Exhibit 99.1

















sandstorm_gold_noLTD_vertical



GOLD



SANDSTORM GOLD LTD.







ANNUAL INFORMATION FORM

FOR THE FINANCIAL YEAR ENDED DECEMBER 31,
2013







March 10,
2014









Suite 1400, 400 Burrard Street

Vancouver, B.C. V6C 3A6









SANDSTORM GOLD LTD.

ANNUAL INFORMATION FORM

FOR THE FINANCIAL YEAR ENDED DECEMBER 31,
2013



TABLE OF CONTENTS



|INTRODUCTORY NOTES                                         | 3                                                       
|---------------------------------------------------------- | --------------------------------------------------------
|                                                           | Cautionary Note Regarding Forward-Looking Information   
|                                                           | Currency Presentation                                   
|CORPORATE STRUCTURE                                        | 4                                                       
|GENERAL DEVELOPMENT OF THE BUSINESS                        | 4                                                       
|                                                           | Public Offerings                                        
|                                                           | Credit Facility                                         
|                                                           | Mineral Interests                                       
|                                                           | Spin-out of Sandstorm Metals                            
|                                                           | Consolidation of Common Shares                          
|                                                           | Listing on the NYSE MKT LLC                             
|                                                           | Listing on the Toronto Stock Exchange                   
|                                                           | Acquisition of 100% Interest in Premier Royalty         
|DESCRIPTION OF THE BUSINESS                                | 12                                                      
|                                                           | Principal Product                                       
|                                                           | Competitive Conditions                                  
|                                                           | Operations                                              
|RISK FACTORS                                               | 15                                                      
|                                                           | Risks Relating to the Company                           
|                                                           | Risks Relating to the Mining Operations                 
|TECHNICAL INFORMATION                                      | 26                                                      
|                                                           | CIM Standards Definitions                               
|                                                           | Aurizona Mine, Brazil                                   
|                                                           | Santa Elena Mine, Sonora, Mexico                        
|                                                           | Black Fox Mine, Canada                                  
|                                                           | Bachelor Lake Mine, Canada                              
|DIVIDENDS                                                  | 80                                                      
|DESCRIPTION OF CAPITAL STRUCTURE                           | 80                                                      
|TRADING PRICE AND VOLUME                                   | 81                                                      
|                                                           | Common Shares                                           
|                                                           | Warrants                                                
|DIRECTORS AND OFFICERS                                     | 84                                                      
|                                                           | Cease Trade Orders, Bankruptcies, Penalties or Sanctions
|                                                           | Conflicts of Interest                                   
|INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 87                                                      
|TRANSFER AGENT AND REGISTRAR                               | 87                                                      
|MATERIAL CONTRACTS                                         | 87                                                      
|INTERESTS OF EXPERTS                                       | 87                                                      
|                                                           | Qualified Persons Under NI 43-101                       
|                                                           | Auditors                                                
|AUDIT COMMITTEE                                            | 88                                                      
|                                                           | Relevant Education and Experience                       
|                                                           | Reliance on Certain Exemptions                          
|                                                           | Pre-Approval Policies and Procedures                    





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|                       | External Auditor Service Fees | 89
|---------------------- | ----------------------------- | --
|ADDITIONAL INFORMATION | 90                           
|SCHEDULE “A”           | A - 1                        

















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INTRODUCTORY
NOTES



Cautionary Note
Regarding Forward-Looking Information

This annual
information form (“AIF”) contains “forward-looking statements” or “forward-looking information”
within the meaning of applicable securities legislation. Forward-looking information is provided as of the date of this AIF and
Sandstorm Gold Ltd. (“Sandstorm Gold” or the “Company”) does not intend, and does not assume
any obligation, to update this forward-looking information, except as required by law.

Generally, forward-looking
information 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
information is based on reasonable assumptions that have been made by Sandstorm Gold as at the date of such information and is
subject to known and unknown risks, uncertainties and other factors that may cause the actual actions, events or results to be
materially different from those expressed or implied by such forward-looking information, including but not limited to: the impact
of general business and economic conditions; the absence of control over mining operations from which Sandstorm Gold will purchase
gold and other precious metals and risks related to those mining operations, including risks related to international operations,
government and environmental regulation, delays in mine construction and operations, actual results of mining and current exploration
activities, conclusions of economic evaluations and changes in project parameters as plans continue to be refined; problems inherent
to the marketability of gold and other precious metals; industry conditions, including fluctuations in the price of the primary
commodities mined at such operations, fluctuations in foreign exchange rates and fluctuations in interest rates; government entities
interpreting existing tax legislation or enacting new tax legislation in a way which adversely affects Sandstorm Gold; stock market
volatility; competition; as well as those factors discussed in the section entitled “Risk Factors” herein.

Forward-looking
information in this AIF includes, among other things, disclosure regarding: Sandstorm Gold’s existing eight gold streams
plus its 27 royalties as well as its future outlook and the mineral reserve and mineral resource estimates for the Aurizona Mine,
Santa Elena Mine, Black Fox Mine and the Bachelor Lake Mine (as defined below). Forward-looking information is based on assumptions
management believes to be reasonable, including but not limited to the continued operation of the mining operations from which
Sandstorm Gold will purchase gold and other precious metals, no material adverse change in the market price of commodities, that
the mining operations will operate in accordance with their public statements and achieve their stated production outcomes, and
such other assumptions and factors as set out therein.

Although Sandstorm Gold
has attempted to identify important factors that could cause actual actions, events or results to differ materially from those
contained in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that such information will prove to be accurate, as future actions and events
and actual results could differ materially from those anticipated in such information. Accordingly, readers should not place undue
reliance on forward-looking information.



Currency Presentation

All dollar amounts referenced,
unless otherwise indicated, are expressed in United States dollars.



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CORPORATE
STRUCTURE



The Company was incorporated
under the Business Corporations Act (British Columbia) on March 23, 2007. The Company changed its name from “Sandstorm
Resources Ltd.” to “Sandstorm Gold Ltd.” on February 17, 2011.



The Company’s head,
registered, and records office are located at Suite 1400, 400 Burrard Street, Vancouver, British Columbia, V6C 3A6.



The Company has three principal
wholly-owned subsidiaries, Sandstorm Gold (Barbados) Limited, incorporated under the laws of Barbados, Sandstorm Gold (Canada)
Ltd., incorporated under the laws of the Province of British Columbia and Premier Royalty Inc. (“Premier Royalty”),
incorporated under the laws of the Province of Ontario.



GENERAL
DEVELOPMENT OF THE BUSINESS



Public Offerings

On April 23, 2009,
the Company completed a public offering of 116,909,580 subscription receipts at a price of C$0.40 per subscription receipt for
gross proceeds of approximately C$46.8 million (the “April 2009 Offering”). The gross proceeds from the April
2009 Offering were held in escrow until May 15, 2009, and were released upon completion of the transactions with each of Luna
(as defined below) and SilverCrest (as defined below) as described below. On May 22, 2009, each subscription receipt was automatically
exercised, without payment of additional consideration, into one common share (each, a “Common Share”) and
one-half of one common share purchase warrant (each whole common share purchase warrant, a “2009 Warrant”).
As adjusted to reflect the 5:1 consolidation of the Company’s Common Shares described below, each five 2009 Warrants entitle
the holder to acquire one Common Share at a price of $3.00 until April 23, 2014. A portion of the net proceeds from the April
2009 Offering were used to fund the Luna and SilverCrest transactions described below as well as a transaction with Santa Fe Gold
Corp. with respect to its Summit Mine in the United States. The remaining net proceeds were used for general corporate and working
capital purposes.

On October 14, 2009, the
Company completed a public offering of 81,778,800 units at a price of C$0.45 per unit for gross proceeds of C$36.8 million (the
“October 2009 Offering”). Each unit was comprised of one Common Share and one-half of one 2009 Warrant. A portion
of the net proceeds from the October 2009 Offering were used to fund the Rambler (as defined below) transaction described below.
The remaining net proceeds were used by the Company for the acquisition of gold and other precious metals purchase agreements
(“Gold Streams”) from Metanor (as defined below) and Rambler (as defined below).



On October 19, 2010, the
Company completed a public offering of 78,768,100 units at a price of C$0.73 per unit for gross proceeds of C$57.5 million (the
“October 2010 Offering”). Each unit was comprised of one Common Share and one-quarter of one common share purchase
warrant (each whole common share purchase warrant, a “2010 Warrant”). As adjusted to reflect the 5:1 consolidation
of the Company’s Common Shares described below, each five 2010 Warrants entitle the holder to purchase one Common Share
at a price of $5.00 until October 19, 2015. A portion of the net proceeds were used to fund the Brigus (as defined below) and
Metanor transactions described below. The remaining net proceeds were used for general corporate and working capital purposes.



On September 7, 2012, the
Company completed a public offering of 15,007,500 units at a price of C$10.00 per unit for gross proceeds of approximately C$150.1
million (the “September 2012 Offering”). Each unit was comprised of one Common Share and one-third of one common
share purchase warrant (each whole common share purchase warrant, a “2012 Warrant”). Each 2012 Warrant entitles
the holder to purchase one Common Share at a price of $14.00 until September 7, 2017.



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The net proceeds from the
September 2012 Offering have been and continue to be used to finance the acquisition of Gold Streams and royalties, including
the Colossus (as defined below) and Mutiny (as defined below) Gold Streams described below, and for working capital purposes.



Credit Facility

On January 12, 2012, the
Company entered into a revolving credit agreement with The Bank of Nova Scotia, which allowed the Company to borrow up to $50
million (the “Revolving Loan”). The Revolving Loan had a term of three years, which was extendable by mutual
consent of The Bank of Nova Scotia and the Company.



On February 11, 2013 (as
amended February 15, 2014), the Company amended the Revolving Loan to increase the amount which the Company is permitted to borrow
thereunder to up to $100 million (the “Amended Revolving Loan”). The Amended Revolving Loan has a term of four
years, which is extendable by mutual consent of The Bank of Nova Scotia, Bank of Montreal, National Bank of Canada and the Company.
The Amended Revolving Loan will continue to be used for the acquisition of Gold Streams. The amounts drawn on the Amended Revolving
Loan are subject to interest at LIBOR plus 3.00%-4.25% per annum, and the undrawn portion of the Amended Revolving Loan is subject
to a standby fee of 0.75%-1.05% per annum, dependent on the Company’s leverage ratio. At December 31, 2013, the Company
had not drawn down on the Amended Revolving Loan and the full balance remained available.



Mineral Interests

Aurizona Gold Stream

On May 15, 2009, the Company
entered into an agreement (the “Aurizona Gold Stream”) with Luna Gold Corp. (“Luna”) to
purchase 17% of the life of mine gold produced from Luna’s Aurizona mine, located in Brazil (the “Aurizona Mine”),
for $17.8 million and 5,500,000 Common Shares as an upfront payment, plus ongoing per ounce payments equal to the lesser of $400
(subject to a 1% annual inflationary adjustment beginning on February 9, 2014) and the then prevailing market price per ounce
of gold.



On September 19, 2012,
the Company agreed to contribute up to $10 million in capital towards the Phase 1 expansion (the “Phase 1 Expansion”)
at the Aurizona Mine. The Company’s contribution towards the Phase 1 Expansion will be equal to 17% of the capital costs
incurred by Luna towards the Phase 1 Expansion to a maximum contribution of $10 million. As at December 31, 2013, the Company
had remitted $4.9 million to Luna in connection with the Phase 1 Expansion. Luna has agreed to complete the Phase 1 Expansion
by not later than June 15, 2014.



In addition, in September
of 2013, the Company made a loan to Luna in the principal amount of $10 million (the “Loan”), which is to be
used solely to fund the Phase 1 Expansion and associated exploration costs. The Loan bears interest at a rate of 12% per annum
(subject to certain conditions) and is due and payable on June 30, 2017. Also, under certain circumstances, the Loan and all accrued
and unpaid interest may, at the option of the Company, be exchanged for common shares of Luna at an exchange price equal to the
volume weighted average closing price of Luna’s common shares on the Toronto Stock Exchange over the five trading days immediately
prior to the exchange date.



If Luna decides to develop
an underground mine on the Aurizona property (the “Aurizona Underground Mine”), the Company has the right to
purchase 17% of the gold from the underground mine at a per ounce price equal to the lesser of $500 (subject to a 1% annual inflationary
adjustment beginning three years after the mine achieves commercial production (an “Inflationary Adjustment”))
and the then prevailing market price per ounce of gold. If Sandstorm Gold elects to exercise its right to purchase gold from the
Aurizona Underground Mine, Sandstorm Gold will be required to pay 17% of the capital expenditures incurred to determine the economic
viability and to construct the mine.



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For further details regarding
the Aurizona Mine, see “Technical Information - Aurizona Mine, Brazil” below.



Santa Elena Gold Stream

On May 15, 2009, the Company
entered into an agreement (the “Santa Elena Gold Stream”) with SilverCrest Mines Inc. (“SilverCrest”)
to purchase 20% of the life of mine gold produced from SilverCrest’s Santa Elena mine, located in Mexico (the “Santa
Elena Mine”), for $12.0 million and 3,500,000 Common Shares as an upfront payment, plus ongoing per ounce payments equal
to the lesser of $350 (subject to a 1% annual inflationary adjustment beginning on July 13, 2014) and the then prevailing market
price per ounce of gold.



SilverCrest is also developing
an underground mine on the Santa Elena property (the “Santa Elena Underground Mine”) and the Company had the
right to purchase 20% of the gold from the underground mine at a per ounce price equal to the lesser of $450 (subject to an Inflationary
Adjustment) and the then prevailing market price per ounce of gold. Subsequent to year-end, Sandstorm Gold elected to exercise
its right to purchase gold from the Santa Elena Underground Mine. For consideration, the Company made a $10 million payment to
SilverCrest and will continue to make per ounce payments equal to $350 until 50,000 ounces of gold have been delivered to the
Company (inclusive of the ounces already received from the open-pit production), at which time the ongoing per ounce payments
will increase to $450.



For further details regarding
the Santa Elena Mine, see “Technical Information - Santa Elena Mine, Mexico” below.



Ming Gold Stream

On March 4, 2010 (as amended),
the Company entered into an agreement (the “Ming Gold Stream”) to purchase approximately 25% of the first 175,000
ounces of gold produced, and 12% of the gold produced thereafter, from Rambler Metals & Mining plc’s (“Rambler”)
Ming mine, located on the Baie Verte Peninsula in Newfoundland, Canada (the “Ming Mine”). For consideration,
the Company paid $7.0 million in 2010 and $13.0 million in 2011 for a total of $20.0 million in up front payments. There are not
ongoing per ounce payments required by the Company in respect of the Ming Gold Stream. In the event that the metallurgical recoveries
of gold at the Ming Mine are below 85%, the percentage of gold that the Company is entitled to purchase will be increased proportionately.



Black Fox Gold Stream

On November 9, 2010,
the Company entered into an agreement (the “Black Fox Gold Stream”) with Brigus to purchase 12% of the life
of mine gold produced from Brigus Gold Corp.’s (“Brigus”) Black Fox mine, located in Ontario, Canada
(the “Black Fox Mine”), for $56.3 million in upfront payments plus ongoing per ounce payments equal to the
lesser of $500 (subject to an inflationary adjustment beginning in 2013, not to exceed 2% per annum - the per ounce payments are
currently $509) and the then prevailing market price per ounce of gold.

Brigus had the option
(the “Repurchase Option”), until January 1, 2013, to repurchase 50% of the gold to be purchased under the Black
Fox Gold Stream by making a $36.6 million payment to the Company. Upon receipt of the payment from Brigus, the Company was to
reduce the percentage of gold to be purchased from the Black Fox Mine from 12% to 6%. In November 2012, Brigus partially exercised
the Repurchase Option and paid the Company $24,396,668 which reduced the percentage of gold to be purchased by the Company from
the Black Fox Mine to 8%.

The Company also
had the right to purchase, by remitting the per ounce payments (described above), 10% of the gold produced from an area defined
under the Black Fox Gold Stream as the “Black Fox Extension”, covering a portion of Brigus’ Pike River
property. As a result of the partial exercise of the Repurchase Option by Brigus, the Company’s right to purchase 10% of
the gold produced from the Black Fox Extension has been reduced to 6.3%.

NOTE: Effective
March 6, 2014, Primero Mining Corp. (TSX:P; NYSE:PPP) acquired all of the issued and outstanding shares of Brigus by way of plan
of arrangement under the Canada Business Corporations Act, however, the Company’s rights under the Black Fox Gold
Stream remain intact.



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For further details
regarding the Black Fox Mine, see “Technical Information - Black Fox Mine, Canada” below.

Bachelor Lake Gold Stream

On January 17, 2011,
the Company entered into an agreement (the “Bachelor Lake Gold Stream”) with Metanor to purchase 20% of the
life of mine gold produced from Metanor Resources Inc.’s (“Metanor”) Bachelor Lake Gold project located
outside of Val d’Or, Quebec (the “Bachelor Lake Mine”), for an upfront payment of $20.0 million plus
ongoing per ounce payments equal to the lesser of $500 and the then prevailing market price per ounce of gold.

Metanor has provided
a guarantee that the Company will receive a minimum of $1.0 million in pre-tax cash flow in 2012 (which has been met); $5.5 million
in pre-tax cash flow in 2013 (which has been met), 2014, and 2015; and $2.5 million in pre-tax cash flow in 2016.

For further details
regarding the Bachelor Lake Mine, see “Technical Information - Bachelor Lake Mine, Canada” below.

Bracemac-McLeod Gold Stream

On July 12, 2011
(as amended), the Company entered into an agreement (the “Donner Gold Stream”) with Donner Metals Ltd. (“Donner”)
via a back-to-back agreement with Sandstorm Metals & Energy Ltd. (“Sandstorm Metals”) to purchase 24.5%
of the life of mine gold produced from the Bracemac-McLeod development project (the “Bracemac-McLeod Mine”).
For consideration, the Company made an upfront payment of $5.0 million in June 2012 and an upfront payment of $3 million in November
2012 and makes ongoing per ounce payments equal to the lesser of $350 per ounce of gold or gold equivalent and the then prevailing
market price of gold.

Donner held a 35%
participating interest in the Bracemac-McLeod Mine but, during the summer of 2013, Donner announced their inability to meet the
cash calls under their operating agreement with the owner/operator of the project, Glencore Xstrata plc (“Glencore”).
Accordingly, on August 30, 2013, the Company was granted a 0.6% net smelter return royalty on 100% of the production from the
Bracemac-McLeod Mine from Glencore and the Company relinquished its Gold Stream on Bracemac-McLeod.

As a result of the
conversion of the Donner Gold Stream into a 0.6% net smelter return royalty, the Company recorded an impairment charge of $3.2
million during the three months ended September 30, 2013.

Colossus Gold Stream

On September 18, 2012,
the Company entered into an agreement (the “Colossus Gold Stream”) with Colossus Minerals Inc. (“Colossus”)
and Colossus Mineração Ltda. (“Colossus Brazil”) to purchase, for a period of 40 years (which
may be extended), an amount equal to 1.5% of the gold and 35% of the platinum produced from the Serra Pelada mine, located in
Brazil (the “Serra Pelada Mine”), for $60 million plus ongoing per ounce payments equal to the lesser of $400
per ounce for the gold and the then prevailing market price per ounce of gold and the lesser of $200 per ounce for the platinum
and the then prevailing market price per ounce of platinum (subject to a 1% annual inflationary adjustment beginning in September
2015). Colossus guaranteed certain minimum annual deliveries for the initial 10 year period, commencing in 2013, so long as the
Serra Pelada Mine was in operation. Colossus also provided a guarantee that if the Serra Pelada Mine shut down for a period of
24 months and the Company had not recognized cash flow equal to the initial upfront deposit, then Colossus would refund the balance
to the Company. In addition, Colossus agreed to refund a pro-rata portion of the upfront deposit if the Serra Pelada Mine did
not achieve a completion test within 48 months of funding.



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As part of the transaction,
the Company also agreed to purchase an amount equal to 35% of the palladium produced from the Serra Pelada Mine (the “Palladium
Stream”) in exchange for paying a $15 million deposit plus ongoing per ounce payments and the Company concurrently entered
into a back-to-back agreement with Sandstorm Metals whereby Sandstorm Metals purchased the Palladium Stream from the Company for
$15 million.

In late 2013, Colossus
advised the Company that it was in dire financial circumstances and the Company and a group of holders of Colossus Convertible
Gold Linked Notes (the “Gold Linked Notes”) proposed a restructuring plan for Colossus. The proposal provides
for a restructuring of Colossus’ capital structure through the conversion of its Gold Linked Notes and the Colossus Gold
Stream into equity (the “Restructuring”). Colossus filed a notice of intention to make a proposal under the
Bankruptcy and Insolvency Act (Canada) which is intended to enable Colossus to pursue the Restructuring and a sale process with
the benefit of creditor protection and under Court supervision. As part of the Restructuring, the Company has agreed to cancel
the Colossus Gold Stream in exchange for a 1.6% net smelter return royalty on the Serra Pelada Mine plus common shares of Colossus.
When the Restructuring is completed (which is expected to be in mid to late March 2014), the Company expects to own approximately
31% of the issued and outstanding shares of Colossus. Upon completion of the Restructuring, the Company will also cancel the Sandstorm
Metals back-to-back agreement with respect to the Palladium Stream and Sandstorm Metals will receive a 0.4% net smelter return
royalty on the Serra Pelada Mine and approximately 8% of the outstanding common shares of Colossus.



As a result of the
Restructuring of the Colossus Gold Stream as detailed above, the Company recorded an impairment charge of $52.2 million for the
fiscal year ended December 31, 2013.

Mutiny Gold Stream

On December 5, 2012, the
Company entered into an agreement (the “Mutiny Gold Stream”) with Mutiny Gold Ltd. (“Mutiny”)
and three of its subsidiaries, Deflector Gold Pty Ltd., Gullewa Gold Project Pty Ltd. and Central Infrastructure Pty Ltd. to purchase,
for a period of 40 years (which may be extended), an amount equal to 15% of the gold produced from Mutiny’s Deflector project,
located in Western Australia (the “Deflector Mine”), for $9 million (the “Initial Deposit”).
The Company agreed to make a future cash remittance of $29 million (the “Second Deposit”) once Mutiny had received
final mining permits for the Deflector Mine as well as completing certain funding conditions. In addition, the Company agreed
to make ongoing per ounce payments equal to the lesser of $500 per ounce for the gold and the then prevailing market price per
ounce of gold (subject to an annual variable inflationary adjustment beginning on the fourth anniversary of the date on which
the Second Deposit was made). If the Deflector Mine produced more than 85,000 ounces of gold in a given year, the Company was
to make a one time $4 million payment to Mutiny.



In August of 2013, the
Company amended the Mutiny Gold Stream. In accordance with the amended Mutiny Gold Stream, the Company agreed to purchase an amount
equal to 2.6% of the gold produced from the Deflector Mine in exchange for an upfront payment of $6 million. Since the $6 million
payment was previously remitted to Mutiny by the Company in the form of a loan, there are no additional payments which are required
to be made to Mutiny by the Company with respect to the Deflector Mine.



Entrée Metal Credits Agreement

On February 14, 2013, the
Company entered into a funding agreement (the “Entrée Metal Credits Agreement”) with Entrée Gold
Inc. (“Entrée”) to purchase, for a period of 50 years (which may be extended), metal credits equal to:



| | (a) | 6.77% of the gold, 6.77% of the silver
                                         and 0.50% of the copper produced from the Hugo North Extension deposit (Lower Level);
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | (b) | 10.15% of the gold, 10.15% of the silver
                                         and 0.75% of the copper produced from the Hugo North Extension deposit (Upper Level);
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | 5.13% of the gold, 5.13% of the silver
                                         and 0.50% of the copper produced from the Heruga Deposit (Lower Level); and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | 7.70% of the gold, 7.70% of the silver
                                         and 0.75% of the copper produced from the Heruga Deposit (Upper Level);
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------



(all of which are subject to adjustment upon
the occurrence of certain stated events). The above-mentioned deposits are all located in the South Gobi desert of Mongolia and
form part of the Oyu Tolgoi mining complex (the lower and upper levels of the Hugo North Extension and the lower and upper levels
of the Heruga Deposit collectively referred to herein as the “Entrée JV Project”), for $40 million.
In addition, the Company will make ongoing payments equal to the lesser of the prevailing market price and $220 per ounce for
the gold, $5 per ounce for the silver and $0.50 per pound for the copper, until approximately 8.6 million ounces of gold, 40.3
million ounces of silver and 9.1 billion pounds of copper have been produced from the Entrée JV Project (the “Initial
Fixed Prices”). Thereafter, the ongoing payments will increase to the lesser of the prevailing market price and $500
per ounce for the gold, $10 per ounce for the silver and $1.10 per pound for the copper (the “Subsequent Fixed Prices”).



The Initial Fixed Prices
are all subject to a 1% annual inflationary adjustment beginning on the fourth anniversary of the date upon which the Company
commences receiving payable gold, silver and copper. The Subsequent Fixed Prices are all subject to a 1% annual inflationary adjustment
beginning on the first anniversary of the date upon which the fixed prices which the Company pays for the gold, silver and copper
are adjusted from the Initial Fixed Prices to the Subsequent Fixed Prices.



The Entrée Metal
Credits Agreement does not require the delivery of physical metal and Entrée may use future cash flows from any of its
mineral property interests to delivery metal credits to the Company to fulfill its requirements under the Entrée Metal
Credits Agreement. In addition, Entrée has provided the Company with a right of first refusal on any future production-based
funding agreements on Entrée’s share of production from the Entrée JV Project.



Concurrently, the
Company entered into a similar back-to-back agreement with Sandstorm Metals whereby Sandstorm Metals purchased the copper portion
of the Entrée Metal Credits Agreement (the “Copper Agreement”) from the Company in exchange for issuing
$5 million in common shares of Sandstorm Metals to the Company. Upon receiving acceptance from the TSX Venture Exchange (the “TSXV”),
Sandstorm Metals issued 1,113,333 (post-consolidation) common shares to the Company at a post-consolidation price of C$4.50 per
share.

The Hugo North Extension
is one of the world’s richest porphyry copper-gold deposits and the Heruga Deposit is a copper-gold-molybdenum porphyry
deposit. Both are located in the South Gobi desert of Mongolia, approximately 570 kilometres south of the capital city of Ulaanbaatar
and 80 kilometres north of the border with China. The Hugo North Extension and the Heruga Deposit are part of the Oyu Tolgoi mining
complex and are being developed by Oyu Tolgoi LLC, a subsidiary of Ivanhoe Mines Ltd. (now known as Turquoise Hill Resources Ltd.)
and the Government of Mongolia, and its project manager Rio Tinto plc. Entrée retains a 20% interest in the resources of
the Hugo North Extension and Heruga deposits. The first development production from Entrée’s joint venture ground
is expected in 2015.

Entrée Private Placement

The Company has also purchased
17,857,142 common shares of Entrée (the “Entrée Shares”) at a price of C$0.56 per Entrée
Share, for gross proceeds to Entrée of C$10 million (the “Private Placement”). Following completion
of the Private Placement and before taking into account any exercise by Rio Tinto International Holding Limited of its pre-emptive
rights, the Company owns approximately 12% of the issued and outstanding common shares of Entrée.



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Solitario Royalty

On June 11, 2012, the Company
entered into agreements (the “Solitario Royalty”) with Solitario Exploration & Royalty Corp. (“Solitario”)
and Mt. Hamilton LLC (“Hamilton”) pursuant to which it purchased, in perpetuity, a 2.4% net smelter return
royalty (the “Mt. Hamilton NSR”) on the Mt. Hamilton gold project, located in White Pine County, Nevada,
USA (the “Mt. Hamilton Project”) for $10 million (of which $6 million was paid in fiscal 2012 and the remaining
$4 million was paid in 2013). The Mt. Hamilton Project is held by Mt. Hamilton which is 80% owned by Solitario and 20% owned by
Ely Gold & Minerals Inc.



Mt. Hamilton has the option
(the “Repurchase Option”), until December 11, 2014, to repurchase the Mt. Hamilton NSR for $12 million provided
that Mt. Hamilton enters into a Gold Stream with the Company having an upfront deposit of not less than $30 million. The Company
has received a guarantee from Mt. Hamilton that the Company will receive minimum before tax cash flow of $10 million by December
21, 2022. In addition, Mt. Hamilton has provided the Company with a right of first refusal on any future royalty or metals stream
financing for the Mt. Hamilton Project.



Spin-out of Sandstorm
Metals

On May 13, 2010, Sandstorm
Gold completed a plan of arrangement (the “Arrangement”) with Sandstorm Metals. Under the Arrangement, Sandstorm
Gold spun-out its option agreement on the Eagle Lake property owned by Eagle Plains Resources Ltd. located in Saskatchewan, Canada
and working capital of C$500,000 to Sandstorm Metals in exchange for 6,836,810 shares of Sandstorm Metals. Thereafter, Sandstorm
Gold distributed all of its shares of Sandstorm Metals to the existing Sandstorm Gold shareholders.



Consolidation of
Common Shares

On May 9, 2012, the Common
Shares were consolidated on a 5:1 basis.



For clarification, only
the Common Shares were consolidated. The 2009 Warrants and the 2010 Warrants were not consolidated, but their exercise terms were
adjusted in accordance with the provisions contained in their respective warrant indentures. Supplemental warrant indentures describing
these adjustments are filed on SEDAR at www.sedar.com.



Listing on the
NYSE MKT LLC

On August 20, 2012, the
Common Shares commenced trading on the NYSE MKT LLC (“NYSE MKT”) under the symbol “SAND”.



The Company’s three
series of publicly traded warrants (namely the 2009 Warrants, the 2010 Warrants and the 2012 Warrants) are not listed on the NYSE
MKT, nor are the Listed Premier Warrants (as defined below) which trade on the Toronto Stock Exchange under the symbol SSL.WT.C.



Listing on the
Toronto Stock Exchange

On November 23, 2012, the
Common Shares and the Company’s three series of publicly traded warrants (namely the 2009 Warrants, the 2010 Warrants and
the 2012 Warrants) commenced trading on the Toronto Stock Exchange (“TSX”) and were delisted from trading on
the TSXV.



-10-









Acquisition of
100% Interest in Premier Royalty

The Acquisition



In 2013, the Company acquired
100% of the issued and outstanding common shares of Premier Royalty.



Through a series of transactions
conducted in January 2013, the Company acquired an aggregate of 46,678,221 common shares and 6,965,676 warrants of Premier Royalty.
The 46,678,221 common shares of Premier Royalty owned by the Company at that time represented approximately 59.9% of Premier
Royalty’s issued and outstanding shares and the Company SEDAR filed a Form 51-102F4, Business Acquisition Report under National
Instrument 51-102, in respect of these initial transactions.



Subsequently,
on August 14, 2013, the Company announced that it had entered into an arrangement agreement (the “Arrangement Agreement”)
with Premier Royalty pursuant to which the Company would acquire 100% of the issued and outstanding common shares of Premier Royalty
(“Premier Shares”) on the basis of 0.145 of a fully paid and non-assessable common share of the Company
(the “Consideration Shares”) for each outstanding Premier Share (other than the 46,678,221 Premier Shares already
owned by the Company), by way of a court-approved statutory plan of arrangement under section 182 of the Business Corporations
Act (Ontario) (the “Premier Arrangement”). On October 4, 2013, the Company completed the Premier
Arrangement and acquired an additional 31,849,015 common shares of Premier Royalty by issuing an aggregate of 4,618,109 Consideration
Shares to the shareholders of Premier Royalty.

In accordance
with the terms of outstanding warrants to acquire Premier Royalty shares (each, a “Premier Royalty Warrant”),
each holder of a Premier Royalty Warrant outstanding immediately prior to the effective time of the Premier Arrangement will receive,
on subsequent exercise of such holder’s Premier Royalty Warrant, in accordance with its terms, for the same aggregate consideration
payable for such warrant, 0.145 of a Common Share of the Company. Also, in accordance with the terms of outstanding stock options
to acquire Premier Royalty shares (each, a “Premier Royalty Option”), each holder of a Premier Royalty Option
outstanding immediately prior to the effective time of the Premier Arrangement will receive, on subsequent exercise of such holder’s
Premier Royalty Option, in accordance with its terms, for the same aggregate consideration payable for such option, 0.145 of a
Common Share of the Company.

There are an aggregate
of 22,715,815 Premier Royalty Warrants outstanding which are exercisable into an aggregate of 3,293,794 Common Shares of the Company
at a post-Premier Arrangement price per Common Share ranging from approximately C$12.07 - C$17.24. Of the outstanding 22,715,815
Premier Royalty Warrants, 1,643,750 are listed on the TSX under the symbol SSL.WT.C (the “Listed Premier Warrants”).
The remainder of the Premier Royalty Warrants are unlisted.

There are an aggregate
of 2,873,333 Premier Royalty Options outstanding which are exercisable into an aggregate of 416,333 Common Shares of the Company
at a post-Premier Arrangement price per Common Share ranging from approximately C$10.62 - C$16.345.

Business of Premier Royalty



Premier Royalty is a
public company whose common shares, until October 9, 2013, were listed for trading on the TSX. Premier Royalty was in the business
of acquiring royalty interests in mineral properties that are advanced staged development projects or operating mines. Premier
Royalty does not conduct mining operations, nor is it required to contribute to capital costs, exploration costs, environmental
costs or other mining costs on the properties in which it holds royalty interests.



-11-









As a result of obtaining
100% of Premier Royalty’s common shares, the Company added a number of quality royalty assets to its portfolioalong
with over $30 million in cash.



Three of Premier’s
(and thus, the Company’s) operating royalty interests are:



Gualcamayo Royalty- a 1.0% net smelter return royalty on the Gualcamayo open pit, heap leach gold mine which is located in San Juan province,
Argentina and is owned and operated by Yamana Gold Inc.



Emigrant Springs Royalty- a 1.5% net smelter return royalty on the Emigrant Springs open pit, heap leach gold mine which is located in the Carlin
Trend in Nevada, U.S.A. and is owned and operated by Newmont Mining Corp.



Mine Waste Solutions
Royalty - a 1.0% net smelter return royalty on the gold produced from Mine Waste Solutions gold and uranium tailings recovery
operation which is located near Stilfontein, South Africa, and is owned and operated by AngloGold Ashanti Ltd.



DESCRIPTION
OF THE BUSINESS



Sandstorm Gold is a non-operating
gold streaming company which generates its revenue primarily from the sale of gold and other precious metals. The Company is listed
on the TSX (symbol: SSL) and the NYSE MKT (symbol: SAND). In addition, the Company’s 2009 Warrants, 2010 Warrants, 2012
Warrants and the Listed Premier Warrants all trade on the TSX (symbols: SSL.WT, SSL.WT.A, SSL.WT.B and SSL.WT.C, respectively).



