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Exhibit 99.1



SILVER WHEATON CORP.

****

ANNUAL INFORMATION FORMFOR THE YEAR ENDED DECEMBER
31, 2012

March25,2013



Suite 3150, 666 Burrard StreetVancouver, B.C. V6C
2X8

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SILVER WHEATON CORP.ANNUAL INFORMATION FORMFOR THE YEAR ENDED DECEMBER 31, 2012

TABLE OF CONTENTS

|DESCRIPTION                                                      | PAGE NO.
|---------------------------------------------------------------- | --------
|                                                                 |         
|INTRODUCTORY NOTES                                               | 1       
|CORPORATE STRUCTURE                                              | 3       
|GENERAL DEVELOPMENT OF THE BUSINESS                              | 3       
|DESCRIPTION OF THE BUSINESS                                      | 6       
|Principal Product                                                | 7       
|Competitive Conditions                                           | 11      
|Operations                                                       | 11      
|Risk Factors                                                     | 12      
|TECHNICAL INFORMATION                                            | 18      
|777 MINE, CANADA                                                 | 24      
|SAN DIMAS MINES, MEXICO                                          | 30      
|PASCUA-LAMA PROJECT, BORDER OF CHILE AND ARGENTINA               | 52      
|SALOBO MINE, BRAZIL                                              | 58      
|DIVIDENDS                                                        | 68      
|DESCRIPTION OF CAPITAL STRUCTURE                                 | 69      
|TRADING PRICE AND VOLUME                                         | 70      
|DIRECTORS AND OFFICERS                                           | 71      
|INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
      TRANSACTIONS | 75      
|TRANSFER AGENT AND REGISTRAR                                     | 75      
|MATERIAL CONTRACTS                                               | 76      
|INTERESTS OF EXPERTS                                             | 76      
|AUDIT COMMITTEE                                                  | 77      
|ADDITIONAL INFORMATION                                           | 78      

SCHEDULE A  AUDIT COMMITTEE CHARTER

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INTRODUCTORY NOTES

Cautionary Note Regarding Forward-Looking Statements

This annual information form contains forward-looking
statements within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and forward-looking information within the
meaning of applicable Canadian securities legislation. Forward-looking
statements, which are all statements other than statements of historical fact,
include, but are not limited to, statements with respect to the future price of
silver and gold, the estimation of mineral reserves and mineral resources, the
realization of mineral reserve estimates, the timing and amount of estimated
future production, costs of production, reserve determination, reserve
conversion rates and any statements as to future dividends. Generally, these
forward-looking statements can be identified by the use of forward-looking
terminology such as plans, expects or does not expect, is expected,
budget, scheduled, estimates, forecasts, intends, anticipates or
does not anticipate, or believes, or variations of such words and phrases or
statements that certain actions, events or results may, could, would,
might or will be taken, occur or be achieved. Forward-looking statements
are subject to known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or achievements of
Silver Wheaton to be materially different from those expressed or implied by
such forward-looking statements, including but not limited to: fluctuations in
the price of silver and gold; the absence of control over mining operations from
which Silver Wheaton purchases silver and gold and risks related to these mining
operations including risks related to fluctuations in the price of the primary
commodities mined at such operations, actual results of mining and exploration
activities, economic and political risks of the jurisdictions in which the
mining operations are located, changes in project parameters as plans continue
to be refined; and differences in the interpretation or application of tax laws
and regulations; as well as those factors discussed in the section entitled
Risk Factors in this annual information form. Forward-looking statements are
based on assumptions management believes to be reasonable, including but not
limited to: the continued operation of the mining operations from which Silver
Wheaton purchases silver and gold, no material adverse change in the market
price of commodities, that the mining operations will operate and the mining
projects will be completed in accordance with their public statements and
achieve their stated production outcomes, and such other assumptions and factors
as set out herein. Although Silver Wheaton has attempted to identify important
factors that could cause actual results to differ materially from those
contained in forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can be no
assurance that forward-looking statements will prove to be accurate.
Accordingly, readers should not place undue reliance on forward-looking
statements. The forward-looking statements and forward-looking information
contained or incorporated by reference in this annual information form are
included for the purpose of providing investors with information to assist them
in understanding the Companys expected financial and operational performance
and may not be appropriate for other purposes. Silver Wheaton does not undertake
to update any forward-looking statements that are included or incorporated by
reference herein, except in accordance with applicable securities laws.

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Currency Presentation and Exchange Rate Information

This annual information form contains references to United
States dollars and Canadian dollars. All dollar amounts referenced, unless
otherwise indicated, are expressed in United States dollars. Canadian dollars
are referred to as Canadian dollars or C$.

The high, low and closing noon spot rates for Canadian dollars
in terms of the United States dollar for each of the three years in the period
ended December 31, 2012, as quoted by the Bank of Canada, were as follows:

|        |  | Year ended
      December 31 | 
|------- |  | ---------------------------- | 
|        |  | 2012                         | 
|        |  |                              | 
|High    |  | C$1.0418                     | 
|Low     |  | 0.9710                       | 
|Closing |  | 0.9949                       | 

On March 25, 2013, the noon spot rate for Canadian dollars in
terms of the United States dollar, as quoted by the Bank of Canada, was US$1.00
= C$1.0218.

Silver Prices

The high, low, average and closing fixing silver prices in
United States dollars per troy ounce for each of the three years in the period
ended December 31, 2012, as quoted by the London Bullion Market Association,
were as follows:

|        |   | Year ended
      December 31 | 
|------- | - | ---------------------------- | 
|        |   | 2012                         | 
|        |   |                              | 
|High    | $ | 37.23                        | 
|Low     |   | 26.67                        | 
|Average |   | 31.15                        | 
|Closing |   | 29.95                        | 

On March 25, 2013, the closing fixing silver price in United
States dollars per troy ounce, as quoted by the London Bullion Market
Association, was $28.67.

Gold Prices

The high, low, average and closing afternoon fixing gold prices
in United States dollars per troy ounce for each of the three years in the
period ended December 31, 2012, as quoted by the London Bullion Market
Association, were as follows:

|        |   | Year ended
      December 31 | 
|------- | - | ---------------------------- | 
|        |   | 2012                         | 
|        |   |                              | 
|High    | $ | 1,791.75                     | 
|Low     |   | 1,540.00                     | 
|Average |   | 1,668.98                     | 
|Closing |   | 1,657.50                     | 

On March 25, 2013, the closing afternoon fixing gold price in
United States dollars per troy ounce, as quoted on the London Bullion Market
Association, was $1,602.25.

- 2 -

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CORPORATE STRUCTURE

Pursuant to Articles of Continuance dated December 17, 2004,
Silver Wheaton Corp. (Silver Wheaton or the Company) was continued under the
Business Corporations Act (Ontario).

The Companys head office is located at Suite 3150, Park Place,
666 Burrard Street, Vancouver, British Columbia, V6C 2X8 and its registered
office is located at Suite 2100, 40 King Street West, Toronto, Ontario, M5H 3C2.

The Companys active subsidiaries are Silver Wheaton (Caymans)
Ltd. (Silver Wheaton Caymans) which is wholly-owned by the Company and is
governed by the laws of the Cayman Islands and Silver Wheaton Luxembourg
S.a.r.l. (Silver Wheaton Luxembourg) which is wholly-owned by Silver Wheaton
Caymans and is governed by the laws of Luxembourg. As of December 31, 2012,
Silverstone Resources (Barbados) Corp. was liquidated into Silver Wheaton
Caymans. As used in this annual information form, except as otherwise required
by the context, reference to Silver Wheaton or the Company means Silver
Wheaton Corp., Silver Wheaton Caymans and Silver Wheaton Luxembourg.

SILVER WHEATON AND ITS PRINCIPAL SUBSIDIARIES



GENERAL DEVELOPMENT OF THE BUSINESS

Three Year History

Vale Transaction

Salobo Mine

On February 28, 2013, the Company entered into an agreement
(the Salobo Mine Purchase Agreement) to acquire from Vale S.A. (Vale) an
amount of gold equal to 25% of the life of mine gold production from its
currently producing Salobo mine (the Salobo Mine), located in Brazil. Silver
Wheaton made a total upfront cash payment of $1.33 billion on March 12, 2013
and, in addition, will make ongoing payments of the lesser of $400 per ounce of
gold (subject to an inflationary adjustment of 1% beginning in the fourth year)
or the prevailing market price per ounce of gold delivered.

Vale is in the process of expanding the mill throughput
capacity at the Salobo Mine to 24 million tonnes per annum from its current 12
million tonnes per annum. If the expansion to 24 million tonnes per annum is not
completed by December 31, 2016, Silver Wheaton would be entitled to a gross up
(a temporary increased percentage of gold production) based on the pro-rata
achievement of the target production. If throughput capacity is expanded above
28 million tonnes per annum within a predetermined period, Silver Wheaton will be
required to make an additional payment to Vale based on a set fee schedule
ranging from $67 million up to $400 million, dependent on the timing and scale
of any expansion.

- 3 -

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Sudbury Mine

On February 28, 2013, the Company entered into an agreement to
acquire from Vale an amount of gold equal to 70% of the gold production from
certain of its currently producing Sudbury mines located in Canada, including
the Coleman mine, Copper Cliff mine, Garson mine, Stobie mine, Creighton mine,
Totten mine and the Victor project (the Sudbury Mines) for a period of 20
years. Silver Wheaton made a total upfront cash payment in March, 2013 of
$570 million plus warrants to purchase 10 million shares of Silver Wheaton
common stock at a strike price of $65, with a term of 10 years. In addition,
Silver Wheaton will make ongoing payments of the lesser of $400 per ounce of
gold or the prevailing market price per ounce of gold delivered.

New Credit Facilities

On February 28, 2013, the Company entered into two new
unsecured credit facilities, comprised of (i) a $1 billion revolving credit
facility having a five year term (the Revolving Facility); and (ii) a $1.5
billion bridge financing facility having a one year term (the Bridge
Facility). The Revolving Facility and Bridge Facility replaced the $400 million
revolver loan and the term loan, with the latter being repaid in full on
February 22, 2013. Silver Wheaton has committed to use 100% of the net proceeds
from the issuance of equity securities or debt securities to repay the Bridge
Facility. The Bridge Facility is available for up to two drawdowns until May 31,
2013, after which the amount available under the Bridge Facility shall be
reduced to the then outstanding balance. The Revolving Facility can be drawn
down at any time to finance acquisitions, investments or for general corporate
purposes.

Hudbay Transaction

777 Mine

On August 8, 2012, the Company entered into an agreement (the
777 Mine Purchase Agreement) with Hudbay Minerals Inc. (Hudbay) to acquire
100% of the life of mine silver and gold production from its currently producing
777 mine (the 777 Mine), located in Canada. Silver Wheatons share of gold
production at the 777 Mine will remain at 100% until the later of the end of
2016 or the satisfaction of a completion test relating to Hudbays Constancia
project (the Constancia Project), after which it will be reduced to 50% for
the remainder of the mine life. Silver Wheaton made an upfront cash payment of
$455.1 million in September, 2012 and, in addition, will make ongoing
payments of the lesser of $5.90 per ounce of silver and $400 per ounce of gold
(both subject to an inflationary adjustment of 1% beginning in the fourth year
and subject to being increased to $9.90 per ounce of silver and $550 per ounce
of gold after the initial 40 year term) or the prevailing market price per ounce
of silver and gold delivered.Hudbay has granted Silver Wheaton a right
of first refusal on any future streaming agreement, royalty agreement or similar
transaction related to the production of silver or gold from the 777 Mine.

See Further Disclosure Regarding Mineral Projects on Material
Properties  777 Mine, Canada for details regarding the 777 Mine.

Constancia Project

On August 8, 2012, the Company entered into an agreement with
Hudbay to acquire 100% of the life of mine silver production from the Constancia
Project in Perú. Silver Wheaton will pay Hudbay total cash consideration of
$294.9 million, of which $44.9 million was paid in September, 2012, with two
further payments of $125 million to be made once capital expenditures of $500
million and $1 billion have been incurred at the Constancia Project. In
addition, Silver Wheaton will make ongoing payments of the lesser of $5.90 per
ounce of silver (subject to an inflationary adjustment of 1% beginning in the
fourth year and subject to being increased to $9.90 per ounce of silver after
the initial 40 year term) or the prevailing market price per ounce of silver
delivered. If the Constancia Project processing plant fails to achieve at least
90% of expected throughput and recovery by December 31, 2020, Silver Wheaton
would be entitled to a proportionate return of $250 million of the upfront cash
consideration relating to the Constancia Project. Hudbay has granted Silver
Wheation a right of first refusal on any future streaming agreement, royalty
agreement or similar transaction related to the production of silver from the
Constancia Project.

- 4 -

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San Dimas Transaction

On October 15, 2004, the Company entered into a silver purchase
agreement (the San Dimas Silver Purchase Agreement) with Goldcorp Inc.
(Goldcorp) to acquire an amount equal to 100% of the silver produced by
Goldcorps Luismin mining operations in Mexico (owned at the date of the
transaction) for a period of 25 years. The Luismin operations consisted
primarily of the San Dimas mine (the San Dimas Mines) and Los Filos mines

On August 6, 2010, Goldcorp completed the sale of the San Dimas
mine to Primero Mining Corp. (Primero). In conjunction with the sale, Silver
Wheaton amended its silver purchase agreement relating to the mine. The term of
the silver purchase agreement, as it relates to San Dimas, has been extended to
the life of mine. During the first four years following the closing of the
transaction, Primero will deliver to Silver Wheaton a per annum amount equal to
the first 3.5 million ounces of payable silver produced at San Dimas and 50% of
any excess, plus Silver Wheaton will receive an additional 1.5 million ounces of
silver per annum to be delivered by Goldcorp. Beginning in the fifth year after
closing, Primero will deliver a per annum amount to Silver Wheaton equal to the
first 6 million ounces of payable silver produced at San Dimas and 50% of any
excess. In addition, a per ounce cash payment of the lesser of $4.04 per ounce
of silver (subject to an annual inflationary adjustment) or the prevailing
market price is due, for silver delivered under the agreement. Goldcorp will
continue to guarantee the delivery by Primero of all silver produced and owing
to the Company until 2029. Primero has provided Silver Wheaton with a right of
first refusal on any metal stream or similar transaction it enters into.

See Further Disclosure Regarding Mineral Projects on Material
Properties  San Dimas Mines, Mexico for details regarding the San Dimas Mine.

Los Filos Transaction

Silver Wheaton has an agreement with Goldcorp to acquire 100%
of the silver production from its Los Filos mine in Mexico for a period of 25
years, commencing October 15, 2004. In addition, pursuant to Goldcorps sale of
the San Dimas mine, Goldcorp is obligated to deliver to Silver Wheaton 1.5
million ounces of silver per annum until August 6, 2014 as noted under San
Dimas Transaction above.

Rosemont Transaction

On February 10, 2010, the Company entered into an agreement
with Augusta Resource Corporation (Augusta) to acquire an amount equal to 100%
of the life of mine silver and gold production from its Rosemont copper project
(the Rosemont Project) located in Pima County, Arizona. The payable
rate for silver and gold has been fixed at 92% of production. Silver Wheaton will
make total upfront cash payments of $230 million, payable on an instalment basis
to partially fund construction of the mine, once certain milestones are
achieved, including the receipt of key permits and securing the necessary
financing to complete construction of the Rosemont Project. In addition, a per
ounce cash payment of the lesser of $3.90 per ounce of silver and $450 per ounce
of gold (both subject to an inflationary adjustment) or the prevailing market
price is due, for silver and gold delivered under the agreement.

Long-Term Investments

At December 31, 2012, the Company held long-term investments
with a market value of approximately $121.3 million.

Bear Creek Mining Corporation

At December 31, 2012, Silver Wheaton owned approximately 13.3
million common shares of Bear Creek Mining Corporation (TSXV: BCM) (Bear
Creek), representing approximately 14% of the outstanding shares of Bear Creek.
At December 31, 2012, the fair value of the Companys investment in Bear Creek
was approximately $44.1 million.

Revett Minerals Inc.

At December 31, 2012, Silver Wheaton owned 5.3 million common
shares of Revett Minerals Inc. (TSX: RVM) (Revett), representing approximately
15% of the outstanding shares of Revett. At December 31, 2012, the fair value of
the Companys investment in Revett was approximately $14.8 million.

- 5 -

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Sabina Gold & Silver Corp.

At December 31, 2012, Silver Wheaton owned 11.7 million common
shares of Sabina Gold & Silver Corp. (Sabina), representing approximately
7% of the outstanding shares of Sabina. At December 31, 2012, the fair value of
the Companys investment in Sabina was $31.2 million.

Other

At December 31, 2012, Silver Wheaton owned common shares and
common share purchase warrants of several other publicly traded mineral
exploration, development and mining companies. At December 31, 2012, the fair
value of such other long-term investments was approximately $31.3 million. As
Silver Wheatons investment represents less than 10% of the outstanding shares
of each of the respective companies and is not considered material to Silver
Wheatons overall financial position, these investments are not separately
identified in this annual information form.

DESCRIPTION OF THE BUSINESS

Silver Wheaton is a mining company which generates its revenue
primarily from the sale of silver and gold. The Company is listed on the New
York Stock Exchange (NYSE) (symbol: SLW) and the Toronto Stock Exchange
(TSX) (symbol: SLW). In addition, the Company has common share purchase
warrants that trade on the TSX (symbol: SLW.WT.U).

To date, the Company has entered into 20 long-term purchase
agreements associated with silver and/or gold (precious metal purchase
agreements), relating to 23 different mining assets, whereby Silver Wheaton
acquires silver and gold production from the counterparties for a per ounce cash
payment at or below the prevailing market price. The primary drivers of the
Companys financial results are the volume of silver and gold production at the
various mines and the price of silver and gold realized by Silver Wheaton upon
sale. Attributable silver and gold as referred to in this annual information
form is the silver and gold production to which Silver Wheaton is entitled
pursuant to the various purchase agreements.

The Company is actively pursuing future growth opportunities,
primarily by way of entering into long-term precious metal purchase agreements.
There is no assurance, however, that any potential transaction will be
successfully completed.

- 6 -

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Principal Product

The Companys principal product is silver that it has agreed to
purchase pursuant to precious metal purchase agreements. The Company also
acquires gold that it has agreed to purchase pursuant to precious metal purchase
agreements. The following table summarizes the silver and gold interests
currently owned by the Company (collectively, the Mining Operations):

|Silver and       |  | Mine             |  |  | Location of     |  |   | Upfront         |    |  | AttributableProduction to bePurchased |  |  | Term of    |  |  | Date of      | 
|---------------- |  | ---------------- |  |  | --------------- |  | - | --------------- | -- |  | ------------------------------------- |  |  | ---------- |  |  | ------------ | 
|Gold Interests   |  | Owner            |  |  | Mine            |  |   | Consideration 1 |    |  | Silver                                |  |  | Gold       |  |  | Agreement    | 
|San Dimas        |  | Primero 2        |  |  | Mexico          |  | $ | 189,799         | 3  |  | 100% 2                                |  |  | -          |  |  | Life of Mine | 
|Zinkgruvan       |  | Lundin           |  |  | Sweden          |  | $ | 77,866          |    |  | 100%                                  |  |  | -          |  |  | Life of Mine | 
|Yauliyacu        |  | Glencore         |  |  | Peru            |  | $ | 285,000         |    |  | 100% 4                                |  |  | -          |  |  | 20 years     | 
|Peñasquito       |  | Goldcorp         |  |  | Mexico          |  | $ | 485,000         |    |  | 25%                                   |  |  | -          |  |  | Life of Mine | 
|Minto            |  | Capstone         |  |  | Canada          |  | $ | 54,805          | 5  |  | 100%                                  |  |  | 100% 6     |  |  | Life of Mine | 
|Cozamin          |  | Capstone         |  |  | Mexico          |  | $ | 41,959          | 5  |  | 100%                                  |  |  | -          |  |  | 10 years     | 
|777              |  | Hudbay           |  |  | Canada          |  | $ | 455,100         |    |  | 100%                                  |  |  | 100%/50% 7 |  |  | Life of Mine | 
|Salobo           |  | Vale             |  |  | Brazil          |  | $ | 1,330,000       | 8  |  | -                                     |  |  | 25%        |  |  | Life of Mine | 
|Sudbury          |  | Vale             |  |  | Canada          |  | $ | 623,572         | 9  |  | -                                     |  |  | 70%        |  |  | 20 years     | 
|Barrick          |  |                  |  |  |                 |  | $ | 625,000         |    |  |                                       |  |  |            |  |  |              | 
|Pascua-Lama      |  | Barrick          |  |  | Chile/Argentina |  |   |                 |    |  | 25%                                   |  |  | -          |  |  | Life of Mine | 
|Lagunas Norte    |  | Barrick          |  |  | Peru            |  |   |                 |    |  | 100%                                  |  |  | -          |  |  | 4 years 10   | 
|Pierina          |  | Barrick          |  |  | Peru            |  |   |                 |    |  | 100%                                  |  |  | -          |  |  | 4 years 10   | 
|Veladero         |  | Barrick          |  |  | Argentina       |  |   |                 |    |  | 100% 11                               |  |  | -          |  |  | 4 years 10   | 
|Other            |  |                  |  |  |                 |  | $ | 839,203         |    |  |                                       |  |  |            |  |  |              | 
|Los Filos        |  | Goldcorp         |  |  | Mexico          |  | $ | 4,463           | 3  |  | 100%                                  |  |  | -          |  |  | 25 years     | 
|Stratoni         |  | Eldorado Gold 12 |  |  | Greece          |  | $ | 57,500          |    |  | 100%                                  |  |  | -          |  |  | Life of Mine | 
|Neves-Corvo      |  | Lundin           |  |  | Portugal        |  | $ | 35,350          | 5  |  | 100%                                  |  |  | -          |  |  | 50 years     | 
|Aljustrel        |  | I'M SGPS         |  |  | Portugal        |  | $ | 2,451           | 5  |  | 100%                                  |  |  | -          |  |  | 50 years     | 
|Mineral Park     |  | Mercator         |  |  | United States   |  | $ | 42,000          |    |  | 100%                                  |  |  | -          |  |  | Life of Mine | 
|Campo Morado     |  | Nyrstar NV       |  |  | Mexico          |  | $ | 79,250          |    |  | 75%                                   |  |  | -          |  |  | Life of Mine | 
|Keno Hill        |  | Alexco           |  |  | Canada          |  | $ | 50,000          |    |  | 25%                                   |  |  | -          |  |  | Life of Mine | 
|Rosemont         |  | Augusta          |  |  | United States   |  | $ | 230,000         | 13 |  | 100%                                  |  |  | 100%       |  |  | Life of Mine | 
|Loma de La Plata |  | Pan American     |  |  | Argentina       |  | $ | 43,289          | 14 |  | 12.5%                                 |  |  | -          |  |  | Life of Mine | 
|Constancia       |  | Hudbay           |  |  | Peru            |  | $ | 294,900         | 16 |  | 100%                                  |  |  | -          |  |  | Life of Mine | 

|(1)  | Expressed in United States dollars, rounded to the
      nearest thousand; excludes closing costs and capitalized interest, where
      applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)  | Until August 6, 2014, Primero will deliver to Silver
      Wheaton a per annum amount equal to the first 3.5 million ounces of
      payable silver produced at San Dimas and 50% of any excess, plus Silver
      Wheaton will receive an additional 1.5 million ounces of silver per annum
      to be delivered by Goldcorp. After August 6, 2014, Primero will deliver a
      per annum amount to Silver Wheaton equal to the first 6 million ounces of
      payable silver produced at San Dimas and 50% of any excess.                                                                   
|(3)  | On August 6, 2010, Goldcorp completed the sale of the San
      Dimas mine, which was part of the Luismin mining operations (Luismin),
      to Primero. The original cost of Luismin was allocated to San Dimas and
      Los Filos based on the estimated fair values of these silver interests as
      at August 6, 2010.                                                                                                                                                                                                                                                                  
|(4)  | To a maximum of 4.75 million ounces per annum. In the
      event that silver produced at Yauliyacu in any year totals less than 4.75
      million ounces, the amount sold to Silver Wheaton in subsequent years will
      be increased to make up for the shortfall, so long as production
      allows.                                                                                                                                                                                                                                                                                      
|(5)  | Comprised of the value allocated to the silver and gold
      interest upon the Companys acquisition of Silverstone Resources Corp.,
      which was closed on May 21, 2009 (the Silverstone
Acquisition).                                                                                                                                                                                                                                                                                                                                                                                    
|(6)  | The Company is entitled to acquire 100% of the first
      30,000 ounces of gold produced per annum and 50% thereafter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(7)  | Silver Wheaton is entitled to acquire 100% of the life of
      mine gold production from the 777 Mine until the Constancia Project
      satisfies a completion test, or the end of 2016, whichever is later. At
      that point, Silver Wheatons share of gold production from the 777 Mine
      will be reduced to 50% for the life of mine.                                                                                                                                                                                                                                               
|(8)  | Does not include the contingent liability related to the
      Salobo Mine expansion. Vale is in the process of expanding the mill
      throughput capacity at the Salobo mine to 24 million tonnes per annum from
      its current 12 million tonnes per annum. If throughput capacity is
      expanded above 28 million tonnes per annum within a predetermined period,
      Silver Wheaton will be required to make an additional payment to Vale
      based on a set fee schedule ranging from $67 million up to $400 million,
      dependent on the timing and scale of any expansion.
|(9)  | Comprised of a $570 million upfront cash payment plus
      warrants to purchase 10 million shares of Silver Wheaton common stock at a
      strike price of $65, with a term of 10 years.                                                                                                                                                                                                                                                                                                                                                                                                       
|(10) | Barrick (as defined herein) will deliver to Silver
      Wheaton silver production from the currently producing mines until
      December 31, 2013. In addition, during 2014 and 2015, Silver Wheaton will
      be entitled to all or a portion of the silver production from these mines
      to the extent of any production shortfall at Pascua-Lama relative to the
      completion guarantee provided by Barrick, until such time as the
      completion guarantee is satisfied.                                                                                                       

- 7 -

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|(11) | Silver Wheatons attributable silver production is
      subject to a maximum of 8% of the silver contained in the ore mined at
      Veladero during the period.                                                                                                                                                                          
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(12) | 95% owned by Eldorado Gold Corporation.                                                                                                                                                                                                                                                                                                    
|(13) | Payable on an installment basis to partially fund
      construction of the Rosemont mine once certain milestones are achieved,
      including the receipt of key permits and securing the necessary financing
      to complete construction of the mine.                                                                                
|(14) | Comprised of $10.9 million allocated to the silver
      interest upon the Silverstone Acquisition in addition to $32.4 million,
      the payment of which is contingent upon the satisfaction of certain
      conditions, including Pan American receiving all necessary permits to
      proceed with the mine construction.           
|(15) | Definitive terms of the agreement are in the process of
      being finalized.                                                                                                                                                                                                                                                             
|(16) | Comprised of $44.9 million which was paid on the closing
      date, with a further payment of $125 million to be made once $500 million
      in capital expenditures have been incurred at the Constancia Project, and
      a final payment of $125 million to be made once $1 billion in capital
      expenditures have been incurred.

Further details regarding the purchase agreements entered into
by the Company in respect of these silver and gold interests can be found under
the heading General Development of the Business  Three Year History above,
except for the following interests which were entered into prior to the past
three years:

Zinkgruvan Mine

On December 8, 2004, Silver Wheaton Caymans entered into an
agreement with Lundin Mining Corporation (Lundin) and Zinkgruvan Mining AB
(Zinkgruvan AB) to acquire 100% of the payable silver produced by Lundins
Zinkgruvan mining operations (the Zinkgruvan Mine) in Sweden for the life of
mine for the lesser of $3.90 per ounce of silver (subject to an annual
inflationary adjustment) and the then prevailing market price per ounce of
silver. Upfront consideration payable to Zinkgruvan AB was approximately
$77,866,000.

Yauliyacu Mine

On March 23, 2006, Silver Wheaton Caymans entered into a silver
purchase agreement with Glencore International AG (Glencore) and Anani
Investments Ltd. to acquire an amount equal to 100% of the payable silver
produced from Glencores Yauliyacu mining operations (the Yauliyacu Mine) in
Perú, up to a maximum of 4.75 million ounces per year, for a period of 20 years
commencing in March of 2006, for $3.90 per ounce of silver (subject to an annual
inflationary adjustment). In the event that silver produced at Yauliyacu in any
year totals less than 4.75 million ounces, the amount sold to Silver Wheaton
Caymans in subsequent years will be increased to make up the shortfall, to the
extent production allows. During the term of the contract, Silver Wheaton
Caymans has a right of first refusal on any future sales of silver streams from
the Yauliyacu Mine and a right of first offer on future sales of silver streams
from any other mine owned by Glencore at the time of the initial
transaction.

See Further Disclosure Regarding Mineral Projects on Material
Properties  Yauliyacu Mine, Perú for details regarding the Yauliyacu Mine.

Peñasquito Mine

On July 24, 2007, Silver Wheaton Luxembourg entered into a
silver purchase agreement (the Peñasquito Silver Purchase Agreement) with
Goldcorp Inc. (Goldcorp) and Minera Peñasquito, S.A. de C.V. (Minera
Peñasquito), a wholly-owned subsidiary of Goldcorp, pursuant to which Silver
Wheaton Caymans agreed to purchase 25% of the payable silver produced by Minera
Peñasquito from the Peñasquito Mine located in Mexico (the Peñasquito Mine)
over its entire mine life, for upfront consideration of $485 million, plus a
payment equal to the lesser of $3.90 per ounce of delivered silver (subject to
an annual inflationary adjustment three years after commercial production
commences) and the then prevailing market price per ounce of silver. Silver
Wheaton Luxembourg and Silver Wheaton Caymans entered into a back to back silver
purchase agreement in respect of the Peñasquito Mine.

See Further Disclosure Regarding Mineral Projects on Material
Properties - Peñasquito Mine, Mexico for details regarding the Peñasquito Mine.

Stratoni Mine

On April 23, 2007, Silver Wheaton Caymans entered into a silver
purchase agreement with European Goldfields Limited (European Goldfields),
which was acquired by Eldorado Gold Corporation on February 24, 2012, and Hellas
Gold S.A. (Hellas Gold), a 95%-owned subsidiary of European Goldfields,
pursuant to which Silver Wheaton Caymans agreed to purchase 100% of the payable
silver produced by Hellas Gold from the Stratoni mine (the Stratoni Mine) located in Greece over its entire mine life, for an upfront
cash payment of $57.5 million, plus a payment equal to the lesser of $3.90 per
ounce of delivered silver (subject to an annual inflationary adjustment after
April 23, 2010) and the then prevailing market price per ounce of silver. During
the term of the contract, Silver Wheaton Caymans has a right of first refusal on
any future sales of silver streams from any other mine owned by Hellas Gold or
European Goldfields.

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Keno Hill Mine

On October 2, 2008, the Company entered into a silver purchase
agreement with Alexco Resource Corp. (Alexco) and Elsa Reclamation &
Development Company Ltd. and Alexco Keno Hill Mining Corp. (formerly called
Alexco Resource Canada Corp.), each of which are wholly-owned subsidiaries of
Alexco, pursuant to which the Company agreed to pay, subject to the completion
of certain conditions, an upfront cash payment of $50 million in order to
acquire 25% of all payable silver produced from the Keno Hill district,
including the currently producing Bellekeno mine in the Yukon Territory, Canada
(the Keno Hill Mine), over its entire mine-life, for the lesser of $3.90
(subject to an annual inflationary adjustment beginning in year four after the
achievement of specific operating targets) and the then prevailing market price
per ounce of delivered silver. Silver Wheaton is not required to contribute to
further capital or exploration expenditures and Alexco has provided a completion
guarantee with certain minimum production criteria by specific dates.

Campo Morado Mine

On May 13, 2008, Silver Wheaton Caymans entered into a silver
purchase agreement with Nyrstar Mining Ltd. (formerly called Farallon Mining
Ltd., and prior to that Farallon Resources Ltd.) (Nyrstar) and Nyrstar
Resources (Barbados) Ltd. (formerly called Farallon Resources (Barbados) Ltd.),
which are subsidiaries of Nyrstar NV as a result of Nyrstar NVs acquisition of
Farallon Mining Ltd. (as it was then named) in January 2011. Under the terms of
the silver purchase agreement, Silver Wheaton Caymans agreed to pay, subject to
the completion of certain conditions, an upfront cash payment of $80 million in
order to acquire 75% of payable silver produced by the Campo Morado property in
Mexico (the Campo Morado Mine), over its entire mine-life, for the lesser of
$3.90 (subject to an annual adjustment beginning in year four after production
commences) and the then prevailing market price per ounce of delivered silver.
The upfront payment was made on a drawdown basis to fund ongoing capital
expenditures at the Campo Morado Mine.

Mineral Park Mine

On March 17, 2008, Silver Wheaton Caymans entered into a silver
purchase agreement with Mercator Minerals Ltd. (Mercator) and Mercator
Minerals (Barbados) Ltd., a wholly-owned subsidiary of Mercator, pursuant to
which Silver Wheaton Caymans agreed to pay, subject to the completion of certain
conditions, an upfront cash payment of $42 million in order to acquire 100% of
the payable silver produced by the Mineral Park mine in the United States (the
Mineral Park Mine), over its entire mine-life, for the lesser of $3.90
(subject to an annual adjustment beginning three years after a minimum
production level has been met) and the then prevailing market price per ounce of
delivered silver.

Pascua-Lama Project

On September 8, 2009, the Company entered into a silver
purchase agreement (the Pascua-Lama Silver Purchase Agreement) with Barrick
Gold Corporation (Barrick) pursuant to which the Company agreed to purchase an
amount of silver equivalent to 25% of the life of mine silver production from
Barricks Pascua-Lama project (the Pascua-Lama Project) located on the border
of Chile and Argentina, as well as an amount of silver equivalent to 100% of the
silver production from its Lagunas Norte mine and Pierina mine, which are both
located in Perú, and its Veladero (Silver Wheatons attributable silver
production is subject to a maximum of 8% of the silver contained in the ore
mined at Veladero during the period) mine, which is located in Argentina, until
the end of 2013 (the Barrick Transaction). The Company will make total upfront
cash payment to Barrick of $625 million (the Upfront Payment). In addition,
per ounce cash payments of the lesser of $3.90 (subject to an annual
inflationary adjustment starting three years after achieving project completion
at Pascua-Lama) and the prevailing market price is due for silver delivered
under the Pascua-Lama Silver Purchase Agreement.

Barrick has provided the Company with a completion guarantee,
requiring Barrick to complete the Pascua-Lama Project to at least 75% of design
capacity by December 31, 2015. During 2014 and 2015, the Company will be
entitled to the silver production from the Lagunas Norte, Pierina and Veladero
mines to the extent of any production shortfall at the Pascua-Lama Project,
until Barrick satisfies the completion test. If the requirements of the
completion test have not been satisfied by December 31, 2015, the agreement may
be terminated by the Company. In such an event, the Company would be entitled to
the return of the Upfront Payment less a credit for silver delivered up to the
date of such event. Barrick has also granted the Company a five year right of first refusal on
any further metal stream sales in connection with the Pascua-Lama Project, where
more than 50% of the value is derived from silver.

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If, after Barrick satisfies the requirements of the completion
test, certain political events occur in Argentina or Chile, including an
expropriation of any part of the Pascua-Lama Project, the selective and
discriminatory imposition of any law or war or insurrection, that results in
Barrick losing all or substantially all of the rights, privileges or benefits
pertaining to any part of the Pascua-Lama Project, then Silver Wheatons
entitlement to silver production from that part of the Pascua-Lama Project will
be suspended until the political event ceases.

If, after Barrick satisfies the requirements of the completion
test, certain political events occur in Argentina or Chile that would reduce
Barricks economic value of its investment in the Pascua-Lama Project by more
than 50%, then Silver Wheatons entitlement to silver production from the Pascua
Lama Project and the uncredited balance of the Upfront Payment will be reduced
to reflect the reduction of Barricks economic value of its investment in the
Pascua-Lama Project, until the political event ceases. If the political event
continues for the term of the transaction, then Silver Wheatons entitlement to
the repayment of the uncredited balance of the Upfront Payment will be reduced
to reflect the suspension of silver sales from the affected portion of the
Pascua-Lama Project.

If, after Barrick satisfies the requirements of the completion
test, any of Barricks subsidiaries that own any part of the Pascua-Lama Project
becomes insolvent or bankrupt, or Barricks lenders exercise or enforce any
security granted to them that results in Barrick losing all or substantially all
of the rights, privileges or benefits pertaining to the Pascua-Lama Project,
then the transaction will terminate and Silver Wheaton will be entitled to an
immediate repayment of the uncredited balance of the Upfront Payment.

If Silver Wheaton fails to pay any portion of the Upfront
Payment to Barrick, then Barrick may terminate Silver Wheatons obligation to
make any further payments of the Upfront Payment and reduce the amount of the
Upfront Payment already paid to Barrick by the lesser of 20% of the amount
already paid and $50 million. Following any such reduction, Barrick will
continue to sell silver to Silver Wheaton in accordance with the terms of the
transaction until the amount of silver sold to Silver Wheaton equals the reduced
amount of the Upfront Payment, after which the transaction will terminate.

See Further Disclosure Regarding Mineral Projects on Material
Properties Pascua-Lama Project, Border of Chile and Argentina for details
regarding the Pascua-Lama Project.

Silverstone Acquisition

On May 21, 2009, the Company completed the acquisition of all
of the outstanding common shares of Silverstone Resources Corp. (Silverstone)
by way of a statutory plan of arrangement. Each common share of Silverstone was
exchanged for 0.185 of a common share of Silver Wheaton (each common share of
Silver Wheaton generally referred to herein as a Common Share), resulting in
the issuance of approximately 23.4 million Common Shares. The following
interests were acquired as a result of the acquisition of Silverstone:

Minto Mine  A precious metal purchase agreement to
acquire 100% of the silver produced from the Minto mine (the Minto Mine) in
Canada, owned by Capstone Mining Corp. (Capstone) and 100% of the first 30,000
ounces of gold produced per annum and 50% thereafter for the lesser of $3.90 per
ounce of silver and $300 per ounce of gold (subject to an annual inflationary
adjustment after three years) and the then prevailing market price per ounce of
silver or gold. If gold production from the Minto Mine exceeds 30,000 ounces per
year, the Company has committed to purchase 50% of the amount that production
exceeds those thresholds for the same per ounce payment noted above.

