EXHIBIT 99.2







Consolidated Financial Statements

(Expressed in Thousands of Canadian Dollars)

For the years ended December 31, 2011
and 2010























March 30, 2012



Independent Auditor’s Report



To the Shareholders of Extorre Gold Mines Limited

We have completed an integrated audit of Extorre Gold Mines Limited’s
(the “Company”) 2011 consolidated financial statements and its internal control over financial reporting as at
December 31, 2011 and an audit of its 2010 consolidated financial statements. Our opinions, based on our audits, are
presented below.



Report on the consolidated financial statements

We have audited the accompanying consolidated financial statements
of the Company, which comprise the consolidated statements of financial position as at December 31, 2011, December 31, 2010
and January 1, 2010 and the consolidated statements of loss and comprehensive loss, cash flows and changes in equity
for the years ended December 31, 2011 and December 31, 2010 and the related notes, which comprise a summary
of significant accounting policies and other explanatory information.



Management’s responsibility for the consolidated financial
statements

Management is responsible for the preparation and fair presentation
of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Boardand for such internal control as management determines is necessary to enable the preparation
of consolidated financial statements that are free from material misstatement, whether due to fraud or error.



Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We conducted our audits in accordance with Canadian Auditing Standards (CAS) and the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an
audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. CAS
require that we comply with ethical requirements.



An audit involves performing procedures to obtain audit evidence,
on a test basis, about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on
the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s
preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate
in the circumstances. An audit also includes evaluating the appropriateness of accounting principles and policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements.



We believe that the audit evidence we have obtained in our audits
is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.








PricewaterhouseCoopers LLP, Chartered Accountants

PricewaterhouseCoopers Place, 250 Howe Street, Suite
700, Vancouver, British Columbia, Canada V6C 3S7

T: +1 604 806 7000, F: +1 604 806 7806, www.pwc.com/ca



“PwC” refers to PricewaterhouseCoopers
LLP, an Ontario limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member
firm of which is a separate legal entity.















Opinion

In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Company as at December 31, 2011, December 31, 2010 and January 1, 2010
and its financial performance and its cash flows for the years ended December 31, 2011 and December 31, 2010 in accordance
with International Financial Reporting Standards as issued by the International Accounting Standards Board.



Report on internal control over financial reporting

We have also audited the Company’s internal control over
financial reporting as at December 31, 2011, based on criteria established in Internal Control - Integrated Framework,
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).



Management’s responsibility for internal control over
financial reporting

Management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included
in Management’s Report on Internal Control Over Financial Reporting.



Auditor’s responsibility

Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting
in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects.



An audit of internal control over financial reporting includes
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating effectiveness of internal control, based on the assessed risk, and performing such other
procedures as we consider necessary in the circumstances.



We believe that our audit provides a reasonable basis for our
audit opinion on the Company’s internal control over financial reporting.



Definition of internal control over financial reporting

A company’s internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations
of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial
statements.















Inherent limitations

Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies
or procedures may deteriorate.



Opinion

In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as at December 31, 2011 based on criteria established in Internal Control -
Integrated Framework issued by COSO.



(signed) PricewaterhouseCoopers LLP



Chartered Accountants





1









|Extorre Gold Mines Limited                                     
|---------------------------------------------------------------
|Consolidated Statement of Financial Position                   
|(Expressed in Thousands of Canadian Dollars, Except Share Data)



|                                         |  |  |           |  | December 31, 2011 |   |          | December 31, 2010 |  |   | January 1, 2010 |  
|---------------------------------------- |  |  | --------- |  | ----------------- | - | -------- | ----------------- |  | - | --------------- | -
|Assets                                   |  |  |           |  |                   |   |          |                   |  |   |                 |  
|                                         |  |  |           |  |                   |   |          |                   |  |   |                 |  
|Current                                  |  |  |           |  |                   |   |          |                   |  |   |                 |  
|Cash and cash equivalents                |  |  | (Note 9)  |  |                   | $ | 26,204   |                   |  | $ | 46,102          |  
|Amounts receivable and prepaid expenses  |  |  |           |  |                   |   | 1,698    |                   |  |   | 485             |  
|Due from related parties                 |  |  | (Note 16) |  |                   |   | -        |                   |  |   | 22              |  
|                                         |  |  |           |  |                   |   | 27,902   |                   |  |   | 46,609          |  
|                                         |  |  |           |  |                   |   |          |                   |  |   |                 |  
|Property and equipment                   |  |  | (Note 10) |  |                   |   | 5,036    |                   |  |   | 239             |  
|Mineral properties                       |  |  | (Note 11) |  |                   |   | 124      |                   |  |   | 2,847           |  
|                                         |  |  |           |  |                   | $ | 33,062   |                   |  | $ | 49,695          |  
|                                         |  |  |           |  |                   |   |          |                   |  |   |                 |  
|Liabilities                              |  |  |           |  |                   |   |          |                   |  |   |                 |  
|                                         |  |  |           |  |                   |   |          |                   |  |   |                 |  
|Current                                  |  |  |           |  |                   |   |          |                   |  |   |                 |  
|Accounts payable and accrued liabilities |  |  |           |  |                   | $ | 2,750    |                   |  | $ | 2,269           |  
|Due to related parties                   |  |  | (Note 16) |  |                   |   | 69       |                   |  |   | 88              |  
|                                         |  |  |           |  |                   |   | 2,819    |                   |  |   | 2,357           |  
|                                         |  |  |           |  |                   |   |          |                   |  |   |                 |  
|Shareholders’ Equity                     |  |  |           |  |                   |   |          |                   |  |   |                 |  
|                                         |  |  |           |  |                   |   |          |                   |  |   |                 |  
|Share capital                            |  |  | (Note 12) |  |                   |   | 175,230  |                   |  |   | 144,641         |  
|Contributed surplus                      |  |  | (Note 15) |  |                   |   | 19,728   |                   |  |   | 11,168          |  
|Deficit                                  |  |  |           |  |                   |   | (163,362 | )                 |  |   | (107,916        | )
|Accumulated other comprehensive loss     |  |  |           |  |                   |   | (1,353   | )                 |  |   | (555            | )
|                                         |  |  |           |  |                   |   | 30,243   |                   |  |   | 47,338          |  
|                                         |  |  |           |  |                   | $ | 33,062   |                   |  | $ | 49,695          |  



|Contractual Obligations | (Note 19) | 
|----------------------- | --------- | 



Approved by the Directors:



|“ Eric Roth ”     | Director
|----------------- | --------
|                  |         
|“ George Lawton ” | Director



See accompanying
notes to the consolidated financial statements



2











|Extorre Gold Mines Limited                                     
|---------------------------------------------------------------
|Consolidated Statements of Loss and Comprehensive Loss         
|(Expressed in Thousands of Canadian Dollars, Except Share Data)









|For the years ended December 31,                                                |  | 2011              |  |   | 2010       |  
|------------------------------------------------------------------------------- |  | ----------------- |  | - | ---------- | -
|                                                                                |  |                   |  |   |            |  
|Income                                                                          |  |                   |  |   |            |  
|Interest income                                                                 |  |                   |  | $ | 380        |  
|                                                                                |  |                   |  |   |            |  
|Expenses                                                                        |  |                   |  |   |            |  
|Accounting and audit                                                            |  |                   |  |   | 416        |  
|Administration salaries and consulting                                          |  | (Note 13)         |  |   | 1,476      |  
|Directors’ fees                                                                 |  | (Note 13)         |  |   | 2,508      |  
|Foreign exchange loss (gain)                                                    |  |                   |  |   | 18         |  
|General and administration                                                      |  | (Note 18)         |  |   | 939        |  
|Legal fees                                                                      |  |                   |  |   | 112        |  
|Loss on write off of mineral properties                                         |  | (Note 11(c)(iii)) |  |   | 2,618      |  
|Management fees                                                                 |  | (Note 13)         |  |   | 3,621      |  
|Mineral property exploration expenditures                                       |  | (Notes 11 and 13) |  |   | 42,854     |  
|Shareholder communications                                                      |  | (Note 13)         |  |   | 1,058      |  
|Stock exchange listing and filing fees                                          |  |                   |  |   | 206        |  
|                                                                                |  |                   |  |   | 55,826     |  
|                                                                                |  |                   |  |   |            |  
|Net loss for the year                                                           |  |                   |  |   | 55,446     |  
|Other comprehensive loss                                                        |  |                   |  |   | 798        |  
|Net loss and comprehensive loss for the year                                    |  |                   |  | $ | 56,244     |  
|                                                                                |  |                   |  |   |            |  
|Basic loss per common share from net loss and comprehensive loss for the year   |  |                   |  | $ | (0.62      | )
|Diluted loss per common share from net loss and comprehensive loss for the year |  |                   |  | $ | (0.62      | )
|                                                                                |  |                   |  |   |            |  
|Weighted average number of common shares outstanding                            |  |                   |  |   | 89,991,075 |  