Sandstorm Gold currently
has a portfolio of eight Gold Streams and 27 net smelter return royalty (“NSR”) agreements, of which 13 of
the underlying mines are producing gold.



Sandstorm Gold seeks to
acquire Gold Streams from companies which have advanced stage development projects or operating mines. In return for making a
one-time upfront payment to acquire a Gold Stream, Sandstorm Gold receives the right to purchase, at a fixed price per unit, a
percentage of a mine’s production for the operating life of the asset. Sandstorm Gold is focused on acquiring Gold Streams
on mines with low production costs, significant exploration potential and strong management teams.



A royalty is a payment
to a royalty holder by a property owner or an operator of a property and is typically based on a percentage of the minerals or
other products produced or the revenues or profits generated from the property. Royalties are not typically working interests
in a property and, depending on the nature of a royalty interest and the laws applicable to it and the project, the royalty holder
is generally not responsible for, and has no obligation to contribute additional funds for any purpose, including, but not limited
to, operating or capital costs or environmental or reclamation liabilities. An NSR royalty is generally based on the value of
production or net proceeds received by an operator from a smelter or refinery. These proceeds are usually subject to deductions
or charges for transportation, insurance, smelting and refining costs as set out in the specific royalty agreement. For gold royalties,
the deductions are generally minimal. NSR’s generally provide cash flow which is free of any operating or capital costs
and environmental liabilities. A smaller percentage NSR in a project can effectively equate to the economic value of a larger
percentage profit or working interest in the same project.



Gold Streams and royalties
are an alternative to other more conventional forms of financing, including equity, convertible securities and debt financings
which can be used to finance mineral projects. Sandstorm Gold competes directly with these other sources of capital to provide
financing and assists other companies in the resource industry grow their businesses, while acquiring attractive assets in the
process. Sandstorm Gold plans to grow and diversify its low cost production profile through the acquisition of additional Gold
Streams.



-12-









The Company is actively
pursuing future growth opportunities, primarily by way of entering into Gold Streams. There is no assurance, however, that any
potential transaction will be successfully completed.



Principal Product

The Company’s principal
product is gold that it has agreed to purchase in the future pursuant to its Gold Stream agreements. There is a worldwide gold
market into which the Company can sell the gold purchased under the gold purchase agreements and, as a result, the Company will
not be dependent on a particular purchaser with regard to the sale of the gold that it expects to acquire pursuant to its gold
purchase agreements. The Company also expects to receive payments pursuant to its NSR royalty agreements.





The following table summarizes
the gold and other precious metals interests currently owned by the Company (collectively the “Mining Operations”):



|Property                                          | Mine
    Owner                | Location
    of Mine | Attributable
    Production to be Purchased                                          
|------------------------------------------------- | ----------------------------- | -------------------- | -------------------------------------------------------------------------------------
|Gold                                              | Other                        
|                                                  |                               |                      |                                                                                      
|Sandstorm
    - Gold Streams:                     |                               |                      |                                                                                      
|Aurizona
    Mine                                 | Luna                          | Brazil               | 17%                                                                                  
|Santa
    Elena Mine                              | SilverCrest                   | Mexico               | 20%                                                                                  
|Ming
    Mine                                     | Rambler                       | Canada               | Approximately
    25% of the first 175,000 ounces of gold produced and 12% thereafter
|Black
    Fox Mine                                | Brigus                        | Canada               | 8%
    from the Black Fox Mine plus 6.3% from the Black Fox Extension                
|Bachelor
    Lake Mine                            | Metanor                       | Canada               | 20%                                                                                  
|Serra
    Pelada Mine  (1)                        | Colossus                      | Brazil               | 1.5%                                                                                 
|Deflector
    Mine  (2)                           | Mutiny                        | Australia            | 2.6%                                                                                 
|Hugo
    North Extension and Heruga deposits  (3) | Entrée                        | Mongolia             | 25.7%
    and 33.8% of Entrée’s 20% share of the gold and silver by-products         
|Summit
    Mine                                   | Santa
    Fe Gold Corp.       | United
    States    | 50%
    of the first 10,000 ounces of gold produced and 22% thereafter               
|                                                  |                               |                      |                                                                                      
|Sandstorm
    - Royalty Portfolio:                |                               |                      |                                                                                      
|                                                  |                               |                      |                                                                                      
|Coringa                                           | Magellan
    Minerals Ltd.    | Brazil               | 2.5%
    NSR                                                                         
|Ann
    Mason Deposits                            | Entrée                        | United
    States    | 0.4%
    NSR                                                                         
|Bracemac-McLeod
    Mine                          | Glencore                      | Canada               | 0.6%
    NSR                                                                         
|Mt.
    Hamilton                                  | Solitario                     | United
    States    | 2.5%
    NSR                                                                         
|Paul
    Isnard Project                           | Columbus
    Gold Corp.       | French
    Guiana    | 1.0%
    NSR                                                                         
|Prairie
    Creek Project                         | Canadian
    Zinc Corporation | Canada               | 1.2%
    NSR                                                                         
|                                                  |                               |                      |                                                                                      

-13-







|Premier
    - Royalty Portfolio: (4) |                          |                   |                                          | 
|------------------------------------ | ------------------------ | ----------------- | ---------------------------------------- | 
|                                     |                          |                   |                                          | 
|Producing:                           |                          |                   |                                          | 
|Gualcamayo
    Mine                  | Yamana
    Gold          | Argentina         | 1.0%
    NSR                             | 
|Emigrant
    Springs Mine            | Newmont                  | United
    States | 1.5%
    NSR                             | 
|Mine
    Waste Solutions             | Anglogold
    Ashanti    | Africa            | 1.0%
    NSR                             | 
|San
    Andres                       | Aura
    Minerals        | Honduras          | 1.5%
    NSR                             | 
|Thunder
    Creek                    | Lake
    Shore Gold      | Canada            | 1.0%
    NSR                             | 
|                                     |                          |                   |                                          | 
|Non-Producing:                       |                          |                   |                                          | 
|Argosy                               | Cangold
    Limited      | Canada            | 0.5%
    NSR                             | 
|Newman-Madsen                        | Sabina
    Gold          | Canada            | 0.5%
    NSR                             | 
|East
    My-Ritt                     | Mega
    Precious Metals | Canada            | 0.5%
    NSR                             | 
|Pickle
    Crow                      | PC
    Gold              | Canada            | 0.5%
    NSR                             | 
|Skinner
    Gold                     | Sabina
    Gold          | Canada            | 7.5%
    Net Profit Interest  (5)        | 
|Red
    Ridge                        | Tone
    Resources       | United
    States | 3.0%
    NSR                             | 
|Cerro
    Prieto                     | Oroco                    | Mexico            | 2.0%
    NSR                             | 
|Don
    Nicholas                     | Minera
    IRL           | Argentina         | $3.00/ounce
    royalty up to $2 million | 
|Rain                                 | Newmont                  | United
    States | 1.5%
NSR                                 | 
|Broulan
    Reef                     | Goldcorp                 | Canada            | 2.0%
    NSR                             | 
|HM
    Claim Property                | Kirkland
    Lake Gold   | Canada            | 2.0%
    NSR                             | 



| | (1) | Please refer to “GENERAL DEVELOPMENT
                                         OF THE BUSINESS - Mineral Interests - Colossus Gold Stream” herein for clarification
                                         with respect to the pending re-structuring of this Gold Stream.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Please refer to “GENERAL DEVELOPMENT
                                         OF THE BUSINESS - Mineral Interests - Mutiny Gold Stream” herein for clarification
                                         with respect to the terms of this Gold Stream.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Please refer to “GENERAL DEVELOPMENT
                                         OF THE BUSINESS - Mineral Interests - Entrée Metal Credits Agreement” herein
                                         for further clarification with respect to the terms of this Gold Stream.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | The Company acquired all of these
                                         royalties by virtue of its takeover of Premier Royalty on October 4, 2013.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Net Profit Interest (“NPI”)
                                         is based on the profit realized after deducting costs related to production as set out
                                         in the applicable royalty agreement. NPI payments generally begin after payback of capital
                                         costs and ongoing operating costs and some also allow deductions for prior exploration
                                         and interest costs. Although the royalty holder is not responsible for providing capital,
                                         covering operating losses or environmental liabilities, increases in production costs
                                         will affect net profits and royalties payable.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following table summarizes
the ounces of gold sold and the respective revenue received by the Company from each of its producing gold interests for
the year ended December 31, 2013:



|Property               | Ounces
    Sold                                  | Sales & Royalty 
Revenue ($000’s)
|---------------------- | ------------------------------------------------ | ---------------------------------
|                       |                                                  |                                  
|Aurizona
    Mine      | 13,678                                           | 19,264                           
|Santa
    Elena        | 6,097                                            | 8,441                            
|Ming
    Mine          | 1,274                                            | 1,667                            
|Black
    Fox Mine     | 7,925                                            | 11,322                           
|Bachelor
    Lake Mine | 7,172                                            | 10,239                           
|Royalties              | N/A
                                         (1) | 8,903                            
|Total                  | 36,146                                           | 59,836                           
|                       |                                                  |                                  



NOTES:



|(1) |  | The Company does not receive gold ounces from the royalties. Please refer to “DESCRIPTION
OF BUSINESS - Principal Product” herein for clarification with respect to the royalties.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------











-14-







Further details regarding
the purchase agreements entered into by the Company in respect of its material Gold Streams and NSR’s (excepting
the portfolio of royalties acquired pursuant to the Company’s takeover of Premier Royalty) can be found under the heading
“GENERAL DEVELOPMENT OF THE BUSINESS” above.



Competitive Conditions

Sandstorm Gold competes
with other companies to identify suitable Gold Streams and enter into agreements for the purchase of gold and other precious metals.
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 Gold Streams. See “Description of the Business - Risk Factors - Competition”.



Operations

Raw Materials

The Company expects to
purchase gold and other precious metals pursuant to the purchase agreements described above under “Description of the Business
- Principal Product”.



Employees

At the end of the most
recently completed financial year, the Company and its subsidiaries had 16 employees. No management functions of the Company are
performed to any substantial degree by a person other than the directors or executive officers of the Company.



Foreign Interests

The Company currently purchases
or expects to be purchasing gold and/or other precious metals or expects to receive payments under its NSR royalty agreements
from mines in Brazil, Mexico, the United States, Western Australia, Mongolia, South Africa, Argentina, Honduras and Canada. Any
changes in legislation, regulations or shifts in political attitudes in such 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 cannot be accurately predicted. See “Description of the Business - Risk Factors - Risks Relating
to the Mining Operations - International Interests”.



Risk
Factors



The operations of the Company
are speculative due to the nature of its business which is principally the investment in Gold Streams. 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

Global Financial Conditions

Global financial conditions
have always been subject to volatility. Access to public financing has been negatively impacted by sovereign debt concerns in
Europe and emerging markets, as well as concerns over global growth rates and conditions. These factors may impact the ability
of the Company to obtain equity or debt financing in the future and, if obtained, on terms favourable to the Company. Increased
levels of volatility and market turmoil can adversely impact the Company’s operations and the value and the price of the
Common Shares could to be adversely affected.



-15-









Subject to the Same Risk
Factors as the Mining Operations



To the extent that they
relate to the production of 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.”



Market
Price of the Common Shares, 2009 Warrants, 2010 Warrants, 2012 Warrants and Listed Premier Warrants



The Common Shares, 2009
Warrants, 2010 Warrants, 2012 Warrants and the Listed Premier Warrants are all listed and posted for trading on the TSX. The Common
Shares are also listed and posted for trading on the NYSE MKT. 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, 2009 Warrants,
2010 Warrants, 2012 Warrants and the Listed Premier Warrants are also likely to be significantly affected by short-term changes
in commodity prices, the Company’s financial condition or results of operations as reflected in its quarterly and annual
financial statements, currency exchange fluctuations and the other risk factors identified herein.



No Control Over Mining Operations

The Company has agreed
to purchase a certain percentage of the gold and other precious metals produced from certain of the Mining Operations and also
expects to receive payments under its NSR royalty agreements from certain of 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.



Except in limited circumstances,
the Company will not be entitled to any material compensation if any of the Mining Operations do not meet their forecasted production
targets in any specified period or if the operations shut down or discontinue their operations on a temporary or permanent basis.
All of the Mining Operations may not commence commercial production within the time frames anticipated, if at all, and there can
be no assurance that the production from such Mining Operations will ultimately meet forecasts or targets. At any time, any of
the operators of the Mining Operations or their successors may decide to suspend or discontinue operations. The Company is subject
to the risk that the Mining Operations may shut down on a temporary or permanent basis due to issues including but not limited
to economic conditions, lack of financial capital, floods, fire, weather related events, mechanical malfunctions, community or
social related issues, social unrest, the failure to receive permits or having existing permits revoked, exploration and other
risks. These issues are common in the mining industry and can occur frequently. There is a risk that the carrying values of the
Company’s assets may not be recoverable if the mining companies operating the Mining Operations cannot raise additional
finances to continue to develop those assets. The exact effect of these factors cannot be accurately predicted, but the combination
of these factors may result in the Mining Operations becoming uneconomic resulting in their shutdown and closure. The Company
is not entitled to purchase gold if no gold is produced from the Mining Operations.



Acquisition Strategy

As part of the Company’s
business strategy, it has sought and will continue to seek to purchase Gold Streams from third party natural resource companies.
In pursuit of such opportunities, the Company may fail to select appropriate acquisition candidates or negotiate acceptable arrangements,
including arrangements to finance the 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 at all, or that any acquisitions or business arrangements completed will ultimately benefit the Company.



-16-









Operating Model Risk

The Company is not directly
involved in the ownership or operation of mines. The Gold Stream agreements that the Company enters into are subject to most of
the significant risks and rewards of a mining company, with the primary exception that, under such agreements, the Company acquires
gold at a fixed cost. As a result of the Company’s operating model, the cash flow of the Company is 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
third party arrangements. In addition, the termination of one or more of the Company’s Gold Stream agreements could have
a material adverse effect on the results of operations or financial condition of the Company.



Taxes and Accounting Rules

The Company has a subsidiary
in Barbados which entered into Gold Streams in connection with the Aurizona Mine, Santa Elena Mine and Summit Mine. Also, the
Company’s new subsidiary, Premier Royalty, has subsidiary companies in the United States and Argentina which own the rights
to certain NSR royalties in those jurisdictions. 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, Barbados, Argentina and the United States or
any of the countries in which the Mining Operations are located or to which shipments of gold or other precious metals are made,
could result in an increase in the Company’s taxes, or other governmental charges, duties or impositions. The Company’s
international transactions have not yet been reviewed by the Canada Revenue Agency and, should such transactions be reviewed,
no assurances can be given that the tax matters will be resolved favourably. The Company’s remaining Gold Streams and royalties
have been entered into directly by Canadian based subsidiaries and will, therefore, be subject to Canadian, and/or U.S. taxation,
as the case may be.



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.



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 Gold Streams less attractive to counterparties.
Such changes could adversely affect the Company’s ability to enter into new Gold Streams.



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
gold and other precious metals purchase agreements or royalty agreements; (ii) through financial institutions that hold the Company’s
cash and cash equivalents; (iii) through companies that have payables to the Company; (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, 2009 Warrants, 2010 Warrants, 2012 Warrants and the Listed Premier Warrants could be adversely
affected.



-17-









Dependence Upon Key Management
Personnel

The Company is dependent
upon the services of a small number of key management personnel who are highly skilled and experienced. The Company’s ability
to manage its activities will depend in large part on the efforts of these individuals. The Company faces intense competition
for qualified personnel, and there can be no assurance that the Company will be able to attract and retain such personnel. The
loss of the services of one or more of such key management personnel could have a material adverse effect on the Company.



Commodity Prices

The price of the Common
Shares, 2009 Warrants, 2010 Warrants, 2012 Warrants and the Listed Premier Warrants and the Company’s financial results
may be significantly adversely affected by a decline in the price of gold. The price of 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 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 gold-producing countries throughout the world.



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



The following table sets
forth the high, low and annual average London Bullion Market Association afternoon fixed price per ounce of gold in United States
dollars for the past 10 years:



|Year | Average per Ounce of Gold
        ($) | High
        (per ounce) ($) | Low
        (per ounce) ($)
|---- | ------------------------------------- | ---------------------------- | ---------------------------
|2013 | 1,411.23                              | 1,693.75                     | 1,192.00                   
|2012 | 1,668.98                              | 1,791.75                     | 1,540.00                   
|2011 | 1,571.52                              | 1,895.00                     | 1,319.00                   
|2010 | 1,224.52                              | 1,421.00                     | 1,058.00                   
|2009 | 972.98                                | 1,212.50                     | 810.00                     
|2008 | 871.96                                | 1,011.25                     | 712.50                     
|2007 | 695.39                                | 841.10                       | 608.40                     
|2006 | 603.77                                | 725.00                       | 524.75                     
|2005 | 444.45                                | 536.50                       | 411.10                     
|2004 | 409.17                                | 454.20                       | 375.00                     





Competition

The Company competes with
other companies for Gold Streams and similar transactions, some of which may possess greater financial and technical resources.
Such competition may result in the Company being unable to enter into desirable Gold Streams or similar transactions, to recruit
or retain qualified employees or to acquire the capital necessary to fund its Gold Streams. Existing or future competition in
the mining industry could materially adversely affect the Company’s prospects for entering into additional Gold Streams,
royalties and similar transactions in the future.



Dividend Policy

No dividends on the Common
Shares have been paid by the Company to date. The Company does not intend to declare or pay any cash dividends in the foreseeable
future. Payment of any future dividends will be at the discretion of the Company’s Board of Directors after taking into
account many factors including the Company’s operating results, financial condition and current and anticipated cash needs.



-18-









Equity Price Risk

The Company holds shares,
convertible debentures and warrants of other exploration and mining companies with a combined market value as at December 31,
2013 of $13 million.



The Company is exposed
to equity price risk as a result of holding long-term investments in these companies. The daily exchange traded volume of these
shares, including the shares underlying the warrants, may not be sufficient for the Company to liquidate its position in a short
period of time without potentially affecting the market value of such shares. Just as investing in the Company is inherent with
risks such as those set out in this AIF, by investing in these other companies, the Company is exposed to the risks associated
with owing equity securities and those risks inherent in the investee companies. The Company does not actively trade these investments.



Conflicts of Interest

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 voting on any matter in which such directors may have a conflict of interest
in accordance with the procedures set forth in the Business Corporations Act (British Columbia) and other applicable laws.



Future Sales or Issuances of
Securities

Sandstorm Gold may issue
additional securities to finance future activities. Sandstorm Gold cannot predict the size of future issuances of securities or
the effect, if any, that future issuances and sales of securities will have on the market price of the Common Shares, 2009 Warrants,
2010 Warrants, 2012 Warrants and the Listed Premier Warrants. Sales or issuances of substantial numbers of Common Shares, or the
perception that such sales could occur, may adversely affect prevailing market prices of the Common Shares, 2009 Warrants, 2010
Warrants, 2012 Warrants and the Listed Premier Warrants. With any additional sale or issuance of Common Shares or the exercise
of the 2009 Warrants, 2010 Warrants, 2012 Warrants or the Premier Royalty Warrants, investors will suffer dilution to their voting
power and Sandstorm Gold may experience dilution in its earnings per share.



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 is required
to assess its internal controls in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“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 registered Chartered Accountants addressing this assessment beginning
with the Company’s fiscal year ended December 31, 2013. 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 negativelyimpact the trading price of the Common Shares, 2009
Warrants, 2010 Warrants, 2012 Warrants and the Listed Premier Warrants. 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.



-19-









During the year ended December
31, 2013, the Company acquired a 100% interest in Premier Royalty and, as such, the Company’s officers and management have
limited the scope of the design of the disclosure controls and procedures and the internal controls over financial reporting to
exclude controls, policies and procedures of Premier Royalty.



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 financial 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
controls 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 compliance, the Company cannot be certain that it will be successful in complying
with Section 404 of SOX on an ongoing basis.



Risks Relating
to the Mining Operations

Exploration, Development and
Operating Risks

Mining operations generally
involve a high degree of risk. The Mining Operations are subject to all of the hazards and risks normally encountered in the exploration,
development and production of metals, including weather related events, unusual and unexpected geology formations, seismic activity,
rock bursts, cave-ins, pit-wall failures, 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. Any of these hazards and risks and other acts of God could
shut down mining operations temporarily or permanently. Mining 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, development,
mining and processing of mineral deposits involves significant risks which even a combination of careful evaluation, experience
and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, 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
profitable commercial mining operations. 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, but the combination of these factors may result in one or more of the Mining Operations not receiving
an adequate return on invested capital. Accordingly there can be no assurance the Mining Operations which are not currently in
production will be brought into a state of commercial production.



-20-









Commodity Prices for Other Metals
Produced from the Mining Operations

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 upon the price of other metals produced from the mines which generate
cash flow to the owners, cash flow from 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 and projects economically viable.



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.



Environmental Risks and Hazards

All phases of the Mining
Operations are subject to governmental regulation including environmental regulation in the various jurisdictions in which they
operate. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, 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 is no assurance that future changes in environmental regulation,
if any, will not adversely affect the Mining Operations. Also, environmental hazards may exist on the properties which are unknown
to the owners or operators of the Mining Operations at present which were caused by previous or existing owners or operators of
the properties and which could impair the commercial success, levels of production and continued feasibility and project development
and mining operations on these properties. One or more of the mining companies may become liable for such environmental hazards
caused by previous owners or operators of the properties.



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 or in the
exploration or development of mineral properties may be required to compensate those suffering loss or damage by reason of the
mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.



Government Regulation, Permits
and Licenses

The exploration and development
activities related to 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 occupational 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.



-21-









Government approvals, licences
and permits are currently, and will in the future be, required in connection with the Mining Operations. To the extent such approvals
are required and not obtained, the Mining Operations may be curtailed or prohibited from proceeding with planned operations, which
could have an impact on the business and financial condition of the Company. 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.



Amendments to current laws,
regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could
have a material adverse impact on 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.



Permitting

The Mining Operations are
subject to receiving and maintaining permits from appropriate governmental authorities. Although the Company believes that, other
than as discussed elsewhere herein, the owners and operators of the Mining Operations currently have all required permits for
their respective operations as currently conducted, there is 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 the 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.



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.



See “Permitting,
Construction, Development and Expansion Risk” for additional permitting risks associated with developmental projects.



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.



-22-









Uncertainty of Mineral Resource
and Mineral Reserve Estimates

The life-of-mine estimates
for the Mining Operations may not be correct. The figures for mineral resources and mineral reserves presented in this AIF and
derived from the technical reports filed in respect of the Aurizona Mine, the Santa Elena Mine, the Black Fox Mine and the Bachelor
Lake Mine are estimates only and 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.



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.



Replacement of Depleted Mineral
Reserves

Because mines have limited
lives based primarily on proven and probable mineral reserves, the mining companies which own and/or operate the Mining Operations
must continually replace and expand their mineral reserves depleted by their mine’s production to maintain production levels
over the long-term. Mineral reserves can be replaced by expanding known ore bodies, locating new deposits or making acquisitions.
Exploration is highly speculative in nature. Once a site with mineralization is discovered, it may take several years from the
initial phases of drilling until production is possible, during which time the economic feasibility of production may change.
Substantial expenditures are required to establish proven and probable mineral reserves and to construct mining and processing
facilities. As a result, there is no assurance that current or future exploration programs will be successful. There is a risk
that depletion of mineral reserves will not be offset by discoveries or acquisitions.



Competition

The mining companies which
own and/or operate the Mining Operations each face competition from a number of large established companies with substantial capabilities,
and greater financial and technical resources. These mining companies compete with these other mining companies for the acquisition
of prospective, explored, developing and developed mining and mineral properties, as well as for the recruitment and retention
of qualified directors, professional management, employees and contractors.



Dependence on Good Relations
with Employees

Production at the Mining
Operations depends on the efforts of its employees. There is intense competition for geologists and persons with mining expertise.
The ability of the mining companies to hire and retain geologists and persons with mining expertise is key to the Mining Operations.
Further, relations with employees may be affected by changes in the scheme of labour relations that may be introduced by the relevant
governmental authorities in the jurisdictions in which the Mining Operations are conducted. Changes in such legislation or otherwise
in the mining companies’ relationships with their employees may result in strikes, lockouts or other work stoppages, any
of which could have a material adverse effect on the Mining Operations, results of operations and financial condition.



-23-









Uninsured Risks

The mining industry is
subject to significant risks that could result in damage to, or destruction of, mineral properties or producing facilities, personal
injury or death, environmental damage, delays in mining, monetary losses and possible legal liability. Where each of the mining
companies considers it practical to do so, it maintains insurance in amounts that it believes to be reasonable, including insurance
for workers’ compensation, theft, general liability, all risk property, automobile, directors and officers liability and
fiduciary liability and others. Such insurance, however, contains exclusions and limitations on coverage. Accordingly, the mining
companies’ insurance policies may not provide coverage for all losses related to their business (and specifically do not
cover environmental liabilities and losses). The occurrence of losses, liabilities or damage not covered by such insurance policies
could have a material adverse effect on the mining companies’ profitability, results of operations and financial condition.



Land Title

Although title to the Mining
Operations has been reviewed by or on behalf of the Company, no assurances can be given that there are no title defects affecting
the properties and mineral claims owned or used by the Mining Operations. The mining companies may not have conducted surveys
of the claims in which they hold direct or indirect interests; therefore, the precise area and location of such claims may be
in doubt. It is possible that the Mining Operations 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 mining companies
may be unable to operate the Mining Operations as permitted or to enforce their rights with respect to the Mining Operations which
may ultimately impair the ability of these owners and operators to fulfill their obligations under their agreements with the Company.



Off-take Agreements

Rambler is required by
contract to sell all concentrate produced from the Ming Mine to a third party processor whose facilities are used to process the
concentrate mined from the property. Access to the facilities is regulated by an off-take agreement agreed to between Rambler
and the third party processor. The off-take agreement establishes the price paid for the metals. The third party processor and
the Company may need to enter into an agreement or agreements that are similar (as to payment terms) to the payment terms contained
in the off-take agreement between Rambler and the third party processor. Such a form of agreement will streamline the payment
process as between the third party processor and Rambler, and the third party processor and the Company. If Rambler (on behalf
of the Company) and the third party processor are unable to negotiate such an agreement, Rambler and the Company will be obliged
to accept payments “in kind” from the third party processor under the existing off-take agreement.



International Interests

The operations with respect
to the majority of the Company’s gold and other precious metals interests are conducted in the United States, Brazil, Mexico,
Australia, Mongolia, Argentina and South Africa and as such the operations are all exposed to various levels of political, economic
and other risks and uncertainties. These risks and uncertainties vary from country to country and 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. Several of the countries have experienced political,
social and economic unrest in the past and protestors have from time to time targeted foreign mining companies.



-24-









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 or the imposition of additional local or foreign parties as joint venture partners with carried or other
interests. 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, cancellation or dispute of licenses or entitlements which could
result in substantial costs, losses and liabilities in the future.



The occurrence of these
various factors and uncertainties related to the economic and political risks for operations in foreign jurisdictions cannot be
accurately predicted and could have an adverse effect on the Mining Operations resulting in substantial costs, losses and liabilities
in the future.



In particular, any changes
or unfavourable assessments with respect to (i) the validity, ownership or existence of the Entrée concessions; as well
as (ii) the validity or enforceability of Entrée’s joint venture agreement with Oyu Tolgoi LLC may adversely affect
the Company’s profitability or profits realized under the Entrée Gold Stream. The Company’s interest in the
Serra Pelada Mine may be adversely impacted if the Cooperative de Mineração dos Garimpeiros de Serra Pelada, which
holds a 25% interest in the Serra Pelada Mine, takes any unfavourable actions. In addition, Colossus Brazil has payables in excess
of $30 million and accordingly, there is a risk that they may be unable to repay their debts, resulting in their insolvency.



Permitting, Construction, Development
and Expansion Risk

Some of the Mining Operations
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 owners or 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.



Indigenous Peoples

Various international and
national laws, codes, resolutions, conventions, guidelines, and other materials relate to the rights of indigenous peoples. The
Company holds royalty or streaming interests on operations located in some areas presently or previously inhabited or used by
indigenous peoples. Many of these materials impose obligations on government to respect the rights of indigenous people. Some
mandate that government consult with indigenous people regarding government actions which may affect indigenous people, including
actions to approve or grant mining rights or permits. The obligations of government and private parties under the various international
and national materials pertaining to indigenous people continue to evolve and be defined. The mining companies’ current
or future operations are subject to a risk that one or more groups of indigenous people may oppose continued operation, further
development, or new development on those projects or operations on which the Company holds a royalty or streaming interest. Such
opposition may be directed through legal or administrative proceedings or protests, roadblocks or other forms of public expression
against the Company or the owner/operator’s activities. Opposition by indigenous people to such activities may require modification
of or preclude operation or development of projects or may require the entering into of agreements with indigenous people. Claims
and protests of indigenous people may disrupt or delay activities of the owners/operators of the Company’s royalty/stream
assets.



-25-











TECHNICAL
INFORMATION



CIM Standards Definitions

The estimated Mineral Reserves
and Mineral Resources set forth below for the Aurizona Mine, Santa Elena Mine, Black Fox Mine and the Bachelor Lake Mine have
been estimated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) - Definitions
adopted by CIM Council on November 27, 2010 (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.



-26-









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



This section and elsewhere
in this AIF use 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 (the “SEC”) does not recognize them. “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.





-27-







Summary of Mineral Reserves
and Mineral Resources



The following tables
set forth the estimated Mineral Reserves and Mineral Resources (gold only) for the projects or mines relating to which the Company
has MATERIAL purchase agreements, adjusted where applicable to reflect the Company’s percentage entitlement to gold
produced from such projects or mines, as of December 31, 2013, unless otherwise noted. The tables are based on information available
to the Company as of the date of this AIF, and therefore will not reflect updates, if any, after such date:



attributable
Proven and Probable MINERAL Reserves

(As
of DECEMBER 31, 2013, unlessotherwise noted)

|Property                                               | Proven  | Probable              | Proven
    & Probable
|------------------------------------------------------ | ------- | --------------------- | ---------------------
|                                                       | Tonnage | Grade                 | Contained            
|                                                       | kt      | (grams
    per tonne) | (ounces)             
|                                                       |         |                       |                      
|                                                       |         |                       |                      
|Aurizona
    Mine  (1 - 12)                            | 3,368   | 1.26                  | 137,256              
|                                                       |         |                       |                      
|Bachelor
    Lake Mine  (29 - 34)                      | 39      | 8.33                  | 10,349               
|Black
    Fox Mine - Stockpile & Open Pit  (35 - 44)   | 42      | 1.60                  | 2,214                
|Black
    Fox Mine - Underground (35 - 44)             | -       | -                     | -                    
|Santa
    Elena Mine - Underground (45, 46, 49, 50)    | -       | -                     | -                    
|Santa
    Elena Mine - Open Pit (45,47,48)             | -       | -                     | -                    
|Santa
    Elena Mine - Leach Pad Reserves (45, 48, 50) | -       | -                     | -                    
|TOTAL
    CONTAINED GOLD                               |         |                       | 149,819              



-28-





attributable
Measured AND Indicated MINERAL Resources

(As
of DECEMBER 31, 2013, unlessotherwise noted)

|Property                                                | Measured | Indicated             | Measured
    & Indicated
|------------------------------------------------------- | -------- | --------------------- | ------------------------
|                                                        | Tonnage  | Grade                 | Contained               
|                                                        | kt       | (grams
    per tonne) | (ounces)                
|                                                        |          |                       |                         
|Aurizona
    Mine  (13 - 28)                            | 3,317    | 1.36                  | 144,500                 
|Bachelor
    Lake Mine  (29 - 34)                       | 39       | 8.8                   | 10,901                  
|Black
    Fox Mine - Stockpile & Open Pit  (35 - 44)    | -        | -                     | -                       
|Black
    Fox Mine - Underground  (35 - 44)             | -        | -                     | -                       
|Santa
    Elena Mine - Underground (45, 46, 49, 50, 51) | -        | -                     | -                       
|TOTAL
    CONTAINED GOLD                                |          |                       | 155,401                 



ATTRIBUTABLE
INFERRED MINERAL RESOURCES

(AS
OF DECEMBER 31, 2013, UNLESS OTHERWISE NOTED)

|Property                                                  | Inferred
|--------------------------------------------------------- | --------
|                                                          | Tonnage 
|                                                          | kt      
|Aurizona
    Mine  (13 - 28)                              | 3,152   
|                                                          |         
|Bachelor
    Lake Mine (29 - 34)                          | 85      
|Santa
    Elena Mine - Underground   (45, 46, 49, 50, 51) | 298     
|TOTAL
    CONTAINED GOLD                                  |         
|                                                          |         



All Mineral Reserves and Mineral Resources set
forth above have been estimated in accordance with the CIM Standards and National Instrument 43-101 Standards of Disclosure
for Mineral Projects (“NI 43-101”).



