZAMBIQUE                              
|     |                                                   |                                                            
|     | 1.2.5                                             | ESMERALDA PROPERTY, NEVADA,
      USA                      
|     |                                                   |                                                            
|     | 1.2.6                                             | RUSAF PROPERTIES                                           
|     |                                                   |                                                            
|     | 1.2.7                                             | KRYSO RESOURCES PLC                                        
|     |                                                   |                                                            
|     | 1.2.8                                             | MARKET TRENDS                                              
|     |                                                   |                                                            
|1.3  | SELECTED ANNUAL
      INFORMATION                 | 26                                                         
|     |                                                   |                                                            
|1.4  | SUMMARY OF QUARTERLY
      RESULTS                | 27                                                         
|     |                                                   |                                                            
|1.5  | RESULTS OF OPERATIONS                             | 27                                                         
|     |                                                   |                                                            
|1.6  | LIQUIDITY                                         | 30                                                         
|     |                                                   |                                                            
|1.7  | CAPITAL RESOURCES                                 | 31                                                         
|     |                                                   |                                                            
|1.8  | OFF-BALANCE
      SHEET ARRANGEMENTS              | 32                                                         
|     |                                                   |                                                            
|1.9  | CONTRACTUAL OBLIGATIONS                           | 33                                                         
|     |                                                   |                                                            
|1.10 | TRANSACTIONS
      WITH RELATED PARTIES           | 34                                                         
|     |                                                   |                                                            
|1.11 | FOURTH QUARTER                                    | 34                                                         
|     |                                                   |                                                            
|1.12 | PROPOSED TRANSACTIONS                             | 34                                                         
|     |                                                   |                                                            
|1.13 | CRITICAL ACCOUNTING
      ESTIMATES               | 34                                                         
|     |                                                   |                                                            
|1.14 | ADOPTION OF
      NEW ACCOUNTING POLICIES         | 36                                                         
|     |                                                   |                                                            
|1.15 | NEW ACCOUNTING
      PRONOUNCEMENTS               | 37                                                         
|     |                                                   |                                                            
|1.16 | FINANCIAL INSTRUMENTS
      AND OTHER INSTRUMENTS | 37                                                         
|     |                                                   |                                                            
|1.17 | OTHER MD&A
      REQUIREMENTS                     | 38                                                         

1

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

| | 1.17.1 | DISCLOSURE OF OUTSTANDING
      SHARE DATA      | 39
| | ------ | ----------------------------------------------- | --
| |        |                                                 |   
| | 1.17.2 | NON GAAP MEASURES                               | 39
| |        |                                                 |   
| | 1.17.3 | DISCLOSURE CONTROLS AND
      PROCEDURES        | 40
| |        |                                                 |   
| | 1.17.4 | INTERNAL CONTROL OVER FINANCIAL
      REPORTING | 41

1.1        Date

This Managements Discussion and Analysis ("MD&A") should
be read in conjunction with the annual financial statements of Great Basin Gold
Ltd. ("Great Basin", the "Company", or the Group) for the years ended December
31, 2008 and 2007 which are prepared in accordance with Canadian Generally
Accepted Accounting Principles and are available through the internet on SEDAR
at www.sedar.com. All dollar amounts herein are expressed in Canadian Dollars
unless stated otherwise.

This MD&A is prepared as of March 20, 2009.

This discussion includes certain
          statements that may be deemed "forward-looking statements"
          and information. These forward-looking statements constitute "forward-looking
          statements" within the meaning of Section 27A of the Securities
          Act of 1933 and 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
          and information. Although the Company believes the expectations expressed
          in such forward-looking statements and information 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 and information. Factors that could
          cause actual results to differ materially from those in forward-looking
          statements include market prices, exploitation and exploration successes,
          drilling and development results, 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.




2

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

1.2        Overview

Great Basin Gold Limited ("Great Basin" or the "Company") is a
mineral exploration and development company that is currently focused on
delivering two advanced stage projects: Hollister Development Block (HDB)
Project, which covers about 5% of the Hollister Property on the Carlin Trend
in Nevada, USA and the Burnstone Gold Project in the Witwatersrand
Goldfields in South Africa. The Company, currently recognized as an emerging
producer, will migrate to the ranks of the junior gold producers as these two
projects commence full commercial gold production. Over and above the
exploration being conducted at the above mentioned properties, green field
exploration is being undertaken in Alaska, Tanzania, Mozambique and the Island
of Kurils in Russia.

The current global economic crisis which has impacted on the
availability of capital in the equity and financial markets has required
management to re-assess the development schedule of both advanced stage projects
and planned exploration. Management has implemented a strategy of cash
preservation to ensure Great Basin is able to meet contractual obligations and
preserve shareholder value. This strategy entails:

- Continue with the development of our Hollister and Burnstone Projects to
  ensure that they are completed as planned, and within budget
- Ensuring that production targets are met which will deliver the necessary
  cash flow to finance operating and development activities.
- Improved cost management procedures.
- Reduction in exploration undertaken at Hollister as well as Burnstone.
  Exploration continues at Hollister and will be focused on in-fill drilling and
  the Hatter Graben area whilst exploration drilling at Burnstone is now
  focusing on underground delineation and evaluation of the initial mining
  areas.
- Re-planning the Tanzanian exploration projects for 2009 based on the
  availability of funding.
- Placing grass roots exploration projects at Ganes Creek, Tsetsera and
  Kurils on hold until such time as free cash flow is available to continue.

The Company launched various fund raising initiatives since the
fourth quarter of 2008 to ensure the Company has adequate cash resources to
develop its projects. The strategy entailed a three-phased approach consisting
of a combination of debt and equity, taking into account the availability of
funding in the market as a result of the global economic crisis.

| | (i) | Public offering                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | The Global economic crisis and the direct impact thereof
      on the financial sector negatively impacted the ability of the commercial
      banks to approve in principle the terms of the original agreed term sheet
      for the Burnstone project finance facility. Additional equity contribution
      was required from the Company as well as standby equity to be available to
      fund potential cost overruns. The increase in the gold price since January
      2009 provided the Company with a window of opportunity to raise the
      required equity in the market. The Company completed
    a

3

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

| |       | public offering on March 13, 2009 whereby it issued
      100,000,000 units (the Units) at a price of $1.30 per Unit (the
      Offering Price). Each Unit consists of one common share (each, a Common
      Share) in the capital of the Company and one-half of one common share
      purchase warrant (each whole common share purchase warrant, a Warrant)
      of Great Basin. Each Warrant entitles the holder thereof to purchase one
      Common Share (a Warrant Share) at a price of $1.60 at any time before
    5:00 p.m. (Vancouver time) on October 15, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       | The Company has granted to the Underwriters an over-allotment option to acquire additional Common Shares in an aggregate amount of up to 15% of the aggregate number of Common Shares sold pursuant to the Offering.  The Over-Allotment Option is expected to be exercised in full and closure will be within 30 days of March 13, 2009 taking the gross proceeds on the offering to $149,500,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (ii)  | Investec Equity Line Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       | The second phase of the fund raising initiative included a small private placement to fund the corporate expenditure of the Company in the short term. In December 2008, the Company entered into an equity line agreement (the “Investec Agreement”) with an affiliate of Investec Limited (“Investec”).  The Investec Agreement provided that the Company could sell to Investec over the term of the Investec Agreement up to $4 million of common shares in tranches at a price which was to be calculated as 95% of prevailing market with a floor price of $1.12 per common share.  The Investec Agreement has terminated on February 7, 2009 and the Company issued an aggregate of 2,846,800 common shares to Investec at an average price of $1.38 to raise net proceeds of $3.92 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (iii) | Senior Secured Note Financing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       | The sell-off in all equities subsequent to
        the collapse of the financial sector since September 2008 necessitated
        the Company to first gear through borrowing available assets to minimize
        dilution to its shareholders. Commercial banks were generally not lending
        money at the time and private funds were the only lenders to selective
        projects. On December 12, 2008, the Company closed a senior secured note
        financing (the “Note Financing”), issuing a total of 51,500
        units and raising gross proceeds of US$51,500,000 which netted approximately
        $39 million (US$32 million) net of prepayment of 24 months of interest
        and other costs of the offering. Each unit consisted of a senior secured
        note (a “Note”) in the principal amount of US$1,000 and 350
        common share purchase warrants (the “Note Financing Warrants”).
        Each Note Financing Warrant entitles the holder to purchase one common
        share in the capital of the Company at a price of $1.80 per share on or
        before December 12, 2011 with anti-dilution protection to a floor price
        of $1.11 described below. Each Note matures at 120% of principal on the
        earlier of December 12, 2011 and certain stated events, including a change
        of control. The Notes bear interest of 14% per annum. The Notes are guaranteed
        on a joint and several basis by all of the Company’s Nevada subsidiaries
        and secured by their assets, being the Hollister Property and all other
        Nevada assets.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       | The proceeds of the financing were used to acquire the
      Esmeralda Property ($2.4 million or US$2 million), with $18 million (US$15
      million) of the proceeds used to fund the ongoing development of the
      Burnstone Property. The remainder of the funds will be used to refurbish
      the Esmeralda mill and associated infrastructure. Purchasing the Esmeralda
      mill at the time was essential to secure a long-term economical milling
      solution for the Hollister project. The mill was
    initially                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

4

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

offered to the Company at US$8 million
during June 2008 but a subsequent cash offer expiring on December 16, 2008
resulted in the Company securing the mill for US$2 million.

The Equity offering that closed on
March 13, 2009 (refer below) triggered the anti-dilution protection on the
warrants issued in respect of the Senior Secured Notes. The exercise price of
these warrants was adjusted to $1.25 (from $1.80) per common share and the
number of common shares which may be acquired increased from to 26,994,240
common shares (including agents warrants). These warrants remain subject to
anti-dilution rights, including certain anti-dilution rights triggered by the
issuance of common shares at a price less than the exercise price, but have a
minimum exercise price of $1.11 per common share.

The current market conditions also present significant
opportunities to grow the asset base of the Company. The Corporate development
strategy remains active with the exception that any potential acquisition
targets have to be fully funded as to not place additional pressure on the cash
resources required to deliver the Hollister and Burnstone projects.

The Company achieved the following goals in the year ended
December 31, 2008:

Hollister Property

- Extracted 50,161 tons of ore at an average grade of 1.61equivalent gold ounces per ton from trial mining activities.
- Toll treated 33,830 tons of ore and thereby advancing metallurgical test
  work.
- Completed the acquisition of the Esmeralda property and thereby secured an in-house milling solution for Hollister ore.
- A total of 17,204 ft (5,243 m) of underground development has been
  completed of which 6,099 ft (1,859 m) was directed at exposing the veins.
  Total development to December 31, 2008 is 22,132 ft (6,746 m).
- Progress on permitting with the granting of the permit for larger scale test-mining activities by the Nevada Division of Environmental Protection (“NDEP”) to extract up to 275,000 tons of ore per annum.
- Filed an updated NI43-101 technical report in March 2009.
- Completed a further 49,460 ft (14,988 m) of underground delineation and
  exploration drilling on the Gweneviere-Clementine vein system. The
  continuation of surface diamond drilling on the Hatter Graben target to the
  east has outlined a zone 1400 x 400m in dimension with narrow bonanza grade
  quartz veins.

____________________________________
  1 Gold equivalent was calculated using US$800/oz for Au and US$12/oz per
  Ag.

5

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

Burnstone Property

- Granting of the New Order Mining Right by the Department of Minerals and
  Energy (DME) on October 28, 2008 to the Companys wholly owned subsidiary,
  Southgold Exploration (Pty) Ltd (Southgold), authorizing Southgold to mine
  for gold, silver and aggregate in the Burnstone Project area.
- Vertical shaft reached a depth of 538 ft (164 m) at the end of December
  2008 and the completion of the header dam in January 2009.
- Construction of the permanent head gear in January 2009.
- Advancing to 6,867 ft (2,093 m) of the 7,590 ft (2,314 m) planned length of
  the underground decline by December 31, 2008. Total length achieved by
  December 31, 2008 including all secondary pre-development, is 9,702 ft (2,957
  m). The reef will be intercepted at 7,218 ft (2,200 m).
- Filed an updated NI43-101 technical report in March 2009.
- Surface exploration drilling during 2008 involved a further 31 boreholes
  totaling 80,106 ft (24,415 m) drilled on Areas 1, 3 and 4. These are to be
  included in a revised mineral resource estimate being undertaken during the
  first quarter of 2009. The drilling has focused on further delineation of the
  Kimberley Reef in the initial mining areas as well as testing down dip
  extensions into Area 4. The drilling has confirmed further areas of
  mineralization in Area 1, as well as increased channel thickness, spreading
  into Area 4.

Corporate

- Successful completion of the $150 million (inclusive of anticipated over–allotment) equity unit offering in March 2009 with the proceeds to be used to bring the Burnstone project into commercial production.
- Successful placement of 51,500 Senior Secured Notes at $1,000 each in
  December 2008 to finance the acquisition and refurbishment of the Esmeralda
  mill and continue the funding of the Burnstone project.
- Completion of the Investec Equity line agreement and thereby issuing 2,846,800 common shares to raise gross proceeds totaling $3.92 million.

Exploration

- Completion of drilling programs at Nkulwesi, Imweru and Lubando prospects
  in Tanzania.
- Completion of a geological mapping and trenching program at Ganes Creek,
  Alaska.
- Completion of a 33 hole diamond drilling program in the Kurils, eastern Russia.