Cozamin Mine  A silver purchase agreement to acquire
100% of the silver produced from the Cozamin mine (the Cozamin Mine) in
Mexico, owned by Capstone until 2017 for the lesser of $4.00 (subject to an
annual inflationary adjustment after three years) and the then prevailing market
price per ounce of silver. The payment per ounce of silver delivered from the
Cozamin Mine may be subject to price adjustments in certain circumstances, the
effects of which are being reviewed and are not determinable at this time.

Neves-Corvo Mine  A silver purchase agreement to
acquire 100% of the silver produced from the Neves-Corvo mine (the Neves-Corvo
Mine) in Portugal, owned by Lundin Mining Corporation for the life of mine
(nominal term of 50 years) for the lesser of $3.90 (subject to an annual
inflationary adjustment after three years) and the then prevailing market price
per ounce of silver.

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Aljustrel Mine  A silver purchase agreement to acquire
100% of the silver produced from the Aljustrel mine (the Aljustrel Mine) in
Portugal, owned by IM SGPS for the life of mine (nominal term of 50 years) for
the lesser of $3.90 (subject to an annual inflationary adjustment after three
years) and the then prevailing market price per ounce of silver.

Loma de La Plata Project  A debenture with Pan American
Silver Corp. (Pan American) (formerly with Aquiline Resources Inc.)
convertible into an agreement to purchase 12.5% of the life of mine silver
production from the Loma de La Plata (the Loma de La Plata Project) zone of
the Navidad Project in Argentina. On February 25, 2010, the Company elected to
convert the debenture with Pan American into an agreement to acquire an amount
equal to 12.5% of the life of mine silver production from the Loma de La Plata
Project. As such, Silver Wheaton will make total upfront cash payments of $32.4
million following the satisfaction of certain conditions, including Pan American
receiving all necessary permits to proceed with the mine construction. In
addition, a per ounce cash payment of the lesser of $4.00 per ounce and the
prevailing market price is due for silver delivered under the agreement. The
terms of the definitive precious metal purchase agreement continue to be
negotiated.

Sales of Principal Product

There is a worldwide silver and gold market into which the
Company can sell the silver and gold purchased under the precious metal purchase
agreements and, as a result, the Company will not be dependent on a particular
purchaser with regard to the sale of the silver or gold that it acquires
pursuant to its precious metal purchase agreements. The silver in concentrate
from the Zinkgruvan Mine, the Stratoni Mine and the Neves-Corvo Mine and the
silver and gold from the Minto Mine is purchased from the Company by various
smelters and off-takers at the worldwide market price for silver and gold.

Competitive Conditions

The Company is the largest precious metals streaming company in
the world. The ability of the Company to acquire additional precious metals in
the future will depend on its ability to select suitable properties and enter
into similar precious metal purchase agreements. See Description of the
Business  Risk Factors  Competition.

Operations

Raw Materials

The Company purchases silver and/or gold pursuant to the
purchase agreements described under Description of the Business  Principal
Product.

Employees

Currently, the Company and its subsidiaries have an aggregate
of 27 employees.

Foreign Interests

The Company currently purchases or expects to be purchasing
silver and/or gold from mines in Mexico, the United States, Brazil, Greece,
Sweden, Perú, Chile, Argentina and Portugal. Any changes in legislation,
regulations or shifts in political attitudes in such foreign countries are
beyond the control of the Company and may adversely affect its business. The
Company may be affected in varying degrees by such factors as government
legislation and regulations (or changes thereto) with respect to the
restrictions on production, export controls, income and other taxes,
expropriation of property, repatriation of profits, environmental legislation,
land use, water use, land claims of local people and mine safety. The effect of
these factors on the Company cannot be accurately predicted. See Description of
the Business  Risk Factors  Risks relating to the Mining Operations 
International Operations.

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Risk Factors

The operations of the Company are speculative due to the nature
of its business which is the purchase of silver and/or gold production from
producing mining companies. These risk factors could materially affect the
Companys future operating results and could cause actual events to differ
materially from those described in forward-looking statements relating to the
Company. The risks described herein are not the only risks facing the Company.
Additional risks and uncertainties not currently known to the Company, or that
the Company currently deems immaterial, may also materially and adversely affect
its business.

Risks Relating to the Company

Commodity Prices

The price of the Common Shares and the Companys financial
results may be significantly adversely affected by a decline in the price of
silver or gold. The price of silver and gold fluctuates widely, especially in
recent years, and is affected by numerous factors beyond the Companys control,
including but not limited to, the sale or purchase of silver and gold by various
central banks and financial institutions, interest rates, exchange rates,
inflation or deflation, fluctuation in the value of the United States dollar and
foreign currencies, global and regional supply and demand, and the political and
economic conditions of major silver and gold producing countries throughout the
world.

In the event that the prevailing market price of silver or gold
is at or below the price at which the Company can purchase such pursuant to the
terms of the agreements associated with its silver and gold interests, the
Company will not generate positive cash flow or earnings.

Silver and gold are by-product metals at all of the Mining
Operations, other than at the Keno Hill Mine located in Canada and the Loma de La Plata Project
located in Argentina,
and therefore, the economic cut-off applied to the reporting of silver and gold
reserves and resources will be influenced by changes in the commodity prices of
other metals at the mines.

Risks Relating to the Mining Operations

To the extent that they relate to the production of silver or
gold from, or the continued operation of, the Mining Operations, the Company
will be subject to the risk factors applicable to the operators of such mines or
projects, some of which are set forth below under Risks Relating to the Mining
Operations.

No Control Over Mining Operations

The Company has agreed to purchase a
certain percentage of the silver and/or gold produced by the Mining Operations.
The Company is not directly involved in the ownership or operation of mines and
has no contractual rights relating to the operation of the Mining Operations. As
a result, the cash flows of the Company are dependent upon the activities of
third parties which creates the risk that at any time those third parties may:
(a) have business interests or targets that are inconsistent with those of the
Company, (b) take action contrary to the Companys policies or objectives, (c)
be unable or unwilling to fulfill their obligations under their agreements with
the Company, or (d) experience financial, operational or other difficulties,
including insolvency, which could limit a third partys ability to perform its
obligations under the precious metal purchase agreements. Except in limited
circumstances, the Company will not be entitled to any material compensation if
such operations do not meet their forecasted silver or gold production targets
in any specified period or if the operations shut down, suspend or discontinue
on a temporary or permanent basis. There can be no assurance that the silver or
gold production from such properties will ultimately meet forecasts or targets.

Taxes and Accounting Rules

A significant portion of the Companys operating profit is
derived from its subsidiaries, Silver Wheaton Caymans and historically,
Silverstone Resources (Barbados) Corp., which are incorporated and operated in
the Cayman Islands and Barbados, respectively, such that the Companys profits
are subject to minimal income tax.

The introduction of new tax laws or
regulations, or changes to, or differing interpretation of, or application of,
existing tax laws or regulations in Canada, the Cayman Islands, Barbados,
Luxembourg, the Netherlands or any of the countries in which the Mining
Operations are located or to which shipments of silver or gold are made, could
result in an increase in the Companys taxes, or other governmental charges,
duties or impositions. Due to the size, complexity and nature of the Companys
operations, various legal and tax matters are outstanding from time to time,
including an audit by the Canada Revenue Agency of the Companys international
transactions covering the 2005 to 2010 taxation years. No assurance can be given
that new tax laws or regulations will not be enacted or that existing tax laws
or regulations will not be changed, interpreted or applied in a manner which
could have a material adverse effect on the Company.

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In addition, the introduction of new
tax laws or regulations or accounting rules or policies, or changes to, or
differing interpretations of, or application of, existing tax laws or
regulations or accounting rules or policies, could make precious metal purchase
agreements less attractive to counterparties. Such changes could adversely
affect the Company's ability to enter into new precious metal purchase
agreements.

Credit and Liquidity Risk

The Company is exposed to counterparty risks and liquidity
risks including, but not limited to: (i) through the companies with which the
Company has precious metal purchase agreements; (ii) through financial
institutions that hold the Companys cash and cash equivalents; (iii) through
companies that have payables to the Company, including concentrate customers;
(iv) through the Companys insurance providers; and (v) through the Companys
lenders. The Company is also exposed to liquidity risks in meeting its operating
expenditure requirements in instances where cash positions are unable to be
maintained or appropriate financing is unavailable. These factors may impact the
ability of the Company to obtain loans and other credit facilities in the future
and, if obtained, on terms favourable to the Company. If these risks
materialize, the Companys operations could be adversely impacted and the
trading price of the Common Shares could be adversely affected.

Competition

The Company competes with other companies for precious metal
purchase agreements and similar transactions. Some of these companies may
possess greater financial and technical resources than the Company. Such
competition may result in the Company being unable to enter into desirable
precious metal purchase agreements or similar transactions, to recruit or retain
qualified employees or to acquire the capital necessary to fund its precious
metal purchase agreements. Existing or future competition in the mining industry
could materially adversely affect the Companys prospects for entering into
additional precious metal purchase agreements in the future.

Acquisition Strategy

As part of the Companys business strategy, it has sought and
will continue to seek new exploration, mining and development opportunities in
the resource industry. In pursuit of such opportunities, the Company may fail to
select appropriate acquisition candidates or negotiate acceptable arrangements,
including arrangements to finance acquisitions or integrate the acquired
businesses and their personnel into the Company. The Company cannot assure that
it can complete any acquisition or business arrangement that it pursues, or is
pursuing, on favourable terms, or that any acquisitions or business arrangements
completed will ultimately benefit the Company.

Market Price of the Common Shares and the Common Share
Purchase Warrants

The Common Shares are listed and posted for trading on the TSX
and on the NYSE and the Companys common share purchase warrants are listed and
posted for trading on the TSX. An investment in the Companys securities is
highly speculative. Securities of companies involved in the resource industry
have experienced substantial volatility in the past, often based on factors
unrelated to the financial performance or prospects of the companies involved.
The price of the Common Shares and the Companys common share purchase warrants
are also likely to be significantly affected by short-term changes in silver and
gold prices, the Companys financial condition or results of operations as
reflected in its quarterly earnings reports, currency exchange fluctuations and the other risk factors
identified herein.

Equity Price Risk

The Company is exposed to equity price risk as a result of
holding long-term investments in other exploration and mining companies. Just as
investing in the Company is inherent with risks such as those set out in this
annual information form, by investing in these other companies, the Company is
exposed to the risks associated with owning equity securities and those risks
inherent in the investee companies. The Company does not actively trade these
investments.

Dividend Policy

The declaration, timing, amount and payment of dividends is at
the discretion of the Companys Board of Directors. There can be no assurance
that the Company will continue to declare a dividend on a quarterly, annual or
other basis.

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Dependence Upon Key Management Personnel

The Company is dependent on the services of a small number of
key executives who are highly skilled and experienced. The loss of these persons
or the Companys inability to attract and retain additional highly skilled
employees may adversely affect its business and future operations.

Litigation

The Company is from time to time involved in various claims,
legal proceedings and disputes arising in the ordinary course of business. If
the Company is unable to resolve these disputes favourably, it may have a
material adverse impact on the Companys financial performance, cash flows or
results of operations.

The Company may fail to achieve and maintain the adequacy
of internal control over financial reporting pursuant to the requirements of the
Sarbanes-Oxley Act

The Company documented and tested during its most recent fiscal
year, its internal control procedures in order to satisfy the requirements of
Section 404 of the Sarbanes-Oxley Act (SOX). SOX requires an annual assessment
by management of the effectiveness of the Companys internal control over
financial reporting and an attestation report by the Companys independent
auditors addressing this assessment. The Company may fail to achieve and
maintain the adequacy of its internal control over financial reporting as such
standards are modified, supplemented, or amended from time to time, and the
Company may not be able to ensure that it can conclude on an ongoing basis that
it has effective internal controls over financial reporting in accordance with
Section 404 of SOX. The Companys failure to satisfy the requirements of Section
404 of SOX on an ongoing, timely basis could result in the loss of investor
confidence in the reliability of its financial statements, which in turn could
harm the Companys business and negatively impact the trading price of the
Common Shares or market value of its other securities. In addition, any failure
to implement required new or improved controls, or difficulties encountered in
their implementation, could harm the Companys operating results or cause it to
fail to meet its reporting obligations. There can be no assurance that the
Company will be able to remediate material weaknesses, if any, identified in
future periods, or maintain all of the controls necessary for continued
compliance, and there can be no assurance that the Company will be able to
retain sufficient skilled finance and accounting personnel. Future acquisitions
of companies, if any, may provide the Company with challenges in implementing
the required processes, procedures and controls in its acquired operations.
Future acquired companies, if any, may not have disclosure controls and
procedures or internal control over financing reporting that are as thorough or
effective as those required by securities laws currently applicable to the
Company.

No evaluation can provide complete assurance that the Companys
internal control over financial reporting will detect or uncover all failures of
persons within the Company to disclose material information otherwise required
to be reported. The effectiveness of the Companys control and procedures could
also be limited by simple errors or faulty judgments. In addition, as the
Company continues to expand, the challenges involved in implementing appropriate
internal controls over financial reporting will increase and will require that
the Company continue to improve its internal controls over financial reporting.
Although the Company intends to devote substantial time and incur costs, as
necessary, to ensure ongoing compliance, the Company cannot be certain that it
will be successful in complying with Section 404 of SOX.

Risks Relating to the Mining Operations

Governmental Regulations

The Mining Operations are subject to extensive laws and
regulations governing exploration, development, production, exports, taxes,
labour standards, waste disposal, protection and remediation of the environment,
reclamation, historic and cultural resources preservation, mine safety and
occupation health, handling, storage and transportation of hazardous substances
and other matters. The costs of discovering, evaluating, planning, designing,
developing, constructing, operating and closing the Mining Operations in
compliance with such laws and regulations are significant. It is possible that
the costs and delays associated with compliance with such laws and regulations
could become such that the owners or operators of the Mining Operations would
not proceed with the development of or continue to operate a mine. Moreover, it
is possible that future regulatory developments, such as increasingly strict
environmental protection laws, regulations and enforcement policies thereunder,
and claims for damages to property and persons resulting from the Mining
Operations could result in substantial costs and liabilities for the owners or
operators of the Mining Operations in the future such that they would not
proceed with the development of, or continue to operate, a mine.

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With respect to the Argentinean federal glacier protection law,
see Description of the Business  Pascua-Lama Project, Border of Chile and
Argentina  Environment.

International Operations

The operations at the Luismin Mines, the Peñasquito Mine, the
Campo Morado Mine and the Cozamin Mine are conducted in Mexico, the operations
at the Salobo Mine are conducted in Brazil, the operations at the Zinkgruvan
Mine are conducted in Sweden, the operations at the Yauliyacu Mine, the Lagunas
Norte Mine, the Pierina Mine and the Constancia Project are conducted in Perú,
the operations of the Stratoni Mine are conducted in Greece, the operations at
the Mineral Park Mine and the Rosemont Project are conducted in the United
States, the operations of the Keno Hill Mine, the Minto Mine, the 777 Mine and
the Sudbury Mines are conducted in Canada, the operations of the Pascua-Lama
Project are conducted in Chile and Argentina, the operations of the Veladero
Mine and the Loma de La Plata Project are conducted in Argentina, and the
operations of the Neves-Corvo Mine and the Aljustrel Mine are conducted in
Portugal, and as such the operations are all exposed to various levels of
political, economic and other risks and uncertainties. These risks and
uncertainties include, but are not limited to, terrorism, hostage taking,
military repression, crime, political instability, currency controls, extreme
fluctuations in currency exchange rates, high rates of inflation, labour unrest,
the risks of war or civil unrest, expropriation and nationalization,
renegotiation or nullification of existing concessions, licenses, permits,
approvals and contracts, illegal mining, changes in taxation and mining laws, regulations
and policies, restrictions on foreign exchange and repatriation, and changing
political conditions and governmental regulations relating to foreign investment
and the mining business. Argentina and Perú are countries that have experienced
political, social and economic unrest in the past and protestors have from time
to time targeted foreign mining firms.

Changes, if any, in mining or investment policies or shifts in
political attitude may adversely affect the operations or profitability of the
Mining Operations in these countries. Operations may be affected in varying
degrees by government regulations with respect to, but not limited to,
restrictions on production, price controls, export controls, currency
remittance, income taxes, expropriation of property, foreign investment,
maintenance of claims, environmental legislation, land use, land claims of local
people, water use, mine safety and the rewarding of contracts to local
contractors or requiring foreign contractors to employ citizens of, or purchase
supplies from, a particular jurisdiction. Failure to comply strictly with
applicable laws, regulations and local practices relating to mineral right
applications and tenure, could result in loss, reduction or expropriation of
entitlements, or the imposition of additional local or foreign parties as joint
venture partners with carried or other interests.

The occurrence of these various factors and uncertainties
cannot be accurately predicted and could have an adverse effect on the Mining
Operations.

Exploration, Development and Operating Risks

Mining operations generally involve a high degree of risk. The
Mining Operations are subject to all the hazards and risks normally encountered
in the exploration, development and production of metals, including unusual and
unexpected geologic formations, seismic activity, rock bursts, cave-ins,
flooding, environmental hazards and the discharge of toxic chemicals, explosions
and other conditions involved in the drilling, blasting and removal of material,
any of which could result in damage to, or destruction of mines and other
producing facilities, damage to property, injury or loss of life, environmental
damage, work stoppages, delays in production, increased production costs and
possible legal liability. Milling operations are subject to hazards such as
equipment failure or failure of retaining dams around tailings disposal areas
which may result in environmental pollution and consequent liability for the
owners or operators of the Mining Operations.

The exploration for and development of mineral deposits
involves significant risks which even a combination of careful evaluation,
experience and knowledge may not eliminate. Few properties which are explored
are ultimately developed into producing mines. Major expenditures may be
required to locate and establish mineral reserves, to develop metallurgical
processes and to construct mining and processing facilities at a particular
site. It is impossible to ensure that the exploration or development programs
planned by the owners or operators of the Mining Operations will result in a
profitable commercial mining operation. Whether a mineral deposit will be
commercially viable depends on a number of factors, some of which are: the
particular attributes of the deposit, such as size, grade and proximity to
infrastructure; metal prices which are highly cyclical; government regulations,
including regulations relating to prices, taxes, royalties, land tenure, land
use, importing and exporting of minerals and environmental protection; and
political stability. The exact effect of these factors cannot be accurately
predicted. There can be no assurances that the Mining Operations, which are not
currently in production, will be brought into a state of commercial production.

- 15 -

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Environmental Regulation

All phases of mining and exploration operations are subject to
governmental regulation including environmental regulation. Environmental
legislation is becoming more strict, with increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed projects
and heightened responsibility for companies and their officers, directors and
employees. There can be no assurance that possible future changes in
environmental regulation will not adversely affect the Mining Operations. As
well, environmental hazards may exist on a property in which the owners or
operators of the Mining Operations hold an interest which were caused by
previous or existing owners or operators of the properties and of which such
owners or operators are not aware at present and which could impair the
commercial success, levels of production and continued feasibility and project
development and mining operations on these properties.

Permitting

The Mining Operations are subject to receiving and maintaining
permits from appropriate governmental authorities. There can be no assurance that delays will not occur in connection with obtaining all
necessary renewals of such permits for the existing operations, additional
permits for any possible future changes to operations or additional permits
associated with new legislation. Prior to any development on any of these
properties, permits from appropriate governmental authorities may be required.
There can be no assurance that the owners or operators of the Mining Operations
will continue to hold all permits necessary to develop or continue operating at
any particular property. See Permitting, Construction, Development and
Expansion Risk for additional permitting risks associated with developmental
projects.

Compliance with Laws

Failure to comply with applicable laws, regulations and
permitting requirements may result in enforcement actions thereunder, including
orders issued by regulatory or judicial authorities causing operations to cease
or be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment or remedial actions. Parties
engaged in mining operations may be required to compensate those suffering loss
or damage by reason of the mining activities and may be liable for civil or
criminal fines or penalties imposed for violations of applicable laws or
regulations. Amendments to current laws, regulations and permitting
requirements, or more stringent application of existing laws, may have a
material adverse impact on the owners or operators of the Mining Operations,
resulting in increased capital expenditures or production costs, reduced levels
of production at producing properties or abandonment or delays in development of
properties.

Infrastructure

Natural resource exploration,
development and mining activities are dependent on the availability of mining,
drilling and related equipment in the particular areas where such activities are
conducted. A limited supply of such equipment or access restrictions may affect
the availability of such equipment to the owners and operators of the Mining
Operations and may delay exploration, development or extraction activities.
Certain equipment may not be immediately available, or may require long lead
time orders. The lack of availability on acceptable terms or the delay in the
availability of any one or more of these items could prevent or delay
exploration, development or production at the Mining Operations.

Mining, processing, development and exploration activities
depend, to one degree or another, on adequate infrastructure. Reliable roads,
bridges, power sources and water supply are important determinants, which affect
capital and operating costs. Unusual or infrequent weather phenomena, sabotage,
government or other interference in the maintenance or provision of such
infrastructure could adversely affect the Mining Operations.

Mineral Reserve and Mineral Resource Estimates

The reported mineral reserves and mineral resources for the
Mining Operations are only estimates. No assurance can be given that the
estimated mineral reserves and mineral resources will be recovered or that they
will be recovered at the rates estimated. Mineral reserve and mineral resource
estimates are based on limited sampling and geological interpretation, and, consequently, are uncertain
because the samples may not be representative. Mineral reserve and mineral
resource estimates may require revision (either up or down) based on actual
production experience. Market fluctuations in the price of metals, as well as
increased production costs or reduced recovery rates, may render certain mineral
reserves and mineral resources uneconomic and may ultimately result in a
restatement of estimated mineral reserves and/or mineral resources.

- 16 -

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Mineral resources that are not mineral reserves do not have
demonstrated economic viability. Due to the uncertainty of inferred mineral
resources, there is no assurance that inferred mineral resources will be
upgraded to proven and probable mineral reserves as a result of continued
exploration.

Need for Additional Mineral Reserves

Because mines have limited lives based primarily on proven and
probable mineral reserves, the Mining Operations must continually replace and
expand their mineral reserves as their mines produce metals. The life-of-mine
estimates for the Mining Operations may not be correct. The ability of the
owners or operators of the Mining Operations to maintain or increase their
annual production of silver or gold will be dependent in significant part on
their ability to bring new mines into production and to expand mineral reserves
at existing mines.

Land Title

No assurances can be given that there are no title defects
affecting the properties and mineral claims owned or used by the Mining
Operations. Such properties and claims may be subject to prior unregistered
liens, agreements, transfers or claims, including native land claims, and title
may be affected by, among other things, undetected defects. In addition, the
operators of such operations may be unable to operate them as permitted or to
enforce their rights with respect to their properties and claims which may
ultimately impair the ability of these operators to fulfill their obligations
under the silver and precious metal purchase agreements with the Company.

Commodity Price Fluctuations

The price of metals has fluctuated widely in recent years, and
future serious price declines could cause continued development of and
commercial production from the Mining Operations to be impracticable. Depending
on the price of other metals produced from the mines which generate cash flow to
the owners, cash flow from the Mining Operations may not be sufficient and such
owners could be forced to discontinue production and may lose their interest in,
or may be forced to sell, some of their properties. Future production from the
Mining Operations is dependent on metal prices that are adequate to make these
properties economic.

In addition to adversely affecting the reserve estimates and
financial conditions, declining commodity prices can impact operations by
requiring a reassessment of the feasibility of a particular project. Such a
reassessment may be the result of a management decision or may be required under
financing arrangements related to a particular project. Even if the project is
ultimately determined to be economically viable, the need to conduct such a
reassessment may cause substantial delays or may interrupt operations until the
reassessment can be completed.

Additional Capital

The mining, processing, development and exploration of the
Mining Operations may require substantial additional financing. Failure to
obtain sufficient financing may result in delaying or indefinite postponement of
exploration, development or production on any or all of the Mining Operations
and related properties or even a loss of property interest. There can be no
assurance that additional capital or other types of financing will be available
if needed or that, if available, will be on satisfactory terms.

Permitting, Construction, Development and Expansion Risk

The Salobo Mine, the Peñasquito Mine, the Keno Hill Mine, the
Pascua-Lama Project, the Loma de La Plata Project, the Rosemont Project and the
Constancia Project are currently in various stages of permitting, construction,
development and expansion. Construction, development and expansion of such
projects is subject to numerous risks, including, but not limited to, delays in
obtaining equipment, material and services essential to completing construction
of such projects in a timely manner; delays or inability to obtain all required
permits; changes in environmental or other government regulations; currency
exchange rates; labour shortages; and fluctuation in metal prices. There can be
no assurance that the operators of such projects will have the financial,
technical and operational resources to complete the permitting, construction,
development and expansion of such projects in accordance with current
expectations or at all.

- 17 -

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TECHNICAL INFORMATION

CIM Standards Definitions

The estimated Mineral Reserves and Mineral Resources for the
Mining Operations have been calculated in accordance with the Canadian Institute
of Mining, Metallurgy and Petroleum (CIM)  Definitions adopted by CIM Council
on November 27, 2010 (the CIM Standards) or in accordance with the
Australasian Code for Reporting of Mineral Resources and Ore Reserves (the JORC
Code), the Australian worldwide standards, and were restated in accordance with
the requirements of the Canadian Securities Administrators National Instrument
43-101 Standards of Disclosure for Mineral Projects (NI 43-101) to
comply with the CIM Standards. The following definitions are reproduced from the
CIM Standards:

The term Mineral Resource is a concentration or
occurrence of diamonds, natural solid inorganic material, or natural solid
fossilized organic material including base and precious metals, coal, and
industrial minerals in or on the Earths crust in such form and quantity and of
such a grade or quality that it has reasonable prospects for economic
extraction. The location, quantity, grade, geological characteristics and
continuity of a Mineral Resource are known, estimated or interpreted from
specific geological evidence and knowledge. Mineral Resources are sub-divided,
in order of increasing geological confidence, into Inferred, Indicated and
Measured categories.

The term Inferred Mineral Resource is that part
of a Mineral Resource for which quantity and grade or quality can be estimated
on the basis of geological evidence and limited sampling and reasonably assumed,
but not verified, geological and grade continuity. The estimate is based on
limited information and sampling gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes.

The term Indicated Mineral Resource is that
part of a Mineral Resource for which quantity, grade or quality, densities,
shape and physical characteristics, can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and economic
parameters, to support mine planning and evaluation of the economic viability of
the deposit. The estimate is based on detailed and reliable exploration and
testing information gathered through appropriate techniques from locations such
as outcrops, trenches, pits, workings and drill holes that are spaced closely
enough for geological and grade continuity to be reasonably assumed.

The term Measured Mineral Resource is that part
of a Mineral Resource for which quantity, grade or quality, densities, shape and
physical characteristics are so well established that they can be estimated with
confidence sufficient to allow the appropriate application of technical and
economic parameters, to support production planning and evaluation of the
economic viability of the deposit. The estimate is based on detailed and
reliable exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough to confirm both geological and
grade continuity.

The term Mineral Reserve is the economically
mineable part of a Measured or Indicated Mineral Resource demonstrated by at
least a Preliminary Feasibility Study. This study must include adequate
information on mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic extraction can
be justified. A Mineral Reserve includes diluting materials and allowances for
losses that may occur when the material is mined.

The term Probable Mineral Reserve is the
economically mineable part of an Indicated Mineral Resource and, in some
circumstances, a Measured Mineral Resource demonstrated by at least a
Preliminary Feasibility Study. This study must include adequate information on
mining, processing, metallurgical, economic and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can be
justified.

The term Proven Mineral Reserve is the
economically mineable part of a Measured Mineral Resource demonstrated by at
least a Preliminary Feasibility Study. This study must include adequate
information on mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic extraction is
justified.

- 18 -

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Cautionary Note to United States Investors Concerning
Estimates of Measured, Indicated and Inferred Mineral Resources

This annual information form uses the terms Measured,
Indicated and Inferred Mineral Resources. United States investors are
advised that while such terms are recognized and required by Canadian
regulations, the United States Securities and Exchange Commission does not
recognize them and expressly prohibits U.S. registered companies from including
such terms in their filings with the United States Securities and Exchange
Commission. Inferred Mineral 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 an Inferred Mineral Resource will ever be
upgraded to a higher category. Under Canadian rules, estimates of Inferred
Mineral Resources may not form the basis of feasibility or other economic
studies.

United States investors are cautioned not to assume that all
or any part of Measured or Indicated Mineral Resources will ever be converted
into Mineral Reserves. United States investors are also cautioned not to assume
that all or any part of an Inferred Mineral Resource exists, or is economically
or legally mineable.

Summary of Mineral Reserves and Mineral Resources

The following tables set forth the estimated Mineral Reserves
and Mineral Resources (silver and/or gold only) for the mines relating to which
the Company has purchase agreements, adjusted where applicable to reflect the
Companys percentage entitlement to silver and/or gold produced from such mines,
as of December 31, 2012, unless otherwise noted. The tables are based on
information available to the Company as of the date of this document, and
therefore will not reflect updates, if any, after such date. The most current
Mineral Reserves and Mineral Resources will be available on the Companys
website:

|ATTRIBUTABLE PROVEN AND PROBABLE RESERVES(1,2,3,8,17)AS OF DECEMBER 31, 2012 UNLESSOTHERWISE NOTED(6)
|-----------------------------------------------------------------------------------------------------
|                                                                                                     
|                                                                                                     
|                                                                                                     
|SILVER                                                                                               
|Peñasquito (25%)(14)                                                                                 
|Mill                                                                                                 
|Heap Leach                                                                                           
|San Dimas(10,
      14)                                                                              
|Pascua-Lama (25%)(14)                                                                                
|Lagunas Norte(11)                                                                                    
|Pierina(11)                                                                                          
|Veladero(11)                                                                                         
|Yauliyacu(11,
      12)                                                                              
|777 (13, 14)                                                                                         
|Neves-Corvo                                                                                          
|Copper                                                                                               
|Zinc                                                                                                 
|Rosemont(15)                                                                                         
|Constancia                                                                                           
|Mineral Park(15)                                                                                     
|Zinkgruvan                                                                                           
|Zinc                                                                                                 
|Copper                                                                                               
|Aljustrel                                                                                            
|Copper                                                                                               
|Campo Morado (75%)                                                                                   
|Stratoni                                                                                             
|Minto                                                                                                
|Cozamin(11)                                                                                          
|Copper                                                                                               
|Los Filos                                                                                            
|                                                                                                     
|Total Silver                                                                                         
|GOLD                                                                                                 
|Salobo (25%)(16)                                                                                     
|Sudbury (70%)(11)                                                                                    
|777 (13, 14)                                                                                         
|Minto                                                                                                
|TOTAL GOLD                                                                                           

- 19 -

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|ATTRIBUTABLE MEASURED & INDICATED RESOURCES (1,2,3,4,5,9,17)AS OF DECEMBER 31, 2012 UNLESSOTHERWISE NOTED(6)
|------------------------------------------------------------------------------------------------------------
|                                                                                                            
|                                                                                                            
|SILVER                                                                                                      
|Peñasquito (25%)(14)                                                                                        
|Mill                                                                                                        
|Heap Leach                                                                                                  
|Pascua-Lama (25%)(14)                                                                                       
|Yauliyacu(11, 12)                                                                                           
|Neves-Corvo                                                                                                 
|Copper                                                                                                      
|Zinc                                                                                                        
|Rosemont(15)                                                                                                
|Constancia                                                                                                  
|Mineral Park(15)                                                                                            
|Zinkgruvan                                                                                                  
|Zinc                                                                                                        
|Copper                                                                                                      
|Aljustrel                                                                                                   
|Zinc                                                                                                        
|Copper                                                                                                      
|Campo Morado (75%)                                                                                          
|Loma de La Plata (12.5%)                                                                                    
|Minto                                                                                                       
|Keno Hill (25%)                                                                                             
|Underground                                                                                                 
|Elsa Tailings                                                                                               
|Los Filos                                                                                                   
|                                                                                                            
|Total Silver                                                                                                
|GOLD                                                                                                        
|Salobo (25%)(16)                                                                                            
|Sudbury (70%)(11)                                                                                           
|Minto                                                                                                       
|TOTAL GOLD                                                                                                  

- 20 -

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ATTRIBUTABLE INFERRED RESOURCES(1,2,3,4,5,9,17)AS OF DECEMBER 31, 2012 UNLESS OTHERWISE NOTED (6)

InferredTonnage
    
    
    Grade
    
    
    ContainedSILVER
    
    Mt
    
    
    g/t
    
    
    MozPeñasquito (25%)(14)Mill
    
    31.7
    
    
    9.1
    
    
    9.3Heap Leach
    
    12.7
    
    
    1.6
    
    
    0.7San Dimas(10, 14)
    
    6.1
    
    
    327.2
    
    
    64.6Pascua-Lama (25%)(14)
    
    8.1
    
    
    15.5
    
    
    4.0777(13, 14)
    
    0.8
    
    
    31.1
    
    
    0.8Neves-CorvoCopper
    
    25.4
    
    
    47.2
    
    
    38.6Zinc
    
    22.1
    
    
    51.0
    
    
    36.2Rosemont(15)
    
    104.5
    
    
    3.3
    
    
    11.1Constancia
    
    223.0
    
    
    1.9
    
    
    13.4Mineral Park(15)
    
    320.1
    
    
    2.3
    
    
    23.9ZinkgruvanZinc
    
    4.6
    
    
    78.0
    
    
    11.4Copper
    
    0.6
    
    
    31.0
    
    
    0.6AljustrelZinc
    
    8.7
    
    
    50.4
    
    
    14.0Copper
    
    4.7
    
    
    16.0
    
    
    2.4Campo Morado (75%)
    
    1.7
    
    
    128.9
    
    
    7.1Stratoni
    
    0.7
    
    
    89.0
    
    
    2.0Loma de La Plata (12.5%)
    
    0.2
    
    
    76.0
    
    
    0.4Minto
    
    8.5
    
    
    2.9
    
    
    0.8Keno Hill (25%)Underground
    
    0.2
    
    
    340.8
    
    
    1.9Los Filos
    
    239.2
    
    
    6.0
    
    
    46.5TOTAL SILVER
    
    
    
    
    
    
    
    289.7GOLDSalobo (25%)(16)
    
    37.0
    
    
    0.31
    
    
    0.37Sudbury (70%)(11)
    
    18.9
    
    
    0.67
    
    
    0.40777(13, 14)
    
    0.4
    
    
    1.75
    
    
    0.02Minto
    
    8.5
    
    
    0.24
    
    
    0.07TOTAL GOLD
    
    
    
    
    
    
    
    0.86


- 21 -

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|(1) | All Mineral Reserves and Mineral Resources have been
      calculated in accordance with the CIM Standards and NI 43-101, or the
      AusIMM JORC equivalent.                                                                                                                                                                                                                     
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|(2) | Mineral Reserves and Mineral Resources are reported above
      in millions of metric tonnes (Mt), grams per metric tonne (g/t) and
      millions of ounces (Moz).                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|(3) | Individual qualified persons (QPs), as defined by the
      NI 43-101, for the technical information contained in this document
      (including the Mineral Reserve and Mineral Resource estimates) for the
      following operations are as follows:                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|    | a.                                                                                                                                                                                                                                                                                                                                                                                 
|    | b.                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|(4) | The Mineral Resources reported in the above tables are
      exclusiveof Mineral Reserves. The Minto, Campo Morado,
      Neves-Corvo, Zinkgruvan and Aljustrel mines report Mineral Resources
      inclusive of Mineral Reserves. The Companys QPs have made the exclusive
      Mineral Resource estimates for these mines based on average mine
      recoveries and dilution.
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|(5) | Mineral Resources which are not Mineral Reserves do not
      have demonstrated economic viability.                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|(6) | Other than as detailed below, Mineral Reserves and
      Mineral Resources are reported as of December 31, 2012 based on
      information available to the Company as of the date of this document, and
      therefore will not reflect updates, if any, after such date.                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|    | a.                                                                                                                                                                                                                                                                                                                                                                                 
|    | b.                                                                                                                                                                                                                                                                                                                                                                                 
|    | c.                                                                                                                                                                                                                                                                                                                                                                                 
|    | d.                                                                                                                                                                                                                                                                                                                                                                                 
|    | e.                                                                                                                                                                                                                                                                                                                                                                                 
|    | f.                                                                                                                                                                                                                                                                                                                                                                                 
|    | g.                                                                                                                                                                                                                                                                                                                                                                                 
|    | h.                                                                                                                                                                                                                                                                                                                                                                                 
|    | i.                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|(7) | Process recoveries are the average percentage of silver
      or gold in a saleable product (doré or concentrate) recovered from mined
      ore at the applicable site process plants as reported by the
    operators.                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|(8) | Mineral Reserves are estimated using appropriate process
      recovery rates and the following commodity prices:                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|    | a.                                                                                                                                                                                                                                                                                                                                                                                 
|    | b.                                                                                                                                                                                                                                                                                                                                                                                 
|    | c.                                                                                                                                                                                                                                                                                                                                                                                 
|    | d.                                                                                                                                                                                                                                                                                                                                                                                 
|    | e.                                                                                                                                                                                                                                                                                                                                                                                 
|    | f.                                                                                                                                                                                                                                                                                                                                                                                 
|    | g.                                                                                                                                                                                                                                                                                                                                                                                 
|    | h.                                                                                                                                                                                                                                                                                                                                                                                 
|    | i.                                                                                                                                                                                                                                                                                                                                                                                 
|    | j.                                                                                                                                                                                                                                                                                                                                                                                 
|    | k.                                                                                                                                                                                                                                                                                                                                                                                 
|    | l.                                                                                                                                                                                                                                                                                                                                                                                 
|    | m.                                                                                                                                                                                                                                                                                                                                                                                 
|    | n.                                                                                                                                                                                                                                                                                                                                                                                 
|    | o.                                                                                                                                                                                                                                                                                                                                                                                 
|    | p.                                                                                                                                                                                                                                                                                                                                                                                 
|    | q.                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|(9) | Mineral Resources are estimated using appropriate
      recovery rates and the following commodity prices:                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|    | a.                                                                                                                                                                                                                                                                                                                                                                                 
|    | b.                                                                                                                                                                                                                                                                                                                                                                                 
|    | c.                                                                                                                                                                                                                                                                                                                                                                                 
|    | d.                                                                                                                                                                                                                                                                                                                                                                                 
|    | e.                                                                                                                                                                                                                                                                                                                                                                                 
|    | f.                                                                                                                                                                                                                                                                                                                                                                                 
|    | g.                                                                                                                                                                                                                                                                                                                                                                                 
|    | h.                                                                                                                                                                                                                                                                                                                                                                                 
|    | i.                                                                                                                                                                                                                                                                                                                                                                                 
|    | j.                                                                                                                                                                                                                                                                                                                                                                                 
|    | k.                                                                                                                                                                                                                                                                                                                                                                                 
|    | l.                                                                                                                                                                                                                                                                                                                                                                                 
|    | m.                                                                                                                                                                                                                                                                                                                                                                                 
|    | n.                                                                                                                                                                                                                                                                                                                                                                                 

- 22 -

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|     | o.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Loma de La Plata  $12.50 per ounce silver.                                                                                                                                                                                                                                                                                                
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | p.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Keno Hill  $15.25 per ounce silver for the Southwest and
      99 Zones, $14.50 per ounce silver for the East Zone, $17.00 per ounce
      silver for the Elsa Tailings, $18.50 per ounce silver for the Lucky Queen
      and Onek deposits, $23.00 per ounce silver for Bermingham and $24.00 per
      ounce silver for Flame and Moth.
|     | q.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Salobo - $1,150 per ounce gold.                                                                                                                                                                                                                                                                                                            
|     | r.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Sudbury - $975 per ounce gold.                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                            
|(10) | The San Dimas silver purchase agreement provides that
      from August 6, 2010 until August 5, 2014, Primero will deliver to the
      Company a per annum amount equal to the first 3.5 million ounces of
      payable silver produced at San Dimas and 50% of any excess, plus the
      Company will receive an additional 1.5 million ounces of silver per annum
      to be delivered by Goldcorp. Beginning August 6, 2014, Primero will
      deliver to the Company a per annum amount equal to the first 6.0 million
      ounces of payable silver produced at San Dimas and 50% of any excess, for
      the life of the mine.                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                            
|(11) | The Companys attributable Resources and Reserves for
      Pierina, Lagunas Norte, Veladero, Cozamin and Yauliyacu silver interests,
      in addition to the Sudbury and 777 gold interests, have been constrained
      to the production expected for the various contracts.                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                            
|(12) | The Companys Yauliyacu silver purchase agreement (March
      2006) with Glencore International AG provides for the delivery of up to
      4.75 million ounces of silver per year for 20 years. In the event that
      silver sold and delivered to Silver Wheaton in any year totals less than
      4.75 million ounces, the amount sold and delivered to Silver Wheaton in
      subsequent years will be increased to make up for any cumulative
      shortfall, to the extent production permits. Depending upon production
      levels it is possible that the Companys current attributable tonnage may
      not be mined before the agreement expires.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                            
|(13) | The 777 Purchase Agreement provides that Hudbay Minerals
      Inc. will deliver 100% of the payable silver for the life of the mine and
      100% of the payable gold until completion of the Constancia project, after
      which the gold stream will reduce to 50%. The gold figures in this table
      represent the attributable 777 Resources and Reserves constrained to the
      production expected for the 777 contract.                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                            
|(14) | The scientific and technical information in this document
      regarding Peñasquito, San Dimas, Pascua-Lama and 777 was sourced by the
      Company from the following SEDAR (www.sedar.com) filed documents:                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                            
|     | a.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Peñasquito  Goldcorp annual information form filed on
      March 1, 2013;                                                                                                                                                                                                                                                                
|     | b.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | San Dimas  Primero annual information form filed on
      April 2, 2013;                                                                                                                                                                                                                                                                  
|     | c.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Pascua-Lama  Barrick annual information form filed on
      March 28, 2013; and                                                                                                                                                                                                                                                           
|     | d.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 777  Hudbay annual information form filed on  March
      28, 2013.                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                            
|     | The Company QPs have approved the disclosure of
      scientific and technical information in respect of Peñasquito, San Dimas,
      Pascua-Lama and 777 in this document.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                            
|(15) | The Mineral Park and Rosemont Resources and Reserves do
      not include the SX/EW leach material since this process does not recover
      silver.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                            
|(16) | The Company has filed a technical report for Salobo which
      is available on SEDAR at www.sedar.com.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                            
|(17) | Silver and gold are produced as by-product metal at all
      operations with the exception of silver at the Keno Hill mine and Loma de
      La Plata project; therefore, the economic cut-off applied to the reporting
      of silver and gold Resources and Reserves will be influenced by changes in
      the commodity prices of other metals at the time.                                                                                                                                                                                                                                                                                                    

- 23 -

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FURTHER DISCLOSURE REGARDING MINERAL PROJECTS ON MATERIAL
PROPERTIES

777 MINE, CANADA

The following description of the 777 Mine is based on the
information disclosed in the annual information form of Hudbay filed on March
28, 2013. The Company QPs have approved the disclosure of scientific and
technical information in respect of the 777 Mine in this document.