-29-









Aurizona Mine

| | (1) | Luna
                                         Gold Mineral Resource update effective as at January 29, 2013
| | --- | -----------------------------------------------------------------------------------------------------------

| | (2) | April
                                         2013 Reserve is based on a gold price of US$1,350 per ounce.
| | --- | -----------------------------------------------------------------------------------------------------------

| | (3) | The
                                         model was depleted to the end of month topography December 2012.
| | --- | -------------------------------------------------------------------------------------------------------------

| | (4) | Includes
                                         98% mining recovery.
| | --- | ----------------------------------------------------------------------

| | (5) | Includes
                                         10% mine dilution.
| | --- | --------------------------------------------------------------------

| | (6) | Includes
                                         foreign exchange conversion rate of 1.95 Brazilian Real to 1 US Dollar.
| | --- | -------------------------------------------------------------------------------------------------------------------------

| | (7) | Break
                                         even cut off grades of 0.44 grams per tonne, 0.49 grams per tonne and 0.51 grams per
                                         tonne were used for saprolite and laterite, transition and fresh rock ore types, respectively.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (8) | Metallurgical
                                         recoveries are included in the cut-off grade calculations and calculated to be 92% for
                                         saprolite and laterite, 91% for transition and 91% for fresh rock, respectively.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (9) | Gold
                                         ounces exclude metallurgical recoveries.
| | --- | --------------------------------------------------------------------------------------

| | (10) | April
                                         2013 Reserve is presented in accordance with the classification standards established
                                         by the Canadian Institute of Mining, Metallurgy and Petroleum.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (11) | The
                                         estimates of Mineral Reserves may be materially affected by geotechnical, environmental,
                                         permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (12) | The
                                         Qualified Person (“QP”), as defined by NI 43-101, for the technical
                                         information regarding the Aurizona Mine contained in this document, including the review
                                         and verification of the Mineral Reserve estimates as detailed above, is G. Peter Mah,
                                         P.Eng Ontario, who is the Chief Operating Officer of Luna.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (13) | Open
                                         Pit resources (Whittle pit® optimization) are constrained by a 0.30 grams per tonne
                                         gold grade domain and stated at the following cut-off grades for Piaba, Boa Esperança,
                                         Ferradura and Conceiçao: Laterite & Saprolite - 0.322 grams per tonne gold
                                         , Transition - 0.364 grams per tonne gold and Fresh Rock - 0.400 grams per tonne gold
                                         based on a gold price of $1,500 per ounce, pit slopes of 45 for Laterite/Saprolite/Transition
                                         and 55 for Fresh Rock, mining cost of $1.80/t material moved, process and G&A cost
                                         of $14.00/t (Laterite/Saprolite), US$15.50/t (Transition) and $17.00/t (Fresh), recoveries
                                         of 92% (Laterite/Saprolite) and 90% (Transition/Fresh Rock) and selling cost (transportation,
                                         insurance, royalty) of $30.00/ounce.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (14) | Open
                                         Pit resources (Whittle pit® optimization) are constrained by a 0.30 grams per tonne
                                         gold grade domain and stated at the following cut-off grades for Tatjuba: Laterite &
                                         Saprolite - 0.368 grams per tonne gold, Transition - 0.411 grams per tonne gold and Fresh
                                         Rock - 0.447 grams per tonne gold based on the same parameters as outlined in above plus
                                         an additional cost of $2.00/t for transportation to the Aurizona mill.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (15) | Fresh
                                         rock resources outside the pit shell are stated at the following cut-off grades for Piaba:
                                         1.50 grams per tonne gold based on a gold price of $1,500 per ounce, mining cost of $45.00/t
                                         moved, process and G&A cost of $19.00/t, recovery of 90% selling cost of $30.00/ounce
                                         and an additional 1% royalty increase.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (16) | Aurizona
                                         topography is current as of October 31, 2012 for the Mineral Resources.
| | ---- | -------------------------------------------------------------------------------------------------------------------------



| | (17) | Maptek's
                                         Vulcan v8.1.4 was used in the resources estimation including compositing and grade estimation.
                                         Internal waste blocks are included inside the 0.30 grams per tonne gold grade shell.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (18) | Internal
                                         waste blocks were designated through indicator kriging. Gold was estimated separately
                                         in the internal waste blocks and the mineralized blocks by the ID3 algorithm.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (19) | Block
                                         dimensions are ten metres x five metres in the xy plane x three metres on the z axis.
                                         Sub-blocking to one metre x one metre in the xy plane and three metres in the z axis
                                         was performed at the 0.30 grams per tonne gold grade domain margins and at topography.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (20) | The
                                         Aurizona resource estimates are supported by the following number of individual specific
                                         gravity measurements: Piaba - 12,657; Boa Esperança - 1,273; Ferradura - 1,000;
                                         Conceiçao - 473. Tatajuba specific gravity was based on the Piaba data in 2008
                                         when the Tatajuba resource was estimated.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (21) | The
                                         Piaba database contains 77,574 metres consisting of 351 diamond drill holes, 142 reverse
                                         circulation holes and 448 auger drill holes.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (22) | The
                                         Boa Esperança database contains 9,015 metres consisting of 15 diamond drill holes,
                                         142 reverse circulation holes, 175 auger drill holes and 8 trenches.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (23) | The
                                         Tatajuba database consists of 4,740 metres in 45 diamond drill holes (2008).
| | ---- | -------------------------------------------------------------------------------------------------------------------------

-30-









| | (24) | The
                                         following capping values were used prior to compositing: Piaba (Laterite - 11 grams per
                                         tonne gold , Saprolite - 18 grams per tonne gold , Transition/Fresh Rock - 25 grams per
                                         tonne gold ), Tatajuba - ten grams per tonne gold , Boa Esperança - six grams
                                         per tonne gold , Ferradura - ten grams per tonne gold and Conceiçao - three grams
                                         per tonne gold.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (25) | Tonnes
                                         are rounded to the nearest 10,000. Ounces are rounded to the nearest 1,000 and small
                                         tonnage and grade differences may be found due to rounding.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (26) | Mineral
                                         Resources that are not Mineral Reserves do not have a demonstrated economic viability.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------



| | (27) | There
                                         may be political, environmental, legal and other risks that may materially affect the
                                         mineral resource estimate.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (28) | The
                                         QP for the technical information regarding the Aurizona Mine contained in this document,
                                         including the review and verification of the Mineral Resources estimates as detailed
                                         above, is Leah Mach, CPG, M.Sc., of the Denver office of SRK Consulting (U.S.) Inc.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Bachelor
Lake Mine



| | (29) | Bachelor
                                         Lake Mineral Reserves are inclusive of Mineral Resources.
| | ---- | -----------------------------------------------------------------------------------------------------------



| | (30) | The
                                         QP for the technical information regarding the Bachelor Lake Mine contained in this document,
                                         including the review and verification of the Mineral Reserve and Mineral Resources estimates
                                         as detailed above, is Pascal Hamelin, Vice President of Metanor. The Mineral Reserves
                                         are classified as proven and probable, and are based on the CIM Standards.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (31) | The
                                         underground mineral reserves have been calculated using a cut-off grade of 3.43 grams
                                         per ton, recovery of 90%, and dilution of 10% in the stoping areas.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (32) | Proven
                                         and Probable Mineral Reserves are a subset of Measured and Indicated Mineral Resources.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------



| | (33) | Mineral
                                         Resources are not known with the same degree of certainty as Mineral Reserves and do
                                         not have demonstrated economic viability.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (34) | Bachelor
                                         Lake Mineral Reserves and Mineral Resources are reported as of December 2010 and based
                                         on a gold price forecast per ounce using the Bloomberg consensus average gold price of:
                                         2012: $1,381; 2013: $1,416; and 2014 and beyond: $1,177.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Black Fox
Mine



| | (35) | Black
                                         Fox Mineral Reserves are fully included in the Mineral Resources.
| | ---- | ----------------------------------------------------------------------------------------------------------------



| | (36) | Black
                                         Fox Reserves and Resources are reported as of October 31, 2010.
| | ---- | --------------------------------------------------------------------------------------------------------------



| | (37) | The
                                         QP for the technical information regarding the Black Fox Mine contained in this document,
                                         including the review and verification of the Mineral Reserve and Mineral Resources estimates
                                         as detailed above, is Howard Bird, former Senior Vice President, Exploration of Brigus.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (38) | Cut-off
                                         grade for the open-pit reserves and resources is 0.88 grams per tonne gold.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------



| | (39) | Cut-off
                                         grade for the underground reserves and resources is 2.54 grams per tonne gold.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------



| | (40) | Metal
                                         prices used for initial cut-off calculations are $1,150 per ounce for 88% of the gold
                                         sold and $500 per ounce of gold sold through the Black Fox Gold Stream.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (41) | The
                                         estimated underground reserves include 10% unplanned dilution at 0 grams per tonne from
                                         the backfill and 15% planned dilution at one gram per tonne from the walls for a total
                                         dilution of 25%. The estimated open pit reserves include 30% dilution at 0 grams per
                                         tonne and a 95% mining recovery factor for both. The higher average gold grades for the
                                         open pit and underground in the Indicated Resources compared to the Probable Reserves
                                         are the result of no dilution being applied to Indicated Resources.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (42) | The
                                         Mineral Resources were estimated using the ordinary kriging method. Mineral Resources
                                         which are not Mineral Reserves do not have demonstrated economic viability.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (43) | The
                                         Mineral Reserves were estimated from the life of mine plan, which defined sustaining
                                         capital requirements and mine operating costs, to demonstrate that these reserves can
                                         be economically extracted and processed. Mining losses and dilution were determined based
                                         on sub-surface geotechnical conditions, the mining method and equipment capabilities
                                         for each area of the mine.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (44) | Contained
                                         metal in estimated reserves remains subject to metallurgical recovery losses.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------

-31-









Santa
Elena Mine

| | (45) | The
                                         QP for the technical information regarding the Santa Elena Mine contained in this document,
                                         including the review and verification of the Mineral Reserve and Mineral Resources estimates
                                         as detailed above, is Nathan Eric Fier, C.P.G., P.Eng, Chief Operating Officer of SilverCrest.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (46) | Underground
                                         Probable Reserve is based on a cutoff grade of 1.47 grams per tonne gold equivalent with
                                         an average 10% dilution and 90% mine recovery. Average true thickness of the designed
                                         stopes is 13.4 metres.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (47) | Open
                                         Pit Reserve is based on a cutoff grade of 0.20 grams per tonne gold equivalent in a constrained
                                         pit shell with applied capping of eight grams per tonne gold and 300 grams per tonne
                                         silver.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (48) | Leach
                                         Pad Reserve based on production and drill hole data for volumetrics and grade model using
                                         a cutoff grade of 0.5 grams per tonne gold equivalent. No capping was applied.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (49) | Underground
                                         Resources are exclusive of Probable Reserves and based on one gram per tonne gold equivalent
                                         grade shell, a cutoff grade of 1.4 grams per tonne gold equivalent, and applied capping
                                         of 12 grams per tonne gold and 600 grams per tonne silver.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (50) | Underground
                                         and Leach Pad Reserves and Resources are based on three year historic metal price trends
                                         of $28 per ounce silver, $1,450 per ounce gold and metallurgical recoveries of 92% gold
                                         and 67.5% silver with a metal ratio of silver:gold at 70:1 used for grade cutoff determination.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (51) | Mineral
                                         Resources which are not Mineral Reserves do not have demonstrated economic viability.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------



Each of the below described
mines or projects are considered to be material mineral properties to the Company.



Aurizona Mine,
Brazil

A technical report was
prepared in accordance with NI 43-101 entitled “NI 43-101 Technical Report, Aurizona Resource and Reserve Update, Brazil”
dated April 29, 2013 but having an effective date of January 29, 2013 (the “Aurizona Report”).



The following description
of the Aurizona Mine has been summarized, in part, from the Aurizona Report and readers should consult the Aurizona Report to
obtain further particulars regarding the Aurizona Mine. The Aurizona Report is available for review under Luna’s profile
on the SEDAR website located at www.sedar.com. Information that updates the information in the Aurizona Report has been provided
by Luna.



The Aurizona Mine is owned
by Mineração Aurizona S.A. (“Mineração Aurizona”), which is in turn wholly-owned
by Aurizona Goldfields Corporation (“Aurizona Goldfields”), a wholly-owned subsidiary of Luna. On December
21, 2006, Luna entered into a share purchase agreement with Eldorado Gold (“Eldorado”), Brascan Recursos Naturais
S.A. and Brascan Natural Resources S.A. (collectively, “Brascan”) pursuant to which it acquired 100% of the
issued shares of Aurizona Goldfields.



Project Description and Location

The Aurizona Mine is located
in the municipality of Godofredo Viana (population 10,500) in the state of Maranhão. The area is on the northern coast
of Brazil, 220 kilometres northwest of the state capital city of São Luís.



The mineral licenses for
the Aurizona Mine are 100% held by Luna through Mineração Aurizona. At the time of the Aurizona Report, the property
included a mining license (Portaria de Lavra) totalling 9,981 hectares and three exploration licenses totalling approximately
5,427 hectares. The mining license is subject to a government royalty of 1%, which is applied to gross gold sales less costs incurred
in selling, transportation and insurance. The exploration licenses are subject to annual payments to the Brazilian government
and completion of a work report and are subject to an annual exploration tax according to the claim size and time held. There
are no other royalties on gold production from the property.



-32-









The Aurizona Mine contains
the Piaba, Tatajuba, Boa Esperança, Ferradura and Conceição gold deposits and over ten near mine exploration
targets which are being actively explored by Mineração Aurizona.



The Piaba resource, reserve
and associated mine facilities described in the Aurizona Report are completely contained within Brazilian Mines Department (“DNPM”)
Mining License 800.256/78. The Tatajuba resource described in the Aurizona Report is completely contained within exploration license
806.042/03. The other near mine exploration targets are located within DNPM Mining Permit 800.256/78 and DNPM Exploration Permits
860.042/03, 806.195/07 and 806.111/96.



The Aurizona coastal region
is Federal Government land administered by the Serviço do Patrimônio da União, an institution within the Ministry
of Economy. Nevertheless the region has been occupied for many years by squatters and garimpeiros.



In September 2007, Mineração
Aurizona completed a detailed survey of the title situation of land occupiers and garimpeiros, which included a register of the
recognized occupiers, a ground survey of the area occupied, and an inventory of any improvements or assets on the lands. In October
2007, Mineração Aurizona started a buyout program of the plots considered necessary for the project that were not
already owned. By December 31, 2012, 1,400 hectares of the surface rights required for the project had been acquired. As the plots
are acquired, the Mineração Aurizona property fence is adjusted and sign-posted as required by law.



Aurizona currently consists
of a developed mine camp, open pit operation, process plant and associated infrastructure. Mineração Aurizona currently
employs over 900 employees and contractors from the local communities (80%) and from around Brazil.



Mineração
Aurizona has almost completed infrastructure development and the development of various management plans. The social and environmental
plans have been developed.



The Aurizona region has
a long tradition as a gold producer, almost solely from garimpeiros. An inspection conducted in 1989 by the Ministry of Mines
and Energy and the State Secretariat for the Environment for Maranhão verified the uncontrolled exploitation of the area
by prospectors and concluded the area was contaminated. During the Environmental Impact Study/Environmental Impact Assessment
process, levels of mercury were measured. In August 2009, several soil, sediments, and water mercury assays were performed on
areas potentially impacted by mining activities by garimpeiros in the Aurizona region. Mercury was detected in soil and sediment
samples; however, the values were lower than reference values required for contaminated areas intervention, the record of which
is chronicled in environmental resolution Conama Number 420/2009.



Accessibility, Climate, Local
Resources, Infrastructure and Physiography

The Aurizona Mine is on
the Atlantic coast of Brazil within three kilometres of an ocean inlet. All year road access is available from the state capital
cities of Belém, Pará (400 kilometres), and São Luís, Maranhão (320 kilometres), the latter
requiring a ferry transfer from São Luís island to the mainland or longer bypass road on land. The main federal
highway connecting both capitals, BR316, has been resurfaced in both states and is in good condition. State highway MA206 connects
BR316 with the town of Godofredo Viana, a distance of 110 kilometres, from which the property is accessed by 16 kilometres of
a regularly maintained 8 metre wide laterite road. Mineração Aurizona, in partnership with local authorities, has
upgraded the landing strip at Godofredo Viana. Travel time between Aurizona and São Luis or Belém is approximately
one hour by light aircraft.



-33-









The coastline is characterized
by the occurrence of mangrove swamps and has an elevation of two metres to three metres above mean sea level in and on the edges
of saline waterways. The vegetation consists of grasses in the low-lying areas with denser tropical vegetation consisting of larger
shrubs, vines, and hardwood tropical trees on the low rounded hills. The elevation in the project area varies from 0 to 90 metres
above mean sea level. The isthmus that joins the Aurizona Peninsula to the mainland consists of low-lying flats that are subject
to mild flooding at high neap tides. This does not affect project access.



The climate is tropical,
often humid, with annual rainfalls of up to 3,000 millimetres. The rainy season occurs from mid-December to mid-July, with the
heaviest rains from January through April. The area is close to the equator and has relatively steady temperatures, ranging from
an average low of 24 degrees Celsius to an average high of 31 degrees Celsius.



The Aurizona Mine location
benefits from a local population of inexpensive labour and abundant water. The principal facilities in support of the process
plant are a gold room, assay laboratory and four 2.5 kilovolt diesel generators, fuelling station, compressors, electrical building
and substation, warehouse, laydown, helicopter pad and office space. There is a plant maintenance workshop that currently exists
as well as a two bay heavy equipment workshop. There is currently a camp located at Aurizona with an infirmary, offices, lodging
facilities and kitchen/dining area for serving meals mainly to the administration staff, including short term contractors. All
essential mine facilities except expanded camp accommodations, site airstrip and maintenance shop have been constructed. External
laydown areas and a horticultural nursery are located adjacent to the mine camp.



Tailings infrastructures
have been raised to the 27 metre level prior to the rainy season of 2013. The current elevation allows water collection of over
three million cubic metres of water while augmenting storage capacity to over 9.2 million tonnes of tailings. Uplift to 31 metres
elevation is planned to resume during the dry season in 2013 and studies to conduct a further uplift to a level of 45 metres is
underway. There are two other potential locations for extra tailings dam capacity (which are located within the mining lease area)
and preliminary studies for these areas, together with the total capacity of the current dam provides a potential total capacity
of 67 million tonnes.



Grid power is controlled
and supplied by Companhía Energética do Maranhão (“CEMAR”). As of July 2012, CEMAR was
able to guarantee the supply of 4.6 megawatts of power which will be enhanced to 7.8 megawatts for the Phase I Expansion. In addition
to grid power, Mineração Aurizona relies on four 2.5 kilovolt generators that act as a back-up. CEMAR will have
sufficient capacity for continual operations in 2014 and beyond.



Potable water in the camp
area is drawn from an existing cased well which has a flow rate of four cubic metres per hour. Potable water also comes from the
municipal water treatment plant.



Process water comes from
the tailings dam, old pit workings and recirculation of solution recovered during the thickening process. The life of mine demand
is estimated at 382 cubic metres per hour. The tailings from the carbon-in-leach process report to a thickener, which concentrates
the solids and recovers a large part of the water as thickener overflow. An estimated 190 cubic metres per hour of thickener supernatant,
with a residual cyanide concentration of 80 milligrams per litre, is recycled to process, and the tailings pulp sent to the neutralization
process before final discharge to the tailings dam. The make-up water supply for the grinding process of 176 cubic metres per
hour comes from the supernatant of the tailings dam.



The industrial requirement
will include showers, toilets, carbon washing and general cleaning purposes and firefighting. Industrial water comes from a small
dam on the back of Pirocaua hill and potentially from clean water pumped from the pit. It will have a separate line, pump and
header tank with a capacity of 400 cubic metres.



-34-









History

The Aurizona region has
a long history of gold production dating back to the Jesuits in the 17th Century. There are anecdotal reports that companies were
active in the area in the 1880’s, but that they left due to problems with the indigenous Urubus people. In 1912, there was
considerable activity around the village of Aurizona and again in 1931 when the government declared a “free mining area
except for the tax on gold production payable to the State”. Garimpeiros have been active in the region, on a discontinuous
basis since that time.



In 1978, Brascan, through
subsidiary companies, started exploration programs in the alluvium that lasted through 1985. In 1988, a subsidiary of Brascan,
Mineração Aurizona Ltd., received a license to mine within DNPM area 800.256/78. In 1991, an application for a five-year
suspension of mining operations was applied for with the purpose of carrying out an evaluation of the primary gold resources.



In 1991, a joint venture
between Cesbra S/A, a Brascan Brazil subsidiary, and Unamgen Mineração e Metalurgia S.A. (“Unamgen”),
an exploration subsidiary of Gencor Ltd. (“Gencor”), was formed. Unamgen assumed the position of operator of
the joint venture company, Mineração Aurizona. Exploration from 1991 to 1993 consisted of an airborne magnetic and
radiometric heliborne survey, photogrammetry survey, soil geochemical surveys, geologic mapping and sampling of garimpeiro pits
and follow-up ground geophysical surveys consisting of induced polarization, electromagnetic, magnetic, and gamma spectrometry.
The Piaba deposit was drill tested with auger, reverse circulation (“RC”), and diamond drilling. Auger drilling
consisted of shallow drilling to an average depth of eight metres to verify gold anomalies. Unamgen drilled 142 diamond drillholes
and 67 reverse circulation holes, initially on 50 metre spaced sections, later infilled to 25 metres.



In 1994, following preliminary
process tests at Mintek in South Africa, more comprehensive test works were carried out in Brazil at the Metais de Goías
S/A metallurgical process facility in Goiania, and at the laboratory of Paulo Abib Engenharia S.A., a mining engineering company
subsequently acquired by Kilborn Engineering, now SNC-Lavalin Inc., located in São Paulo. The emphasis at that time was
on gravity concentration techniques. An economic viability study and environmental impact assessment were completed. This work
terminated in a positive economic evaluation of working the Piaba deposit using mining equipment from Cesbra’s tin operations
in Rondonia, a gravity-only process plant and diesel powered electricity generation. At the same time, a technical study report
and an environmental impact assessment to mine the weathered part of the Piaba deposit were submitted to government agencies and
public audiences were held. Unamgen terminated its joint venture with Cesbra in 1995.



In 1996, Gencor agreed
to sell its gold assets in Brazil to Eldorado and in the process introduced Eldorado to Cesbra. This resulted in a new project
joint venture with Unamgen, as a subsidiary of Eldorado, as the operator. In 1997, an exploration program commenced that included
61 diamond drillholes and 26 rotary circulation drillholes of the extensions of the Piaba deposit along strike to the east and
west, scout drilling at some of the nearby targets and evaluation of targets. Regional exploration was conducted involving reconnaissance-scale
mapping, sampling of garimpeiro pits and evaluation of specific regional targets via soil sampling. Airborne magnetic and radiometric
surveys were completed.



In 1999, Brascan commissioned
a gravity pilot plant to test the Saprolite and tailings at Piaba. The pilot plant testwork was completed in February 2000. The
property was on care and maintenance from 2000 until March 2007, when Luna commenced a new exploration program at Aurizona focused
on the Piaba and Tatajuba deposits and more recently included systematic exploration of the Aurizona area via soil sampling, geologic
mapping, geophysical surveying, shallow auger drilling, trenching, diamond and reverse circulation drilling.



Historic production from
the Aurizona properties has been by garimpeiros mining in small pits and cannot be quantified. Luna’s production for the
period 2010 - 2012 is detailed herein under “Mining Operations”.



-35-









Geological Setting

Regional Geology



The Aurizona Mine is located
within the São Luís Craton (“SLC”), defined as the Precambrian continental crust at the border
between the states of Pará and Maranhão in northern Brazil. The SLC extends approximately 400 kilometres east-west
and 120 kilometres north-south and consists of a metavolcano-sedimentary succession (“Aurizona Group”), subordinate
volcanic rocks and several granitoid suites (“Tromaí Intrusive Suite”) which are covered by Phanerozoic
sedimentary basin deposits and recent coastal sediments. Collectively the Aurizona Group and Tromaí Intrusive Suite are
referred to as the Granite Greenstone Terrain of Northwest Maranhão. The SLC and the Palaeoproterozoic basement rocks of
the Neoproterozoic Gurupi Belt in northern Brazil are part of an orogen having an early accretionary phase at 2,240 to 2,150 million
years and a late collisional phase. Despite the extent of the SLC, outcrop is limited to discontinuous erosive and tectonic windows
within the sedimentary cover. The western limit of the SLC is defined by the Tracuatuea Intrusive Suite and the eastern limit
is placed approximately 30 kilometres east of the state capital of Maranhão, São Luís. The southern boundary
is defined by the regionally important north by northwest-south by southeast trending sinistral strike-slip Tentugal Shear Zone,
which contains the gold deposits of the Gurupi Gold Belt. The northern contact is not well defined due to the Phanerozoic coastal
basins.



The rock associations inferred
geologic settings and the crustal evolution displayed by the SLC are similar to that described in Paleoproterozoic domains of
major geotectonic units of the South American Platform including the São Francisco Craton, the southeastern Guyana Shield
and the West African Craton. Several studies suggest that the SLC is a fragment of the West African Craton that was left behind
on the South American Platform following the break-up of the Pangea super continent.



Local Geology



The Aurizona Mine area
is underlain by east/northeast trending greenstone volcano sediments and acid intrusives of the Aurizona Group and Tromai Intrusive
Suite. There is a strong structural control on the gold mineralization in the Aurizona area which can be seen by the close association
of magnetic lineaments and the gold deposits and the near mine exploration targets. Mineralization is hosted within district scale
shear zones and generally at or close to contacts with a volcano sedimentary unit which generally forms the footwall to the mineralization.



The Piaba deposit is a
3.3 kilometre long, east/northeast trending, orogenic gold deposit hosted in greenstone belt rocks of the Aurizona Group located
within the east/northeast trending Aurizona Shear Zone (“ASZ”). The ASZ has been traced for several kilometres
and also hosts the Tatajuba gold deposit, a near mine deposit at Aurizona, located 2.4 kilometres west/southwest of Piaba.The footwall of the Piaba deposit is a distinctive volcano sedimentary unit which dips steeply to the north. The principal
hanging wall lithologies are felsic intrusives, predominantly tonalite and quartz porphyrysand dacite volcanics
intruded by minor dikes. Metamorphic grade is greenschist faces (chlorite zone). The host units are intensely overprinted by several
hydrothermal and mineralizing events including sericitization, chloritization, graphitization, carbonatization and silicification
which frequently mask the host protolith. Gold mineralization preferentially occurs within the tonalite and quartz porphyry units
due to the fact that they are more brittle and fractured more easily than the volcanics and thus provided greater permeability
for mineralizing gold fluids within the shear zone. Piaba is a large, low-grade, deeply weathered (average depth of oxidation
is 60 metres) tabular-shaped gold deposit dipping north/northwest. Zones (shoots) of high-grade gold mineralization controlled
by oblique sheer zones occur within the lower-grade deposit. These high-grade zones are controlled by structures oblique to the
main orebody strike. Drilling to date has been focused on defining the strike and depth extent of the main orebody. However, future
drilling will also target the high-grade lodes at depth.



The widest portion of the
Piaba deposit is located at a bend in the ASZ. Analysis of structural fabrics and textures in drill core shows limited shear fabrics
(confined to graphitic slip planes) which indicate that the maximum depth of current drilling has mainly tested the brittle and
brittle-ductile transition zones of the Piaba deposit. The deposit is currently open at depth on all drill sections within the
3.3 kilometre strike. The Tatajuba, Boa Esperança, Ferradura and Conceição deposits and the near mine exploration
targets are hosted by similar lithological units and structural settings as the Piaba deposit.



-36-









Property Geology



The Piaba deposit represents
an east/northeast trending mineralized envelope of low-grade gold mineralization within a major east/northeast trending shear
zone in the Aurizona Group. The mineralized envelope displays several flexures along its length though it is not significantly
faulted. There is a clearcut stratigraphic and structural footwall to the south of the deposit defined by a sub-vertical to steeply
north-dipping volcano-sedimentary package. Graded bedding, erosional channels and truncated trough bedding within the laminated
sediment footwall indicate the movement is up to the north (normal). Shearing occurs locally along the footwall contact.



The Tatajuba deposit is
located 2.4 kilometres west/southwest from Piaba within the Aurizona shear zone. The deposit extends over an 800 metre strike
length and, like Piaba, contains gold mineralization associated with a sub-vertical to moderately north-dipping structure within
the Aurizona shear zone. Mineralization is hosted in amafic to ultramafic volcano-sedimentary sequence and is similar to Paiba
although the lateration and mineralization zone at Tatajuba is more restricted and the weathering profile less deep.



The Boa Esperança
deposit is represented by a long linear gold-in-soil anomaly associated with a well defined magnetic structure located one kilometre
due southeast of the Piaba deposit. Gold mineralization at Boa Esperança is hosted in a mixed sequence of intrusives and
volcanics and the footwall to the mineralization is the same as the Piaba deposit footwall.



The Ferradura deposit is
located 1.7 kilometres due southeast of the Piaba deposit. Mineralization trends east/northeast along a 0.60 kilometre strike
length and, like Boa Esperança, is hosted in a sub-vertical shear zone that is steeply dipping to the north.



The Conceição
deposit is located 1.6 kilometres south/southwest of the Piaba deposit and 0.5 kilometres west/southwest along strike from the
Ferradura target and hosted within the same shear zone. Mineralization is hosted in a sub-vertical shear zone and is steeply dipping
to the north.



Over ten near mine targets
occur in the immediate vicinity of the Piaba deposit. The near mine targets which occur to the north and south of the main Piaba
deposit may occur along separate sub-parallel shear zones/splays or they may occur along flower structures which developed in
the principal deformation zone of the Aurizona shear zone.



Exploration

In January 2010, Luna retained
Reconsult Geofísica Ltda. to reprocess and interpret the historic airborne magnetic and radiometric survey data collected
by Unamgen in 1991 and 1996. Both surveys were reprocessed and merged using Geosoft Oasis Montaj 7.1.1, followed by interpretation
and integration with existing geological maps and databases in order to improve understanding of geologic controls on gold mineralization
in the Aurizona Mine. The data quality of the surveys is excellent and no survey correction or decorrugation was required. Due
to the deep tropical weathering in the area the radiometric data shows mainly cover sequences and drainage patterns. However,
the magnetic database provided important information on the structural control on the Piaba and near mine targets at Aurizona.



Luna has completed soil
sampling and reconnaissance-scale mapping programs covering much of the entire Aurizona area with the objective of defining the
surface gold anomalies associated with the near mine targets. These programs are supervised by trained mining technicians who
also map the soil and laterite profiles during sampling. Luna also conducts rock grab sampling concomitantly. The soil sampling
programs have identified the following near mine targets at Aurizona: Boa Esperança, Tatajuba Extensions, Ferradura, Conceição,
São Lourenço, Pirocaua SE, Micote, Genipapo, Barriguda, Agenor and Pico. Soil sampling has also been completed over
the LDW area located on the western side of the Tromai River estuary and several new gold in soil anomalies have been defined
in this area.



Luna conducts its own ground
magnetic surveys using trained company employees and equipment. Luna owns three GSM-19 v7.0 Overhauyser Magnetometer Units running
Novatel SuperStar II GPS board adaptation kits. Surveys have been completed covering the near mine targets and the data are processed
by Reconsult. Luna will finalize ground magnetic surveys over new mineralized structures where required.



-37-









Luna has completed several
auger drill grids at Aurizona using company owned motorized Honda auger drills fabricated by Trado Equipamentos e Servicos Ltda,
Belo Horizonte. Initially the auger drill programs were focused on condemnation exploration programs in areas intended for mine
areas and infrastructure. These were completed in 2009.Subsequent auger drill programs are focused on the systematic
testing of the near mine targets associated with structural lineaments and in the shallow drilling of the Aurizona gold deposits.
Auger drilling has a very low environmental impact and has been successful in defining sub-cropping mineralization. Luna conducts
trench programs to verify and reveal the nature of certain gold anomalies that are identified through soil sampling, mapping and
auger drill programs. Condemnation exploration programs involving soil sampling, channel sampling and auger drilling were completed
in all areas intended for mine areas and plant infrastructure and reports finalized. Future condemnation programs will be required
as the project expands into new areas.



Luna conducted diamond
drilling in 2007 and 2008 on the Piaba and Tatajuba deposits. Between May 2009 and November 2011, Luna completed
a large diamond drill program at the Piaba deposit totalling 153 holes. In 2012, Luna conducted resource diamond drilling at the
Boa Esperança, Ferradura and Conceição deposits in addition to six deep drillholes and eight infill holes
at the Piaba deposit and all programs have been successful in extending the known mineralization at these deposits.



Luna has conducted detailed
geological studies at the Piaba, Tatajuba, Boa Esperança, Ferradura and Conceição deposits including re-logging
of all drill core and RC chips, petrographic analysis of select lithologies and field mapping. Core logging was done using a dedicated
core logging software called GeoticLOG. This work has significantly improved understanding of deposit geology and ore controls.



The exploration programs
conducted by Luna and its predecessors are appropriate for gold deposits occurring in relatively narrow structures. The Aurizona
property has few rock outcrops and geophysical surveys were used to identify structural trends and to refine the geological interpretation
of the area. Airborne magnetic and radiometric surveys were used to identify structural trends and ground electro-resistivity
was used in locating the footwall of the structure. Because of the lack of outcrop, mapping is most useful in the garimpeiro pits.
The historic drilling includes diamond core and reverse circulation. Luna is using predominantly diamond core drilling in the
resource areas. The holes are oriented perpendicular to the strike of the structure and angled to intersect the structure at angles
between 40 degrees and 20 degrees.



Mineralization

Piaba is a large low-grade
gold deposit within a major shear zone containing second and possibly third order structures which control high-grade ore shoots
attaining values of 30 grams per tonne of gold and higher. Mineralization occurs within the volcanic sequence though preferentially
occurs within tonalite and quartz porphyry intrusions, due to their competency contrast with the volcanics. The widest portion
of the deposit is located at a bend in the ASZ which is an area where increased extension likely occurred. Mineralization is strongly
associated with quartz veining. The alteration assemblage is composed of quartz, chlorite, carbonate (ankerite and calcite), graphite,
alkali feldspar, sericite, pyrite and minor amounts of tourmaline. Mineralization and alteration are strong to intense particularly
within the centre of the deposit. Metamorphic grade is chlorite zone greenschist facies. Quartz occurs in vein form and in silicification
fronts. Chlorite occurs as matrix replacive and in veinlets and its intensity is likely linked to the occurrence of mafic wall
rocks. Ankerite and carbonate occur as matrix replacement and in veinlets and commonly as accessory minerals in quartz veins.
Tourmaline occurs solely in quartz veins. Both tourmaline and calcite appear to increase with depth. Pyrite occurs in quartz veins
although it predominantly forms a matrix replacement, particularly at deeper levels. Minor pyrrhotite occurs at deeper levels.
Graphite alteration is locally moderate to strong and is closely associated with gold mineralization. The graphite may have been
sourced from the footwall at deeper levels in the ASZ early in the deposit formation and subsequently acted as a reductant trap
for gold mineralizing fluids. Graphite introduction also occurred along oblique shears. No significant base metals occur at Piaba.



-38-









Drilling

Luna has conducted drilling
programs at Aurizona since its acquisition of the property in January 2007. Prior to drill mobilization, the exploration manager
obtains all required permits. A field visit to the planned drill sites is conducted to document and photograph the area, vegetation
type, proximity to any preservation areas and access.Prior to drill mobilization, the senior project mining technician
liaises with landowners to discuss the program and obtain their authorization for the drill to mobilize to their property. Drilling
only commences following agreement with the landowner.



All drilling is carried
out with diamond drill rigs with HQ (63.5 millimetres) core tools. The drill hole locations, orientation, and final depth are
checked by the senior project mining technician prior to start of drilling each hole. Azimuth and dip of each drill hole are checked
by the senior project mining technician at regular intervals during drilling to monitor any deviation which may occur.



The drill company is informed
of the strict requirement to collect quality core samples. Onsite supervision is maintained and site inspection visits are carried
out at regular intervals to ensure that the contractor is working within the contractual parameters. All holes outside the mine
area are sealed and marked with a concrete plinth and metal marker showing hole azimuth and dip and are surveyed by the company
surveyor. Approximately one metre of casing is left in the top of holes to permanently mark the collar and to allow for down-hole
surveys which are carried out on all inclined holes using a Devico, a miniature multishot instrument with a 30 centimetre diameter,
or similar instrument. This unit is lowered to the bottom of the hole following completion and readings are taken on 50 metre
intervals.