See accompanying
notes to the consolidated financial statements



3









|Extorre Gold Mines Limited                                     
|---------------------------------------------------------------
|Consolidated Statements of Cash Flow                           
|(Expressed in Thousands of Canadian Dollars, Except Share Data)









|For the years ended December 31,                                    |  |  |                   |  | 2011 |   |         | 2010 | 
|------------------------------------------------------------------- |  |  | ----------------- |  | ---- | - | ------- | ---- | 
|                                                                    |  |  |                   |  |      |   |         |      | 
|Operating Activities                                                |  |  |                   |  |      |   |         |      | 
|Net loss for the year                                               |  |  |                   |  |      | $ | (55,446 | )    | 
|                                                                    |  |  |                   |  |      |   |         |      | 
|Adjustments                                                         |  |  |                   |  |      |   |         |      | 
|Amortization                                                        |  |  | (Note 10)         |  |      |   | 372     |      | 
|Share - based compensation                                          |  |  | (Note 13)         |  |      |   | 10,287  |      | 
|Write off of mineral properties                                     |  |  | (Note 11(c)(iii)) |  |      |   | 2,618   |      | 
|                                                                    |  |  |                   |  |      |   | (42,169 | )    | 
|                                                                    |  |  |                   |  |      |   |         |      | 
|Changes in non-cash working capital items:                          |  |  |                   |  |      |   |         |      | 
|Accounts receivable and prepaid expenses                            |  |  |                   |  |      |   | (1,373  | )    | 
|Due from related parties                                            |  |  |                   |  |      |   | 22      |      | 
|Due to related parties                                              |  |  |                   |  |      |   | (19     | )    | 
|Accounts payable and accrued liabilities                            |  |  |                   |  |      |   | 716     |      | 
|                                                                    |  |  |                   |  |      |   | (42,823 | )    | 
|                                                                    |  |  |                   |  |      |   |         |      | 
|Financing Activities                                                |  |  |                   |  |      |   |         |      | 
|Issue of share capital for cash                                     |  |  | (Note 12)         |  |      |   | 30,546  |      | 
|Share issue costs                                                   |  |  |                   |  |      |   | (1,684  | )    | 
|Funding provided by Exeter                                          |  |  | (Note 7)          |  |      |   | -       |      | 
|                                                                    |  |  |                   |  |      |   | 28,862  |      | 
|Investing Activities                                                |  |  |                   |  |      |   |         |      | 
|Acquisition of property and equipment                               |  |  |                   |  |      |   | (5,864  | )    | 
|                                                                    |  |  |                   |  |      |   |         |      | 
|Effect of foreign exchange rate change on cash and cash equivalents |  |  |                   |  |      |   | (73     | )    | 
|Net increase (decrease) in cash and cash equivalents                |  |  |                   |  |      |   | (19,898 | )    | 
|                                                                    |  |  |                   |  |      |   |         |      | 
|Cash and cash equivalents – beginning of the year                   |  |  |                   |  |      |   | 46,102  |      | 
|                                                                    |  |  |                   |  |      |   |         |      | 
|Cash and cash equivalents – end of the year                         |  |  |                   |  |      | $ | 26,204  |      | 



See accompanying
notes to the consolidated financial statements



4













|Extorre Gold Mines Limited                                     
|---------------------------------------------------------------
|Consolidated Statements of Changes in Equity                   
|(Expressed in Thousands of Canadian Dollars, Except Share Data)





|                                                                      |  | Issued Share Capital |            |  |        |   |         |                     |  |   |          |   |  |                                      |         
|--------------------------------------------------------------------- |  | -------------------- | ---------- |  | ------ | - | ------- | ------------------- |  | - | -------- | - |  | ------------------------------------ | --------
|                                                                      |  | Number of Shares     |            |  | Amount |   |         | Contributed Surplus |  |   | Deficit  |   |  | Accumulated Other Comprehensive Loss |         
|Balance at January 1, 2010                                            |  |                      | -          |  |        | $ | -       |                     |  | $ | 77,599   |   |  | $                                    | (74,751 
|Additions during the year:                                            |  |                      |            |  |        |   |         |                     |  |   |          |   |  |                                      |         
|- Issued pursuant to the Arrangement                                  |  |                      | 74,755,898 |  |        |   | 104,407 |                     |  |   | (104,407 | ) |  |                                      | -       
|- Equity financing net of share issue costs                           |  |                      | 9,100,000  |  |        |   | 37,900  |                     |  |   | -        |   |  |                                      | -       
|- Transfer of net assets from Exeter                                  |  |                      | -          |  |        |   | -       |                     |  |   | 27,947   |   |  |                                      | -       
|- Funding provided and expenses paid by Exeter                        |  |                      | -          |  |        |   | -       |                     |  |   | 1,850    |   |  |                                      | -       
|- Share-based compensation allocated from Exeter                      |  |                      | -          |  |        |   | -       |                     |  |   | 826      |   |  |                                      | -       
|- Exercise of warrants                                                |  |                      | 250,729    |  |        |   | 316     |                     |  |   | -        |   |  |                                      | -       
|- Exercise of stock options                                           |  |                      | 3,367,000  |  |        |   | 1,593   |                     |  |   | -        |   |  |                                      | -       
|- Contributed surplus allocated on exercise of  warrants and  options |  |                      | -          |  |        |   | 948     |                     |  |   | (948     | ) |  |                                      | -       
|- Agent ́s warrants                                                    |  |                      | -          |  |        |   | (523    | )                   |  |   | 523      |   |  |                                      | -       
|- Share-based compensation recognized                                 |  |                      | -          |  |        |   | -       |                     |  |   | 7,778    |   |  |                                      | -       
|- Other comprehensive loss                                            |  |                      | -          |  |        |   | -       |                     |  |   | -        |   |  |                                      | -       
|- Net loss for the year                                               |  |                      | -          |  |        |   | -       |                     |  |   | -        |   |  |                                      | (33,165 
|Balance at December 31, 2010                                          |  |                      | 87,473,627 |  |        | $ | 144,641 |                     |  | $ | 11,168   |   |  | $                                    | (107,916
|Additions during the year:                                            |  |                      |            |  |        |   |         |                     |  |   |          |   |  |                                      |         
|- Equity financing net of share issue costs                           |  |                      | 2,400,000  |  |        |   | 23,516  |                     |  |   | -        |   |  |                                      | -       
|- Exercise of stock options                                           |  |                      | 2,238,312  |  |        |   | 3,071   |                     |  |   | -        |   |  |                                      | -       
|- Exercise of warrants                                                |  |                      | 455,000    |  |        |   | 2,275   |                     |  |   | -        |   |  |                                      | -       
|- Contributed surplus allocated on exercise of  warrants and options  |  |                      | -          |  |        |   | 2,337   |                     |  |   | (2,337   | ) |  |                                      | -       
|- Share-based compensation recognized                                 |  |                      | -          |  |        |   | -       |                     |  |   | 10,287   |   |  |                                      | -       
|- Agent’s warrants                                                    |  |                      | -          |  |        |   | (610    | )                   |  |   | 610      |   |  |                                      | -       
|- Other comprehensive loss                                            |  |                      | -          |  |        |   | -       |                     |  |   | -        |   |  |                                      | -       
|- Net loss for the year                                               |  |                      | -          |  |        |   | -       |                     |  |   | -        |   |  |                                      | (55,446 
|Balance at  December 31, 2011                                         |  |                      | 92,566,939 |  |        | $ | 175,230 |                     |  | $ | 19,728   |   |  | $                                    | (163,362



See accompanying notes to the consolidated
financial statements



5


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010






| | 1. | Nature of Business
| | -- | ------------------



Extorre Gold Mines Limited (“Extorre”
or the “Company”) is an exploration stage company incorporated under the laws of British Columbia, Canada and together
with its subsidiaries, it is engaged in the acquisition and exploration of mineral properties located in Argentina.



The Company is in the process
of exploring its mineral properties and has not yet determined whether these properties contain mineral reserves that are economically
recoverable. The continued operations of the Company and the recoverability of the amounts shown for property and equipment and
mineral properties are dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain
necessary financing to complete the development of such properties, and the profitable production from or disposition of such properties.



The Company has its primary listing
on the Toronto Stock Exchange and a secondary listing on the NYSE - Amex. The Company’s head office is located at 1660 -
999 West Hastings Street, Vancouver, BC, Canada, V6C 2W2.



| | 2. | Basis of Preparation and Adoption of IFRS
| | -- | -----------------------------------------



The Company prepares its financial
statements in accordance with Canadian generally accepted accounting principles as set out in the Handbook of the Canadian Institute
of Chartered Accountants (“CICA Handbook”). In 2010, the CICA Handbook was revised to incorporate International Financial
Reporting Standards (“IFRS”), and required publicly accountable enterprises to apply such standards effective for years
beginning on or after January 1, 2011. Accordingly, the Company has commenced reporting on this basis in these consolidated financial
statements. In these financial statements, the term “Canadian GAAP” refers to Canadian GAAP before the adoption of
IFRS.



These consolidated financial
statements have been prepared in accordance with IFRS, including certain optional transitions and mandatory exemptions from retrospective
application of IFRS as described in IFRS 1. Subject to certain elections disclosed in Note 3, the Company has consistently applied
the same accounting policies in its opening IFRS statement of financial position at January 1, 2010 the (“Transition Date”)
and throughout all periods presented, as if these policies had always been in effect. Note 3(b) discloses the impact of the transition
to IFRS on the Company’s reported financial results, including the nature and effect of significant changes in accounting
policies from those used in the Company’s consolidated financial statements for the year ended December 31, 2010.



The accounting policies applied
in these consolidated financial statements are based on IFRS effective for the year ended December 31, 2011. The financial statement
were approved and authorized by the Audit Committee of the Board of Directors for issue on March 27, 2012.



| | 3. | Explanation of Transition to IFRS
| | -- | ---------------------------------



The accounting policies set out
in Note 4 have been applied in preparing these consolidated financial statements, the comparative information presented for the
year ended December 31, 2010 and the preparation of an opening IFRS balance sheet at January 1, 2010, subject to certain elections
disclosed in this note.