1.2.1    Hollister Property, Nevada,
USA

The Hollister Property is located in the northeastern part of
the Carlin Trend, approximately 80 km (50 mi) from Elko, Nevada. Great Basins
exploration efforts at Hollister from 1997-2001 resulted in the discovery and
delineation of several high-grade gold-silver vein systems on the HDB. The main
vein systems are called the Clementine, Gwenivere and South Gwenivere.

6

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

Permitting

The State of Nevada issued a Water Pollution Control Permit
effective December 24, 2008, authorizing the Company to extract and process off
site up to 275,000 tons of ore per year. Great Basin Resource Watch (GBRW) has
filed an appeal with the Nevada State Environmental Commission (the NSEC)
challenging the Nevada Division of Environmental Protections (the NDEP)
issuance of this Water Pollution Control Permit. An informational meeting was
concluded with GBRW and NDEP on February 24, 2009. The meeting provided GBRW
with additional information. As of the date of this MD&A, the GBRW has not
indicated whether it intends to continue with the appeal. A hearing with the
NSEC will be scheduled should GBRW choose to continue with the appeal.

Under the current Plan of Operations approved by the BLM, the
Company is permitted to undertake underground exploration and development
inclusive of test mining and the taking and removal of bulk samples. An amended
Plan of Operations to approve full production was submitted to the BLM in March
2008. After evaluating the Companys proposal for full-scale production, the BLM
determined that the environmental analysis required for the Plan of Operations
amendment is an Environmental Impact Statement (EIS). The preliminary
procedural portions of the EIS process have commenced which includes a
Memorandum of understanding with the BLM, the drafting for publication the
Notice of Intent to prepare an EIS in the Federal Register, and developing the
bid package for the third-party contractor that will prepare the EIS for
BLM.

Pending the completion of the EIS process and receiving BLMs
approval of the amended Plan of Operations, the underground exploration and
development activities at the Hollister Property must be conducted within the
275,000 ore tons per year limit set out in the Water Pollution Control Permit
that the NDEP issued and in a manner that will aim to fully protect the
environment, including the archaeological resources near the mine, and that will
not create any additional surface disturbance or other new environmental impacts
as required by the current Plan of Operations.

February 2009 Technical Report

The following disclosure is derived from a report on the 2008
program, mineral resources and 2009 update of the project financial evaluation
(2009 Hollister Update) that is included in the Revised Technical Report on
the Mineral Resources and Reserves on the Hollister Development Block Project,
Elko County, Nevada dated February 27, 2009 by Johan Oelofse, Pr.Eng. FSAIMM,
Deon van der Heever, Pr.Sci.Nat., and Phil Bentley, Pr.Sci.Nat., (2009
Hollister Report) and filed on www.sedar.com.
Mr van der Heever is an independent qualified person and Mssrs Oelofse and
Bentley are qualified persons that are not independent of the Company.

All information relating to the contents of the 2009
      Hollister Update, including but not limited to statements of the HDB
      project's potential and information such as capital and operating costs,
      production summary, and financial analysis are forward looking statements.
      The 2009 Hollister Update was prepared to quantify the HDB project's
      capital and operating cost parameters and to determine the project's
      likelihood of feasibility and optimal production rate. The capital and
      operating cost estimates which were used have been developed based on
      detailed capital cost to production level relationships. 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 HDB project. The mineralized material at the HDB
      project 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
      HDB projects mineralization is considered to be a reserve under US mining
      standards as all necessary mining permits and project financing would be
      required in order to classify the projects mineralized material as an
      economically exploitable reserve. Although work has been done to confirm
      the mine design, mining methods and processing methods assumed in the 2009
      Hollister Update, construction and operation of the mine and processing
      facilities depend on securing environmental and other permits on a timely
      basis. Additional permits, when required, have yet to be applied for and
      there can be no assurance that required permits can be secured or secured
      on a timely basis. Although costs, including design, procurement,


7

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

construction and on-going operating costs and metal
      recoveries have been established at a level of detail required for a
      feasibility study, these could be materially different from those
      contained in the 2009 Hollister Update. There can be no assurance that
      these infrastructure facilities can be developed on a timely and
      cost-effective basis. Energy risks include the potential for significant
      increases in the cost of fuel and electricity. The 2009 Hollister Update
      assumes specified, long-term prices levels for gold. The price of this
      metal is historically volatile, and the Company has no control of or
      influence on its price which is determined in international markets. There
      can be no assurance that the price of gold will continue at current levels
      or that it will not decline below the prices assumed in the 2009 Hollister
      Update. Prices for gold have been below the price ranges assumed in 2009
      Update at times during the past ten years, and for extended periods of
      time. The project will require additional financing. Although interest
      rates are at historically low levels, there can be no assurance that debt
      and/or equity financing will be available on acceptable terms. Other
      general risks include those ordinary to very large construction projects,
      including the general uncertainties inherent in engineering and
      construction cost, the need to comply with generally increasing
      environmental obligations, and accommodation of local and community
      concerns.


Mineral Resources

An updated resource estimate was completed in June 2008. At a
0.25 Au oz/t cut-off, the estimated measured and indicated resources at the HDB
total 1.57 million ounces Au equivalent, with an average in situ Au grade of
0.87 oz/ton and Ag grade of 4.57 oz/ton.

**Cautionary Note to U.S. Investors Concerning Estimates of Measured and Indicated Resources**        This management discussion and analysis uses the term ‘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.**


Table 1Measured and Indicated Resources as of
June 2008

Au
        Grade
      
      Ag
        GradeAu EqvResource
      Cut-off
      Tons
      Tonnes
      
      
      Au (oz)
      
      
      Ag (oz)
      (oz)Category
      (oz/ton)
      (000)
      (000)
      (oz/ton)
      (g/t)
      (000)
      (oz/ton)
      (g/t)
      (000)
      (000)0.25
      1,121
      1,017
      0.91
      31.29
      1,023
      5.55
      190.45
      6,227
      1,167Measured
      0.28
      1,027
      931
      0.97
      33.33
      998
      5.92
      202.99
      6,078
      1,1380.35
      867
      786
      1.09
      37.50
      948
      6.61
      226.56
      5,725
      1,0800.25
      494
      448
      0.76
      26.13
      376
      2.33
      80.00
      1,152
      403Indicated
      0.28
      442
      401
      0.82
      28.11
      363
      2.48
      84.93
      1,095
      3880.35
      361
      328
      0.93
      32.00
      337
      2.69
      92.39
      974
      360Total
      0.25
      1,615
      1,465
      0.87
      29.71
      1,399
      4.57
      156.68
      7,379
      1,569Measured
      0.28
      1,469
      1,333
      0.93
      31.76
      1,360
      4.88
      167.45
      7,173
      1,526& Indicated
      0.35
      1,228
      1,114
      1.05
      35.88
      1,285
      5.46
      187.07
      6,699
      1,440


Additional information:

|(1) | Metallurgical recoveries were assumed to be
  100%.                                               
|--- | --------------------------------------------------------------------------------------------------
|(2) | Gold equivalent was calculated by using the metal prices
    US$650/oz for Au and US$15/oz for Ag.
|(3) | Resources are reported undiluted.                                                                 

**Cautionary Note to U.S. Investors Concerning Estimates of Inferred Resources**
          This management discussion and analysis 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 it.  ‘Inferred resources’ have a great amount of uncertainty as to their existence, and 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.**


Table 2Inferred Resourcesas of June 2008

Au
        Grade
      
      Ag
        GradeAu EqvResource
      Cut-off
      Tons
      Tonnes
      
      
      Au (oz)
      
      
      Ag (oz)
      (oz)Category
      (oz/ton)
      (000)
      (000)
      (oz/ton)
      (g/t)
      (000)
      (oz/ton)
      (g/t)
      (000)
      (000)0.25
      1,252
      1,136
      0.51
      17.40
      635
      1.43
      49.10
      1,793
      677Inferred
      0.28
      1,149
      1,043
      0.53
      18.14
      608
      1.39
      47.74
      1,600
      6450.35
      848
      770
      0.61
      20.80
      515
      0.99
      33.81
      837
      534


Additional information:

|(1) | Metallurgical recoveries were assumed to be
  100%.                                               
|--- | --------------------------------------------------------------------------------------------------
|(2) | Gold equivalent was calculated by using the metal prices
    US$650/oz for Au and US$15/oz for Ag.
|(3) | Resources are reported undiluted.                                                                 

8

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

In order to complete the resource estimates, recent drilling
was taken into account, including exploration drilling of approximately 40,000
ft that took place between March 2007 and March 2008. Drilling was done from
suitable positions to explore the deeper parts of the deposit and to infill gaps
from previous exploration programs.

The grade-tonnage models of the deposit on the Hollister
Property consist of 24 separate veins. The models were created using a 3-D
wireframe approach within which grades were directly estimated to blocks located
within the wireframes in 3-D as well. This approach is commonly applied in
estimating vein-style deposits, particularly those anticipated to be exploited
by open-pit mining methods, and those sufficiently wide to offer the possibility
of mining selectivity across the vein width.

The methodology works well for narrow veins where a sufficient
density of data is available to model the width of the vein accurately. The
Company is currently reviewing the resource estimation methodology in the light
of continued drilling and geological modeling of the veins.

Mineral Reserves

Mineral reserves are determined using  a cut-off grade of 0.33 oz/ton Au. The portion of the mineral resources that were included in the mine plan were modified inclusive of mining dilution (minimum mining width 42”), mining gold losses (6%), metallurgical recovery (90%) and royalties (2.5%) to the equivalent of proven and probable reserves disclosed in  Table 3 below.  Proven reserves were classified according to mine infrastructure and current access as the economically mineable part of the measured resources and according to the mine plan are expected to be mined during 2009. The remainder of the economically mineable part of the measured and indicated resources were classified as probable reserves, and according to the mine plan are expected to be depleted over the following eight years. The proven and probable reserves have been determined in accordance with Canadian regulations under NI 43-101.

|**Cautionary Note to U.S. Investors Concerning Reserve Calculations**
        The mineral reserve estimates contained in this management discussion and analysis have been calculated in accordance with NI 43-101, as required by Canadian securities regulatory authorities. For United States reporting purposes, SEC Industry Guide 7 (under the United States Securities Exchange Act of 1934 (the “Exchange Act”)), as interpreted by Staff of the SEC, applies different standards in order to classify mineralization as a reserve.  As a result, the definitions of proven and probable reserves used in NI 43-101 differ from the definitions in the SEC Industry Guide 7.  Under SEC standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.  Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under the SEC standards. Accordingly, mineral reserve estimates contained herein may not qualify as “reserves” under SEC standards.  In addition, disclosure of “contained ounces” is permitted disclosure under Canadian regulations; however, the SEC only permits issuers to report mineralization as in place tonnage and grade without reference to units.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Table 3Proven and Probable Reserves as of
February 2009

Cut-off(1)
    
    
    
    
    
    Au Grade
    
    
    Ag Grade
    
    
    Au
    
    
    Ag
    
    
    Au Eqvt(2)Reserve
      Category
    
    oz/ton
    
    
    Tons
    
    
    (oz/ton)
    
    
    (oz/ton)
    
    
    (oz)
    
    
    (oz)
    
    
    (oz)Proven
    
    0.33
    
    
    109,600
    
    
    1.107
    
    
    7.77
    
    
    121,348
    
    
    851,946
    
    
    134,127Probable
    
    0.33
    
    
    1,124,742
    
    
    0.818
    
    
    3.98
    
    
    920,475
    
    
    4,479,868
    
    
    987,673Total
    
    0.33
    
    
    1,234,342
    
    
    0.844
    
    
    4.32
    
    
    1,041,823
    
    
    5,331,814
    
    
    1,121,800


Notes to Table:

|(1) | The cut-off grade for reserves was calculated using the
      direct operating cost achieved during steady state production, excluding
    taxes and contingencies.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Gold equivalent was calculated using US$800/oz for Au and US$12/oz for
      Ag.                                                                                   

Drilling

The underground drilling is an important phase of evaluation,
enabling more detailed delineation of vein mineralization, and there are now 24
recognized discrete veins constituting the Gwenivere and Clementine systems.
Drilling on both the Clementine veins and the Gwenivere veins has intercepted
more veins, and correlation between historical drilling and the more recent
drilling during 2008 has assisted the Company in better defining the newly
interpreted continuous veins. The geological continuity of the Clementine vein
system has now been extended to nearly 2,800 ft (854 m) from the previous drill
strike, and the Gwenivere system appears to coalesce with the Clementine system
with a noticeable thickening of the vein package. Both systems are open at depth
and to the east and west.

9

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

Underground diamond drilling totaled 49,460 ft (150,793 m) and
included systematic cover drilling to delineate economic areas as well as
exploration drilling along strike and at depth.

Surface drilling totaling 32,652 ft (9,955 m) has also
continued during 2008, and has been focused on targets outside the HDB, in
particular the Hatter Graben area approximately 3,281 ft (1,000 m) to the east
of the Clementine/Gwenivere veins. The Hatter Graben target on the Hollister
Property comprises an east-west trending vein swarm hosted by metasediments, and
twelve surface boreholes have been completed here with intersections ranging up
to 7.8 oz/ton Au. A narrow high grade subvertical quartz vein zone some 4,593 ft
(1,400 m) long and 1,312 ft (400/m) wide has been delineated to date, and will
be subject to further evaluation during 2009. The permitting of an underground
exploration crosscut from the existing East Lateral infrastructure into the area
of interest is being assessed.