The core boxes are labelled
and arrows drawn so that the core is systematically laid in the box. A wooden marker or aluminum tag is placed in the core box
after each run and the metres down hole is written on the marker. Transfer of the core from the core barrel to the box is done
as carefully as possible so that no core is allowed to fall on the ground. A plastic or rubber mallet is used to loosen core from
the core tube. As soon as a core box is full a lid is properly secured. Regular inspections are carried out to ensure that core
boxes are clean, sturdy and suitable for core storage. Intervals of ground core and any other irregularities are documented to
address potential inaccuracies in depth labelling of the core boxes.



Resource estimates were
completed for the Piaba, Tatajuba, Boa Esperança, Ferradura and Conceição deposits and therefore individual
drill hole intercepts will not be listed in this section.



Sampling and Analysis

Sample interval
selection is the responsibility of the geologist responsible for core logging. The sample interval is a nominal 2.0 metre in barren
hanging wall rocks which is reduced 1 metre or less within the mineralization. Sample intervals are selected on the basis of lithology,
mineralogy, weathering, structures and veins. Sample intervals are marked on the core box. The geologist marks the core using
red and yellow crayons in two parallel lines separated by 0.3 centimetres. The red line is marked on the right side of the core,
the yellow line on the left. An arrow is marked pointing down hole on the left side of the core. Core is marked respecting any
foliation (perpendicular) and in a manner which best produces as similar core halves as possible.An electric saw
is used to cut hard drill core. Saprolite and soft rock which would suffer washing during cutting is cut manually with a large
knife or machete. The saw is washed between each sample interval. When approved by the geologist, the core is sent for sampling.
Core is consistently sampled on one side (right - red line). The remaining core half is stored in the box for future reference.
The core logging geologist checks the sample intervals with the core sampler (mining technician) who is responsible of all sampling
procedures including the physical insertion of QA/QC controls in the sample stream. Samples are placed in pre-labelled thick polythene
bags and closed with sealed ties. All samples are double bagged. A sample ticket is placed inside the bag. The sample bags are
then placed in cloth sacks which are sewn shut, addressed and compiled into batches. The sample sequence, including the internal
control samples (blanks, certified reference material and duplicates) are recorded in GeoticLOG. When the drill core has been
sampled it is stored in the core storage facility for future reference. Reverse circulation samples are collected at the drill
rig by Servitec personnel. The entire sample representing one metre is collected and no sample processing or quartering is conducted
on the project. The samples are shipped to the commercial assay laboratory where they are dried and processed in the same manner
as the drill core samples.

-39-







Soil samples are
collected at a nominal depth of 0.50 metres on a 100 metres x 25 metres north south orientated grid which is surveyed using a
total station. Several types of ancillary data are also recorded. Samples are assayed for gold via fire assay (30 grams) and a
suite of 35 elements using inductively coupled plasma atomic emission spectroscopy (“ICP-AES”) at ALS Chemex
Laboratory Group (“ALS Chemex”), Belo Horizonte (preparation) and ALS Chemex, Lima (assay and induced couple
plasma (“ICP”)). Luna operates a laboratory Quality Assurance/Quality control (“QA/QC”)
program for soil samples which involves the insertion of blanks, certified reference materials (“CRM”) and
sample duplicates at the rate of 6% of each sample per batch.

Luna initially used ACME
Analytical Laboratories Ltd (“Acme”) as its primary lab for sample preparation (Maraba, Pará) and analysis
(Vancouver, Canada). During this time Luna used ALS Chemex in Belo Horizonte as its secondary laboratory. Since January 2008,
Luna has been using ALS Chemex in Belo Horizonte and Goiania as its primary preparation laboratory and ALS Chemex in Lima Peru
and Perth Australia as its primary assay laboratory. From September 2011 to December 2011, Luna also used Acme Labs in Goiania
and Santiago, Chile as a primary lab due to backlogs at ALS Chemex. Acme is accredited under the general ISO 9001:2000 regulations,
but does not have ISO 17025 laboratory accreditation. ALS Chemex in Lima has ISO 17025 accreditation and ALS Chemex Vancouver
has ISO 9001:2008 accreditation.



For both laboratories Luna
has a policy of a minimum of 80% passing 10 mesh for all drill core samples and 85% passing 200 mesh for all drill core pulps.
After January 3, 2008, a 1 kilogram split is pulverized to 85% passing 200 mesh (Acme - 0.50 kilogram split) to better address
any coarse gold associated with high-grade quartz veins. For drill samples prepped by Acme, approximately 125 gram aliquot of
each sample was shipped to Acme in Vancouver, Canada and Santiago Chile via international courier for assay. All drill samples
assayed by Acme were analyzed in sequential order. Lower detection limit for this package is 0.01 grams per tonne of gold. Over
limit samples, greater than 10 grams per tonne gold, were automatically analyzed via gravimetric gold analysis.



For all drill samples prepped
by ALS Chemex, approximately 150 gram aliquot of each sample is shipped to ALS Chemex in Lima, Peru or Perth, Australia for assay.
In 2008, ALS Chemex assayed samples in Belo Horizonte. All drill samples assayed by ALS Chemex are analyzed in sequential order.
The lower detection limit for this package is 0.005 grams per tonne of gold. Over limit samples greater than 10 grams per tonne
of gold are automatically assayed via an ore grade package.



All reject and pulp samples
are returned to Luna on a regular basis. These samples are checked for consistency and to ensure that return QA/QC samples correspond
with the originals. They are sealed in new sample bags and stored for future reference.



QA/QC is conducted to ensure
high quality drill data. The Exploration Manager is responsible for all the activities related to QA/QC including: preparation
and validation of standards and blanks or purchase of standards; selection and validation of primary and secondary laboratories;
drafting of laboratory contract; preparation of logic table of failures; supervision on the insertion of control materials; supervision
of core sampling and batch assembly; lab audit(s); validation of batches and uploading to diamond drill hole database; corrective
actions when necessary; record keeping; submission of samples for check assays at secondary lab; submission of coarse crush replicates
and core duplicates; submission of coarse rejects for particle size analysis; variance studies; and QA/QC report.



-40-









The laboratory is instructed
to prepare and analyze all samples in numerical order. This is adhered to and is backed-up by unannounced site visits to the sample
preparation laboratories by Luna technical personnel. These site visits are documented in audit reports. Internal control samples
are inserted randomly within the drill core sequence by the core logging geologist. The location of the control samples is noted
on the sample log and GeoticLOG database. Luna utilized a system of random insertion which makes identification of sample controls
by the laboratory more difficult. Internal control samples have the same numbering system as the drill core samples. The analyses
of the blanks and SRM’s indicate that Acme and ALS Chemex perform at an industry standard level. Limited screened metallic
fire assays indicate that there is a component of course gold at the Piaba deposit. SRK has indicated that the sample preparation,
analytical procedures and security meet industry best practices.



The historic data was not
available in digital format, but all the paper lab certificates had been preserved in excellent quality. Luna prepared the database
from the historic data as a double entry (two people independently entered the data and then checked the resulting databases).
Assays from Luna’s drilling program is received in digital format and entered directly into the database, thus eliminating
transcription errors. SRK checked the database in 2008, 2009, 2010 and 2012 against the original assay certificates. Errors in
the 2008 database were reported to Luna and the necessary corrections were made. Since then, Luna has completely audited its database
and no errors were found by SRK in its 2009, 2010 and 2012 checks. SRK’s opinion is that the database has been verified
and is suitable for use in resource estimation.



Security of Samples

Drill core sample security
from the drill site to the analytical laboratory is a vital component of the drilling program. Luna’s procedure involves
direct drill management, secure transportation methods, secure sampling and logging areas and secure sample storage facilities.
Core is not left unattended and all core and sample storage facilities are locked and monitored when not in use. Drill samples
are accompanied from project to the analytical laboratory by Luna personnel. Core is secured from outside inspection and interference
or accidental internal interference. Chain of custody is strictly maintained during transportation, sample collection, shipping
and preparation to avoid tampering or inappropriate release of privileged information. Assay results are maintained confidential
and only released to those on a need to know basis.



In addition, a single access
point to the Aurizona operation is secured by double gates and spikes allowing only authorized personnel to the working area.
Radio communication with the supervisor is required prior to gaining access.



-41-







Mineral Resource and Mineral
Reserve Estimates

The following table sets
forth the estimated consolidated Mineral Resources for the Aurizona project, inclusive of Mineral Reserves, as at January 29,
2013: (1 to 8)



|Deposit                                 | Type                   | Classification             | Tonnes
        (000s) | Gold Grade
        (grams per tonne) | Contained Gold
        (ounces)
|--------------------------------------- | ---------------------- | -------------------------- | --------------------- | ------------------------------------ | -------------------------------
|Piaba                                   |                        | Measured                   | 19,510                | 1.36                                 | 850,000                        
|Pit
    Constrained                     | Indicated              | 59,010                     | 1.40                  | 2,652,000                           
|                                        | Measured and Indicated | 78,520                     | 1.39                  | 3,502,000                           
|                                        | Inferred               | 6,990                      | 1.61                  | 362,000                             
|Outside
    Pit Shell                   | Inferred               | 9,450                      | 1.95                  | 592,000                             
|Tatajuba                                |                        |                            |                       |                                      |                                
|Pit
    Constrained                     | Indicated              | 1,380                      | 1.40                  | 62,000                              
|                                        |                        |                            |                       |                                     
|                                        | Inferred               | 810                        | 1.39                  | 36,000                              
|Boa
    Esperança                       |                        |                            |                       | -                                    | -                              
|Pit
    Constrained                     | Indicated              | 1,430                      | 0.79                  | 36,000                              
|                                        |                        |                            |                       |                                     
|                                        | Inferred               | 970                        | 1.00                  | 31,000                              
|Conceição                               | Pit
    Constrained    | Indicated
        Inferred | 160
        60        | 0.75
        0.82                    | 4,000
        2,000            
|Ferradura                               | Pit
    Constrained    | Indicated
        Inferred | 500
        260       | 1.65
        1.65                    | 27,000
        14,000          
|Total                                   |                        | Measured                   | 19,510                | 1.36                                 | 850,000                        
|Pit Constrained and
        Outside Pit | Indicated              | 62,480                     | 1.38                  | 2,781,000                           
|                                        | Measured and Indicated | 81,990                     | 1.38                  | 3,631,000                           
|                                        | Inferred               | 18,540                     | 1.74                  | 1,036,000                           





| | (1) | Resources are stated at the following cut-off grades for open
                                         pit:
| | --- | -----------------------------------------------------------------------------------------------------------

Piaba, Boa Esperança, Conceição
and Ferradura

| | - | Laterite and Saprolite | 0.322 grams per tonne gold
| | - | ---------------------- | --------------------------

| | - | Transition | 0.364 grams per tonne gold; and
| | - | ---------- | -------------------------------

| | - | Fresh rock | 0.400 grams per tonne gold.
| | - | ---------- | ---------------------------

Tatajuba

| | - | Laterite and Saprolite | 0.368 grams per tonne gold;
| | - | ---------------------- | ---------------------------

| | - | Transition | 0.411 grams per tonne gold; and
| | - | ---------- | -------------------------------

| | - | Fresh rock | 0.447 grams per tonne gold
| | - | ---------- | --------------------------

| | (2) | Resources are stated at the following cut-off grades for outside
                                         pit:
| | --- | --------------------------------------------------------------------------------------------------------------

| | - | Piaba fresh rock | 1.5 grams per tonne gold
| | - | ---------------- | ------------------------

| | (3) | Piaba topography is current as of October 31, 2012
| | --- | --------------------------------------------------

| | (4) | Tonnes are rounded to the nearest 10,000; ounces are rounded
                                         to the nearest 1,000
| | --- | --------------------------------------------------------------------------------------------------------------------------

| | (5) | Small tonnage and grade differences may be found due to rounding.
| | --- | -----------------------------------------------------------------

| | (6) | All Mineral Resources have been
                                         estimated in accordance with the CIM Standards and NI 43-101.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------

| | (7) | Mineral resources that are not
                                         mineral reserves do not have a demonstrated economic viability.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------

| | (8) | The Mineral Resource estimates
                                         set out in the above table have been reviewed and verified by Leah Mach, C.P.G., M.Sc.,
                                         Principal Resource Geologist of SRK Consulting (US) (“SRK”), who is
                                         a qualified person under NI 43-101.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-42-









The following table sets
forth the estimated Mineral Reserves for the Piaba deposit at the Aurizona project, effective as of January 29, 2013:

Proven and Probable Mineral Reserves (1 - 12)

|Deposit                 | Classification | Tonnes     | Gold
    Grade(grams per tonne) | Contained
    Gold(ounces)
|----------------------- | -------------- | ---------- | ------------------------------- | --------------------------
|Piaba                   | Proven         | 19,810,270 | 1.26                            | 807,389                   
|Probable                | 35,643,165     | 1.35       | 1,547,887                      
|Proven
    and Probable | 55,453,435     | 1.32       | 2,355,276                      

| |  | 
| |  | 

| | (1) | Luna Mineral Resource Update effective
                                         as at January 29, 2013.
| | --- | -------------------------------------------------------------------------------------------------------

| | (2) | April 2013 Mineral Reserve is based
                                         on a gold price of $1,350 per ounce
| | --- | ----------------------------------------------------------------------------------------------------------------

| | (3) | The model was depleted to the end
                                         of month topography December 2012
| | --- | ------------------------------------------------------------------------------------------------------------

| | (4) | Includes 98% mine recovery
| | --- | --------------------------

| | (5) | Includes 10% mine dilution
| | --- | --------------------------

| | (6) | Includes foreign exchange conversion
                                         rate of 1.95 Brazilian Real to one US Dollar
| | --- | --------------------------------------------------------------------------------------------------------------------------

| | (7) | Break even cut-off grades of 0.44
                                         grams per tonne, 0.49 grams per tonne and 0.51 grams per tonne were used for saprolite
                                         and laterite, transition and fresh rock ore types, respectively.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (8) | Metallurgical recoveries are included
                                         in the cut-off grade calculations and calculated to be 92% for saprolite and laterite,
                                         91% for transition and 91% for fresh rock, respectively
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (9) | Gold ounces exclude metallurgical
                                         recoveries
| | --- | -------------------------------------------------------------------------------------

| | (10) | The April 2013 Mineral Reserves
                                         have been estimated in accordance with the CIM Standards and NI 43-101
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------

| | (11) | The estimates of mineral reserves
                                         may be materially affected by geotechnical, environmental, permitting, legal, title,
                                         taxation, sociopolitical, marketing, or other relevant issues
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (12) | The Mineral Reserves estimates set
                                         out in the above table have been reviewed and verified by G. Peter Mah, P. Eng. Ontario,
                                         Chief Operating Officer of Luna, who is a qualified person under NI 43-101.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Mining Operations

Mining operations for the
Piaba deposit are comprised of 100% owner operations for main earthworks and grade control. From time to time, Luna will utilize
contractors to assist in excess earthworks movement. Mining operations are mainly owner operated with the exception of a very
small portion of load and haul and the explosives charge up crew. The extra load and haul equipment conducts day works which are
not necessarily production related but assist with the development of the mine, i.e. creating sumps, helping with stockpiles and
handling boulders. The team has developed the skills to conduct the technical services as well as executing the short term plans.
Drilling and blasting takes place in some areas containing competent material. The procedure is performed almost entirely by the
mining team. The only portion which is left for third party contractors to complete is the loading of emulsion which the contractor
delivers by transport truck and subsequently leaves the mine property on the same day after the blast has occurred. The mining
team also conducts grade control and with current results often surpassing drilling rates of 380 metric tonnes per day.



Mining operations are conducted
in soft saprolite and laterite material, encountering some intrusions of transitional rock at times. The harder fresh rock material
will only form part of the production in mid-2014. The pit faces its challenges during the rainy season and historically there
have been seasons when it has rained as much as three metres. The pit has been designed with the latest software technology, NPV
scheduler for the pit optimizations and Deswik CAD for designs and schedules. The schedules take into account the slower production
rates during the wet season and the design aims for the higher up areas which permit work to be conducted while minimizing exposure
to the wet saprolitic material. The production fleet is composed of twelve CAT 740 articulated dump trucks and CAT 374 excavators.
The production drilling is done with a Ranger 800 and the grade control is done with Explorac 50 RC. Mine roads require sheeting
and compaction to maintain safe, continuous mining conditions during periods of high rainfall. Sufficient pumping capacity is
also included in the planning to avoid flooding of the pit.



-43-









The current life of mine
plan assumes production from open pit sources at an average annual production rate of 135,000 ounces of gold produced until 2028,
for a life of mine of 16 years.



The environmental impact
studies were completed in 1995 and submitted to regulatory authorities for review and approval. SEMA-MA issued Aurizona
with an Operating License (“LO”) on July 11, 2007 to initiate the mining and processing of gold within the limits
of DNPM Mining License 800.256/1978, an area comprising 9,981.47 hectares. The LO, No. 259/2007, was renewed and a new LO, No.
108/2010 was issued in March 2010 valid until March 2012. The renewal process for this license was initiated in November 2011.
The LO was conditional upon Aurizona filing a conceptual closure plan, an update to the impacted areas and revised project description.
This was submitted in October 2007. In 2009, 2010 and 2011, updates to clearing and operating licenses and a license for effluent
dilution or pumping water from the tailings dam were issued and additional licenses for control of substances were issued by the
army and police.



Gold markets are global
and mature and there are no restrictions on gold sales outside of Brazil. Luna currently produces high-grade doré gold
product that is transported by air to Umicore Refinery and then to London for sale on the spot market through a sales contract
with Auramet Trading LLC. The terms contained within the sales contract are typical and consistent with standard industry practice.
17% of the gold production is forward sold to Sandstorm.



Luna’s production
for the period 2010 - 2012 is shown below:







|Description      | 2010    | 2011      | 2012      | Total    
|---------------- | ------- | --------- | --------- | ---------
|Dry Ore (Tonnes) | 747,329 | 1,275,652 | 2,155,204 | 4,178,205
|Au g/t           | 1.15    | 1.30      | 1.21      | 1.23     
|Contained Ounces | 27,642  | 53,313    | 83,841    | 164,796  
|Recovery %       | 59      | 78        | 87        | 79       
|Recovered Ounces | 15,759  | 43,055    | 74,269    | 133,083  





Exploration and Development

Luna commenced an expansion
to the process plant (“Phase I Expansion”) to increase annual production capacity ore throughput to 10,000
Mt per day resulting in annual gold production averaging 135,000 ounces per annum. The Phase I Expansion commenced in December
2012 and is expected to be completed in the fourth quarter of 2013 (please see below - Luna has recently announced that the revised
deadline for completion of the Phase I Expansion will be the first half of 2014).



The expansion is targeting
low capital cost improvements to the existing Aurizona process plant with minimal impact to the plant’s established footprint
or current operations, while further expansion studies are being completed. Aurizona’s increased capacity will be facilitated
as follows: commissioning of an intense leach reactor and four electrowinning cells; carbon regeneration kiln; new elution and
acid wash columns to improve the efficiency of the elution circuit; installation of two new high-rate thickeners and installation
of three new CIL tanks and ancillary equipment; improvements to ore receiving; and improvements to the existing grinding circuit.





Aurizona Mine Milestones

Current activities at the
Aurizona Mine include:



| | • | In
                                         January 2014, Luna reported that the Aurizona Mine produced 22,177 ounces of gold during
                                         the fourth quarter of 2013. Luna’s total gold production for 2013 from the Aurizona
                                         Mine was 79,229 ounces.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



-44-









| | • | Luna
                                         also announced in January 2014 that the Aurizona Gold Mine Phase l Expansion is progressing
                                         and that the overall engineering, including detailed site engineering, reached 97% complete,
                                         procurement awarded reached 90% complete, construction reached 42% complete and they
                                         advised that completion of the Phase l Expansion remains targeted for the first half
                                         of 2014. In addition, Luna provided 2014 guidance which included (a) expected annual
                                         gold production of 85,000 to 95,000 ounces; (b) anticipated delivery of an updated NI
                                         43-101 Resource and Reserve Estimate for the Aurizona Mine during the third quarter of
                                         2014; and (c) targeted release of a Preliminary Feasibility Study for Phase II of Aurizona’s
                                         expansion during the third quarter of 2014.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Santa Elena Mine,
Sonora, Mexico

A technical report was
prepared in accordance with NI 43-101 entitled “Santa Elena Expansion Pre-Feasibility Study and Open Pit Reserve Update”
dated July 25, 2013 but having an effective date of April 30, 2013 (the “Santa Elena Report”).



The
following description of the Santa Elena Mine has been summarized, in part, from the Santa Elena Report and readers should consult
the Santa Elena Report to obtain further particulars regarding the Santa Elena Mine. The Santa Elena Report is available for review
under SilverCrest’s profile on the SEDAR website located atwww.sedar.com.Information that updates the information in the Santa Elena Report has been provided by SilverCrest.

Project Description and Location

The Santa Elena Mine is
currently producing gold and silver from an approximately 2,500 tonne per day open pit and heap leaching operation which declared
commercial production in July of 2011. The Santa Elena Mine is located in Sonora, Mexico, approximately 150 kilometres northeast
of the state capital city of Hermosillo and seven kilometres east of Banámichi. The Santa Elena Mine consists of six contiguous
concessions (the “Santa Elena Concessions”) covering approximately 3,142.81 hectares registered in the name
of Nusantara de México, S.A. de C.V. (“Nusantara”), a wholly owned subsidiary of SilverCrest. Nusantara
filed the Santa Elena 7 concession, which surrounds the other concessions. All concessions were ground surveyed by a registered
land surveyor at the time of staking.



On December 8, 2005, Nusantara
entered into an option agreement with Tungsteno de Baviacora (“Tungsteno”) to acquire a 100% interest in the
Santa Elena Mine through staged option payments over 5 years for a total cost of $4 million paid in cash and SilverCrest shares.
Payments were completed in August of 2009 with SilverCrest owning 100% of the Santa Elena Mine with no underlying royalties. SilverCrest
has maintained all of the necessary permits for exploration and facilities at the Santa Elena Mine. In 2009, the Santa Elena Mine
received its Manifestacion de Impacto Ambiental (“MIA”) and operating permit from Secretaría de Medio
Ambiente y Recursos Naturales (“SEMARNAT”). Taxes based on the surface area of the concession are approximately
$10,000 per year and have been paid to date. A further MIA was submitted to SEMARNAT in early January of 2013 for an amendment
of the land use licence related to the underground expansion project and was approved in May 2013. The amendment approval allows
for tailings facilities that were not previously approved for the current operation.



All mining concessions
in Mexico are valid for a period of 50 years. A mining concession in Mexico does not confer any ownership of surface rights. The
Santa Elena Concessions are located on Ejido land, and on November 12, 2007, a lease agreement with the surface owners was signed
which allows SilverCrest access and authorization to complete mining exploration activities for 20 years for a maximum of 841
hectares. In July 2013, the surface rights agreement was amended to extend the lease for 20 years after ratification by the Ejido
Agrarian court which took place in August 2013. Lease obligations have been met to date.



-45-







Accessibility, Climate, Local
Resources, Infrastructure and Physiography

The Santa Elena Mine can
be accessed year round by paved highways 90 kilometres east from Hermosillo to Ures, then 50 kilometres north along a paved secondary
road to the community of Banamichi, then by a gravel maintained road seven kilometres east to the mine site. The Santa Elena Mine
is located on the western edge of the northtrending Sierra Madre Occidental mountain range geographically adjacent to the Sonora
River Valley. Property elevations range from 800 metres above sea level to 1,000 metres above sea level. The property is located
on the range front at a low elevation in relation to the mountains immediately east and west, respectively. Vegetation is scarce
during the dry season, limited primarily to juvenile and mature mesquite trees and cactus plants. During the wet season, various
blooming cactus, trees and grasses are abundant in drainage areas.



The climate is typical
Sonoran desert, with a dry season from October to May. Average rainfall is estimated at 300 millimetres per annum. There are two
wet seasons, July to September and October to May. The summer rains are short with heavy thunderstorms whereas the winter rains
are longer and lighter. Seasonal temperatures vary from 0 degrees Celsius to 40 degrees Celsius. Summer afternoon thunderstorms
are common and can temporarily impact the local electrical service. Flash flooding is common in the area.



Water for the Santa Elena
Mine is available from two wells which were installed and tested in 2009 and 2011. A small amount of electrical line power is
available from nearby sources that currently supply municipalities and agriculture but is insufficient for the Santa Elena Mine
operation. Additional power for production is provided by onsite diesel generators. Future line power is possible, but requires
permitting and a significant capital expenditure.



The Santa Elena Mine facilities
consist of a seven kilometre main access road from the paved highway and local community of Banamichi, a 2,500 tonnes per day
ore open pit mine, a waste dump with the estimated permitted capacity of 35 million tonnes, a 3-stage crusher, two lined and certified
leach pads, a lined and certified barren and pregnant solution pond, a lined and certified emergency pond designed for 100 year
event, Merrill Crowe plant and refinery, an on-site laboratory for production and exploration work, an administration office,
four diesel generators, a core storage and logging facility and all required piping, power and security. Construction of infrastructure
to support an underground mine expansion, new mill and processing facility is currently underway on site. The material on the
existing heap leach facility will be removed, and there is space on the facility for rehandling of the tailings prior to transport
to the waste dump as dry stack tailings. In January of 2012, the expansion of the Santa Elena Mine from an open pit heap leach
operation to an underground mill operation was commenced with ground breaking of the underground portal. As of April 31, 2013,
the expansion was approximately 30% complete with all major equipment purchased and the completion of all earthworks for the new
processing facility, tank construction underway and approximately 1,300 metres of underground ramping and development.



Northern Mexico has significant
precious and base metal mines and there is a significant workforce of trained mining and processing personnel. The communities
of Cananea, located approximately 100 kilometres north, and Hermosillo, located 150 kilometres southwest of the Santa Elena Mine,
are both considered exploration and mining centres and can provide services for heavy machine purchase and repair, materials fabrication
and engineering services and supplies to the Santa Elena Mine. Alternatively, Tucson, Arizona is approximately a four hour drive
north across the international Mexican USA border from the Santa Elena Mine.



History

Although minor amounts
of historic production are evident at the Santa Elena Mine, the documentation in support of this work is sparse, not detailed
and cannot be relied upon for future projections of economic viability.



-46-







Consolidated Fields operated
the Santa Elena Mine from the late 19th century until the onset of the Mexican revolution in 1910. It is estimated
that the most extensive underground development occurred during this period. The recent commencement of open cut mining has made
the underground workings unsafe to enter. SilverCrest estimates that approximately 35,000 tonnes of the original tailings from
Consolidated Fields’ operations remain onsite. During the 1960’s, Industrias Peñoles S.A de C.V. drilled two
or three holes on the Santa Elena Mine. During the early 1980’s, Tungsteno mined 45,000 tonnes grading 3.5 grams per tonne
of gold and 60 grams per tonne of silver from an open cut at the Santa Elena Mine.



After 2003, Tungsteno periodically
surface mined high silica/low fluorine material from the Santa Elena Mine. During 2003, Tungsteno conducted an exploration program
at the Santa Elena Mine consisting of 117 surface and underground samples. This data is considered unreliable and has not been
used for the purposes of the Santa Elena Report. In late 2003, Nevada Pacific Gold Inc. completed a brief surface and underground
sampling program with the collection of 119 samples. A report was completed and provided to the owner which was subsequently misplaced.
Only the ALS Chemex assay sheets and a rough location map were available for review. Sample lengths are unclear.



In early 2004, Fronteer
Development Group (“Fronteer”) completed an extensive surface and underground mapping and sampling program.
A total of 145 channel samples (89 underground and 56 surfaces) were collected and analyzed by ALS Chemex of Hermosillo, Mexico.
This data has been used by SilverCrest for exploration purposes only and has not been used in the Santa Elena Report.



SilverCrest acquired the
Santa Elena Mine in December of 2005 and the Santa Elena open pit has been in commercial production of gold and silver since 2011,
with a mining rate of approximately 2,500 tonnes per day.



Geological Setting

Regional Geology



The Santa Elena Mine is
located in northwestern Mexico where much of the geology can be attributed to the subduction and related volcanism of the Farallon
Plate beneath the North American Plate. The east-directed subduction of the Farallon Plate began approximately 200 million years
ago with the tectonic rifting of the supercontinent Pangea. The resulting northwest/southeast trending Sierra Madre Occidental
extends from the USA-Mexican border to Guadalajara in the southeast, a distance of over 1,200 kilometres. It is proposed that
subduction of the Farallon Plate occurred at a relatively shallow angle, resulting in continental uplift across northern Mexico
with accretionary terrains developing along the western fringes. The shallow subduction is also thought to be responsible for
the tectonics that produced the Laramide orogeny. Continental arc volcanism culminated with the Laramide orogeny in the early
to late Eocene. The waning of compression coincides with the first part of Basin and Range extension. The silicic volcanism is
thought to be related to fractional crystallization of mantle sourced basalts from subduction. The five main igneous deposits
of the Sierra Madre Occidental are: (1) plutonic/volcanic rocks: Late Cretaceous - Paleocene; (2) Andesite and lesser Dacite-Rhyolite:
Eocene (Lower Volcanic Complex); (3) Silicic ignimbrites: Early Oligocene and Miocene (Upper Volcanic Complex); (4) Basaltic-andesitic
flows: late stage of and after ignimbrites pulses; and (5) repeat and episodic volcanic events relating to rifting of the Gulf
of California (alkaline basalt and ignimbrite) emplaced to western flanks: Late Miocene Pliocene and Quaternary. During the final
stages of the deformation period during the Paleocene-Early Eocene, east-west and east/northeast-west/southwest extension occurred
in the Lower Volcanic Complex that now hosts many porphyry deposits of the Sierra Madre Occidental. These porphyry deposits are
hosted to middle Jurassic to Tertiary aged intrusions, located at Cananea, Nacozari and La Caridad. This east-west and east/northeast-west/southwest
extensional direction is similar in orientation to the Santa Elena vein. Early Oligocene extensional tectonics occurred along
the eastern Sierra Madre Occidental flank forming the typical basin and range province. By early to mid-Miocene, extension migrated
west into Northern Sonora and along the western flank of the Sierra Madre Occidental resulting in north/northwest striking normal
faults. This extensional regime caused major deformation across the Sierra Madre Occidental exhuming pre-Cambrian basement rocks,
especially in the Northern Sierra Madre Occidental. Northwest trending shear and fault zones appear to be an important control
on mineralization in the Sonora region. Mineralizing fluids may have been sourced from Cenozoic intrusions. The structural separation
along the faults formed conduits for mineral bearing solutions. The heat source for the mineralizing fluids was likely from the
plutonic rocks that commonly outcrop in Sonora. To the west of the Sierra Madre Occidental are the parallel ranges and valleys
that show structural similarities to the extensional tectonic regimes of the Basin and Ranges Province to the east. Elevations
in the west are lower than the eastern Provinces, with transition to the Coastal plains and Gulf of California.



-47-









Local and Property Geology



The Santa Elena property
is located at the northwest extent of the Sierra Madre Occidental. The primary rock types observed on the Santa Elena Mine are
the tertiary andesite and rhyolite flows. These units have been uplifted and strike north-south with a dip of 10 degrees to 45
degrees east/northeast. All the volcanic units in the immediate area of the Santa Elena Mine deposit exhibit propylitic to silicic
alteration. Within the main mineralized structure, widespread argillic alteration and silicification proximal to quartz veining
is present. Within the andesite beds, chloritic alteration increases away from the mineralized zone. The main mineralized zone
is associated with an east-west structure cross-cutting the volcanic units. The structure hosts an epithermal quartz calcite vein
that has been mapped for approximately 1.2 kilometres in length with a width from one metre to 35 metres averaging approximately
15 metres. The structure dips from 40 degrees to 60 degrees to the south and has been drill-tested to a down-dip depth of approximately
600 metres from surface. Splaying and cross-cutting northwest trending structures appear to influence mineralization at intersections
and along a northwest trend. Andesite and granodoritic dikes have been identified at the Santa Elena Mine deposit. The heat source
for mineralization is unknown but an intrusive at depth is postulated. The main structure is infilled with quartz veining, quartz
veinlets and stockwork, banded quartz, vuggy quartz and black calcite. Breccias are found locally at areas of fault intersections.
Adularia has been identified in a few hand-specimens. Iron oxides including limonite, jarosite, goethite and hematite are associated
with mineralization. Results of induced polarization, resistivity and magnetometer surveys by Pacific Geophysical Ltd. in 2007
showed that the main zone is a resistivity high (silica) and induced polarization low (minor sulphides) which can be traced for
approximately 1.2 kilometres along strike of the zone.



Exploration

During 2006 and the first
half of 2007, SilverCrest completed an extensive exploration program. The exploration work included surface mapping and channel
sampling, underground mapping, underground channel sampling and core drilling. A total of 289 samples were collected and analyzed
by ALS-Chemex in Hermosillo, Mexico and North Vancouver, British Columbia. This program focused on the identification of mineralization
in the footwall (north) of the main mineralized zone. Selective sampling shows some anomalous lead, zinc and copper suggesting
a possible mineralized intrusive (porphyry) at depth. Initial results from the 2007 geophysical program indicate deep-seated induced
polarization highs. Several areas of additional mineralization were identified for follow up exploration work. Independent review
of the exploration activities and reported significant intercepts have been previously conducted for the Santa Elena Mine. The
authors of the Santa Elena Report have read the previous reviews and are of the opinion that the previous sampling was supervised
by professionals and in general appears to meet accepted industry standards for use in the preliminary assessment.



In 2012, SilverCrest began
construction of the underground portal and exploration decline. Mapping was conducted along the decline for geotechnical purposes
in addition to sampling.



Mineralization

Mineralization occurs as
a series of replacement veins, stockworks and hydrothermal breccias typical of other high level low-sulphidation epithermal deposits
found in the Sierra Madres. These deposits form in predominantly felsic sub-aerial volcanic complexes in extensional and strike-slip
structural regimes. Samples previously collected by various parties including SilverCrest show a geochemical signature of gold
+ silver + antimony + lead + zinc + barium +calcium +manganese which is consistent with a high calcium, high level, low-sulphidation
system. The mineralization is the result of ascending structurally controlled low-sulphidation silica-rich fluids into a near-surface
environment. Mineral deposition takes place as the fluids undergo cooling by fluid mixing, boiling and decompression. Brecciation
of the mineralized zone appears to be due to explosive venting from an assumed intrusive at depth followed by deposition of the
mineralization by ascending fluids.