In preparing its opening IFRS
balance sheet, the Company has adjusted certain amounts reported previously in the Company’s consolidated financial statements
prepared in accordance with Canadian GAAP. An explanation of how the transition from Canadian GAAP to IFRS has affected the Company’s
financial position as of January 1, 2010 and December 31, 2010 and its cash flows for the year ended December 31, 2010 is disclosed
in Note 3(b) below.



Initial elections upon adoption



Set
out below are the applicable IFRS 1 exemptions applied in the conversion from Canadian GAAP to IFRS:



6


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010






| | 3. | Explanation of Transition to IFRS
(Continued)
| | -- | ---------------------------------------------



| | a) | IFRS exemption options:
| | -- | -----------------------



Exemption for share-based
payment transactions



An IFRS 1 exemption allows the
Company to not apply IFRS 2, ‘Share-based payment’, to equity instruments granted after November 7, 2002 and vested
before the transition date to IFRS. The Company has elected to utilize the exemption and, as a result, was only required to recalculate
the impact on any share based payments that had not vested at the Transition Date.



Cumulative
translation differences



An IFRS 1 exemption allows the
Company to set the currency translation adjustment, which is included in accumulated other comprehensive income (“OCI”),
to zero at January 1, 2010 and adjust deficit by the same amount. If, subsequent to the Transition Date, a foreign operation is
disposed of, the translation differences that arose before the Transition Date will not affect the gain or loss on disposal.



Business combinations



IFRS 1 provides the option to
apply IFRS 3R, Business Combinations, retrospectively or prospectively from the Transition Date. The Company elected to adopt IFRS
3R effective January 1, 2010.



| | b) | Reconciliations of Canadian GAAP to IFRS
| | -- | ----------------------------------------



Upon conversion to IFRS, IFRS
1 requires an entity to reconcile equity, income (loss) and comprehensive income (loss) for prior periods. The following disclosure
and tables represent the required reconciliation from Canadian GAAP to IFRS.



7


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010






| | 3. | Explanation of Transition to IFRS
(Continued)
| | -- | ---------------------------------------------



| | i. | A reconciliation between the Canadian GAAP and IFRS consolidated statements of financial position
at January 1, 2010 and December 31, 2010 is provided below:
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------





|                                         |  | January
    1, 2010 |         |   | December
    31, 2010            |  
|---------------------------------------- |  | ------------------- | ------- | - | -------------------------------- | -
|                                         |  | Canadian
    GAAP   |         |   | Effect
    of transition
to IFRS |  
|ASSETS                                   |  |                     |         |   |                                  |  
|Current assets                           |  |                     |         |   |                                  |  
|Cash and cash equivalents                |  | $                   | 465     |   |                                  | $
|Amounts receivable and prepaid expenses  |  |                     | 127     |   |                                  |  
|Due from related party                   |  |                     | 249     |   |                                  |  
|                                         |  |                     | 841     |   |                                  |  
|                                         |  |                     |         |   |                                  |  
|Property and equipment                   |  |                     | 88      |   |                                  |  
|Mineral properties                       |  |                     | 3,354   |   |                                  |  
|Total Assets                             |  | $                   | 4,283   |   |                                  | $
|                                         |  |                     |         |   |                                  |  
|LIABILITIES                              |  |                     |         |   |                                  |  
|Current                                  |  |                     |         |   |                                  |  
|Accounts payable and accrued liabilities |  | $                   | 1,435   |   |                                  | $
|Due to related parties                   |  |                     | -       |   |                                  |  
|                                         |  |                     | 1,435   |   |                                  |  
|                                         |  |                     |         |   |                                  |  
|Shareholders’ Equity                     |  |                     |         |   |                                  |  
|Share capital                            |  |                     | -       |   |                                  |  
|Contributed surplus                      |  |                     | 77,599  |   |                                  |  
|Deficit                                  |  |                     | (74,751 | ) |                                  |  
|Accumulated other comprehensive
    loss |  |                     | -       |   |                                  |  
|                                         |  |                     | 2,848   |   |                                  |  
|Total Liabilities and Equity             |  | $                   | 4,283   |   |                                  | $



Notes to the IFRS reconciliation
above:



Foreign
currency translation adjustments relate to integrated foreign operations under Canadian GAAP. IFRS does not distinguish between
integrated and self-sustaining foreign operations and the current rate method is required to be applied to all entities where the
functional currency is different from the presentation currency, resulting in an adjustment on transition to IFRS.



As
at December 31, 2010, the adjustment to equity includes the one noted above for foreign currency and the adjustments described
below in the comprehensive loss reconciliation.



8


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010






| | 3. | Explanation of Transition to IFRS
(Continued)
| | -- | ---------------------------------------------



| | ii. | A reconciliation between the Canadian GAAP and IFRS comprehensive loss for the year ended December 31, 2010 is provided below:
| | --- | ------------------------------------------------------------------------------------------------------------------------------



|                                          |  | Year ended December 31, 2010 |        
|----------------------------------------- |  | ---------------------------- | -------
|                                          |  | Canadian GAAP                |        
|                                          |  |                              |        
|Income                                    |  |                              |        
|Interest income                           |  | $                            | 211    
|                                          |  |                              |        
|Expenses                                  |  |                              |        
|Accounting and audit                      |  |                              | 359    
|Administration salaries and consulting    |  |                              | 1,339  
|Director’s fees                           |  |                              | 2,033  
|Foreign exchange (gain) loss              |  |                              | (90    
|General and administration                |  |                              | 436    
|Legal fees                                |  |                              | 146    
|Management fees                           |  |                              | 3,756  
|Mineral property exploration expenditures |  |                              | 24,474 
|Shareholder communications                |  |                              | 639    
|Stock exchange listing and filing fees    |  |                              | 284    
|                                          |  |                              | 33,376 
|                                          |  |                              |        
|Net loss for the year                     |  | $                            | 33,165 
|Other comprehensive loss                  |  |                              | -      
|Comprehensive loss for the year           |  | $                            | 33,165 
|Net loss for the year                     |  | $                            | 33,165 
|Deficit at beginning of year              |  |                              | 74,751 
|                                          |  |                              |        
|Deficit at end of year                    |  | $                            | 107,916



| | 4. | Changes in Accounting Policy and Disclosures
| | -- | --------------------------------------------



The IASB issued the following
standards which have not yet been adopted by the Company: IFRS 9, Financial Instruments - Classification and Measurement (IFRS
9); IFRS 10, Consolidated Financial Statements (IFRS 10); IFRS 11, Joint Arrangements (IFRS 11); IFRS 12, Disclosure of Interests
in Other Entities (IFRS 12); IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine (IFRIC 20); IFRS 13, Fair Value
Measurement (IFRS 13). The Company is in its preliminary stage of assessing the impact that the new and amended standards will
have on its consolidated financial statements or whether to early adopt any of the new requirements.





The following is a brief summary
of the new standards:



IFRS 9 – Financial
Instruments - Classification and Measurement



IASB intends to replace IAS 39
- Financial Instruments: Recognition and Measurement (“IAS 39”) in its entirety with IFRS 9 - Financial Instruments
(“IFRS 9”) in three main phases. IFRS 9 will be the new standard for the financial reporting of financial instruments,
and is effective for annual periods beginning on or after January 1, 2015, with earlier adoption permitted. In November 2009 and
October 2010, IFRS 9 (2009) and IFRS 9 (2010) were issued, respectively, which address the classification and measurement of financial
assets and financial liabilities. IFRS 9 (2009) requires that all financial assets be classified as subsequently measured at amortized
cost or at fair value based on the Company’s business model for managing financial assets and the contractual cash flow characteristics
of the financial assets. IFRS 9 (2010) requires that financial liabilities are classified as subsequently measured at amortized
cost except for financial liabilities classified as fair value through profit or loss, financial guarantees and certain other exceptions.
IFRS 9 (2009) and IFRS 9 (2010) are effective for annual periods beginning on or after January 1, 2015. Early adoption is permitted
and the standard is required to be applied.retrospectively.



9


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010




| | 4. | Changes in Accounting Policy and Disclosures(Continued)
| | -- | -------------------------------------------------------



IFRS 10
– Consolidation



IFRS 10 requires an entity to
consolidate an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its control over the investee. Under existing IFRS, consolidation is required when an entity
has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. IFRS 10
replaces SIC-12 Consolidation—Special Purpose Entities and parts of IAS 27 Consolidated and Separate Financial Statements.
This standard is effective for annual periods beginning on or after January 1, 2013.



IFRS 11
– Joint Arrangements



IFRS 11 requires a venturer to
classify its interest in a joint arrangement as a joint venture or joint operation. Joint ventures will be accounted for using
the equity method of accounting whereas for a joint operation the venturer will recognize its share of the assets, liabilities,
revenue and expenses of the joint operation. Under existing IFRS, IAS 31, Interests in Joint Ventures, and SIC-13, Jointly Controlled
Entities—Non-monetary Contributions by Venturers, entities have the choice to proportionately consolidate or equity account
for interests in joint ventures IFRS 11 is effective for annual periods beginning on or after January 1, 2013.



IFRS
12 – Disclosure of Interests in Other Entities



IFRS 12 establishes disclosure
requirements for interests in other entities, such as joint arrangements, associates, special purpose vehicles and off balance
sheet vehicles. The standard carries forward existing disclosures and also introduces significant additional disclosure requirements
that address the nature of, and risks associated with, an entity’s interests in other entities. This standard is effective
for annual periods beginning on or after January 1, 2013.