Property Description and Location

The 777 Mine is an underground copper and zinc mine with
significant precious metals credits located in Flin Flon, Manitoba. Hudbay own a
100% interest in the properties that comprise the 777 Mine through mineral
leases, Order in Council (OIC) leases and mineral claims in Manitoba and
Saskatchewan. The properties cover approximately 3,800 hectares, including
approximately 500 hectares in Manitoba and approximately 3,300 hectares in
Saskatchewan. Annual lease rental payments are $16,730 and $6,722 to the
Manitoba and Saskatchewan governments, respectively, and the annual work
expenditure requirement for the Saskatchewan properties is $257,025. Individual
leases have different expiry dates that range from 2013 to 2031. Hudbays
surface rights and permits are sufficient for purposes of current mining
operations.

Liabilities associated with the 777 mine are addressed by the
closure plans that have been submitted to regulators in both Saskatchewan and
Manitoba and financial assurance has been provided to cover the demolition and
remediation activities outlined in such closure plans. The closure and
remediation liability in respect of the property is estimated at $1,222,121 in
January 1, 2010 dollars. In addition, closure plans have been submitted and are
backed with financial assurance for the associated Flin Flon Metallurgical Plant
(FFMC) and Flin Flon Tailings Impoundment System (FFTIS) utilized by the 777
Mine.

Mineral production from the 777 Mine property is subject to a 6
2/3% net profit interest and a $0.25 per short ton royalty pursuant to our
agreement with Consolidated Callinan Flin Flon Mines Limited (Callinan).

Accessibility, Climate, Local Resources, Infrastructure
and Physiography

The 777 Mine is located in Flin Flon, Manitoba, which has a
population of approximately 6,000 people, and is accessible by paved highway.
Flin Flon is the site of Hudbays principal concentrator and zinc plant and has
well developed access to rail and air transportation. Personnel requirements for
the 777 Mine and processing facilities are largely drawn from the immediate
area.

Electrical power is supplied from the Manitoba Hydro and
Saskatchewan Power Corporation power grids, which are fed by three hydroelectric
generating stations. No issues are foreseen for securing additional electrical
power in the future, if required.

Water for mining activities is supplied from a reservoir
located adjacent to the 777 Mine site and is sufficient for operations.

Tailings from milling are sent to the Paste Backfill Plant
located at the lower level of the mill building. Mixed paste backfill is pumped
to one of two lined boreholes adjacent to the mill, where paste is gravity fed
to 1,082 metre level for distribution to mined out stopes. Tailings not used in
paste production are pumped to the Flin Flon Tailings Impoundment System
(FFTIS). The FFTIS is located in Saskatchewan approximately 500m to the west
of our Flin Flon Metallurgical Complex.

The 777 Mine site is 311 metres above sea level. The
geographical area has cool summers and very cold winters with a mean annual
temperature of 0.6 degrees Celsius. Operating costs in the first and fourth
quarters are typically higher due to additional heating and other seasonal
costs. The predominant vegetation is closed stands of black spruce and jack pine
with a shrub layer of ericaceous shrubs and ground cover of mosses and lichens.

- 24 -

---

History

Under the ownership of Minorco, S.A. in the mid-1990s, a
strategic review of the northern Manitoba and Saskatchewan operations depicted
declining reserves, lower ore grades, rising costs and a poor safety record. At
that time, it was concluded that a less than a 10-year mine life was possible
and closure of operations before 2005 was planned.

In connection with the closure plan, it was decided to continue
exploration efforts until 1998, the latest time an ore body could be developed
for production prior to the planned closure. In 1993, based on the drilling
program, the 777 deposit was first indicated by an underground exploration hole
that intersected the mineralization at a depth of 1,000 metres. In 1995, a
drilling program delineated the ore body and by 1997, this ore body was defined.
In 1999, development of the 777 mine was commenced as part of the 777 Project
and commercial production from the mine commenced in January 2004. By this time,
Minorco S.A. had merged with Anglo American Corporation of South Africa to form
Anglo American plc (Anglo American). In December 2004, Hudbay acquired Hudson
Bay Mining and Smelting Co. (HBMS) and the 777 Mine from Anglo American.

HBMS took a working option on the 777 property in 1967 from
Callinan. In 1988, HBMS acquired Callinans remaining interest in the property
and in return granted Callinan the net profit interest and royalty described
above.

The 777 discovery was deemed a geological success as the first
hole, 4Q-64, was drilled down to 1,682 metres in 1993 to test the down trend
extents of the Callinan deposit. This hole, drilled on the west of Ross Lake,
intercepted two zones of volcanogenic massive sulphide (VMS)style
mineralization. With the confirmation of mineralization down trend, this hole
was followed up with further drilling from underground at the 840 metre level
track drift of the Callinan Mine. The deposit was later named after the
discovery hole, CX-777, which intercepted several zones of massive
mineralization, the largest of which was 22.52 metres in core length grading
5.358 grams per tonne gold, 55.994 grams per tonne silver, 2.89% copper, and
7.40% zinc.

Geology and Mineralization

Geological Setting

The 777 deposit lies in the western portion of the
Paleoproterozoic Flin Flon Greenstone Belt. The Greenstone Belt is interpreted
to be comprised of a variety of distinct 1.92 to 1.87Ga tectonostratigraphic
assemblages including juvenile arc, back-arc, ocean floor and ocean island, and
evolved volcanic arc assemblages that were amalgamated to form an accretionary
collage prior to the emplacement of voluminous intermediate to granitoid plutons
and generally subsequent deformation. The volcanic assemblages consist of mafic
to felsic volcanic rocks with intercalated volcanogenic sedimentary rocks. The
younger plutons and coeval successor arc volcanics, volcaniclastic, and
sedimentary successor basin rocks include the older, largely marine turbidites
of the Burntwood Group and the terrestrial metasedimentary sequences of the
Missi Group (which includes the Flin Flon formation).

The Flin Flon formation is subdivided into three mappable
members containing units of heterolithic and monolithic breccias, rhyolite flows
and domes, and massive and pillowed basalt flows and flow-top breccias. It is
comprised of the Millrock member, which contains the 777 and Callinan
mineralization, and the footwall to it with the Blue Lagoon and Club members.

A complex succession of felsic and basalt-dominated
heterolithic volcaniclastic rocks host the Flin Flon Main, Callinan and 777 VMS
deposits within the Greenstone Belt. The north-trending, VMS-hosting, 30 to 700
metre thick volcanic/volcaniclastic succession is recognized for at least five
kilometres along strike and has an average dip of 60 degrees east. The
volcaniclastic rocks have been interpreted to occupy a volcano-tectonic
depression within a basaltic footwall succession.

- 25 -

---

Exploration

Drilling

The 777 deposit was first discovered in 1993 and was defined
with significant drilling between 1995 and 1997. Diamond drilling is the only
drilling type carried out for the purposes of exploration, ore zone definition
and sampling of the 777 Mine. Drilling is done by drilling contractors under the
supervision of Hudbays geologists. The modern 777 drilling program began in the
early 2000s and, as at September 30, 2012, a total of 1,829 holes and 256,625
metres had been drilled. All holes, except a geotechnical shaft pilot hole, were
drilled from underground by a contractor using AW-34, AQTK, BQ and NQ core
sizes. Drill hole spacing along the 777 deposit is generally 30 to 50 metres.
Core recovery is near 100% for all holes. Drilling was categorized as
definition, exploration, or geotechnical. Geotechnical drilling was completed in
areas of planned underground infrastructure to ensure competency.

Standard procedure is that the core is initially logged for
lithology then descriptively for grain size, foliation, minor units, alteration
minerals and intensity, faults, RQD, joints and contacts. Sample intervals are
determined by both lithology and a visual estimate of the sulphide
mineralization. As a general rule, sample intervals are approximately one metre,
though the length varies depending on lithology or type of mineralization. It is
likely that in no cases were samples taken from intervals less than ten centimetres in length. However, as many of the assays are historic in nature,
several were split when they overlapped lithological boundaries in the resource
block model and resulted in sample intervals having lengths as low as one
centimetre.

Surveying

Hudbay routinely conduct time-domain borehole electromagnetic
surveys with three dimensional probes on drill holes. These probes used are
induction coil probes which measure the secondary magnetic field induced by the
primary field created by a loop. These electronic methods can generally detect
off hole targets up to 150 metres or more from the hole depending on the size
and conductivity of the target. The sample quality can be affected by active
mine workings and the proximity of the geophysical apparatus to a large ore
body, such as 777, which can leave an imprint of the mine itself on the data.

After the initial aggressive exploration program that defined
the 777 deposit, few holes had downhole geophysical surveys. The first modern
exploration drill hole at the 777 mine, T7X-001, was pulsed in late 2004.
Following that hole, little exploration work was conducted between 2005 and 2008
with only 56 holes being drilled during that four year period. Since 2009,
exploration efforts have increased with the downhole geophysical surveying of
approximately 30 holes, 20 of these using one of the underground footwall loops.
These were concentrated on deep footwall drilling, around the West Zone, and in
the hanging wall. Among these 30 holes, eight were surveyed in the hanging wall
using a surface loop. All high priority targets have been followed up with
drilling as well as most of the lesser category targets. The few lesser category
targets remaining are planned to be drill tested in 2012.

Between May and September 2007 a seismic survey was conducted
in the Flin Flon area as part of a joint initiative, labeled TGI. The initiative
was funded by Natural Resources Canada, Saskatchewan Industry and Resources, as
well as Manitoba Industry, Economic Development and Mines, with active
participation from Hudbay. This joint Federal-Provincial effort was led by the
Geological Survey of Canada as part of a five year program that was aimed at
sustaining reserves of base metals in established mining communities across
Canada by supporting exploration for new deposits in the vicinity.

During this time period a total of 75 kilometres of high
resolution 2D seismic profiles as well as a 3D survey covering approximately ten
square kilometres was completed. Results were hampered by the significant
challenges posed by the complex crystalline geology of the area, proximity to an
active town, active mining operations, and the highly variable terrain.

The survey resulted in a greater understanding of the area
geology. Also, the discovery of Zone 33 at the 777 Mine was attributed to this
survey as it showed a seismic reflector in the footwall, which was later
followed up with drilling and downhole pulsing. Previous downhole geophysical
surveys had noted this anomaly, but it was previously discounted as a shadow
effect from the 777 Mine. The first drill hole (T7X-060) intercept in the zone
encountered 9.55 metres in core length of 6.402 grams per tonne gold, 99.25
grams per tonne silver, 0.89% copper, and 15.59% zinc.

- 26 -

---

Mineralization

The 777 and Callinan deposits occur within an east-facing
sequence of volcanic rocks documented as tholeiitic and basalt-dominated, and
dated around 1888 Ma. The rocks immediately hosting the mineralization, however,
consist of quartz-phyric (QP) and quartzfeldspar-phyric (QFP) rhyolite flows and
quartz-±feldspar crystal-lithic volcaniclastic rocks of rhyolitic
composition.

The 777 deposit can be divided into two main southeast plunging
trends, the North Limb and the South Limb, as well as the West Zone. All three
zones lie within the same stratigraphic sequence with the same lithofacies as
described above. The West Zone lies in the footwall in what is interpreted to be
a lower thrust slice and both limbs have the same stratigraphic sequence. On
average the lenses strike at 010 degrees and dip to the east at 45 degrees. All
zones have a relatively shallow plunge trending at -35 degrees towards 140
degrees. Horizontal widths throughout the deposit range from 2.5 metres to 70
metres in thickness, and can be thicker when two or more zones overlap.

There are a total of nine distinct sulphide lenses contained
within the 777 deposit. Each of the zones is distinguished based on grade and
mineralization type as well as their spatial location. The 777 deposit
encompasses an area approximately 1,300 metres downplunge by 550 metres across
and varying in depth from approximately 870 to 1,600 metres below surface.
Lenses in general are fairly continuous with the exception of scattered diorite
intrusions.

The Callinan deposit is subdivided into two rhyolite horizons
termed the East-QP and the West-QP. The East-QP is host to the lenses of the
North Zone (northern portion), and the East Zone (southeast portion), and is on
the same horizon as the 777 mineralization. The West-QP hosts the South Zone
(southwest portion) and its associated lenses. Each of these zones is further
subdivided into a number of mineralized lenses. The subdivision of Zones into
lenses was based on the spatial distribution of the mineralization. The South
Zone lenses generally strikes to the north and dips at 50 degrees to the east
with a plunge trending at -50 degrees towards 135 degrees. The North and East
Zones generally strike at 020 degrees with a 50 degree dip to the east with a
shallow plunge trending at -30 degrees towards 145 degrees.

There are a total of 20 sulphide lenses contained within the
three broad zones of the Callinan deposit. The Callinan mineralization is a
distal deposit that has a matrix supported breccia with variable amounts of
wallrock fragments in a fine to medium grained sulphide matrix. The wallrock
fragments are intensely altered with chlorite, talc and sericite with some
degree of pyritization and carbonation. These lenses contain variable amounts of
pyrite, sphalerite, chalcopyrite and minor pyrrhotite.

Mineralization is generally medium to coarse grained
disseminated to solid sulphides consisting of pyrite, chalcopyrite, sphalerite,
pyrrhotite, and magnetite. The principle gangue minerals are chlorite and
quartz. Alteration minerals include biotite, epidote and actinolite.

Sampling and Analysis

Sampling Methods

The majority of sample intervals from definition and
exploration drilling were whole rock sampled with the core placed in a plastic
bag with its unique sample identification tag. Typically when exploration
drilling in new areas, all samples are either split or cut in half with a
diamond saw. The bagged samples were placed in either a burlap bag or a plastic
pail with a submittal sheet that was prepared by the geologist or technician.
Samples were delivered to the Flin Flon assay laboratory, located in the Flin
Flon Metallurgical Complex, which is owned and operated by Hudbay. Samples are
checked by laboratory personnel to ensure that they match the submittal
sheet.

The samples were analyzed for the following elements: gold,
silver, copper, zinc, lead, iron, arsenic and nickel. Base metal and silver
assaying was completed by aqua regia digestion and read by a simultaneous ICP
unit. The gold analysis was completed on each sample by AAS after fire assay
lead collection. Gold values greater than ten grams per tonne were reassayed
using a gravimetric finish. All analytical balances are certified annually by a
third party. Check weights are used daily to verify calibration of balances. All
metal standards used to make the calibration standards for the AAS and ICP are
certified and traceable. Each is received with a certificate of analysis. The
Flin Flon assay laboratory was recently certified, in December 2011, to the ISO
9001 quality management system to help ensure it meets the needs of Hudbay as
well as those of other stakeholders.

- 27 -

---

A total of 112,732 samples from 3,396 drill holes were
submitted to the Flin Flon assay laboratory for analysis as of the date of the
most recent technical report. The average length for these sample intervals was
1.62 metres.

Bulk density measurements were taken on 2,982 of the
mineralized samples selected for assaying as of the date of the most recent
technical report. The measurement methodology consisted of first weighing the
core sample in air, then, the sample was suspended in a tub filled with water by
a chain on the underside of the scale in such a way that it did not touch the
sides of the water-filled tub and the weight of the submerged sample was
recorded.

Quality Assurance and Quality Control

As part of Hudbay Quality Assurance and Quality Control
(QAQC) measures, a portion of the pulp duplicates has been sent to Acme
Analytical Laboratories Ltd. (Acme) in Vancouver, British Columbia for
comparison and verification purposes since early 2006. The Hudbay QAQC measures
also involve the use of blank materials, reference standards, internal
duplicates, and repeats.

During the drilling programs at 777 a total of four different
types of blanks were inserted into the sample stream between early 2000 and
September 2011. Blanks were inserted at a rate of one for every 20 assays until
the fall of 2003, when this was reduced to one for every 50 assays as a means of
cost reduction. Since the Hudbay assay laboratory runs batches of 50-60 samples
at a time this should place at least one blank in every batch.

The use of reference standards has become increasingly
systematic and they are now increasingly systematic inserted into the sample
stream at every 20th assay interval.

Duplicates are used as a check to verify the repeatability of
the assay data. Duplicates are run at the Hudbay laboratory at a frequency of
one in twenty samples, and also at Acme as an independent check. Samples were
selected by Acme at a minimum frequency of one sample per every five internal
duplicates, which equates to at least one sample per every 100 samples.

Repeats, typically referred to as blinds, are run on a
monthly basis on one sample out of every four or five duplicates that were
analyzed during that month. The results are considered an internal independent
check on the Hudbay assay laboratory results.

Data Verification

Examination and mapping of the underground drifting visually
confirmed the geology and VMS style of mineralization. As well, the examination
of drill core for several holes has also confirmed the mineralization and
geology and compared well to underground mapping with drill logs and assays.

A visit was conducted to the 777 core logging and storage area,
exploration core storage facility, and the Hudbay assay facility and each was
deemed to be secure and in reasonable condition. In addition, the qualified
person responsible for this section of the technical report has had several
discussions with current and former geologists as well as other personnel that
have worked at the deposit to verify various details of the mining,
infrastructure, geology, drilling and sampling.

Full verification of the data was not able to be completed as a
small portion of the data, from the Callinan portion of the deposit is
considered historic in nature.

Security of Samples

For security purposes, all sample preparation, splitting,
handling, and storage was in the control of Hudbay personnel at all times in
accordance with then applicable chain of custody policies which were consistent
with industry standards at the time. Hudbay implemented a documented full chain
of custody procedure in August 2011. This involves the creation of a submittal
sheet with all batches of drill core sent for assay by the geologist daily. The
sheet is signed both by the geologist, to verify the samples were stored
securely, and by the laboratory personnel, to verify it was in their control
from the time it left the core shack and is consistent with the current industry
standards.

- 28 -

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Mineral Reserve and Mineral Resource Estimates

See Technical Information Summary of Mineral Reserves and
Mineral Resources for the estimated Mineral Reserves and Mineral Resources for
the 777 Mine as of December 31, 2012.

Mining Operations

The 777 mine is a multi-lens orebody with shaft access down to
the 1508 metre level. The mine consists of an internal ramp that provides access
to each mining level. Mobile tired diesel equipment is utilized. Load haul dumps
units vary from 6.1 cubic metres to 7.6 cubic metres. Trucks are 40 to 50 ton
units feeding an ore pass system or direct to rock-breakers which feed an
underground crusher and ore is skipped to surface via the shaft.

Long-hole open stope is the mining method used at the 777 Mine.
Primary stopes are mined and filled with paste backfill, while secondary stopes
are mined and filled with unconsolidated loose waste rock. Long-hole stopes are
mined at 15 metre to 17 metre vertical sill to sill intervals. Stope strike
lengths are generally 16 metres with widths of two to 100 metres, with an
average of approximately 20 metres. The ore is undercut at the top and bottom of
the block, providing access for drilling and mucking. Drilling is done by top
hammer long-hole drills with holes varying in length between ten metres and 20
metres long and a hole diameter of 3 inches. Mucking is accomplished by remote
control load-haul-dumps (LHDs) and then loaded to haul trucks.

Retreat long-hole open stope and cut and fill are the mining
methods planned for the 777 North expansion. Long-hole stopes will be mined
using a similar method as at 777 Mine.

Ore at 777 Mine is loaded by LHDs to underground haul trucks,
which dump to a series of ore passes that feed three chutes on 1412 metre level.
Haul trucks are loaded from the chutes and haul the ore on the 1,412 metre level
haulage drift directly to the ore grizzly / rock-breaker at 1,412 metres to
properly size the muck. The ore is temporarily stored in a 1,725 tonne coarse
ore bin that feeds the crusher. From the crusher it is conveyed to a 1,600 tonne
fine ore bin, where it is conveyed to a loading pocket at the 1,508 metre level
and placed into two 15 tonne skips and hoisted to surface. The ore on surface is
hauled by 53 to 63 tonne haulage trucks directly to the Flin Flon concentrator
or is dumped on a stockpile close to the concentrator.

Ore from 777 North expansion is loaded onto haul trucks by LHDs
and transported up the ramp to surface. The ore is dumped on the ground prior to
being sent through a surface crusher operated by a contractor. The ore is then
loaded and transported for processing at the Flin Flon concentrator or
stockpiled nearby.

Our Flin Flon concentrator processes 777 ore into copper and
zinc concentrates. Copper concentrate is sold to third party purchasers and zinc
concentrate is sent to our Flin Flon zinc plant where it is further processed
into special high grade zinc before being sold to third party purchasers.

Current production rates are expected to be approximately 4,000
tonnes per day for the 777 Mine and 330 tonnes per day at the 777 North
expansion based on 363 days of production per year. This yields an expected mine
life through to 2020 for the 777 Mine, while 777 North expansion is expected to
end production in 2017. Production from 777 Mine is subject to federal and
provincial income taxes, as well as the Manitoba mining tax. The combined
federal and provincial tax rates are assumed to be approximately 27 percent for
the life of the mine.

The 777 mine has been in commercial production since 2004 and
the original project capital has already been paid back and ongoing capital is
defined as sustaining capital.

Exploration and Development

2011 marked the first year that a concentrated effort on
exploration drilling was conducted from underground at the 777 Mine. Much of the
drilling to that date had been focused on converting resources to reserves. In
excess of 86,000 metres of underground exploration drilling has been drilled at
the 777 Mine targeting additional resources in the hanging wall, footwall, along
strike and in upgrading inferred resources. Significant knowledge was gained on
the stratigraphy and current interpretations to the north of the deposit were
proven to be accurate, and will be the focus of the 2013 exploration programs
which is budgeted to exceed 28,000 metres of exploration drilling.

- 29 -

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Production Information

The following table summarizes the 777 Mine 2012 production on
a 100%, full year basis:

Units
    2012Ore Processed
    (tonne)
    1,567,665Gold Grade
    (g/t)
    2.2Silver Grade
    (g/t)
    25.8Gold Recovery
    (%)
    67Silver Recovery
    (%)
    56Produced Gold
    (oz)
    73,221Produced Silver
    (oz)
    734,440


SAN DIMAS MINES, MEXICO

The following description of the San Dimas Mine is based on the
information disclosed in the annual information form of Primero filed on
April 2, 2013. The Company QPs have approved the disclosure of scientific and
technical information in respect of the San Dimas Mine in this document.

Property Description and Location

The San Dimas Mine is located on the borders of the Durango and
Sinaloa states, approximately 125 km north-east of Mazatlan, Sinaloa and 150
kilometres west of the city of Durango, Durango, in Mexico. The property is
centered on latitude 24°06N and longitude 105°56W.

Mining Concessions, Royalties and Permits

The San Dimas property consists of 66 contiguous concessions
covering 24,966 hectares, having expiry dates ranging from 2019 to 2060. As per
Mexican requirements for grant of tenure, the concessions comprising the San
Dimas Mine have been surveyed on the ground by a licensed surveyor. All
appropriate payments have been made to the relevant authorities and the licenses
are in good standing. Primero has secured surface rights by either acquisition
of private and public land or by entering into temporary occupation agreements
with surrounding communities. There are currently no royalties payable to any
entity, including any governmental entity, however, it is widely anticipated
that the Mexican government will introduce a royalty in 2013.

Primero also holds the appropriate permits under local, State
and Federal laws to allow mining operations. The main environmental permit is
the Licencia Ambiental Unica under which the mine operates its industrial
facilities. The mine and mill expansion of the San Dimas Mine is also covered
by this permit. Other significant permits are those related to water supply and
water discharge rights. There is a waste pad project planned to commence in 2013
for which both the environmental impact study and the technical justification
study have been presented to Secretaria de Medio Ambiente y Recursos Naturales,
the Mexican environmental protection agency. In addition, permits have been
requested from the Commission National de Agua regarding the Piaxtla River
diversion that is part of this waste pad project.

Environmental Matters

The San Dimas property is subject to a full closure plan and
reclamation of the site upon cessation of operations, which would involve all
facilities currently being used (mill, hydro plant, mines, surface
infrastructure, power line, roads, dry tailings). Primero is currently dealing
with two past environmental liabilities: reclamation of old San Antonio milling
facilities and closure/reclamation of old Contrestacas tailings facilities. All
work is expected to be completed in 2014.

On January 3, 2012, tailings containing 5 ppm cyanide were
spilled into the Piaxtla River, impacting a total area of 2.5 kilometres. The
spillage was the result of a hole that developed in a tailings pipe. Primero
notified Mexican governmental authorities of the incident. The Mexican federal
attorney for environmental protection, Procuraduría Federal de Protección al
Ambiente (PROFEPA), and the Mexican national water commission, Comisión
National del Aqua (CNA), visited the site in January 2012. On January 5, 2012,
the municipality of San Dimas, Durango, Mexico confirmed in a letter to Primero
that they considered the incident as localized and under control. The letter
specified that the efficiency of the emergency response limited the damages to
death of small concentrations of fish, without any impact on animals. Following
the spill, Primero took a number of corrective actions including design and
building of a containment structure for the tailings pipe, which will be fully
operational by June 2013 once installation of a second new tailing pump is
complete. On April 20, 2012, PROFEPA issued its preliminary report which
specified that they would not fine Primero for the incident but will monitor
compliance with their recommendations. All of PROFEPAs requests were
implemented and, in July 2012, PROFEPA informed Primero that it would not be
subject to any fines from PROFEPA. On September 3, 2012, Primero received final
resolution from CNA, specifying a fine of 93,500 pesos, which Primero paid on
September 20, 2012.

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On September 17, 2012, following the final resolution from CNA,
Primero was notified by PROFEPA that it was fined $31,200 pesos. The resolution
notification referred to non-compliance to a hazardous waste regulation. Since
tailings are not considered hazardous waste, Primero filed a motion with the H.
Tribunal De Justicia Fiscal and Administrativa on November 23, 2012 to void the
resolution by PROFEPA.

Accessibility, Climate, Local Resources, Infrastructure
and Physiography

Access

Access to the San Dimas area is by air or road from the city of
Durango. By road the trip requires approximately ten hours. Primero maintains a
de Havilland Twin Otter aircraft and a helicopter, both of which are based at
Tayoltita. Travel from either Mazatlan or Durango to Tayoltita requires an
approximate half hour flight in the Twin Otter aircraft. Most of the personnel
and light supplies for the San Dimas Mine arrive on Primeros regular flights
from Mazatlan and Durango. Heavy equipment and supplies are brought in by road
from Durango.

Climate

The climate of the San Dimas area is semi-tropical,
characterized by relatively high temperatures and humidity, with hot summers
(maximum about 35 degrees Celsius) and mild winters. At higher elevations in the
Sierra, frosty nights occur in the winter (November to March). The majority of
the precipitation occurs in the summer (June through September); however,
tropical rainstorms during October to January can result in considerable
additional rainfall. The total average annual rainfall varies from about 66 to
108 centimetres. Weather does not affect the operations and mining is carried
out throughout the year.

Local Resources and Infrastructure

Mining at the San Dimas Mine is done by a mixture of contract
mining and Primero personnel. Tayoltita is the most important population centre
in the region with approximately 8,000 inhabitants, including mining personnel,
and the population outside of this centre is sparse. Subsistence farming,
ranching, mining and timber cutting are the predominant activities of the
regions population.

Water for the mining operations is obtained from wells and from
the Piaxtla River. Water is also supplied by Primero to the town of Tayoltita
from an underground thermal spring at the Santa Rita mine.

Electrical power is provided by a combination of Primeros own
hydro generation system  Las Truchas  and the Federal Power Commission Supply
System (the FPCSS). Primero operates hydroelectric and back-up diesel
generators, which are interconnected with the FPCSS. Las Truchas provides about
75 percent of the total requirement of the San Dimas Mine during nine months of
the year. During the remaining three months of the year, corresponding to the
dry season, the power for operations at San Dimas is mainly supplied by the
FPCSS. Primero is considering increasing the power generation of the Las Truchas
facility from 50 gigawatts to 90 gigawatts.

The main infrastructure of the San Dimas district consists of
roads, a townsite, an airport, the crushing and processing facilities of the
Tayoltita mill, the old San Antonio mill, the Tayoltita/Cupias and San Antonio
tailings facilities, the Las Truchas hydro generation facilities, a diesel power
plant and the San Dimas Mine, which is divided into five blocks: West Block (San
Antonio Mine), Sinaloa Graben Block, Central Block, and the Tayoltita and Arana
Blocks (Santa Rita Mine). The San Antonio mill and tailings facilities are
currently under reclamation.

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The Tayoltita mine is the closest operation to the processing
plant and town site of Tayoltita and is located 400 metres north east of the
processing plant. The Santa Rita mine is located three kilometres upstream from
Tayoltita. The Central Block is currently the most active mine and is located
2,000 metres downstream from the processing plant. The ore from this operation
is hauled by a road parallel to the Piaxtla River and sent directly into the
mill. The Sinaloa Graben mine is the most recent operation integrated to
production and is presently where the major exploration and growth is expected;
the Sinaloa Graben is located 1,000 metres downstream from the Central Block
mine. The West Block mine is located seven kilometres west of the Tayoltita mine
in the State of Sinaloa. The mine is accessed from Tayoltita by a three
kilometre road paralleling the Piaxtla River, opposite the town of Tayoltita to
the portal of the San Luis Tunnel, through the tunnel and then by road, or along
the San Vicente creek bed to the Contraestaca village, for a total drive of
approximately 45 minutes.

Physiography and Vegetation

The San Dimas district is located in the central part of the
Sierra Madre Occidental, a mountain range characterized by very rugged
topography with steep, often vertical walled valleys and narrow canyons.
Elevations vary from 2,400 metres above mean sea level on the high peaks to
elevations of 400 metres above mean sea level in the valley floor of the Piaxtla
River. Vegetation is dominated by pines, junipers and, to a lesser extent, oaks
at higher elevations while lower slopes and valleys are covered with thick
brush, cacti and grass.

History

Prior Ownership

The San Dimas property contains a series of epithermal gold
silver veins that have been mined intermittently since 1757. Modern mining began
in the 1880s, when the American San Luis Mining Company acquired the Tayoltita
mine and American Colonel Daniel Burns took control of the Candelaria mine and
began working in the area, and has continued under different owners to the
present. By 1940, the San Luis Mining Company had acquired the Candelaria and
the Contraestaca mines.

A mining law introduced in 1959 in Mexico required the majority
of a Mexican mining company to be held by a Mexican entity and forced the sale
of 51 percent of the shares of the San Luis Mining Company to Mexicans. In 1961,
the Minas de San Luis S.A. de C.V. was formed and assumed operations of the
mine. In 1978, the remaining 49 percent interest was obtained by Luismin S.A. de
C.V (Luismin).

In 2002, Wheaton River Minerals Ltd. (Wheaton River) acquired
the property and, in 2005, Wheaton River merged with Goldcorp. Through its
wholly-owned subsidiary, Primero Empresa, Primero acquired the San Dimas Mine
from subsidiaries of Goldcorp in August 2010.

Historical Exploration and Development Work

In the San Dimas mining district there are historical records
that mention workings since 1757, but it was not until 1890 that there were
formal operations by the San Luis Mining Company and Mexican Candelaria Company.
In 1904, the first cyanide mill in Mexico was built at Tayoltita. By 1940, the
Candelaria mine had been mined out.

In the 1960s, higher grade discoveries led to the first deep
drilling campaigns and to the initial long tunnels. In 1975, the first 4.5
kilometre tunnel (deepest in the district) was completed in the Tayoltita mine,
this being an area where ore discoveries such as the San Luis vein had taken
place following the Favourable Zone concept aided by field geology. In the
1980s, American and Mexican groups commenced operations that led to the first
geophysical and geochemical exploration in the east Tayoltita-Santa Rita
block.

By the late 1980s and early 1990s, the Favourable Zone
concept and Ag/Au ratios supported by fluid inclusion and thermal fusion studies
led to discovery of the San Antonio and Santa Rita deposits. After acquisition
of the whole property by the Mexican group there was a significant reduction in
exploration activities throughout the whole mining district.

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In 2002, foreign investment (mainly Canadian) returned and the
operation was acquired as a whole, which resulted in a substantial increase in
drilling long drillholes combined with the development of long tunnels
perpendicular to the general trend of veins. Examples of these tunnels include
San Luis, Santa Anita and Sinaloa Graben, where significant intersections and
new high grade veins, similar to the still operating Roberta and Robertita veins
and such as the Elia and Aranza veins, were discovered.

Geology and Mineralization

Regional Geology

The general geological setting of the San Dimas district
includes two major volcanic successions totalling approximately 3,500 metres in
thickness, which have been described the Lower Volcanic Group (LVG) and the
Upper Volcanic Group (UVG) and are separated by an erosional and depositional
unconformity.

The LVG is of Eocene age predominantly composed of andesites
and rhyolitic flows and tuffs and has been locally divided into six units. The
LVG outcrops along the canyons formed by major westward drainage systems and has
been intruded by younger members of the batholith complex of granitic to
granodioritic composition. The Socavón rhyolite is the oldest volcanic unit in
the district, its lower contact destroyed by the intrusion of the Piaxtla
granite.

The Socavón rhyolite is more than 700 metres thick and is host
for several productive veins in the district. Overlying the Socavón rhyolite is
the 20 to 75 metres thick, well-bedded Buelna andesite that is remarkably
persistent throughout the area. The Buelna andesite is overlain by the Portal
rhyolite, a grey, cream to purple coloured rock containing potassic feldspar and
quartz cementing small (five to ten millimetres) volcanic rock fragments. It
ranges in thickness from 50 to 250 metres and is also prevalent throughout the
district.