-48-









The Santa Elena Mine is
estimated to contain silver and gold with minor lead, zinc and copper. The structure consists of multiple banded quartz veins
and stockwork with associated adularia, fluorite, calcite and minor sulphides. Bonanza ore shoots (greater than 500 grams per
tonne of silver and 30 grams per tonne of gold) appear to be locally present but require more definition to determine their full
extent. Metal zonation appears to exist with higher grades and thicker mineralized widths near the epithermal boiling zone, one
of which daylights in the open pit area. A trend of higher grades and thicker veining is apparent with a plunge of approximately
25 degrees to the east. Drill hole SE-12-74 intersected the vein at approximately 500 vertical metres depth with an average uncapped
grade of 1.56 grams per tonne gold and 133 grams per tonne silver over seven metres (not calculated as true width) along this
plunging trend from the current open pit operation. Zonation also appears to correspond to northwest-trending cross-cutting structures
that intersect the main zone and form high grade shoots. Vertical zonation shows gold content consistent with depth and silver
content increasing. At the surface, the silver to gold ratio is 20:1. At 500 metres below surface, the ratio is approximately
100:1. 	Minor sulphides have been observed in a few locations within the mineralized zone. The andesite in the hanging-wall
shows disseminated pyrite averaging 5%. Calcite is found in close proximity to pyrite and averages about the same. Some select
locations in the hanging-wall show greater than 30% of finely disseminated pyrite spatially associated with greater than 30% disseminated
and veinlet calcite. Hydrothermal breccias exist in the hanging-wall andesites proximal to the Main Zone with drill holes intercepting
up to 200 metres of breccia with a pyrite/calcite matrix.



Alteration within the deposit
is widespread and pervasive, with the most significant being silicification, kaolinization, and chloritization. Kaolin and alunite
has formed primarily along structures and contacts, which are deeply weathered and oxidized. Limonite within the oxide zone consists
of a brick-red colour after pyrite, brown goethite and local yellow jarosite. Manganese occurs locally as pyrolusite and minor
psilomelane near the surface. Gangue minerals consist of quartz, calcite, adularia, chlorite and fluorite. Analysis shows calcium
content of up to 15%.



Drilling

During 2006, a core drill
program consisting of 19 holes totalling 2,572 metres was completed by Major Drilling de Mexico (“Major”).
Core holes (NQ size) were drilled on 100 metre sections along the east-west trending strike of the mineralized zone. All holes
but two were drilled north at angles from negative 45 to negative 70 degrees.



SilverCrest completed a
core drill program in 2007 consisting of 21 additional holes totalling 1,951.4 metres and, during 2008, a drill program consisting
of an additional 48 core holes (9,939 metres), 4 geotechnical core holes (1,163 metres) and 21 reverse circulation drill holes
(4,308 metres). Drilling for both programs was completed by Cabo Drilling de Mexico and Intercore Drilling de Mexico of Guadalajara.



SilverCrest completed a
pre-production in-fill drill program in 2009 consisting of 11 in-fill reverse circulation drill holes (577 metres). Reverse circulation
drilling was completed as pre-collars for coring and condemnation drilling in the proposed waste dump and leach pad areas.



From 2006 to 2009 a total
of 144 combined drill holes were drilled at Santa Elena for a total of 25,088.8 metres.



-49-









During 2012 - 2013, SilverCrest
targeted delineation of shallow, below-pit mineralization and deep mineralization with additional drilling and three drilling
companies were contracted. A number of the deep drill holes were reverse circulation collared with diamond tails at depth in the
mineralization. This drilling focused on delineating and extending the areas along trend and down-dip of the vein. Other drilling
was located off strike to explore for near parallel mineralization. A total of 20 drill holes were collared using reverse circulation
to expedite hanging wall drilling, then finished with diamond core from approximately 40 - 50 metres before the vein target depth.
This practice was discontinued due to significant deviation in the pre-collared holes. A total of 149 holes (48,980.18 metres
including reverse circulation with DD tails) were drilled during the 2012 - 2013 program, including holes drilled from within
the current pit. Down hole surveys were performed on a total of 134 drill holes from the 2012 - 2013 drill program. Surveys were
taken at 50 metre intervals down the hole in addition to just below the casing and at the end of the hole.



In early May 2013, SilverCrest
completed 25 large diameter drill holes, totaling 359 metres, on the current leach pad for the purposes of validating production
date. Drill holes were spaced on a 25 by 25 metre grid and drilled to five to 20 metres deep. Enough material and space was left
between the collar of the hole and the liner to prevent any damage to the liner and were stopped several metres above the surveyed
location of the liner. All drilling operations were performed without the addition of water or other additives and full sample
was collected per each interval drilled without any rejects on the drill site. A total of 164 samples were collected for analysis.



Core recovery for the 2012
- 2013 drilling program was measured in relation to market blocks and was generally good. Rock-quality designation was also measured
and recorded during core logging.



Sampling and Analysis

During the 2005 to 2008
core drilling programs core was collected in plastic core boxes and labelled for hole identification and location. Each day, the
core boxes were collected and delivered to the core laydown area located on the property. The core was measured for further identification
and recovery and then geologically logged. After identifying the mineralized zone, core was selected for splitting in half with
a hydraulic hand splitter. Sampling intervals were determined geologically. Once split, the core was placed in a plastic bag with
a label and marked with the sample number. The remaining core was stored on the property in an enclosed area at the camp site
or in the yard (under cover) at the company house in Cumpas.



The surface sampling conducted
by SilverCrest in 2006 consisted of continuous channel sampling along exposed road cuts and outcrops. Sample locations were marked
in the field with flagging and paint with subsequent survey of selective control points for sampling coordinates. The 2006 underground
verification channel sampling program consisted of semi-continuous horizontal sampling of sample locations identified by Fronteer.



The 2008 reverse circulation
drilling program consisted of collecting chips, placing the chips in plastic boxes at two metre intervals and labelling them for
interval and hole identification. All surveying, including drill hole collars, was completed by GPS or a registered surveyor.
Eagle Mapping of Vancouver, British Columbia completed an aerial flight in 2007 with detailed (one to two metre) contouring of
the Santa Elena Mine. All drill pads and holes were validated using the new surface topography. The drill collars were marked
in the field with a concrete cap. A similar process was used in the 2009 reverse circulation drilling program.



-50-







The 2012 - 2013 drilling
program included procedures for the collection and labelling of the drill core. The drill core was recovered and stored in vinyl
boxes, each of which contains approximately 2.25 metres of core. Drill runs were identified in the field by drillers using markers
in the core boxes at three metre intervals. These intervals were validated by SilverCrest geologists. Recovered drill core was
boxed by the drillers on-site. The core boxes were collected and delivered twice daily to the on-site core logging facility where
the core was logged and sampled by SilverCrest technical staff. Core is currently stored on-site for future viewing and reference.
Core logging procedures included review of the core quality and recording of recovery, lithological, geotechnical and mineralogical
data within standardized company logging forms. After characterizing the mineralization, SilverCrest geologists marked the start
and end of each interval for sampling. The average sample length used in the 2013 resource is 1.74 metres. Sample intervals were
recorded on the core box with sample tags. The intervals were marked on the drill core which was cut in half by a SilverCrest
technician using a diamond saw blade. Half of the core was sealed in a sample bag with the corresponding sample tag. The other
half of the core sample was returned to the core box for company record and future viewing. Sample numbers, intervals and descriptions
were recorded on the standardized drill logs. SilverCrest inserted Certified Reference Material, blanks and duplicates samples
at regular intervals into the sampling stream. In addition, internal laboratory QA/QC procedures were followed. For the 2012 -
2013 sampling, two independent analytical laboratories were used for sample analysis - Nusantara, an on-site grade control laboratory
for the Santa Elena operations and ALS Chemex. Nusantara either prepared and analysed samples, or prepared and transported samples
to ALS Chemex in Chihuahua or Hermosillo for further preparation before being sent to ALS Chemex in Vancouver for analysis.



For the heap leach sampling,
all sampling was carried out by SilverCrest’s geologists and sampling protocols adopted the following procedures - plastic
bags were placed in a tray in the vertical outlet of the cyclone and into a container to avoid loss of material; full interval
was sampled and samples were taken at multiple orders according to the depth of the hole; for holes with a length of ten and 20
metres, samples were taken every two metres; for holes with a length of 15 metres, samples were collected every three metres and
only one five metre sample was collected for holes with a five metre length; all bags were labelled with the corresponding depth;
samples were delivered to the Santa Elena lab for splitting to pulverization and additional splitting to generate aliquot for
analysis. All samples were handled by geologists at Santa Elena site and samples were sent to the Santa Elena lab for analysis.
Blanks and Certified Reference Material were inserted by exploration personnel prior to the sampling at the Santa Elena lab to
carry out a QA/QC protocol in the preparation and analysis of the samples collected by the drilling program on the pad. The results
did not indicate deviations from the blanks and CRM assay values.



The authors of the Santa
Elena Report are of the opinion that the sample preparation, analysis and security are acceptable, were supervised by professionals
and in general meet accepted industry standards.



Security of Samples

Gravimetric analysis was
completed for over limit assays on gold and silver. Internal standards and checks on the laboratory analyses were completed by
both ALS Chemex and Acme. SilverCrest did not insert standards or blanks in the field. Security for the SilverCrest samples was
completed using typical tagging and tracking of samples up to delivery to the laboratory. Although reliant on internal laboratory
control procedures the authors of the Santa Elena Report are of the opinion that the data was processed and verified properly
and is suitable for estimating the resources and the sample preparation, analysis and security are acceptable, were supervised
by professionals and in general meet accepted industry standards.



Data Verification



During April 2006, Scott
Wilson Roscoe Postle Associates (“SWRPA”) collected select samples for verification, including an underground
continuous channel sample and quarter splits of drill core and sent to ALS Chemex in Hermosillo with a regular shipment of core
samples. Overall, the grade comparisons are considered to be within acceptable ranges.



-51-







In May 2006, SilverCrest
collected 15 underground channel samples to verify the sampling results of Fronteer samples. Although there was variation in the
data, SWRPA considered it acceptable at this stage of property development to use the Fronteer data in the resource estimate.
Gravimetric silver grades were consistently higher compared to both the Fronteer and the SilverCrest silver fire with AA finish
results. The result lends support to the higher values. The fire assay with AA results was used in the resource estimate as they
were more similar to the Fronteer results which were also used.



In addition to the underground
sampling by SilverCrest, SilverCrest completed silver geochemical analysis on 289 surface samples for fire assay AA finish and
fire assay gravimetric analysis. Results show an overall 20.3% increase in silver grade using silver gravimetric assays. AA silver
results were used in the resource estimation and are considered conservative for grade estimation. For QA/QC, duplicate analyses
on 16 of 298 samples were completed at ACME Laboratories in Vancouver on ALS-Chemex pulps from core sampling and preparation.
Although the ACME results have a higher detection limit, the limited results on the duplicate pulps show consistent correlation
of grades between laboratories. During the 2008 drilling, approximately every 20th sample was duplicated in a different laboratory
for QA/QC purposes. The comparison for 2008 drill sample results show average gold and silver results to be similar and within
acceptable limits for QA/QC. The authors of the Santa Elena Report are of the opinion that the data meet accepted industry standards
and are suitable for use in estimating resources.



James Barr, P. Geo, visited
the Santa Elena Mine between May 10-11, 2012 and October 13-14, 2012 during the 2012 - 2013 drilling campaign at which time rock
exposure in the open pit and exploration underground decline were inspected, sample collection and logging procedures were reviewed,
verification samples were collected and recommendations for sampling quality control measures were made.



For verification of Santa
Elena results against ALS-Chemex, 751 samples were sampled at both Santa Elena and ALS-Chemex from the 2012 - 2013 Santa Elena
drilling. Samples analysed at Santa Elena prior to sending to ALS-Chemex facilities in Hermosillo or Chihuahua were at the drill
core, pulp or reverse circulation cutting stage of preparation. Samples of up to 250 grams of pulverized material, with 85% passed
a 75 micron screen, were transferred internally to ALS-CHemex in Vancouver, British Columbia for analysis. A total of 175 samples
within the resource are using results analysed from Santa Elena.



The authors of the Santa
Elena Report are of the opinion that the data was processed and verified properly, meets accepted industry standards and is suitable
for use in estimating resources.



Mineral Resource and Mineral
Reserve Estimates

The following
table sets forth the estimated Mineral Reserves and Mineral Resources for the Santa Elena Mine from the Santa Elena Report (gold
only, excludes silver grades for Sandstorm reporting purposes):





-52-







|Category(1)                                          | Tonnes
        (000s) | Gold Grade
        (grams per tonne) |  | Contained
    Gold
    (ounces)
|---------------------------------------------------- | --------------------- | ------------------------------------ |  | -------------------------------
|Underground
    Diluted and Recoverable Reserves (2) |                       |                                      | 
|Probable                                             | 3,920                 | 1.57                                 |  | 198,170                        
|Open
    Pit Reserves (3)                            |                       |                                      | 
|Probable                                             | 1,427                 | 1.52                                 |  | 69,830                         
|Leach
    Pad Reserves (4)                           |                       |                                      | 
|Probable                                             | 2,844                 | 0.65                                 |  | 59,420                         
|TOTAL
    RESERVES                                   | 8,192                 | 1.24                                 |  | 327,430                        
|Underground
    Resources (5)                        |                       |                                      | 
|Indicated                                            | 2,143                 | 1.69                                 |  | 116,000                        
|Inferred                                             | 1,490                 | 1.50                                 |  | 72,000                         



_________________________________



All numbers are rounded. Underground
and Leach Pad Mineral Reserves and Mineral Resources are based on three year historic metal price trends of $28 per ounce silver,
$1,450 per ounce gold and metallurgical recoveries of 92% gold and 67.5% silver with metal ratio of Ag:Au at 70:1 used for grade
cutoff determination. All Mineral Resources and Mineral Reserves conform to NI 43-101, 43-101CP and CIM definitions for Mineral
Resources and Mineral Reserves. Inferred Mineral Resources have been estimated from geological evidence and limited sampling and
must be treated with a lower level of confidence than Indicated Mineral Resources.



| | (1) | Open Pit and Leach Pad Probable Mineral
                                         Reserves were classified by SilverCrest. Underground Mineral Reserves and Mineral Resources
                                         were classified by EBA, a Tetra Tech Company.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Underground Probable Reserve is based
                                         on a cutoff grade of 1.47 grams per tonne gold equivalent with an average 10% dilution
                                         and 90% mine recovery. Average true thickness of the designed stopes is 13.4 metres.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Open Pit Reserve is based on a cutoff
                                         grade of 0.20 grams per tonne gold equivalent in a constrained pit shell with applied
                                         capping of 8 grams per tonne gold and 300 grams per tonne silver.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Leach Pad Reserve based on production
                                         and drill hole data for volumetrics and grade model using a cut-off grade of 0.5 grams
                                         per tonne gold equivalent. No capping was applied.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Underground Mineral Resources are
                                         exclusive of Probable Mineral Reserves and based on 1 gram per tonne gold equivalent
                                         grade shell, a cutoff grade of 1.4 grams per tonne gold equivalent and applied capping
                                         of 12 grams per tonne gold and 600 grams per tonne silver.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





Mining Operations and Exploration
and Development

Santa Elena Mine Open Pit Mining



The Santa Elena Mine is
a conventional open pit and on September 9, 2010, the Santa Elena Mine poured its first gold and silver dore ounces. All drilling,
blasting and mining is completed by a local Mexican mine contractor utilizing a fleet of four 40 tonnes Caterpillar 740 carticulating
trucks, three 70 tonnes Caterpillar 769 haul trucks, support equipment including one D8 and two D9 dozers, two excavators, two
air track drills (Tamrock and G. Denver), one 140H Caterpillar grader, explosives truck and maintenance vehicles plus auxillary
equipment including a water truck and light vehicles. The current optimized pit is designed for an estimated mine life of four
years, which was originally 6.5 years. The design was changed to avoid a strip ratio up to 10:1 in year three and prevent excavation
with a subsequent high cost diversion of the adjacent Tinaja gulch which has high water flows in the rainy season. With the optimization
of the original pit, a portion of the original reserves have been transferred to underground. The overall strip ratio for the
pit is approximately 4:1.



Spent ore will be delivered
to the mill using a 3.5 cubic meter loader and a conveyor belt (grasshopper and stacker). A loader will load the spent ore from
the leach pad onto a 24 inch wide conveyor belt capable of handling 220 tonnes per hour to be delivered to a stockpile area for
blending with underground ore using a reclaim tunnel at the processing facility. Grade control will be performed on spent ore
using a belt sampler. For the Santa Elena Report, a 50/50 blend is used to maintain a nominal 3,000 tonnes per day feed to the
processing facility (1,500 tonnes per day underground ore and 1,500 tonnes per day spent ore from the leach pad). The tailings
produced from the processing facility will be filtered and deposited as dry-stack tailings.



The ore from both underground
and open pit resources will be processed by conventional cyanide leaching technology. In addition, partially leached material
from the existing heap leach operations will be blended with underground ore at a variable rate and reprocessed through the same
plant. The process plant has been designed to treat a nominal 3,000 tonne per day of ore, a mixture of freshly mined material
and partially leached heap residue and has been designed to treat any proportion of these two types of feed.



-53-









The waste rock storage
facility at Santa Elena has been designed for a capacity of 35 million tonnes and fully covers all planned open pit and underground
waste and dry stack tailings.



The plan for open pit closure
will be to transform the land back to its near original condition for best future land use. The open pit is not required to be
backfilled but is required to be stable and fenced to prevent accidents.



Santa Elena Mine Underground Mining



The Santa Elena ore body
varies in dip and thickness along strike and at depth. As a result, three well established underground mining methods have been
selected for ore extraction, being longitudinal long hole stoping, transverse long hole stoping and mechanized cut and fill. In
general, conventional mechanized mining methods have been selected. The basis of the development of the mining methods and consequent
equipment selection has been that SilverCrest will undertake production drilling, blasting and loading using a contractor for
the waste rock and ore haulage to surface. Initially a contractor will be retained to carry out mine development with jumbo drill
rigs purchased later in the mining life, after which development will be done in-house. SilverCrest will undertake general mine
infrastructure development, mine management and planning, general underground maintenance and provision of supplies, ore drilling
and blasting, ore loading and ore development and tunneling (after purchase of a drilling jumbo). The haulage contractor will
undertake haulage of all waste rock and ore to surface and backhaul of all backfill rock and tailings to underground. The development
contractor will undertake initial ramp, ore drift and other tunneling underground.



Longitudinal long hole
stoping is a sublevel bulk mining method involving a narrow, steeply dipping vein with competent ore and host rock. SilverCrest
will employ longitudinal long hole stoping when the ore has a width of less than 15 metres. Stoping will begin by drilling and
blasting the lower sublevel to initiate ore flow and provide an open face into which the ore will be blasted. The mining will
then continue on the upper level and will retreat towards the cross cut intersection from the ramp from which the stope is accessed.
In areas with a proposed stope thickness of greater than 15 metres, the transverse long hole mining method will be used. When
mining transversely, access drifts will be driven perpendicular to the strike of the ore body from the initial footwall developments.
Mining occurs by retreating from the hanging wall to the footwall, initiating ore flow by blasting from the footwall towards free
face reated against the hanging wall. To mine the stope, it is divided into primary, secondary and possibly tertiary stopes. When
the dip of the ore body results in stopes with a footwall inclination of less than 50 degrees, long hole stoping will not be suitable
and mechanized cut and fill mining will be considered for those areas. Once each cut is mined out, it will be filled with cemented
rock fill. Support will be required for the exposed cut back (roof) of each cut during mining, for safety of personnel operating
machinery and working in the stopes.



Additional mining equipment
will be required for the underground mine and the purchasing of the equipment has been scheduled based on when the equipment will
be required in SilverCrest’s capital cost estimate schedule, with consideration for equipment delivery lead times. For the
purpose of the pre-feasibility study contained within the Santa Elena Report, a preliminary schedule has been developed so that
the stope tonnes and grades can be applied to a mining timeline. The development schedule was established by ensuring that the
required development for all stopes operating in a particular period was completed in advance of production commencing. Allowance
has also been made for a ramp up period. The mining schedule contained within the Santa Elena Report anticipates peak production
to be reached in year six when both access ramps are actively producing. Mechanized cut and fill mining in the lower portions
of the mine have been scheduled later in the life of mine.



Santa Elena Expansion Project



The Santa Elena Expansion
Project involves combined processing of ore from the remaining reserves in the open pit, new reserves from underground development
and reprocessing of spent ore from the existing heap leach pad in a new milling and processing plant. Construction of a 3,000
tonne per day mill and plant facility is currently underway on the property. An underground decline is being developed and has
intersected the main mineralized zone at an elevation of 625 metres above sea level. The purpose of the Santa Elena Report is
to document a pre-feasibility study completed for the Santa Elena Expansion Project and support the mineral resource and mineral
reserve estimates announced by SilverCrest on May 29, 2013.



-54-







Environmental Conditions



Environmental studies have
been conducted on the existing open pit excavation occurring at the Santa Elena Mine.



Sale of Product



Santa Elena is an operating
mine and currently sells gold and silver as part of ongoing operations. 20% of the gold production is forward sold to Sandstorm.



Santa Elena Mine Milestones

Current activities at the
Santa Elena Mine include:



| | • | As
                                         mentioned above, on May 29, 2013, SilverCrest announced updated reserve and resource
                                         estimations for the Santa Elena Mine. The updated Probable Reserves (underground, open
                                         pit and leach pad) are estimated at 8.2 million tonnes grading 74.9 grams per tonne silver
                                         and 1.25 grams per tonne gold containing 19.7 million ounces of silver and 327,430 ounces
                                         of gold, representing a 103% increase in contained silver and a 50% increase in contained
                                         gold over the previous Probable Reserves statement. Updated Indicated Resources (exclusive
                                         of Probable Reserves) are estimated at 2.1 million tonnes grading 114.9 grams per tonne
                                         silver and 1.69 grams per tonne gold containing 7.9 million ounces of silver and 116,000
                                         ounces of gold, representing a 127% increase in contained silver and a 99% increase in
                                         contained gold over the previous Indicated Resources.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | In
                                         January 2014, SilverCrest announced that the Santa Elena Mine produced record production
                                         in 2013 of 2.66 million ounces of silver equivalent, 779,026 ounces of silver and 31,099
                                         ounces of gold. They also provided an update on their 2013 construction and expansion
                                         plan progress and advised that the 3,000 tonnes per day mill and Counter Current Decantation/Merrill
                                         Crowe plan is approximately 90% complete. Current construction activities are focused
                                         on piping and electrical work for all mill components. The mill is scheduled to start
                                         up late in Q1 of 2014, due to one month delay in receiving the ball mill.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | In
                                         February 2014, SilverCrest reported that, as of January 31, 2014, total underground lateral
                                         development (including ramp access) has progressed to approximately 2,730 metres and
                                         675 metres of ore development and 430 metres of raise development have been completed
                                         by an independent contractor. In addition, twenty-two closely-spaced underground drill
                                         holes, totaling 1,590 metres have been completed to better define underground resources
                                         and verify widths and grades for the first planned production stopes to be mined in 2014.
                                         The drill program, with estimated 25 metre centres, confirmed the consistent continuity
                                         and geometry of the main mineralized zone and drill result reconciliation with previous
                                         wider-spaced drilling in this area showed comparable widths and grades. With the arrival
                                         of SilverCrest’s underground production equipment in May 2014, test stoping is
                                         scheduled for late Q2 and early Q3 of 2014. SilverCrest stated that they are looking
                                         forward to transitioning from their current open pit heap leach operation to underground
                                         mining with a 3,000 tonnes per day conventional mill by the second half of 2014.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Black Fox Mine,
Canada

A technical report was
prepared in accordance with NI 43-101 entitled “Black Fox Project, National Instrument 43-101 Technical Report Prepared
for Brigus Gold Corp.” dated January 6, 2011 (the “Black Fox Report”). The following description of the
Black Fox Mine has been summarized, in part, from the Black Fox Report and readers should consult the Black Fox Report to obtain
further particulars regarding the Black Fox Mine which is available for review under Brigus’ profile on the SEDAR website
located at www.sedar.com. Information that updates the information in the Black Fox Report has been provided by Brigus.



-55-









Project Description and Location

The Black Fox property
(the “Black Fox Property”) is located 10 kilometres east of Matheson, Ontario, along Hwy 101 east and approximately
655 kilometres north of Toronto, Ontario. It is located in the Hislop and Beatty townships, District of Cochrane, in the Larder
Lake Mining District 90.



The Black Fox Property
includes approximately 1,761.41 hectares of land. All of the claims for the Black Fox Property are current and the required claim
fees and work commitments have been completed. All of the claim corners have been surveyed. Brigus owns: (i) 12 claims with the
surface and mineral rights, (ii) 15 claims with surface rights, and (iii) one claim with mineral rights, and leases (i) three
claims with surface and mineral rights, (ii) one with mineral rights and (iii) 22 other mining claims.

A closure plan has
been developed for the development of the project in compliance with legislation and directives from all pertinent regulatory
bodies.

The Black Fox Mine
is currently permitted under the following approvals:

| | • | Certificate
                                         of Approval for Industrial Sewage Works 4-0125-96-006;
| | - | -----------------------------------------------------------------------------------------------------------

| | • | Amended
                                         Certificate of Approval - Air - (mine heaters and generators) 3505-56R2JP;
| | - | ---------------------------------------------------------------------------------------------------------------------------

| | • | Amended
                                         Certificate of Approval - Air - (laboratory) 3505-56R2JP; and
| | - | --------------------------------------------------------------------------------------------------------------

| | • | Permit
                                         to Take Water - (mine dewatering) 00-P-6025.
| | - | --------------------------------------------------------------------------------------------



Upon obtaining the
Black Fox Property, Brigus has undertaken to clarify historical permits and obtain new permits required by new or amended legislation.

Accessibility, Climate, Local
Resources, Infrastructure and Physiography

The Black Fox Property
is located ten kilometres east of Matheson, Ontario and 65 kilometres east of Timmins, Ontario, Canada. Access is via Highway
101 East, which crosses the Black Fox claim block at the properties center from east to west. The mine site and its facilities
are located on the south side of Highway 101 East. Supplies and services are available in Matheson or Timmins and can be delivered
with a 12-hour turnaround. The primary industries are forestry and mining and the Black Fox Property is located in a well-established
mining camp. Mining and exploration personnel as well as equipment can be found locally for projects in the area. The property
is also contacted by two other roads: Hislop 2 Road to the east and Hislop 6 Conc to the south.

Access to the mine
and mill sites, including the pit and tailings impoundments, is limited. Security gates and guardhouses are positioned on the
main access roads at the entry points to the project areas. Entry is controlled by a guardhouse operated 24 hours per day, 365
days per year. The security team’s responsibilities include maintaining a constant, 24/7 presence at the site access guardhouse,
performing roving patrols around the site, and performing plant security and loss protection.

Temperature ranges
from 20 degrees Celsius to 33 degrees Celsius during the summer months and -30 degrees Celsius to 10 degrees Celsius during the
cooler winter months of October to May. The average precipitation is 873.4 millimetres per year and ranges between 44.5 millimetres
in February to 100.1 millimetres in July. Rapid melting of accumulated snowfall can produce local flooding on the Black Fox Property
for short periods during the spring months. Average monthly wind speeds for the region are 11 to 15 kilometres per hour. Past
operations at the property have not been affected by weather. The surface at the Black Fox Property is mainly agricultural land
with secondary growth of poplar and willow shrub.

-56-







The Black Fox Property
is predominantly agricultural land with a mature willow shrub, poplar, black spruce, and white birch forest located to the south
and eastern borders of the property. The region is characterized by outwash deposits from continental glaciation including raised
beaches, flat clay pans and eskers. Relief includes rock knobs and ridges. Surface waters include lakes, rivers, and their associated
habitats. Lakes include Froome Lake located 0.7 kilometres west of the mine, Leach Lake located 1.4 kilometres northwest of the
mine and Lawler Lake located 1.7 kilometres south. Two other lakes, Salve located 5.2 kilometres north and Nickel located 5.9
kilometres north, form the headwaters of the Salve Creek. Salve Lake is designated as a Forest Reserve and Recommended Conservation
Reserve. The property is located on the Salve Creek and Pike River watersheds, which are both tributaries of the Black River.
The Black River flows north into to the Abitibi River which in turn flows into the Moose River. The Moose River ultimately flows
into James Bay. The Black Fox property has low to moderate topography with elevation ranging from 295 to 330 metres above mean
sea level.

The infrastructure
of the Black Fox Property consists of Highway 101 East, which is adjacent to the project site and facilities. The existing surface
site facilities consist of established infrastructure, including a fresh water well, offices, an approved mine treatment system,
hydropower lines and waste rock and ore storage pad areas.

The plant is being
fed from an existing 27 kilovolt power line to the plant site. Power will be distributed at the plant site from this 27 kilovolt
power line, a 5 mega volt ampere (“MVA”), 4,160 volt (“V”), 3 phase, 60 hertz distribution
transformer will be installed. The system is being upgraded to adequately handle the new loads.

Fresh water is being
supplied from a fresh water well. Fire water will be pumped from the maintenance facility which will source water from the mine
polishing pond. The underground mine water is currently being pumped at the rate of 25 to 35 cubic metres per hour. Mine run off
is anticipated to average above 16 cubic metres per hour. Underground mine water reports to the mine holding pond for recycling
and or discharge through the Black Fox water treatment facility. Excess water will be treated during the spring and summer months
for discharge to the environment through the water treatment system.

Firewater will be
fed by an electric firewater pump with a diesel backup pump in the event of a power failure. Firewater will be delivered to the
maintenance shop via buried distribution piping, while the administration complex is supplied with fire extinguishers. The fresh
water discharge connection is at an elevation above the tank bottom and ensures the remaining volume will be available for firewater
purposes. Municipal fire department is located within 10 kilometres of the Black Fox Property.

History

The Black Fox Property
was first explored by Dominion Gulf in 1952 and then byHollinger in 1962. In 1988, Glimmer Mine Inc. (“Glimmer”)
put together the property package using a combination of crown and private lands. In 1989, Noranda Exploration Company Ltd. (“Noranda”)
entered into a joint venture agreement with Glimmer. As a result of this agreement, Noranda held a 60% interest in the property.
During their ownership, Noranda merged with Hemlo Gold Mines Inc. (“Hemlo”). Exall purchased the property from
Hemlo in April 1996, obtaining approximately 60% interest in the property with Glimmer retaining 40%. Apollo Gold Corporation
(“Apollo Gold”) acquired a 100% ownership in the fall of 2002 and renamed the property “Black Fox”.
In June 2010 Apollo and Linear Gold Corporation (“Linear”) merged to form Brigus.

The first drilling
on the property was done by Dominion Gulf in 1952. Hollinger next tested the area in 1962 near the diabase dikes located in the
easternmost part of the property. Between 1989 and 1994, Noranda, and later Hemlo, completed eight surface diamond drill programs
with a total of 28,014 metres of drilling in 143 drillholes. The result of these drilling programs was the definition of an intensive
grouping of ore zones in two areas of the property. These ore zones were all within 250 metres of the surface. Some high-grade
intercepts, including abundant visible gold, were recovered during the drilling program. Between 1995 and 1999, Exall completed
another 142 surface diamond drillholes, as well as 708 underground diamond drillholes with mine development. Eight hundred and
ninety-six (896) diamond drillholes were completed by Apollo Gold between 2002 and 2008.

Noranda first performed
detailed geological mapping of the property and much of the surrounding area in 1989. A total field magnetic survey over most
of the property was conducted along with a complete inductive source resistivity survey and a conventional induced polarity (“IP”)
survey over portions of the property at that time. Additional IP surveys were completed in 1997 by Glimmer.

-57-







Ore mined from the
Black Fox Mine was custom milled from 1997 through September 1999 at the St. Andrew Goldfields Stock Mill located 34 kilometres
from the mine. From October 1999 through May 2001, ore was milled at Kinross Gold Corporation’s Macassa facility in Kirkland
Lake, subsequent to mineral tests carried out by Lakefield Research and other metallurgical laboratories. These mills used cyanidation
of the whole ore to process the ore. Test work has indicated that gravity pre-concentration may improve gold recovery.

Black Fox was formally
owned and operated by Exall. The previously estimated ore reserves were 3.1 million tonnes (“Mt”) with a grade
of 4.6 grams per tonne gold (449 100 ounces of gold) all from open pit mining. The open pit total waste is 47.2 Mt of waste rock
and overburden material with an equivalent overall strip ratio of 15.4 waste to one ore. The underground ore resources (below
9,815 metres) were 1.6 million tonnes with a grade of 8.1 grams per tonne gold.

Exall mined portions
of the deposit from the bottom of the crown pillar to the 225 metre level (measured vertically 225 metres below the surface) using
conventional underground mining methods including jumbo drills, diesel load haul dump (“LHD’s”) loaders
and haul trucks in a random room and pillar method.

Geological Setting

The Black Fox Property
is located east of the city of Timmins in northeastern Ontario located on the Destor-Porcupine Fault Zone(“DPFZ”).
The DPFZ has a strike length of about 200 kilometres, and many of Ontario’s gold mines are located on or near the DPFZ.



The Black Fox Property
is located within Precambrian age metavolcanics and metasedimentary rocks of the Abitibi Greenstone Belt. The area hosts five
main rock groups, most of which have tectonic contacts of varying intensity. These include:

| | • | Blake
                                         River Group
| | - | ----------------------------------------------------------

| | • | Kinojevis
                                         Group
| | - | --------------------------------------------------------

| | • | Stoughton-Roquemaure
                                         Group (Black Fox Host Units)
| | - | ------------------------------------------------------------------------------------------

| | • | Hunter
                                         Mine Group
| | - | ----------------------------------------------------------

| | • | Porcupine
                                         Group
| | - | --------------------------------------------------------



The Blake River Group
consists of calc-alkalic basalt, andesite, dacite and rhyolite flows and tuffs. It is the youngest of the volcano-sedimentary
rocks and stratigraphically overlies the Kinojevis Group. The Kinojevis Group is a sequence of iron rich tholeiitic volcanic rocks
that occur on both sides of the Blake River synclinorium. The Stoughton-Roquemaure Group stratigraphically underlies the Kinojevis
Group and is a mixture of ultramafic to basaltic komatiite lavas and magnesium-rich tholeiitic basalts that host the Black Fox
gold zones. This is underlain by calc-alkalic rocks of the Hunter Mine Group. The Hunter Mine Group consists primarily of calcalkalic
pyroclastic and flow rocks in the dacite-rhyolite compositional range. The Porcupine Group of wacke, siltstone and argillite sediments
are the youngest in the region. They are separated from the above mentioned volcanic groups by a major fault contact interpreted
to have once been a thrust fault. This group lies predominantly north of the Black Fox Property. Pre- to syn-kinematic granitic
rocks occur throughout the section, cross-cutting all older lithologic units.