IFRS
13 – Fair Value Measurement



IFRS 13 is a comprehensive standard
for fair value measurement and disclosure requirements for use across all IFRS standards. The new standard clarifies that fair
value is the price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between market
participants, at the measurement date. It also establishes disclosures about fair value measurement. Under existing IFRS, guidance
on measuring and disclosing fair value is dispersed among the specific standards requiring fair value measurements and in many
cases does not reflect a clear measurement basis or consistent disclosures. This standard is effective for annual periods beginning
on or after January 1, 2013.



IFRIC
20 – Stripping Costs in the Production Phase of a Surface Mine



IFRIC 20 clarifies the requirements
for accounting for stripping costs associated with waste removal in surface mining, including when production stripping costs should
be recognised as an asset, how the asset is initially recognised, and subsequent measurement. This standard is effective for annual
periods beginning on or after January 1, 2013.



10


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010








| | 5. | Summary of Significant Accounting Policies, Judgements and Estimation Uncertainty
| | -- | ---------------------------------------------------------------------------------



| | a) | Basis of Presentation
| | -- | ---------------------



These consolidated
financial statements include the accounts of the following significant subsidiaries:





|                                      |  | Incorporation          |  | Percentage of
        Ownership
|------------------------------------- |  | ---------------------- |  | -------------------------------
|Estelar Resources Limited (“Estelar”) |  | British Virgin Islands |  | 100%                           
|Cognito Limited (“Cognito”)           |  | British Virgin Islands |  | 100%                           









All intercompany transactions,
balances and unrealized gains and losses from intercompany transactions are eliminated on consolidation.



| | b) | Mineral property costs
| | -- | ----------------------



| |  | Mineral properties consist of exploration and mining concessions, options and contracts. Acquisition
costs are capitalized and deferred until such time as the property is put into production or the property is disposed of, either
through sale or abandonment or becomes impaired. If a property is put into production the costs of acquisition are expensed over
the life of the property based on estimated economic reserves. Proceeds received from the sale of any interest in a property are
credited against the carrying value of the property with any excess recognized in the income statement. If a property is abandoned,
the acquisition costs are written off to the income statement.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Although the Company has taken
steps that it considers adequate to verify title to mineral properties in which it has an interest, these procedures do not guarantee
the Company’s title. Title to mineral properties in foreign jurisdictions is subject to uncertainty and consequently, such
properties may be subject to prior undetected agreements or transfers and title may be affected by such instances.



| | c) | Mineral property exploration expenditures
| | -- | -----------------------------------------





The Company expenses mineral
property exploration expenditures when incurred. When it has established that a mineral deposit is commercially mineable and following
a decision to commence development, the costs subsequently incurred to develop a mine on the property prior to the start of mining
operations are capitalized and are amortized against production following commencement of commercial production, or written off
if the property is sold, allowed to lapse or abandoned.



| | d) | Impairment of mineral property
| | -- | ------------------------------



Assets are reviewed for impairment
indicators at each reporting date. An impairment test is performed when the impairment indicators demonstrate that the carrying
amount may not be recoverable.



An impairment loss is recognized
for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less cost to sell and value in use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable cash flows (cash generating units). These are typically the individual
mines or exploration projects. Non-financial assets impaired in prior periods are reviewed for possible reversal of the impairment
at each reporting date.



When recoverable amount is assessed
using discounted cash flow techniques, the estimates are based on the detailed mine and/or production plans. For value in use,
recent cost levels are considered, together with expected changes in costs that are compatible with the current condition of the
business.



11


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010




| | 5. | Summary of Significant Accounting Policies, Judgements
and Estimation Uncertainty(Continued)
| | -- | --------------------------------------------------------------------------------------------



The cash
flow forecasts are based on best estimates of expected future revenues and costs, including the future cash costs of production,
capital expenditure and reclamation and closures costs. These may include net cash flows expected to be realized from extraction,
processing and sale of mineral resources that do not currently qualify for inclusion in proven or probable reserves.



| | e) | Cash and cash equivalents
| | -- | -------------------------



The Company considers cash and
cash equivalents to include amounts held in banks and highly liquid investments with a term to maturity of 90 days or less.



| | f) | Translation of foreign currencies
| | -- | ---------------------------------



| | (i) | Presentation currency:
| | --- | ----------------------



The consolidated financial statements
are presented in Canadian dollars.



| | (ii) | Functional currency
| | ---- | -------------------



The financial statements of
each entity in the Company group are measured using the currency of the primary economic environment in which the entity operates
(the “Functional Currency”).



The Functional Currency of the
parent Company is Canadian dollars and the Functional Currency of the Company’s subsidiaries, Cognito and Estelar, is the
Argentine Peso. The financial statements of the Company’s Argentine subsidiaries (“foreign operations”) are translated
into the Canadian dollar presentation currency as follows:



| | · | Assets and liabilities – at the closing rate at the date of the statement of financial position.
| | - | ------------------------------------------------------------------------------------------------



| | · | Income and expenses – at the average rate of the period (as this is considered a reasonable
approximation to actual rates).
| | - | ---------------------------------------------------------------------------------------------------------------------------



All resulting changes are recognized
in Other Comprehensive Income (“OCI”) as cumulative translation adjustments.



When the settlement of a monetary
item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange
gains and losses arising from the item are considered to form part of the net investment in a foreign operation and are recognized
in OCI.



When an entity disposes of its
entire interest in a foreign operation, or loses control, joint control, or significant influence over a foreign operation, the
foreign currency gains or losses accumulated in OCI related to the foreign operation are recognized in profit or loss. If an entity
disposes of part of an interest in a foreign operation which remains a subsidiary, a proportionate amount of foreign currency gains
or losses accumulated in OCI related to the subsidiary are reallocated between controlling and non-controlling interests.



| | (ii) | Transactions and balances
| | ---- | -------------------------



Foreign currency transactions
are translated into the functional currency of an entity using the exchange rates prevailing at the dates of the transactions.
Generally, foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation
at year-end exchange rates of monetary assets and liabilities denominated in currencies other than an operation’s functional
currency are recognized in the statement of income.



| | g) | Loss per share
| | -- | --------------



Basic loss per share is calculated
using the weighted average number of common shares outstanding during the period. Diluted loss per share has not been presented
separately as the effect of common shares issuable on the exercise of stock options and share purchase warrants would be anti-dilutive.



12


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010






| | 5. | Summary of Significant Accounting Policies, Judgements
and Estimation Uncertainty(Continued)
| | -- | --------------------------------------------------------------------------------------------



| | h) | Property and equipment
| | -- | ----------------------



Property and equipment are carried
at cost less accumulated amortization and accumulated impairment losses. Cost includes expenditures that are directly attributable
to the acquisition of the asset. Amortization is calculated at the following annual rates:



|Canada                       |                   |             
|---------------------------- | ----------------- | ------------
|Computer equipment           | Declining balance | -  30%      
|Computer software            | Declining balance | -  50%      
|Leasehold Improvements       | Straight line     | -   5 years 
|                             |                   |             
|Argentina                    |                   |             
|Computer equipment           | Straight-line     | -  3-6 years
|Computer software            | Straight-line     | -  2 years  
|Equipment including vehicles | Straight-line     | -  3-7 years



The Company allocates the amount
initially recognized in respect of an item of property and equipment to its significant parts and depreciates separately each part.
Residual values, method of amortization and useful lives of the assets are reviewed annually and adjusted if appropriate.



| | i) | Share-based compensation
| | -- | ------------------------



The Company has adopted an incentive
stock option plan. Stock options vest in tranches over a period of 1 to 2 years (50 - 100% per year) and expire after 5 years.
All share-based awards are measured and recognized using the fair-value method as determined by the Black-Scholes option pricing
model. Awards that the Company has the ability to settle with stock are recorded as equity. Share-based compensation expense is
recognized over the tranche’s vesting period, in earnings or capitalized as appropriate, based on the number of options expected
to vest.



| | j) | Income taxes
| | -- | ------------



Income tax expense comprises
current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized
either in OCI or directly in equity, in which case it is recognized in OCI or in equity respectively.



Current tax is the expected tax
payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment
to tax payable in respect of previous years.



Deferred income tax is recognised,
using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the consolidated financial statements.



However, deferred income tax
is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using
tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the
related deferred income tax asset is realized or the deferred income tax liability is settled.



A deferred tax asset is recognized
to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realized.



13


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010




| | 5. | Summary of Significant Accounting Policies, Judgements
and Estimation Uncertainty(Continued)
| | -- | --------------------------------------------------------------------------------------------



| | k) | Use of estimates and judgements
| | -- | -------------------------------



The preparation of the consolidated
financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses. Areas of estimates include assumptions used in
the accounting for share based compensation, amortization rates, valuation of future income tax benefits, commencement of capitalization
of exploration expenditures and contingent liabilities. Actual results may differ from these estimates.



Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised
and in any future periods affected.



| | l) | Financial instruments
| | -- | ---------------------



Financial assets and liabilities
are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized
when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially
all risks and rewards of ownership.



Financial assets and liabilities
are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized
amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.