The overlying Productive Andesite is more than 750 metres in
thickness and has been divided into two varieties based on grain size, but of
identical mineralogy. One variety is fragmental (varying from a lapilli tuff to
coarse agglomerate), and the other has a porphyritic texture (one to two
millimetres plagioclase phenocrysts).

Above the Productive Andesite, the overlying Camichin unit,
composed of purple to red interbedded rhyolitic and andesite tuffs and flows, is
more than 300 metres thick. It is the host rock of most of the productive ore
shoots of Patricia, Patricia 2, Santa Rita and other lesser veins in the Santa
Rita mine.

The Las Palmas Formation, at the top of the LVG, consists of
green conglomerates at the base and red arkoses and shales at the top, with a
total thickness of approximately 300 metres. This unit outcrops extensively in
the Tayoltita area. The lower contact between the LVG and the underlying
Productive Andesite is unconformable.

The predominant plutonic events in the district resulted in
intrusion of the LVG by granitic to granodioritic intrusives, part of the
Sinaloa composite batholith.

Other intrusives cutting the LVG include the Intrusive
Andesite, the Elena aplite and the Santa Rita dacitic dikes. The even younger
Bolaños rhyolite dike, and the basic dikes intrude both the LVG and UVG.
Intrusive activity in the western portion of the Sierra Madre Occidental has
been dated continuously from 102 to 43 million years. The UVG overlies the
eroded surface of the LVG unconformably.

Local and Property Geology

In the San Dimas district, the UVG is divided into a
subordinate lower unit composed mainly of lavas of intermediate composition
called Guarisamey Andesite and an upper unit called the Capping Rhyolite. The
Capping Rhyolite is mainly composed of rhyolitic ash flows and air-fall tuffs
and is up to 1,500 metres thick in the eastern part of the district; however,
within most of the district it is about 1,000 metres thick. The San Dimas
district lies within an area of complex normal faulting along the western edge
of the Sierra Madre Occidental. Compressive forces first formed predominantly
east-west and east-northeast tension gashes that were later cut by transgressive
north-northwest striking slip faults. The strike-slip movements caused the
development of secondary north-northeast faults, with right lateral
displacement. Five major north-northwest-trending normal faults divide the
district into five tilted fault blocks generally dipping 35 degrees to the east.

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Deposits and Mineralization

Deposits

The deposits of the San Dimas district are high grade,
silver-gold-epithermal vein deposits characterized by low sulphidation and
adularia-sericitic alteration. They were formed during the final stages of
igneous and hydrothermal activity from quartz-monzonitic and andesitic
intrusions.

As is common in epithermal deposits, the hydrothermal activity
that produces the epithermal vein mineralization began a few million years after
the intrusion of the closely associated plutonic rocks and several million years
after the end of the volcanism that produced the rocks that host the
hydrothermal systems. At San Dimas, based on age determinations, the average
period between the end of the late stage of plutonism and the hydrothermal
activity is 2.1 million years; however, hydrothermal activity continued for at
least another five million years. Older veins appear more common in the eastern
part of the district, whereas younger veins are found in the western part.

Typical of epithermal systems, the gold and silver
mineralization at the San Dimas Mine exhibits a vertical zone with a distinct
top and bottom that the prior owner of the mine termed the Favourable Zone. At
the time of deposition, this Favourable Zone was deposited in a horizontal
position paralleling the erosional surface of the LVG on which the UVG was
extruded.

This favourable, or productive, zone at San Dimas Mine is some
300 metres to 600 metres in vertical extent and can be correlated, based both on
stratigraphic and geochronologic relationships, from vein system to vein system
and from fault block to fault block. Using this concept of the dip of the
unconformity at the base of the UVG, the various mine owners, over the years,
have been able to infer the dip of the Favourable Zone and with considerable
success explore and predict the Favourable Zone in untested areas.

Mineralization

The mineralization is typical of epithermal vein structures
with banded and drusy textures. Within the San Dimas district, the veins occupy
east-west trending fractures except in the southern part of Tayoltita where they
strike mainly northeast and in the Santa Rita mine where they strike
north-northwest. The veins were formed in two different systems. The east-west
striking veins were the first system developed, followed by a second system of
north-northeast striking veins. Veins pinch and swell and commonly exhibit
bifurcation, horse-tailing and sigmoidal structures. The veins vary from a
fraction of a centimetre in width to eight metres, but average 1.5 metres. They
have been followed underground from a few metres in strike length to more than
1,500 metres.

Three major stages of mineralization have been recognized in
the district: (1) early stage; (2) ore forming stage; and (3) late stage quartz.
Three distinct sub-stages of the ore forming stage also have been identified,
each characterized by distinctive mineral assemblages with ore grade
mineralization always occurring in the three sub-stages: (1)
quartz-chlorite-adularia; (2) quartz-rhodonite; and (3) quartz-calcite.

The minerals characteristic of the ore forming stage are
composed mainly of white, to light grey, medium to coarse grained crystalline
quartz with intergrowths of base metal sulphides (sphalerite, chalcopyrite and
galena) as well as pyrite, argentite, polybasite, stromeyerite, native silver
and electrum.

The ore shoots within the veins have variable strike lengths
(five to 600 metres); however, most average 150 metres in strike length.
Down-dip extensions of ore shoots are up to 200 metres but are generally less
than the strike length.

Exploration and Drilling

Historically, exploration of the Favourable Zone at San Dimas
Mine has been done both by diamond drilling and by underground development work.
Diamond drilling is predominantly done from underground stations as both the
rugged topography (i.e. access to surface drill stations) and the great drilling
distance from the surface locations to the target(s) makes surface drilling both
challenging and expensive. All exploration drilling and the exploration
underground development work are done both in-house and by use of contractors,
such contractors being Services Inter Lab of Mexico, S.A. de C.V. and Mr. Jose
Valente Nevarez Samaniego.

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Channel Sampling

While drilling is now the current method of exploration,
underground channel sampling plays a large role in the estimation of current
Mineral Resources.

Channel samples are routinely taken every three metres in all
development in vein, and stoping is sampled every two rounds (six metres).
Sample limits within the vein are based on texture and mineralogy changes. No
sample is more than 1.2 metres in length and the minimum sample width is 0.2
metres. A second cut is taken across the vein as a validation and the results
averaged for grade control purposes. A tarpaulin is laid down below the sample
line. The samples are taken as a rough channel along the marked line, ensuring
that the unit is sampled in a representative fashion, with large slabs being
broken and sub-sampled. The total sample which has collected on the tarpaulin is
broken with a hammer, mixed and quartered such that a two kilogram sample is
bagged and labelled with sample number and location details. Samples are
dispatched to the Primero Tayoltita Mine Laboratory (the TAY Lab) and samples
received by 1:00 p.m. are reported that day. Sketches of the face sampled are
filed, showing samples physical locations from surveying and the measured width
of each sample. Since January 2012, 15 percent of all channel samples have been
sent to the independent SGS laboratory in Durango. These samples have QAQC
procedures applied and are of a standard that can be reliably used for
estimation of Mineral Resources. The vein mapping and channel sampling is
continually plotted on plans and both used for grade control and for Mineral
Resource estimation.

Drilling

All drilling was previously termed exploration drilling and
collected data well away from the underground development that was intensively
tested by channel sampling. Commencing in 2011 drilling designed to convert
Inferred Mineral Resources to Indicated Mineral Resources was designated as
delineation drilling and drilling designed to explore the extension of known
veins and test new targets was designated as exploration drilling.

Drill holes are typically drilled to get the best intersection
possible such that the intersected width is as close as possible to the true
width, while giving vertical coverage. Drilling underground is achieved by
drilling from one vein development to another, or from specific drill stations.
Holes are typically 200 to 250 metres long and generally between +/- 50 degrees
in dip, while surface drilling can be up to 700 metres deep. Generally, fans are
drilled on multiple sections from one set up. Since October 2011, samples have
been sent for analysis to the SGS laboratory in Durango and bulk density
measurements have been systematically taken on core samples.

Central Block

In the Central Block, 179 holes were completed in 2012 for a
total of 45,383 metres of drilling. Drilling was focused on upgrading the
Inferred Mineral Resources to Measured and Indicated Mineral Resources
categories and to help define better the boundaries of the Roberta/Robertita
systems at depth and to the east of the known faulted boundary (Falla Huerta)
which has uplifted the barren Piaxtla Intrusive. Drilling indicated that the
known mineralization in the Roberta/Robertita systems extends to a depth of at
least 60 metres below the deepest current exploitation level and between 300
metres to 500 metres east of the present development. Drillholes east of the
established economic zone have intercepted the Roberta vein, though the exact
location of the favourable horizon remains to be established. The extension of
the Roberta/Robertita systems east of the Falla Huerta will be tested during
2013.

Sinaloa Graben

In the Sinaloa Graben, 125 holes were completed in 2012 for a
total of 33,078 metres of drilling. Drilling was focused on converting Mineral
Resources from Inferred to Indicated, to add new Inferred Resources in the
Victoria and Alexa veins, and to assess whether the economic zones (ore shoots)
found in this block were a continuation of the ore shoots of the Central Block.
Drilling helped establishing that the high-grade mineralization continues west
of the Sinaloa Fault (i.e. Alexa) up to the San Mateo Fault (an offshoot of the
Sinaloa Fault) and continues at depth.

The 2012 drilling program helped categorize more than 110,000
ounces of gold Indicated Resource in Alexa and Victoria.

During 2013, (1) the Victoria & Alexa veins will be
delineated and expanded; (2) the extensions of the Elia and Aranza veins will be
advanced and delineated; and (3) other targets will be tested (e.g. extension of
Roberta/Robertita System) by a drilling and drifting program of approximately
25,420 metres and 1,200 metres, respectively.

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Arana Hanging Wall

Two targets were evaluated during 2012 in the Arana Hanging
Wall area by seven deep drill holes (approximately 3,600 metres); the objective
of the 2012 exploration program in the Arana Hanging Wall area was to expand on
earlier (2011) drill holes indicating potential for new orebodies at depth in
this historical area. Drilling results were not as good as expected, though five
of the seven drill holes intercepted the target veins and textures and
alteration minerals indicated proximity to the favourable horizon. Approximately
7,400 metres of drilling are planned for this area in 2013.

Contemplated Exploration and Development Activities

Contemplated Exploration Activities

The San Dimas $15.4 million 2013 exploration program includes
approximately 73,100 metres of diamond drilling employing 14 rigs, broken into
16,580 metres of underground exploration drilling, 19,000 metres of surface
exploration drilling and 37,520 metres of delineation drilling, plus 3,900
metres of exploration drifting.

The current main production area is located in a prolific
central corridor that runs south-west to north-east across the property. This
central corridor historically contains vein systems that are noted for their
high-grade nature, above average thickness and significant lateral extensions.

The main target of the 2013 underground mine exploration
program is to replace the depleted Mineral Resources plus 100 percent additional
new Indicated Mineral Resources. In order to achieve this goal, a drilling
program of 54,100 metres is proposed, consisting of 134 drillholes (37,520
metres) for delineation and 48 drillholes (16,580 metres) for exploration. The
majority of the delineation drilling is planned for the Roberta-Robertita and
Marina1- Marina2 vein systems in the Central Block (47 percent) and the
Victoria-Alexa and Elia-Aranza vein systems in the Sinaloa Graben (31 percent).
The remainder of the delineation program is divided almost equally between the
Central Blocks San Fernando (seven percent), Santa Rita (six percent) and Arana
(nine percent) areas. The objective is to delineate accurately already known
historical Mineral Resources in former producing veins. Exploration drilling
will be focused on the Sinaloa Graben (64 percent). The strategy is: (1) to
define the extensions of the Victoria-Alexa and Elia-Aranza vein systems; (2) to
explore north and south of these veins systems; (3) to locate the Roberta and
Robertita veins in the Sinaloa Graben and (4) to evaluate the Rosario vein. The
Central Block exploration (13 percent) will aim for the extensions of Marina2
and Soledad-Jael veins. The remaining exploration drilling (21 percent) will
target the Central Blocks San Fernando zone (the area north of Roberta up to
the Noche Buena vein, including the Pozolera and Frapopan veins). A total of
3,849 metres of exploration drifting is also proposed for the Sinaloa Graben
(2,063 metres), Tayoltita (1,065 metres) and Central Block (721 metres) areas.
The most favourable targets for exploration drifting are: (1) the extension of
the Central Blocks Roberta and Robertita veins west of the Limoncito Fault and
into the Sinaloa Graben; (2) the continuation of the Victoria and Alexa veins on
the western Sinaloa Graben; and (3) the west extension of the Elia and Aranza
veins.

The Sinaloa Graben is the next high-grade mineralized zone at
San Dimas, and represents a considerable portion of the potential mid to long
term production for the mine. This block contains more than 20 known veins of
which only a few have been mined with the remainder of the veins are unexplored.
A north-south tunnel currently extending 4.6 kilometres (planned to extend to
8.0 kilometres) through the centre of the Sinaloa Graben has been developed and
provides direct underground access to the east-west mineralization projected
within the high grade central corridor.

Since acquiring the mine, Primero discovered the Elia and
Aranza high-grade veins in the southern end of the central corridor in the
Sinaloa Graben. The Elia and Aranza veins are separated by 250 metres and run
almost parallel to the central corridor of mineralization. Drifting results from
Elia and Aranza continue to exceed expectations suggesting that the Sinaloa
Graben contains much higher than the average grade and width of mineralization
than Mineral Reserves and Mineral Resources in the Central Block.

On March 28, 2012 Primero announced the discovery of the
Victoria vein, located in the Sinaloa Graben, 1.0 kilometre north of the Elia
vein. Several high-grade intercepts of the Victoria vein have been intersected,
and these exhibit similar grades, widths and mineralization as the Robertita
vein system in the adjacent Central Block.

The discovery of the Victoria vein is a promising result of
Primeros 2012 objective to validate the existence of the south-west lateral
extensions of the Roberta and Robertita vein systems into the Sinaloa Graben.
San Dimas is currently drilling the Victoria vein from former underground
workings of the El Pilar vein with two rigs, and expects to extend the known ore-shoot along strike and at depth. Access to the
Victoria vein area improved in 2012 as a result of underground development
advancing west from the Central Block and north via the Sinaloa Graben tunnel.
San Dimas is now able to drill the Victoria vein and the wider Sinaloa Graben
from three strategic underground locations.

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Contemplated Development Activities

Primeros goal in 2013 is to add to the estimated Mineral
Reserves and Mineral Resources, net of depletion, and to convert mineralization
from exploration potential to Inferred Mineral Resources through new
discoveries.

The east-west tunnel that joins the north-south Sinaloa Graben
tunnel, connecting the historical main mining block, the Central Block, with the
new mining area, the Sinaloa Graben, is expected to be completed in 2013,
significantly improving access routes at the mine. Primero is also driving a
second east-west haulage tunnel approximately 250 metres below the first, that
is expected to be completed within 18 to 24 months and is designed to facilitate
the increased haulage associated with the mine expansion to 2,500 tonnes per
day.

Primero has designed the mill expansion project such that a
potential further expansion to 3,000 tonnes per day can be achieved with minimal
capital and no down-time to operations. Primero will continue detailed
engineering in 2013 for a potential expansion to 3,000 tonnes per day and, based
on exploration results, could announce a further expansion to 3,000 tonnes per
day before the end of the year.

Sampling, Assaying and Security

The majority of the data utilized in the Mineral Resource
estimation has been generated in the TAY Lab, with some samples having been
assayed at the San Antonio laboratory, which was decommissioned in 2004. Both
laboratories have been owned and operated by the mine, and have not been
accredited at any time. The TAY Lab was audited in early 2012. The audit
identified a number of deficiencies and, to the extent that these applied at the
time of the audit, some of these are discussed below.

As a result of the audit, Primero has implemented revised
quality control procedures and is working to upgrade or replace equipment at the
TAY Lab. Since October 2011, Primero has been utilizing an external independent
laboratory (SGS in Durango, an ISO 17025 certified laboratory) for all drill
samples. While channel samples continue to be processed principally at the TAY
Lab, approximately 10% of the samples are also sent to SGS.

Sample Handling and Preparation

Samples are delivered to the TAY Lab on an ongoing basis. The
building is located in a fenced area and consists of a central corridor with the
various activities taking place in rooms off of it. There are no formal sample
transmission and reception procedures, and checking of sample numbers is
difficult and not assisted by the reuse of sample numbers over time.

Samples are placed in bowls and dried in a small drying oven,
but drying facilities are limited. Crushing is carried out in a Marcy jaw
crusher and pulverizing is carried out in two disc mills and one small ring and
puck mill. Sample pulps are delivered to the weighing room. The equipment being
used is old and overused.

Sample Analysis

Gold values were determined by Fire Assay using a ten gram fire
assay charge, finished by gravimetric means. The small charge is governed by the
size of the fusion crucibles which is dictated by the size of the furnaces.

While some standards are used by the TAY Lab, there were no
certified standards used between 2009 and early 2012. Until early 2012, pulps
were held for one month and then discarded, which did not give time to review
any QAQC data and re-run batches.

Data Security

Data is entered into a daily Excel spreadsheet, which is placed
on the server such that Primero personnel can access the data on a daily basis.
The results for geology can only be accessed by geology staff and the cells are
protected with only the laboratory having the ability to place data into the
database. While some limits to access are in place on the daily sheet, there is not a secure database within the
laboratory. In addition, manual transcriptions take place in the laboratory
process.

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Laboratory Audit

Primero had a third party audit the TAY Lab in early 2012. The
auditor noted poor quality of the data and, in a meeting with Primero, noted
concerns over poor sample preparation procedures, flawed assaying, that no
certified standards had been used since 2009, and the likelihood for mixed up
and duplicate sample numbers.

Due to the quality of the data not being up to industry
standards, a set of tasks was put in place in order to support current and
future Mineral Resource and Mineral Reserve estimates. The most important
activity involved a review of the reconciliation process and the comparison
based on the laboratory figures to the metal in doré. The fact that San Dimas is
an operating mine that has been successfully producing precious metals for many
decades means that reconciliation is an important indicator of the reliability
of Mineral Resource and Mineral Reserve estimates. This is particularly the case
when data underpinning those estimates is of questionable reliability.

Assay QAQC

As part of its review, AMC investigated the historical QAQC
data supplied by Primero and replotted some of the data provided. AMCs analysis
reinforces the observations of the 2012 audit and found a poor correlation
between the SGS analysis of TAY Lab duplicates, blanks well above background
levels for gold and silver, and gold standards not falling within acceptable
limits.

AMC was of the opinion that there was an issue with the
underlying assay data and it was of poor quality, and recommended that Primero
continues utilizing an external laboratory for all drill samples and a portion
of the channel samples until equipment at the site laboratory can be upgraded or
replaced. Primero intends to upgrade the TAY Lab by end of 2013. As follow-up to
the TAY Lab and assay issues identified in 2012, remedial actions have been
taken as follows:

| | 1. | All sampled exploration core in 2012 was sent to the SGS
      Durango laboratory for assay;                                                                                                                                                             
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | Approximately 20 percent of the chip samples taken in
      2012 were assayed at the SGS Durango laboratory;                                                                                                                                             
| | 3. | QAQC procedures are in place, although they have not been
      reviewed by AMC;                                                                                                                                                                         
| | 4. | The TAY Lab is implementing a compliance specification
      regarding Entidad Mexicana de Accreditation A.C (EMA) certification.
      Primero has been working with an external consultant since February 2013
      in implementing such compliance.
| | 5. | Technical/handling changes at the TAY Lab level will
      commence in April 2013; and                                                                                                                                                                   
| | 6. | In 2013, the TAY Lab will be expanded in size and some
      new equipment will be purchased (in order to meet EMA
    certification).                                                                                                                   

It is expected that the TAY Lab will have the necessary
technical skills and meet regulatory specifications by December 2013.

AMC also recommended that both the TAY Lab and the Primero
geology group adopt the use of certified standards and standard control plots
for ongoing tracking and for QAQC reports that should be produced monthly. The
recommendation has been implemented.

Data Verification

On the basis of the data being of relatively poor quality, AMC
undertook a number of checks in order to ensure the data was managed and
utilized correctly. These checks included:

- Assay Integrity The daily laboratory results sheets of the TAY
  Lab, and the results database, were reviewed by AMC to see if results could be
  changed;
- Data Flow Five entries were randomly selected by AMC from the
  resource database underpinning the polygonal resource estimates and the data
  supporting the estimates was reviewed;
- Mill Reconciliation AMC reviewed the results of a mill
  reconciliation exercise undertaken by Primero in December 2011. The reconciliation exercise
  had been carried out to ensure that mining decisions were based on sound grade
  figures and to identify if there was a correlation between the daily grades
  and the final month-end reported grades, which are prepared based on
  gold/silver poured during the month. For the entire month a daily sample of
  the ball mill feed was taken at the automatic sampler located at the end of
  the belt feeding the surge bin and prepared/split under supervision. One
  sample was sent to the TAY Lab while a duplicate sample was sent to the
  external SGS lab located in Durango. In addition the pulps generated at TAY
  Lab on a daily basis were sent to SGS lab to be assayed. Primero worked to
  ensure that the samples sent to the TAY Lab and SGS lab were representative of
  the daily mill feed and were duplicate samples;

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- Model Depletion The tonnes mined and the gold and silver produced
  from the Roberta vein were reported from the block model prepared in 2012, and
  compared by AMC to production. The Roberta vein was chosen for this exercise
  as it could be reconciled based on the wireframes for mining carried out in a
  particular year. The model tonnes and grade were compared to the sum of the
  monthly reconciled production as prorated back since 2009 to the Roberta vein;
- Production Comparison AMC reviewed the monthly production
  comparison conducted by Primero based on individual veins. The mine figure was
  reconciled to the mill figure (before certain small adjustments); and
- Exploration Data Pulps that had been sent to the SGS Durango
  laboratory were returned to the TAY Lab and assayed. AMC reviewed the assay
  data from SGS and the TAY Lab.

AMC has accepted that there was an issue with the TAY Lab. The
sample data, however, has to be used in the Mineral Resource and Mineral
Reserves estimates in the absence of any other available data at this time.
While AMC considers the use of this data to be reasonable, adjustments have been
made to the classifications used. AMC recommended that drilling be carried out
to substantiate the data in the current Mineral Reserves, and, most importantly,
the laboratory issues need to be addressed. Most of the laboratory issues have
been addressed or will be addressed during 2013. There is no evidence to say
that the quality of the sample data affects the gold and silver ounces produced,
though it does impinge on decision making through the mining process.

Checks have shown that there is not a gross overestimation of
the grade that cannot be explained by dilution, and reconciliation is generally
good. AMC has recommended using the sample database for the current Mineral
Resource and Mineral Reserve estimates but, due to uncertainty in the data
quality, not classifying any of the Mineral Resources as a Measured Mineral
Resource.

Mineral Reserve and Mineral Resource Estimates

See Technical Information  Summary of Mineral Reserves and
Mineral Resources for the estimated Mineral Reserves and Mineral Resources for
the San Dimas Mines as ofDecember 31, 2012.

Mining Operations

The San Dimas Mine operation includes five underground gold and
silver mining areas: the West Block (San Antonio mine); the Sinaloa Graben
Block; the Central Block, the Tayoltita mine and the Arana Block (the Santa Rita
mine). Typical mining to date of the vein systems has been by mechanized
cut-and-fill, using drill jumbos or jacklegs and load-haul-dump machines, with
primary access provided by adits and internal ramps from an extensive tunnel
system through the steep, mountainous terrain. Vein thickness varies from 0.1
metres to eight metres with the average approximately 1.9 metres. Some veins
have a strike length of more than 1,500 metres. Vein dips vary from about 35
degrees to sub-vertical, the latter being decidedly more prevalent. The general
mining recovery factor is about 95 percent, while that for sill mining is about
75 percent.

The Central Block provided the majority of mine production
during 2012. Primero produced 87,900 ounces of gold and 5.13 million ounces of
silver, 10 percent and 12 percent higher, respectively, than 2011.

Ground conditions throughout most of the San Dimas operations
are good. The need for installation of ground support is assessed on an on-going
basis as development and stoping progresses. In flatter-dip vein areas where the
stopes tend to be wider, rock bolts and screen may be installed and low-grade
pillars left for support.

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The basis for ore haulage at San Dimas is LHD equipment feeding
either truck or rail haulage to the mill at Tayoltita. Development waste is
generally moved to stopes as fill.

The workforce at San Dimas is made up of company personnel
(staff and unionized) and contractor personnel. There are approximately 175
contractors currently on site.

2013 Development Plans

The San Dimas underground development plan for 2013 envisages a
similar development rate and number of metres of advance as was achieved in
2012, namely about a total of 22.3 kilometres of drifting.

In 2013, Primero expects to produce between 120,000 and 130,000
gold equivalent ounces up to 17 percent higher than 2012, based on higher
throughput at slightly higher grades. Production is expected to ramp-up at the
end of the first quarter when the current maximum milling capacity of 2,150
tonnes per day is achieved. Cash production costs are expected to be in the
range of $620 to $640 per gold equivalent ounce (or between $280 and $300 per
gold ounce on a byproduct basis) in 2013, similar to actual costs in 2012
despite the increase in planned throughput.

Material assumptions used to forecast total cash costs for 2013
include: an average gold price of $1,700 per ounce; an average silver price of
$8.52 per ounce (calculated using the silver agreement contract price of $4.12
per ounce and assuming excess silver beyond contract requirements is sold at an
average silver price of $30 per ounce); and foreign exchange rates of 1.00
Canadian dollars and 13 Mexican pesos to the U.S. dollar.

Capital expenditures during 2013 are expected to increase to
approximately $42 million excluding capitalized exploration costs. Underground
development capital and sustaining capital remain at similar levels to 2012,
with approximately 49 percent of 2013 capital expenditures allocated to projects
and 51 percent to operations. The 2013 project capital includes the mill
expansion to 2,500 tonnes per day ($10.7 million) and the first phase of a
two-year waste rock pad project ($6.8 million) designed to support the long-term
waste disposal at San Dimas.

Tayoltita Mill

The Tayoltita mill presently employs two-stage crushing and two
ball mills (12 x 14) that can operate simultaneously or separately to achieve
70 percent to 75 percent passing 200 mesh. Leaching is completed in a series of
tanks providing 92 hours of leach residence time. The pregnant solution is
recovered in a counter current decant (CCD) circuit with the gold and silver
recovered from solution in a zinc precipitation circuit. Pumping systems have
been installed to transport the high density tailings (53 percent solids) slurry
to a box canyon nearly two kilometres distant and with 180 metres elevation
gain, relying on a Putzmeister piston pump with three Geho piston diaphragm
pumps as back-up. A second Putzmeister piston pump is being added as a back-up
system to eliminate the use of the Geho pumps by mid-2013. Refining uses an
induction furnace to produce 1,000 oz gold and silver doré bars (average 98
percent pure).

The Tayoltita mill has undergone a series of plant expansions
over its operating life which have resulted in two small ball mills in parallel
as well as a series of small tanks in the leaching and CCD circuit. An expansion
at Tayoltita in 2003 increased the nominal capacity to 2,150 tonnes per day to
replace the capacity required for shutdown of the San Antonio mill. Currently,
the Tayoltita mill is operating at nearly its capacity of 2,150 tonnes per day.

In October 2012, Primero initiated a mine and mill expansion of
the San Dimas Mine. Primero approved the expenditure of a total $16.5 million to
expand the San Dimas Mine and mill to 912,500 tonnes per year or 2,500 tonnes
per day. Construction of the mine and mill expansion is expected to be completed
during the first quarter of 2014. Expansion of the mill consists mainly in
addition of a third ball mill, reconfiguration of current crushing plant,
addition of two new leach tanks and addition of one thickener.

Tailings Dams

The very rugged mountainous terrain and steep walled canyons in
the San Dimas district have presented formidable challenges to tailings
management as the scale of operations grew and storage areas were depleted.

At the time of Wheaton Rivers acquisition in 2002, Luismins
practice had been to discharge tailings from the cyanidation mills to multiple
unlined structures designed to settle the solids and collect solutions for
recycling to the milling operations. The containment dams were typically
constructed with cyclone underflow and the overflow drains to decant structures in the central portion of the dam. Although the
design and operating practices complied with Mexican requirements and the
relevant permits, the tailings containment sites did not meet international
standards. They had not been subjected to comprehensive geotechnical
investigations before construction, normal safety factors in dam design had not
applied, and accepted seepage monitoring and control measures had not been
implemented.

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In anticipation of environmental requirements in Mexico
becoming more aligned with world standards, a series of improvements were
identified as necessary to reduce risk, as well as the potential environmental
impact. Since 2002, a number of improvements have been made relating to the
stability of the dams and to the management of the tailings. Since 2011, the
tailings containment sites are 100 percent operational and now comply with the
international regulations.

Capital expenditures for environmental purposes since 2004 were
largely focussed on the tailings storage facilities. They totalled approximately
$15 million at Tayoltita/Cupias and $10 million at San Antonio. Capital
expenditures on the San Antonio tailings were $1.3 million in 2005, $2.2 million
in 2006 and $1.6 million in 2007. Investment in the Tayoltita tailings dam was
$1.6 million in 2005, $0.6 million in 2006, $3.2 million in 2007, $1.5 million
in 2010 and $3.2 million in 2011.

Tayoltita Tailings

The Tayoltita operation had developed numerous tailings
disposal sites in the valley near the mill and in more recent years, the
tailings dam was moved up the valley to the east of the mill. The operation
relied on 10 pumping stations to elevate the thickened tailings to the
containment site, and the tailings line and solution return line on cable
supports to cross the river valley were previously without any provisions for
spill containment in the event of a line failure. The suspended section of the
tailings line crossing the river is now contained within a second pipe. In 2012
Primero initiated the installation of three new tailings pipes, which are fully
contained in a metal box. The new system will be fully operational by mid-year
2013, once the installation of second new tailings pump will be completed.

On abandonment of the sites as they filled, the dried tailings
were left to dehydrate and efforts to establish a natural vegetation cover were
undertaken. The abandoned dams in the area are subject to erosion and
instability until remediation measures are taken. On three of the older tailings
dams near the Tayoltita mill, the land has been reclaimed for use as a soccer
field, a softball field, and a garden nursery, respectively.

Monitoring of the Piaxtla River downstream of the Tayoltita
tailings deposits has not shown any environmental impact on the water quality,
but it may be impacted with higher suspended solids in periods of heavy
rainfall. Over the past few years significant capital improvements have been
made at the Tayoltita tailings operation and further improvements to the dam and
operating practices are planned.

In 2012 a new tailings pumping system was installed. The new
single Putzmeister piston pump has the capacity to pump high density tailings
(53 percent solids) over a distance of 1,847 metres and total elevation of 225
metres above the mill level. The Geho pumps are now used only as a back-up
system to the new system. San Dimas is now in the process of adding a second
Putzmeister pump as a back-up system to eliminate the use of the Geho pumps by
mid-2013. Eventually, and with the expansion of the mill to 2,500 tonnes per
day, a third pump will be installed as backup as two pumps will be required to
pump total tailings of 2,500 tonnes per day. High capacity thickeners have been
added to the mill to increase the tailings density and reduce the solution
containment, hydrostatic heads, and return capacity required at the tailings
dam. At the river crossing, the tailings lines are suspended in a spill recovery
trough with provision to divert any spills into a containment area.

Construction of the initial phase of an earthen berm against
the downstream side of the dam was completed to increase the safety factor of
the containment structure. In 2011, the most important work was the construction
of the third belt filter, comprising excavating the foundation, constructing the
building, filter and auxiliary equipment installation and filter
instrumentation. This filter has a capacity of 68 tonnes per hour, adding to the
combined capacity of the first two filters of 80 tonnes per hour. With the new
filter, San Dimas achieved 85% efficiency in the tailings filtering process. In
2012, Primero was able to recover an average of 50,000 tonnes of solution each
month which were recycled into the leaching process. The third filter also
provides redundancy in the event that any one of the filters is not operating.
Under the current San Dimas plan, the Tayoltita mill operation and future
expansion will process all ore mined in the district with all tailings deposited
in the currently active Cupias tailings disposal dam.

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On January 3, 2012, tailings containing five parts per million
cyanide were spilled into the Piaxtla River, impacting a total area of 2.5
kilometres. The spillage was the result of a hole that developed in a tailings
pipe. Primero notified Mexican governmental authorities of the incident. PROFEPA
and CNA visited the site in January 2012. Primero understands that both the
PROFEPA and the CNA considered the spillage to be localized. On January 5, 2012,
the municipality of San Dimas, Durango, Mexico confirmed in a letter to Primero
that they considered the incident as localized and under control. The letter
specified that the efficiency of the emergency response limited the damages to
death of small concentrations of fish, without any impact on animals. Following
the spill, Primero took a number of corrective actions including design and
building of a containment structure for the tailings pipe, which will be fully
operational by June 2013 once installation of the second new tailing pump is
complete.

San Antonio Tailings

Due primarily to the exhausted capacity of the tailings dam,
the San Antonio mill was shutdown in 2003. The tailings dam site is located in a
turn in a steep walled river canyon downstream of the mill operation. The river
has been diverted through two tunnels which have been excavated in the canyon
wall on the inside of the river bend. A third tunnel for road access has been
excavated and also serves as an additional channel for the river in high flow
periods. In the 2002 due diligence by Wheaton River, the San Antonio tailings
dam was identified as a risk to failure due to a low safety factor in the dam,
risk associated with an unknown hydrostatic head in the active tailings
deposition area and possible erosion due to a flood event in the adjacent river.

Since the shutdown of the mill operations, some of the risk has
been removed by elimination of the hydrostatic head in the dam and diversion of
a local drainage channel. It has been proposed that the dam safety factor be
increased by extending the concrete wall on the upstream side of the dam and
protection of the downstream side by covering it with mine waste rock. These
measures would also decrease the erosion potential of the tailings. Some of this
work was initiated while options to close and reclaim the tailings dam were
studied. DMSL received approval to reclaim the San Antonio dam by stabilizing
the tailings in their current location after an environmental assessment, which
demonstrated the validity of the plan, was submitted. A scale model was
developed that through a series of tests determined the best design from the
hydraulic aspect and to determine if some of the design features needed to be
augmented. During 2007, in agreement with the design by Knight Piesold (Canadian
geotechnical consultant), the emplacement of rock filled berm began with about
60% completed, however, the rains and lack of an access road significantly
affected progress. Further work was done in 2008 and subsequent years.

Taxes

Corporate profits in Mexico are taxed only by the Federal
Government. Through 2008, there were two federal taxes in Mexico that applied to
mining company operations; a Flat Rate Business Tax (FRBT) and a corporate
income tax. Mexican corporate income tax is calculated based on gross revenue
less deductions for all refining and smelting charges, direct operating costs,
all head office general and administrative costs, and depreciation deductions.
During 2008 and 2009, the corporate income tax rate in Mexico was 28 percent, it
is 30 percent from 2010 to 2013, and it is planned to be 29 percent during 2014
and 28 percent for 2015 and subsequent taxation years. On October 17, 2011,
Primero filed a formal application to the Mexican tax authorities for an advance
ruling on the appropriate price of silver sales under the silver purchase
agreement. On October 4, 2012, Primero received a ruling from the Mexican tax
authorities that the appropriate price was the approximate $4 per ounce received
from SW Caymans. This confirmed the silver pricing in Primero Empresas 2010 and
2011 income tax returns.

The FRBT is a minimum tax that applies in addition to the
corporate income tax. The tax is applicable to the taxpayers net income from
the (i) sale of goods; (ii) performance of independent services; and (iii) lease
of goods at the rate of 16.5 percent during 2008, 17 percent during 2009 and
17.5 percent from 2010. The base to which the FRBT is applied is determined by
deducting from gross revenue certain items, such as expenses associated with
purchasing goods, rendering independent services, and leasing goods, or expenses
incurred in connection with the administration of such activities. Some expenses
that are deductible in determining taxable income for income tax purposes, such
as salaries, interest in some cases and royalties with foreign related parties
are not deductible in determining the FRBT, however, certain tax credits are
available to offset the FRBT.

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Production Information

The following table summarizes 2008 to 2012 silver production
from the San Dimas Mines:

Units
    2008
    2009
    2010
    2011
    2012Ore Processed
    (tonne)
    657,479
    673,311
    612,253
    662,612
    721,264Gold Grade
    (g/t)
    4.3
    5.4
    4.5
    3.9
    3.9Silver Grade
    (g/t)
    259
    249
    244
    226
    234Gold Recovery
    (%)
    97
    98
    97
    97
    97Silver Recovery
    (%)
    94
    95
    94
    96
    95Produced Gold
    (oz)
    86,682
    113,018
    85,429
    79,564
    87,900Produced Silver
    (oz)
    5,113,466
    5,093,385
    4,530,000
    4,602,846
    5,134,184


PEÑASQUITO MINE, MEXICO

The Peñasquito Mine is indirectly wholly-owned by Goldcorp. The
Peñasquito Mine is an open pit mining operation located in north-central Mexico
with two separate process facilities, an oxide ore facility and a plant to
process sulfide ore. The oxide ore is processed through a heap
leach/Merrill-Crowe facility that went into production in February 2008. The
first gold pour for the oxide circuit was on May 10, 2008. Line 1 of the sulfide
plant started operating in September 2009 and first concentrate was shipped
November 2009. The Peñasquito Mine achieved commercial production in September
2010.

The following description of the Peñasquito Mine is based on
the information disclosed in the annual information form of Goldcorp filed on
March 1, 2013. The Company QPs have approved the disclosure of scientific and
technical information in respect of the Peñasquito Mine in this document.

Property Description and Location

Goldcorp owns, through its indirectly wholly-owned
subsidiaries, 100 percent of the Peñasquito Mine. The operating entity for the
Peñasquito Mine is a Goldcorp subsidiary, Minera Peñasquito, S.A. de C.V.
Peñasquito is situated in the western half of the Concepción del Oro district in
the northeast corner of Zacatecas State, Mexico, approximately 200 kilometres
northeast of the city of Zacatecas.