Milling

During 2008, a number of bulk samples of mineralized material
were generated from the Hollister Propertys ongoing trial mining initiative and
sold to third party milling facilities for processing, as part of the Companys
metallurgical test work and processing optimization of the ore at the Hollister
Property. A summary of the metallurgical recoveries from bulk samples generated
from the Hollister Property mine development during 2008 is given in the table
below. In addition, at the end of December 2008 the Companys Hollister Property
had approximately 10,273 gold equivalent ounces in various stockpiles.

Table 4Summary of Metallurgical Recoveries from
Bulk Samples (2008)

Au (Head
    Ag (Head
    
    
    Aggrade)
    grade)
    Dry Short
    Au Recovery
    RecoveryMill Locality (Period)
    (oz pt)
    (oz pt)
    (tons)
    (%)
    (%)Newmont Midas (May)
    1.15
    9.53
    4,737
    84.7
    94.3Newmont Midas (June)
    0.75
    9.70
    3,906
    88.2
    92.6Newmont Midas (September)
    1.43
    12.07
    10,907
    88.1
    91.1Newmont Midas (November)(1)
    2.02
    16.20
    12,075
    83.0
    N/AKinross Republic
      (November)(1)
    2.34
    20.14
    4,692
    N/A
    N/A


Note to table:

|(1) | Actual assays not yet processed.
|--- | --------------------------------

Metallurgical testing has confirmed that both carbon in leach and roasting are viable process options for the ore on the Hollister Property. The Company initially planned to utilize the Jerritt Canyon Mill in Nevada; however, after an initial test milling and processing exercise, the Jerritt Canyon Mill ceased operations.  The Company also conducted test milling at the Midas Mill owned by Newmont (the “Midas Mill”), and although the technical compatibility of the Midas Mill was found to be suitable, the terms and conditions of the proposed toll agreement imposed unacceptable costs which rendered this option unsatisfactory.  Therefore, in the last quarter of 2008, the Company searched for a suitable milling solution, and concluded that the best option was the Esmeralda processing plant (the “Esmeralda Mill”) located on the Esmeralda Property.

On December 16, 2008, the Company completed an agreement with
Metallic Ventures Gold (U.S.) Inc. (MVI) whereby the Company acquired the
Esmeralda Property, which includes the Esmeralda mine and infrastructure for an
aggregate cost of $2.4 million (US$2 million) plus the assumption of
environmental bond obligations of $ 1.3 million (US$1.1 million).

10

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|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

The main reasons the Company selected the Esmeralda Mill as a potentially viable alternative to toll milling are:  (i) the Esmeralda Mill is a carbon in pulp plant designed to treat low grade gold ore; (ii) the design throughput is 350 tons/day, which matches the Hollister Property production profile in the short to medium term; (iii)  permits required to operate a gold processing plant are currently in place and in good standing although additional permits would be required to increase the throughput to the planned Hollister volumes; (iv) the Esmeralda Mill has been mothballed for four years and has to be refurbished, but it is expected that this can be done in a short period and an approximately US$8 million cost; (v) the Hollister deposit has a grade which is higher than what the Esmeralda Mill was designed for, but it is expected that the plant can be modified with relative ease and no significant design modifications; (vi) the carbon in pulp circuit can be modified to accept higher gold and silver grades and this will be done in conjunction with the installation of a gravity circuit which will recover approximately 50% of the gold and 40% of the silver at the front end of the Esmeralda Mill; and (vii) the refurbishment of current equipment and the modification of the carbon in pulp to a carbon in leach circuit, as well as the installation of a standalone gravity circuit, have been estimated at $9.7 million (US$8 million), which represents a significantly lower cost than any of the other options available to Great Basin.

Trial mining

During 2008 a total of 17,204 ft (5,243 m) of underground development has been completed of which 6,099 ft (1,859 m) has exposed the veins. Total development to December 31, 2008 is 22,132 ft (6,746 m), of which 6,697 ft (2,041 m) has been conducted
on the veins. Trial mining commenced in May 2008 to determine the optimum method of extracting the high-grade narrow vein ore at Hollister and to compare actual grades to predicted model grades. 50,161 tons of ore were extracted for the year ended
December 31, 2008 at an average grade of 1.6 gold equivalent ounces per ton, resulting in a total of 80,305 gold equivalent ounces.

Stoping progress on the Gwenivere veins includes initial cut and fill stoping as well as shrinkage stope development. Clementine stopes are being developed making use of cut and fill methods. Planned use of attack ramps and mechanized cut and fill
methods have not been employed on the 5,190 level due to the better viability of the above two methods. The planned underground backfill system has been commissioned and multiple fills have been successfully completed on the Gwenivere and Clementine
stopes.

The production costs for the ounces extracted during the year, excluding milling costs, amounted to US$302 per ounce or US$480 per ton. These costs were in line with managements expectations for the ramp up phase to planned
production.

33,830 tons of ore were subjected to toll milling and metallurgical testing during the year. The average recovery of 1.14 gold equivalent ounces per ton was a direct result of the toll milling agreements entered into whereby the Company did not
receive 100% of the recovered ounces. The toll milling agreements entered into were based on a cost of 20 to 25% of actual recoveries, depending on any direct milling costs payable in addition. Gross revenue of $33 million (US$27.3 million)
was generated through the sale of recovered metal during the year.

Hollister received three first place safety awards from the Nevada Mining Association: first for Small Underground Hardrock Mine; first place for top underground mine superintendent (Doug Crawford) and 1st place for underground general
foreman (Red McKinnon). Hollister had more first place awards than any other Nevada underground mine.

11

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

Project financial evaluation

The 2009 Hollister Report included an update on the financial
  analysis of the project. The trial mining conducted by the Company up to December
  31, 2008 indicated additional development required to maximize the extraction
  of the high grade veins. Improving the safety and ventilation of the underground
  workings necessitated additional development capital to be spent on life of
  mine raises and sill pillars.

The life of mine capital costs includes underground development
for a 10 year mine life and acquisition and refurbishment costs of the Esmeralda
Mill.

Table 5 Capital Cost Estimates

Capital Costs
      (US$ Millions)
    
    2009 Hollister ReportUnderground exploration & development
    
    53Plant
    
    10Infrastructure
    
    17Surface equipment
    
    3Sub total
    
    83Life of Mine (LOM) capital
    
    27Total project capital
    
    110Capital spent up to December 31,
      2008
    
    53Remaining capital to be spent over LOM
    
    57


Regarding the cash cost table below, cash costs include direct
and indirect development costs, engineering, environmental, safety, plant and
site services, geology, general and administration, workmans compensation,
insurance, property tax, royalties, ore haulage, milling costs and contingencies
in each section. The increase in the cash costs is a direct result of the
increased haulage cost to the Esmeralda Mill, estimates of commodity prices and
the lower estimated average grade over the life of mine.

Table 6 Cash Cost Estimates

LOM Avg. Cash
      Costs (US$/oz)
    
    2009 Hollister ReportMine costs
    
    222Development
    
    61Ore transport
    
    60Milling
    
    50Administration
    
    33Total
    
    426


Regarding the total life of mine cost table below, the total
costs per equivalent ounce include cash costs plus proceeds on mineral taxes,
federal income tax, contingencies and depreciation and amortization.

Table 7 Total Cost Estimates

LOM Avg. Total
      Costs (US$/oz)
    
    2009 Hollister ReportTotal costs
    
    559


An after tax cash flow schedule has been developed for the
current production scenario and the capital and operating costs disclosed
herein. The cash flow includes royalties and taxes payable. The results, at a
cut-off of 0.30 oz/ton, show an estimated net present value (NPV) of US$129.6
million at a 5% discount rate and an internal rate of return (IRR) of 41.15% .

12

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|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

Table 8 Financial Analysis

Financial
      Analysis (After Tax)
    
    2009 Hollister ReportIRR
    
    41.2%NPV (5% discount rate)
    
    US$129.6 millionNPV (10% discount rate)
    
    US$93.8 millionPayback
    
    5 yearsMine life
    
    10 years, including one year
      start up


Plans for fiscal 2009

Exploration drilling in 2009 will focus on the east and west
extensions and cross cuts to the north are planned to provide systematic drill
platforms which will enable testing the system at depth. Notably, the base of
the vein system on the Hollister Property has not been detected yet.

The Company plans to continue its test mining (ore removal and
test-processing) activities at the HDB within the allowable ore tonnage
authorizations of its existing permits. Using the existing infrastructure, the
planned 2009 underground bulk sampling program will develop approximately
260,000 tons of rock (both waste and ore), similar to the volume of rock
developed and removed from the underground workings in 2008. Management
anticipates that the planned 2009 activities could result in the recovery of
approximately 110,000 tons of ore. These activities are subject to ascertainment
with Nevada mining authorities that none of the activities fall outside the
recently acquired Water Pollution Control Permit and other applicable permits.
This ore will be processed off-site in accordance with the Water Pollution
Control Permit to determine its metallurgical characteristics. The Company also
intends to refurbish the Esmeralda Mill in anticipation that operating costs
will be less than the cost of the toll milling arrangements that have been
offered to the Company.

The Company will also be working on preparation of the required Environmental Impact Statement and will continue to refine its resource estimates. The current resource estimates will be reviewed in the next few months incorporating additional borehole and underground sampling, as well as using a variety of estimation techniques. The base of the mineral system remains geologically  unconstrained and is an important exploration target.

The Company believes there is still considerable exploration
potential on the Hollister Property and 16 drill targets peripheral to the HDB
have been prioritized for exploration drilling.

1.2.2      Burnstone Property,
Mpumalanga Province, South Africa

The Burnstone Property is in the South Rand area of the
Witwatersrand goldfields located approximately 50 mi (80 km) 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. The project has received all of the required permits
to complete the development of the mine and commence commercial production.

Permitting

On March 10, 2008, Great Basin announced that the DME had
approved an amended Environmental Management Plan for the sinking of the
vertical shaft at the Burnstone Property. This development was

13

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|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

needed to remain in compliance with safety regulations by the
establishment of a second outlet for the bulk sample project currently in
development. A further Environmental Management Plan was approved and the bulk
sample program is to be replaced by a LOM plan, the detail of which is being
developed.

On February 17, 2009, Southgold was officially awarded the
right to mine for gold, silver and aggregate in the Burnstone mining area for a
period of 18 years from date of execution of the mining right along with renewal
rights.

February 2009 Technical Report

The following disclosure is derived from a report on the 2008
program, mineral resources and 2009 update of the project financial evaluation
(2009 Burnstone Update) that is included in the Revised Technical Report
Update Of The June 21, 2007 Technical Report (Optimized Feasibility Study),
Inclusive Of Updated Mineral Resource And Reserve Estimates For The Burnstone
Gold Project, Mpumalanga Province, South Africa dated February 27, 2009 by
Johan Oelofse, Pr.Eng. FSAIMM, Deon van der Heever, Pr.Sci.Nat., and Phil
Bentley, Pr.Sci.Nat., (2009 Burnstone Report) and filed on www.sedar.com. Mr van der Heever is an independent
qualified person and Mssrs Oelofse and Bentley are qualified persons that are
not independent of the Company.

All information relating to the contents of the 2009
      Burnstone Update, including but not limited to statements of the Burnstone
      project's potential and information such as capital and operating costs,
      production summary, and financial analysis are forward looking statements.
      The 2009 Update was prepared to quantify the Burnstone project's capital
      and operating cost parameters and to determine the project's likelihood of
      feasibility and optimal production rate. The capital and operating cost
      estimates which were used have been developed based on detailed capital
      cost to production level relationships. 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
      Burnstone project. The mineralized material at the Burnstone project 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 Burnstone
      projects mineralization is not yet considered to be a reserve under US
      mining standards as all necessary mining permits and project financing
      would be required in order to classify the projects mineralized material
      as an economically exploitable reserve. Although work has been done to
      confirm the mine design, mining methods and processing methods assumed in
      the 2009 Burnstone Update, construction and operation of the mine and
      processing facilities depend on securing environmental and other permits
      on a timely basis. Authorization has been received for mining. Additional
      permits, when required, have yet to be applied for and there can be no
      assurance that required permits can be secured or secured on a timely
      basis. Although costs, including design, procurement, construction and
      on-going operating costs and metal recoveries have been established at a
      level of detail required for a feasibility study, these could be
      materially different from those contained in the 2009 Burnstone Update.
      There can be no assurance that these infrastructure facilities can be
      developed on a timely and cost-effective basis. Energy risks include the
      potential for significant increases in the cost of fuel and electricity.
      The 2009 Burnstone Update assumes specified, long-term prices levels for
      gold. The price of this metal is historically volatile, and the Company
      has no control of or influence on its price which is determined in
      international markets. There can be no assurance that the price of gold
      will continue at current levels or that it will not decline below the
      prices assumed in the 2009 Burnstone Update. Prices for gold have been
      below the price ranges assumed in 2009 Burnstone Update at times during
      the past ten years, and for extended periods of time. The project will
      require additional financing. Although interest rates are at historically
      low levels, there can be no assurance that debt and/or equity financing
      will be available on acceptable terms. Other general risks include those
      ordinary to very large construction projects, including the general
      uncertainties inherent in engineering and construction cost, the need to
      comply with generally increasing environmental obligations, and
      accommodation of local and community concerns. South African mining tenure
      laws require that significant economic ownership in Burnstone be held by
      historically disadvantaged South Africans (HDSAs) and for which ownership
      rights the Company may not be significantly compensated. The Company has
      an agreement with Tranter Gold (Pty) Ltd which represents the required
      interest by HDSA. The economics of the Burnstone Project are sensitive to
      the US Dollar and South African Rand exchange rate and this rate has been
      subject to large fluctuations in the last several years.