At initial recognition, the Company
classifies its financial instruments in the following categories depending on the purpose for which the instruments were acquired:



| | · | Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. The Company’s loans and receivables are comprised of accounts
receivable, cash and cash equivalents, and amounts due from related parties, and are included in current assets due to their short-term
nature.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Loans and receivables are initially
recognized at the amount expected to be received less, when material, a discount to reduce the loans and receivables to fair value.
Subsequently, loans and receivables are measured at amortized cost using the effective interest method less a provision for impairment.



| | · | Financial liabilities at amortized cost: Financial liabilities at amortized cost include accounts
payable and accrued liabilities and amounts due to related parties. Accounts payables are initially recognized at the amount required
to be paid less, when material, a discount to reduce the payables to fair value. Financial liabilities are classified as current
liabilities as payment is due within twelve months.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. | Management of Capital
| | -- | ---------------------



The Company’s objectives
when managing capital are to safeguard its ability to continue as a going concern in order to pursue the development of its mineral
properties and to maintain a flexible capital structure which optimizes the cost of capital at an acceptable risk.



In the management of capital,
the Company includes the components of shareholders’ equity.



The Company manages the capital
structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying
assets. To maintain or adjust its capital structure, the Company may attempt to issue new shares, issue debt and acquire or dispose
of assets.



14


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010






| | 6. | Management of Capital (Continued)
| | -- | ---------------------------------



In order to facilitate the management
of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending on various
factors, including successful capital deployment and general industry conditions. The annual and updated budgets are approved by
the Board of Directors.



In order to maximize ongoing
development efforts, the Company does not pay dividends.



The Company’s investment
policy is to limit investments to guaranteed investment certificates, banker’s acceptance notes, investment savings accounts
or money market funds with high quality financial institutions in Canada and treasury bills, selected with regards to the expected
timing of expenditures from continuing operations.



| | 7. | Transfer of Assets
| | -- | ------------------



On March 24, 2010 Exeter Resource
Corporation (“Exeter”) completed a Plan of Arrangement (the “Arrangement”) under the British Columbia Business
Corporation Act pursuant to which it transferred its Argentine assets to Extorre.



The Arrangement was approved
by the board of directors of Exeter and by among other things, the favourable vote of Exeter's shareholders at a special meeting
held on March 11, 2010 to approve the Arrangement.



Under the Arrangement, each shareholder
of Exeter received one share of Extorre for each share of Exeter held. Exeter transferred its wholly owned subsidiaries, Estelar
and Cognito to Extorre. Estelar and Cognito hold the assets, consisting of cash and working capital balances and the interests
in a number of precious metal projects, being the Cerro Moro property, the Don Sixto property, and various other mineral properties
in Argentina (the “Argentine Business”).



Where applicable, Extorre’s
consolidated financial statements reflect the statements of loss and comprehensive loss and cash flows of the Argentine Business
as if Extorre existed in its present form during the periods reported. The statements of loss and comprehensive loss for the period
to March 24, 2010, which is included in the year results to December 31, 2010, include the direct general and administrative and
exploration expenses of Estelar and Cognito and an allocation of Exeter’s general and administrative expenses and share-based
compensation incurred in that period. The allocation of general and administrative expense was calculated on the basis of the ratio
of costs incurred on the Argentine assets compared to the costs incurred on all mineral properties of Exeter. The allocation of
share-based compensation was calculated on a specific project basis for those employees or consultants assigned specifically to
projects in Argentina and for all others based on the ratio of costs incurred on the Argentine assets compared to the costs incurred
on all mineral properties of Exeter.



The transfer of the Argentine assets is summarized
in the table below:



|                                         |  | March 24, 2010 |       
|---------------------------------------- |  | -------------- | ------
|                                         |  |                |       
|Cash and cash equivalents                |  | $              | 25,498
|Amounts receivables and prepaid expenses |  |                | 183   
|Due from related party                   |  |                | 238   
|Long term assets:                        |  |                |       
|Property and equipment                   |  |                | 169   
|Mineral properties                       |  |                | 3,354 
|Accounts payable and accrued liabilities |  |                | (1,495
|Net assets transferred to Extorre        |  | $              | 27,947



15


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010






| | 8. | Financial Instruments
| | -- | ---------------------



| | a) | Fair Value
| | -- | ----------



The fair value of financial instruments at December
31, 2011 and 2010 is summarized as follows:



|                                         |  | 2011            |        | 2010      
|---------------------------------------- |  | --------------- | ------ | ----------
|                                         |  | Carrying amount |        | Fair value
|Financial Assets                         |  |                 |        |           
|Loans and receivables                    |  |                 |        |           
|Cash and cash equivalents                |  | $               | 26,204 |           
|Amounts receivable – at amortized cost   |  | $               | 174    |           
|Due from related parties                 |  | $               | —      |           
|Financial Liabilities at amortized cost  |  |                 |        |           
|Accounts payable and accrued liabilities |  | $               | 2,750  |           
|Due to related parties                   |  | $               | 69     |           





The carrying amount of amounts
receivable, accounts payable and accrued liabilities and due to and from related parties approximates fair value due to the short
term of these financial instruments.



| | b) | Financial Risk Management
| | -- | -------------------------



The Company’s activities
potentially expose it to a variety of financial risks, including credit risk, foreign exchange currency risk, liquidity and interest
rate risk.



Credit risk

Credit risk is the risk that
one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Financial
instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and amounts receivable. The
Company deposits the majority of its cash and cash equivalents with high credit quality financial institutions in Canada and holds
balances in banks in Argentina as required to meet current expenditures. The carrying amount of financial assets recorded in the
financial statements, net of any allowances for losses, represents the Company’s maximum exposure to credit risk.



Currency risk

The Company operates in Canada
and Argentina, and it is therefore exposed to foreign exchange risk arising from transactions denominated in a foreign currency.



The Company’s cash and
cash equivalents, amounts receivable, accounts payable and accrued liabilities are denominated in several currencies (mainly Canadian
Dollars, US Dollars, Australian Dollars and Argentine Pesos) and are therefore subject to fluctuation against the Canadian Dollar.



16


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010








| | 8. | Financial Instruments(Continued)
| | -- | --------------------------------



The Company had the following
balances in foreign currency as at December 31, 2011 and 2010:







|                                         |  | 2011 (in thousands)
|---------------------------------------- |  | -------------------
|                                         |  | Argentine Pesos    
|Cash and cash equivalents                |  |                    
|Accounts payable and accrued liabilities |  |                    
|Net balance                              |  |                    
|                                         |  |                    
|Equivalent in Canadian Dollars           |  |                    
|Rate to convert to $1.00 CDN             |  |                    





|                                         |  | 2010 (in thousands) |       
|---------------------------------------- |  | ------------------- | ------
|                                         |  | Argentine Pesos     |       
|Cash and cash equivalents                |  |                     | 3,524 
|Accounts payable and accrued liabilities |  |                     | (7,198
|Net balance                              |  |                     | (3,674
|                                         |  |                     |       
|Equivalent in Canadian Dollars           |  |                     | (890  
|Rate to convert to $1.00 CDN             |  |                     | 0.2423



Based on the above net exposures as at December 31, 2011, and assuming that all other variables remain constant, a 10% depreciation
or appreciation of the Argentine peso, US dollar and Australian dollar against the Canadian dollar would result in an increase/decrease
of $22, $21 and $16 respectively (2010 - $89, $176 and $20 respectively) in the Company’s net loss.Interest rate riskInterest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes
in market interest rates. The Company’s interest rate risk mainly arises from the interest rate impact on the cash and cash
equivalents. Cash and cash equivalents earn interest based on current market interest rates, which at year end ranged between
1.20% and 1.35%.
Based on the amount of cash and cash equivalents at December 31, 2011, and assuming that all other variables remain constant,
a 0.5% change in the applicable interest rate would result in an increase/decrease of $131 in the interest earned by the Company
per annum.Liquidity riskLiquidity risk is the risk that the Company will not be able to meet its financial obligations
as they fall due. The Company manages its liquidity risk by forecasting cash flows required by operations and anticipated investing
and financing activities. The Company had cash at December 31, 2011 in the amount of $26,204 in order to meet short-term business
requirements. At December 31, 2011, the Company had current liabilities of $2,819 which are due on demand or within 30 days.





17


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010








| | 9. | Cash and Cash Equivalents
| | -- | -------------------------



|                                   |  | December 31, 2011 |        |  | December 31, 2010 |  
|---------------------------------- |  | ----------------- | ------ |  | ----------------- | -
|Cash                               |  | $                 | 2,203  |  |                   | $
|Investment Savings Accounts        |  |                   | 1,513  |  |                   |  
|Guaranteed Investment Certificates |  |                   | 22,488 |  |                   |  
|Total                              |  | $                 | 26,204 |  |                   | $



