(Mine) in this sentence functions as a PRONOUN. A possessive pronoun.
But since pronoun isn't one of the options, I think we could also say that it functions as an adjective. Because Lilly is describing the toy as hers.
The part of speech that the word "mine" has in the sentence is "noun" so option A) is correct.
The word "mine" is a pronoun that functions as a replacement of a noun. In this case the pronoun "mine" is a substitute for a noun.
The rest of the parts of speech provided as options do not reflect the function of the pronoun "mine" in the sentence.
To sum up, the pronoun "mine" functions as noun in this sentence.