The Peñasquito Mine is comprised of 130 exploitation
concessions covering a total area of approximately 122,534 hectares, which
contains the Peñasco and Brecha Azul (Chile Colorado) deposits. Concessions were
granted for durations of 50 years. The Peñasco and Brecha Azul deposits are
primarily within the Alfa, Beta, La Peña, Las Peñas and El Peñasquito
concessions. Obligations which arise from the mining concessions include
performance of assessment work, payment of mining taxes and compliance with
environmental laws. Duty payments for the concessions have been made as
required. Minimum expenditures, pursuant to Mexican regulations, may be
substituted for sales of minerals from the mine for an equivalent amount.

Goldcorp holds additional tenure in the greater Peñasquito Mine
area (within about 200 to 300 kilometres of the Peñasquito Mine infrastructure),
which is under application, is granted, or is part of joint ventures with third
parties. Two of these wholly-owned deposits, Camino Rojo and Nocha Buena, are
under conceptual evaluation as potential stand-alone heap leach operations due
to the low precious metal grades of these deposits and may benefit from
potential administrative synergies with the Peñasquito Mine mining operation.
However, the deposits will not be developed as satellite operations for the
Peñasquito Mine, and are not considered to be part of the Peñasquito Mine.

A two percent net smelter return royalty is payable to Royal
Gold on production from both the Chile Colorado and Peñasco pits which
constitute the Peñasquito Mine. In 2007, Silver Wheaton acquired 25% of the
silver produced by the Peñasquito Mine over the life-of mine for an upfront cash
payment of $485 million and a per ounce cash payment of the lesser of $3.90 and
the prevailing market price (an inflationary adjustment to the contract price
commenced in 2011 and resulted in a price of $3.99 per ounce achieved during
2012 versus the original agreement of $3.90 per ounce), for silver delivered
under the contract.

- 43 -

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Environmental liabilities were limited to those that would be
expected to be associated with an open pit mine that is in the early production
phases, and includes the open pit, roads and site infrastructure, and waste and
tailings disposal facilities. A closure and reclamation plan has been prepared.
Progressive rehabilitation will occur over the life of the mine as waste dumps
and mining areas are completed and become available for rehabilitation
activities.

Goldcorp holds the appropriate permits under local, state and
federal laws to allow for mining operations.

Accessibility, Climate, Local Resources, Infrastructure
and Physiography

The site is accessed via a turnoff from Highway 54
approximately 25 kilometres south of Concepción Del Oro. Within the Peñasquito
Mine, access is by foot trails and tracks. The closest rail link is 100
kilometres to the west. There is an airport on site and airports in the cities
of Zacatecas and Monterrey.

Power is currently supplied through the Mexican central grid
from the Mexican Federal Electricity Commission. On January 25, 2011, Minera
Peñasquito, S.A. de C.V. signed a power delivery agreement (the Power
Agreement) with a subsidiary of InterGen, pursuant to which InterGen will
construct and operate a 200 to 250 megawatt gas-fired combined cycle power plant
near San Luis de la Paz, Guanajuato, Mexico, to deliver electricity to the
Peñasquito Mine for a minimum term of 20 years, subject to regulatory and
environment approvals. The construction of the power plant is expected to be
completed in 2015 and the Peñasquito Mine has been sourcing power from another
InterGen source in the interim. Process and potable water for the Peñasquito
Mine is sourced from a water field located six kilometres west of the Peñasquito
Mine. Permits to pump up to 35 million cubic metres of this water per year have
been received. The Peñasquito Mine recycles approximately 80 percent of the
water it uses in the mining process.

There is sufficient suitable land available within the
Peñasquito Mine for tailings disposal, mine waste disposal, and mining-related
infrastructure, such as the open pit, process plant, workshops and offices which
have been constructed. A skilled labour force is available in the region where
the Peñasquito Mine is located and in the surrounding mining areas of Mexico.
Accommodation comprises a 2,000-bed camp with full dining, laundry and
recreational facilities.

Mining concessions give the holder the right to mine within the
concession boundary, sell the mining product, dispose of waste material
generated by mining activities within the lease boundary, and have access
easements. Surface rights in the vicinity of the Chile Colorado and Peñasco Azul
open pits are held by private individuals and three ejidos. Signatures
indicating agreement have been obtained for all three of the ejidos and nearly
all the private owners. Goldcorp currently is in negotiations to finalize
surface rights to minor land positions still held by some private owners.
Relations with the ejidos through the process have been positive. Goldcorp holds
sufficient surface rights in the Peñasquito Mine area to support the mining
operations, including provisions for access and power lines.

The climate is generally dry with precipitation being limited
for the most part to a rainy season in the months of June and July. Annual
precipitation for the area is approximately 700 millimetres, most of which falls
in the rainy season. The Peñasquito Mine area can be affected by tropical storms
and hurricanes which can result in short-term high precipitation events.
Temperatures range between 20 degrees Celsius and 30 degrees Celsius in the
summer and zero degrees Celsius to 15 degrees Celsius in the winter. Mining
operations can be conducted year-round.

The Peñasquito Mine is situated in a wide valley bounded to the
north by the Sierra El Mascaron and the south by the Sierra Las Bocas. Except
for one small outcrop, the area is covered by up to 30 metres of alluvium. The
terrain is generally flat, rolling hills; vegetation is mostly scrub, with
cactus and coarse grasses. The prevailing elevation of the property is
approximately 1,900 metres above sea level.

History

The earliest recorded work in the Peñasquito Mine consists of
excavation of a shallow shaft and completion of two drill holes in the 1950s.

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Kennecott Canada Explorations Inc. through its Mexican
subsidiary, Minera Kennecott S.A. de C.V. (Kennecott) acquired initial title
to the Peñasquito Mine and commenced exploration in 1994. Regional geochemical
and geophysical surveys were undertaken in the period 1994 to 1997. This work
led to the early discovery of two large mineralized diatreme breccia bodies, the
Outcrop and Azul Breccias. Kennecott completed 250 rotary air blast (RAB)
drill holes (9,314 metres) to systemically sample bedrock across the entire
Peñasquito Mine area which resulted in the discovery of the Chile Colorado
silver-lead-zinc-gold zone. A total of 72 reverse circulation and core drill
holes (24,209 metres) were sited to test mineralization at the Outcrop Breccia,
Azul Breccia, and Chile Colorado zones.

In 1998, Western Copper Holdings Ltd. (Western Copper)
acquired a 100 percent interest in the Peñasquito Mine from Kennecott. Western
Copper completed a nine hole (3,185 metres) core drilling program and 13.4 line
kilometres of tensor controlled source audio frequency magnetollurics
geophysical survey work the same year. Exploration efforts were focused on the
Chile Colorado zone and the Azul Breccia pipe targets.

Western Copper optioned the property to Minera Hochschild S.A.
(Hochschild) in 2000. Hochschild completed 14 core holes (4,601 metres),
eleven of which were sited into the Chile Colorado anomaly, but subsequently
returned the property to Western Copper.

From 2002 to 2009, Western Copper completed an additional 874
core and reverse circulation drill holes (496,752 metres) and undertook a
scoping-level study, a pre-feasibility study, and a feasibility study in 2003,
2004, and 2005 respectively. The feasibility study was updated in 2006. Under
the assumptions in the studies, the Peñasquito Mine returned positive economics.
In 2003, Western Copper underwent a name change to Western Silver Corporation
(Western Silver). Glamis acquired Western Silver in May 2006, and the combined
company was subsequently acquired by Goldcorp in November 2006.

During 2005, a drill rig was used to perform geotechnical field
investigations to support the design of the heap leach facility, waste rock
piles, tailings impoundment and process plant. Standard penetration tests were
performed.

Construction in the Peñasquito Mine commenced in 2007. In
October 2009, the first lead and zinc concentrates were produced and concentrate
shipment to smelters commenced with first sales recorded in November 2009.
Commercial production was achieved in September 2010.

Geological Setting

Regional Geology

The regional geology is dominated by Mesozoic sedimentary rocks
intruded by Tertiary stocks of intermediate composition (granodiorite and quartz
monzonite). The sedimentary rocks formed in the Mexico Geosyncline, a 2.5
-kilometre thick series of marine sediments deposited during the Jurassic and
Cretaceous Periods consisting of a 2,000-metre thick sequence of carbonaceous
and calcareous turbiditic siltstones and interbedded sandstones underlain by a
1,500 to 2,000-metre thick limestone sequence.

Large granodiorite stocks are interpreted to underlie large
portions of the mineralized areas within the Concepción Del Oro District,
including Peñasquito. Slightly younger quartzfeldspar porphyries, quartz
monzonite porphyries, and other feldspar-phyric intrusions occurring as dikes,
sills, and stocks cut the sedimentary units. The intrusions are interpreted to
have been emplaced from the late Eocene to mid-Oligocene.

Local Geology

The Mesozoic sedimentary units of the Mazapil area were folded
into east-west arcuate folds, cut by northeast- and north-striking faults, and
intruded by Tertiary granodiorite, quartz monzonite, and quartzfeldspar
porphyry bodies. Tertiary stocks and batholiths are exposed in the ranges, while
the valleys are filled with alluvium, generally a few tens of metres thick. Two
diatreme breccia pipes, believed to be related to quartzfeldspar porphyry
stocks beneath the Peñasquito Mine, explosively penetrated the Mesozoic
sedimentary units, and probably breached the surface. Eruption craters and
ejecta aprons have since been eroded away. The current bedrock surface at the
Peñasquito Mine is estimated to be a minimum of 50 metres below the original
paleo surface when the diatremes were formed. There may have been up to several
hundred metres of erosion since the time of mineralization. Alluvium thickness
now averages 30 to 50 metres at the Peñasquito Mine. There was one small outcrop
exposure at the Peñasquito Mine, of breccias near the center of the Peñasco
diatreme, rising about five metres above the valley surface. The two diatreme
pipes, Peñasco and Brecha Azul, are the principal hosts for goldsilverzinclead mineralization at the
Peñasquito Mine. The single outcrop near the center of the Peñasco pipe
contained weak sulphide mineralization along the south and west side of the
outcrop, representing the uppermost expression of much larger mineralized zones
below.

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Property Geology

Peñasco and Brecha Azul are funnel-shaped breccia pipes, which
flare upward, and are filled with breccia clasts in a milled matrix of similar
lithological composition. The larger diatreme, Peñasco, has a diameter of 1,000
metres by 850 metres immediately beneath surface alluvial cover. The second, and
smaller, diatreme, Brecha Azul, is about 600 metres in diameter immediately
below alluvium. Polymetallic mineralization is hosted by the diatreme breccias
column and surrounding sandstone and siltstone units of the Caracol Formation.
The diatreme breccias are broadly classified into three units, determined by
igneous matrix and clast composition: sediment-clast breccia, milled mixed
sedimentary-intrusive matrix, and intrusive matrix breccias, from top to bottom
within the breccia column. Sedimentary rock clasts consist of Caracol siltstone
and sandstone; intrusion clasts are dominated by quartz-feldspar porphyry. A
variety of dikes cut the breccia column and immediately adjacent clastic wall
rocks. These dikes exhibit a range of textures from porphyry breccia, to
quartzfeldspar and quartz-eye porphyries, to porphyritic, to aphanitic micro
breccias.

Both of the breccia pipes lie within a hydrothermal alteration
shell consisting of a central sericitepyritequartz (phyllic) alteration
assemblage, surrounding sericitepyritequartzcalcite assemblage, and
peripheral chloriteepidotepyrite (propylitic) alteration halo. A halo of
generally lower grade disseminated zincleadgoldsilver mineralization lies
within the sericitepyritequartzcalcite assemblage surrounding the two
breccias. Disseminated and lesser fracture-controlled electrum, sphalerite,
galena, and various silver sulphosalts are hosted by milled breccias within the
diatremes and by Cretaceous clastic units in the surrounding mineralized halo.
Alteration, mineral zoning, porphyry intrusion breccia, and dykes all suggest
the deposits represent distal mineralization some distance above an underlying
quartzfeldspar porphyry system. The Peñasco and Brecha Azul diatremes lie along
a northwest-trending system of fractures within the central axis of the broad
northwest oval of sericitepyritequartzcalcite alteration. The dominant
foliation direction observed in the outcrop of breccia at Peñasco is also
northwest-trending. Both are thought to reflect the orientation of the porphyry
intrusion underlying the known mineralization.

Mantos-style sulphide replacements of carbonate strata have
been discovered beneath the clastic-hosted disseminated sulphide zones adjacent
and around the diatreme pipes. They consist of semi-massive to massive sulphide
replacements of sub-horizontal limestone beds, as well as cross-cutting
chimney-style, steeply dipping, fracture and breccias zones filled with high
concentrations of sulphides. The sulphides are generally dominated by sphalerite
and galena, with variable concentrations, but also contain significant pyrite.
Gangue minerals are subordinate in these strata-replacement mantos and
cross-cutting chimneys, although calcite is usually present. Stratiform and
chimney mantos are characterized by their very high zinc, lead, and silver
contents, with variable copper and gold contributions. Mantos and skarn
mineralization have also been discovered lying beneath the planned open pits in
limestone units adjacent and around the diatremes and above the source of
cross-cutting quartzfeldspar porphyry dykes.

Exploration

Exploration activities on the Peñasquito Mine have included
geological mapping, reverse circulation and core drilling, ground geophysical
surveys, mineralization characterization studies and metallurgical testing of
samples. Petrographic studies and density measurements on the different
lithologies have also been carried out.

From 2006 to 2010, Goldcorp completed 42 core and reverse
circulation drill holes, including metallurgical, geotechnical and condemnation
drilling. An updated feasibility study was completed and mine construction was
commenced during this period.

During 2010, an exploration drilling program was completed to
test whether there was sufficient mantos-hosted mineralization at depth adjacent
to the Peñasquito diatreme to support potential underground development. A total
of 7,317 metres was drilled in six mantos test holes. Mantos were detected at
900 metres below surface and the exploration potential remains both at depth and
laterally. Within the greater Peñasquito Mine area, there is also potential for
additional deposit styles, including base metal skarns and porphyry-related
disseminated deposits. Exploration for these deposit styles is at a
conceptual/early exploration stage.

Exploration at Peñasquito during 2011 was focused on geological
mapping, diamond drilling, and a reverse circulation and condemnation program
totaling 80 drill holes. The exploration program for the mantos and skarn zones continued during 2012 with 22 deep holes totaling 23,276 metres
completed. The objective of this program was to test the grade and thickness
extents of the mantos and skarn mineralization at depth. In the RAB exploration
area, potential extensions to the Peñasco diatreme were tested, with the
completion of 59 drill holes for a total of 2,496 metres in 2011. Objectives of
the program were to potentially identify, with shallower drilling, new anomalies
in the bedrock. Three different anomalies were identified with the 2011 program.
The condemnation drilling program was initiated in late 2011 and continued in
2012 with 62 holes totaling 25,074.9 metres. The program was designed to provide
condemnation in the area of the waste dump to the north and west of the existing
tailings storage facility. An aeromagnetic survey defined an eight kilometres by
four kilometres, north to south-trending magnetic high centered approximately on
the Outcrop (Peñasco) Breccia. Magnetometer surveys suggested the presence of
deep-seated granodiorites, and indicated a relationship between mineralization
and the underlying intrusions. IP surveys were instrumental in locating sulphide
stockworks at the Chile Colorado zone, and the gravity survey helped identify
the Brecha Azul diatreme. In almost all instances, the geophysical surveys
indicated the presence of numerous anomalies scattered across the Peñasquito
Mine.

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Mineralization

Sulphide mineralization occurs in the Peñasco deposit, beneath
and adjacent to the outcrop breccia, and in the Chile Colorado deposit, located
about 1.5 kilometres southeast of Peñasco. Both deposits are centered on
diatreme breccias pipes, the Peñasco diatreme at Peñasco, and the Brecha Azul
diatreme at Chile Colorado. The diatremes are surrounded by coalesced halos of
lower grade, disseminated sphalerite, galena, and sulphosalts containing silver
and gold.

Mineralization consists of disseminations and veinlets of
medium to coarse-grained sphalerite, galena, argentite, a variety of other
antimony-dominated sulphosalts, including bournonite, jamesonite, tetrahedrite,
polybasite, pyrargyrite, stibnite rare hessite and a common gangue of sericite
and calcite, with minor quartz, rhodochrosite, and fluorite.

Drilling

Drilling completed on the Peñasquito Mine for the period 1994
to 2012 comprises 1,060 drill holes totaling 564,153 metres. Drilling has
focused on five principal areas: the original Chile Colorado Zone, the Brecha
Azul Zone (Azul Breccia, Northeast Azul, and Luna Azul), the Peñasco Zone
(including El Sotol), Mantos East Zone and skarn targets at depth.

Reverse circulation drilling was conducted using down-hole
hammers and tricone bits, both dry and with water injection. Some reverse
circulation drilling was performed as pre-collars for core drill holes. Core
drilling typically recovered HQ size core (63.5 millimetres diameter) from
surface, then was reduced to NQ size core (47.6 millimetres) where ground
conditions warranted. Metallurgical holes were typically drilled using PQ size
core (85 millimetres).

Any break in the core made during removal from the barrel was
marked with a colour line. When breakage of the core was required to fill the
box, edged tools and accurate measure of pieces to complete the channels was the
common practice to minimize core destruction. The end of every run was marked
with a wooden tick and the final depth of the run. Core was transferred to
wooden core boxes, marked with up and down signs on the edges of the boxes
using indelible pen. The drill hole number, box number and starting depth for
the box was written before its use, whilst end depth were recorded upon
completion. All information was marked with indelible pen on the front side of
the box and also on the cover.

All core from the Goldcorp drill programs has been processed on
site. Core boxes were transported to the core shed by personnel from the company
that was managing the drill program, or the drilling supervisor.

Geotechnical Drilling

Core holes were oriented at an angle of 60 degrees to the
horizontal and were sited to intersect the November 2005 design basis pit wall
one-third of the ultimate wall height above the base of the final pit level.
Core hole diameters were typically HQ3 (61 millimetres diameter) but were
telescoped down to NQ3 (45 millimetres) if difficult drilling conditions were
encountered. Core was recovered in a triple tube core barrel assembly.

Core orientation was accomplished using two independent
methods: clay impression and a mechanical down-hole system referred to as
Corientor. Field point load tests were completed for each core run to estimate
the unconfined compressive strength of the intact rock. Drill holes to WC-250
were also geotechnically logged.

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Core recovery for the Peñasquito Mine drilling averages 96.9
percent. Sample recoveries were not routinely recorded for reverse circulation
holes.

Geological and Geotechnical Logging

Logging of reverse circulation drill cuttings and core utilized
standard logging procedures. Logs recorded lithologies, breccia type, fracture
frequency and orientation, oxidation, sulphide mineralization type and
intensity, and alteration type and intensity. Core was photographed and video
recorded from collar to toe; these digital files are stored on hard disc.
Geotechnical logging for pit design purposes was typically completed at three
metre intervals, and recorded on compact discs. For site location purposes,
geotechnical logging included sample descriptions, Standard Penetration Test
blow counts, sample numbers and visual classifications based on the united soil
classification system.

Collar Surveys

Collar surveys have been performed by a qualified surveyor
since 2002. All drill hole collars are identified with a concrete monument,
allowing all drill holes to be identified at a later date. The monument is
placed directly over the hole collar on completion of each drill hole.

Down-hole Surveys

Down-hole surveys are completed by the drilling contractor
using a single shot, through the bit, survey instrument. Drill holes are
surveyed on completion of each hole as the drill rods are being pulled from the
hole.

Deposit Drilling

Drill hole spacing is generally on 50 metre sections in the
main deposits spreading out to 400 metres spaced sections in the condemnation
zones. Drill spacing is wider again in the areas outside the conceptual pit
outlines used to constrain Mineral Resources. Drilling covers an area of
approximately eight kilometres east to west by 4,500 metres north to south with
the majority of drill holes concentrated in an area 2.1 kilometres east to west
by 2.8 kilometres north to south.

Blasthole Drilling

Drilling for all materials is on 15 metre benches drilled with
1.5 metres of sub-grade, using seven blast hole drill rigs. The drill sections
display typical drill hole orientations for the deposits, show summary assay
values using colour ranges for assay intervals that include areas of
non-mineralized and very low grade mineralization, and outline areas where
higher-grade intercepts can be identified within lower-grade sections. The
sections confirm that sampling is representative of the gold, silver, and base
metals grades in the deposits, reflecting areas of higher and lower grades.

Sampling and Analysis

Peñasquito Mine project staff has been responsible for sample
collection, core splitting, run of mine assaying, preparation of samples,
storage and security from inception to date.

Reverse circulation drill cuttings were sampled at intervals of
two metres. The material was split at the drill into several portions of 12
kilograms or less. A handful of rock chips from each sample interval was
collected and logged by experienced onsite geologists. Data from the drill logs
were entered digitally into files for computer processing.

The standard sample interval is two metres. Some samples are
limited to geological boundaries and are less than two metres in length. Logging
was completed at the drill site prior to splitting. Splitting of the core was
supervised by the geologist who logged the core in order to ensure sampling
integrity. For condemnation drill holes, core was assayed every two metres out
of 20 unless geologic inspection dictated otherwise.

A senior Goldcorp geologist examined the core, defined the
primary sample contacts, and designated the axis along which to cut the core.
Special attention is taken in veined areas to ensure representative splits are
made perpendicular to, and not parallel to, veins.

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Standard reference material samples and blanks were inserted in
a documented sequence into the sample stream going to the assay laboratory. Cut
samples were bagged and numbered in polyethylene bags. Groups of 20 sample bags
were placed in larger bags and labelled with the name and address of the
laboratory, and the number and series of samples that were contained within the
bag. A Peñasquito Mine truck transports the sacks to the ALS Chemex laboratories
in Guadalajara, Mexico, approximately once per week. ALS Chemex was responsible
for sample preparation throughout exploration and infill drilling phases through
its non-accredited sample preparation facilities in Guadalajara. All samples
were dispatched to the ALS Chemex Vancouver, Canada laboratory facility for
analysis, which, at the time the early work was performed, was ISO-9000
accredited for analysis; the laboratory is currently ISO-17025 certified and is
independent of Goldcorp. The umpire (check) laboratory is Acme Laboratories in
Vancouver, which holds ISO-9000 accreditations for analysis. The run-of-mine
laboratory is not certified.

Blast holes are sampled as whole-hole samples by an experienced
sampler. During 2008, Goldcorp staff completed a total of 1,229 specific gravity
measurements on drill core. An additional 127 bulk density measurements were
also available from Dawson Metallurgical Laboratories Inc. Utah. Specific
gravity data were used to assign average bulk specific gravity values by
lithology.

Sizes of the sampled areas are representative of the
distribution and orientation of the mineralization and sampling is
representative of the gold, silver, and base metal grades in the deposits,
representing areas of higher and lower grades.

A number of independent data checks have been performed, in
support of feasibility-level studies, and in support of technical reports,
producing assessments of the database quality on the Peñasquito Mine. No
significant problems with the database, sampling protocols, flowsheets, check
analysis program, or data storage were noted. Goldcorp performed sufficient
verification of the data and database to support Mineral Resources and Mineral
Reserves being estimated.

Security of Samples

Blanks and standard reference materials have been used in
sampling programs by Goldcorp. The seven SRMs were prepared by Metcon Research,
Tucson, Arizona from Peñasquito Mine mineralization. Blank samples comprise
non-mineralized limestones from the general Peñasquito Mine area.

Entry of information into databases utilized a variety of
techniques and procedures to check the integrity of the data entered. A system
whereby data is electronically entered (without a paper log step) is still being
implemented. Assays were received electronically from the laboratories and
imported directly into the database. Drill hole collar and down hole survey data
were manually entered into the database. Data are verified on entry to the
database by means of in-built program triggers within the mining software.
Checks are performed on surveys, collar co-ordinates, lithology data, and assay
data.

Paper records were kept for all assay and QA/QC data,
geological logging and bulk density information, down-hole and collar coordinate
surveys. All paper records were filed by drill hole for quick location and
retrieval of any information desired. Assays, down-hole surveys, and collar
surveys were stored in the same file as the geological logging information. In
addition, sample preparation and laboratory assay protocols from the
laboratories were monitored and kept on file.

Sample security was not generally practiced at the Peñasquito
Mine during the drilling programs, due to the remote nature of the site. Sample
security relied upon the fact that the samples were always attended or locked at
the sample dispatch facility. Sample collection and transportation have always
been undertaken by Goldcorp or laboratory personnel using company vehicles.
Drill samples were picked up at site by ALS Chemex, prepared to a pulp in
Guadalajara, Mexico, and sent by ALS Chemex via air to the ALS Chemex analytical
laboratory in Vancouver, Canada. Chain of custody procedures consisted of
filling out sample submittal forms that were sent to the laboratory with sample
shipments to make certain that all samples were received by the laboratory.
Assay pulps and crushed reject material are returned by ALS Chemex to Goldcorps
core shack in Mazapil for storage. Drill core is stored in wooden core boxes on
steel racks in the buildings adjacent to the core logging and cutting
facilities. The core boxes are racked in numerical sequence by drill hole number
and depth coarse rejects in plastic bags are stored in cardboard boxes on steel
racks in a separate locked building. The coarse reject boxes are labelled and
stored by sample number.

Typically, drill programs included insertion of blank,
duplicate and CRM samples. The QA/QC program results do not indicate any
problems with the analytical programs; therefore the gold, silver, and base
metal analyses from the core drilling are suitable for inclusion in Mineral
Resource and Mineral Reserve estimation.

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Mineral Reserve and Mineral Resource Estimates

See Technical Information  Summary of Mineral Reserves and
Mineral Resources for the estimated Mineral Reserves and Mineral Resources
(silver only, 25%) for the Peñasquito Mine as of December 31, 2012.

Mining Operations

Mining Method

The final pit will have one contiguous outline at surface but
will consist of two distinct pit bottoms, one on the Peñasco zone and one on the
Azul/Chile Colorado zone. Currently only the Peñasco portion of the pit is in
operation, using a conventional truck-and-shovel fleet. Drill patterns range
from nine metres by nine metres in overburden to six metres by six metres in
sulphide ore. The heap leach ore drill pattern is being adjusted as needed to
ensure rock fragmentation of about 127 to 152 millimetres for leaching.

Metallurgical Process

The Peñasquito Mine consists of a leach facility that processes
a nominal 25,000 tonnes per day of oxide ore and a sulphide plant that will
process a nominal 130,000 tonnes per day of sulphide ore. Mine construction
commenced in 2007. By year-end 2011, mine production was at full capacity;
however the plant was still ramping up and lacking only sufficient pebble feed
to the High Pressure Grinding (HPGR) circuit, limiting throughput in the HPGR
circuit. A project to provide supplemental ore feed directly to the HPGR circuit
was initiated in late 2011 and was successfully commissioned at the end of the
first quarter of 2012. In October 2009, the first lead and zinc concentrates
were produced and concentrate shipment to smelters commenced with first sales
recorded in November 2009.

Ore placement on the heap leach pad began in February 2008. On
April 8, 2008, ore leaching was initiated and the first gold pour occurred on
May 10, 2008. During 2012, a total of 5,954,455 dry metric tonnes of ore with an
average grade of 0.34 grams per tonne of gold and 21.0 grams per tonne of silver
were placed on the leach pad. A total of 42,669 ounces of gold and 1,420,300
ounces of silver were produced from the oxide facility in 2012. Recoveries
averaged 58.9 percent for gold and 24.0 percent for silver.

Oxide Ore

Run-of-mine oxide ore will be delivered to the heap leach pile
from the mine by haul trucks. Lime will be added to the oxide ore, prior to
addition of the oxide ore to the pad. Ore is placed in ten metre lifts, and
leached with cyanide solution. Pregnant leach solution is clarified, filtered,
and de-aerated, then treated with zinc dust to precipitate the precious metals.
The precipitated metals are subsequently pressure filtered, and the filter cake
smelted to produce doré.

Sulphide Ore

Run-of-mine sulphide ore is delivered to the crusher dump
pocket from the mine by 300 tonne rear-dumphaul trucks. The crushing circuit is
designed to process up to 130,000 tonnes per day of run-of-mine sulphide ore to
80 percent passing 150 millimetres. The crushing facility consists of a gyratory
crusher capable of operating at 92 percent utilization on a 24-hour-per-day,
365-days-per-year basis.

Pre-commissioning activities started on the waste rock overland
conveyor system in the fourth quarter of 2012. Commissioning activities with and
without load commenced in early January 2013 and will continue through the first
quarter of 2013. During 2011, both 50,000 tonne-per-day capacity semi-autogenous
grinding (SAG) lines were operational and the high pressure grind roll
(HPGR) operation was sporadic due to lack of pebble generation due to
inconsistent feed. A project to provide for supplemental feed directly to the
HPGR was commissioned at the end of the first quarter of 2012. Sulphide plant
throughput averaged 99,500 tonnes per day in 2012. Production in the second
quarter of 2012 was affected by lower mill throughput, a result of an inadequate
water supply in the month of June. Prolonged drought conditions in the region
contributed to lower-than-expected water recharge in the well field as well as
lower-than-expected water production from the accelerated pit dewatering
program. This condition continued to affect plant throughput in the second half
of 2012. Goldcorp holds permits for sufficient quantities of water and is
currently working to drill additional wells to increase water production. Concurrently,
work is also underway to increase water use efficiency site wide. Furthermore, a
water and tailings study is expected to be completed in the first half of 2013
to develop a comprehensive long-term water strategy for the Peñasquito district.
For 2012, a total of 36,406,938 dry metric tonnes of ore with an average grade
of 0.50 grams per ton of gold, 27.4 grams per tonne of silver, 0.62% zinc and
0.28% lead was processed through the sulphide plant facility, for a total of
368,594 ounces of gold, 22,284,558 ounces of silver, 324,175,492 pounds of zinc,
and 153,710,300 pounds of lead produced (payable metal). Metallurgical
recoveries averaged 69.4% for gold, 77.5% for silver, 77.2% for zinc, and 73.9%
for lead.

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Mine Life and Expected Payback Period

The mine plan and financial analysis are based on a detailed
production schedule. The life-of-mine plan update in 2012 was based on $1,350
per ounce of gold and operating parameters derived from the 2012 site budget
plan and consisted of production schedules, operating parameters and operating
costs. Mine production during 2012 was 165.4 million metric tonnes. The
production rate for the period 2012 to 2017 is projected to average 593,000
tonnes per day. The mine will supply sulphide ore to the plant at a rate of 40.2
million metric tonnes of sulphide ore per year. The total material mined per
year will peak 225 million metric tonnes per year (616,000 tonnes per day). The
production rate increases will correspond to significant increases in the
equipment quantities of the mining fleet and assistance from contractor waste
stripping in 2013 and 2014.

The Peñasco pit will provide the only sulphide mill feed
through 2021 and will continue to provide mill feed into 2033. Waste stripping
will begin in Chile Colorado in 2020 and sulphide ore will be mined during 2021
through 2033. The sulphide mill feed will be from both pits from 2021 to 2032.
The payback for the initial capital investment in the Peñasquito Mine was 8.9
years from commencement of the Peñasquito Mine in 2007, which means that under
this scenario the Peñasquito Mine will achieve payback by the fourth quarter of
2015. Goldcorp prepared an economic analysis which confirmed that the economics
based on the Mineral Reserves over a 22-year mine life could repay life-of-mine
operating and capital costs.

Markets and Contracts for Sale

Goldcorp currently has a toll agreement for the refining of
silver-gold doré produced from the Peñasquito Mine. Goldcorps bullion is sold
on the spot market, by marketing experts retained in-house by Goldcorp. The
terms contained within the sales contracts are typical and consistent with
standard industry practice, and are similar to contracts for the supply of doré
elsewhere in the world. Part of the silver production is sold to Silver Wheaton.

The markets for the lead and zinc concentrates from the
Peñasquito Mine are worldwide with smelters located in Mexico, North America,
Asia and Europe. Metals prices are quoted for lead and zinc on the London Metals
Exchange and for gold and silver by the London Bullion Market Association. The
metal payable terms and smelter treatment and refining charges for both lead and
zinc concentrate represent typical terms for the market and qualities produced
by the Peñasquito Mine. In addition to the forward sales contract for silver
production with Silver Wheaton, Goldcorp has entered into sales and collar
option agreements for the base metals volumes in relation to Peñasquito Mine
concentrate sales.

Taxes

The income tax rate applicable to corporations in Mexico was
increased from 28 percent to 30 percent as of January 1, 2010. The rate will be
applied only during 2010, 2011, 2012 and 2013. In 2014 the rate is scheduled to
be reduced to 29 percent, and further scheduled to be reduced to 28% in 2015.

Environment

Environmental laws require the filing and approval of an
environmental impact statement for all exploitation work, and for exploration
work that does not fall within the threshold of a standard issued by the Federal
Government for mining exploration. Reviews of environmental permitting, legal,
title, taxation, socio-economic, marketing and political factors and constraints
for the Peñasquito Mine support the declaration of Mineral Reserves.

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Exploration and Development

Following a full year of operations and the availability of new
cost data, approximately 220 million tonnes of low-grade gold material were
moved from Proven and Probable Mineral Reserves into the Measured and Indicated
Mineral Resources category, reflecting current higher operating cost assumptions
than were contemplated in the original 2006 feasibility study.

Exploration potential remains under the current open pits, and
may support underground mining. Goldcorp is currently investigating an option of
mining mineralization outside the area of the current open pit design using bulk
mining methods such as block caving and represents upside potential for the
Peñasquito Mine following the cessation of open pit mining in 2032. Goldcorp is
also investigating the potential for underground mining of the mantos
mineralization during the open pit mine life. This could utilize selective
mining methods such as longhole stoping or cut-and-fill. These studies are at an
early, conceptual stage, and no underground Mineral Resources or Mineral
Reserves have been declared.

Production Information

The following table summarizes 2008 to 2012 silver production
(100% basis) from the Peñasquito Mine:

Oxides
    Units
    2008
    2009
    2010
    2011
    2012Produced Payable Gold
    (oz)
    20,000
    83,200
    78,399
    55,800
    42,700Produced Payable Silver
    (oz)
    1,356,000
    2,600,000
    3,006,262
    1,891,000
    1,420,300SulphidesProduced Payable Gold
    (oz)
    
    
    89,800
    198,300
    368,600Produced Payable Silver
    (oz)
    
    
    10,946,400
    17,154500
    22,284,500


PASCUA-LAMA PROJECT, BORDER OF CHILE AND ARGENTINA

The following description of the Pascua-Lama Project is based
on the information disclosed in the annual information form of Barrick filed on
March 28, 2013 and the managements discussion and analysis of Barrick filed on
February 14, 2013. The Company QPs have approved the disclosure of scientific
and technical information in respect of the Pascua-Lama Project  in this document.

General Information

The Pascua-Lama property is located in the Frontera District in
Chiles Region III and Argentinas San Juan Province. It straddles the
Chile-Argentina border and is approximately 150 kilometers southeast of the city
of Vallenar, Chile, 380 kilometres by road northwest of the city of San Juan,
Argentina and approximately 10 kilometers from the Veladero mine. The total
project area consists of approximately 45,500 hectares in Chile and Argentina.
The Chilean part of the deposit, which is at an elevation of approximately 4,300
to 5,250 meters above sea level, was acquired by Barrick through its acquisition
of Lac Minerals in 1994. Lac Minerals acquired its interest in the property from
Bond Gold International in 1989. Exploration on the property dates back as far
as 1977. With respect to the portion of the project located in Argentina,
Barrick acquired certain of the mining concessions that form part of the project
in 1995. It acquired the remaining project mining concessions through its
acquisition of Exploraciones Mineras Argentinas S.A. from Minera S.A. in 1997.
Pascua-Lama employs approximately 1,100 employees and 16,180 contractors.

In both Chile and Argentina, Barrick, through its wholly-owned
Argentinean subsidiary, Barrick Exploraciones Argentina S.A. (BEASA), and its
wholly-owned Chilean subsidiary, Compañia Minera Nevada SpA (CMN), owns the
mining property in the project area. The mining rights have no expiry date,
provided the applicable annual land payments are made. Sufficient surface rights
have been obtained for current operations at the property.

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The legislatures of both Chile and Argentina completed the
ratification of a Mining Treaty between the two countries in 2000. The Specific
Additional Protocol for the Pascua-Lama Project under the Mining Treaty was
signed into law by both countries in the third quarter of 2004. The Pascua-Lama
Project is within the area subject to the Mining Treaty (the Protocol Area)
and the project is entitled to enjoy the benefits to cross-border mining
operations that are granted by the Mining Treaty. An increase in the size of the
Protocol Area has been requested to include certain additional project-related
infrastructure, which request is expected to be approved in due course. In April
2009, the authorities of Chile and Argentina reached an agreement specific to
the Pascua-Lama Project, which avoids double taxation for the project under the
rules of the Mining Treaty. The provisions of the April 2009 agreement remain in
force despite the termination of several double taxation treaties by Argentina
in 2012, including the general 1976 double taxation treaty with Chile.

The Pascua-Lama property area is characterized by high mountain
ranges and deep valleys with natural slopes of 20 to 40 degrees. Surface
material consists of rock outcrops, alluvial and colluvial materials, which are
primarily gravel, sand, silt and clay. Vegetation is sparse. The area is
considered to have a sub-arid, sub-polar, mountain climate. During the winter
months, extreme weather may create a challenging operating environment.
Recognizing this issue, the potential impact of possible extreme weather
conditions, to the extent possible, will be incorporated into the projects
operating plan. Access to the property is pursuant to a combination of public
highways and private roads from both, Vallenar, Chile and San Juan, Argentina.

Primary road access in Chile initially was via a 126 kilometer
public road (route C 485) from the city of Vallenar, through the town of Alto
del Carmen and several small communities to the Barrick property and 44
kilometers on Barrick private road to the Protocol Area access control point at
Tres Quebradas. The project recently completed the upgrade of 70 kilometers of
an existing public road from Punta Colorada and the construction of 48
kilometers of new road to join the road from Alto del Carmen which runs to the
Barrick property. Once inside the Protocol Area the road continues an additional
23 kilometres up to the entry to the mine site at La Mesa.

Primary access in Argentina will be by public highways to
Tudcum, some 200 kilometers north of the San Juan Province capital city of San
Juan and from there 157 kilometres on an existing private road to the access
gate to Barrick's Veladero Mine, and another 30 kilometres through the Veladero
property to the Protocol Area. Once inside the Protocol Area, the road continues
another five kilometres to the process plant site.