| | 10. | Property and Equipment
| | --- | ----------------------



|                                       |  | Computer
    Equipment |     |   | Computer
    Software |   |     | Equipment
    including Vehicles |  |   | Leasehold
    Improvements |   |  | Land |    |   | Total |  
|-------------------------------------- |  | ---------------------- | --- | - | --------------------- | - | --- | -------------------------------- |  | - | -------------------------- | - |  | ---- | -- | - | ----- | -
|Cost                                   |  |                        |     |   |                       |   |     |                                  |  |   |                            |   |  |      |    |   |       |  
|As at January 1, 2010                  |  | $                      | 70  |   |                       | $ | 36  |                                  |  | $ | 194                        |   |  | $    | -  |   |       | $
|Additions                              |  |                        | 10  |   |                       |   | 38  |                                  |  |   | 305                        |   |  |      | -  |   |       |  
|Effect of movements in exchange rates  |  |                        | (9  | ) |                       |   | (27 | )                                |  |   | (58                        | ) |  |      | -  |   |       |  
|Balance as at December
    31, 2010    |  | $                      | 71  |   |                       | $ | 47  |                                  |  | $ | 441                        |   |  | $    | -  |   |       | $
|                                       |  |                        |     |   |                       |   |     |                                  |  |   |                            |   |  |      |    |   |       |  
|Depreciation                           |  |                        |     |   |                       |   |     |                                  |  |   |                            |   |  |      |    |   |       |  
|As at January 1, 2010                  |  | $                      | (20 | ) |                       | $ | (29 | )                                |  | $ | (163                       | ) |  | $    | -  |   |       | $
|Charged for the period                 |  |                        | (16 | ) |                       |   | (16 | )                                |  |   | (122                       | ) |  |      | -  |   |       |  
|Effect of movements in exchange rates  |  |                        | 7   |   |                       |   | 11  |                                  |  |   | 28                         |   |  |      | -  |   |       |  
|Balance as at December
    31, 2010    |  | $                      | (29 | ) |                       | $ | (34 | )                                |  | $ | (257                       | ) |  | $    | -  |   |       | $
|                                       |  |                        |     |   |                       |   |     |                                  |  |   |                            |   |  |      |    |   |       |  
|Net carrying value                     |  |                        |     |   |                       |   |     |                                  |  |   |                            |   |  |      |    |   |       |  
|As at January 1, 2010                  |  | $                      | 50  |   |                       | $ | 7   |                                  |  | $ | 31                         |   |  | $    | -  |   |       | $
|As at December 31,
    2010            |  | $                      | 42  |   |                       | $ | 13  |                                  |  | $ | 184                        |   |  | $    | -  |   |       | $
|                                       |  |                        |     |   |                       |   |     |                                  |  |   |                            |   |  |      |    |   |       |  
|Cost                                   |  |                        |     |   |                       |   |     |                                  |  |   |                            |   |  |      |    |   |       |  
|As at January 1, 2011                  |  | $                      | 71  |   |                       | $ | 47  |                                  |  | $ | 441                        |   |  | $    | -  |   |       | $
|Additions                              |  |                        | 58  |   |                       |   | -   |                                  |  |   | 1,028                      |   |  |      | 31 |   |       |  
|Effect of movements in exchange  rates |  |                        | (17 | ) |                       |   | (8  | )                                |  |   | (177                       | ) |  |      | -  |   |       |  
|Balance as at December
    31, 2011    |  | $                      | 112 |   |                       | $ | 39  |                                  |  | $ | 1,292                      |   |  | $    | 31 |   |       | $
|                                       |  |                        |     |   |                       |   |     |                                  |  |   |                            |   |  |      |    |   |       |  
|Depreciation                           |  |                        |     |   |                       |   |     |                                  |  |   |                            |   |  |      |    |   |       |  
|As at January 1, 2011                  |  | $                      | (29 | ) |                       | $ | (34 | )                                |  | $ | (257                       | ) |  | $    | -  |   |       | $
|Charged for the period                 |  |                        | (39 | ) |                       |   | (6  | )                                |  |   | (324                       | ) |  |      | (3 | ) |       |  
|Effect of movements in exchange rates  |  |                        | 14  |   |                       |   | 4   |                                  |  |   | 85                         |   |  |      | -  |   |       |  
|Balance as at December
    31, 2011    |  | $                      | (54 | ) |                       | $ | (36 | )                                |  | $ | (496                       | ) |  | $    | (3 | ) |       | $
|                                       |  |                        |     |   |                       |   |     |                                  |  |   |                            |   |  |      |    |   |       |  
|Net carrying value                     |  |                        |     |   |                       |   |     |                                  |  |   |                            |   |  |      |    |   |       |  
|As at January 1, 2011                  |  | $                      | 42  |   |                       | $ | 13  |                                  |  | $ | 184                        |   |  | $    | -  |   |       | $
|As at December 31,
    2011            |  | $                      | 58  |   |                       | $ | 3   |                                  |  | $ | 796                        |   |  | $    | 28 |   |       | $





18


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010








| | 11. | Mineral Properties - Acquisition and Exploration Costs
| | --- | ------------------------------------------------------



| | a) | Acquisition Costs
| | -- | -----------------



|                    |  | December 31, 2011             |      
|------------------- |  | ----------------------------- | -----
|                    |  | Balance beginning
of the year |      
|Don Sixto and Other |  | $                             | 2,686
|CVSA Properties     |  |                               | 161  
|                    |  | $                             | 2,847



|                    |  | December 31, 2010             |      
|------------------- |  | ----------------------------- | -----
|                    |  | Balance beginning of the year |      
|Don Sixto and Other |  | $                             | 3,139
|CVSA Properties     |  |                               | 215  
|                    |  | $                             | 3,354

Cognito LimitedBy a Principles of Agreement dated October 27, 2002, an Option to Purchase, Acquisition and Joint Venture Agreement dated
January 18, 2003, and an agreement dated April 30, 2003, the Company acquired the right, subject to the payment noted below, to
earn a 100% interest in Cognito, including the Don Sixto project. The Don Sixto project is subject to a 3.5% net smelter royalty
(“NSR”). (See note 11(c)(iii))
Effective July 22, 2003, 1,600,000 shares were issued and $25 paid for the right to earn a 100% interest in Cognito. Direct costs
of the acquisition totalled $3. At that date, $348 being the fair value of the consideration paid for that right was recorded
as mineral property acquisition cost. 	Effective July, 2005, to exercise the option to acquire a 100% interest in Cognito,
a further 2,500,000 shares were issued having a fair value of $2.5 million which was recorded as a mineral property acquisition
cost.Estelar Resources LimitedEffective July 22, 2003, a 100% interest in Estelar was acquired for consideration of 1,000,000 shares (fair value of $238),
which was recorded as a mineral property acquisition cost.





19


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010








| | 11. | Mineral Properties - Acquisition and Exploration Costs(Continued)
| | --- | -----------------------------------------------------------------



| | b) | Exploration Costs
| | -- | -----------------



The table
below shows the exploration expenditures of the Company for the years ended December 31, 2011 and 2010:



|                                |  | Cerro Moro |        |  | Other Santa Cruz |   |        | Don Sixto & Other |  |   | 2011   |   |  | 2010 |        
|------------------------------- |  | ---------- | ------ |  | ---------------- | - | ------ | ----------------- |  | - | ------ | - |  | ---- | -------
|Assays                          |  | $          | 1,312  |  |                  | $ | 214    |                   |  | $ | 23     |   |  | $    | 1,549  
|Consultants and contractors     |  |            | 878    |  |                  |   | 7      |                   |  |   | 2      |   |  |      | 887    
|Drilling                        |  |            | 13,500 |  |                  |   | 2,158  |                   |  |   | 79     |   |  |      | 15,737 
|Engineering and metallurgical * |  |            | 1,696  |  |                  |   | 2      |                   |  |   | -      |   |  |      | 1,698  
|Environmental                   |  |            | 467    |  |                  |   | 44     |                   |  |   | 33     |   |  |      | 544    
|Field camp                      |  |            | 3,770  |  |                  |   | 314    |                   |  |   | 31     |   |  |      | 4,115  
|Geological *                    |  |            | 2,346  |  |                  |   | 240    |                   |  |   | 83     |   |  |      | 2,669  
|Hydrology                       |  |            | 245    |  |                  |   | 22     |                   |  |   | -      |   |  |      | 267    
|Infrastructure                  |  |            | 110    |  |                  |   | -      |                   |  |   | -      |   |  |      | 110    
|IVA tax                         |  |            | 3,888  |  |                  |   | 567    |                   |  |   | (186   | ) |  |      | 4,269  
|Legal and title                 |  |            | 125    |  |                  |   | 46     |                   |  |   | 15     |   |  |      | 186    
|Office operations               |  |            | 1,664  |  |                  |   | 238    |                   |  |   | 190    |   |  |      | 2,092  
|Resource development            |  |            | 289    |  |                  |   | -      |                   |  |   | 1      |   |  |      | 290    
|Travel                          |  |            | 2,247  |  |                  |   | 439    |                   |  |   | 49     |   |  |      | 2,735  
|Wages and benefits *            |  |            | 5,015  |  |                  |   | 429    |                   |  |   | 262    |   |  |      | 5,706  
|Exploration costs for the year  |  | $          | 37,552 |  |                  | $ | 4,720  |                   |  | $ | 582    |   |  | $    | 42,854 
|                                |  |            |        |  |                  |   |        |                   |  |   |        |   |  |      |        
|Cumulative exploration costs    |  | $          | 85,513 |  |                  | $ | 14,134 |                   |  | $ | 20,418 |   |  | $    | 120,065

*Includes share - based compensation as reflected below:



|                              |  | Cerro  Moro |       |  | Other Santa Cruz |   |   | Don Sixto  & Other |  |   | 2011 |  |  | 2010 |      
|----------------------------- |  | ----------- | ----- |  | ---------------- | - | - | ------------------ |  | - | ---- |  |  | ---- | -----
|Geological                    |  | $           | 1,575 |  |                  | $ | - |                    |  | $ | -    |  |  | $    | 1,575
|Engineering and metallurgical |  |             | 475   |  |                  |   | - |                    |  |   | -    |  |  |      | 475  
|Wages and benefits            |  |             | 2,346 |  |                  |   | - |                    |  |   | -    |  |  |      | 2,346
|Total                         |  | $           | 4,396 |  |                  | $ | - |                    |  | $ | -    |  |  | $    | 4,396





| | c) | Agreements
| | -- | ----------
| |    |           

| | i) | CVSA Properties - Argentina
| | -- | ---------------------------
| |    |                            

By an Exploration and Option Agreement
dated December 30, 2003, Estelar obtained the right to acquire a 100% interest in the Cerro Moro, Santa Cruz, Chubut and Rio Negro
Projects (comprised of thirty-nine mineral concessions (the “Properties”), located in Santa Cruz, Chubut and Rio Negro
Provinces, Argentina, from Cerro Vanguardia (“CVSA”) by making cash payments of US$100 (paid) and incurring US$3.0
million (incurred) in exploration expenditures. CVSA holds a 2% NSR in Cerro Moro and the various other projects in Santa Cruz
acquired by the Company.