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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

Underground Development and production build-up

The first of a two-stage underground access development program
  began in July 2006. Development and construction programs are ongoing and on December 31, 2008 approximately 6,867 ft (2,093 m) of the planned 7,590 ft (2,314 m) of decline development were completed.

Additional breakaways to reef positions have been established. A total of 256 ft (78 m) is left to Block B where stoping is scheduled to start in the second quarter and 581 ft (177 m) left to Block C where stoping is scheduled to start in the third
quarter. The equipment required for the stoping of Block B is already on site and the crews have been trained.

Vertical shaft

The vertical shaft is intended primarily for rock hoisting, but will also be equipped for the insertion and extraction of men and material. For this purpose, two winders will be installed. The shaft will, at completion, be sunk to a depth of 1,644
ft (501 m) at shaft bottom.

The contract to sink and equip the vertical shaft was awarded to Grinaker  LTA Mining, a business unit of Aveng (Africa) Ltd. Site preparation and establishment was completed in time for the sinking operation to commence after the approval of
the amended EMP. After the project commenced in January 2008, first blast was achieved on April 16, 2008. Concurrent activities with the sinking process include procurement and refurbishment of long lead items such as two winders, one being the rock
winder, intended for hoisting of ore and waste, and one being a service winder, intended to hoist personnel and material. The winders have been procured and are in the process of refurbishment.

Currently, the Vertical Shaft has completed the initial, presink phase, and reached a depth of 538 ft (164 m) below surface by the end of 2008. Preparations for the next phase, the main sink phase that is to take place at an advanced rate of
sinking, is underway and nearing completion. The erection of the permanent headgear on January 19, 2009, as part of these preparations allows for three temporary sinking winders to be installed.  These winders will be replaced by a permanent twin
winder arrangement towards completion of the project.

The Vertical Shaft Project is expected to be completed during first quarter 2010.

Metallurgical plant

The metallurgical plant for the Burnstone Mine was designed to Feasibility Study level by MDM Engineering, and published as part of the final report. The plant was initially designed for a production rate of 125,000 tonnes per month. This design,
with the inclusion of Area 2 in the initial LOM plan was increased with a further 50,000 tonnes per month to 175,000 tonnes per month capacity.

During this phase, it became clear that the lead time to acquire
  a new plant was in excess of 36 months, and a subsequent decision was taken
  to purchase and refurbish an ex-works plant.

The plant was shipped from Papua New Guinea to South Africa
  and was delivered to the site during May 2008. It is planned to refurbish and
  reconstruct the plant in preparation for commencement of production.

The current status of the metallurgical plant project is that a metallurgical update to the June 2007 Optimized Feasibility Study is nearing completion. Having finalized the Process Flow Design and Plant Layout for a Carbon-in-Leach process, current activities revolve around detailed engineering and design concurrently with the Optimised Feasibility Study update, which should be completed during the second quarter, 2009.  The mills have been subjected to non-destructive testing to determine the level of refurbishment required.  The Metallurgical Plant commissioning is on track for completion by the end of the first quarter of 2010.

15

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

The focus for the next quarter will be to review and sign off the Final Designs and Control Budget Estimate in time to commence procurement from the end of the first quarter of 2009. Remaining long lead items will be dealt as highest priority and construction of plant components will commence during the second quarter of 2009.

The refurbishment of the Semi Autogenous Grinding (SAG) and
Ball mills are in process.

Mineral Resources

From February 2007 to January 2008, a total of 23 boreholes
were drilled. The drilling continued to increase confidence levels in Areas 1
and 2 and also increase the resource base in Area 4. This drilling formed the
basis of the current resource estimate which is set out in Tables 9 and 10
below.

|**Cautionary Note to U.S. Investors Concerning Estimates of Measured and Indicated Resources**
        This management discussion and analysis uses the term ‘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.**
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Table 9Measured and Indicated Mineral Resources
as of January 2008

Cut-off
    Tonnes
    Grade
    Contained Gold(1)(2)Category
    (cmg/t)
    (millions)
    (g/t)
    (ounces)350
    39.0
    7.56
    9,474,000Measured
    400
    33.8
    7.80
    8,484,000Indicated
    350
    15.7
    4.95
    2,503,000400
    15.1
    4.89
    2,372,000Measured & Indicated
    350
    54.7
    6.81
    11,977,200400
    48.9
    6.90
    10,856,000


Notes to table:

|(1) | Conversion factor of 31.103 was used to convert grams to
    ounces for contained metal.
|--- | ----------------------------------------------------------------------------------------
|(2) | Metallurgical recovery assumed to be 100% for contained
    metal calculation.          

|**Cautionary Note to U.S. Investors Concerning Estimates of Inferred Resources**
        This management discussion and analysis 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 it.  ‘Inferred resources’ have a great amount of uncertainty as to their existence, and 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.**
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Table 10Inferred Resources as of January
2008

Cut-off
    Tonnes
    Grade
    Contained Gold(1)(2)Category
    (cmg/t)
    (millions)
    (g/t)
    (oz)Inferred
    350
    18.6
    4.42
    2,642,000400
    17.0
    4.37
    2,394,000


Notes to table:

|(1) | Conversion factor of 31.103 was used to convert grams to
    ounces for contained metal.
|--- | ----------------------------------------------------------------------------------------
|(2) | Metallurgical recovery assumed to be 100% for contained
    metal calculation.          

Mineral Reserves

Mineral reserves are declared at a cut-off gold content of 400
cmg/t (4 g/t over 100 cm). The portion of the mineral resources that were
included in the mine plan were modified inclusive of mining dilution (minimum
stoping width 90 cm with 10 cm dilution, minimum tramming width 120 cm), mining
gold losses (10%), metallurgical recovery (95%) and royalties (4%) to the
equivalent of proven and probable reserves disclosed in Table 11 below.

The proven and probable reserves have been determined in terms
of Canadian regulations under NI 43-101.

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|**Cautionary Note to U.S. Investors Concerning Reserve Calculations**
        The mineral reserve estimates contained in this management discussion and analysis have been calculated in accordance with NI 43-101, as required by Canadian securities regulatory authorities. For United States reporting purposes, SEC Industry Guide 7 (under the Exchange Act) as interpreted by Staff of the SEC, applies different standards in order to classify mineralization as a reserve.  As a result, the definitions of proven and probable reserves used in NI 43-101 differ from the definitions in the SEC Industry Guide 7.  Under SEC standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.  Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under the SEC standards. Accordingly, mineral reserve estimates contained herein may not qualify as “reserves” under SEC standards.  In addition, disclosure of “contained ounces” is permitted disclosure under Canadian regulations; however, the SEC only permits issuers to report mineralization as in place tonnage and grade without reference to units.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Table 11Proven and Probable Reserves as of
    February 2009

|           | Tonnes     | Grade | Au Content
|---------- | ---------- | ----- | ----------
|Category   | (millions) | (g/t) | (oz)      
|Area 1     |            |       |           
|Proven     | 20.7       | 4.59  | 3,052,000 
|Probable   | 1.9        | 4.22  | 252,000   
|Area 2     |            |       |           
|Proven     | 6.9        | 3.32  | 741,000   
|Probable   | 0.5        | 3.22  | 51,000    
|Area 1 & 2 |            |       |           
|Proven     | 27.6       | 4.27  | 3,793,000 
|Probable   | 2.4        | 4.01  | 303,000   
|Total      | 30.0       | 4.25  | 4,096,000 

Additional information:

|(1) | Reserves calculated at a 4 g/t
cut-off.
|--- | ---------------------------------------

Energy

A process was initiated to mitigate the potential impact of a
lack of electricity during the construction phase and establish alternatives to
electrical power supply to the Burnstone Projects; this resulted in short,
medium and longer term approaches. In the short term, the current Eskom (power
grid) power supply to the mine site of 2 megawatts (MW) is being augmented by a
diesel-driven standby power supply with the establishment of an 8 MW diesel
generator pack to bridge the initial construction phase. It was envisaged to
establish an 18 MW Heavy Fuel Oil generation capacity in the medium term to
support the construction process until early to mid 2009. Subsequent to the
completion of an initial concept study this option was discarded due to the
excessive capital cost in building the plant.

Eskom has subsequently acknowledged the Burnstone application
for electrical power supply, and has committed to supplying a first allocation
of 20 MW. This entails the combined upgrading of an existing line, and the
building of a new power line to the Burnstone site. Negotiations with Eskom are
continuing. Through the establishment of a joint steering committee to drive the
project, with the aim of fixing time lines and planning parameters, much
progress was made to date. Development of the new supply is expected to commence
in 18 to 24 months. The above team is also working closely together to ensure
that the Burnstone electrical designs comply with generally accepted modern
standards of power economization, in order to remain in compliance with Eskom
guidelines in this regard.

Currently the mine development schedule is being investigated
with the aim of accommodating the Eskom supply expansion beyond 20 MW. This
issue is the focus of strategic talks between Eskom and the Company. Subsequent
to a meeting between executive management members of Eskom and GBG, Eskom
verbally committed to the supply of energy to the project, initially pinned to
the 20MW supply as discussed above, and gradually, following the production
build  up, the full requirement of 54MW. The supply line from Eskom as well as
the internal electrical reticulation system is designed and will be built to
accommodate the full power requirement of Burnstone.

Deficits in power supply will be overcome by using diesel
generators for additional power supply.

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Mining method

The feasibility study for the project is based on using
  conventional breast stoping, with no mechanisation on the reef plane. The
  Company has investigated the opportunity of using alternative mining methods at
  Burnstone to improve safety, productivity and potential profitability of the
  project.

In December 2007 Great Basin commissioned Turgis Consulting
(Pty) Limited (Turgis) to evaluate the possibility of using Long-Hole Stoping
(LHS) at Burnstone. The concept of LHS in narrow, tabular, relatively flat
dipping ore bodies has been used at Telfer Mine in Australia and has been
experimented with in South Africa, including Beatrix Mine and Angloplats, Union
Section and Boschfontein.

Trial mining with this method has shown potential for improved
safety, reduced dilution and improved productivity. The main safety feature of
the proposed mining method is that entry by workers into the stope is not
required.

Initial costing work, conducted at a concept study level of
detail, showed potential cost savings by using LHS. Great Basin subsequently
commissioned Turgis to prepare a mine plan, utilising LHS for Burnstone, with
the aim of comparing the results of this mine plan with the technical report
filed in February 2009.

The Company is currently preparing to test LHS for a trial
period in the first two stoping areas. The equipment needed for the trial stope
is already on site, crews trained and testing of the equipment and its
capabilities successfully completed. Turgis has been appointed to independently
review the results of the trial stopes to ensure timeous and accurate decision
making.

Project financial evaluation

The 2009 Burnstone Report included an update on the financial
analysis of the project. The tables below provide a summary of the Companys key
progress to date on the Burnstone Properties, by providing an update with
current economic parameters and financial analysis.

Table 12 Financial Analysis Assumptions

Assumptions
      
      2009 Burnstone ReportAu Price
      
      US$800/ozUS$/ZAR exchange rate
      
      ZAR9.00Proven and probable reserves used for the
        financial model
      
      30 million tons @ 4.2 g/t ofgold. 4.1 million oz of Au @4 g/t Au cut-offPercentage of measured and indicated resources
        used in financial
      38%modelGold recovery
      
      95%


Cash costs include direct and indirect mining costs,
development costs, engineering, environmental, safety, plant and site services,
geology, general and administration, workmans compensation, insurance,
royalties and milling costs.

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Table 132009 LOM Average Cash Cost

LOM Avg. Cash
      Cost (US$/oz)
    
    2009 Burnstone ReportMining
    
    218Milling
    
    37South African royalty
    
    32Social development
    
    1Administration
    
    31Total
    
    319


Regarding the capital cost table below, the increase in the
capital costs are being negated by the devaluation of the ZAR to the US$.
Estimates of the capital cost include an increase of 12% in ZAR denominated
costs from the 2007 Burnstone Optimized feasibility study.

Table 14 Capital Cost Estimates

Project Capital
      Cost (US$ millions)
    
    2009 Burnstone ReportMine Development
    
    101Process plant
    
    37Vertical shaft
    
    30Tailings
    
    7Sub total
    
    175LOM capital
    
    49Total project capital
    
    224Capital spent up to December 31, 2008
    
    55Remaining capital to be spent over
      LOM
    
    169


Regarding the total life of mine cost table below, total costs
include cash costs plus proceeds on mineral taxes, income tax payable and
depreciation and amortization.