Development

The Pascua-Lama project is being designed as a large-scale open
pit operation with processing facilities having a designed throughput capacity
of 45,000 tonnes per day. Non-refractory ore produced by the mine will be
subject to cyanide leaching, while refractory ore will be subjected to flotation
prior to cyanide leaching. The development of the processing facilities has been
staged to reflect the expected composition of the ore over the mine life.

The updated mine construction cost estimate and schedule for
the project was finalized in the fourth quarter of 2012. Expected total mine
construction capital is in the range of $8.0 to $8.5 billion, with first gold
production targeted for the second half of 2014. The project is being impacted
by labor and commodities cost pressures as a result of inflation and competition
for skilled labor. As of December 31, 2012, approximately $4.2 billion had been
spent and construction was approximately 40 percent complete. The tunnel was
approximately 70 percent complete. Construction of the primary crusher in Chile
commenced in January 2013 and in Argentina, construction of the process plant
facility advanced with approximately 60 percent of structural steel erected and
about 50 percent of mass earthworks completed. For the 2013 summer construction
season, the requisite number of skilled craft laborers have been screened and
hired, primarily from the province of San Juan and the rest of Argentina.

During the fourth quarter of 2012, strong winds contributed to
increased dust in the open pit area. Barrick voluntarily halted pre-stripping
activities in order to implement additional dust mitigation and control
measures. Subsequently, regulatory authorities in Chile issued an order to
suspend pre-stripping until such dust-related concerns are addressed. The
project has strengthened dust mitigation and control measures, including
enhanced tunnel ventilation, revised blasting fragmentation, use of more robust
protective equipment and a dust monitoring system.

Restrictions have also been placed on the project due to the
need to repair and improve certain aspects of the water management system in
Chile. In December 2012 and January 2013, a portion of the non-contact water
diversion system was damaged. As a result, interim and permanent improvements to
the water management system are currently being evaluated. In addition, upgrades
to the water treatment plant are being evaluated and completion of the
industrial water conveyance system is pending. Interim measures to repair and
improve the non-contact water management system are expected to be completed by mid-year, while completion of the
other aspects is expected by the end of the first quarter of 2014.

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Pre-stripping of the pit in Chile is unlikely to recommence
until matters related to dust and water management are resolved. However, the
project is evaluating an alternative which would involve accelerating
development of another small pit, which had been scheduled to be mined later, in
order to provide an alternative source of ore for initial production if
resumption of pre-stripping in Chile is delayed beyond May 2013. As a result, to
date, the suspension of pre-stripping has not altered the target of first
production in the second half of 2014. However, the outcomes of the regulatory
processes, and of constitutional rights protection actions, are uncertain, and
the Company will continue to monitor for potential impacts on the timing of
first production.

The Pascua-Lama Project is expected to produce an average of
800,000 to 850,000 ounces of gold and 35 million ounces of silver in its first
full five years of production at all-in sustaining cash costs of $50 to $200 per
ounce and total cash costs of $0 to negative $150 per ounce. The foregoing
estimates are based on gold, silver and oil price assumptions of $1,700 per
ounce, $30 per ounce and $90 per barrel, respectively and assuming a Chilean
peso exchange rate of 475:$1 and do not include escalation for future
inflation.

Barrick will continue to finance the project through a
combination of one or more of existing capital resources, operating cash flows
and additional financings.

In 2009, Barrick entered into the silver purchase agreement
with Silver Wheaton whereby it sold the equivalent of 25 percent of the
life-of-mine Pascua-Lama silver production from the later of January 1, 2014 or
completion of project construction, and 100 percent of silver production from
the Lagunas Norte, Pierina and Veladero mines until that time In return, Barrick
was entitled to an upfront cash payment of $625 million payable over three
years, from the date of the agreement, as well as ongoing payments in cash of
the lesser of $3.90 (subject to an annual inflation adjustment of one percent
starting three years after project completion at the Pascua-Lama Project) and
the prevailing market price for each ounce of silver delivered under the
agreement. During 2012, Barrick received the final cash instalment payment of
$137.5 million.

Geology

The Pascua-Lama Project is located in the high Andean
Mountains, in what has been designated as the Eastern Belt of Hydrothermal
Alteration. The gold, silver and copper mineralization at the Pascua-Lama
Project is part of a mineralized acid sulfate system that was structurally
controlled within intrusive and volcanic rock sequences of Upper Paleozoic and
Middle Tertiary age.

Basement rocks in the Pascua-Lama Project area are dominated by
a multiphase granite pluton that may be a slightly younger upper Permian or
lower Triassic phase of the Permian Guanaco Sonso sequence of intrusive and
volcanics. In the deposit area, the granite intrudes older diorites and volcanic
pyroclastic units and is, in turn, intruded by diorite stocks and dykes of
mid-Tertiary Bocatoma age. During Tertiary time, all of the previously described
rocks were cut by sub-vertical fault zones and hydrothermal breccias located at
complex fault intersections.

Numerous breccias bodies occur in the Esperanza, Quebrada de
Pascua and Lama areas. At the surface, these breccias vary in size from outcrops
measured in centimeters up to hundreds of meters. Typically the breccias show a
strong correlation to zones of intersection of two or more major structural
zones. Breccia Central, the large inter mineral breccias pipe, occurs in the
Quebrada de Pascua area. On the surface, this breccia body is about 650 meters
long and up to 250 meters in width, while underground, between 200 and 400
meters below the surface, the composite body measures about 550 meters in length
and up to 130 meters in width. It extends to at least 700 meters below surface.
This well mineralized breccia pipe is evidence of an explosive hydrothermal
event related to the formation of the Quebrada de Pascua ore deposit. Breccia
Oeste and Breccia Sur are the two large post mineralization breccias pipe
complexes located in the mine area. Oriented north/south along the Breccia Oeste
fault zone in the Esperanza area, the Breccia Oeste pipe measures up to 500
meters long, up to 150 meters wide, and extends up to 300 meters below surface.

Mineral Reserve and Mineral Resource Estimates

See Technical Information  Summary of Mineral Reserves and
Mineral Resources for the estimated Mineral Reserves and Mineral Resources
(silver only, 25 percent) for the Pascua-Lama Project as of December 31, 2012.

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Mining and Processing

The Pascua-Lama mine is being designed as an open pit, centered
at an elevation of 4,800 meters. The project will produce both non-refractory
oxide and refractory sulfide ores. Construction on the Pascua-Lama project began
in 2009. Ore will be treated in two phases due to the nature and distribution of
ore types (non-refractory and refractory). Both ore types will be ground and
washed, with non-refractory ore being subjected to direct cyanide leaching only.
Washed refractory sulfides will be subjected to flotation prior to cyanide
leaching of the flotation tailings. Final products from the process include doré
bullion and gold/silver/copper flotation concentrates.

The plant consists of primary crushing, wet grinding in
autogenous mills, ball milling, CCD washing, pre-aeration, oxygen assisted
cyanide leaching, CCD thickening for pregnant solution recovery, neutralization,
cyanide detoxification, cementation using Merrill-Crowe, retorting, smelting and
tailings deposition. For the treatment of the refractory ore, a flotation
circuit will be added. The processing plant is designed to operate 24 hours a
day, 365 days per year. The average design throughput is approximately 2,000
tonnes per hour.

During years 1 and 2, the process facility is designed to
process 45,000 tonnes per day of non-refractory ore through three mill lines
(Phase 1). In the late first quarter of year 3, a flotation facility will be
added and refractory ore will be introduced to one of the mill lines at the rate
of 15,000 tonnes per day (Phase 2). During this phase, which continues
throughout the remainder of the mine life, the remaining two mill lines continue
to process non-refractory ore at 30,000 tonnes per day. Recovered gold and
silver from the leach circuit will be smelted into doré on-site and shipped to
an outside refinery for processing into bullion. During the mine life refractory
ore in the form of gold/silver/copper concentrate will be sold to an offsite
smelter.

Until permanent power is available at site, temporary
construction power will be provided by diesel generator. The temporary
construction generators will be suitable for use as emergency back-up generators
during operations in the event of a primary power failure. Permanent electrical
power for the project will be provided by a single circuit 220 kilovolts 106
kilomentres line from a main substation connected to the Chile main Central
Interconnected grid System (SIC) near Punta Colorada (Coquimbo Region) to a
substation near the Protocol Area Access Control point in Chile. From there,
separate 220 kilovolt lines will be provided for power supply to the substations
located at the process plant in Argentina (47 kilometres) and the mine
facilities in Chile (23 kilometres). The construction of the primary power
supply system is planned to be completed by mid-2013.

The Company is aware of a number of actions that have been
initiated against the Province of San Juan in Argentina relating to approvals
granted in respect of or actions affecting the Pascua-Lama project. Barrick is
not a party to such actions and has limited information with respect to the
nature or status of the claims or complaints. In addition, certain other
complaints and actions relating to the project have been brought against
subsidiaries of Barrick. In 2011, Mountain-West Resources Inc. (MWR) issued a
series of false and misleading press releases in which MWR falsely claimed that
the Chilean portion of the Pascua-Lama project is not owned by Barrick but is
instead owned by a third party who had granted MWR an option to acquire 50
percent of that property. Barrick has advised MWR that these statements are
false and misleading, and has filed formal complaints referring these matters to
the appropriate authorities. Based on the information currently available to the
Company, none of these actions or complaints is believed to present a
significant risk to the construction of the Pascua-Lama project.

In 2007, the Huascoaltinos Agricultural Community filed a
petition against the State of Chile before the Inter-American Commission on
Human Rights (IACHR) claiming that certain of the Communitys rights under the
American Convention of Human Rights had been violated as a result of, amongst
other things, the States issuance of certain environmental approvals relating
to the project. The case has been briefed by the petitioner Community and the
respondent State before the IACHR. Barrick is not a party to the proceedings and
Barrick believes that the petitioners claims are without merit. Depending on
the decision reached by the IACHR, the IACHR could, amongst other things,
potentially impose precautionary measures on the State or recommend alterations
to the conditions under which the project was approved or reopen its
environmental review. Any such decision could limit or suspend Barricks ability
to develop the project, and could potentially affect Barricks ability to
complete the project as it is currently designed.

In September and October, 2012, two constitutional rights
protection actions were filed in the Court of Appeals of Copiapo, Chile by
representatives of indigenous communities and certain other individuals against
Compania Minera Nevada (CMN), Barricks Chilean subsidiary that holds the
Chilean portion of the Pascua-Lama project, and the Environmental Evaluation Commission (EEC) of the III Region
of Atacama, Chile, the regulatory body with oversight authority over the
Pascua-Lama project.

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The plaintiffs in the actions allege, among other matters, that
the construction of the Pascua-Lama project affects their constitutional rights
to life and to live in an environment free of contamination. The relief sought
in the actions is the suspension of the construction of the Pascua-Lama project
in Chile until all environmental obligations are fulfilled. Both cases have been
admitted for review by the Court, with the first action proceeding toward a
hearing. Barrick has stated that the outcome of the regulatory process related
to these actions is uncertain but that it intends to vigorously defend itself
against these actions.

In April 2011, the Argentinean government implemented import
controls on a greater number of goods. Delays associated with these import
controls have the potential to affect certain aspects of Pascua-Lamas
operations, such as maintenance and new construction that are dependent on
imported goods. Barricks activities were not impacted by these measures in
2012.

In October 2011, the Argentinean government issued Decree 1722,
which requires crude oil, natural gas, and mining companies to repatriate and
convert all foreign currency revenues resulting from export transactions into
Argentine pesos. A bank transaction tax of 0.6 percent will apply to the
subsequent conversion of pesos to foreign currencies in transactions that would
have been executed using offshore funds.

Environment

The Pascua-Lama Project environmental permit was submitted to
both Chilean and Argentine authorities in 2000. The Pascua-Lama project received
conditional Environmental Impact Assessment (EIA) approval from appropriate
authorities in Chile in May 2001 and, in December 2004, CMN submitted a second
EIA in respect of modifications of the project. CMN received conditional
approval of the EIA from Chilean environmental regulatory authorities in
February 2006. In San Juan Province, BEASA submitted an Environmental Impact
Report (Informe de Impacto Ambiental, IIA) in 2000 to support the
environmental approval process for the Argentine components of the project. In
2004, BEASA developed an updated IIA assessing the cumulative environmental
impacts of the Pacua-Lama project and the nearby Veladero project. BEASA
received conditional approval of the project from the San Juan, Argentina
environmental regulatory authority in December 2006. Under Argentine law BEASA
is required to update the IIA at least every two years. To date, BEASA has
submitted three IIA updates and a fourth is currently in development for
submittal later this year.

To date, Barrick has identified over 1,100 permits and
authorizations required for the construction, operation and/or closure of
project facilities in both countries. The project has obtained over 700 permits
and the remaining permits are expected to be obtained in due course.

All environmental aspects of the Pascua-Lama Project were
reviewed during the course of the Argentine and Chilean environmental
assessments. CMN and BEASA have developed environmental management plans
addressing the key environmental aspects of the project. Most of the ore and
waste rock to be excavated from the open pit is defined as potentially acid
generating due to its geochemical characteristics. In the upper Estrecho valley
in Chile where the waste rock will be stockpiled, project development plans
include a water management system to divert non-contact waters around the waste
rock facility and to collect and treat any drainage from the waste rock. Treated
water will be utilized in the mine for industrial purposes (mainly fugitive dust
control) and discharged under permit to the Río Estrecho. In December 2012 and
January 2013, a portion of the non-contact water diversion system was damaged.
See Development above. In March 2013, the environmental authority in Chile
issued a resolution alleging certain non-compliances related to the acid rock
drainage water management system in Chile. CMN will review and evaluate the
resolution once it is formally notified of the same and will respond to the
allegations as required, including by presenting a plan to bring the system into
compliance with the projects environmental permit.

In Argentina the process plant will utilize sodium cyanide to
recover gold and silver from the ore. The process plant and tailings storage
facility have been designed to prevent process solutions from being released to
surface water or groundwater. These facilities will be lined and will include
seepage detection and collection systems. The facilities will also include
treatment a cyanide destruction circuit. Management procedures for cyanide
handling, monitoring and transportation in accordance with the International
Cyanide Management Code are being implemented for the project.

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In November 2010, a federal glacier protection law came into
force that bans new mining exploration and exploitation activities on glaciers
and in the peri-glacial environment, and subjects ongoing mining activities to
an environmental audit. If such an audit identifies significant impacts on
glaciers and the peri-glacial environment, the relevant authority is empowered
to take action, which, according to the legislation, could include the
suspension or relocation of the activity. In the case of the Veladero mine and
the Pascua-Lama project, the competent authority is the Province of San Juan. In
late January 2013, the Province of San Juan announced that it had completed the
required environmental audit, which concluded that Veladero and Pascua-Lama do
not impact glaciers or peri-glaciers.

On July 3, 2012, the Supreme Court of Argentina overturned
temporary injunctions granted by the Federal Court in San Juan suspending the
application of the federal law in the Province and in particular to Veladero and
Pascua-Lama. The Supreme Court has not yet ruled on the constitutionality of the
law.

As per Barricks year-end 2012 MD&A, during the fourth
quarter of 2012, after observing increased dust in the open pit area,
exacerbated by stronger than normal winds, Barrick voluntarily halted
pre-stripping activities at the Pascua-Lama project in order to implement
additional dust mitigation and control measures. Regulatory authorities in Chile
subsequently issued an order to suspend pre-stripping activities until
dust-related health and safety concerns are addressed. Barrick has stated that
the Pascua-Lama project is strengthening dust mitigation and control measures,
including enhanced tunnel ventilation, revised blasting fragmentation, use of
more robust protective equipment and a robust dust monitoring system. Barrick
has also indicated that further restrictions may be placed on the Pascua-Lama
project due to the need to repair and improve certain aspects of the water
management system in Chile, and that pre-stripping is unlikely to recommence
until matters related to dust and water management are resolved. Barrick has
stated that to date, the suspension of pre-stripping has not altered Barricks
target of first production in the second half of 2014. However, the outcomes of
the regulatory processes related to dust and water management, and of the
constitutional rights protection actions (see above) is uncertain and Barrick
has stated that they will continue to assess the potential for impacts on the
timing of first production.

At December 31, 2012, the recorded amount of estimated future
reclamation and closure costs that were recorded under IFRS as defined by IAS
37, and that have been updated each reporting was approximately $78.8 million
(as described in Note 25 to the Consolidated Financial Statements).

Exploration, Drilling and Analysis

As of December 31, 2012, the drill hole database used to
support the development of mineral resources for the Pascua-Lama property
contains 1,240 reverse circulation holes, 605 diamond drill core holes, 2,060
underground channel samples, 383 surface channel samples, 157 metallurgical
samples and 20 muck samples. The gold and silver resources have been estimated
from representative samples taken from 333,415 meters of reverse circulation
holes, 159,212 meters of diamond drill holes, 24,503 meters of underground
channel samples and 12,704 meters of road channel samples. The drill hole
spacing is variable, approximately 40 meters in the Esperanza area and 40 to 60
meters in the Quebrada de Pascua area. The plan for 2013 is to drill a total of
3,668 meters in the Pascua area and 950 meters in the Esperanza area.

Pascua-Lama Project samples were analyzed for gold, silver and
copper by independent laboratories in Santiago, Chile. The quality assurance
procedures, data verification and assay protocols followed by Barrick in
connection with drilling and sampling on the Pascua-Lama Project property
conform to industry accepted quality control methods.

Quality control, data verification and assurance protocols
included controls during sampling, transport, laboratory preparation and
analysis. All samples remained in the possession of Barrick employees until
delivery to third party laboratories. A final check by statistical means
indicated that sampling methodologies were accurate and precise without
contamination. Only when all data was checked were results introduced into the
data base. Additionally, the data base was checked against the original data
before use in the reserve model. Regular internal auditing of the mineral
reserve and mineral resource estimation processes and procedures are conducted.

Royalties and Taxes

Pursuant to federal legislation which implemented law 24.196 in
May 1993, and Provincial legislation adhering to the same, operating mines are
required to pay to the Provincial government a royalty of up to 3 percent for
minerals extracted from Argentinean soil. In addition, Barrick is obligated to
pay a gross proceeds sliding scale royalty on gold produced from the Pascua-Lama
properties located in Chile ranging from 1.433 percent to 9.555 percent and a
1.91 percent net smelter royalty on copper produced from the properties. In
addition, a step-scale five percent or 7.5 percent gross proceeds royalty on
gold produced and a sliding scale net smelter royalty of 0.5 percent to 6
percent on all products other than gold and silver is payable in respect of certain portions
of the property located in Argentina, not currently included in the mine plan.
The sliding scale and step-scale royalties on gold increase with rising spot
gold prices.

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In 2002, as an emergency measure, Argentina adopted a 5% export
duty on certain mineral products, including gold. At the time, the duty was
described as temporary. Export of gold doré from Barricks Veladero Mine is
currently subject to this duty. Should such export duty continue to be in place
at the time that Barrick commences production from Pascua-Lama, only production
from ore extracted in Argentina will be subjected to such duty.

SALOBO MINE, BRAZIL

Christopher Jacobs, CEng MIMMM, Vice President and Mining
Economist, Micon International Ltd., James Turner, BSc (Hons) MSc CEng MiMMM,
Senior Mineral Process Engineer, Micon International Ltd., Barnard Foo, P. Eng.,
MBA, Senior Mining Engineer, Micon International Ltd. and Jason Ché Osmond,
Senior Geologist, Micon International Ltd. prepared a technical report in
accordance with NI 43-101 entitled Technical Report on the Mineral Reserves and
Mineral Resources of the Salobo Copper-Gold Mine Carajás, Pará State, Brazil
dated March 19, 2013 (the Salobo Report). Christopher Jacobs, James Turner,
Barnard Foo and Jason Ché Osmond are qualified persons under NI 43-101. The
following description of the Salobo Mine has been summarized from the Salobo
Report and readers should consult the Salobo Report to obtain further
particulars regarding the Salobo Mine. A copy of the Salobo Report is available
under the Companys profile on SEDAR at www.sedar.com.

Property Description and Location

The Salobo Mine is a copper-gold deposit located approximately
80 kilometres northwest of Carajás, Pará State in northern Brazil. Geographic
coordinates for the property are 5°4725 S latitude and 50°325 W
longitude.

The Salobo Mine comprises a single claim and is permitted for
mining copper and gold under National Department of Mineral Production (DNPM)
807.426/74. The area of the property is 9,180.61 hectares, as defined by
Exploration Permit no. 1121, dated 14 July, 1987. Brazilian legislation
separates the ownership of the surface rights from mineral ownership. A mining
company can operate a mine even if does not own the surface, provided it owns
the minerals. In this case it is necessary to pay a royalty to the surface
owner. The royalty is calculated as 50% of the CFEM (Compensation for Financial
Exploitation of Mineral Resources), which is paid to the government. The mining
concessions are updated every year on presentation by Vale of the annual report
of mining production to the DNPM. The Salobo Mine received its first Operating
Licence No. 1096/2012 on November 5, 2012, valid for four years. Vale maintains
that the company holds clear mineral title to the deposit areas and has the
necessary permits for operation of the mine.

The area is well-served by railroads and highways that connect
the seaport and other cities. Air service is available at the Carajás airport,
which is approximately 70 kilometres southeast of Salobo and is capable of
receiving commercial aircraft. There are regular flights to Belém (capital city
of Pará state, population 2 million) and to other Brazilian cities. The city of
Marabá is approximately 240 kilometres east-northeast from Salobo by highway.

Accessibility, Climate, Local Resources, Infrastructure
and Physiography

The tropical climate, typical of the Amazon region, is humid
and hot with a temperature ranging from 17 degrees Celsius to 32 degrees
Celsius, and averaging 27 degrees Celsius. The average humidity is about 76
percent and the average annual rainfall is approximately 192 centimetres. The
rainy season extends from December to April, with most rainfall occurring in
February and March.

In the Salobo Mine area, surface elevations range from 190 to
520 metres, compared to the elevation of 850 metres attained on the Carajás
Ridge to the southeast. The topography is fairly steep: the Salobo ridge, where
the deposit is located, has a nominal slope of 2.5H:1.0V. On either side of the
Salobo ridge are the Cinzento and Salobo Rivers, respectively, both of which
flow into the Itacaiúnas River. The latter flows into the Tocantins River close
to the city of Marabá.

Salobo is within the Flona de Tapirape-Aquiri national forest
which is 190,000 hectares in area. The deposit is in the northwestern portion of
the Carajás Reserve. The main ecosystem is tropical forest, which is dominated
by relatively dense trees with substantial brush in the under-storey.

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Mining is the primary industry of the area. As well as Salobo,
Vale also operates a very large iron ore mine at Carajás, and the established
Sossego copper mine.

Concentrate produced at the mine is hauled by 40 ton (gross
weight) highway trucks 85 kilometres on the highway to a rail-loading site
located approximately ten kilometres north of the town of Parauapebas. From
there, it is transported by train 870 kilometres to Itaqui port located near the
coastal city of São Luís in the State of Maranhão.

Electrical energy is supplied from Tucuruí, a 8,370 megawatt
hydroelectric generating station on the Tocantins River, 200 kilometres north of
Marabá, and 250 kilometres due north of Parauapebas. An 87-kilometre overhead
transmission line (230 kilovolts) supplies the Salobo site. There is no ring
feed.

Process make-up water comprises runoff and direct precipitation
within the tailings storage basin. This raw water is pumped up to the plant
together with return water from tailings deposited in the storage facility. At
the time of Micons visit, excess water was being discharged from the tailings
storage facility (TSF). However, if the process plant requires additional
makeup water, this can be abstracted from Igarapé Mamão (Pawpaw creek) via a
floating intake within the project site, using vertical pumps.

The Salobo TSF, comprising an earth dam and concrete-lined
spillway, was designed for Vale by Brazilian engineering company BVP Engenharia
to withstand a one in 10,000 year event. The TSF, when completed to a height of
280 metres above sea level, will have sufficient capacity to store tailings
resulting from the entire Mineral Reserve planned over the life of the mine. At
present, work is underway to lift the impoundment from 170 metres above sea
level to an intermediate design height of 220 metres above sea level.
Potentially, the TSF site could also store tailings from the material presently
identified as mineral resources.

History

The Salobo copper deposit was discovered in 1974 during
exploration carried out by Companhia Vale do Rio Doce, now known as Vale
(CVRD) personnel. In 1977, a detailed exploration program commenced and in
1978 the presence of copper sulphides associated with magnetic schist was
confirmed and the first drill hole was completed that intersected a mineralized
interval of 140 metres at 0.45 percent Copper.

From 1985 to 1987, a pilot-scale study was carried out at
Salobo and, in July, 1987, mining rights were awarded to CVRD. On 29 June, 1993,
Salobo Metais S.A. (SMSA) was created as a joint venture between CVRD and
Morro Velho Mining, to further study the economic viability of the deposit. In
1997, almost 30,000 metres of drilling was completed and a pre-feasibility study
was completed by MRDI. This was followed in 1998 with the first feasibility
study. In 2001, a revised feasibility study was completed by Kvaerner which was
updated in 2002 by AMEC E&C Services Inc. CVRD acquired a controlling
interest in the property in June, 2002.

The period 2002 and 2003 saw an additional 72,000 metres of
drilling completed. There followed a number of independent mineral resource
models and audits by Snowden (2003), Golder and AMEC (2004), Pincock, Allen and
Holt (2005 and 2008), and Golder (2010). The latter went on to prepare the
current (2012) block model and Mineral Resource estimate. The definitive
feasibility study was completed by Fluor JPS in June, 2004.

In 2007, CVRD changed its name to Vale.

Pre-stripping operations were commenced at the Salobo Mine in
2009, and the Phase I process plant commenced commissioning and ramp-up in June,
2012. Phase II construction is now well advanced and is expected to be complete
in 2014.

Geology and Mineralization

Regional Geology

The Carajás Mining District, located in the southeast of Pará
State, Brazil, is a unique geologic feature covering an area of about 30,000
square kilometres (300 kilometres by 100 kilometres), between the Xingu and
Tocantins / Araguaia Rivers.

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The Carajás Province is a major late Archean basin, deformed
into a sigmoid shape, trending west-northwest  east-southeast. The Carajás
sigmoid shape is further defined by several major west-northwest 
east-southeast lineaments such as the Carajás and Cigano sinistral fault zones.
Northeast and northwest fault systems crosscut the region.

The Carajás Archean volcano-sedimentary sequence is composed
mainly of bimodal volcanic, chemical sediments, including the gigantic banded
iron formations (BIF) that host the largest iron deposits in the world, and
pyroclastic and clastic sediments. Several Archean intrusive units, the
calc-alkaline Plaquê Suite (2.77 billion years old), and the alkaline Salobo and
Estrela granites (2.5 billion years old), are known to have a strong correlation
with coppergold mineralization in Carajás. There are many generations of mafic
bodies including some that are post-mineral dykes. A Proterozoic suite (1.88
billion years old) of alkaline granites, the central Carajás granite, Cigano,
and Pojuca granites, also intrude the Carajás sequence. Several generations of
younger mafic dykes crosscut the entire sequence.

The Carajás volcano-sedimentary sequence has been locally named
the Itacaiúnas Supergroup, which has been tentatively divided from top to the
bottom into:

| | I.   | Igarapé Bahia Group  is composed of mafic volcanic:
      lavas, tuffs and breccias, meta-sediments and BIF, with deposits of
      copper, copper-iron, copper-gold-Mo-silver including the Igarapé Bahia (18
      million tonnes at 4.0 grams per tonne gold in the weathering profile) and
      Alemão/Bahia deposits (120 million tonnes at 1.1 percent copper and 1.5
      grams per tonne gold). The Serra Pelada oxide-gold deposit is hosted by an
      overlying clastic metasedimentary sequence.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | II.  | Grão Pará Group - consists of the basal Parauapebas
      Formation made up of bimodal volcanic rocks with various degrees of
      hydrothermal alteration, metamorphism and deformation. The Parauapebas is
      overlain by the Carajás Formation, which hosts the gigantic Fe deposits
      (18 Bt at 15 percent iron).                                                                                                                                                                                   
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | III. | Igarapé Pojuca Group - comprises basic to intermediate
      volcanics (frequently with cordierite- anthophyllite alteration),
      amphibolites, gneisses and chemical sediments (cherts), BIF of
      oxide-silicate facies and schists of various compositions. The BIF unit
      hosts the Pojuca copper-zinc deposit.                                                                                                                                                                                   
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | IV.  | The Igarapé Salobo Group  is composed of iron-rich
      sediments associated with quartzites and gneisses, amphibolite facies of
      metamorphism, which includes the Salobo copper-gold
  deposit.                                                                                                                                                                                                                                                                                                         

The basement of the Carajás sequence comprises a gneissic
terrain with remnants of Archean greenstone belts. Copper and gold
mineralization within the province is associated with Archean felsic intrusives
(Plaquê and Estrela Granites). Proterozoic anorogenic felsic intrusives (dykes)
and Mesozoic mafic dykes crosscut the Carajás Sequence and the gneissic terrain.

The Salobo and Sossego goldcopper deposits lie within the
Carajás belt of the Amazon craton. Basement rocks comprise gneisses and
migmatites of the Xingu Complex and orthogranulites of the Pium Complex that
were metamorphosed at about 2.8 Ga. In the Carajás belt, the basement assemblage
defines a broad, steeply dipping, east-west trending ductile shear zone
(Itacaiúnas shear zone), which experienced multiple episodes of reactivation
during the Achaean and Palaeoproterozoic. Unconformably overlying the basement
is a sequence of volcano-sedimentary rocks of Archaean age (2.75 billion years
ago), the Itacaiúnas Supergroup. The basal unit is the Grão Pará Group that
includes greenschist-facies metamorphosed metavolcanic rocks and BIF.

Sandstone and siltstone deposited in a shallow marine to
fluvial environment (Águas Claras Formation), dated at 2.645 billion years old
to 2.681 billion years old, overlie the volcanic rocks of the Grão Pará Group.
The volcano-sedimentary sequence has been intruded by granitic rocks of various
ages. Palaeoproterozoic intrusions (ca. 1.88 billion years old) include several
anorogenic granitic plutons, such as the Central Carajás and Cigano granitoids.
Achaean intrusions include granitoids and diorites of the Plaquê Suite (ca. 2.74
billion years old), younger alkaline granitoids (ca. 2.57 billion years old),
such as the Estrela Complex, the Old Salobo Granite (2.573 ± 0.002 billion years
old) and the Itacaiúnas Granite.

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Property Geology

The Salobo mineralization is hosted in the biotite-magnetite
(BDX) and amphibolite magnetite schists (XMT) along the trend of a steeply
dipping sequence of metamorphic rocks. Granitic intrusives (granitoid, GR) occur
adjacent to the north side of the sequence of rocks and a series of much younger
diorite dykes (diabase, DB) crosscut the mineralization forming barren zones.
Copper mineralization occurs as chalcocite and bornite, with subordinate
quantities of chalcopyrite, together with variable proportions of molybdenite,
cobaltite, covellite, gold and silver, contained in schists with variable
proportions of magnetite, amphibole, olivine, garnet, biotite, quartz and
plagioclase. Brittle-ductile shear zoned deformation has resulted in lenticular
shaped ore shoots that characteristically show close associations between copper
mineralization and magnetite contents.

Near-surface weathering of the bedrock in the deposit area has
produced a humid, clayey saprolite surface layer. The sulphide mineralization in
the upper 20 metres to 25 metres part of the saprolite has been oxidized, while
the lower five metres to ten metres of the saprolite contains variable
sulphides, and is transitional downward into fresh, sulphide-bearing bedrock.
The oxide saprolite layer has been partially leached by groundwater resulting in
a significant reduction in the copper and gold content. The sulphide saprolite
is a transitional unit for which leaching has also reduced the copper and gold
content, but to a lesser degree than the oxide saprolite. The lack of sulphides
and the reduced grade in the oxide saprolite prohibits it from currently being
considered of economic interest.

Magnetite Schist (XMT)

XMT is represented by massive, foliated and banded rocks, with
predominant magnetite, fayalite, grunerite, almandine and secondary biotite.
Granoblastic textures with polygonal contacts in magnetite and fayalite are
common. The presence of fayalite is marked by the replacement of grunerite and
greenalite and transformation into magnetite and other sulphides. Iron-potassic
alteration is common, creating schistosity in biotite units.

The southeast portion of the deposit hosts hastingsite,
replaced partially by actinolite, grunerite and sulphide minerals. Fluorite,
apatite, graphite and uranium oxides are associated with this assemblage,
Fe-silicate minerals and alteration products of fayalite.

Garnet-Grunerite Schist (DGRX)

These are massive rocks with local development of schistosity.
The rocks with significant almandine and grunerite content have isotropic
texture or very few schistosity structures, with nematoblastic and granoblastic
texture. The main mineralogical composition consists of almandine and
cummingtonite-grunerite, with magnetite, hematite, ilmenite, biotite, quartz,
chlorite, tourmaline and subordinate allanite. Fluorite and uraninite generally
occur in veinlets related to stilpnomelane, calcite and grunerite.

Biotite Schist (BDX)

This unit is the most common lithology at Salobo and consists
of medium to coarse-grained material with anastomosed foliation. The mineral
assembly is characterized by biotite (responsible for the foliation observed
within the rocks), garnet, quartz, magnetite and chlorite. The assemblage with
garnet, magnetite, grunerite and biotite is partially replaced by a second
generation of biotite and magnetite with chlorite, K feldspar, quartz, hematite
and sulphides. Tourmaline, apatite, allanite, graphite and fluorite generally
occur throughout this unit.

Feldspar-Chlorite Mylonite (ML)

The feldspar-chlorite-quartz mylonite is characterized by
mylonitic foliation, produced by the orientation of rims of chloritized deformed
biotite, hastingsite, elongated quartz and saussuritized plagioclase
(K-feldspar, epidote and muscovite alteration). Porphyroblastic garnet is
partially or totally replaced by chlorite and epidote. Allanite and apatite
generally occur throughout this lithology.

Metavolcanic Basic (MTB)

This group of massive coarse-grained rocks is characterized by
Fe-hastingsite and/or hornblende and plagioclase with chlorite alteration. It
occurs irregularly in the system, but is concordant with other lithotypes in
abrupt contacts, probably hydrothermally altered intrusive basic relicts within
the package of volcanic rocks.

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Quartz Mylonites (QML)

Quartz mylonites are grey or white in colour, passing through
green to red. Where present, Fe-oxides are medium to fine grained, foliated and
composed predominantly of quartz, muscovite, sericite, sillimanite and chlorite.
Accessories, such as biotite, feldspar, magnetite, almandine, tourmaline, zircon
and allanite are common. It is possible to differentiate: (a) red
quartz-feldspathic rocks formed by K-feldspar and quartz and which may be a
product of shearing between the gneissic basement and the supracrustal rocks;
and (b) chlorite schists, mainly composed of chlorite and quartz, that represent
intense hydrothermal alteration. This unit is found near the southern border of
the deposits, close to important brittle shear zones, which may be interpreted
as conduits for hydrothermal fluids.

Old Salobo Granite (GR)

The Old Salobo Granite occurs as a stockwork of approximately
2,573 ±2 million years old. The rocks appear colorless-pink to grey, coarse
grained and with mylonitization in some areas. The main mineralogy is composed
of K-feldspar (orthoclase-microcline), oligoclase, quartz, augite, hornblende,
chlorite and, rarely, magnetite. There is no evidence of contact metamorphism
with the host rocks. The mylonitic aspects that appear both in granite and host
rocks are likely to have formed during the deformation phase.

Young Salobo Granite (GR)

The Young Salobo Granite occurs as small northwest-trending
sills, hosted by the supracrustal sequence and by the gneisses of basement. It
corresponds to the youngest granitic intrusion detected by drilling in the
Salobo area. In some porphyritic portions, the matrix is aphanitic, containing a
porphyry of red albite (Fe-oxide in micro-fractures) and chlorite pseudomorphed
by biotite. This mineral assemblage is composed of fine to medium grained,
equigranular, hypidiomorphic grains of albite/oligoclase, orthoclase, quartz,
chlorite, with minor epidote, zircon, fluorite, magnetite, chalcopyrite and
pyrite. Deformation was not observed and the structure is isotropic. Age dating
indicates an age of 1,880 ±80 million years old.

Diabase (DB)

Diabase is located in southeast of the deposit, striking at
approximately N70°E, while in the northwest of the deposit striking near to
N20°W. The predominant minerals comprising the rock type are augite,
plagioclase, magnetite, ilmenite and quartz. The fine grained diabase has an age
of 553 ±32 million years old, while the more granular margins are dated at 561
±16 million years old. This unit represent the last magmatic event of the area.
The dykes are set within shear/fault lateral geometries to (N70°E) and frontal
geometries (N20°W), probably developed before the intrusions, in a compressional
regime modified by an extensive regime.

Rhyolite (RIO)

Rhyolite dykes are grey-reddish in colour, porphyritic in
texture within an aphanitic matrix. The majority are composed of K-feldspars,
plagioclase, quartz, amphibole in a matrix cut by quartz veinlets. In drill
holes the occurrence is rare or an ultimate phase.

Mineralization

The sulphide mineralization consists of assemblages of
magnetite-chalcopyrite-bornite and magnetite bornite- chalcocite. Variable
amounts of molybdenite, cobaltite, safflorite, gold and silver, also exist
hosted by rocks which contain magnetite, fayalite, grunerite, garnet, biotite,
quartz and plagioclase. The mineralization is related to Fe-rich rocks and
occurs in lenticular shears and hydrothermally altered zones. The chalcopyrite
is associated with magnetite schists (XMT) rich in fayalite and magnetite.

Different styles of mineralization can be found: disseminated,
with planar structures (stringers) parallel to rock, associated with local
concentrations of magnetite and/or garnet, filling or surrounding the fractures
of mineral grains (stock works); in cleavages of amphiboles and platy minerals,
consisting of massive sulphide, parallel to bedding of hosted rocks in some
cases, as well as remobilized mineralization in shear zones. Chalcopyrite,
bornite, and chalcocite occur interstitially in silicate minerals. These
sulphide minerals are commonly found filling the cleavage planes of biotite and grunerite. Hematite is rare but, in places, comprises as much
as four percent by volume. It exhibits tabular texture (specularite), with
infilling bornite and partial replacement by magnetite.