The Black Fox Property
is situated within a deeply rooted ductile shear zone accompanied by large-scale isoclinal folds. The mineralization is situated
on the southern limb of a regional anticline and on the northern limb of the Blake River Syncline. At Black Fox, the axial plane
of the syncline strikes roughly northwest to southeast. The DPFZ hosts gold mineralization comparable to the Cadillac Break to
the South and Casa Berardi Fault Zones located to the North. These regional fault fabrics typically strike east to southeast and
dip to the south. They are deeply rooted structures that likely penetrate to the mantle, as indicated by the associated ultramafics
of the DPFZ and the syenites of the Ross Mine Syenitic Belt (“RMSB”). Zones of intense hydrothermal alteration
measured in thousands of feet are locally associated with these belts. These types of deep-rooted faults are considered to be
the main channel way for the upward migration of deep fluids. The main structural feature on the Black Fox Property is the intersection
of the DPFZ with the RMSB.

-58-







Most of the Black
Fox Property is rather flat and lacking in outcrops. Pleistocene overburden averages 20 metres thick and is composed of lacustrine
clay, gravel and till. The main bedrock types consist of variably sheared, faulted, carbonatized and mineralized sequences of
komatiitic ultramafic volcanics, belonging to the Stoughton-Roquemaure Group. These strike northwest-southeast across the property,
dipping 45 degrees southwest, parallel to the DPFZ.

Numerous syenitic
and feldspar ± quartz porphyry sills and dykes of various ages occur, primarily within the main ankerite alteration zone.
They are commonly massive to brecciated, silicified and pyritic with occasional sericite and hematite alteration and a more common
black chlorite alteration at the contacts. Fragments of these dykes frequently occur within the more strongly deformed green carbonate
zones and they can contain very high gold grades.

Surface, underground
and exploration drilling has delineated five major rock types in the vicinity of the Black Fox mineralization. These include:
Mafic volcanic units; Metasediments; Green carbonate schist; Ultramafic volcanics; and Felsic intrusive units.

The mafic volcanic
units are further subdivided into massive mafic volcanics (“MV”), pillowed mafic volcanics (“PMV”)
and bleached mafic volcanic flows (“BMV”). The MV and PMV are fine grained typically hosting a significant
degree of chlorite alteration. These units occur primarily within the hanging wall of the deposit. In the hanging wall, they are
fractured and contain minor amounts of quartz-calcite veins. Where they occur in the footwall, they lack carbonate veining and
have more prevalent quartz and chlorite alteration.

The BMV, also known
as the “Flow Zones”, is a medium to fined grained, bleached mafic volcanic rock, which is generally located just above
the footwall of the mineralization. This unit has weak chlorite and sericite alteration and is associated with fine grained disseminated
pyrite. Stronger sericite and pyrite alteration is found near the upper contact of the BMV. Pyrite in this unit is associated
with gold. The BMV dips 45 degrees to 55 degrees southwest and is moderately foliated.

The metasedimentary
rocks overlie the BMV and also occur as lens of greywacke (“SED”) within the green carbonate schists (“CGR”)
as described below. At the top of the BMV, the greywacke layers are interbedded with siltstone. This unit is discontinuous, varies
from 0.05 metres to 1 metre thick and displays graded bedding with stratigraphic tops to the southwest.

The CGR, ranges from
15 metres to 75 metres thick and is continuous along strike and dip across the property. It is characterized by intense ductile
and brittle deformation shown by multiple generations of foliation and veining. The CGR host a quartzankerite-fuchsite-leucoxene
alteration assemblage accompanied by varying levels of retrograde chlorite alteration. This unit contains numerous small bodies
and blocks of felsic dikes and sills with a syenitic composition. A complex stockwork of quartzankerite veins cross cut the main
CGR fuchsite assemblage and the felsic material. The lapilli sized fragments have been deformed to their current elliptical shape,
elongate parallel to foliation. Mineralogy, microscopic texture and structures suggest that the CGR is an ultramafic pyroclastic
rock, which has undergone intense ductile deformation. Medium to coarse-grained pyrite is a minor component and is estimated at
approximately 1%. Gold occurs as fine-grained free gold located along chlorite slips, as disseminated grains in quartz veins and
associated with the felsic dikes.

The ultramafic volcanic
rocks are divided into five units. These include; chlorite-talc ultramafic (“CUV”), talc ultramafic (“TUV”),
grey carbonate (“CGY”), silicified grey carbonate (“SUV”) and ankerite ultramafic (“AUV”).
Generally, the ultramafic volcanics occur stratigraphically above the CGR.

The CUV is massive,
brecciated in places and often magnetic ultramafic rock. This unit does not display pervasive carbonate alteration and carbonate
is restricted to late veins and fractures. Tremolite is present, the two primary mineral assemblages are tremolite-talc-chlorite
and talc-chlorite-carbonate. Locally, the CUV occurs within the mineralized envelope as a non-brecciated unit and the CUV is not
of major economic significance.

-59-







The TUV is fine grained,
marbled with quartz-ankerite fragments and massive ultramafic volcanic rock. It tends to be strongly foliated proximal to shear
zones, ranging from 0.3 m to 15 m thick. It is most often associated with the stockwork CGY.

The CGY is composed
of a fine grained, massive matrix composed primarily of magnesite-quartz. Relic outlines of pyroxene and preserved black chromite
grains are visible in hand specimen. This unit contains several generations of quartz veining. The CGY is 0.5 metre to 2 metre
thick, generally occurs above the CGR and is bound by talc ultramafic shear zones.

The AUV is fine-medium
grained rock composed of a quartzankerite- calcite-chlorite assemblage cross cut by quartz-ankerite veining. Chloritization varies
throughout this unit with matrix ankerite and calcite alternating downward through the package. Visible gold occurs in highly
chloritized area as well as in association with the quartz-ankerite stockwork. The AUV generally occurs above the CGR and is one
of the dominant rock types at the Black Fox Property.

Many types of felsic
intrusive (“FI”) have been recognized within a number of different lithologies at the Black Fox Property. Most
of the felsic intrusives are fine to medium grained, massive and moderately fractured, but some coarser grained porphyritic bodies
have also been observed.

They are often cross
cut by quartz-ankerite stockwork and most are strongly affected by sericite and albite alteration. Varying amounts of fine-grained
disseminated pyrite are a strong indication of gold mineralization. Gold occurs as free gold associated with quartz veins. Syenitic
pods have been observed in the CGR. These are coarse grained and contain a relatively high concentration of pyrite, at 5 to 15%
they typically have an average gold grade of 15grams per tonne.

Mineralization

Gold mineralization
at Black Fox occurs mainly within an ankerite alteration zone 1 kilometre along strike and 20 metres to 100 metres wide. This
alteration envelope occurs primarily within komatiitic ultramafics and lesser mafic volcanics within the outer boundaries of the
DPFZ. In some areas, the auriferous zones are concordant, which follow lithological contacts and have been subsequently deformed
to slightly discordant zones that are associated with syenitic sills. Other auriferous zones occur in quartz veins and stockworks
discordant to lithology.

The three main
styles of gold mineralization observed at the Black Fox Property are:

| | • | Low-sulfide
                                         mineralization associated with abundant quartz veining and quartz stockwork within strong
                                         ankerite-fuchsite altered ultramafic volcanic rocks.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Mineralization
                                         hosted within mafic volcanic units associated with greater than 5% pyrite and minor to
                                         moderate quartz veining.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Mineralization
                                         hosted by silicified felsic dikes.
| | - | ------------------------------------------------------------------------------------------



The first style
is low sulfide mineralization occurring within quartz-rich portions of the AUV and CGR rock types. This includes the green carbonate
alteration of the “Main Zone”. The typical host is the ankerite-fuchsite altered ultramafic volcanic rocks, commonly
found throughout the DPFZ. Quartz veining and quartz stockwork show multiple phases of veining and structural episodes. Visible
gold is common in high-grade areas.

The second style
of mineralization is hosted within mafic volcanic units coded as BMV or MV. This style is referred to as the “Flow Zones”.
It is typically associated with greater than 5% fine-grained pyrite, minor to moderate quartz veining and a strong bleaching may
be present. The quartz veins are typically parallel to foliation, and visible gold is characteristically absent. This style of
mineralization is common in the footwall portion of the DPFZ. It has been tested mainly by the eastern part of the 235 Level underground
drilling.

-60-







The third style
of mineralization is hosted in silicified felsic bodies. These include both quartz-feldspar porphyries and finer grained units
which are possibly syenitic in origin. Mineralization in the felsic units is associated with increased silicification, pyrite
and some quartz veining all associated with a fracture foliation. In the middle and hanging wall portions of the DPFZ, felsic-hosted
mineralization can be correlated from hole to hole over short distances. In the footwall portions, blocks and lenses of felsic
material are encountered which do not correlate from hole to hole. There have been 15 separate mineralized structures identified
within the ankerite envelope. The two main gold-bearing zones of their classification are the A1 at the hanging wall contact and
the C0 located at the footwall contact. The other smaller zones located between these two generally have less continuity and width
and represent parallel, mineralized shears and faults. Previous underground mining indicates that sub-horizontal, mineralized
bodies located within the “Main Zone”, can be up to 15 metres thick and very high grade. This suggests that zones
of dilation were produced during episodes of structural movements. The majority of the other mineralized zones and quartz veins
are one to five metres in width.

At least three generations
of structurally controlled quartz veining have been identified in the underground workings. Quartz veins and stockwork zones within
the main mineralized envelope are concentrated along shear/fault zones. These structures parallel the main mineralized envelope
suggesting they are responsible for the location and formation of the mineralization. The presence of sigmoidal vein structures,
multiple quartz injections and re-sheared vein material with chloritic slips indicate complex and repeated structural movements
during a cyclic brittle-ductile deformation period. In the quartz stockwork zones, gold mineralization can be erratic possibly
related to certain vein sets carrying gold, whereas others are barren.

Exploration

During the spring
of 2003, Brigus contracted with Quantec Geophysical, Inc., Toronto, Ontario, to complete an IP survey covering the entire property.
Lines were spaced every 200 metres with 100 metre dipole spacing. This survey has shown many chargeability and resistivity anomalies
along both the DPFZ and the northwest projection of the Ross Fault. The Ross Fault is the host for the Ross Mine, located approximately
7,500 metres southeast of the Black Fox mine. In addition to these, a number of north-south trending anomalies were found. The
intersections of these trends are considered to be prime exploration targets. It appears that the data from the earlier Noranda
magnetic survey will also be valuable in defining exploration targets.

In 2010 Brigus contracted
Scott Hogg & Associates Ltd. of Toronto, Ontario to carry out a helicopter towed aeromagnetic gradient survey at a 75 metre
line spacing and contracted Quentec Geosciences Ltd. of Toronto, Ontario to conduct a Titan Deep IP geophysical survey at a 200
metre line spacing. The magnetic survey covered the entire Black Fox Property and the IP survey filled in areas that were not
surveyed by the Quantec IP survey conducted in 2004. The results of both surveys are in the process of being interpreted.

Drilling

The initial portion
of the Brigus surface drilling program concentrated on finding new ore zones below the Black Fox Property known resources, along
strike and adjacent to the known zones. The targets were the intersection of secondary faults with the DPFZ and also dilation
zones within it. The mineralization is so tightly controlled by structures that a hole a few metres away could miss a high-grade
zone. Fans were spaced approximately 25 metres along strike and the intersections of the holes with the DPFZ were planned to be
approximately 25 metres apart. The result of this program was the identification of a number of small, high-grade ore shoots that
generally plunge at a 20 to 40 degree angle to the southeast or southwest, along the DPFZ. This is consistent with the intersection
of two 45 to 70 degree dipping faults or with a zone of dilation along a fault that has both horizontal and vertical movement.
Many of these ore shoots are still open with depth. A near-surface portion of high-grade mineralization was drilled on 12.5 metre
spacing to improve the definition of this higher-grade mineralization.

There was no surface
or underground exploration drilling in 2008, 2009 and 2010 conducted on the Black Fox deposit by Brigus, except for the completion
of 11 NQ-sized condemnation surface diamond drill holes. The condemnation holes have an average depth of 231 metres and total
to 2,544 metres.

-61-







The last Brigus exploration
drilling in 2007 continued from previous campaigns on 12.5 to 25 metre fence lines. The two main emphases included infill delineation
of existing mineralization and to explore for areas of new mineralization. In 2004, a 1,250 metre long exploratory underground
drift (4 metre x 4 metre) was developed in the hanging wall down to 235 metre below the surface, to establish drill stations for
an underground drilling program. The underground drilling program consisted of 78,650 metre of diamond drilling from 396 core
holes. Surface drilling continued and by the end of 2007, Brigus had completed 896 diamond drill holes on the property, totalling
225,334 metres. The Brigus drilling consisted of 500 surface drill holes for a total of 146,684 metres and 396 underground drill
holes for a total of 78,650 metres.

Norex Drilling International
from Porcupine, Ontario, has completed most of the surface drilling at Black Fox for Brigus. The holes are typically NQ diameter
core unless conditions require a reduction in core size. In general, ground conditions have been very good with average core recovery
approximately 95%. The following sections document drilling, chain of custody and logging procedures employed by Brigus. Although
no records are available to document the procedure used by the prior operators, there is no reason to suspect they did not follow
standard industry practices of the time.

The core is removed
from the wire line inner barrel and placed in wooden core boxes. Each box can hold up to six metres of NQ core. The depth at the
end of the core run, along with the length of the run and the amount of core actually recovered, is written on wooden blocks,
which are placed in the box at the end of the core run. When the box is full, the drillhole number, along with the beginning and
ending depth is written on the outside of the box. A wooden lid is then placed on the box and the box is sealed with wire. The
core is stacked at the side of the drill until it is picked up by representatives of Brigus. During this time, the core is under
the direct supervision of the driller.

The core samples
are picked up by Brigus personnel each morning and at various times during the day as necessary. It is loaded into a company truck
and taken to the core logging facility on the project site. The core is then unloaded from the truck, the wire ties are removed
and the core is inspected for any damage that might have occurred during transport. Each box is then placed in racks within the
core logging facility to await logging by Brigus geologists. When the geologist begins logging a hole, a logging form is first
computer generated with data regarding the hole ID, depth, date logged, location and the logging geologist. All logging is done
electronically with no handwritten data. This eliminates a separate data entry step and the subsequent errors that it can introduce.
The geologist moves the boxes of core from the rack to the core logging table. The lids are removed and placed outside for later
reuse. The pieces of core are then reassembled, within the box, just as it would have come out of the hole. The core is then measured
and that measurement is compared to the core depth markers placed in the box by the drillers. This is documents core recovery
and provides a check against any lost or missing core not accounted for by the drillers. All of this data, along with all geological
data, are entered into the computer spreadsheet by the geologist. The core is then digitally photographed on the logging bench.
This digital record is stored in the computer files for that hole. All of the geological information is backed up on the server
daily.

Prior to removing
the drill string, the downhole deflection is measured with a Reflex E-Z Shot digital tool (E-Z Shot). Measurements are taken approximately
every 50 metres down the hole. Occasionally a spurious reading will be obtained near a particularly strongly magnetic rock unit.
The geologists review all surveys and any such readings are discarded. As a check, three holes were re-surveyed using a Maxi-bore
gyroscopic tool. The Maxi-bore survey duplicated the E-Z Shot survey very well. On average, the E-Z Shot gave readings that were
within 3.1% on bearing and 0.4% on dip from the Maxi-bore survey information. All drillholes have their collars located by a licensed
surveyor upon completion.

The Brigus drilling
program has targeted two main areas of the mineralization. The first is the near-surface area where about half of the surface
drillholes were completed. Drilling typically is located along sections oriented 36 degrees azimuth at inclinations of -45 degrees
to -50 degrees to provide an alignment oriented nearly perpendicular to the DPFZ.

-62-







The second targeted
area of mineralization is down dip of the previous drilling. At depth, the DPFZ has the same southeasterly strike, but the dip
steepens to an average of -60 degrees. The mineralization still occurs along structural intersections and at dilation zones along
the fault. These appear to rake at about -40 degrees to the southeast or southwest. In this area, the shoots tend to be smaller,
thinner and less continuous than those encountered near the surface. The drillholes, which test this area, were collared from
both the surface and underground. Typically, fans were used so that the structure was tested on 12.5 to 25 metre spacing. Eventually,
more tightly-spaced drilling from underground platforms will be required to improve the delineation of the mineralization.

Sampling and Analysis

The sampling procedure
begins with the geologist defining each sample interval and designating such with a sample tag documented in a sample book. They
next mark the core with a center line cut mark and replace the core box lids for transfer to the sawing station. In the sawing
room technicians saw the core sample in half with a diamond saw and place one half in a bag which is marked with the sample number
and includes a sample tag. The half core that remains in the core box has the lid replaced and is placed back in the rack by the
technician. Blank and standard samples are inserted approximately every 20 samples and are numbered in sequence with the core
samples. The samples are then stored inside the core facility until they are picked up by Swastika Laboratories (“Swastika”)
from Swastika, Ontario. The samples are placed into their truck, with each sample being checked off a list as it is being loaded
and then taken directly to the laboratory where they are unloaded into a secure facility. At the logging area, once a truck load
of split core has accumulated, the boxes are labelled with hole number and footage on stainless steel tags and then moved to covered
storage racks located outdoors.

There have been reported
two serious sampling issues at the Black Fox Mine. Both of which are related to coarse gold and sample size resulting in analyses
that tend to report less gold than is actually present. The first issue relates to obtaining a large enough sample to represent
the area it will influence. The gold at the Black Fox deposit appears to be concentrated in small areas causing drill hole samples
to occasionally get too much gold in the sample or more commonly, missing the area of concentration and get too little gold in
the sample.

The second issue
relates to the particle size and distribution of the gold. When the particles are relatively large and not evenly distributed,
the core holes can be too small to obtain a representative sample. This has a similar effect, in some cased it will overestimate
the gold content but more typically underestimate it. Some samples may even appear to be waste having not encountered any gold
particles that may be located relatively close by. It is likely that holes several metres in diameter would be required to obtain
representative samples of the deposit. Some areas that were mined when compared with the drilling present and found many instances
of drill indicated waste which were subsequently stoped.

This second issue
is accentuated by getting the representative amount of gold in the sample pulp once the core sample has been split, crushed, split
again and then pulverized. Gold particles up to 0.15 centimetres have been observed and particles of 0.06 centimetres are very
common. With gold this coarse, it is easy to create sub-samples that contain too many or too few gold particles if the sample
size is not based on the size of the gold particles in the deposit. In order to sample the 0.15 centimetres gold particles that
occur at Black Fox, samples of up to 109 kilograms must be processed in their entirety. If the sample contains 0.06 centimetres
gold particles, which commonly occur in the deposit, a seven kilogram sample must be processed in its entirety. These sample sizes
are much larger than the typical 30 gram fire assay sample or even the generally larger than the 1,000 gram screen metallic assay
sample. Once again, the samples result in a few assays containing too much gold, with far more containing less than is actually
present in the whole sample.

Without proper size
samples the database for the deposit likely contains a few samples that are too high in grade, but far more that are too low in
grade.

-63-







Quality Control

During the development
of the SRK Pre-Feasibility Study, Analytical Solutions (“ASL”) of Toronto Canada was contracted to provide
an independent QA/QC review of historical and current sampling at Black Fox. The following paragraphs summarize their findings
ASL has been contracted to review documentation related to assay quality control and sampling for the Black Fox mine. The principal
objective was to justify use of the existing assay database for Resource calculations.

The focus of the
studies by ASL was to determine (a) whether there was any evidence of bias in the assay database and (b) the effect of coarse
gold on the reliability of the assays. The Black Fox Mine assay data includes 128,026 assays. The 50th percentile for the dataset
is 0.06 grams per tonne gold, the 90th percentile is 0.77grams per tonne gold and the 95th
percentile is 2.23 grams per tonne gold. It is apparent that only the upper 5% of the samples will influence the Resource calculation
and the focus of the review should be this relatively small percentage of samples in the database.

No evidence has been
found by previous consultants, who have done extensive reviews of procedures and data, of a bias in the gold assays. A systematic
bias over a significant amount of time would affect a resource calculation but this problem has not been identified. Concerns
have been raised regarding sample representivity of the Black Fox Mine. Thousands of pulp and reject duplicates confirm that it
is difficult to reproduce assays within an arbitrary ± 10% but the assay reproducibility is typical of similar deposits
and does not represent a material risk.

Brigus has implemented
a significantly improved check assay program where there is a check assay on each mineralized interval. In addition to the blank
and standard check samples, Swastika runs its own internal check samples. All of the samples are run using a 30 gram fire assay.
Relatively higher-grade zones are selected from the fire assay results by Brigus personnel and these intervals are re-run with
a 1,200 gram screened metallic assay. Two of these samples are selected out of each ore zone at random and the rejects are sent
to SGS Laboratories in Rouyn, Quebec where they are re-prepped and run for a second screen metallic assay. This is used as the
quality check on the first assay set run by Swastika. All of the assay data is sent to Brigus in digital format where it is merged
with the geological spreadsheet for that hole.

Brigus has completed
screen metallic assays on 594 samples. Of these, 512 assays can be compared to normal fire assays. The screen metallic assays
are 17% higher in grade than the average of the fire assays from these intervals. A total of 289 screen metallic assays are higher
in grade to the average of the fire assays, while 223 are equal to or lower in grade. Other assay methods will find too much gold
on occasion, but the majority will find less than is in the core.

Brigus submitted
standards and blanks within each set of samples submitted for assay. Four labs were used with most of the assays completed by
Swastika. Several thousand tests were completed and the blanks typically agreed. A number of sample standards have been run within
each group of samples. Swastika has reported reasonable ability to accurately assay the standards.

If the blank or standard
failed, then the entire batch (20 samples) would be reassayed, as well as the failed standard or blank.

A total of 8,425
sample pulps have been rerun by the original assayer. These samples indicate good agreement between the original sample and the
rerun sample. The check was required to be within ± 10%. If not, the pulp would be reassayed a second time.

A total of 2,618
assay intervals have been checked by a different lab using splits from the sample rejects. The results indicate that the original
sample is higher than the check by about 4%. Of the 2,618 checks, a total of 905 or about 35% have differences of greater than
30%. If the checks were not within 20%, a second pulp would be prepared from the rejects. These relative differences are very
significant and point out the need for a more substantial sampling and assaying program.

-64-







Large composites
averaging about 14 kilograms in weight were made by combining drillhole core and/or rejects. Typically, nine drillhole intervals
were composited into one minibulk sample, however the range was four to 17 kilograms. A total of 47 composites were made from
mostly ore-grade intervals. Twenty-one of the 47 ore-grade composites contained high-grade. Since these tests use a much larger
sample than the assay pulp, one would expect in a coarse gold deposit that the results of the mini-bulk sample gravity tests would
be more reliable than the 30 gram pulps used for fire assay. The results of the 47 ore-grade mini-bulk gravity tests indicated
a 9% lower grade in the mini-bulk samples compared to the individual assays. This is the opposite of what would be expected, and
it is likely due to more high-grade material being in the mini-bulk samples than in the deposit as an average.

After the core was
logged, the core samples were split by a diamond saw to obtain the assay lab sample. The 50% split was bagged at the site and
either picked up by assay lab personnel or shipped to the assay lab. The sample was dried, crushed, split, pulverized, and blended
to obtain fire assay pulps. The labs prepared 15 gram to 30 gram assay ton samples for assay. Most of the assays were completed
by fire assay methods with a gravimetric finish.

Data Verification

Site visits were
conducted from August 31 to September 2, 2010 and again from November 17 to 19, 2010. During these site visits, inspections were
conducted of the site, including the open pit, underground and mill location.

Seven drill holes
were spot checked by Wardrop Engineering Inc. (“Wardrop”). These holes were selected to provide a cross section
of geographic location, mineralization intersected and of the various diamond drilling campaigns. The core was reviewed and compared
with the paper drill logs on November 19, 2010. No issues were identified with the core logging and transcription.

Each of these drill
holes were cross checked with the paper and digital drill logs for the collar coordinates and down hole surveys. The assays for
each of the drillholes were crosschecked with their assay certificates. No errors were found.

Security of Samples

Brigus sawed the
core and shipped half of the drill core to either Swastika or SGS Laboratories. The labs prepared a 30 gram sample for fire assay
with a gravimetric finish. The core was first crushed -10 mesh and a 400 gram split then pulverized. As a quality check, the coarse
reject sample material from each mineralized zone, over 1.0 gram per tonne gold is sent to the other lab. The rejects are re-split,
pulverized and re-assayed using a 30 gram fire assay with a gravimetric finish. This procedure provided a check on the entire
assay process, from sample preparation through to the gravimetric finish. Many of the higher grade samples were run with a screened
metallic fire assay. All check data was subjected to a standard QA/QC analysis. Swastika sent certificates of analysis and electronic
data files directly to the Brigus office in Matheson, Ontario. Hard copy results and assay certificate were also faxed to Brigus.
The faxed certificates, were marked up with specific hole intervals and cross checked to the digital file for errors. After confirmed
to be correct, the faxed copies were stamped complete, and added to the audit file for back referencing. The digital assay file
was cut and pasted directly into the electronic core logs. Once the results were pasted in, the sample numbers were cross-referenced
to ensure no pasting errors occurred. The completed drilling logs were then saved into a separate file and were put into a locked
folder on the Black Fox database, which can only be accessed as a read-only file. All editing of these files must be done through
the Administrator (Project Manager). Once the file has been saved to this folder, the file was sent to Apollo’s offices
in the United States for modeling and reporting purposes.

All reported assays
are final assays, and original certificates of analysis are stored in a separate binder and stored in a fire proof safe at the
Black Fox Property. All assay reporting goes through the Black Fox Property Manager. Since 2008, Brigus has not completed any
further exploration drilling on the Black Fox Property, so no additional procedures are reported.

-65-







Mineral Resource and Mineral
Reserve Estimates

The following table sets forth the estimated
Mineral Resources for the Black Fox Mine:

Indicated and Inferred Mineral Resources
(1 to 10)(Inclusive of Mineral Reserves)

|                    | Category  | Tonnes(000s) | Gold
    Grade(grams per tonne) | Contained
    Gold(ounces)
|------------------- | --------- | ------------ | ------------------------------- | --------------------------
|Open
    Pit        | Indicated | 3,164.2      | 4.445                           | 452,200                   
|Inferred            | 667.1     | 2.61         | 56,000                         
|Underground         | Indicated | 2,504.8      | 7.182                           | 579,200                   
|Inferred            | 115.2     | 5.816        | 21,500                         
|Total
    Indicated | 5,669.0   | 5.654        | 1,031,000                      
|Total
    Inferred  | 782.3     | 3.082        | 78,000                         

_____________



| | (1) | Black Fox Mineral Reserves are fully included in the Mineral
Resources.
| | --- | -----------------------------------------------------------------------

| | (2) | Black Fox Mineral Reserves and Mineral Resources are reported
as of October 31, 2010.
| | --- | -------------------------------------------------------------------------------------

| | (3) | The Mineral Resources have been reviewed and verified by
Howard Bird, former Senior Vice President, Exploration of Brigus, who is a qualified person under NI 43-101.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Cut-off grade for the open-pit reserves and resources is
0.88 grams per tonne gold.
| | --- | -----------------------------------------------------------------------------------

| | (5) | Cut-off grade for the underground reserves and resources
is 2.54 grams per tonne gold.
| | --- | --------------------------------------------------------------------------------------

| | (6) | Metal prices used for initial cut-off calculations are $1,150
per ounce for 88% of the gold sold and $500 per ounce of gold sold through the Black Fox Gold Stream.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | The estimated underground reserves include 10% unplanned
dilution at 0 grams per tonne from the backfill and 15% planned dilution at one gram per tonne from the walls for a total dilution
of 25%. The estimated open pit reserves include 30% dilution at 0 grams per tonne and a 95% mining recovery factor for both. The
higher average gold grades for the open pit and underground in the Indicated Resources compared to the Probable Reserves are the
result of no dilution being applied to Indicated Resources.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (8) | The mineral resources were estimated using the ordinary kriging
method.
| | --- | -----------------------------------------------------------------------

| | (9) | The mineral reserves were estimated from the life of mine
plan, which defined sustaining capital requirements and mine operating costs, to demonstrate that these reserves can be economically
extracted and processed. Mining losses and dilution were determined based on sub-surface geotechnical conditions, the mining method
and equipment capabilities for each area of the mine.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (10) | Contained metal in estimated reserves remains subject to
metallurgical recovery losses.
| | ---- | ---------------------------------------------------------------------------------------



-66-









The following table sets forth the estimated
Mineral Reserves for the Black Fox Mine:



Proven and Probable Mineral Reserves (1
to 9)



|             | Category              | Tonnes(000s) | Gold
    Grade(grams per tonne) | Contained Gold
        (ounces)
|------------ | --------------------- | ------------ | ------------------------------- | -------------------------------
|Open
    Pit | Probable              | 3,159.8      | 3.228                           | 327,920                        
|Underground  | Probable              | 2,936.0      | 5.933                           | 560,008                        
|Stockpile    | Proven                | 352.1        | 1.630                           | 18,446                         
|Total        | Proven
    + Probable | 6,447.9      | 4.372                           | 906,375                        

_______________



| | (1) | Black Fox Mineral Reserves and Mineral Resources are reported
as of October 31, 2010.
| | --- | -------------------------------------------------------------------------------------

| | (2) | The Mineral Reserves have been reviewed and verified by Howard
Bird, former Senior Vice President, Exploration of Brigus, who is a qualified person under NI 43-101.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Cut-off grade for the open-pit reserves and resources is
0.88 grams per tonne gold.
| | --- | -----------------------------------------------------------------------------------

| | (4) | Cut-off grade for the underground reserves and resources
is 2.54 grams per tonne gold.
| | --- | --------------------------------------------------------------------------------------

| | (5) | Metal prices used for initial cut-off calculations are $1,150
per ounce for 88% of the gold sold and $500 per ounce of gold sold through the Black Fox Gold Stream.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | The estimated underground reserves include 10% unplanned
dilution at 0 grams per tonne from the backfill and 15% planned dilution at one gram per tonne from the walls for a total dilution
of 25%. The estimated open pit reserves include 30% dilution at 0 grams per tonne and a 95% mining recovery factor for both. The
higher average gold grades for the open pit and underground in the Indicated Resources compared to the Probable Reserves are the
result of no dilution being applied to Indicated Resources.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | The Mineral Resources were estimated using the ordinary kriging
method.
| | --- | -----------------------------------------------------------------------

| | (8) | The Mineral Reserves were estimated from the life of mine
plan, which defined sustaining capital requirements and mine operating costs, to demonstrate that these reserves can be economically
extracted and processed. Mining losses and dilution were determined based on sub-surface geotechnical conditions, the mining method
and equipment capabilities for each area of the mine.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (9) | Contained metal in estimated mineral reserves remains subject
to metallurgical recovery losses.
| | --- | -----------------------------------------------------------------------------------------------



Mining Operations

Open Pit

The alluvial till
is being mined by a fleet of owner operated equipment, consisting of two CAT 320CL hydraulic backhoe excavators and twelve CAT
D740 articulated dump trucks. Support equipment consists of two CAT D6 Low Ground Pressure (“LGP”) dozers.
Till material is being dumped in separate overburden dumps located to the east of the offices. The overburden is dumped in three
metre lifts in cells created by forming up rock bunds from waste excavation. This method ensures that the free running nature
of the overburden is contained. Rock haul roads are constructed to allow the safe passage of the trucks. The LGP dozers are used
to form up the rock bunds and dress the overburden.

In areas known to
contain only waste, the drillhole spacing and drillhole depth is different from areas containing mineralization. About 75% of
the waste rock mined will be from areas containing only waste. Blasted waste rock is mined by a 12 cubic metres Komatsu PC2000
hydraulic backhoe excavator and 91 tonne CAT 777F rigid dump trucks haul trucks. A 6.5 cubic metres CAT 988H front-end loader
is used as a backup for the excavator and for general duties.

The mineralized zones
average 4.75 metre wide, but can be as narrow as one metre. The minimization of dilution of the ore is a critical element of the
mining operation due to the characteristics of the orebody. For this reason, the ore is mined in 3 metre lifts or benches, so
that identification of ore blocks can be carried out with the most accuracy and the material mined with the minimum of dilution.
The drill cuttings from all blastholes are sampled and assayed in order to provide the basis for ore grade control. The sampling
requirements influence the spacing of the blastholes which in turn influences the blasthole diameter.

Mining in the mineralized
area is accomplished using two, four cubic metres CAT 385CL hydraulic backhoe excavators to minimize dilution. For this study,
all of the ore was scheduled using the smaller excavator but in the larger ore zones the 12.0 cubic metres excavator could be
used to decrease the loading times. The 91 tonne rigid haul trucks are also used for hauling the ore, despite the fact that this
will require 11 to 12 passes. The benefit of this is that the truck fleet is standardized. The loading of the ore zones is restricted
to daytime shifts only to provide better control in mining the ore.

-67-







Additional factors
have been added to the equipment requirement calculations to allow for the extra time and costs that will be encountered during
the mining through the existing underground workings. Mining in the existing underground workings is scheduled using the smaller
four cubic metre excavator. The production rate for mining in these areas is calculated at 65% of the normal production rate to
allow for the extra time that is expected in these areas. The 91 tonne haul trucks are used for hauling the ore. As this operation
is necessarily slow in these areas the additional number of passes is offset by less trucks and standardization of the truck fleet.
The loading of the old working areas is restricted to daytime shifts only for safety concerns.

To ensure that the
old workings are safe to work it is necessary to identify the potential area of old workings from existing survey information.
These areas are flagged to delineate a safe working zone. Holes are drilled, plugged and blasted to collapse the old workings.
Further holes are then drilled to probe the collapsed old workings to ensure they are safe to work.

Underground

For ramp and level
development, two-boom electric hydraulic (“EH”) jumbo drills will be used to drill blastholes. Blastholes will
be nominal 1 3/4 inch (45 millimetre) diameter x 12 feet (3.7 metre) average length for development headings. Single boom EH jumbo
will be used in MCF production drilling. Holes are 1 1/4 inch (32 millimetre) x 11 feet (3.4 metre).

Overall explosive
consumption has been based on the use of ANFO and packaged emulsions (13%) at a powder factor of 1.63 pounds per ton for mine
development. It is assumed that emulsions are not needed in the MCF stopes, resulting in powder factor of 1.00.

During ramp and lateral
development, blasted waste rock will be mucked by an eight cubic yard (LHD) unit and hauled to a remuck bay, or ideally directly
into a 30-tonne truck fitted with an ejector box which will deliver to an empty stope for backfill. As a last resort, waste must
be hauled to surface when all underground openings suitable for storage have been filled. Waste that is brought to surface will
be piled in a designated area in the open pit, preferably in close proximity to the ramp portal. It will be retrieved, backhauled
to underground by ore trucks once a stope is ready for backfilling.