20


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010






| | 11. | Mineral Properties - Acquisition and Exploration Costs(Continued)
| | --- | -----------------------------------------------------------------



| | ii) | Fomicruz
| | --- | --------



On March 2, 2009 Estelar signed
a definitive agreement with Fomento Minera de Santa Cruz Sociedad del Estado (“Fomicruz”), a mining company owned by
the government of Santa Cruz Province, Argentina. The Agreement allows for Estelar to acquire up to an 80% interest in certain
licenses, adjacent to the Cerro Moro project, owned by Fomicruz, by spending US$10 million over a number of years. It further provides
for Fomicruz to acquire a five percent participating interest in the Cerro Moro project following the granting of mining permits.
Estelar will manage the potential future development of both the Cerro Moro project and the areas covered by Fomicruz licenses
and will fund all exploration and development costs.





| | iii) | Don Sixto – Argentina
| | ---- | ---------------------



By an agreement dated February
27, 2003, Cognito has the right to acquire a 100% interest (subject to a 3.5% NSR which may be purchased for US$1.0 million) in
the Don Sixto Project, located in Mendoza Province, Argentina, for consideration of cash payments totalling US$525 paid or payable
as follows:





| | - | US$175 on signing and anniversary dates to December 15, 2007; (paid) and
| | - | ------------------------------------------------------------------------

| | - | US$50* on or before December 15 of each year thereafter up to and including December 15, 2014.
| | - | ----------------------------------------------------------------------------------------------









* Due to the
current anti-mining legislation these payments have been suspended until the legislation is changed (see below for more details).



Cognito may terminate the payments
described above upon making a development decision in respect to the project; provided that production must commence within two
years of that decision.



Early in 2007, Cognito expanded
its holding around Don Sixto by signing an option agreement over additional exploration rights situated to the immediate north
of Don Sixto. The terms for the option agreement provide for annual payments of US$25 over six years followed by a purchase price
comprising three annual payments of US$200. Should Cognito exercise its option to purchase the property, the annual payments cease.
There are no expenditure requirements.



In December 2005, Cognito purchased
the surface rights covering the area of the proposed mine development at Don Sixto at a cost of $78. In addition, Cognito is required
to build two dwellings elsewhere on the property at an estimated cost of $75. The previous owners of the property retain the right
to re-acquire the property upon completion of mining activities.



On June 20, 2007 the Mendoza Provincial
government introduced anti-mining legislation which may preclude development of mining projects in Mendoza Province. The Company
has delayed all exploration and independent engineering studies in Mendoza and filed an action in the Mendoza Supreme Court to
have this anti-mining legislation declared unconstitutional.



During the year ended December
31, 2008, the Company entered an agreement with the property owners deferring the annual payments until such time as the legislation
is amended such that mining can be conducted in Mendoza Province.



During the year ended December
31, 2011, following the Mendoza Government’s rejection of the environmental approval application for commencement of mining
filed by another mining company in the province, the Company has determined to write down its investment in the Don Sixto project.
The constitutional challenge filed by the Company remains in front of the Mendoza Supreme Court and until such time as a decision
is handed down by the courts and the constitutional challenge is withdrawn, the Company expects to incur only minimal expenditures
to secure the property.





21


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010






| | 11. | Mineral Properties - Acquisition and Exploration Costs(Continued)
| | --- | -----------------------------------------------------------------



| | iv) | Other Properties
| | --- | ----------------



MRP Properties
- Argentina



By an agreement dated October
1, 2003, Estelar obtained the right to acquire a 100% interest (subject to a 2% NSR which may be acquired for $750) in the Agua
Nueva Projects, located in Mendoza Province, Argentina, for consideration of cash payments totalling $440 paid or payable as follows:



-   	an accumulated $70
on signing and anniversary dates to October 1, 2007; (paid)

- 	  $30 on or before October
1, 2008; (not paid)*

- 	  $40 on or before October
1, 2009; (not paid)* and

- 	  $50 on or before October
1 of each year thereafter to 2015**.



| | * | Payments suspended until the current anti-mining legislation is changed to allow mining in Mendoza
Province.
| | - | ------------------------------------------------------------------------------------------------------------

| | ** | In the event that a decision is made to build and operate a mine on any of the projects, payment
of the remaining option payments may be terminated.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------





| | 12. | Share Capital
| | --- | -------------



The Company is authorized to
issue an unlimited number of common shares without par value and an unlimited number of preferred shares.





|                                          |  | December 31, 2011 |            |  | December 31, 2010 |  
|----------------------------------------- |  | ----------------- | ---------- |  | ----------------- | -
|                                          |  | Number of Shares  |            |  | Amount            |  
|Balance, beginning of year                |  |                   | 87,473,627 |  |                   | $
|Shares issued pursuant to the Arrangement |  |                   | -          |  |                   |  
|Issued during the period for cash:        |  |                   |            |  |                   |  
|Equity financing                          |  |                   | 2,400,000  |  |                   |  
|Exercise of options                       |  |                   | 2,238,312  |  |                   |  
|Exercise of warrants                      |  |                   | 455,000    |  |                   |  
|Share issue costs                         |  |                   | -          |  |                   |  
|Contributed surplus allocated             |  |                   |            |  |                   |  
|Exercise of options                       |  |                   | -          |  |                   |  
|Exercise of warrants                      |  |                   | -          |  |                   |  
|Balance, end of year                      |  |                   | 92,566,939 |  |                   | $

The Company issued 2,400,000 shares at a price of $10.50 per share pursuant to a bought deal financing
for gross proceeds of $25.2 million. The Company paid a commission of 6% ($1,512) and incurred share issue costs of $172 for net
proceeds of $23.5 million before accounting for the fair value of warrants issued to brokers (the “Agent’s Warrants”).
The Agent’s Warrants consist of 120,000 warrants and are convertible to common shares at a price of $11.15 each on or before
July 12, 2012. The fair value of the Agent’s Warrants, calculated using the Black-Scholes Model, of $610 has been allocated
to contributed surplus (Note 15) and added to share issue costs.





22


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010












| | 13. | Stock Option Plan
| | --- | -----------------





The Company
has adopted an incentive stock option plan (the “Plan”), the essential elements of which are as follows: The aggregate
number of shares of the Company’s capital stock issuable pursuant to options granted under the Plan, which was approved by
shareholders on March 11, 2010, may not exceed 15% of the issued and outstanding shares of the Company at the time of the option
grant. At December 31, 2011, the maximum number of options issuable under the Plan was 13,885,041. The Plan provides for a limit
on insider participation such that the shares reserved for issuance to insiders does not exceed 10% of the issued and outstanding
shares of the Company. Options granted under the Plan may have a maximum term of ten years. Unless subsequently amended, the exercise
price of options granted under the Plan cannot be less than the last closing market price of the Company’s shares immediately
preceding the grant date. Options granted under the Plan are generally exercisable immediately following the grant, however certain
options may be subject to vesting at times as determined by the directors of the Company and the Toronto Stock Exchange.



A summary of the changes in
share options during the year is as follows:







|                                       |  | December 31, 2011 |            |   | December 31, 2010               |  
|-------------------------------------- |  | ----------------- | ---------- | - | ------------------------------- | -
|                                       |  | Options           |            |   | Weighted Average Exercise Price |  
|Options outstanding, beginning of year |  |                   | 12,200,525 |   |                                 | $
|Cancelled                              |  |                   | (19,000    | ) |                                 |  
|Exercised                              |  |                   | (2,238,312 | ) |                                 |  
|Granted                                |  |                   | 400,000    |   |                                 |  
|Options outstanding, end of year       |  |                   | 10,343,213 |   |                                 | $

The following table summarizes information about the stock options outstanding at December 31, 2011.

|Outstanding Options |             |  | Exercisable Options | 
|------------------- | ----------- |  | ------------------- | 
|Range of Prices ($) |             |  | Number              | 
|                    | 0.01 - 1.00 |  |                     | 
|                    | 1.01 - 2.00 |  |                     | 
|                    | 2.01 - 3.00 |  |                     | 
|                    | 4.01 - 5.00 |  |                     | 
|                    | 5.01 - 6.00 |  |                     | 
|                    | 6.01+       |  |                     | 
|                    |             |  |                     | 



For the options granted
during the year, the weighted average fair market value was $4.71 per share.