Table 15LOM Capital Cost Estimates

LOM Avg. Total
      Costs (US$/oz)
    
    2009 Burnstone ReportTotal costs
    
    495


An after tax cash flow schedule has been developed for the
current production scenario, and the capital and operating costs disclosed
above. The cash flow includes royalties and taxes payable. The results, at a
cut-off of 4 g/t Au cut-off, show an estimated NPV of US$687 million at a 5%
discount rate and an internal rate of return of 36%.

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Table 16 Financial Analysis

Financial
      Analysis (Post Tax)
    
    2009 Burnstone ReportCash operating costs (per ounce)
    
    319/ozIRR
    
    35.6%NPV (5% discount rate)
    
    US$687 millionNPV (10% discount rate)
    
    US$414 millionPayback
    
    3.5 years (after mill start up)Mine life
    
    19 years (including a four yearstart-up period)


Plans for fiscal 2009

The Companys current project development plan consists of two
mainstream activities:

|(i)  | Preparation for and entering early stage production in
      Area 1. This will entail underground development into the mining blocks
      identified for early stage and trial mining by opening up and mining
      certain stopes. During this stage, advanced stoping techniques and mining
      technology will be evaluated. Completion of the decline shaft to shaft
      bottom is necessary, linking up with the shaft bottom development of the
      vertical shaft. Construction of other mine infrastructure, above and below
      surface is also planned, which entails the continuance and completion of
      the vertical shaft, construction of the metallurgical plant, construction
      of adequate surface infrastructure, road and offices and the establishment
      of adequate electrical power to the Burnstone Property. The Company will
      also source, employ and train the necessary workforce and purchase the
      equipment required; and
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(ii) | Planning and preparation for access into Area 2. The
      development of the twin decline into Area 2 is postponed for a period of
      one year. The mining right for the Burnstone mine (granted October 2008
      and executed February 17, 2009) contributed to the delay in the planned
      development of the decline shaft into Area 2 as it was a prerequisite for
      the environmental impact assessment (EIA) process for development of
      access into Area 2 to be initiated. After the EIA is completed, the
      Company plans to obtain approval from the relevant authorities to access
      Area 2 by way of a decline shaft. Although Area 2 would be accessed by a
      dedicated decline shaft, mining operations would share the surface
      infrastructure currently established for Area 1, with the exclusion of
      ventilation shafts.                                                                                                  

The one year delay on initial planning will not have a
significant impact on the planned production build up because of the planned
mill start up time (mid  2010) , as well as the percentage contribution to
total production on the Burnstone Property from Area 2 (30%). In addition to the
above, the production shortfall from Area 2 due to the delays discussed may be
compensated for by additional production from Area 1 which will be extracted via
the decline shaft.

1.2.3Ganes
Creek Property, Alaska, USA

Great Basin signed an agreement with Clark/Wiltz Mining (“CMW”), effective November 14, 2007, whereby it can earn an 80% interest in all hard rock mineral rights on the Ganes Creek Property in Alaska by expending a total of US$3 million over a period of 3 years. Funds invested into the project will be contingent on positive results. Failure to spend the agreed exploration amount will result in the loss of the earn in option.

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The Company can also increase its interest in the event and time of  a production decision, by purchasing the remaining 20% in the Property at fair market value should CWM not wish to participate in any development costs. CWM would retain a 2% Net Smelter Royalty of which 1% could be purchased by Great Basin for US$2 million.

Property information

The Ganes Creek Property is located in Alaska, 440 km northwest
of Anchorage and 40 km northwest of McGrath. The property is situated in the
Tintina Gold Belt, which hosts the 20 million ounce Donlin Creek Project, held
by NovaGold Resources and Barrick Gold and located some 100 km to the northeast
of the Ganes Creek Property. The mineral rights held by CWM at Ganes Creek total
15,402 acres, comprising thirty-nine 40-acre state claims, seventy 160-acre
state claims and fourteen federal patents, containing 90 patented claims with a
total area of 2,628 acres.

Exploration program

During 2008 the field program consisted of geological mapping,
soil sampling, trenching and ground induced polarization (IP) geophysical
surveys. Approximately 2,918 continuous chip and more than 250 select hand
samples were taken from exploration trenches. In addition, 487 soil samples were
collected in a soil geochemistry survey. Approximately 7,000 m of cut-lines were
established on the highlands between Maki and Potosi Creeks (two of the larger
placer gold producing side tributaries to Ganes Creek). Another 1,200 m long
geophysical line has also been surveyed along the side of the entire length of
the existing runway in the Ganes Creek valley.

Numerous quartz-gold nuggets have been found in local tailing
piles adjacent to the runway. The target for this survey line is potential
covered quartz veins hosted in fold hinges and thrust faults structures that
parallel Ganes Creek.

Additionally, all existing drill core on the property,
consisting of ~1,580 m core, drilled by Battle Mountain Exploration and Full
Metal Minerals was photographed, re-logged, and selectively sampled. These
drillhole data will be used, in conjunction with surface geological maps,
existing down-hole and surface assay data and 2-dimensional and 3-dimensional IP
inversion information, to model the geology at depth at Independence/2040/Pzs
Ridge, Breccia Hill, Katz, Potosi Creek and at the Beaumeister Bench areas.

Plans for fiscal 2009

The collation of all field data has been completed, and
interpretation of the results in progress. The Company concluded an amendment to
the agreement with CWM to defer its 2009 exploration funding commitments to
2010, subject to all state claim fees and reclamation costs for 2009 being paid
by the Company. Subject to availability of funding for exploration projects, an
assessment of continuing with the project investment will be made.

1.2.4      Tsetsera Property,
Mozambique

The Company concluded a Joint Venture Agreement to enter into
an unincorporated joint venture with G S Minase Refnaria Limitade (GSR) in
Mozambique on August 20, 2007 (the JV). The purpose of the JV is to establish
a gold exploration and mining business in Mozambique, whereby the Company will
have the exclusive right to explore all GSRs properties.

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The Company has the right to earn-in an 80% interest in the JV,
and has committed to exploration expenditures of approximately US$2 million over
a three year period on the Tsetsera Property, which is located 80 km south of
Manica in Mozambique, and other properties over which GSR holds mineral rights.

The Company manages the JV and is responsible for the day to
day management of the exploration and other activities to be conducted.

Property information

GSR currently owns the 17 square km Tsetsera Property. The
property was worked historically by artisanal miners, who crushed quartz vein
material and panned gold from the fines. The artisanal miners have exposed over
985 ft (300 m) strike length of quartz veins, 5 to 60 cm in width, within a
phyllite (strongly metamorphosed sediments). Rock samples taken during a field
visit returned gold assay values between 0.22 g/t and 26.8 g/t from grab
samples, and a chip sample across a 60 cm quartz vein returned 5.6 g/t Au. No
other work has been completed on the property.

Field work on the ground in Mozambique started in July 2007.
Mapping and sampling of the surface exposures commenced and a total of 17.5 line
km have been mapped. A shear zone, hosting the surface quartz vein showing, was
mapped over a strike length of 2.5 km.

Exploration program

An initial soil sampling and ground geo-physics program has
been completed on the property during 2008. Four follow up exploration targets
were delineated from this work.

Plans for fiscal 2009

The project is currently on care and maintenance. Management
will evaluate the continuation of this project subject to the availability of
funding for exploration activities.

1.2.5      Esmeralda property,
Nevada, USA

The Company purchased the Esmeralda property on November 30,
2008 from Metallic Ventures (U.S.), Inc. (MVI) for an aggregate consideration
of $2,403,600 (US$2,000,000).

The Esmeralda Mine and Property Mill consist of patented and
unpatented mining claims, fee lands, water rights and a mill.

A reclamation asset equal to the $1,318,763 (US$1,082,728)
reclamation liability incurred under the asset purchase was recorded against the
Esmeralda property.

Esmeralda is approximately 290 miles from the Hollister project
with 80% of that distance over paved roads.

Property information

An initial assessment of previous mining activities on the property,
  including the quantum and quality of available drilling, geological and mining
  related data is planned. The Esmeralda property has mineral resources, and these
  resources will be the subject of a detailed review and estimate that is NI43-101
  compliant. Preliminary observations and analysis of data from the underground
  workings suggest that a high grade epithermal vein  type target, not dissimilar
  to Hollister, is present.

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Refurbishment of mill

The Esmeralda Mill was operational for a short period during
2003 and 2004, after which it was placed on care and maintenance. The Esmeralda
Mill processes ore through a carbon in leach milling process with tailing
deposition into an adjacent impoundment. Other features of the Esmeralda
Property include crushing facilities, stockpile areas, waste rock facilities,
roads and other miscellaneous areas. Required permits that allow for the
operation of the mining, milling and associated crushing activities are
currently being transferred to the Company.

The Esmeralda Mill can currently process up to 350 tons per
day. The re-commissioning and reconfiguring of the Esmeralda Mill is expected to
be completed by the end of June 2009, and the anticipated costs are
refurbishment and commissioning of $3,264,240 (US$2,680,000); plant modification
of $5,719,839 (US$4,696,091) and ancillary expenses of approximately $420,210
(US$345,000). Operating costs of the Esmeralda Mill are estimated not to exceed
$60 (US$50) per ton.

All administrative matters related to final closure of the
Esmeralda transaction, through which the mill was acquired, has been completed
as well as the planning and scheduling required for the refurbishment and
re-commissioning of the Esmeralda plant. During January and February 2009, a
turnkey refurbishment and re-commissioning proposal was solicited from
prospective contractors, for the Esmeralda Mill. This resulted in Hanlon
Engineers being awarded the contract to commence with Phase 1 of the
refurbishment and re-commissioning program. Refurbishment started on March 1,
2009.

Plans for fiscal 2009

The Company will continue with the refurbishment of the mill
and related infrastructure with July 1, 2009 being targeted for the mill
start-up date. Historical geological data have been accumulated and are being
analyzed and captured in the Companys geological software. The results will be
used to assess the viability of re-opening the closed down mine and exploration
on the property.

1.2.6      Rusaf Properties

During the second quarter of 2008, the Company acquired the
remaining 63% of Rusaf Gold Ltd (Rusaf) for a total consideration of $22.9
million, paid in approximately 6.6 million Great Basin common shares (plus 1.1
million shares issuable on exercise of warrants and options). The former Rusaf
properties are held by the wholly owned subsidiary of the Company, GBG Rusaf
Gold Ltd (GBG Rusaf).

The exchange ratio applied was 1 Great Basin share for every
4.5 Rusaf shares.

The acquisition terms also provide for additional Great Basin
shares to be issued in the first 3 years from closing, contingent upon gold
discoveries involving more than 500,000 ounces on certain mineral prospects
currently held by Rusaf.

In the event of such discoveries, Great Basin will issue shares valued at the higher of the closing price on acquisition date (C$2.94) or then-prevailing market price to the former Rusaf shareholders on the basis of valuing these gold ounces (including equivalent metals) at US$15/oz for inferred resources and US$40/oz

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for measured and indicated resources (subject to a minimum average cut-off grade of 1.5 g/t or 0.04 oz/ton). Great Basin has also agreed to spend between $7 million and $20 million in exploring the acquired properties during this period depending on independent advice as to the likelihood of exploration success.

Property information

During 2008 GBG Rusaf conducted exploration in Tanzania and the
Kurils Islands in eastern Russia.

In Tanzania the exploration program consists of three regional
exploration programs in the following areas:

- Lake Victoria (North-West), including several early stage exploration
  programs and drilling on two targets.
- Lupa (South-West), where the Nkolwisi project was the focus of a surface
  drilling program.
- Kikugwe (Central South), where a soil sampling program was completed.

Exploration on the island of Kurils in 2008 included 33 diamond boreholes aimed at establishing indicated mineral resources in the main project area. Assays for these holes are partially in-hand aand discussed below and the balance are expected to be released in the second quarter, 2009.

Exploration program

Final results received from the drill program in Lake Victoria
are currently being processed, and geological modeling and mineral resource
estimation on the Lubando and Imweru is expected to be completed during the
second quarter of 2009.

The Nkulwisi (Lupa) drill program was completed in mid October
and results from this program have been received. Geological modeling and
mineral resource estimation is being undertaken during the first quarter of
2009. Due to delays in government permitting, very little exploration work has
been undertaken on the Kigugwe properties thus far. The process has now
progressed to a stage where a final recommendation to grant the permit has been
made to the relevant Ministries.

In Kurils, 33 diamond boreholes totaling 20,073 ft (6,118 m)
were completed on the Pereselencheskoye (Peres) target. Partial analyses from 11
drill holes have been received. The most significant results to date are in hole
number PC08-01 with 130 ft (39.5 m) at 1.82 g/t Au and >0.4% Zn, PC08-03 with
223 ft (68 m) at 0.36 g/t Au and >0.26% Zn, and PC08-05 with 39 ft (12 m) at
2.4 g/t Au, >0.49% Pb, >0.51% Zn. Final assays are still pending,
inclusive of additional analysis due to overlimits (>10 ppm for silver,
>10,000 ppm for Pb and >10,000 ppm for Zn).on many of the samples

Preliminary conclusions based on results to date show a large
low grade Au-Pb-Zn deposit. A disseminated gold halo appears to exist around
dacitic to rhyolitic intrusive dike and stock(s). Lead and zinc mineralization
occurs in veins and stockwork veinlets predominately within the intrusives.
Skarn (hornfels and diopside) mineralization is present within altered volcanics
adjacent to intrusive rocks. Deposit-type is characteristic of high sulfidation
epithermal to porphyritic in nature.