The primary backfill
material will be the waste rock produced from underground development. If necessary, supplemental material will be sourced from
the open pit waste dump.

A cement binder will
be added to the fill in the sill cut. A slurry tank will be set up in the vicinity of the stope, equipped with a mixer and a pump.
The pump will deliver the slurry to the stope via a pipeline. The pipeline will fork into two or three perforated branch lines
strung to the back of the stope. The slurry will spray and percolate the rockfill. Cement slurry will be placed at a ratio of
five parts cement to 95 parts (w/w%) or 5% by weight.

Markets

Markets for doré
are readily available. Gold markets are mature, global markets with reputable smelters and refiners located throughout the world.
Demand is presently high with prices for gold showing remarkable increases during recent times. The 36-month average London PM
gold price fix through 2010 is $1018 per ounce.

-68-







Black Fox Mine Milestones

Current activities and
milestones at the Black Fox Mine include:



| | • | In
                                         October 2013, Brigus announced two high grade gold intersections from its underground
                                         drilling at Black Fox. One test hole assayed 18.09 grams per tonne gold over 37.80 metres,
                                         including 39.45 grams per tonne gold over 10.35 metres and the second hole assayed 40.71
                                         grams per tonne gold over 26.75 metres, including 103.20 grams per tonne gold over 8.35
                                         metres. With these positive results, exploration drilling at the Black Fox mine recommenced
                                         and this new phase of exploration is to consist of 12 - 15 additional holes to be drilled
                                         from underground to further test and define the new zone. The Black Fox orebody remains
                                         open for expansion both laterally and at depth.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | In
                                         January 2014, Brigus reported annual production of 98,710 ounces of gold from the Black
                                         Fox Mine. They further reported an average grade of 4.34 grams per tonne gold and an
                                         average recovery of 93.9% for the year. Throughput was 2,063 tonnes per day milled, 752,959
                                         tonnes milled for the year.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Bachelor Lake Mine,
Canada

A technical report was
prepared in accordance with NI 43-101 entitled “Technical Report on the Bachelor Lake Gold Project Prepared for Metanor
Resources” dated April 26, 2011 (the “Bachelor Lake Report”). The following description of the Bachelor
Lake Mine has been summarized, in part, from the Bachelor Lake Report and readers should consult the Bachelor Lake Report to obtain
further particulars regarding the Bachelor Lake Mine. The Bachelor Lake Report is available for review under Metanor’s profile
on the SEDAR website located at www.sedar.com. Information that updates the information in the Bachelor Lake Report
has been provided by Metanor.



Property Description and, Location

The Bachelor Lake Mine
is a previously mined gold property currently under development. The Bachelor Lake Mine is located in the Le Sueur Township approximately
225 kilometres northeast of Val d’Or and is composed of five blocks totalling 241 claims and two mining concessions (total
area 7,566.73 hectares) which are 100% owned by Metanor Resources Inc. (“Metanor”). The Geonova Block is composed
of 51 claims and two mining concessions totalling an area of 1,867.67 hectares. The Hewfran Block is composed of 38 claims totalling
683.5 hectares. The Hansens Block is composed of 12 claims totalling 311.33 hectares. The MJL-1 Block is composed of 76 claims
totalling 1,672.12. The MJL-2 Block is composed of 64 claims totalling 3,032.1 hectares.



The Bachelor Lake Mine
infrastructure is located on mining concessions which is comprised of surface and underground rights to explore and extract mineral
resources as well as to erect and operate all required infrastructure to support mineral extraction activities. Surface rights
are sufficient for the proposed mining operations. Mining concessions are renewed every year. Claims do not comprise surface rights
and are renewed every two years at their expiration date. Since various blocks of claims have been registered at different periods
of time, their expiration dates differ. For the Bachelor Lake Mine, the total renewal fees to be paid over one cycle of renewal
are $9,984. The total work required to cover one cycle of all claims renewal total is $342,720. The total excess of work credits
total is $2,028,467.



The property was not surveyed
with the exception of the two mining concessions. There are no major environmental issues, land claim issues, ownership disputes
pending. In early 2010, Metanor appointed GENIVAR to undertake an environmental evaluation for the proposed mine development.
The application for Certificate of Authorization to proceed with a bulk sample was submitted to the Ministère du Développement
Durable, de l’ Environnement, de la Faune et des Parcs (“MDDEFP”) in 2010. All necessary environmental
permits to proceed to commercial production were obtained in July 2012. Metanor is in the process of obtaining the necessary permits
and authorizations from government and regulatory agencies.



The following permits have
been obtained in relation to the Bachelor Lake Mine: A Certificate of Authorization for mill process; a Modified Certificate of
Authorization to process 500,000 tonnes at a rate of 800 tonnes per day (Barry Project); A Certificate of Authorization for the
installation of a cyanide destruction process (OZONE); A Certificate of Authorization to increase the mill capacity at 1,200 tonners
per day; A Certificate of Authorization to process a bulk sample of 5,000 tonnes (Bachelor Lake Gold Mine); A permit to extract
900,000 tonnes from Bachelor Lake Gold Mine; and a Certificate of Authorization for Land Reclamation Program.



-69-









The Bachelor Lake Mine
is subject to five royalties. The first royalty is 1% of the revenue with Jubilee Gold Exploration up to a maximum of $1,750,000.
The second royalty is 2% of the revenue generated from the Hewfran claims portion of the property with Teck Cominco. The third
royalty is 0.5% of the revenue generated from the Bachelor claims portion with Gold Royalties. The fourth royalty is 0.5% of the
revenue generated from the Bachelor claims portion with Sandstorm Gold. The fifth royalty is 0.25% of the revenue generated from
the Bachelor claims portion with Wolfden Resources Inc. (“Wolfden”).



Accessibility, Climate, Local
Resources, Infrastructure and Physiography

The Bachelor Lake Mine
is located 3.5 kilometres south east of the village of Desmaraisville. The community is serviced by bus and truck transport, and
is connected to the provincial power grid and telecommunication systems. A large population of experienced miners and related
tradespersons is available within a 240 kilometre radius of the mine. The Bachelor Lake Mine is at an elevation of 355 metres
above sea level and is relatively flat. The outcrop exposure is minimal and wetlands cover the central and southern part of the
property. The property is accessible via Hwy 113 which connects Chibougamau to Val d’Or. The property is located in the
municipality of James Bay, 3.5 kilometres south east of Desmaraisville, which is accessible by a gravel road.



The average daily temperature
is slightly above one degree Celsius. An average precipitation of 929.4 millimetres falls annually of which 703.8 millimetres
is rain and 225.6 millimetres is snow. Operations can occur throughout the year.



Existing mine buildings
are located atop a rocky hill. East of the mine is the tailings ponds with an area of approximately 50 hectares and the polishing
pond with an area of five hectares. The surface infrastructure includes, an underground mine, including hoistroom, compressor
room, headframe, and shaft; a tailings pond, polishing pond, dykes and drainage ditches; a mill including the assay laboratory,
refinery, and crushing room; an administrative office and warehouse; a garage and fuel tanks; storage for hazardous materials;
and an upgraded security system. A camp facility was built to house workers about two kilometres from the mine. The housing capacity
of the camp will allow for expansion to meet rising labour needs. There are offices for the management staff of various departments,
a first aid facility, and a security gatehouse directly on the mine site.



Several phases of refurbishing
work have been completed by Metanor during the past few years. The mill was completely renovated and put into operation in January
2008. The grinding capacity was increased by the addition of a new ball mill the same year, raising the throughput to 700 tonnes
per day. A rod mill was commissioned in February 2010 increasing grinding capacity to over 1,000 tonnes per day. Major work has
been completed to bring the old tailings ponds into current regulation as required by the MDDEFP. A berm was built to divide the
old impoundment into two sections (tailings pond and decantation pond). Another berm was built on the west side of the tailings
ponds to prevent any spills into the environment. Observation wells were also installed to sample the water table around the tailings
area.



The compressor room and
compressors were also completely overhauled. These compressors are now automated and the output is 3,500 cubic feet per minute.
The site is equipped with automated back-up diesel generators. The hoisting infrastructure was refurbished in 2009. Currently
the site is fed by four mega volt amps from Hydro Quebec and is sufficient for the current plan.



History

The Bachelor Lake Mine
was originally staked by O’Brien Gold Mines Ltd. (“O’Brien”) in 1946. This discovery was followed
by various exploration works: trenching, geophysical surveys and numerous drill holes. In 1951 the Quebec Department of Mines
performed geological mapping of the Bachelor Lake Mine.



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Bachelor Claims



During the 1960’s,
Sturgeon River Mines Ltd. (“Sturgeon”) sank a shaft and launched an underground drill program. Surface and
underground exploration was carried out by Quebec Sturgeon River Mines from 1972 to 1975. In the 1980’s, Bachelor Lake Gold
Mine Inc., a subsidiary of Sturgeon, conducted several underground development work phases and commercial production commenced
in 1982. From 1984 to 1985 Bachelor Lake Gold Mines Inc. performed humus geochemical survey; with a total of 1,283 samples being
taken. From 1985 to 1987 very low frequency and electromagnetic and health surveys were carried out. The deepening of the shaft
to Level 12 was completed in 1987, and production ceased in 1989 with a total of 130,341 ounces of refined gold. Ore dilution
was excessive and was undoubtedly the main reason for the financial difficulties. The mine was placed on a care and maintenance
basis, when costs exceeded revenues.



Hewfran Claims



In 1946, S-Francis Mining
discovered Agar #1 and #2 which was followed by geological mapping and trenching. In 1948 Batch River Gold Mines discovered two
zinc showings and a gold showing in the northern third of Lots 12-19, RV. This was followed by numerous geophysical surveys, mapping
and trenching. Dome Exploration did testing for Coniagas-type massive sulphide mineralization. The extension of Agar #2 showed
34 diamond drill holes totalling 4,066 metres. In 1957 Quebec Bachelor Mining Corp. performed a magnetometric survey of the north-western
part of the Hewfran property. In 1960 a geological survey was performed by Roxford Mining. An induced polarization survey and
drilling program was performed by Sturgeon River Mines in 1965 and Valdex Mines (“Valdex”) in 1970 discovering
several weak anomalies. Valdex went on to perform magnetometric and electromagnetic surveys in 1971. Valdex carried out geophysical
surveys searching for Coniagas-type massive sulphides and Bachelor-type gold.



In 1978, Brominco Inc.
(“Brominco”) carried out induced polarization surveys in several parts of the property. In 1983 detailed mapping
was carried out through Kretschmer with a very low frequency electromagnetic survey and lithogeochemistry covering the north east
corner of the property. Detailed geology, humus surveys and diamond drilling was carried out by Brominco. In 1986, Aur Resources
Inc. (“Aur”) commenced a program to explore for the extension of the Bachelor Lake Mine, with a major exploration
drilling program from May 1987 to May 1989. In 1988, Aur tested bulk samples from the Main Zone.



Prior Ownership



In 1990, a joint venture
agreement was negotiated with Hecla Mining Company of Canada (“Hecla”) whereby Hecla could earn a 60% interest
for placing the property back into production. After Hecla acquired control of Acadia Mineral Ventures Ltd (“Acadia”)
the Bachelor Lake Mine was assigned to Acadia. Acadia carried out 167.64 metres of underground drifting to establish 2 drill stations.
A number of significant gold intersections were cut.



Espalau Mining Corporation
(“Espalau”) acquired the Bachelor Lake Property and from 1994 to 1995 realized surface diamond drilling holes
as a follow-up program to a magneto metric and very low frequency survey. GéoNova Explorations Inc. (“GéoNova”)
acquired a 100% interest in the Bachelor Lake Mine in March of 2001, including buildings (offices, shops, compressor rooms, headframe,
cyanidation plan and crusher room).



Between 2003 and 2004,
Wolfden signed an agreement to acquire a 50% interest from GéoNova after incurring $3,000,000 in exploration over three
years and dewatering was undertaken.



-71-









In 2004, Metanor acquired
the 100% interest held by GéoNova for $2.3 million. Halo Resources Inc. (“Halo”) satisfied its commitments
to acquire a 50% undivided ownership in the property in 2005 and the Bachelor Lake joint venture (“BLJV”) between
Halo and Metanor was created. The BLJV commissioned a 2005 technical report by InnovExplo Inc. (“InnovExplo”).



Metanor acquired 100% of
the Bachelor Lake Mine from Halo in November, 2007.



Geological Setting

Regional Geology



The Bachelor Lake Mine
is located within the Northern Volcanic Zone of the Abitibi sub-province, Superior province. The Bachelor Lake Mine is situated
near the western limit of the Chibougamau-Chapais greenstone belt. The mafic to felsic volcanic and volcanoclastic rocks of the
Bachelor Lake Mine are part of the basal mafic-dominated sequence referred to as the Volcanic Cycle I. The Northern Volcanic Zone
of the Abitibi sub-province is interpreted as a diffuse arc passing laterally into a back-arc environment with numerous felsic
and mafic-felsic edifices and intra-arc sedimentary basins.



The Bachelor Lake Mine
lies along a local northeast trend which is deviated from the general east-west pattern of the Abitibi sub-province due to significant
synvolcanic pluton emplacement and the influence of the major northeast-trending Wedding-Lamarck fault in the Bachelor Lake area.
Rock units typically include mafic, intermediate and felsic flows and their intrusive equivalents. Post-tectonic lamprophyre dykes
are also present.



Local Geology



The Bachelor Lake Mine
is underlain by Archean volcanic rocks of the Obatogamau Formation in a poorly known and poorly explored area of the Abitibi greenstone
belt. Based on the absence of marker horizons and the paucity of outcrops, it is difficult to establish a well defined rock sequence
in the Coniagas-Bachelor Lake area. The Obatogamau Formation includes mafic, intermediate and felsic flows and synvolcanic intrusive
equivalents which are the host for the volcanogenic massive sulphide occurrences. A local composite stratigraphic section shows
a typical complex volcano-sedimentary assemblage. This stratigraphic sequence includes the 280 metre thick Coniagas Mine sequence
represented by a maficdominated volcanoclastic sequence. A significant 500 to 700 metre thick, lenticular and dome shaped felsic
unit composed of massive to brecciaed rhyolitic to rhyodacitic lava flows occurs up-section. This felsic-dominated unit corresponds
to the Bachelor Lake Mine gold deposit host rocks. Mafic volcanic and volcanoclastic rocks make up the upper part of the sequence.
The Auger Lake and Bachelor Lake sedimentary rocks remain enigmatic, but probably mark the top of the sequence. The late emplacement
of several plutons, adds to the complexity of the region. Post-tectonic lamprophyre dykes are also common at the Bachelor Lake
Mine and kimberlitic dykes were documented in the Desmaraisville area.



The local northeast trending
sequence deviates from the general east-west pattern of the Abitibi sub-province due to the presence of significant pluton emplacement
and the influence of the major northeast-trending Wedding-Lamarck fault. The folded volcanic rock sequence shows local changes
in trend from North 25 degrees to North 65 degrees, with vertical to steep northwest dips (60 degrees to 77 degrees). Folding
and faulting are responsible for stratigraphic repetition and disruption of the volcano-sedimentary sequence. Foliation relationships
indicate a possible third phase of deformation. Five post-ore fault system striking North 110 degrees are recognized at the Bachelor
Lake Mine and effect the gold-bearing zones.



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Property Geology



The Bachelor Lake Mine
hosts a wide variety of deposit types from volcanogenic polymetallic type to syn-orogenic to late-orogenic gold mineralization.
On the Bachelor Lake Mine, volcanic hosted massive sulphide potential is illustrated by the Coniagas Horizon, Zinc Showing #1
and #2, Area-Opawica showings.



The Bachelor Lake Mine
gold mineralization is related to brittle deformational features and dilatational zones (stockwork) and to brittle-ductile shear
zones. The Bachelor Lake gold deposit can be either classified an “orogenic lode gold deposit” or an “intrusion
related gold deposit”. The gold distribution appears to be controlled by both structural and lithological features
(e.g. the rhyolite being more fractured compared to the agglomerate). The Bachelor Lake Mine gold mineralization has also been
interpreted to be associated with the late-tectonic granitic to granodioritic intrusion.



Exploration

The actual Mineral Resources
estimation is based on data provided by diamond drilling programs of 2004 to 2005 and before. Since then, Metanor has executed
additional diamond drilling at the Bachelor Lake Gold Mine and in the vicinity of the deposit. From September 2005 to the date
of the Bachelor Lake Report, 50 diamond drill holes totalling 13,424 metres have been completed. Since February 2006 to the date
of the Bachelor Lake Report, all exploration work has been executed under the supervision of Metanor.



In 2010 a new gold zone
was discovered by Metanor approximately 2.5 kilometres to the northwest of the Bachelor Lake Mine mill during an exploration program.
This discovery was made using technology developed by Diagnos Inc. and was mandated by Metanor to conduct exploration on the identified
targets. A series of samples greater than ten grams per metric tonne were found two to ten metres from the road leading to the
mill, and this new mineralized zone is comprised of quartz veins in an east-west orientated shear zone. Metanor completed a diamond
drilling program of 20 short holes totalling 1,200 metres to follow the extension of this structure. At the date of the Bachelor
Lake Report, this program was still in progress.



Mineralization

The Bachelor Lake Mine
hosts several gold and base metal showings occurring on the surface and hosts six gold-bearing zones, namely the Main, A, B, C,
A West and B West Zones, which were all included in the 2005 resource estimate.



Two types of gold-bearing
zones have been identified at Bachelor Lake: silica-flooding and hematite-altered ± stockwork zones, illustrated by the
Main Zone and the B Zone. In both cases, gold is spatially associated with pyrite and the gold content correlates well with the
pyrite content. Gold mineralization at the Bachelor Lake Mine occurs predominately within the pyrite (greater than 70%), as grains
attached to the pyrite (-18%) or as free gold enclosed in the gangue (-10%). This was demonstrated in a polished-thin section
examination done on the Hewfran claims. The gold is fine grained with an average diameter between six to eight millimetres, and
visible gold is more characteristic of the B Zone. Pyrite is usually finely disseminated (2% to 10%) hosted in strongly altered
rocks, often brecciaed and occasionally injected by quartz/carbonate veins and veinlets. At surface, traces of gold, chalcopyrite
and ilmenite occurrences have been observed. Gold has been introduced late in the paragenetic sequence as were fluorite and some
of the carbonates.



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The Main Zone



The Main Zone has contributed
90% of the ore derived from the Bachelor Lake Mine gold mine and is characterized by pervasive moderate to strong silicification
and hematitization with 2 to 10% pyrite generally associated with hematite alteration. It is cross-cut by quartz-carbonate veinlets
usually less than two centimetres and some local narrow late siliceous hydraulic breccias are described. Some intense altered
zone intersections show association with ankeritization. The Main Zone contains also minor amounts of epidote, chlorite, amethyst,
micas, magnetite and base metal sulphides. A distinctive deep brick red hematite alteration characterizes the Main Zone. The Main
Zone trends North 110 degrees, dipping at 55 degrees south-west near the surface, steepens to near vertical at Level 12, and changes
to 60 degrees to 75 degrees at depth. The Main Zone alteration envelope increases in width with depth, while ore values are not
uniformly distributed, which results in an anastomosing mineralized pattern. There is a recurrent presence of a weaker and narrower
alteration zone of three to five metres in the footwall of the Main Zone. This northern branch is clearly related to the same
event, but rarely shows economic interest. The average width of the Main Zone, above Level 6, was 1.82 metres, and increased to
an average of 2.44 metres below this level. The Main Zone has an average horizontal width of 2.8 metres and reached a maximum
horizontal width of 12.8 metres. This alteration system is recognized over 1,150 metres and was mined over 335 metres from the
western limit of the Bachelor Lake Mine claims to the western contact of the O’Brien pluton. The new interpretation proved
the Main Zone continuity to be over 488 metres horizontally and 900 metres vertically.



The B Zone



The B Zone may represent
a potential for additional resources, but until now limited mining has occurred in this zone. Test mining has indicated that the
B Zone has competent walls and an average horizontal width of 3.1 metres and reaches a maximum horizontal width of 10.5 metres.
The B Zone generally dips steeper than the Main Zone at approximately 75 degrees to 85 degrees to the south, south-west, and is
interpreted to be the result of a younger geological event and formed after the Main Zone mineralization. It is characterized
by a hydraulic glassy to white silica breccia with angular fragments of the altered unit and cut by quartz veins. Its alteration
is similar to the Main Zone and is represented by strong to intense silicification and hematitization and generally by moderate
ankeritization. Mineralization is characterized by two percent to seven percent pyrite generally associated with the late quartz
breccias. The presence of visible gold is often seen in this alteration zone.



The A Zone



The A Zone was discovered
by drilling from Level 9 and has been traced up to Level 4. Test mining at the Bachelor Lake Mine, using shrinkage techniques,
has shown an unacceptable level of dilution on this zone. It is a highly altered and sheared zone which strikes north 60 degrees
to 70 degrees and dips 45 degrees to 50 degrees to the southeast and cross cuts the Main and B Zones. It has previously been interpreted
as a gold-bearing zone as well, but the last underground drilling campaign demonstrated a poor grade development of this zone
when alone. The best values in the A Zone are related to its junction with other zones. Significant intersections have been documented
while crossing the Main or B Zones, probably due to gold remobilization. The last interpretation showed increases in thickness
at these junctions.



The C Zone



The newly interpreted C
Zone has similar characteristics to the Main Zone, although it seems to be less continuous, and it appears that it can be a branch
of the Main Zone. The C Zone has been documented in the Bachelor Lake Mine area in the eastern portion of the 2005 interpretation.



The A West and B West
Zones



The A West and B West Zones
have been delineated in the West Zone area of the Hewfran claims. These zones are interpreted to be the continuity of the A and
B Zones identified at the Bachelor Lake Mine area.



-74-









The A West Zone lies within
the western extension of the A shear and the mineralized zone documented at the Bachelor Lake Mine. The discovery hole intersected
the zone, 487 metres west of the last encountered ore grade within the A Zone at 13,500 east. The hole was drilled to test the
eastern extension of the mineralized shear structure identified in the Agar #1 outcrop which had been mechanically stripped, washed
and channel sampled during the summer of 1987. Lateral continuity of the structure from section to section is obvious, but gold
mineralization appears sporadic and essentially concentrated in the vicinity of sections 12,100 East and 12,300 East.



The B West Zone seems to
be the extension of the B Zone documented at the Bachelor Mine. The zone dips at approximately 80 to 85 degrees (almost vertically)
and shows only very sporadic grades over a cut-off grade of 3.43 grams per metric tonne gold. This zone is characterized by a
strong silica and hematite alteration, and by local brecciation.



Drilling

The last drilling campaign
on the Hewfran claims, included in the resources estimation, was completed between 1987 and 1989 by Aur. The Aur program included
47 surface holes for 14,255.5 metres (46,770 feet) and 96 underground holes for 10,401 metres. Between 1990 and the 2005 underground
drilling program, two drilling programs were completed on the Bachelor claims: one program in 1990 and one in 1995. In 1990, Acadia
drilled 34 holes for a total of 4,807 metres from the underground workings at various locations on Levels 11 and 12. In 1995,
Espalau completed 10 drill holes from surface for a total of 2,572 metres. This surface drilling program was executed by Géospex.
From 1987 to 1989, the Hewfran claims were the site of a major drilling program: 47 holes drilled from surface for a total of
14,259 metres, and 96 holes drilled from underground for a total of 10,404 metres.



In 2005, the Bachelor Lake
Joint Venture partners, Metanor and Halo, completed a major underground drilling program consisting of 69 holes for a total of
13,345 metres. This program was initiated by Halo and continued by Metanor and the BLJV. The main goals of the 2005 underground
drilling program were to upgrade the and increase the mineral resources.



The 69 holes comprising
the 2005 drilling program was completed from two fixed drill stations located on Level 12 by using azimuth drilling. Drilling
was completed using BQ size by Forage Orbit of Val d’Or. The drill program was initiated by Halo with a clear objective
of upgrading the resources by completing twenty 25 metre drill centers on the Main Zone and to some extents on the B and A Zones,
which are located closer to the two drill stations.



Despite the fact that this
program was completed from a limited platform, it successfully filled the central gap between the T1 Fault and the A Zone and
also between the two main ore shoots with seventeen holes. The program also in-filled the gaps left from the previous exploration
programs with 24 drill holes, extended the mineralized zones laterally to the west, on the footwall of the Waconichi Fault and
at depth with 19 holes, extended and connected the Bachelor Lake resources to the west with the Hewfran claims with six holes
and extended the mineralized zones to the east side with three holes.



Between September 2005
and January 2006 a diamond drilling program consisting of 11 holes totalling 6,394 metres was completed by the BLJV and designed
to test the gold potential within a mineralized corridor immediately west of the Bachelor Lake Mine development. Holes were collared
to replicate and confirm historic estimates and to validate results. A hole encountered an intensely hematite altered, locally
silicified zone of alteration. The hole was positioned below the East Zone and demonstrated the presence of a well-developed alteration
zone extending to depth.



From December 2006 to February
2007, a diamond drilling program was completed by Metanor consisting of eight holes totalling 2,906 metres. The program was designed
to test extensions of the West Zone, B West Zone, East Zone and the area to the north of the Main Zone of the Bachelor Lake Mine
attempting to localize its northern and displaced extension on the property.



-75-









A stripping campaign completed
during autumn 2008 allowed Metanor to locate the extension on surface of the West Zone of Hewfran and to expose this strongly
hematized and mineralized zone on a horizontal distance of approximately 40 metres with thickness reaching six metres. This zone
was originally defined in drilling over a horizontal distance of approximately 300 metres and between the depths of 180 metres
and 330 metres. The two gold bearing zones oriented east-west and the north-east, which comprise the West Zone, correspond to
those of the A Zone and the Main Zone of the Bachelor Lake Mine. Grab and chip samples were taken along the east-west mineralized
zone and along the north-east sheared zone.



In 2008 to 2009, a drilling
campaign of 11 holes totalling 2,924 metres tested extensions of the West Zone and the continuity at shallow depth of the gold
bearing zones exposed on surface after the stripping program. In 2010 20 holes were drilled to test a new gold zone exposed on
the surface at approximately 2.5 kilometres Northwest of the Bachelor Lake Mine.



Sampling and Analysis

From April to July 2005,
69 BQ size (36.5 millimetre diameter) drill holes were completed by Forage Orbit Inc. using the industry standard wire line methods.
All holes were drilled from two underground drill stations at Level 12. Fifty-two reached the mineralized zones in the Bachelor
Lake Mine claims, while 17 reached the mineralized zones in the Hewfran claims. Holes were planned using the Main Zone longitudinal
section with intercepts every 22.8 metres. The 2005 drill hole database contains a total of 3,555 samples. One hundred percent
of the 2005 drilling program was stored and categorized for future reference purposes in the core library located at the Bachelor
Lake Mine.



During the 2005 drilling,
3,251 samples were submitted for gold analysis, representing 3,347.63 metres (24.4% of total drilled length). Inserted throughout
these samples, 304 blanks and standards were also shipped for a controlled follow-up for a total of 3,555 samples.



Every altered zone (especially
hematization and silicification) containing pyrite and every wide altered zone was considered potentially mineralized and therefore
sampled. This systematic exploration sampling allowed confirming the attitude of mineralization within the altered zones, as well
as other lateral small mineralized zones. At the Bachelor Lake Mine, samples collected through the diamond drilling are of good
quality; the mineralization in the core is generally intact with no possibility of loss due to wash out. The hardness nature of
the mineralized zones explains the excellent recovery for the mineralized zones. The core was rarely ground on short distances
(less than 0.5 metres). Overall, the drill core sample recovery from the mineralized zones can be considered to be representative.



Sampling, preparation,
security and analytical procedures used on the property were judged to be adequate. The performance of the laboratory during the
2005 drilling program was good.



Sampling and laboratory
protocol for the 2005 drilling program were defined by InnovExplo. During the program, core samples were sent to ALS Chemex Chimitec
in Val d’Or, certified ISO 9001:2000. At the laboratory, all the bags were opened and conformed to the laboratory protocols.
The laboratory delivered results in electronic format with assay results reported in grams per tonne.



Quality Assurance



Contamination was not discovered
during the 2005 drill program. The good performance of the laboratory for external standards (field standard) is an evidence of
accurate determinations being made by the laboratory. The QA/QC analysis of the pulp duplicate demonstrates a reasonable level
of precision with overall approximate errors of 12%. This level of error is not uncommon for Archean gold deposits where the principal
component of the ore is often “freely” liberated gold. In fact, many coarse “nugget” gold deposits demonstrate
much poorer levels of precision in pulp duplicate sample results. Precision of metallic screen assay (150 mesh pulp duplicate)
was analyzed. The metallic sieve method incorporates duplicate fire assay determinations of the -150 mesh fraction of the screened
pulp. The results demonstrate that precision levels of the screened pulp duplicate assays are overall approximate 6.5%. A 5% residual
“nugget” effect at 150 mesh is quite acceptable for this type of gold mineralization.



-76-









The results for the coarse
duplicate was not that good. The extremely large introduction of error between coarse and pulp duplicates is clearly indicative
of unrepresentative 1 kilogram coarse crush sample splits. The cause may be inappropriate crush/splitting specifications or related
to original field sample size, while this type of error may not result in any global change in resource estimation.



Data Verification



The Gemcom database used
for the 2005 resource estimation includes 15,192 assay results from 394 diamond drill hole records. From the total, 325 were historical
holes that were compiled and 69 holes were from the 2005 program. Both the historical and the new data acquired were validated.



Security of Samples

In October 2005, InnovExplo
re-sampled 24 samples within the “A West” mineralized zones from six drill holes of the Hewfran claims. Fifteen samples
were from the Hewfran West area and nine samples from the Hewfran East area. Core boxes containing mineralized zones intersections
were already in Val d’Or, at the Alexis Mineral core shack. Selected cores were transported to Metanor’s core shack
and examined and resampled by InnovExplo’s team. Quarter splitting was then completed by Metanor’s technician for
the 15 Hewfran West BQ core samples while the other nine samples were entirely samples because of their AQ size. Two high grade
certified standards were also inserted into sequences, and samples were sent to ALS Chemex Laboratory in Val d’Or.



All check samples were
assembled and separated into four groups:



| | • | Two
                                         samples below the cut-off grade (under 0.1 ounces per short ton gold) had a difference
                                         of 0.003 ounces her short ton gold;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Six
                                         samples close to the cut-off grade (from 0.1 to 0.15 gold) had an average difference
                                         of 0.004 ounces per short ton gold. This important verification minimized the risk associated
                                         to misclassification of ore and waste block material;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         samples close to the resource average grade (from 0.15 to 0.3 ounces per short ton gold)
                                         had an average difference of 0.015 ounces per short ton gold. This significant low difference
                                         also means that the overall average may not change drastically. Although some absolute
                                         difference can be as high as 0.284 ounces per short ton gold, meaning that on a local
                                         basis, some ore blocks may have been overestimated or underestimated; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Ten
                                         samples with high grade assay results (over 0.3 ounces per short ton gold) had a greater
                                         average grade difference (0.043 ounces per short ton gold). Locally, some grade can be
                                         either over or underestimated.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



BLJV completed a surface
exploration program at Bachelor Lake in October 2005. The current drilling exploration program includes one confirmation drill
hole located in the Hewfran East area in order to confirm results.



-77-









Mineral Resource and Mineral
Reserve Estimates

The following table sets
forth the estimated Mineral Resources for the Bachelor Lake Mine as at December 2010:



Measured, Indicated and Inferred Mineral
Resources (1 to 3)

(Inclusive of Mineral Reserves)



|Deposit           | Category                 | Tonnes  | Gold Grade
        (grams per tonne) | Contained Gold
        (ounces)
|----------------- | ------------------------ | ------- | ------------------------------------ | -------------------------------
|                  |                          |         |                                      |                                
|Bachelor
    Lake | Measured                 | 177,898 | 8.83                                 | 50,487                         
|                  | Indicated                | 465,928 | 7.63                                 | 114,329                        
|                  | Measured
    + Indicated | 643,826 | 7.96                                 | 164,815                        
|                  | Inferred                 | 207,517 | 6.76                                 | 45,083                         
|                  |                          |         |                                      |                                
|Hewfran           | Measured                 | 14,696  | 8.50                                 | 4,018                          
|                  | Indicated                | 183,069 | 7.14                                 | 42,024                         
|                  | Measured
    + Indicated | 197,765 | 7.24                                 | 46,042                         
|                  | Inferred                 | 218,630 | 6.30                                 | 44,283                         
|                  |                          |         |                                      |                                
|Total             | Measured                 | 192,594 | 8.80                                 | 54,504                         
|                  | Indicated                | 648,997 | 7.49                                 | 156,352                        
|                  | Measured
    + Indicated | 841,591 | 7.79                                 | 210,857                        
|                  | Inferred                 | 426,148 | 6.52                                 | 89,366                         



_____________

| |  | 
| |  | 

| | (1) | The Mineral Resource estimates for
                                         the Bachelor Lake Mine set out in the table above have been reviewed and verified by
                                         Pascal Hamelin, Vice President of Metanor, who is a qualified person under NI 43-101.
                                         The Mineral Resources are classified as measured, indicated and inferred, and are based
                                         on the CIM Standards.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Mineral Resources are not known with
                                         the same degree of certainty as Mineral Reserves and do not have demonstrated economic
                                         viability.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Numbers may not add up due to rounding.
| | --- | ---------------------------------------



-78-







The following table sets forth the estimated
Mineral Reserves for the Bachelor Lake Mine as at December 2010:



Proven and Probable Mineral Reserves (1
to 4)



|Deposit           | Category              | Tonnes   | Gold Grade
        (grams per tonne) | Contained Gold
        (ounces)
|----------------- | --------------------- | -------- | ------------------------------------ | -------------------------------
|                  |                       |          |                                      |                                
|Bachelor
    Lake | Proven                | 178,359  | 8.36                                 | 47,930                         
|                  | Probable              | 467,1352 | 7.23                                 | 108,538                        
|                  | Proven
    + Probable | 645,494  | 7.54                                 | 156,467                        
|                  |                       |          |                                      |                                
|Hewfran           | Proven                | 14,734   | 8.05                                 | 3,814                          
|                  | Probable              | 183,543  | 6.76                                 | 39,895                         
|                  | Proven
    + Probable | 198,278  | 6.86                                 | 43,710                         
|                  |                       |          |                                      |                                
|Total             | Proven                | 193,093  | 8.33                                 | 51,743                         
|                  | Probable              | 650,679  | 7.10                                 | 148,433                        
|                  | Proven
    + Probable | 843,772  | 7.38                                 | 200,177                        



_____________

| | (1) | The Mineral Reserve estimates for the
                                         Bachelor Lake Mine set out in the table above have been reviewed and verified by Pascal
                                         Hamelin, Vice President of Metanor, who is a qualified persons under NI 43-101. The Mineral
                                         Reserves are classified as proven and probable, and are based on the CIM Standards.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | The underground mineral reserves have
                                         been calculated using a cut-off grade of 3.43 grams per tonne, recovery of 90%, and dilution
                                         of 10% in the stoping areas.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Proven and Probable Mineral Reserves
                                         are a subset of Measured and Indicated Mineral Resources.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Numbers may not add up due to rounding.
| | --- | ---------------------------------------



Mining Operations

Mining Method



Ore should be extracted
using sublevel stoping and longhole blasting due to the dip and continuity of the zones, as well as the quality of the vein wall.
To obtain a high degree of accuracy (and thereby minimize dilution), the ideal drill-hole length of approximately 13.5 metres
was used to determine the sublevel spacings. The veins will be entirely excavated on every sublevel. This means that the width
of a sublevel could also exceed 9.0 metres. The walls of the sublevels have to be inclined according to the dip of the vein to
minimize dilution. The height, on the other hand, must be kept at 2.74 metres to allow the longhole drilling equipment to have
the necessary manoeuvring space. Production of 200,177 ounces of gold mined is forecasted up to 2016. The mill was put into operation
in January 2008, and the throughput is 700 tonnes per day. A rod mill was commissioned in February 2010 increasing grinding capacity
to over 1,000 tonnes per day. Work has been completed to bring the old tailings ponds to regulation and observation wells were
installed to sample water table around the tailings area.