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Native gold grains are observed locally, mainly occurring as
inclusions in cobaltite and safflorite or interstitial to bornite. In addition,
ilmenite, uraninite, allanite, fluorite and apatite occur as accessory minerals.
The above textural relationships indicate that mineralization was firstly marked
by an oxide stage, with a subsequent sulphide stage.

Molybdenite occurs interstitial to magnetite, and shows
cleavages planes filled with chalcopyrite and bornite. In mylonitic samples,
molybdenite forms kinked stringers with marked variable extinction, the result
of in-lath recrystallization.

Magnetite occurs mainly as idiomorphic to sub-diomorphic
grains, interstitial to silicate minerals or in fractures, or forms bands in
mylonitic rocks.

The gangue minerals are almandine, garnet, grunerite and
tourmaline, reflecting the intense iron-metasomatism. Minor amounts of fayalite
and hastingsite are pseudomorphed by grunerite and magnetite. Tourmaline, with a
dominant schorlitic composition occurs as idiomorphic crystals preferentially
oriented parallel to mylonitic foliation, in association with biotite, garnet
and grunerite.

Biotite sub-diomorphic crystals, commonly kinked, are
associated with potassic alteration and spatially related to the copper-gold
mineralization. In addition, uraninite and zircon inclusions may be locally
abundant in biotite. Quartz shows undulose extinction, and is associated with
biotite in ore samples or constitutes concordant veins within the host rocks.

Hydrothermal alteration appears to be much more important than
previously recognized. The spatial distribution of hydrothermal alteration in
the Salobo deposit shows that areas affected by intense irons and
potassic-metasomatism host most of the iron oxide copper-gold ore.

In general, the massive magnetite associated with the
mineralization is the core of the hydrothermal system and is surrounded by less
intensely altered rocks. Within the massive magnetite body are small veins and
irregular masses of secondary biotite. Garnet is completely replaced by
magnetite, forming obvious pseudomorphs. Away from the massive magnetite, the
magnetite gradually diminishes, giving way to biotite garnet schist and/or
garnet grunerite schist. When not obscured by magnetite, biotite-garnet schist
and garnet-grunerite schist are very distinctive and easily logged.
Alkali-metasomatism is recognized in the amphibolite rocks of the Salobo
deposit. It is expressed by weak sodium with intense superimposed potassium
alteration (≤ 4.6 wt% of K2O).

Potassiumfelsdpar, biotite and oligoclase are in the main
alteration minerals. A significant increase in the FeO content (≤35 wt%)
accompanied the potassium alteration in amphibolite and was marked by the
replacement of calcic-amphibole (mostly magnesium-hornblende and hastingsite) by
iron-magnesium amphibole (cummingtonite), and by formation of biotite and
magnetite. The chemistry of the meta-graywackes at the deposit indicates that
they also underwent significant iron and potassium alteration. Alteration
assemblages are characterized by almandine, garnet, biotite and grunerite,
subordinate tourmaline and minor magnetite. The richest ore zone, located in the
central part of the deposit, corresponds to the most altered area.

Exploration

The discovery of the Salobo copper deposit occurred during a
systematic program of geochemical, geophysical and geological exploration in the
Carajás region, initiated by CVRD/DOCEGEO in 1974.

In 1977 a program of detailed geological and geochemical work
explored magnetic anomalies existing in the basin of Igarapé Salobo (Salobo
stream). Anomalies of up to 2,700 parts per million copper were detected in
stream sediments collected from tributaries of Igarapé Salobo. These anomalies
lead to the development of detailed work in the area, involving geological,
geochemical and geophysical prospecting. In 1978, exploration revealed the
presence of copper sulphides associated with magnetic schist and the first phase
of several drilling programs was initiated.

The primary method employed in the exploration and evaluation
of the Salobo deposit is diamond core drilling, details of which are presented
below.

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Drilling

The geochemical and geophysical anomalies identified at Salobo
were initially tested by nine exploratory drill holes by DOCEGEO in 1978,
including a mineralized interval of 140 metres at 0.45 percent copper. A
successive drilling campaign (the first of five major campaigns), to follow-up
this promising mineralization, was conducted on a 400 metre by 200 metre drill
grid, subsequently reduced to 200 metres by 200 metres and then to 200 metres by
100 metres. This initial campaign completed 65 diamond drill holes for 29,322
metres between March, 1978 and May, 1983.

The second campaign (January, 1986 to June, 1987) was jointly
undertaken by CVRD/GICOR that reduced the grid to 100 metres by 100 metres in
the core of the deposit with further drilling undertaken in the southeast of the
deposit from the adit (G-3). This phase completed 9,033 metres of diamond
drilling from 60 drill holes.

In 1993, and to accompany an economic feasibility study by
SMSA, a third campaign was initiated. The primary objective was to investigate
the best probable location in the deposit in which to commence mining and to
optimize the first five years of production as well as investigate mineralized
continuity at depth. Between July, 1993 and February, 1994 a total of 65 drill
holes had been completed for 14,585 metres.

In 1997, the fourth drilling campaign commenced, accounting for
25,491 metres from 88 holes.

The fifth drilling campaign completed 190 drill holes for
66,243 metres in 2002 and a further 2,047 metres in 2003 that brought the grand
total for the Salobo deposit to almost 147,000 metres of geological
drilling.

By the end of the campaigns in 2003, some areas were drilled a
little more densely (50 metres by 50 metres), including the area around the
adit.

The surface drilling was initiated with a diameter of HQ and
the minimum diameters were BX and BQ. The underground drilling was carried
throughout with BX diameter. The drilling system used included the traditional
and wireline methods. Down hole surveys were carried with the R-F DDI (reflex
fotobor dip and direction pointer), Fotobor DDI and Maxbor units were used to
prevent errors in azimuth readings due to the influence of natural magnetic
properties within the rocks. Core recoveries of 80% in weathered rock and 90% in
fresh rock were achieved by the drilling companies during the campaigns.

The majority of the core recovered is NQ size (47.1
millimetres) with a lesser amount of (Imperial) BQ size (31.5 millimetres).

Sampling and Analysis

Sample Preparation

Core is delivered by the drilling contractor to the core
logging/storage area. After the core is photographed and logged, sample
intervals are marked; the sample intervals average one metre in mineralized
zones and two or four meters in barren zones. Sample lengths may vary depending
on geological and lithological/structural criteria (geologic boundaries,
lithological/mineralogical changes, faults and shear zones, etc). The core is
cut by a diamond saw and one half is submitted for sample preparation and
assaying while the other half is kept in the core storage facility for further
reference.

Sample Analysis

Sample Receipt and Preparation

Upon receipt of samples, the preparation laboratory personnel
referenced (scanned) the bar code label attached to the sample bag. The weight
of sample was electronically recorded together with information such as date,
time, equipment used and operator name. The scanning process allowed for
complete traceability of the sample through the entire laboratory process.

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Assay Methodology

The samples (a 5 gram aliquot) were routinely analyzed for
copper, silver and iron by atomic absorption spectrometry (AAS). Gold was
determined by a lead collection fire assay/AAS technique on a 30 gram sample. In
the early stages of the exploration program Pd, Pt, Ni, Mo, and U were also
analyzed but later were excluded from the analytical package.

Sample Security

All drill core was brought from the drill site at the end of
shift, and stored in a purpose built logging and storage facility. Core
undergoes a standard logging procedure before being sawn at the adjacent diamond
saw building. Mineralized sample boxes are returned to the storage facility
where they are kept under lock and key. The core storage and logging facility is
kept locked when unoccupied. Unshipped samples are also stored in a secure
facility at the same location.

Quality Assurance and Quality Control

The QAQC program implemented for Salobo is complex due the
implementation of different schemes of QA over a prolonged period of time.

SGS Lakefield Research Ltd. (Lakefield) was used for the
routine analysis of copper, gold and silver, while Acme analysed for Mo, U, F, S
and C. The Gamik laboratory was used as a secondary laboratory to check the
results obtained from the primary laboratory (Lakefield and/or Acme). Initially,
SMSA allowed the laboratory the responsibility on the insertion of standards,
blanks and duplicates samples. Consequently, in the absence of robust QAQC data,
and in an attempt to validate the results related to campaigns before 2002, a
total of 51,768 of the original 75,577 samples drilled prior to 2002 were
re-assayed to corroborate the original results. The re-analysis considered pulps
and coarse rejects materials when possible. However, they are not identified
separately as repeats or duplicate in order to evaluate precision and sample
preparation respectively. Based on the results obtained, Vale applied an
adjustment factor to original sample grades.

For the 2002 to 2003 samples, SMSA produced internal standards,
but they were only available at the end of drilling program. Because of this, a
special lot of 1,500 samples from the 2002 to 2003 drilling program were sent
for reanalysis. A total of 76 aliquots were inserted in blind form for both
standards B5B and B3E3C3 (Salobo CMR) of the project.

The QC protocol at Salobo operations includes the following
control samples:

- In-house standard reference materials inserted at about 2.5 percent
  frequency.
- Coarse preparation blanks inserted at approximately 2.5 percent frequency.
- Pulp duplicates carried out by the primary laboratory at about five
  percent frequency.
- External assay checks by the secondary laboratory on up to five percent of
  randomly selected original pulps analyzed previously by the primary
  laboratory.

Mineral Reserve and Mineral Resource Estimates

See Technical Information Summary of Mineral Reserves and
Mineral Resources for the estimated Mineral Reserves and Mineral Resources for
the Salobo Mine as of December 31, 2012.

Mining Operations

The Mineral Reserve at the Salobo Mine is being extracted using
conventional open pit mining methods consisting of shovels, trucks and drills as
the major mining equipment. Pre-stripping of the site has been completed and
production is expected to ramp up to 12 million tonnes per year by 2014 and
eventually reach 24 million tonnes per year by 2016.

The mine plan was generated based on the Proven and Probable
Mineral Reserves contained in Vales 2012 resource model. Reserves are reported
above a copper equivalent cut-off grade of 0.296 percent.

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The ultimate pit was subdivided into seven internal phases
targeting the highest grade, lowest cost areas of the ultimate pit first. The
Salobo mine life spans approximately 29 years ending in 2042. However, the
process plant will continue operations, milling stockpile material, for another
22 years until 2064.

Phasing of the open pit development and application of the
cut-off grade strategy allows higher grade ore (above 1.00 percent copper) to be
mined in the initial years of the operation. This is followed, from years 2025
to 2033, by the mining of progressively lower grade material averaging 0.48
percent copper. The copper grade improves again during the final phases of pit
development, then decreases as production ramps down towards the processing the
lower grade stockpile material.

During mining, the ore placed on the stockpiles is classified
according to the following grade categories:

- Medium grade ore: 0.60 to 0.85 percent copper equivalent
- Low grade ore: 0.30 to 0.60 percent copper equivalent

Recovery Methods

Mineral reserves at Salobo indicate total reserve grades of
approximately 0.72 percent copper and 0.38 grams per tonne gold. Copper occurs
primarily as the minerals chalcocite, bornite and chalcopyrite. Gold values are
predominantly associated with the copper sulphides. Average levels of magnetite
and chlorite are five percent and ten percent respectively. Potential
deleterious elements include fluorine at approximately 0.40 percent and uranium
at approximately 16 parts per million.

The main lithologies for hosting the copper sulphide
mineralisation are magnetite schists (XMT) and biotite schists (BDX). In
general, higher copper values are associated with the magnetite schists,
containing greater than ten percent magnetite, with values typically greater
than 0.6 percent copper. Biotite schists generally contain lower copper values,
typically in the range of 0.2 percent-0.6 percent copper. Low grade ore is
currently stockpiled.

Phase I of the Salobo plant is designed to process 12 million
tonnes per year of ore to produce approximately 100,000 tonnes of copper in a
copper-gold concentrate annually. Production commenced in June, 2012. Phase II
of the Salobo plant expansion involves doubling the throughput to 24 million
tonnes per year with annualized copper in concentrate production rising to
approximately 200,000 tonnes. Construction of Phase II is well advanced and is
basically a mirror-image of Phase I, i.e. essentially two identical production
lines. Production from Phase II is scheduled to start in 2014.

Currently, Phase I is designed to operate 365 days per year, 24
hours per day and at 90 percent availability to process an average 1,522 tonnes
per hour.

Overall, for the total reserve copper head grade of 0.72
percent copper, expected recovery was 84.2 percent, and for the total reserve
gold head grade of 0.38 grams per tonne, expected recovery was 61.9 percent.
Target copper grades in concentrate are 35-42 percent copper with a typical
value of 38 percent copper. Target gold grade in concentrate is 17 grams per
tonne with an upper limit of 40 grams per tonne.

There are three deleterious elements of potential concern in
the copper concentrate, namely fluorine, chlorine and uranium. Of these,
fluorine is the most significant. In general, smelters will tend to reject
concentrates with high fluorine content due to problems in the smelters
sulphuric acid plants. However, there are smelters that can accept high fluorine
contents, although they are few in number. Vale has advised it has secured
contracts with four smelters (in Poland, India, Sweden and Germany) which are
able to accept concentrates with an anticipated average fluorine content of
1,800 parts per million and a maximum content of 4,000 parts per million.

Apart from the inclusion of high pressure grinding rolls
(HPGR) for tertiary crushing ahead of ball milling, the circuit is very
conventional to the copper industry. The use of conventional semi-autogenous
grinding (SAG) milling is generally considered within Vales operating
philosophy but the reasons for the design and selection of the HPGR/Ball Milling
circuit are sound and were due mainly to the high magnetite (and copper) content
of critical size pebbles that would have been removed with the magnet protecting
the pebble crusher and therefore requiring additional processing and the
expected variability in ore hardness that would cause variability in SAG mill
throughput in a typical SAG mill, ball mill, pebble crusher circuit.

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Run-of-mine ore at 2.5 metres top size is hauled in 240-tonne
trucks and crushed in a 60 in x 89 in primary gyratory crusher to a product 80
percent passing 152 millimetres. The dump pocket volume capacity is equivalent
to the volume of 2.5 trucks. Primary crushed ore is conveyed to a crushed ore
stockpile which has a live capacity of approximately 24,800 t and a total
capacity of 73,400 tonnes. Coarse ore stockpile reclaim feeders are used to feed
onto the primary screen feed conveyor which feeds two operating double-deck
vibrating screens. Screen oversize is crushed in two MP-1000 cone crushers (746
kilowatt motors) in a standard closed circuit. The nominal throughput for each
crusher is 1,198 tonnes per hour.

Secondary crushed product is then conveyed to the secondary
crushed ore stockpile feeding the HPGR units. This stockpile has a total
capacity of approximately 171,000 tonnes and a live capacity of about 58,400
tonnes.

Four operating reclaim feeders are then used to reclaim the
crushed ore and deliver it to the HPGR circuit via the stockpile reclaim
conveyor and silo feed conveyor, equipped with a shuttle head. This delivers ore
into one of two concrete silos, providing approximately 20 minutes nominal
capacity. A reversible feed belt conveyor and feed belt feeders then feed each
of the two HPGR units.

Each HPGR unit has a drum 2.0 metres diameter by 1.5 metres
wide. The maximum feed size is 55 millimetres and the product is 80 percent
passing 17 millimetres. The crushed HPGR product is discharged as a compressed
cake and, via the product collection conveyor, is then screened at eight
millimetres aperture and broken up with high pressure water sprays. There are a
total of four operating screens. The screen undersize, at 80 percent passing six
millimetres, discharges directly into a Ball Mill discharge sump. The screen
oversize is recirculated back via the screen oversize collection conveyor to the
silo feed conveyor and further HPGR crushing.

Slurry in the Ball Mill discharge sump is pumped to
hydrocyclones. Hydrocyclone underflow is fed by gravity to an overflow Ball Mill
(7.9 metres diameter x 12.2 metres long) equipped with a 17 MW gearless motor.
There are two Ball Mills operating in closed circuit, each with a hydrocyclone
cluster, i.e., two production lines. Ball Mill discharge feeds into the
discharge sump for recirculation to the hydrocyclones. The design grind is 80
percent passing 105 microns. Hydrocyclone overflow advances to the copper
flotation circuit at approximately 42 percent solids by weight. The Ball Mills
are designed to operate at a 30-35 percent ball charge using 76 millimetres
diameter steel balls and with a recirculating load of approximately 300 percent.

The flotation circuit is of conventional design. Rougher 1
flotation is carried out in two lines (one for each Ball Mill) using two cells,
one for each line. The cells are mechanically agitated Outotec cells of 200
cubic metre capacity. The rougher 1 concentrate advances to the cleaner circuit.
The rougher 1 flotation tailings advances to the rougher 2 (scavenger) circuit
consisting of two lines, each line containing six mechanically agitated 200
cubic metrecells.

Rougher scavenger (rougher 2) tailings gravitate to the TSF.
Rougher 2 (scavenger) concentrate advances to the regrind circuit.

Rougher 1 concentrate advances to the cleaner circuit which is
divided into cleaner 1, 2 and 3 circuits. Cleaner 1 circuit consists of eight
column cells, each six metre diameter x 14 metres height, arranged in two lines
of four cells each. The concentrate from the cleaner 1 circuit advances to the
cleaner 2 circuit, consisting of four cells, in two lines of two cells each,
each column 4.3 metre diameter x 14 metres height. Concentrate from the cleaner
2 circuit advances to the cleaner 3 circuit, consisting of two cells, in two
lines of one cell each, each column 4.3 metre diameter x 14 metres height.
Cleaner 3 tailings recirculates back to the feed of cleaner 2 and cleaner 2
tailings recirculates back to the feed of cleaner 1.

Cleaner 3 concentrate (final concentrate) advances to the
concentrate dewatering circuit.

Cleaner 1 tailings advances to the cleaner-scavenger circuit
which consists of ten 200 cubic metres mechanically agitated cells, arranged in
two lines of five cells each. Cleaner-scavenger tailings reports to the final
tailings with the rougher scavenger tailings.

Cleaner-scavenger concentrate is reground in the regrind
circuit together with the rougher 2 (scavenger) concentrate. The regrind circuit
consists of four parallel tower mills fitted with 1,120 kilowatt motors and
operated in closed circuit (one cluster per mill) with hydrocyclones. The
product of the regrinding process is nominally 80 percent passing 21 to 23
microns and advances to the cleaner 1 circuit.

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The final concentrate dewatering circuit consists of a 15 mtre
diameter, high-capacity thickener, producing a pulp at 60 percent solids. The
slurry is then transferred into a 1,360 cubic metre stock tank and cyclically
pumped into two horizontal frame pressure filters. The filtrate solution returns
to the thickener and thickener overflow is pumped to the plant process water
tank.

The filtered concentrate has a residual moisture content of
about 9.5 percent. It is stockpiled below the filters in a covered concentrate
storage area.

Concentrate is reclaimed by front-end loader and loaded into
trucks. Each loader bucket (approximately seven tonnes) is sampled and a
composite, representative sample for about 125 tonnes of concentrate is taken
for assay. The copper concentrate is weighed in the trucks using a static scale
and delivered to a rail spur storage area, 85 kilometres away at the town of
Parauapebas. The warehouse can hold 16 kilotonnes of concentrate which is
reclaimed by front-end loader and loaded into railcars carrying it to the port
of Itaqui, in São Luís, about 900 kilometres from Parauapebas. Further sampling
is carried out here.

Flotation reagents used include potassium amyl xanthate and
sodium dithiophosphate as primary and secondary collectors respectively,
poliglycolic alcohol and methyl isobutyl carbinol as frothers, quicklime for pH
modification and sodium sulphide for oxidized or easily oxidized copper
minerals, e.g. bornite.

The combined flotation circuit tailings (rougher and
cleanerscavenger tailings) flow by gravity from the plant to the tailings
deposition area, located directly north of the processing plant. Tailings are
dumped from a single-point discharge and create a beach on the south side of the
dam. Over the mine life, several phases of dam raising with mine waste will be
required to provide the required storage volume. Vertical pumps installed on
pontoons pump recycled tailings dam water back to the process plant, accounting
for approximately 95 percent of the total process water requirements.

DIVIDENDS

On March 3, 2011, the Company announced that its Board of
Directors had approved an inaugural quarterly dividend of $0.03 per Common
Share, which was paid for each of the first three quarters of 2011. A fourth
quarterly dividend of $0.09 per share was paid to the holders of record of the
Common Shares as of the close of business on November 23, 2011. The total
dividends paid during 2011 was $0.18 per Common Share. A quarterly dividend of
$0.09 per share was paid to shareholders for each of the first two quarters of
2012. A third quarterly dividend of $0.10 per share was paid to the holders of
record of the Common Shares as of the close of business on August 30, 2012. A
fourth quarterly dividend of $0.07 per share was paid to holders of record of
the Common Shares as of the close of business on November 21, 2012. The total
dividends paid during 2012 was $0.35 per Common Share.

In November 2011, the Company announced that it had adopted a
new dividend policy that linked quarterly dividend payments to operating cash
flows in the prior quarter, such that the quarterly dividend per Common Share
will be equal to 20% of the cash generated by operating activities in the
previous quarter divided by the Companys outstanding Common Shares at the time
the dividend is approved, all rounded to the nearest cent. The declaration,
timing, amount and payment of dividends remains at the discretion of the Board
of Directors and will depend on the Companys cash requirements, future
prospects and other factors deemed relevant by the Board of Directors.

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DESCRIPTION OF CAPITAL STRUCTURE

Authorized Capital

The authorized share capital of the Company consists of an
unlimited number of Common Shares and an unlimited number of preference shares
(the Preference Shares), issuable in series. As of March 25, 2013, 354,571,602
Common Shares and no Preference Shares are issued and outstanding.

The Company has issued U.S. dollar common share purchase
warrants (the U.S. Dollar Warrants), which are exercisable to acquire one
Common Share at a price of $20.00 until Spetember 5, 2013. The exercise price
and the number of Common Shares issuable upon exercise are both subject to
adjustment in certain circumstances. No fractional Common Shares will be
issuable upon the exercise of any U.S. Dollar Warrants, and no cash or other
consideration will be paid in lieu of fractional shares. Holders of U.S. Dollar
Warrants will not have any voting rights or any other rights which a holder of
Common Shares would have. The U.S. Dollar Warrants are authorized to be issued
under a warrant indenture entered into between the Company and CIBC Mellon Trust
Company dated July 24, 2008. As of March 25, 2013, 2,475,590 U.S. Dollar
warrants were issued and outstanding.

The Company has issued common share purchase warrants to Vale
(the Vale Warrants), which are exercisable to acquire one Common Share at a
price of $65.00 until February 28, 2013. The exercise price and the number of
Common Shares issuable upon exercise are both subject to adjustment in certain
circumstances. No fractional Common Shares will be issuable upon the exercise of
any Vale Warrants, and no cash or other consideration will be paid in lieu of
fractional shares. Holders of Vale Warrants will not have any voting rights or
any other rights which a holder of Common Shares would have. The Vale Warrants
are authorized to be issued under a warrant indenture entered into between the
Company and Canadian Stock Transfer Company dated February 28, 2013. As of March
25, 2013, 10,000,000 Vale Warrants were issued and outstanding.

Common Shares

Holders of Common Shares are entitled to receive notice of any
meetings of shareholders of the Company, to attend and to cast one vote per
Common Share at all such meetings. Holders of Common Shares do not have
cumulative voting rights with respect to the election of directors and,
accordingly, holders of a majority of the Common Shares entitled to vote in any
election of directors may elect all directors standing for election. Holders of
Common Shares are entitled to receive on a pro rata basis such dividends, if
any, as and when declared by the Companys Board of Directors at its discretion
from funds legally available therefor and upon the liquidation, dissolution or
winding up of the Company are entitled to receive on a pro rata basis the net
assets of the Company after payment of debts and other liabilities, in each case
subject to the rights, privileges, restrictions and conditions attaching to any
other series or class of shares ranking senior in priority to or on a pro rata
basis with the holders of Common Shares with respect to dividends or
liquidation. There are currently no other series or class of shares which rank
senior in priority to the Common Shares. The Common Shares do not carry any
pre-emptive, subscription, redemption or conversion rights, nor do they contain
any sinking or purchase fund provisions.

Preference Shares

The Preference Shares may, at any time or from time to time, be
issued in one or more series. The Companys Board of Directors shall fix before
issue, the number of, the consideration per share of, the designation of, and
the provisions attaching to the shares of each series. Except as required by law
or as otherwise determined by the Companys Board of Directors in respect of a
series of shares, the holder of a Preference Share shall not be entitled to vote
at meetings of shareholders. The Preference Shares of each series rank on a
priority with the Preference Shares of every other series and are entitled to
preference over the Common Shares and any other shares ranking subordinate to
the Preference Shares with respect to priority and payment of dividends and
distribution of assets in the event of liquidation, dissolution or winding-up of
the Company.

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TRADING PRICE AND VOLUME

Common Shares

The Common Shares are listed and posted for trading on the TSX
and the NYSE under the symbol SLW. The following table sets forth information
relating to the trading of the Common Shares on the TSX for the months
indicated.

|               | High  | Low   |           
|-------------- | ----- | ----- | ----------
|Month          | (C$)  | (C$)  | Volume    
|               |       |       |           
|January 2012   | 36.75 | 30.16 | 25,425,308
|February 2012  | 39.88 | 34.64 | 29,213,823
|March 2012     | 38.42 | 31.64 | 30,106,081
|April 2012     | 33.93 | 27.90 | 30,893,034
|May 2012       | 30.61 | 23.11 | 39,038,808
|June 2012      | 29.58 | 26.05 | 31,721,193
|July 2012      | 29.65 | 25.62 | 20,950,757
|August 2012    | 34.49 | 26.41 | 24,313,625
|September 2012 | 39.33 | 34.06 | 31,786,065
|October 2012   | 40.50 | 37.21 | 25,390,662
|November 2012  | 41.18 | 34.83 | 24,590,703
|December 2012  | 37.80 | 33.65 | 20,394,128

The price of the Common Shares as quoted by the TSX at the
close of business on December 31, 2012 was C$35.86 and on March 25, 2013 was
C$31.88.

U.S. Dollar Warrants

The U.S. Dollar Warrants are listed and posted for trading on
the TSX under the symbol SLW.WT.U. The following table sets forth information
relating to the trading of the U.S. Dollar Warrants on the TSX for the months
indicated.

|               | High  | Low   |        
|-------------- | ----- | ----- | -------
|Month          | ($)   | ($)   | Volume 
|               |       |       |        
|January 2012   | 17.48 | 12.64 | 114,567
|February 2012  | 20.97 | 15.75 | 170,384
|March 2012     | 19.50 | 13.30 | 153,729
|April 2012     | 15.22 | 10.05 | 215,553
|May 2012       | 12.83 | 6.06  | 333,758
|June 2012      | 11.49 | 7.95  | 205,454
|July 2012      | 10.95 | 7.60  | 207,236
|August 2012    | 17.00 | 9.08  | 218,140
|September 2012 | 20.22 | 15.51 | 237,634
|October 2012   | 20.78 | 17.50 | 192,124
|November 2012  | 21.18 | 15.18 | 340,862
|December 2012  | 18.00 | 14.07 | 153,354

The price of the U.S. Dollar Warrants as quoted by the TSX at
the close of business on December 31, 2012 was $16.00 and on March 25, 2013 was
C$11.36.

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DIRECTORS AND OFFICERS

The following table sets forth the name, province/state and
country of residence, position(s) held with the Company and principal occupation
of each person who is a director and/or an executive officer of the Company as
of the date of this annual information form.

|Name,                                                 |                                                                                  |                                                                             
|----------------------------------------------------- | -------------------------------------------------------------------------------- | ----------------------------------------------------------------------------
|Province/State and                                    |                                                                                  |                                                                             
|Country of Residence                                  | Position(s) with the
      Company                                               | Principal Occupation                                                        
|                                                      |                                                                                  |                                                                             
|Douglas M. Holtby British Columbia, Canada            | Chairman of the Board and Director
      since April 2006 (4)                    | Corporate Director                                                          
|                                                      |                                                                                  |                                                                             
|Lawrence I. Bell (2)(3)British
      Columbia, Canada | Director since April 2006
      (4)                                              | Corporate Director                                                          
|                                                      |                                                                                  |                                                                             
|George L. Brack (1)(2)British
      Columbia, Canada  | Director since November 2009
      (4)                                           | Corporate Director                                                          
|                                                      |                                                                                  |                                                                             
|John A. Brough (1)(3)Ontario,
      Canada            | Director since October 2004
      (4)                                            | Corporate Director                                                          
|                                                      |                                                                                  |                                                                             
|R. Peter Gillin (1)(2)Ontario,
      Canada           | Director since October 2004
      (4)                                            | Corporate Director                                                          
|                                                      |                                                                                  |                                                                             
|Eduardo Luna (2)Mexico City,
      Mexico             | Director since December 2004
      (4)                                           | Corporate Director                                                          
|                                                      |                                                                                  |                                                                             
|Wade D. Nesmith (1)(3)British
      Columbia, Canada  | Director since October 2004
      (4)                                            | Corporate Director                                                          
|                                                      |                                                                                  |                                                                             
|Randy V. J. Smallwood British Columbia,
      Canada  | President, Chief Executive Officer
      and DirectorDirector since May 2011 (4) | President and Chief Executive
      Officer of Silver Wheaton               
|                                                      |                                                                                  |                                                                             
|Gary D. Brown British Columbia, Canada                | Senior Vice President and Chief
      Financial Officer                          | Senior Vice President and Chief
      Financial Officer of Silver Wheaton   
|                                                      |                                                                                  |                                                                             
|Curt D. Bernardi British Columbia, Canada             | Senior Vice President, Legal and
      Corporate Secretary                       | Senior Vice President, Legal and
      Corporate Secretary of Silver Wheaton
|                                                      |                                                                                  |                                                                             
|Haytham H. HodalyBritish Columbia, Canada             | Senior Vice President, Corporate
      Development                               | Senior Vice President, Corporate
      Development of Silver Wheaton        

|(1) | Member of the Audit Committee.                                                                                                                                                               
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Member of the Human Resources Committee.                                                                                                                                                     
|(3) | Member of the Governance and Nominating
  Committee.                                                                                                                                         
|(4) | Directors are elected at each annual meeting of Silver
      Wheatons shareholders and serve as such until the next annual meeting or
      until their successors are elected or appointed.

The principal occupations, businesses or employments of each of
the Companys directors and executive officers within the past five years are
disclosed in the brief biographies set forth below.

Douglas M. Holtby  Chairman of the Board and Director.Mr. Holtby is currently the Vice Chairman of the Board and Lead Director
of Goldcorp and President and Chief Executive Officer of Holtby Capital
Corporation, a private investment company. From June 1989 to June 1996, Mr.
Holtby was President, Chief Executive Officer and a director of WIC Western
International Communications Ltd., from 1989 to 1996, he was Chairman of
Canadian Satellite Communications Inc., from 1998 to 1999, he was a Trustee of
ROB.TV and CKVU, from 1974 to 1989, he was President of Allarcom Limited and,
from 1982 to 1989, he was President of Allarcom Pay Television Limited. Mr.
Holtby is a Fellow Chartered Accountant, and a graduate of the Institute of
Corporate Directors - Director Education Program at the University of Toronto,
Rotman School of Management.

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Lawrence I. Bell  Director. Mr. Bell served as
the non-executive Chairman of British Columbia Hydro and Power Authority until
December 2007. From August 2001 to November 2003, Mr. Bell was Chairman and
Chief Executive Officer of British Columbia Hydro and Power Authority and, from
1987 to 1991, he was Chairman and Chief Executive Officer of British Columbia
Hydro and Power Authority. He is also a director of Capstone Mining Corp. and
Matrix Asset Management Inc. and is former Chairman of the University of British
Columbia Board of Directors and former Chairman of Canada Line (Rapid Transit)
Project. Prior to these positions, Mr. Bell was Chairman and President of the
Westar Group and Chief Executive Officer of Vancouver City Savings Credit Union.
In the provinces public sector, Mr. Bell has served as Deputy Minister of
Finance and Secretary to the Treasury Board. He holds a Bachelor of Arts degree
and an Honours Ph.D. from the University of British Columbia. He also holds a
Masters of Arts degree from San José State University and is a Fellow of the
Institute of Corporate Directors.

George L. Brack  Director.Mr. Brack is the
Chairman of both Capstone Mining Corp. and Alexco Resource Corp. and serves as a
director of Aurizon Mines Ltd., Geologix Explorations Inc. and Newstrike Capital
Inc.Mr. Bracks 28-year career in the mining industry has focused on investment
banking and corporate development, specifically identifying, evaluating and
executing strategic mergers and acquisitions, and the provision of equity
financing. Until January 2009, Mr. Brack acted as the Managing Director and
Industry Head, Mining Group, of Scotia Capital. Prior to joining Scotia Capital
in 2006, Mr. Brack spent seven years as President of Macquarie North America
Ltd., an investment banking firm specializing in merger and acquisition advice.
Previous to that, Mr. Brack was Vice President, Corporate Development at Placer
Dome Inc., was Vice President of the investment banking group at CIBC Wood
Gundy, and worked in Rio Algoms Corporate Development department. Mr. Brack
holds an MBA from York University, a BASc in Geological Engineering from the
University of Toronto and the CFA designation.

John A. Brough  Director. Mr. Brough had been
President of both Torwest, Inc. and Wittington Properties Limited, real estate
development companies, from 1998 to December 31, 2007, upon his retirement.
Prior thereto, from 1996 to 1998, Mr. Brough was Executive Vice President and
Chief Financial Officer of iSTAR Internet, Inc. Prior thereto, from 1974 to
1996, he held a number of positions with Markborough Properties, Inc., his final
position being Senior Vice President and Chief Financial Officer which position
he held from 1986 to 1996. Mr. Brough is an executive with over 30 years of
experience in the real estate industry. He is currently a director and Chairman
of the Audit and Risk Committee of Kinross Gold Corporation, a director and
Chairman of the Audit Committee and Lead Director of First National Financial
Corporation, and a director and Chairman of the Audit Committee of Canadian Real
Estate Investment Trust. He holds a Bachelor of Arts degree (Economics) from the
University of Toronto and is a Chartered Accountant. He is also a graduate of
the Institute of Corporate Directors  Director Education Program at the
University of Toronto, Rotman School of Management. Mr. Brough is a member of
the Institute of Corporate Directors and the Ontario and Canadian Institutes of
Chartered Accountants.

R. Peter Gillin  Director. Mr. Gillin was
Chairman and Chief Executive Officer of Tahera Diamond Corporation, a diamond
exploration, development and production company, from October 2003 to September
2008 and Chief Restructuring Officer until December 2008. Since 2004, Mr. Gillin
has been a member of the Independent Review Committee of TD Asset Management
Inc. and, from December 2005 to September 2012, a director of Trillium Health
Care Products Inc. (a private company). Mr. Gillin was appointed a director of
Sherritt International Corporation January 1, 2010 and Dundee Precious Metals
Inc. in December 2009. From April 2008 to March 2009, Mr. Gillin was a director
of HudBay Minerals Inc. From November 2002 to May 2003, Mr. Gillin was President
and Chief Executive Officer of Zemex Corporation, an industrial minerals
producer, and had been a director of that company since 1999. From 1996 to 2002,
Mr. Gillin was Vice Chairman and a director of N.M. Rothschild & Sons Canada
Limited, an investment bank, and, from 2001 to 2002, was Acting Chief Executive
Officer. He holds a HBA degree from the Richard Ivey School of Business at the
University of Western Ontario and is a Chartered Financial Analyst. He is also a
graduate of the Institute of Corporate Directors  Director Education Program at
the University of Toronto, Rotman School of Management and has earned the
designation of ICD.D. from the Institute of Corporate Directors.

Eduardo Luna  Director. Mr. Luna is currently
Director, President and CEO of Rochester Resources Ltd., Advisor and Director of
Primero Mining Corp. and advisor of Mercator Minerals Ltd. Mr. Luna was Chairman
of the Company from October 2004 to May 2009 (and was Interim Chief Executive
Officer of the Company from October 2004 to April 2006), Executive Vice
President of Wheaton River from June 2002 to April 2005, Executive Vice
President of Goldcorp from March 2005 to September 2007 and President of
Luismin, S.A. de C.V. from 1991 to 2007. He holds a degree in Advanced
Management from Harvard University, an MBA from Instituto Tecnologico de
Estudios Superiores de Monterrey and a Bachelor of Science in Mining Engineering
from Universidad de Guanajuato. He held various executive positions with Minera
Autlan for seven years and with Industrias Peñoles for five years. He is the
former President of the Mexican Mining Chamber and the former President of the Silver
Institute. He serves as Chairman of the Advisory Board of the Faculty of Mines
at the University of Guanajuato and as a board member of the Mineral Resources
Council in Mexico.

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Wade D. Nesmith  Director.Mr. Nesmith is
currently Chairman of Primero Mining Corp. and from 2004 to 2009 was associate
counsel with Lang Michener LLP (now McMillan LLP), a law firm where he
previously practiced as a partner from 1993 to 1998. Mr. Nesmith has served on
the boards of, among others, Polymer Group, Inc., Broadpoint Securites, Inc.,
and Westport Innovations, where he was also a senior officer of the Company. He
also served as the Executive Director (then Superintendent of Brokers) for the
British Columbia Securities Commission. Mr. Nesmith received his LLB from
Osgoode Hall Law School in 1977.

Randy V. J. Smallwood  President, Chief Executive
Officer and Director.Mr. Smallwood holds a geological engineering
degree from the University of British Columbia, and is one of the founding
members of Silver Wheaton. In 2007, he joined Silver Wheaton full time as
Executive Vice President of Corporate Development, primarily focusing on growing
the Company through the evaluation and acquisition of silver stream
opportunities. In January 2010 he was appointed President, and in April 2011 he
was appointed Silver Wheatons Chief Executive Officer. Mr. Smallwood originally
started as an exploration geologist with Wheaton River Minerals Ltd., and in
2001 was promoted to Director of Project Development, his role through its 2005
merger with Goldcorp. Before joining the original Wheaton River group in 1993,
Mr. Smallwood also worked with Homestake Mining Company, Teck Corp. and Westmin
Resources. Mr. Smallwood was an instrumental part of the team that built Wheaton
River / Goldcorp into one of the largest, and more importantly most profitable
gold companies in the world, and he is now focused on continuing to add to the
impressive growth profile of Silver Wheaton.