Plans for fiscal 2009

Geological modeling and mineral resource estimation are to be
completed once final analyses are received, which are anticipated during the
second quarter of 2009. Continuation and extend of the exploration programs on
these properties will be assessed based on the results from the pending assays
and the availability of exploration funding within the
Group.

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1.2.7Kryso
Resources Plc

The Company, through various share purchase transactions, holds
15% in the equity of Kryso Resources Plc (Kryso), a mineral resources and
exploration company exploring gold and precious metal deposits in Central Asia.
Kryso is a publicly traded company on the AIM market of the London Stock
Exchange.

Property information

The Pakrut deposit is located in the Tien Shan Belt, a highly
prospective zone running from Uzbekistan through to China which hosts several
world-class gold deposits, including the 70 million ounce Muruntau deposit. The
property hosting the Pakrut deposit is located 107 km from the capital Dushanbe,
and was acquired by Kryso in 2003. A mining license was granted in April
2004.

Kryso also recently acquired the Hukas nickel/copper project in
central Tajikistan. Surface trenching in late 2006 returned promising results,
including highlights of 1.0% -1.6% nickel and 0.6% -1.2% copper over a widths of
2 m-7 m. Ground geophysical surveys and diamond drilling was undertaken in 2007.

Exploration program

During the third quarter of 2008 a revised JORC compliant
Mineral Resource Statement was undertaken at the Pakrut Gold Project.

The Resource Statement, completed by Deon van der Heever,
Pr.Sci.Nat., of GeoLogix Mineral Resource Consultants (Pty) Ltd., incorporated
additional borehole information from the deposit-area called Ore Zone 1. The
resources are considered equivalent to those that would be estimated using CIM
2005 under National Instrument 43-101.

The Resource Statement is summarized below.

Category
      Cut-Off g/t
      Tonnes
      Au g/t
      Au OzMeasured
    1.0
    8,896,700
    3.05
    872,000Indicated
    1.0
    3,048,000
    2.60
    255,000M & I
      1.0
      11,944,700
      2.93
      1,127,000


Plans for fiscal 2009

Kryso announced on February 13, 2009 that it has entered into a conditional subscription agreement with Naveen Holdings Limited a company beneficially wholly owned by Stanislav V. Kotov. The agreement involves the conditional placing of new ordinary shares to raise approximately £2.56 million before expenses, a mandatory convertible loan of £500,000 to provide funding in the period to completion of the placing and issue of warrants conditional on the placing.  Proceeds are to be deployed to complete a bankable feasibility study for the Pakrut gold project, to expand the Pakrut project resource and reserve base and to continue exploration at the Hukas nickel-copper project.

25

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

1.2.8Market
Trends

Global equity markets have declined through 2008 due to rising concerns over liquidity and the ability of banks to finance their derivative commitments.  The collapse or near collapse of several US financial instituions spiked a nearly unprecedented sell-off in equities as investors scrambled to close out their positions in the financial markets and limit their exposure to margin calls. A report issued by Bank of Montreal (“BMO”) in January 2009 indicated that the gold industry was trading on average at 55% of net asset value, with the junior producers and developers trading at 25% of their net asset value.

The share price of Great Basin increased from $3.01 at the
beginning of fiscal 2008 to the 52 week high of $3.83 on March 14, 2008, and
traded consistently above $3.50 until September 2008 when it followed the global
downturn in equities and went as low as $0.98 on October 24, 2008. The share
price recovered somewhat ending the year at $1.57. The gold sector reacted
positively in the early part of 2009 as the global economic crisis continued and
gold equities recovered to an extend but not to the levels seen before September
2008.

Gold prices have been increasingly volatile during the year
opening at US$846 an ounce on January 2, 2008 and increasing to the all time
high of US$1,011per ounce on March 17, 2008. Gold traded between US$940/oz and
US$850/oz until August 2008 when the volatility increased in line with the
global economic crisis. The price per ounce went as low as US$712 on October 24,
2008 and recovered again to US$870 per ounce on December 31, 2008. Gold
increased to above US$900 in January and outperformed all commodities in the
first 2 months of 2009. Analysts forecast a short to medium term price of above
US$900 and in some instances above US$1,000 per ounce.

The movement in the gold price remains one of the major
contributors to fluctuations in the Companys share price.

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                         | 
|                                           |   | 2008                                | 
|                                           |   |                                     | 
|Current assets                             | $ | 52,706                              | 
|Mineral properties                         |   | 259,859                             | 
|Other assets                               |   | 52,635                              | 
|Total assets                               |   | 365,200                             | 
|                                           |   |                                     | 
|Current liabilities                        |   | 27,446                              | 
|Future income taxes and other liabilities  |   | 80,546                              | 
|Shareholders
      equity                 |   | 257,208                             | 
|Total liabilities and shareholders equity |   | 365,200                             | 
|                                           |   |                                     | 
|Working capital1                           | $ | 25,280                              | 

1 Working capital refers to the net amount available
after current liabilities are netted against current assets and is considered a
non-GAAP measure.

26

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

|                                                     |   | As at and for the years ended |  
|---------------------------------------------------- | - | ----------------------------- | -
|                                                     |   | December 31                   |  
|                                                     |   | 2008                          |  
|Revenue                                              |   | 24,716                        |  
|Expenses                                             |   | (141,533                      | )
|                                                     |   |                               |  
|Loss for the year                                    | $ | (84,872                       | )
|                                                     |   |                               |  
|Basic and diluted
      loss per share               | $ | (0.40                         | )
|                                                     |   |                               |  
|Weighted average number of common shares outstanding |   |                               |  
|(thousands)                                          |   | 211,283                       |  

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.

|                              | Dec 31   | Sept 30  | Jun 30   | Mar 31   | Dec 31   | Sept 30   | Jun 30   | Mar 31 
|----------------------------- | -------- | -------- | -------- | -------- | -------- | --------- | -------- | -------
|                              | 2008     | 2008     | 2008     | 2008     | 2007     | 2007      | 2007     | 2007   
|Current assets                | 52,706   | 18,143   | 32,545   | 61,292   | 84,353   | 74,871    | 102,735  | 30,768 
|Mineral properties            | 259,859  | 256,424  | 250,383  | 218,485  | 218,414  | 203,838   | 203,796  | 110,910
|Other assets                  | 52,635   | 35,586   | 34,179   | 32,993   | 26,546   | 25,796    | 10,290   | 4,238  
|Total assets                  | 365,200  | 310,153  | 317,107  | 312,770  | 329,313  | 304,505   | 316,821  | 145,916
|Current liabilities           | 27,446   | 14,240   | 11,115   | 7,895    | 6,121    | 3,158     | 3,048    | 3,307  
|Future income taxes and other |          |          |          |          |          |           |          |        
|Liabilities                   | 80,546   | 47,307   | 34,986   | 31,248   | 35,400   | 36,311    | 38,325   | 17,255 
|Shareholders equity          | 257,208  | 248,606  | 271,006  | 273,627  | 287,792  | 265,036   | 275,448  | 125,354
|Total liabilities and         |          |          |          |          |          |           |          |        
|shareholders equity          | 365,200  | 310,153  | 317,107  | 312,770  | 329,313  | 304,505   | 316,821  | 145,916
|Working
      capital1        | 25,260   | 3,903    | 21,430   | 53,397   | 78,232   | 71,713    | 99,687   | 27,461 
|                              |          |          |          |          |          |           |          |        
|Revenue                       | 16,920   | -        | 7,796    | -        | -        | -         | -        | -      
|(Expenses) income             | (43,085) | (34,805) | (43,131) | (20,512) | (23,385) | (14,372)  | (13,806) | (6,758)
|                              |          |          |          |          |          |           |          |        
|Loss for the period           | (3,693)  | (31,129) | (33,038) | (17,012) | (19,275) | (13,427)2 | (12,956) | (5,510)
|Basic and diluted loss per    |          |          |          |          |          |           |          |        
|share                         | $0.01    | $0.15    | $0.16    | $0.08    | $0.10    | $0.08     | $0.08    | $0.05  
|Weighted average number of    |          |          |          |          |          |           |          |        
|common shares outstanding     |          |          |          |          |          |           |          |        
|(thousands)                   | 215,162  | 214,345  | 205,930  | 203,902  | 202,635  | 180,963   | 166,044  | 113,610

1 Working capital refers to the net amount available
after current liabilities are netted against current assets and is considered a
non-GAAP measure.2Loss from associate for the quarter ended
September 30, 2007 was revised to provide for information which became available
subsequent to date

1.5        Results
of Operations

For the year ended December 31, 2008, Great Basin on a consoliodated basis (the “Group”) incurred a loss of $84,872,078 as compared to a loss of $51,167,666 in the previous year. The increase in the loss is due mainly to higher pre-development costs incurred as the Company develops its two main gold mining projects in Nevada and South Africa as well as increased exploration activities in the 2008 financial year.

27

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

Pre-development costs incurred at Hollister are currently being expensed based on a decision from Management until such time as all of the required permitting is granted to operate the mine at commercial levels of production.  Pre-development costs incurred at Burnstone have been expensed until the Mining Right was received on October 28, 2008 and were capitalized from this day forward. Expensing the pre-development costs has increased the Group’s losses.

Following the acquisition of the remaining 63% of Rusaf Gold Limited the Group also consolidated the results of the exploration programs conducted on the properties in Tanzania and Russia that are owned by the acquired subsidiaries.

|a) | Revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Net revenue for the year from metal sales amounted to $24,716,323 after deducting toll milling charges of $4,398,106. The revenue was generated from the Group’s trial mining activities at the Hollister properties from the sale of 38,465 gold equivalent ounces. Net revenue was reduced by the conditions of the various toll milling agreements the Company entered into during the year which included fixed metal prices and toll milling costs calculated based on a retention of actual metal recovered. Gross revenue at spot prices would have amounted to some $36 million. No revenue was recognized in the previous year.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|b) | Production costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The production costs were in-line with managements’ expectation of the cost to be incurred during the ramp up phase to planned production. Economy of scale benefits will only be achieved as tonnage build-up progresses.                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The production costs were in-line with managements’ expectation of the cost to be incurred during the ramp up phase to planned production. Economy of scale benefits will only be achieved as tonnage build-up progresses.                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|c) | Exploration expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Total exploration expenses increased to $23,902,737 during the year from $13,091,773 in the prior year. At the Hollister Property, exploration expenses increased to $11,413,418 during the year, compared to
$8,589,373 during fiscal 2007. This is predominantly due to the surface and underground drilling program initiated in the Hatter Graben area as well as the successful in-fill drilling program.                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Exploration expenses at Burnstone decreased slightly from $3,405,783 in 2007 to $3,309,362 in 2008. Exploration cost for the year relate to additional in-fill drilling as well as surface exploration in Area 4 of the
property.                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Exploration costs incurred at the properties acquired through the Rusaf Gold Limited acquisition amounted to $7,538,805 during the year. The Rusaf acquisition has been completed on April 1, 2008 and exploration expenses on
these projects have been included in the consolidation from this date.                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | A further $1,641,152 was incurred during the year
        on other exploration activities. These expenses were mainly incurred during
        the exploration in Alaska (Ganes Creek) and Mozambique (Tsetsera project)
        and increased from the $1,096,617 incurred in the previous year.                                                                                                                                                                                                                                                                                                                                        

28

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

|d) | Pre-development expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The pre-development increased to $62,597,563 during
        2008 compared to $30,128,319 in the previous year. Pre-development expenses
        for the Hollister project are expensed until the required permitting has
        been received to operate the mine at sustainable levels. Pre-development
        expenses for the Burnstone project have been expensed till October 28,
        2008 when the New Order Mining Right was received. Subsequent development
        costs for the Burnstone project have been capitalized.                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Pre-development expenses incurred during the year
        at the Hollister project increased to $38,504,303 compared to $18,350,285
        during 2007. The Company included 100% of the pre- development expenses
        for the Hollister project since April 1, 2007 on acquiring Hecla Minings
        remaining 50% interest. The completion of the Alimak raise, additional
        underground development, permitted surface development and the upgrade
        to access roads are included in the pre-development expenses for 2008                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Pre-development expenses at the Burnstone Property
        increased from $11,778,034 in 2007 to $24,093,260 in 2008. The
        increase relates to the development of the Vertical shaft, surface infrastructure
        and the further development of the decline shaft till October 28, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|e) | Foreign exchange                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Changes to economic facts and circumstances related
        to certain of the Groups foreign operations impacted on the treatment
        of the functional currency for these operations from July 1, 2008 with
        the result that $2,311,387 of unrealized foreign exchange gain on
        self sustaining operations in the Group has been recorded in equity for
        the year ended December 31, 2008.                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Foreign exchange differences are recorded on the financial
        assets and liabilities of the foreign integrated operations of the Group
        that are denominated in the local currencies in the jurisdictions that
        the Group operates in. The $2,737,378 foreign exchange loss recognized
        in 2008 therefore represent 100% of foreign exchange translation adjustments
        on all Group operations up to June 30, 2008 and only those foreign exchange
        adjustments on the remaining foreign integrated operations of the Group
        since this date. The unrealized foreign exchange loss of $2,532,752
        recognized in 2007 relates to all foreign exchange adjustments on translation
        of the financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|f) | Office and administration                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Office and administration costs increased to $7,396,242
        during the year compared to $4,098,435 in the previous year. The increase
        from 2007 is attributable to the additional administrative activities
        required to support the increased exploration and development activities
        at Burnstone and Hollister.                                                                                                                                                                                                                                                                                                                                                                                                                             