Metallurgical Process



In December 2010, GENIVAR
was commissioned by Metanor to conduct a milling capacity study for the Bachelor Lake Mine ore. The maximum capacity for the Bachelor
Lake mill using Bachelor Lake Mine ore is 775 tonnes per day at ± 8% accuracy with availability of 92%. Operating costs
were estimated at approximately $22.90 per tonne to treat approximately 260,300 tonnes per year. With the current processing circuit,
and a 775 tonne per day treatment rate, the leaching time is estimated at 31 hours with 55% solids in the tanks. The effect of
reducing the leaching time on the recovery of Bachelor Lake Mine’s ore is not known. Therefore metallurgical testing is
required to determine the recovery that should be expected. Among the proposed tests include gravity tests, leaching tests, thickening
tests, filtration tests, tests to validate the use of activated carbon, grindability tests, and chemical analysis. These tests
should be completed on all mineralized zones that are planned to be extracted and have different characteristics that could affect
the performance of the processing circuit.



-79-









GENIVAR is confident that
a recovery of 93% is achievable with Bachelor Lake ore. However, for this recovery, additional leaching time may be required.
Leaching tests in the laboratory will confirm the time required. The financial analysis used present supplier’s quotes for
capital items which increases the accuracy of the data to above a pre-feasibility study operating costs where compared to the
contractor presently on site, which again increases the accuracy of the analysis. A conservative value of gold per ounce using
the August 2010 Bloomberg Report was inputted for the four years of production. The financial results produced an IRR of 85% with
a payback period of 10 months. With the good exploration potential it is expected that the mine life will be more than four years.
There is also a potential to increase the mill capacity beyond the 800 tonnes per day which will allow for the treatment of the
Barry Open Pit material.



Exploration and Development

The deposit remains open
in several directions and it is reasonable to believe that new resources will be discovered during the production years. This
will help to extend the life of the mine. The Barry Open Pit has not been included in the Bachelor Lake Report, but its economical
resource will help to lower overhead costs and will contribute to the life of the mine.



In 2010 a new gold zone
was discovered by Metanor approximately 2.5 kilometres to the northwest of the Bachelor Lake Mine mill during an exploration program.
Metanor completed a diamond drilling program of 22 diamond drill holes totalling 1,587.5 metres of shallow, lateral extensions
of this new discovery. This program is still in progress.



Bachelor
Lake Mine Milestones



Current activities at the
BachelorLake Mine include:



| | • | In
                                         January and February 2014, Metanor reported the results from its underground drilling
                                         program at the Bachelor Lake Mine to extend the known mineralized zones and increase
                                         the mineral resources.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | In
                                         November 2013, Metanor announced that it had achieved commercial production at the Bachelor
                                         Lake Mine and advised that it expects to produce over 40,000 ounces for the year ending
                                         June 30, 2014. In addition, Metanor advised that it maintains it objective of increasing
                                         the production at its Bachelor Lake Mine toward 713 tonnes per day.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





DIVIDENDS

The Company currently intends
to retain future earnings, if any, for use in its business and does not anticipate paying dividends on the Common Shares in the
foreseeable future. Any determination to pay any future dividends will remain at the discretion of the Company’s Board of
Directors and will be made taking into account its financial condition and other factors deemed relevant by the Board. The Company
has not paid any dividends since its incorporation.



DESCRIPTION
OF CAPITAL STRUCTURE



The
authorized share capital of the Company consists of an unlimited number of Common Shares. As of March 10,
2014, 104,539,896 Common Shares are issued and outstanding.





-80-









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. The Common Shares
do not carry any pre-emptive, subscription, redemption or conversion rights, nor do they contain any sinking or purchase fund
provisions.



Trading
Price and Volume



The Common Shares are listed
and posted for trading on the TSX under the symbol “SSL” and on the NYSE MKT under the symbol “SAND”.



The 2009 Warrants, the
2010 Warrants, the 2012 Warrants and the Listed Premier Warrants are all listed and posted for trading on the TSX under the symbols
“SSL.WT”, “SSL.WT.A”, “SSL.WT.B” and “SSL.WT.C” respectively.
None of these warrants are listed for trading on the NYSE MKT.



Common Shares

The following table sets
forth information relating to the trading of the Common Shares on the TSX for the most recently completed financial year.



|Month              | High
    (C$) | Low
    (C$) | Volume   
|------------------ | ------------- | ------------ | ---------
|                   |               |              |          
|January
    2013   | 13.15         | 11.16        | 4,219,767
|February
    2013  | 12.50         | 9.18         | 6,739,562
|March
    2013     | 10.55         | 8.49         | 5,458,736
|April
    2013     | 9.62          | 6.47         | 7,493,444
|May
    2013       | 8.10          | 6.67         | 6,733,701
|June
    2013      | 8.44          | 5.00         | 7,783,966
|July
    2013      | 6.93          | 5.80         | 9,213,020
|August
    2013    | 7.84          | 5.15         | 8,667,203
|September
    2013 | 7.05          | 5.34         | 6,551,009
|October
    2013   | 6.19          | 4.87         | 7,303,148
|November
    2013  | 5.79          | 4.30         | 5,500,043
|December
    2013  | 4.80          | 4.17         | 6,062,136





The price of the Common
Shares as quoted by the TSX at the close of business on December 31, 2013 was C$4.59 and on March 7,
2014 was C$5.84.



Warrants

SSL.WT

The following table sets
forth information relating to the trading of the 2009 Warrants on the TSX for the most recently completed financial year.



-81-









|Month              | High
    (C$) | Low
    (C$) | Volume   
|------------------ | ------------- | ------------ | ---------
|                   |               |              |          
|January
    2013   | 2.05          | 1.65         | 1,181,662
|February
    2013  | 1.91          | 1.22         | 3,994,573
|March
    2013     | 1.50          | 1.10         | 2,003,350
|April
    2013     | 1.29          | 0.67         | 2,552,216
|May
    2013       | 1.00          | 0.75         | 1,092,144
|June
    2013      | 1.06          | 0.40         | 1,634,689
|July
    2013      | 0.79          | 0.56         | 1,714,445
|August
    2013    | 0.95          | 0.43         | 1,939,498
|September
    2013 | 0.79          | 0.48         | 1,738,645
|October
    2013   | 0.61          | 0.355        | 2,914,829
|November
    2013  | 0.53          | 0.255        | 2,521,405
|December
    2013  | 0.295         | 0.20         | 2,558,695



The price of the 2009 Warrants
as quoted by the TSX at the close of business on December 31, 2013 was C$0.25 and on March 7,
2014 was C$0.50.



SSL.WT.A

The following table sets
forth information relating to the trading of the 2010 Warrants on the TSX for the most recently completed financial year.



|Month              | High
    (C$) | Low
    (C$) | Volume   
|------------------ | ------------- | ------------ | ---------
|                   |               |              |          
|January
    2013   | 1.80          | 1.45         | 443,602  
|February
    2013  | 1.61          | 0.98         | 1,812,489
|March
    2013     | 1.30          | 0.80         | 1,528,606
|April
    2013     | 1.02          | 0.51         | 1,409,477
|May
    2013       | 0.81          | 0.56         | 468,587  
|June
    2013      | 0.85          | 0.335        | 570,450  
|July
    2013      | 0.65          | 0.41         | 255,549  
|August
    2013    | 0.88          | 0.39         | 1,525,541
|September
    2013 | 0.75          | 0.48         | 372,994  
|October
    2013   | 0.53          | 0.35         | 746,424  
|November
    2013  | 0.50          | 0.30         | 445,213  
|December
    2013  | 0.37          | 0.26         | 864,417  



The
price of the 2010 Warrants as quoted by the TSX at the close of business on December 31, 2013 was C$0.30 and on March 7,
2014 was C$0.465.



SSL.WT.B

The following table sets
forth information relating to the trading of the 2012 Warrants on the TSX for the most recently completed financial year.



-82-









|Month              | High
    (C$) | Low
    (C$) | Volume 
|------------------ | ------------- | ------------ | -------
|                   |               |              |        
|January
    2013   | 4.30          | 3.56         | 212,899
|February
    2013  | 3.95          | 2.36         | 419,298
|March
    2013     | 2.90          | 1.93         | 360,290
|April
    2013     | 2.47          | 1.70         | 318,419
|May
    2013       | 2.06          | 1.66         | 129,646
|June
    2013      | 1.95          | 0.85         | 307,370
|July
    2013      | 1.45          | 1.00         | 280,324
|August
    2013    | 2.45          | 1.01         | 377,376
|September
    2013 | 2.25          | 1.40         | 238,481
|October
    2013   | 1.76          | 1.36         | 248,443
|November
    2013  | 1.50          | 1.01         | 199,228
|December
    2013  | 1.18          | 0.75         | 340,413



The price of the 2012 Warrants
as quoted by the TSX at the close of business on December 31, 2013 was C$0.79 and on March 7,
2014 was C$1.71.



SSL.WT.C

The following table sets
forth information relating to the trading of the Listed Premier Warrants on the TSX for the most recently completed financial
year.



|Month              | High
    (C$) | Low
    (C$) | Volume
|------------------ | ------------- | ------------ | ------
|                   |               |              |       
|January
    2013   | 1.16          | 0.85         | 18,505
|February
    2013  | 0.86          | 0.59         | 11,750
|March
    2013     | 0.50          | 0.50         | 1,000 
|April
    2013     | 0.45          | 0.30         | 13,000
|May
    2013       | 0.25          | 0.25         | 1,000 
|June
    2013      | 0.22          | 0.16         | 3,870 
|July
    2013      | N/A           | N/A          | N/A   
|August
    2013    | 0.16          | 0.16         | 1,200 
|September
    2013 | N/A           | N/A          | N/A   
|October
    2013   | 0.09          | 0.08         | 2,000 
|November
    2013  | 0.08          | 0.08         | 25    
|December
    2013  | N/A           | N/A          | N/A   



The price of the
Listed Premier Warrants as quoted by the TSX at the close of business on November 4, 2013, being the last date upon which the
Listed Premier Warrants traded to December 31, 2013, was C$0.08 and on March 7,
2014 was C$0.16.



-83-







DIRECTORS
AND OFFICERS



The following table sets
forth the name, province/state and country of residence, position held with the Company and principal occupation of each person
who is a director and/or an executive officer of the Company.



|Name,
        Province/State and Country
        of Residence | Position(s) with the Company                                                                                                            | Principal Occupation                                                                                                
|------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------
|                                                              |                                                                                                                                         |                                                                                                                     
|Nolan WatsonBritish Columbia, Canada                          | President, Chief Executive Officer and Director since September 2008;
        Chairman of the Board since January 2013                  | Chairman of the Board, President and Chief Executive Officer of the Company and Sandstorm Metals & Energy Ltd.      
|                                                              |                                                                                                                                         |                                                                                                                     
|David Awram
        British Columbia, Canada                  | Director since March 2007; Executive Vice President  from July 2009 to January 2013; Senior Executive Vice President since January 2013 | Senior Executive Vice President of the Company and Sandstorm Metals & Energy Ltd.                                   
|                                                              |                                                                                                                                         |                                                                                                                     
|John P.A. Budreski (1)
British Columbia, Canada               | Director since June 2009                                                                                                                | President and Chief Executive Officer of Morien Resources Corp.                                                     
|                                                              |                                                                                                                                         |                                                                                                                     
|David E. De Witt (1)
        British Columbia, Canada         | Director since April 2008; LeadIndependent Director since January 2013                                                                  | Independent Businessman; Chairman of Pathway Capital Ltd. (“Pathway”)                                               
|                                                              |                                                                                                                                         |                                                                                                                     
|Andrew T. Swarthout (1)
        Arizona, United States        | Director since March 2009                                                                                                               | Chief Executive Officer and Director of Bear Creek Mining Corporation; Director of Rio Cristal Resources Corporation
|                                                              |                                                                                                                                         |                                                                                                                     
|Erfan Kazemi
        British Columbia, Canada                 | Chief Financial Officer since August 2011                                                                                               | Chief Financial Officer of the Company and Sandstorm Metals & Energy Ltd.                                           

| |  | 
| |  | 



_____________

| | (1) | Member of the Audit Committee.
| | --- | ------------------------------



Each director’s term
of office expires at the next annual meeting of shareholders of the Company or when his successor is duly elected or appointed,
unless his term ends earlier in accordance with the articles or by-laws of the Company, he resigns from office or he becomes disqualified
to act as a director of the Company.



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.



Nolan Watson
- Chairman of the Board, President, Chief Executive Officer and Director. Mr. Watson has been the President and Chief
Executive Officer of the Company since September 2008 and its Chairman since January 2013. Since May 13, 2010, Mr. Watson has
been President and Chief Executive Officer of Sandstorm Metals and its Chairman since January 2013. From July 2008 to September
2008, Mr. Watson was an independent businessman. From April 2006 to July 2008, Mr. Watson was the Chief Financial Officer of Silver
Wheaton Corp. (“Silver Wheaton”). Mr. Watson was the Corporate Controller of Silver Wheaton from 2005 to 2006.
From 2003 to 2004, Mr. Watson was a financial advisor and merger and acquisition specialist with Deloitte & Touche LLP. Mr.
Watson is a Chartered Financial Analyst Charterholder, a Chartered Accountant (Valedictorian of the Institute of Chartered Accountants
of British Columbia), and holds a Bachelor of Commerce degree (with honours) from the University of British Columbia.

-84-







David Awram
- Senior Executive Vice President and Director. Mr. Awram was Executive Vice President of the Company from July 2009 to
January 2013 and has been its Senior Executive Vice President since January 2013. Mr. Awram has been Executive Vice President
of Sandstorm Metals since January 2010 and then its Senior Executive Vice President since January 2013. From July 2008 to July
2009, Mr. Awram was an independent businessman. From May 2005 to July 2008, Mr. Awram was the Director of Investor Relations for
Silver Wheaton. Prior to May 2005, he was Manager, Investor Relations with Diamond Fields International Ltd. from April 2004 to
April 2005. He holds a Bachelor of Science degree (Honours) in Geology from the University of British Columbia in 1996.

John P.A.
Budreski - Director. Mr. Budreski has been the President and Chief Executive Officer of Morien Resources Corp. since November
2012. He was a Managing Director and a Vice Chairman with Cormark Securities Inc. from 2009 to 2012. He was the President and
Chief Executive Officer of Orion Securities Inc. from 2005 to 2007. Prior to this, he filled the roles of a Managing Director
of Equity Capital Markets and Head of Investment Banking for Scotia Capital Inc. from March 1998 to February 2005 after starting
out as a Managing Director of US Institutional Equity Group for Scotia Capital. He also held senior roles in investment
banking and equity sales and trading for RBC Dominion Securities and worked for Toronto Dominion Bank. He holds an MBA from the
University of Calgary and a Bachelor of Engineering from TUNS/Dalhousie.

David E. De Witt
- Lead Independent Director. Since October 2004, Mr. De Witt has been a co-founder and Chairman of Pathway, a Vancouver-based
private venture capital company. Mr. De Witt graduated with a BComm/LLB from the University of British Columbia in 1978 and practiced
corporate, securities and mining law until his retirement from the practice of law in January 1997. He currently holds directorships
in a number of public companies involved in the natural resource field and has experience in resource projects located in Latin
America, North America and Asia.



Andrew T.
Swarthout - Director. Mr. Swarthout has been the Chief Executive Officer and a director of Bear Creek
Mining Corporation since 2003. He was also its President until February 2011 and then again from August 2013 to present. Mr.
Swarthout was a Director of Rio Cristal Resources Corporation  from December 2006 to September 2013 and he was a Director
of Esperanza Resources Corp. from May 2012 to August 2013. Formerly he was an officer and member of the management committee
of Southern Peru Copper Corporation from 1995 to 2000 where he participated in decision making during a dynamic period
of corporate expansions, financing and project development. Mr. Swarthout served as a member of the National Mining
Society of Peru’s Committee for the Promotion of Private Investment, where he initiated favourable environmental
and taxation policies to promote foreign mining investment in Peru. Mr. Swarthout graduated in 1974 from the University
of Arizona with a Bachelor of Geosciences degree and he is a Professional Geologist.

Erfan Kazemi - Chief
Financial Officer. Since August 2011, Mr. Kazemi has been the Chief Financial Officer of the Company and of Sandstorm
Metals. Formerly, Mr. Kazemi was a Senior Manager at PricewaterhouseCoopers LLP where he worked commencing in January 2005 (as
an Associate) until June 2011 and where he managed the audits of billion dollar multinational entities and co-authored several
publications. In the community, Mr. Kazemi is a former member of the Vancouver Public Library Board and of the University of British
Columbia Board of Governors. Mr. Kazemi is a Chartered Accountant and also holds a Bachelor of Science (Mathematics) from
the University of British Columbia.



As at March 10,
2014, the directors and executive officers of Sandstorm Gold, as a group, beneficially owned, directly and indirectly, or
exercised control or direction over,  2,328,100 Common Shares, representing approximately 2.2%
of the total number of Common Shares outstanding before giving effect to the exercise of options, restricted share rights or
warrants to purchase Common Shares held by such directors and executive officers.



-85-









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 of this AIF has been, a director,
chief executive officer or chief financial officer of any company (including Sandstorm Gold) 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.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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,



| | (i) | is, or within ten years prior
                                         to the date of this AIF has been, a director or executive officer of any company (including
                                         Sandstorm Gold) 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 John P.A. Budreski, who
                                         was a director of EarthFirst Canada Inc. until March 2, 2010, a company engaged in the
                                         development of wind power and related generation facilities, when it obtained creditor
                                         protection under the Companies’ Creditors Arrangement Act (Canada) (the
                                         “CCAA”) on November 4, 2008. The CCAA process has now been completed
                                         and EarthFirst Canada Inc. has been amalgamated with another company and no longer exists
                                         as a separate entity; or
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | 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.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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.

Conflicts of Interest

To the best of Sandstorm
Gold’s knowledge, and other than as disclosed in this AIF, there are no known existing or potential material conflicts of
interest between Sandstorm Gold and any director or officer of Sandstorm Gold, 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 Sandstorm Gold and their duties as a director or officer of such other companies. See “Description
of the Business - Risk Factors - Risks Relating to the Company - Conflicts of Interest”.



-86-









INTEREST
OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS



Other than as described
below, no directors, executive officers or principal shareholders of Sandstorm Gold or any associate or affiliate of the foregoing
have had any material interest, direct or indirect, in any transactions in which Sandstorm Gold has participated since January
1, 2011, which has materially affected or is reasonably expected to materially affect Sandstorm Gold.



TRANSFER
AGENT AND REGISTRAR



The transfer agent and
registrar for the Common Shares is Computershare Investor Services Inc. at its principal offices in Vancouver, British Columbia
and Toronto, Ontario. The co-transfer agent and registrar for the Common Shares in the United States of America is Computershare
Trust Company, N.A. in Golden, Colorado.



The warrant agent for the
2009 Warrants, the 2010 Warrants and the 2012 Warrants is Computershare Trust Company of Canada at its principal offices in Vancouver,
British Columbia and Toronto, Ontario. The warrant agent for the Listed Premier Warrants is Valiant Trust Company at its principal
office in Toronto, Ontario.



MATERIAL
CONTRACTS



The only material contracts
entered into by the Company within the financial period ended December 31, 2013 or since such time or before such time that are
still in effect, other than in the ordinary course of business, are as follows:



| | 1. | The Aurizona Gold Stream dated May
                                         15, 2009 between the Company and Luna. See “General Development of the Business
                                         - Mineral Interests - Aurizona Gold Stream” for further details.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | The Santa Elena Gold Stream dated May
                                         15, 2009 between the Company and SilverCrest. See “General Development of the Business
                                         - Mineral Interests - Santa Elena Gold Stream” for further details.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | The Black Fox Gold Stream dated November
                                         9, 2010 between the Company and Brigus. See “General Development of the Business
                                         - Mineral Interests - Black Fox Gold Stream” for further details.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | The Bachelor Lake Gold Stream dated
                                         January 17, 2011 between the Company and Metanor. See “General Development of the
                                         Business - Mineral Interests - Bachelor Lake Gold Stream” for further details.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. | The Arrangement Agreement with respect
                                         to the acquisition by the Company of a 100% interest in Premier Royalty. See “General
                                         Development of the Business - Acquisition of 100% Interest in Premier Royalty”
                                         for further details.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | The Amended and Restated Credit Agreement
                                         dated February 15, 2014 between the Company and The Bank of Nova Scotia, Bank of Montreal
                                         and National Bank of Canada. See “General Development of the Business - Credit
                                         Facility” for further details.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

INTERESTS
OF EXPERTS

Qualified Persons
Under NI 43-101

Leah Mach, C.P.G., M.Sc.,
Principal Resource Geologist of SRK, and G. Peter Mah, P.Eng Ontario and Chief Operating Officer of Luna, both qualified persons
under NI 43-101, have reviewed and approved the scientific and technical disclosure relating to the Aurizona Mine.



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Nathan Eric Fier, C.P.G.,
P.Eng, Chief Operating Officer of SilverCrest, a qualified person under NI 43-101, has reviewed and approved the scientific and
technical disclosure relating to the Santa Elena Mine.



Howard Bird, former
Senior Vice President, Exploration of Brigus, a qualified person under NI 43-101, has reviewed and approved the scientific
and technical disclosure relating to the Black Fox Mine.



Pascal Hamelin, Vice President
of Metanor, a qualified person under NI 43-101, has reviewed and approved the scientific and technical disclosure relating to
the Bachelor Lake Mine.



Each of the aforementioned
firms or persons are independent of the Company and held no securities of the Company or of any associate or affiliate of the
Company at the time of preparation of the respective reports and/or at the time of the preparation of the technical information
contained in this AIF and did not receive any direct or indirect interest in any securities of the Company or of any associate
or affiliate of the Company. 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.

Auditors

Deloitte LLP are the independent
auditors for the Company. Deloitte LLP have advised the Company that they are independent with respect to the Company within the
meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of British Columbia and the rules and standards
of the PCAOB and the securities laws and regulations administered by the SEC.





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 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”
to this AIF.



The following are the current
members of the Committee:



|John P.A. Budreski  | Independent (1) | Financially literate (1)
|------------------- | --------------- | ------------------------
|David E. De Witt    | Independent (1) | Financially literate (1)
|Andrew T. Swarthout | Independent (1) | Financially literate (1)

_____________

| | (1) | As defined by National Instrument 52-110 Audit Committees(“NI 52-110”).
| | --- | -----------------------------------------------------------------------



Relevant Education
and Experience

As noted above, each member
of the Audit Committee is financially literate, i.e. has the ability to read and understand financial statements. Collectively,
the Audit Committee members have the education and experience to fulfill their responsibilities as outlined in the Audit Committee
Charter.



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Set out below is 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.



John P.A.
Budreski -Mr. Budreski has been involved in capital markets since 1987 and has acted as an advisor or consultant on a
variety of capital markets matters. From 2009 to 2012, he was a Managing Director and a Vice Chairman with Cormark Securities
Inc. He was the President and Chief Executive Officer of Orion Securities Inc. from 2005 to 2007. Mr. Budreski’s work has
required extensive review and analysis of financial statements. He graduated in 1981 from TUNS/Dalhousie with a Bachelor of Engineering
degree and then in 1986 from the University of Calgary with an MBA degree.

David E. De
Witt - Mr. De Witt is a founding partner and the Chairman of Pathway Capital Ltd., a private venture capital company which
was founded in October 2004. He has been a director and officer of numerous publicly traded companies since 1991 and his work
has required extensive review and analysis of financial statements. Mr. De Witt graduated in 1975 from the University of British
Columbia with a Bachelor of Commerce degree and then in 1978 with a Bachelor of Laws degree.

Andrew
T. Swarthout - In addition to being a Director of the Company and of Sandstorm Metals & Energy Ltd., Mr.
Swarthout has been the Chief Executive Officer and a Director of Bear Creek Mining Corporation since 2003. He was a Director
of Rio Cristal Resources Corporation from  December 2006 to September 2013 and a Director of Esperanza Resources
Corp. from May 2012 to August 2013. These are all publicly traded companies and Mr. Swarthout’s work has required
extensive review of financial statements. Mr. Swarthout graduated in 1974 from the University of Arizona with a Bachelor of
Geosciences degree and he is a Professional Geologist.

Reliance on Certain
Exemptions

At no time since
the commencement of the Company’s most recently completed financial year has the Company relied on any exemption from NI
52-110.

Audit Committee Oversight

At no time since
the commencement of the Company’s most recently completed financial year was a recommendation of the Audit Committee to
nominate or compensate an external auditor not adopted by the Board of Directors of the Company.

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.



External Auditor
Service Fees

The aggregate fees billed
by the Company’s external auditors in each of the last two financial years are as follows:



|Financial
    Year Ending | Audit
    Fees           | Audit-Related
    Fees (1) | Tax
    Fees | All
    Other Fees
|------------------------- | ------------------------ | -------------------------- | ------------ | ------------------
|2013
    (December 31)    | $251,033(C$267,000)      | NIL                        | NIL          | NIL               
|2012
    (December 31)    | $136,768
    (C$136,070) | NIL                        | NIL          | NIL               



-89-











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 is contained in the management information circular
of the Company dated March 26, 2013 filed on SEDAR at www.sedar.com. This information will also be contained in the management
information circular of the Company to be prepared in connection with the Company’s 2014 annual meeting of shareholders
currently scheduled to be held in May 2014 which will be available on SEDAR atwww.sedar.comand on EDGAR atwww.sec.gov. Additional financial information is
provided in the Company’s audited consolidated financial statements and management’s discussion and analysis for the
financial year ended December 31, 2013.



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SCHEDULE
“A”











SANDSTORM GOLD LTD.

(the "Company")

AUDIT COMMITTEE CHARTER



I.Mandate

The primary function of the Audit Committee
(the “Committee”) is to assist the Board of Directors in fulfilling its financial oversight responsibilities
by reviewing the financial reports and other financial information provided by the Company to regulatory authorities and shareholders,
the Company’s systems of internal controls regarding finance and accounting, and the Company’s auditing, accounting
and financial reporting processes. Consistent with this function, the Committee will encourage continuous improvement of, and
should foster adherence to, the Company’s policies, procedures and practices at all levels. The Committee’s primary
duties and responsibilities are to:

| | • | Serve
                                         as an independent and objective party to monitor the Company’s financial reporting
                                         and internal control system and review the Company’s financial statements.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Oversee
                                         the audit of the Company’s financial statements.
| | - | -------------------------------------------------------------------------------------------------

| | • | Review
                                         and appraise the performance of the Company’s external auditors.
| | - | ----------------------------------------------------------------------------------------------------------------

| | • | Provide
                                         an open avenue of communication among the Company’s auditors, financial and senior
                                         management and the Board of Directors.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

II.	Composition

The Committee shall be comprised of
three or more directors as determined by the Board of Directors. Each of these directors shall be independent as required by the
applicable rules of the Company’s regulators. No member of the Committee is permitted to have participated in the preparation
of the financial statements of the Company or any current subsidiary at any time during the past three years.

If permitted by applicable stock exchange
laws and regulations in effect from time to time, one director who (i) is not independent as defined and required under applicable
stock exchange rules, and (ii) is not a current employee or an immediate family member (as defined under applicable stock exchange
rules) of such employee, may be appointed to the Audit Committee if the Board, under exceptional and limited circumstances, determines
that membership on the Audit Committee by the individual is required in the best interests of the Company and its stockholders.
In such event, the Board will disclose in the Company’s next annual proxy statement the nature of that director’s
relationship with the Company and the reasons for that determination. A director appointed to the Committee pursuant to this exception
may not serve in excess of two consecutive years and may not chair the Committee.

-A1-







Each member of the Committee will be
able to read and understand fundamental financial statements. At least one member of the Committee shall have accounting or related
financial management expertise to qualify as a financial expert. A financial expert is a member who understands generally accepted
accounting principles and financial statements; can assess the general application of such principles in connection with the accounting
for estimates, accruals, and reserves; has 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 registrant’s financial statements, or experience actively supervising one
or more persons engaged in such activities; understands internal control over financial reporting; and understands audit committee
functions.

The members of the Committee shall be
elected by the Board of Directors. Unless a Chair is elected by the full Board of Directors, the members of the Committee may
designate a Chair by a majority vote of the full Committee membership.

III.	Meetings

The Committee shall meet at least quarterly,or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee will meet at least
annually with the Chief Financial Officer and the external auditors in separate sessions.

IV.	Responsibilities and Duties

To fulfill its responsibilities and
duties, the Committee shall:

Documents/Reports Review

1.	Review and update this Charter
annually.

| | 2. | Review the Company’s financial
                                         statements, MD&A and any annual and interim earnings, press releases before the Company
                                         publicly discloses this information and any reports or other financial information (including
                                         quarterly financial statements), which are submitted to any governmental body, or to
                                         the public, including any certification, report, opinion, or review rendered by the external
                                         auditors.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Review the expenses of the Chief Executive
                                         Officer on an annual basis.
| | -- | ---------------------------------------------------------------------------------------------------------------

External Auditors

| | 4. | Review annually, the performance of
                                         the external auditors who shall be ultimately accountable to the Board of Directors and
                                         the Committee as representatives of the shareholders of the Company.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | Obtain annually, a formal written statement
                                         of external auditors setting forth all relationships between the external auditors and
                                         the Company.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | Review and discuss with the external
                                         auditors any disclosed relationships or services that may impact the objectivity and
                                         independence of the external auditors.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 7. | Take, or recommend that the full Board
                                         of Directors take, appropriate action to oversee the independence of the external auditors.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 8. | Recommend to the Board of Directors
                                         the selection and, where applicable, the replacement of the external auditors nominated
                                         annually for shareholder approval.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-A2-







| | 9. | At each meeting, consult with the external
                                         auditors, without the presence of management, about the quality of the Company’s
                                         accounting principles, internal controls and the completeness and accuracy of the Company’s
                                         financial statements.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10. | Review and approve the Company’s
                                         hiring policies regarding partners, employees and former partners and employees of the
                                         present and former external auditors of the Company.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 11. | Review with management and the external
                                         auditors the audit plan for the year-end financial statements.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------

| | 12. | Review and pre-approve all audit and
                                         audit-related services and the fees and other compensation related thereto, and any non-audit
                                         services, provided by the Company’s external auditors. The pre-approval requirement
                                         is waived with respect to the provision of non-audit services if:
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | i. | the aggregate amount of all such
                                         non-audit services provided to the Company constitutes not more than five percent of
                                         the total amount of revenues paid by the Company to its external auditors during the
                                         fiscal year in which the non-audit services are provided;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ii. | such services were not recognized
                                         by the Company at the time of the engagement to be non-audit services; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------

| | iii. | such services are promptly brought
                                         to the attention of the Committee by the Company and approved prior to the completion
                                         of the audit by the Committee or by one or more members of the Committee who are members
                                         of the Board of Directors to whom authority to grant such approvals has been delegated
                                         by the Committee.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Provided the pre-approval of the
non-audit services is presented to the Committee’s first scheduled meeting following such approval such authority may be
delegated by the Committee to one or more independent members of the Committee.

Financial Reporting Processes

| | 13. | In consultation with the external auditors,
                                         review with management the integrity of the Company’s financial reporting process,
                                         both internal and external.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 14. | Consider the external auditors’
                                         judgments about the quality and appropriateness of the Company’s accounting principles
                                         as applied in its financial reporting.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 15. | Consider and approve, if appropriate,
                                         changes to the Company’s auditing and accounting principles and practices as suggested
                                         by the external auditors and management.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 16. | Review significant judgments made by
                                         management in the preparation of the financial statements and the view of the external
                                         auditors as to appropriateness of such judgments.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 17. | Following completion of the annual
                                         audit, review separately with management and the external auditors any significant difficulties
                                         encountered during the course of the audit, including any restrictions on the scope of
                                         work or access to required information.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 18. | Review any significant disagreement
                                         among management and the external auditors in connection with the preparation of the
                                         financial statements. Where there are significant unsettled issues, the Committee shall
                                         ensure that there is an agreed course of action for the resolution of such matters.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 19. | Review with the external auditors and
                                         management the extent to which changes and improvements in financial or accounting practices
                                         have been implemented.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-A3-







| | 20. | Solicit and review complaints or concerns
                                         about any questionable accounting, internal accounting controls or auditing matters.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 21. | Review certification process.
| | --- | -----------------------------

| | 22. | Allow for the solicitation of confidential
                                         and/or anonymous submissions by employees of the Company of concerns regarding questionable
                                         accounting or auditing matters.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23.	Review any related-party transactions.

General

| | 24. | The Committee shall be empowered to
                                         retain independent counsel and other advisers as necessary to carry out its duties.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 25. | The Committee shall be provided appropriate
                                         funding from the Company, as determined by the Committee, for payment of compensation
                                         to any registered public accounting firm engaged for the purpose of preparing or issuing
                                         an audit report or performing other audit review or attest services for the Company,
                                         to any advisers employed by the Committee, and for ordinary administrative expenses of
                                         the Committee that are necessary or appropriate in carrying out its duties.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

APPROVED by the Audit Committee of SANDSTORM GOLD
LTD. on May 3, 2012.

APPROVED AND ADOPTED by the Board of Directors of
SANDSTORM GOLD LTD. on May 3, 2012.



-A4-