Gary D. Brown  Senior Vice President and Chief Financial
Officer.Mr. Brown is currently the Senior Vice President and Chief
Financial Officer of Silver Wheaton having joined the Company in June 2008.
Prior to Silver Wheaton, he was the Chief Financial Officer of TIR Systems Ltd.
from September 2005 to July 2007. He has also held senior finance roles with CAE
Inc., Westcoast Energy Inc., and Creo Inc. Mr. Brown brings almost 20 years of
experience as a finance professional and holds professional designations as a
Chartered Accountant and a Chartered Financial Analyst as well as having earned
a Masters Degree in Accounting from the University of Waterloo.

Curt D. Bernardi  Senior Vice President, Legal and
Corporate Secretary.Mr. Bernardi has been practicing law since his call
to the British Columbia bar in 1994. He worked for the law firm of Blake,
Cassels & Graydon in the areas of corporate finance, mergers and
acquisitions and general corporate law until leaving to join Westcoast Energy in
1998. Following the acquisition of Westcoast Energy by Duke Energy in 2002, Mr.
Bernardi continued to work for Duke Energy Gas Transmission as in-house legal
counsel, working primarily on reorganizations, mergers and acquisitions, joint
ventures and general corporate/commercial work. In 2005, Mr. Bernardi joined
Union Gas as their Director, Legal Affairs and was responsible for legal matters
affecting Union Gas. He obtained his Bachelor of Commerce from the University of
British Columbia and his Bachelor of Law from the University of Toronto.

Haytham H. Hodaly Senior Vice President, Corporate
Development.Mr. Hodaly joined Silver Wheaton in 2012, bringing with him
over 16 years of experience in the North American securities industry, most
recently as Director and Mining Analyst, Global Mining Research, at RBC Capital
Markets. In this role, he was responsible for providing, to a wide range of
institutional clients around the globe, up-to-date and insightful research
coverage of North American-listed precious metals companies. Prior to this, Mr.
Hodaly held the position of Co-Director of Research and Senior Mining Analyst at
Salman Partners Inc., in addition to holding the titles of Vice President and
Director of the firm. During his tenure, he helped to establish Salman Partners
Inc. as a leading independent, resource-focused and research-driven investment
dealer. Mr. Hodaly is an engineer with a B.A.Sc. in Mining and Mineral
Processing Engineering and a Masters of Engineering, specializing in Mineral
Economics.

As at December 31, 2012, the directors and executive officers
of Silver Wheaton, as a group, beneficially owned, directly and indirectly, or
exercised control or direction over 545,545 Common Shares, representing less
than one percent of the total number of Common Shares outstanding before giving
effect to the exercise of options or warrants to purchase Common Shares held by
such directors and executive officers. The statement as to the number of Common
Shares beneficially owned, directly or indirectly, or over which control or
direction is exercised by the directors and executive officers of Silver Wheaton
as a group is based upon information furnished by the directors and executive
officers.

- 73 -

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Cease Trade Orders, Bankruptcies, Penalties or Sanctions

To the knowledge of the Company, no director or executive
officer of the Company is, or within ten years prior to the date hereof has
been, a director, chief executive officer or chief financial officer of any
company (including the Company) that, (i) was subject to a cease trade order, an
order similar to a cease trade order or an order that denied the relevant
company access to any exemption under securities legislation, that was in effect
for a period of more than 30 consecutive days, that was issued while the
director or executive officer was acting in the capacity as director, chief
executive officer or chief financial officer; or (ii) was subject to a cease
trade order, an order similar to a cease trade order or an order that denied the
relevant company access to any exemption under securities legislation, that was
in effect for a period of more than 30 consecutive days, that was issued after
the director or executive officer ceased to be a director, chief executive
officer or chief financial officer and which resulted from an event that
occurred while that person was acting in the capacity as director, chief
executive officer or chief financial officer, other than: (a) Mr. Brough who is
a director of a mining company that was subject to a management cease trade
order against the directors and officers of the mining company from April 2005
to February 2006 in connection with such companys failure to file audited
financial statements for the year ended December 31, 2004. The missed filings
resulted from questions raised by the United States Securities and Exchange
Commission (the SEC) about certain accounting practices related to the
accounting for goodwill. When the SEC accepted the mining companys proposed
treatment, the mining company made its filings, and the cease trade orders were
revoked; and (b) Mr. Gillin who was a director of, and Chairman and Chief
Executive Officer of Tahera Diamond Corporation (Tahera) from October 2003 to
December 2008, a company that filed for protection under the Companies
Creditors Arrangement Act (Canada) (CCAA) with the Ontario Superior Court of
Justice on January 16, 2008. As a consequence of its financial difficulties,
Tahera failed to file financial statements for the year ended December 31, 2007
and subsequent financial periods. As a result, Tahera was delisted from the TSX
in November 2009 and issuer cease trade orders were issued in 2010 by the
securities regulatory authorities of Ontario, Quebec, Alberta and British
Columbia, which orders have not been revoked. Tahera subsequently sold its tax
assets to Ag Growth International and certain properties, including the Jericho
diamond mine, to Shear Minerals Ltd., and the monitoring process under CCAA
concluded by order of the Superior Court of Justice in September, 2010.

To the knowledge of the Company, no director or executive
officer of the Company, or a shareholder holding a sufficient number of
securities of the Company to affect materially control of the Company, is, or
within ten years prior to the date hereof has been, a director or executive
officer of any company (including the Company) that, while that person was
acting in that capacity, or within a year of that person ceasing to act in that
capacity, became bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency or was subject to or instituted any proceedings,
arrangement or compromise with creditors or had a receiver, receiver manager or
trustee appointed to hold its assets, other than: (a) Mr. Nesmith who was a
director of an automotive company which applied for Chapter 11 bankruptcy
protection in December 2004 and emerged from Chapter 11 bankruptcy protection in
March 2005; and (b) Mr. Gillin who was a director of, and Chairman and Chief
Executive Officer of Tahera from October 2003 to December 2008, a company that
filed for protection under the CCAA with the Ontario Superior Court of Justice
on January 16, 2008. Tahera subsequently sold its tax assets to Ag Growth
International and certain properties, including the Jericho diamond mine, to
Shear Minerals Ltd., and the monitoring process under CCAA concluded by order of
the Superior Court of Justice in September, 2010.

To the knowledge of the Company, no director or executive
officer of the Company, or a shareholder holding a sufficient number of
securities of the Company to affect materially control of the Company, has,
within ten years prior to the date hereof, become bankrupt, made a proposal
under any legislation relating to bankruptcy or insolvency, or become subject to
or instituted any proceedings, arrangement or compromise with creditors, or had
a receiver, receiver manager or trustee appointed to hold the assets of the
director, executive officer or shareholder.

To the knowledge of the Company, no director or executive
officer of the Company, or a shareholder holding a sufficient number of
securities of the Company to affect materially the control of the Company, has
been subject to (i) any penalties or sanctions imposed by a court relating to
securities legislation or by a securities regulatory authority or has entered
into a settlement agreement with a securities regulatory authority; or (ii) any
other penalties or sanctions imposed by a court or regulatory body that would
likely be considered important to a reasonable investor in making an investment
decision.

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Conflicts of Interest

To the best of Silver Wheatons knowledge, and other than as
disclosed in this annual information form, there are no known existing or
potential material conflicts of interest between Silver Wheaton and any director
or officer of Silver Wheaton, except that certain of the directors and officers
serve as directors and officers of other public companies and therefore it is
possible that a conflict may arise between their duties as a director or officer
of Silver Wheaton and their duties as a director or officer of such other
companies. Certain of the directors and officers of the Company also serve as
directors and/or officers of other companies involved in natural resource
exploration, development and mining operations and consequently there exists the
possibility for such directors and officers to be in a position of conflict. Any
decision made by any of such directors and officers will be made in accordance
with their duties and obligations to deal fairly and in good faith with a view
to the best interests of the Company and its shareholders. In addition, each of
the directors is required to declare and refrain from attending the portion of
the meeting dedicated to discussing any matter in which such directors may have
a conflict of interest or voting on such matter in accordance with the
procedures set forth in the Business Corporations Act(Ontario) and other
applicable laws. See Interest of Management and Others in Material
Transactions.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Other than as described below and elsewhere in this annual
information form, since January 1, 2010, no director, executive officer or 10%
shareholder of the Company or any associate or affiliate of any such person or
company, has or had any material interest, direct or indirect, in any
transaction that has materially affected or will materially affect the Company
or any of its subsidiaries, except as follows:

| | (1) | Each of Messrs. Bell and Holtby are directors of
      Goldcorp, which is the owner of the Peñasquito Mine and the Los Filos
      mine, and was the owner of the San Dimas Mines until August 6,
  2010;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (2) | Mr. Nesmith is a director of Primero and holds a
      significant equity position in Primero, which is the owner of the San
      Dimas Mines, and until March 15, 2012, Mr. Nesmith is the  Chairman of the
      Board of Directors of Primero;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (3) | Mr. Luna is a director of Primero and holds a significant
      equity position in Primero, which is the owner of the San Dimas Mines, and
      until November 30, 2011, Mr. Luna was the Executive Vice President and
      President, Mexico; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (4) | On August 6, 2010, Goldcorp completed the sale of the San
      Dimas Mines to Primero. In conjunction with the sale, the Company amended
      its silver purchase agreement relating to the mine. The term of the silver
      purchase agreement, as it relates to San Dimas, has been extended to the
      life of mine. During the first four years following closing of the
      transaction, Primero will deliver to Silver Wheaton a per annum amount
      equal to the first 3.5 million ounces of payable silver produced at San
      Dimas and 50% of any excess, plus Silver Wheaton will receive an
      additional 1.5 million ounces of silver per annum to be delivered by
      Goldcorp. Beginning in the fifth year after closing, Primero will deliver
      to the Company a per annum amount equal to the first 6 million ounces of
      payable silver produced at San Dimas and 50% of any excess. Goldcorp will
      continue to guarantee the delivery by Primero of all silver produced and
      owing to the Company until 2029. Primero has provided Silver Wheaton with
      a right of first refusal on any metal stream or similar transaction it
      enters into.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Shares is CIBC
Mellon Trust Company (CIBC Mellon) at its principal offices in Vancouver,
British Columbia and Toronto, Ontario. Canadian Stock Transfer Company Inc. acts
as the administrative agent for CIBC Mellon.

The warrant agent for the U.S. Dollar Warrants is CIBC Mellon
at its principal offices in Vancouver, British Columbia and Toronto, Ontario.

- 75 -

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MATERIAL CONTRACTS

The only material contracts entered into by the Company as of
the date of this annual information form or before such time that are still in
effect, other than in the ordinary course of business, are as follows:

|1. | The 777 Mine Purchase Agreement referred to under the
      heading General Development of the Business  Three Year History  Hudbay
      Transaction in this annual information form.                                                     
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                
|2. | The San Dimas Silver Purchase Agreement referred to under
      the heading General Development of the Business  Three Year History 
      San Dimas Transaction in this annual information form;                                          
|   |                                                                                                                                                                                                                                                
|3. | The Peñasquito Silver Purchase Agreement referred to
      under the heading Description of the Business  Principal Product 
      Peñasquito Mine in this annual information form;                                                        
|   |                                                                                                                                                                                                                                                
|4. | The Pascua-Lama Silver Purchase Agreement referred to
      under the heading Description of the Business  Principal Product 
      Pascua-Lama Project in this annual information form;                                                   
|   |                                                                                                                                                                                                                                                
|5. | The Salobo Mine Purchase Agreement referred to under the
      heading Description of the Business  Three Year History  Vale
      Transaction in this annual information form; and                                                        
|   |                                                                                                                                                                                                                                                
|6. | The $1 billion revolving credit facility dated as of
      February 28, 2013, between the Company and the lenders and the $1.5
      billion bridge financing facility dated as of February 28, 2013 between
      the Company and the lenders.

Each of such contracts is available on SEDAR at
www.sedar.com under the Companys profile.

INTERESTS OF EXPERTS

The scientific and technical information for the Companys
mineral projects on a property material to the Company contained in this annual
information form, other than for the Salobo Mine, was sourced by the Company
from the following SEDAR (www.sedar.com) filed documents:

| | a. | Peñasquito  Goldcorp annual information form filed on
      March 1, 2013;                                                                                     
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | San Dimas  Primero annual information form filed on
      April 2, 2013;                                                                                       
| | c. | Pascua-Lama  Barrick annual information form filed on
      March 28, 2013 and Barrick management discussion and analysis filed on
      February 14, 2013; and
| | d. | 777  Hudbay annual information form filed on March 28,
      2013.                                                                                             

A summary of the information sourced from the annual
information forms of Hudbay, Primero, Goldcorp and Barrick is contained in this
annual information form under Technical Information  Further Disclosure
Regarding Mineral Projects on Material Properties  777 Mine, Canada,  San
Dimas Mines, Mexico,  Peñasquito Mine, Mexico,  Pascua-Lama Project, Border of
Chile and Argentina, respectively. Neil Burns, M.Sc., P.Geo., Vice President,
Technical Services and Samuel Mah, M.A.Sc., P.Eng., Senior Director, Project
Evaluations, are
the qualified persons as defined by NI 43-101 in connection with the Mineral
Reserve and Mineral Resource estimates and the scientific and technical
information for the 777 Mine, the San Dimas Mines, the Peñasquito Mine and the
Pascua-Lama Project contained in this annual information form.

Christopher Jacobs, CEng MIMMM, Vice President and Mining
Economist, Micon International Ltd., James Turner, BSc (Hons) MSc CEng MiMMM,
Senior Mineral Process Engineer, Micon International Ltd., Barnard Foo, P. Eng.,
MBA, Senior Mining Engineer, Micon International Ltd. and Jason Ché Osmond, FGS,
C.Geol, EurGeol, Senior Geologist, Micon International Ltd. prepared a technical
report in accordance with NI 43-101 entitled Technical Report on the Mineral
Reserves and Mineral Resources of the Salobo Copper-Gold Mine Carajás, Pará
State, Brazil dated March 19, 2013. A copy of the Salobo Report is available
under the Companys profile on SEDAR at www.sedar.com and a summary of the
Salobo Report is contained in this annual information form under the heading
Description of the Business  Salobo Mine, Brazil.

- 76 -

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The aforementioned firms or persons held no securities of the
Company or of any associate or affiliate of the Company when they prepared the
reports, the mineral reserve estimates or the mineral resource estimates
referred to above, or following the preparation of such reports or estimates and
did not receive any direct or indirect interest in any securities of the Company
or of any associate or affiliate of the Company in connection with the
preparation of such reports or estimates, other than Neil Burns and Samuel Mah,
who together hold less than 1% of the Common Shares. None of the aforementioned
persons are currently expected to be elected, appointed or employed as a
director, officer or employee of the Company or of any associate or affiliate of
the Company, other than Neil Burns and Samuel Mah who are employees of the
Company.

Deloitte LLP is the auditor of the Company and is independent
of the Company within the meaning of the Rules of Professional Conduct of the
Institute of Chartered Accountants of British Columbia.

AUDIT COMMITTEE

The Companys Audit Committee is responsible for monitoring the
Companys systems and procedures for financial reporting and internal control,
reviewing certain public disclosure documents and monitoring the performance and
independence of the Companys external auditors. The committee is also
responsible for reviewing the Companys annual audited financial statements,
unaudited quarterly financial statements and managements discussion and
analysis of financial results of operations for both annual and interim
financial statements and review of related operations prior to their approval by
the full Board of Directors of the Company. The committee also has oversight
responsibility for significant business, political, financial and control risks
that the Company is exposed to, including a review of managements assessment of
the likelihood and severity of those risks and any mitigation steps taken.

The Audit Committees charter sets out its responsibilities and
duties, qualifications for membership, procedures for committee member removal
and appointment and reporting to the Companys Board of Directors. A copy of the
charter is attached hereto as Schedule A.

The current members of the Companys Audit Committee are John
A. Brough (Chairman), George L. Brack, R. Peter Gillin and Wade D. Nesmith. Each
of Messrs. Brough, Brack, Gillin and Nesmith are independent and financially
literate within the meaning of National Instrument 52-110 Audit
Committees (NI 52-110). In addition to being independent directors as
described above, all members of the Companys Audit Committee must meet an
additional independence test under NI 52-110 in that their directors fees are
the only compensation they, or their firms, receive from the Company and that
they are not affiliated with the Company.

The Audit Committee met four times in 2012. Each of Messrs.
Brough, Gillin and Brack were present at all four meetings. Mr. Nesmith was
appointed to the Audit Committee on March 22, 2012 and was present at all three
subsequent meetings.

Relevant Education and Experience

See Directors and Officers for a description of the education
and experience of each Audit Committee member that is relevant to the
performance of his responsibilities as an Audit Committee member.

Pre-Approval Policies and Procedures

The Audit Committees charter sets out responsibilities
regarding the provision of non-audit services by the Companys external
auditors. This policy encourages consideration of whether the provision of
services other than audit services is compatible with maintaining the auditors
independence and requires Audit Committee pre-approval of permitted audit and
audit-related services.

- 77 -

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External Auditor Service Fees

Deloitte LLP, Independent Registered Chartered Accountants,
were the auditors of the Company in 2012. Fees payable to Deloitte LLP in
respect of services in 2011 and 2012 are detailed below:

2011(1) ($)
    2012(1) ($)Audit Fees (2)
    782,734
    512,491Audit-Related Fees
    2,730
    5,298Tax Fees (3)
    26,187
    141,233All Other Fees (4)
    70,773
    86,007TOTAL
    882,424
    745,029


| | (1) | Fees are paid in Canadian dollars and converted to United
      States dollars for reporting purposes in this table at the exchange rate
      of C$1.00 = US$0.9833 for the financial year ended December 31, 2011 and
      at the exchange rate of C$1.00 = US$1.0051 for the financial year ended
      December 31, 2012.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Audit fees were paid for professional services rendered
      by the auditors for the audit of the Companys annual financial statements
      or services provided in connection with statutory and regulatory filings
      or engagements.                                                                                 
| | (3) | Tax fees were paid for tax compliance and advisory
      services.                                                                                                                                                                                                                                                            
| | (4) | Other Fees were paid for Canadian Public Accountability
      Board fees, preparation of tax returns for VAT tax and the Barbados
      subsidiary and accounting advisory services.                                                                                                                                          

ADDITIONAL INFORMATION

Additional information relating to the Company can be found on
SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Additional information,
including directors and officers remuneration and indebtedness, principal
holders of the Companys securities and securities authorized for issuance under
equity compensation plans will be contained in the management information
circular of the Company to be prepared in connection with the Companys annual
meeting of shareholders scheduled to be held on May 21, 2013 which will be
available on SEDAR at www.sedar.com and EDGAR at www.sec.gov. Additional
financial information is provided in the Companys audited consolidated
financial statements and managements discussion and analysis for the year ended
December 31, 2012.

- 78 -

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SCHEDULE A

SILVER WHEATON CORP.AUDIT COMMITTEE CHARTER

|I.  | PURPOSE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Audit Committee is a committee of the Board of
      Directors (the Board) of Silver Wheaton Corp. (Silver Wheaton or the
      Company). The primary function of the Audit Committee is to assist the
      Board in fulfilling its financial reporting and controls responsibilities
      to the shareholders of the Company and the investment community. The
      external auditors will report directly to the Audit Committee. The Audit
      Committees primary duties and responsibilities are:
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | B.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | C.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | D.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | E.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | F.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | G.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|II. | COMPOSITION AND MEETINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | B.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | C.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

---

| | D. | All members shall, to the satisfaction of the Board of
      Directors, be financially literate as defined in Appendix I, and at
      least one member shall have accounting or related financial management
      expertise to qualify as a financial expert as defined in Appendix I, and
      will satisfy such other applicable criteria for financial expertise as may
      be contained in the laws, rules, regulations and listing requirements to
      which the Company is subject.                                                                      
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | E. | If a Committee member simultaneously serves on the audit
      committees of more than three public companies, the Committee shall seek
      the Boards determination as to whether such simultaneous service would
      impair the ability of such member to effectively serve on the Companys
      audit committee and ensure that such determination is disclosed.                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | F. | The Committee shall meet at least four times annually, or
      more frequently as circumstances require. The Committee shall meet within
      45 days following the end of each of the first three financial quarters to
      review and discuss the unaudited financial results for the preceding
      quarter and the related MD&A and shall meet within 90 days following
      the end of the fiscal year end to review and discuss the audited financial
      results for the year and related MD&A prior to their
  publishing.                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | G. | The Committee may ask members of management or others to
      attend meetings and provide pertinent information as necessary. For
      purposes of performing their audit related duties, members of the
      Committee shall have full access to all corporate information and shall be
      permitted to discuss such information and any other matters relating to
      the financial position of the Company with senior employees, officers and
      independent auditor of the Company.                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | H. | As part of its job to foster open communication, the
      Committee should meet at least quarterly with management and the
      independent auditor in in-camera sessions, and as determined in the
      discretion of the Committee with the head of internal audit, to discuss
      any matters that the Committee or each of these groups believe should be
      discussed privately. In addition, the Committee or at least its Chair
      should meet with the independent auditor and management quarterly to
      review the Companys financial statements.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | I. | Each of the Chairman of the Committee, members of the
      Committee, Chairman of the Board, independent auditors, Chief Executive
      Officer, Chief Financial Officer or Secretary shall be entitled to request
      that the Chairman of the Audit Committee call a meeting which shall be
      held within 48 hours of receipt of such
request.                                                                                                                                                                                                                  

|III. | RESPONSIBILITIES AND DUTIES                                                
|---- | ---------------------------------------------------------------------------
|     |                                                                            
|     | To fulfill its responsibilities and duties the Audit
      Committee shall:
|     |                                                                            
|     | A.                                                                         
|     |                                                                            
|     | B.                                                                         
|     |                                                                            
|     | C.                                                                         
|     |                                                                            
|     | D.                                                                         
|     |                                                                            
|     |                                                                            

---

| |    | ii)                 | Review analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of
the effects of alternative accounting principles methods on the financial statements.                                                                                                          
| | -- | ------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | iii)                | Review the effect of regulatory and accounting initiatives, as well as off balance sheet structures, on the financial statements of the Company.                                                                                                                                                                                                                                                                                   
| |    |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | iv)                 | Review policies and procedures with respect to directors and officers expense accounts and management perquisites and benefits, including their use of corporate assets and expenditures related to executive travel and
entertainment, and review the results of the procedures performed in these areas by the independent auditor, based on terms of reference agreed upon by the independent auditor and the Audit Committee.
| |    |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | v)                  | Review expenses of the Board Chair and CEO annually.                                                                                                                                                                                                                                                                                                                                                                               
| |    |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | vi)                 | Ensure that adequate procedures are in place for the review of the Companys public disclosure of financial information extracted or derived from the issuers financial statements, as well as review any financial
information and earnings guidance provided to analysts and rating agencies, and periodically assess the adequacy of those procedures.                                                                         
| | E. | Independent Auditor
| |    |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | i)                  | Recommend to the Board and approve the selection of the independent auditor, consider the independence and effectiveness and approve the fees and other compensation to be paid to the independent auditor.                                                                                                                                                                                                                        
| |    |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | ii)                 | Review and approve the independent auditors audit plan and engagement letter and discuss and approve the audit scope and approach, staffing, locations, reliance upon management and internal audit and general audit
approach.                                                                                                                                                                                                   
| |    |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | iii)                | Monitor the relationship between management and the independent auditor including reviewing any management letters or other reports of the independent auditor and discussing any material differences of opinion between management
and the independent auditor.                                                                                                                                                                  
| |    |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | iv)                 | Review and discuss, on an annual basis, with the independent auditor all significant relationships they have with the Company to determine their independence and report to the Board of Directors.                                                                                                                                                                                                                                
| |    |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | v)                  | Review and approve requests for any non-audit services to be performed by the independent auditor and be advised of any other study undertaken at the request of management that is beyond the scope of the audit engagement letter
and related fees. Pre-approval of non-audit services is satisfied if:                                                                                                                          
| |    |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                     | a)                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                     | b)                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                     | c)                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | vi)                 | Ensure disclosure of any specific policies or procedures adopted by the Committee to satisfy pre- approval requirements for non-audit services by the independent auditor.                                                                                                                                                                                                                                                         

---

| | vii)  | Review the relationship of non-audit fees to audit fees
      paid to the independent auditor to ensure that auditor independence is
      maintained.                                                                                                                                                                                                                                                                                                                                                           
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | viii) | Ensure that both the audit and non-audit fees are
      disclosed to shareholders by category.                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ix)   | Review the performance of the independent auditor and
      approve any proposed discharge and replacement of the independent auditor
      when circumstances warrant. Consider with management and the independent
      auditor the rationale for employing accounting/auditing firms other than
      the principal independent auditor.                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | x)    | At least annually, consult with the independent auditor
      out of the presence of management about significant risks or exposures,
      internal controls and other steps that management has taken to control
      such risks, and the fullness and accuracy of the organizations financial
      statements. Particular emphasis should be given to the adequacy of
      internal controls to expose any payments, transactions, or procedures that
      might be deemed illegal or otherwise improper.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | xi)   | Arrange for the independent auditor to be available to
      the Committee and the full Board as needed. Ensure that the auditors
      report directly to the Committee and are made accountable to the Board and
      the Committee, as representatives of the shareholders to whom the auditors
      are ultimately responsible.                                                                                                                                                                            
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | xii)  | Oversee the work of the independent auditor undertaken
      for the purpose of preparing or issuing an audit report or performing
      other audit, review or attest services.                                                                                                                                                                                                                                                                                                                                 
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | xiii) | Ensure that the independent auditor is prohibited from
      providing the following non-audit services and determining which other
      non-audit services the independent auditor is prohibited from
      providing:                                                                                                                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | g)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | h)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| | xiv) | Approve any permissible non-audit engagements of the
      independent auditor, in accordance with applicable
  legislation.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------

| | F. | Internal Auditor
| | -- | ----------------
| |    |                 
| |    | i)              

---

| |    | ii)                           | Review and approve the scope of the proposed internal
      audit plan and ensure it addresses key areas of risk;                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | ----------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | iii)                          | Periodically review:                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                               | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                               | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                               | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | iv)                           | Ensure the internal audits significant findings and
      recommendations are received, discussed and appropriately acted upon by
      the Committee and management.                                                                                                                                                                                                                                                                                                                            
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | G. | Financial Reporting Processes
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | i)                            | Periodically review the adequacy and effectiveness of the
      companys disclosure controls and procedures and the Companys internal
      control over financial reporting, including any significant deficiencies
      and significant changes in internal controls.                                                                                                                                                                                                                        
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | ii)                           | Understand the scope of the independent auditors
      examination and report on the Companys assessment of internal control
      over financial reporting and review and discuss significant findings and
      recommendations, together with managements responses.                                                                                                                                                                                                                        
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | iii)                          | Consider the independent auditors judgments about the
      quality, appropriateness and acceptability, of the Companys accounting
      principles and financial disclosure practices, as applied in its financial
      reporting, particularly about the degree of aggressiveness or conservatism
      of its accounting principles and underlying estimates and whether those
      principles are common practices or are minority practices.                                             
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | iv)                           | Consider and approve, if appropriate, major changes to
      the Companys accounting principles and practices as suggested by
      management with the concurrence of the independent auditor and ensure that
      the accountants reasoning is described in determining the appropriateness
      of changes in accounting principles and disclosure.                                                                                                                                        
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | H. | Process Improvement          
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | i)                            | Discuss with the independent auditor (i) the auditors
      internal quality-control procedures; and (ii) any material issues raised
      by the most recent internal quality-control review, or peer review, of the
      auditors, or by any inquiry of investigation by governmental or
      professional authorities, within the preceding five years, respecting one
      or more independent audits carried out by the auditors, and any steps
      taken to deal with any such issues.
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | ii)                           | Reviewing and approving hiring policies for employees or
      former employees of the past and present independent auditors.                                                                                                                                                                                                                                                                                                                                                                     
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | iii)                          | Establish regular and separate systems of reporting to
      the Audit Committee by each of management and the independent auditor
      regarding any significant judgments made in managements preparation of
      the financial statements and the view of each as to appropriateness of
      such judgments.                                                                                                                                                                               
| |    |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | iv)                           | Review the scope and plans of the independent auditors
      audit and reviews prior to the audit and reviews being conducted. The
      Committee may authorize the independent auditor to perform supplemental
      reviews or audits as the Committee may deem
desirable.                                                                                                                                                                                                                    

---

| |    | v)                           | Following completion of the annual audit and quarterly
      reviews, review separately with each of management and the independent
      auditor any significant changes to planned procedures, any difficulties
      encountered during the course of the audit and reviews, including any
      restrictions on the scope of work or access to required information and
      the cooperation that the independent auditor received during the course of
      the audit and reviews.
| | -- | ---------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | vi)                          | Review any significant disagreements among management and
      the independent auditor in connection with the preparation of the
      financial statements.                                                                                                                                                                                                                                                                                                                            
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | vii)                         | Where there are significant unsettled issues the
      Committee shall ensure that there is an agreed course of action for the
      resolution of such matters.                                                                                                                                                                                                                                                                                                                         
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | viii)                        | Review with the independent auditor and management
      significant findings during the year and the extent to which changes or
      improvements in financial or accounting practices, as approved by the
      Audit Committee, have been implemented. This review should be conducted at
      an appropriate time subsequent to implementation of changes or
      improvements, as decided by the Committee.                                                                      
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | ix)                          | Review activities, organizational structure, and
      qualifications of the CFO and the staff in the financial reporting area
      and see to it that matters related to succession planning within the
      Company are raised for consideration at the full Board.                                                                                                                                                                                                                  
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | I. | Ethical and Legal Compliance
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | i)                           | Review managements monitoring of the Companys system in
      place to ensure that the Companys financial statements, reports and other
      financial information disseminated to governmental organizations, and the
      public satisfy legal requirements.                                                                                                                                                                                                                      
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | ii)                          | Review, with the Companys counsel, legal and regulatory
      compliance matters, including corporate securities trading policies, and
      matters that could have a significant impact on the organizations
      financial statements.                                                                                                                                                                                                                                             
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | iii)                         | Review implementation of compliance with the
      Sarbanes-Oxley Act, Ontario Securities Commission requirements and other
      legal requirements.                                                                                                                                                                                                                                                                                                                                    
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | iv)                          | Ensure that the CEO and CFO provide written certification
      with annual and interim financial statements and interim MD&A and the
      Annual Information Form.                                                                                                                                                                                                                                                                                                                     
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | J. | Risk Management             
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | i)                           | Make inquires of management and the independent auditor
      to identify significant business, political, financial and control risks
      and exposures and assess the steps management has taken to minimize such
      risk to the Company.                                                                                                                                                                                                                                         
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | ii)                          | Ensure that the disclosure of the process followed by the
      Board and its committees, in the oversight of the Companys management of
      principal business risks, is complete and fairly presented.                                                                                                                                                                                                                                                                              
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | iii)                         | Review managements program of risk assessment and steps
      taken to manage these risks and exposures, including insurance
      coverage.                                                                                                                                                                                                                                                                                                                                            
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | K. | General                     
| |    |                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | i)                           | Conduct or authorize investigations into any matters
      within the Committees scope of responsibilities. The Committee shall be
      empowered to retain independent counsel, accountants and other
      professionals to assist it in the conduct of any
  investigation.                                                                                                                                                                                                         

---

| | ii)  | The Committee may, from time to time, engage and set the
      compensation for outside consultants, advisors or other resources with the
      approval of the Board Chair in consultation with the CEO.                                                                                                                                                                                       
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                 
| | iii) | The Company must provide funding for the Committee to pay
      ordinary administrative expenses that are necessary for the Committee to
      carry out its duties.                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                 
| | iv)  | Establish procedures for the receipt, retention and
      treatment of complaints received by the Company regarding accounting,
      internal accounting controls, or auditing matters; and the confidential,
      anonymous submission by employees of concerns regarding questionable
      accounting or auditing matters and institute and oversee special
      investigations as needed.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                 
| | v)   | Review the findings of any examinations by regulatory
      agencies with respect to financial matters, and any external auditors
      observations made regarding those findings.                                                                                                                                                                                                             
| |      |                                                                                                                                                                                                                                                                                                                                                                                                 
| | vi)  | Ensure disclosure in the Annual Information Form if, at
      any time since the commencement of most recently completed financial year,
      the issuer has relied on any possible exemptions for Audit
    Committees.                                                                                                                                                                       
| |      |                                                                                                                                                                                                                                                                                                                                                                                                 
| | vii) | Perform any other activities consistent with this
      Charter, the Companys Articles and By-laws and governing law, as the
      Committee or the Board deems necessary or
appropriate.                                                                                                                                                                                                      

|IV. | ACCOUNTABILITY
|--- | --------------
|    |               
|    | A.            
|    |               
|    | B.            
|    |               
|    | C.            

---

APPENDIX ONE TO SCHEDULE ASILVER WHEATON CORP.
AUDIT COMMITTEE CHARTER

Affiliated Person under SEC Rules

An affiliated person, in accordance with the rules of the
United States Securities and Exchange Commission adopted pursuant to the
Sarbanes-Oxley Act, means a person who directly or indirectly controls
the Company, or a director, executive officer, partner, member, principal or
designee of an entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Company.

Financial Literacy Under Multilateral Instrument 52-110

Financially literate, in accordance with MI 52-110, means
that the director has the ability to read and understand a set of financial
statements that present a breadth and level of complexity of accounting issues
that are generally comparable to the breadth and complexity of the issues that
can reasonably be expected to be raised by the Companys financial statements.

Financial Expert Under SEC Regulation S-K

A person will qualify as financial expert if he or she
possesses the following attributes:

|a) | an understanding of financial statements and generally
      accepted accounting principles;                                                                                                                                                                                                                                                                                                                               
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                            
|b) | the ability to assess the general application of such
      principles in connection with the accounting for estimates, accruals and
      reserves;                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                            
|c) | experience preparing, auditing, analyzing or evaluating
      financial statements that present a breadth and level of complexity of
      accounting issues that are generally comparable to the breadth and
      complexity of issues that can reasonably be expected to be raised by the
      Companys financial statements, or experience actively supervising one or
      more persons engaged in such activities;
|   |                                                                                                                                                                                                                                                                                                                                                                                                                            
|d) | an understanding of internal controls and procedures for
      financial reporting; and                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                            
|e) | an understanding of audit committee
  functions.                                                                                                                                                                                                                                                                                                                                                                           

A person shall have acquired such attributes through:

|a) | education and experience as a principal financial
      officer, principal accounting officer, controller, public accountant or
      auditor or experience in one or more positions that involve the
      performance of similar functions;
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                              
|b) | experience actively supervising a principal financial
      officer, principal accounting officer, controller, public accountant,
      auditor or person performing similar functions;                                                      
|   |                                                                                                                                                                                                                                              
|c) | experience overseeing or assessing the performance of
      companies or public accountants with respect to the preparation, auditing
      or evaluation of financial statements; or                                                        
|   |                                                                                                                                                                                                                                              
|d) | other relevant experience.                                                                                                                                                                                                                   

---

Item
    
    CSA*
    NYSE**Ensure that the CEOs Terms of Reference include
      responsibility to make annual and interim written affirmations regarding
      the Audit Committee, and ensure that such written affirmations are
      submitted as required.
    
    
    √Disclose the text of the Audit Committees
      charter.
    
    √Disclose names of committee members and state
      whether or not each is (i) independent and (ii) financially literate.
      Describe each members education and experience relevant to
      responsibilities.
    
    √Disclosure whether, at any time since the
      commencement of most recently completed financial year, the Company has
      relied on any possible exemptions for Audit Committees.
    
    √If, at any time since the commencement of the
      issuers most recently completed financial year, a recommendation of the
      audit committee to nominate or compensate an external auditor was not
      adopted by the board of directors, state that fact and why.
    
    √Disclose by category how much the auditor is
      paid for consulting and other services.
    
    √Disclose any specific policies or procedures
      adopted by the Audit Committee for pre-approval of non-audit services by
      the external auditor.
    
    √Prepare and disclose any Audit Committee reports
      required by applicable regulators.
    
    √


---

APPENDIX ONE TO SCHEDULE ASILVER WHEATON CORP.
AUDIT COMMITTEE CHARTER

Affiliated Person under SEC Rules

An affiliated person, in accordance with the rules of the
United States Securities and Exchange Commission adopted pursuant to the
Sarbanes-Oxley Act, means a person who directly or indirectly controls
the Company, or a director, executive officer, partner, member, principal or
designee of an entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Company.

Financial Literacy Under National Instrument 52-110

Financially literate, in accordance with NI 52-110, means
that the director has the ability to read and understand a set of financial
statements that present a breadth and level of complexity of accounting issues
that are generally comparable to the breadth and complexity of the issues that
can reasonably be expected to be raised by the Companys financial statements.

Financial Expert Under SEC Regulation S-K

A person will qualify as financial expert if he or she
possesses the following attributes:

|f) | an understanding of financial statements and generally
      accepted accounting principles;                                                                                                                                                                                                                                                                                                                               
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|g) | the ability to assess the general application of such
      principles in connection with the accounting for estimates, accruals and
      reserves;                                                                                                                                                                                                                                                                       
|h) | experience preparing, auditing, analyzing or evaluating
      financial statements that present a breadth and level of complexity of
      accounting issues that are generally comparable to the breadth and
      complexity of issues that can reasonably be expected to be raised by the
      Companys financial statements, or experience actively supervising one or
      more persons engaged in such activities;
|i) | an understanding of internal controls and procedures for
      financial reporting; and                                                                                                                                                                                                                                                                                                                                    
|j) | an understanding of audit committee
  functions.                                                                                                                                                                                                                                                                                                                                                                           

A person shall have acquired such attributes through:

|e) | education and experience as a principal financial
      officer, principal accounting officer, controller, public accountant or
      auditor or experience in one or more positions that involve the
      performance of similar functions;
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|f) | experience actively supervising a principal financial
      officer, principal accounting officer, controller, public accountant,
      auditor or person performing similar functions;                                                      
|g) | experience overseeing or assessing the performance of
      companies or public accountants with respect to the preparation, auditing
      or evaluation of financial statements; or                                                        
|h) | other relevant experience.                                                                                                                                                                                                                   

- A2 -

---