29

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

|g) | Salaries and compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The increase in staff as well as the options granted
        to senior management and Directors during the second quarter had the result
        that the Company recognized $9,082,504 in stock-based compensation expense
        during the year compared to $4,458,015 in the prior year. Subsequent to
        December 31, 2008 Directors, employees and certain consultants were allowed
        to cancel certain unexercised employee and non-employee stock options
        and receive new previously unallocated options equal to 50% of the cancelled
        options at an exercise price of $1.25 and vesting period of 24 months.
        The allocation of these new options was concluded on January 12, 2009.The
        Company also granted new options in terms of its share option plan during
        February 2009. Subsequent to the above cancellation, replacement and issuance
        of stock options the Company had 16,469,632 options outstanding at an
        average exercise price of $1.66 and 2,057,669 options that are exercisable
        at an average price of $2.24.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|h) | Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The interest expense relates to the interest accrued
        on the Burnstone project finance facility drawn down since August 2008
        as well as the interest accrued on the Senior Secured Notes issued on
        December 12, 2008. No interest was paid in 2007 as the Company had no
        interest bearing loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|i) | Interest received                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Interest received decreased to $2,357,564 during the
        year compared to $3,692,550 received in 2007 mainly due to the movement
        in cash balances after the financing of operating and development expenditure
        as well as investments made.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|j) | Loss from associate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | During the 2ndquarter of 2008 the Company
        finalized the acquisition of the remaining 63% in Rusaf Gold Limited (Rusaf)
        and subsequently accounted for the investment as a subsidiary and consolidated
        the results into the Group accounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|k) | Fair value adjustment on financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | A fair value loss on the warrant investment in Kryso
        Resources Plc of $768,860 has been recorded for the year compared to a
        loss of $104,365 recognized in the previous year. An additional fair value
        loss of $2,701,256 (2007: gain of $538,061) has been recorded in equity
        on the ordinary shares held in Kryso. Kryso had some positive exploration
        results during the year and management has therefore concluded that the
        decline in value is considered to be temporary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|l) | Future income tax recovery                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The increase in the future income tax recovery from
        $7,153,285 in 2007 to $31,944,779 in 2008 is as a result of future income
        tax assets recognized on losses and capital allowances that are available
        for offset against future taxable income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

1.6        Liquidity

The Company monitors its spending plans, repayment obligations
and cash resources and takes actions with the objective of ensuring that there
is sufficient capital in order to meet short term business requirements, after
taking into account cash flows from operations and the Companys holdings of
cash and cash equivalents. The Company believes that these sources will be
sufficient to cover the likely short and long term operating cash requirements.

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 completed a 100,000,000 unit offering on March 13, 2009 and thereby raising gross proceeds of $130 million to fund the development of the Burnstone project. The Company has granted to the Underwriters an over-allotment option to acquire additional Common Shares in an aggregate amount of up to 15% of the aggregate number of Common Shares sold pursuant to the Offering.  The Over-Allotment Option is expected to be exercised in full and closure will be within 30 days of March 13, 2009 taking the gross proceeds on the offering to $149.5 million.

30

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

The Company's access to future equity financing is always
uncertain. During 2008 the Company also raised secured long term debt to fund
its on-going development operations.

Funding the on-going development projects of the Company will
be provided by a combination of cash flow from operations, available cash
resources and borrowings.

The Company remains in negotiation to complete the project loan facilities (the “Facilities”) for the Burnstone Property development. Deteriorating credit markets during the latter part of 2008 have caused delays in obtaining final approvals from the lenders. The Company received non-binding commitments from the lenders to provide the remaining ZAR600 million ($79 million) of the facility subject to the Company spending the agreed amount in equity on the project and completion of definitive agreements. Once concluded, the Facility will amount to a total of ZAR800 million ($105 million). An additional stand by debt facility of ZAR130 million ($17 million) will be made available by the lenders subject to the Company spending an additional ZAR130 million ($17 million) in equity. The standby debt facility is subject to further approval before draw down and will be subject to reaching project completion upon disbursement.

Failure to secure the project finance facility in time will
require a re-assessment of the development schedule or an alternative external
source of finance.

At December 31, 2008, the Company had working capital of approximately $25 million.

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

Great Basin's share capital consists of common shares without par value, of which an unlimited number of shares are authorized and 215,166,542 common shares without par value were issued and outstanding as fully paid and non-assessable as of December 31, 2008 as well as 49,180,312 (before accounting for anti-diltion) share purchase warrants outstanding and 17,242,396 share options outstanding at that date.

In December 2008, the Company entered into an equity line
agreement with an affiliate of Investec Limited (Investec). The agreement
provided that the Company could sell to Investec over the term of the agreement
up to $4 million of common shares in tranches at a price which was to be
calculated as 95% of prevailing market with a floor price of $1.12 per common
share. The agreement terminated on February 7, 2009 and the Company issued an
aggregate of 2,846,800 common shares to Investec at an average price of $1.38.

The Company completed a public offering on March 13, 2009
whereby it issued 100,000,000 units (the Units) at a price of $1.30 per Unit
(the Offering Price). Each Unit consists of one common share (each, a Common
Share) in the capital of the Company and one-half of one common share purchase
warrant (each whole common share purchase warrant, a Warrant) of Great Basin.
Each Warrant will entitle the holder thereof to purchase one Common Share (a
Warrant Share) at a price of $1.60 at any time before 5:00 p.m. (Vancouver
time) on October 15, 2010.

31

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

The Company has granted to the Underwriters an over-allotment
  option to acquire additional Common Shares in an aggregate amount of up to 15%
  of the aggregate number of Common Shares sold pursuant to the Offering. The
  Over-Allotment Option is expected to be exercised in full and closure will be
  within 30 days of March 13, 2009 taking the gross proceeds on the offering to
  $149,500,000. The Equity offering that closed on March 13, 2009 triggered the
  anti-dilution protection on the warrants issued in respect of the Senior Secured
  Notes. The exercise price of these warrants was adjusted to $1.25 (from $1.80)
  per common share and the number of common shares which may be acquired increased
  to 26,994,240 common shares (including agents warrants). These warrants
  remain subject to anti-dilution rights, including certain anti-dilution rights
  triggered by the issuance of common shares at a price less than the exercise
  price, but have a minimum exercise price of $1.11 per common share.

On March 20, 2009 the Company issued share capital consists of
318,033,345 fully paid and non-assessable common shares without par value as
well as 107,428,552 share purchase warrants and 16,469,632 outstanding share
options.

1.8        Off-Balance
Sheet Arrangements

The Company, through its subsidiaries, N5C Resource Inc., N6C
Resources Inc. and Rodeo Creek Gold Inc. signed a loan guarantee agreement
pursuant to the conclusion of the transaction with Tranter Burnstone.

On October 1, 2007, Tranter Burnstone borrowed $29 million
(ZAR200million) from Investec to settle a portion of the purchase consideration
of $38 million (ZAR260 million) for the 812 Southgold shares. The security for
the loan comprised, amongst other items, a loan guarantee which require N5C
Resources Inc., N6C Resources Inc. or Rodeo Creek Gold Inc., in the event of
default by Tranter Burnstone on any of its interest payments to Investec, at any
time for the first four years, to lend not more than $11.6 million (ZAR80
million) to Tranter Burnstone in order to settle such repayment obligations.

The loan agreement with Investec requires Tranter Burnstone to deposit cash into a margin call account if the underlying value of the shares held by Tranter in Great Basin Gold is less than the outstanding loan and accrued interest. The decrease in the share price of the Company since September 2008 triggered the requirement for a cash deposit into the margin account and the Company elected to assist Tranter and deposited $4 million (ZAR31 million) with Investec on behalf of Tranter Burnstone into the margin account in partial satisfaction of the margin requirement. Tranter Burnstone defaulted on depositing the remaining cash requirement to the margin account, and the Company has been advised that Investec served Tranter with a notice of default in December 2008. The terms of refund of the Company’s cash deposited into the margin account is currently under discussion with Investec and is expected to involve further recovery in the price of the Company’s shares. The release of the funds deposited by the Company is contingent upon the share price of the Company exceeding the stated trigger price (ZAR15.98 per share for 10 days trading) and the approval for the full re-instatement of the facilities by the Investec Credit Committee, and accordingly, the amount recoverable from this deposit may change by a material amount when this contingency is resolved.

32

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

1.9        Contractual
obligations

|                            |   |           |  |   | Less than
      one |  |   |              |  |   |                   | 
|--------------------------- | - | --------- |  | - | ------------------- |  | - | ------------ |  | - | ----------------- | 
|                            |   | Total     |  |   | year                |  |   | 2 to 5 years |  |   | More than 5 years | 
|                            |   | (million) |  |   | (million)           |  |   | (million)    |  |   | (million)         | 
|Exploration commitment      | $ | 10        |  | $ | 5                   |  | $ | 5            |  | $ | Nil               | 
|Project loan facility       |   | 48        |  |   | Nil                 |  |   | 33           |  |   | 15                | 
|Senior secured notes        |   | 75        |  |   | Nil                 |  |   | 75           |  |   | Nil               | 
|Finance lease liability     |   | 2.8       |  |   | 1                   |  |   | 1.8          |  |   | Nil               | 
|Operating lease obligations |   | 0.9       |  |   | 0.2                 |  |   | 0.7          |  |   | Nil               | 
|Purchase obligations        |   | Nil       |  |   | Nil                 |  |   | Nil          |  |   | Nil               | 
|Other                       |   | Nil       |  |   | Nil                 |  |   | Nil          |  |   | Nil               | 
|Total                       | $ | 136.7     |  | $ | 6.2                 |  | $ | 115.5        |  | $ | 15                | 

Exploration commitments

The Company signed an agreement, effective November 14, 2007,
whereby the Company can earn 80% interest in all the hard rock mineral rights on
the Ganes Creek Property in Alaska by expending a total of US$3 million in
exploration expenditures over a period of 3 years. The Ganes Creek Property is
held by CWM, based in Talkeetna, Alaska, USA. The earn-in right will be
forfeited should the contracted expenditure not be incurred.

On August 20, 2007, the Company concluded a Joint Venture
Agreement to enter into an unincorporated joint venture with GS Minase Refnaria
Limitade (GSR) in Mozambique. The purpose of the Joint Venture in to establish
a gold exploration and mining business in Mozambique, whereby the Company will
have the exclusive right to explore all GSRs properties. The Company will have
an 80% interest in the Joint Venture and has committed to exploration
expenditures of approximately US$2 million over a 3 year period on the Tsetsera
Property, which is located 80 km south of Manica, Mozambique and other
properties over which GSR holds mineral rights.

In terms of the acquisition agreement of Rusaf the Company
agreed to spend a minimum of US$7 million and up to a maximum of $20 million to
explore the newly acquired properties during the first three years from closing
of the transaction on April 1, 2008. The increased expenditure is contingent
upon gold discoveries above a threshold of 500,000 ounces in size on certain
mineral prospects formerly held by Rusaf.

Project loan facility

The facility has a term of 7 years with quarterly repayments of
$2 million (ZAR18 million) commencing September 2010. Interest rates are linked
to the Johannesburg inter banking borrowing rate (JIBAR) with an average
premium of 2.25% above JIBAR. As at December 31, 2008 JIBAR was at 12.06% .

Senior secured notes

Each Note matures at 120% of principal on the earlier of
December 12, 2011 and certain stated events, including a change of control. The
Notes bear interest of 14% per annum with the first 24 months of interest having
been prepaid.

33

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

The Notes are guaranteed on a joint and several basis by all of
the Companys Nevada subsidiaries and secured by their assets, being the
Hollister Property and all other Nevada assets. The Notes are also repayable at
the election of the holder on 30 days notice after November 12, 2010.

Finance lease liability

The principal debt amount will be repaid in 36 equal
installments. Interest is charged at 6.5% on outstanding capital and is being
calculated on the 15th of each month. The finance lease is
collateralized by the leased assets which had a carrying value of $2,736,595 at
December 31, 2008.

1.10      Transactions with Related
Parties

Related party transactions are recorded at the exchange amount which is the amount of consideration paid or received as agreed to by the parties.  There were no material related party transactions in the fourth quarter.

Information relating to the Companys related party
transactions is available in the Companys annual financial statements which is
available on SEDAR at www.sedar.com.

1.11      Fourth Quarter Results

Loss for the quarter ended December 31, 2008 was $3,692,136
compared to $31,128,987 in the previous quarter and $19,274,560 in the fourth
quarter in fiscal 2007. Net revenue of $16,920,208 and production costs of
$14,286,699 has been recorded in the quarter. No revenue or production costs
have been recorded in the previous quarter or the fourth quarter of 2007. A
depletion charge of $6,344,218 has been recorded in the quarter due to the
extraction of mineral reserves. The net loss for the quarter was also impacted
by the future income tax recovery of $22,471,996 recorded. Exploration and
development expenses decreased from $28,556,920 during the third quarter of 2008
to $12,250,304. This decrease is due to the capitalization of the
pre-development costs at the Burnstone project since October 28, 2008 as well as
the decrease in exploration activities due to the cash preservation drive of the
Company

Interest expense increased to $1,013,588 during the quarter due
to the interest amortization of the Senior secured notes. No other significant
quarter on quarter variances occurred.

1.12      Proposed Transactions

Refer 1.6

1.13      Critical Accounting
Estimates

The Company's accounting policies are presented in note 4 of
the most recent annual consolidated financial statements and a description of a
change in accounting policy is set out in 1.14 of this document.

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 estimates include:

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

34

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

- the valuation of stock-based compensation expense, and
- the estimation of asset retirement obligations.
- the valuation of warrants
- the determination of valuation allowance for future income taxes

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

|(a) | 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 estimated resources and reserves, 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.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The carrying value of property, plant and equipment are considered in terms of the remaining useful life of the particular asset. These estimates are done by engineers in accordance with their knowledge and experience in the
mining industry. Re-assessment of the remaining useful life could cause a significant change in the carrying value initially recorded for property, plant and equipment.                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(b) | Site reclamation costs (asset retirement obligations)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | 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.                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(c) | 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.                                                                                     

35

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

|(d) | Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company from time to time grants share purchase
        warrants as part of its capital raising and under the conclusion of business
        transactions. The Company uses the Black-Scholes option pricing model
        to estimate a value for these warrants. This model, and other models which
        are used to value the 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 fair value attributed to
        warrants issued in a period.                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(e) | Future income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Future income tax assets and liabilities are computed
        based on differences between the carrying amount of existing assets and
        liabilities on the balance sheet and their corresponding tax values, using
        the substantively enacted income tax rates expected to apply to taxable
        income in the years in which those temporary differences are expected
        to be recovered or settled. Future income tax assets also result from
        unused loss carry forwards and other deductions. Future tax assets are
        recognized to the extent that they are considered more likely than not
        to be realized.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The carrying value of future income tax assets is adjusted,
        if necessary, by the use of a valuation allowance to reflect the estimated
        realizable amount.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

1.14      Adoption of new
Accounting Policies

Effective January 1, 2008, the Company adopted the following
new accounting standards issued by the Canadian Institute of Chartered
Accountants (CICA). These new standards have been adopted on a prospective
basis with no restatement to prior period financial statements.

|(a) | Section 1535  Capital Disclosures                                                                                                                                                                                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                      
|    | This standard requires disclosure of an entitys
      objectives, policies and processes for managing capital, quantitative data
      about what the entity regards as capital and whether the entity has
      complied with any capital requirements and, if it has not complied, the
      consequences of such non- compliance.
|    |                                                                                                                                                                                                                                                                                                                                      
|    | The Companys objectives when managing capital
  are:                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                      
|    | •                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                      
|    | •                                                                                                                                                                                                                                                                                                                                    

The Company considers the items included
  in the consolidated statement of shareholders equity as capital. The Company
  manages the capital structure and makes adjustments to it in the light of changes
  in economic conditions and the risk characteristics of the underlying assets.
  In order to maintain or adjust the capital structure, the Company may issue
  new shares through private placements, sell assets to reduce debt or return
  capital to shareholders. The Company is not subject to externally imposed capital
  requirements. The adoption of this standard had no impact on the results of
  the Company.

36

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

|(b) | Section 3031  Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Section prescribes the accounting treatment for
        inventories and provides guidance on the determination of costs and its
        subsequent recognition as an expense, including any write-down to net
        realizable value. It also provides guidance on the cost formula that is
        used to assign costs to inventories. The adoption of this standard had
        no impact on the results of the Company.                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(c) | Financial Instruments  Disclosures (Section
        3862) and Presentation (Section 3863)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | These standards replace CICA 3861, Financial Instruments
         Disclosure and Presentation. They increase the disclosures currently
        required, which will enable users to evaluate the significance of financial
        instruments for an entitys financial position and performance, including
        disclosures about fair value. In addition, disclosure is required of qualitative
        and quantitative information about exposure to risks arising from financial
        instruments, including specified minimum disclosures about credit risk,
        liquidity risk and market risk.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The quantitative disclosures must provide information
        about the extent to which the entity is exposed to risk, based on information
        provided internally to the entitys key management personnel. The
        adoption of this standard had no impact on the results of the Company.                                                                                                                                                                                                                                                                                                              

|(d) | Amendments to Section 1400 - Going
  Concern                                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                               
|    | CICA 1400, General Standards of Financial Statements
      Presentation, was amended to include requirements to assess and disclose
      an entitys ability to continue as a going concern. The adoption of this
      standard had no impact on the results of the
Company.

1.15New
accounting pronouncements

The Canadian Institute of Charted Accountants (CICA) has
issued the following new standards which affect the financial disclosures and
results of operations of the Company for interim and annual periods beginning
January 1, 2009.

|a) | Section 3064 and 1000  Goodwill and intangible
      assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Section 3064 replaces CICA 3062 and establishes standards
      for the recognition, measurement and disclosure of goodwill and intangible
      assets. CICA 1000 is amended to clarify criteria for recognition of an
      asset. CICA 3450 is replaced by guidance in CICA 3064, effective for
      interim and annual financial statements for years beginning on/after
      October 1, 2008. The Company is currently in the process of evaluating the
      impact this will have on the Companys financial
  statements.

1.16      Financial
Instruments and Other Instruments

Kryso is a publicly traded company on the AIM market of the
London Stock Exchange. The shares were acquired at an original cost of
$2,723,152 and were subsequently revalued to their fair value of $3,326,024 on
December 31, 2007, which was calculated based on the closing price of 14.25
pence per share and an exchange rate of $1.96:1GBP.

37

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

On January 1, 2008, the Company held 11,908,429 equal to 15% of
the common shares issued by Kryso Resources Plc (Kryso), a mineral resources
and exploration company exploring gold and precious metal deposits in Central
Asia.

On August 6, 2008 the Company acquired a further 1,492,906
shares during a private placement by Kryso at a total consideration of
GBP134,362 (9 pence per share).

An unrealized loss of $2,701,256 for the year ended December
31, 2008 is reported in the Statement of operations and comprehensive loss under
other comprehensive loss and was calculated based on the closing price of 3.75
pence per share and an exchange rate of $1.79:1GBP.

Under the terms of the share purchase agreement entered into
during December 2006, the Company was granted 5,000,000 warrants (First grant),
exercisable at a price of 15 pence for a common share over five years, from
Kryso. On date of grant the warrants had an estimated fair value of $937,365,
which was revalued to $833,000 on December 31, 2007. The fair value on December
31, 2007 was based on expected volatility of 72.5%, risk free interest rate of
5%, dividend of nil, remaining life of approximately 5 years and an exchange
rate of $1.96:1GBP.

In terms of the April 2008 Convertible loan agreement entered
into, the Company was granted an additional 1,086,956 warrants from Kryso
(Second grant). On date of grant the warrants had an estimated fair value of
$15,820 (using expected volatility of 75.31%, risk free rate of 4.25%, dividends
of nil, remaining life of 2 years and an exchange rate of $1.97:1GBP) .

The warrants were fair valued on December 31, 2008 based on the
assumptions summarized below and an exchange rate of $1.79:1GBP.

First
      grant
    Second
      grantExpected volatility
    75.52%
    75.31%Risk free interest rate
    4.5%
    4.25%Dividend
    Nil
    NilRemaining life
    3.5 years
    1.8 years


The unrealized loss of $768,860 is reported in the net loss for
the year ended December 31, 2008.

The Company used the Black-Scholes option pricing model to
estimate the fair value of its financial instruments held-for-trading.

The decrease in the fair value of the investment is considered
to be temporary based on the underlying mineral resource value of the projects
owned by Kryso.

The financial risk exposure, inclusive of credit risk,
liquidity risk, market risk, foreign exchange risk, interest rate risk and
commodity price risk as well as the risk management policies employed by the
Company are disclosed in detail in the financial statements for the year ended
December 31, 2008.

1.17      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.

The Company will be requested to convert its accounting
framework to International Financial Reporting Standards (IFRS) at the latest
January 1, 2011. The Company is in the process of evaluating the impact of this
required conversion on the financial reporting and disclosure requirements of
the Company.

38

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

1.17.1   Disclosure of Outstanding Share Data

The following details the share capital structure as at March
20, 2008. 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
    
    
    
    318,033,345Share purchase options
    March 31, 2009
    $ 2.07
    36,000April 18, 2010
    $ 2.68
    16,667November 9, 2010
    $3.12
    190,000December 31, 2010
    $ 1.14
    400,000February 4, 2011
    $3.00
    355,002February 15, 2011
    $2.95
    50,000March 31, 2011
    $3.57
    100,000April 30, 2011
    $ 2.45
    450,000May 21, 2011
    $3.47
    180,000August 18, 2011
    $2.78
    670,000October 11, 2011
    $1.50
    1,145,000December 11, 2011
    $1.25
    6,285,263February 11, 2012
    $1.75
    4,621,900April 18, 2012
    $2.68
    90,000April 10, 2013
    $3.60
    110,000December 11, 2013
    $1.25
    254,800January 14, 2014
    $1.35
    825,000February 11, 2014
    $1.75
    690,000
    16,469,632WarrantsApril 20, 2009
    $ 3.50
    28,750,000September 30, 2010
    ZAR20.78
    1,684,312October 15, 2010
    $1.60
    50,000,000December 12, 2011
    $1.25
    26,994,240107,428,552Fully diluted shares
    
    
    
    444,931,529


1.17.2   Non GAAP measures

The Company makes reference to certain non-GAAP measures in its
reporting and believes that these measures, in addition to conventional measures
prepared in accordance with GAAP, are used by certain investors to evaluate the
Companys performance and ability to generate cash flow. Accordingly, these
measures are intended to provide additional information and should not be
considered in isolation or as a substitute for measures of performance prepared
in accordance with GAAP.

39

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

|(a) | Gross revenue at spot prices                                                                                                                                                                                                                                                                                                                                                                            
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Net revenue as disclosed in the financial statement is
      derived from the ore purchase and toll milling agreements entered into
      during the year. These agreements were not always at spot prices and
      included toll milling charges based on a percentage of actual metal
      recoveries. The reconciliation from net revenue to gross revenue at spot
      prices is presented below:

| |                                        |   | For the year ended December 31 | 
| | -------------------------------------- | - | ------------------------------ | 
| |                                        |   | 2008                           | 
| |                                        |   |                                | 
| | Net revenue per financial statements   | $ | 24,716,323                     | 
| | Add : Toll milling charges             |   | 4,398,106                      | 
| | Gross revenue                          | $ | 29,114,429                     | 
| | Gold equivalent ounces sold            |   | 38,465                         | 
| | Recovered price per equivalent ounce   | $ | 757                            | 
| | Average gold spot price for the year   | $ | 930                            | 
| | Calculated gross revenue at spot price | $ | 35,790,471                     | 

|(b) | Cash cost per ounce                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                   
|    | The Company reports total cash cost on a sales basis. In
      the gold mining industry, this is a common performance measure but does
      not have any standardized meaning. The Company follows the recommendations
      of the Gold Institute standard. The reconciliation production cost to cash
      cost per ounce is presented below :

| |                                               |   | For the year ended December 31 |  
| | --------------------------------------------- | - | ------------------------------ | -
| |                                               |   | 2008                           |  
| | Production cost as per financial statements   | $ | 18,177,231                     |  
| | Less: Amortization of underground development |   | (1,286,249                     | )
| | Cash cost for the year                        | $ | 16,890,982                     |  
| |                                               |   |                                |  
| | Gold equivalent ounces produced               |   | 58,290                         |  
| | Cash cost per ounce produced                  | $ | 290                            |  

1.17.3   Disclosure Controls and Procedures

The Chief Executive Officer (CEO) and Chief Financial
  Officer (CFO) are responsible for establishing and maintaining adequate
  disclosure controls and procedures. Disclosure controls and procedures are designed
  to ensure that information required to be disclosed in the Companys filings
  under securities legislation is accumulated and communicated to management,
  including the CEO and CFO as appropriate, to allow timely decisions regarding
  public disclosure. They are designed to provide reasonable assurance that all
  information required to be disclosed in these filings is recorded, processed,
  summarized and reported within the time periods specified in securities legislation.
  The Company evaluates its disclosure controls and procedures annually; however,
  it cannot provide an absolute level of assurance because of the inherent limitations
  in control systems to prevent or detect all misstatements due to error or fraud.

40

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|Great Basin Gold Limited Logo |                                      | 
|----------------------------- | ------------------------------------ | 
|                              | MANAGEMENT'S DISCUSSION AND ANALYSIS | 
|                              |                                      | 
|                              | YEAR ENDED DECEMBER 31, 2008         | 
|                              |                                      | 

There have been no changes in disclosure controls and procedures
  during the year ended December 31, 2008, that could have materially affected
  or are reasonably likely to materially affect the Companys internal control
  over financial reporting.

1.17.4   Internal Control over Financial Reporting

Management is responsible for establishing and maintaining
adequate internal control over financial reporting to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP. Internal
control over financial reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
Company, (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with GAAP,
and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company, and
(3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Companys assets that could
have a material effect on the financial statements.

There have been no changes in internal controls over financial
reporting that have materially affected or are reasonably likely to affect its
internal control over financial reporting during the year ended December 31,
2008. During the Companys fourth quarter, there were no changes in the
Companys internal control over financial reporting that have materially
affected or are reasonably likely to affect its internal control over financial
reporting.

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