Share-based Compensation



The fair value of the
400,000 (2010 – 5,369,125) options granted by the Company during the years ended December 31, 2011 and 2010 was estimated
at the grant date using the Black-Scholes option pricing model with the following assumptions:



23


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010






| | 13. | Stock Option Plan(Continued)
| | --- | ----------------------------





|                           |  | 2011 |         |   | 2010 | 
|-------------------------- |  | ---- | ------- | - | ---- | 
|Expected annual volatility |  |      | 90.00   | % |      | 
|Risk-free interest rate    |  |      | 1.05    | % |      | 
|Expected life              |  |      | 3 years |   |      | 
|Expected dividend yield    |  |      | 0.0     | % |      | 



Share-based
compensation expense of $10,287 (2010 - $8,604) was recognised in the year and was allocated to contributed surplus. Share-based
compensation has been allocated as follows:





|                                          |  | Years ended December 31, |       
|----------------------------------------- |  | ------------------------ | ------
|                                          |  |                          | 2011  
|Administration salaries and consulting    |  | $                        | 1,040 
|Directors’ fees                           |  |                          | 2,508 
|Management fees                           |  |                          | 2,340 
|Mineral property exploration expenditures |  |                          | 4,396 
|Shareholder communications                |  |                          | 3     
|Total                                     |  | $                        | 10,287





Option pricing models require
the input of highly subjective assumptions including the expected price volatility of the Company’s shares. Changes in input
assumptions can materially affect the fair value estimate, and, therefore, these models do not necessarily provide a reliable
single measure of the fair value of the Company’s stock options.





| | 14. | Warrants
| | --- | --------



At December 31, 2011 the Company
had 120,000 (2010 – 455,000) share purchase warrants exercisable at a price of $11.15 (2010 - $5.00). The share purchase
warrants expire on July 12, 2012. During the year ended December 31, 2011 a total of 455,000 (2010 – Nil) warrants were exercised
for proceeds of $2,275 (2010 – $Nil).



| | 15. | Contributed Surplus
| | --- | -------------------



Details are as follows:





|Balance - December 31, 2009                                                                |  | $ | 77,599   |  
|------------------------------------------------------------------------------------------ |  | - | -------- | -
|Net assets contributed by Exeter                                                           |  |   | 27,947   |  
|Funding provided by and expenses paid by Exeter                                            |  |   | 1,850    |  
|Share-based compensation for the period January 1 –  March 24, 2010, allocated from Exeter |  |   | 826      |  
|Allocation to share capital on completion of the Arrangement                               |  |   | (104,407 | )
|Share-based compensation recognized                                                        |  |   | 7,778    |  
|Agent ́s warrants                                                                           |  |   | 523      |  
|Allocation on exercise of options and warrants during the year                             |  |   | (948     | )
|Balance - December 31, 2010                                                                |  | $ | 11,168   |  
|Share-based compensation recognized                                                        |  |   | 10,287   |  
|Agent’s warrants                                                                           |  |   | 610      |  
|Allocation on exercise of options and warrants during the year (Note 12)                   |  |   | (2,337   | )
|Balance –December 31, 2011                                                                 |  | $ | 19,728   |  





24


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010






| | 16. | Related Party Transactions
| | --- | --------------------------



Amounts due from related party
of $Nil at December 31, 2011 (December 31, 2010 - $22) is for expenditures that the Company and Exeter incur for staff and exploration
expenditures on behalf of each other. The amounts due from related parties are non-interest bearing and are due upon receipt of
an invoice.





Amounts due to related parties
of $69 at December 31, 2011 (December 31, 2010 - $88) is for management, consulting and exploration fees and for expenses incurred
while conducting the Company’s business, and ongoing exploration expenditures payable to a related company. The amounts due
to related parties are non-interest bearing and are due upon receipt of an invoice.



During the year ended December
31, 2011 a total of $1,842 (2010 - $1,004), comprised of consulting and management fees of $1,379 (2010 - $635) and administrative
and legal fees of $463 (2010 - $369) was paid or accrued for related party transactions as described below:



| | (i) | Management and consulting fees are comprised of:
| | --- | ------------------------------------------------



| | (a) | Exploration and consulting fees of $265, which included
a bonus of $125 (2010 - $79, of which $47 was paid by the Company and $32 was allocated from Exeter*) were paid or accrued to
a corporation of which a Co-Chairman is a principal. As at December 31, 2011, the Company owed $Nil (2010 - $Nil).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                         

| | (b) | Management fees of $250, which included a bonus of $75 (2010 - $133, of which $107 was paid by
the Company and $26 was allocated from Exeter*) were paid or accrued to a corporation of which a Co-Chairman is a principal. As
at December 31, 2011, the Company owed $8 (2010 - $23).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                       

| | (c) | Management fees of $300, which included a bonus of $100 (2010 - $146, of which $125 was paid by
the Company and $21 was allocated from Exeter*) were paid or accrued to a corporation of which the Senior Vice President is a principal.
As at December 31, 2011, the Company owed $Nil (2010 - $Nil).
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                       

| | (d) | Management fees of $119 (2010 - $Nil) were paid or accrued to a corporation of which the Chief
Operating Officer is a principal. As at December 31, 2011, the Company owed $Nil (2010 - $Nil).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                               

| | (e) | Management fees of $300, which included a bonus of $100 (2010 - $92, of which $67 was paid by the
Company and $25 was allocated from Exeter*) were paid or accrued to a corporation controlled by the Vice-President Finance. As
at December 31, 2011, the Company owed $Nil (2010 - $Nil).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                            

| | (f) | Exploration fees of $52 (2010 - $185, of which $159 was paid by the Company and $26 was allocated
from Exeter*) were paid or accrued to a corporation controlled by the former Vice President Development. As at December 31, 2011,
the Company owed $Nil (2010 - $61).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                        

| | (g) | Consulting Fees of $93, which included a bonus of $15 (2010 - $Nil) were paid or accrued to a corporation
of which the Vice President Corporate Development is a principal. As at December 31, 2011, the Company owed $Nil (2010 - $Nil).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | (ii) | Administrative and legal fees are comprised of:
| | ---- | -----------------------------------------------





| |  | 
| |  | 

| | (a) | Administrative fees of $367 (2010 - $327, of which $252 was paid by the Company and $75 was allocated
from Exeter*) for the provision of office facilities and staff to the Company, and travel expenses of $50 were paid to Exeter.
As at December 31, 2011, the Company owed $44.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                    

| | (b) | Legal Fees of $96 (2010 - $42) were paid or accrued to a company, of which one of the officers
of the Company is a former partner. As at December 31, 2011, the Company owed $17 (2010 - $4).
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------







25


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010






| | 16. | Related Party Transactions(Continued)
| | --- | -------------------------------------



Upon completion of the Arrangement,
the Company reached an agreement with Exeter whereby the Company reimburses Exeter for common expenditures incurred, based upon
a mutually agreed percentage allocation of such expenditures. For the year ending December 31, 2011, the percentage allocation
was 40%, resulting in approximately $417 being reimbursed to Exeter for administrative support and office overhead (See Note 16
(ii)(a)). In addition, the Company reimburses expenditures incurred while conducting ongoing Company business.



| | * | Expenses allocated from Exeter were based on the relative expenditures incurred by Exeter prior
to the effective date of the Arrangement on the Argentine mineral projects, with the amount reflected above representing the amount
allocated to Extorre. These amounts do not necessarily represent actual costs that would have been incurred had the Arrangement
been effective at the beginning of the financial year.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 17. | Executive Compensation
| | --- | ----------------------





Key management
personnel are those persons that have the authority and responsibility for planning, directing and controlling the activities of
the Company, directly or indirectly. Key management personnel of the Company include executive officers and the board of directors.





The
following compensation has been provided to key management personnelfor the years ended December 31, 2011 and 2010:







|                                        |  | 2011 |       |  | 2010 |  
|--------------------------------------- |  | ---- | ----- |  | ---- | -
|Compensation - cash and benefits        |  | $    | 1,711 |  |      | $
|Compensation - share-based compensation |  |      | 5,585 |  |      |  
|Total                                   |  | $    | 7,296 |  |      | $





| | 18. | Expenses by nature
| | --- | ------------------





General and administration
expense is made up of the following:





|                     |  | 2011 |     |  | 2010 |  
|-------------------- |  | ---- | --- |  | ---- | -
|Bank charges         |  | $    | 85  |  |      | $
|Office               |  |      | 454 |  |      |  
|Rent                 |  |      | 94  |  |      |  
|Telecommunications   |  |      | 30  |  |      |  
|Transfer agent       |  |      | 34  |  |      |  
|Travel and promotion |  |      | 242 |  |      |  
|Total                |  | $    | 939 |  |      | $



26


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010










| | 19. | Contractual Obligations
| | --- | -----------------------



The Company leases offices in
Argentina and Canada and has expenditure and option payment obligations related to its properties. Option payments and property
expenditure obligations are contingent on exploration results and can be cancelled at any time should exploration results so warrant
(see note 11(c)). Office lease commitments and the construction of the field camp are summarized in the table below:









|              |  | Payments Due by Year (in thousands) |      
|------------- |  | ----------------------------------- | -----
|              |  | Total                               |      
|Field Camp*   |  | $                                   | 1,937
|Office leases |  |                                     |      
|-	Argentina   |  |                                     | 102  
|-	Canada**    |  |                                     | 378  
|Total         |  | $                                   | 2,417





The Company has various property
access agreements, which are renewed periodically, related to its projects at an estimated cost of approximately $228 per year.



In addition, upon the decision
to commence mining at Don Sixto, the Company is required to build two houses for the original owners of the Don Sixto property
at an estimated cost of approximately $75.



| | * | The amount relates to the construction of a new modular camp facility for the Cerro Moro project.
| | - | -------------------------------------------------------------------------------------------------



| | ** | The Company together with two associated companies has entered into a lease for office premises.
The amount reflected above is the Company’s share of the lease obligation.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------







| | 20. | Supplemental Cash Flow Information
| | --- | ----------------------------------



The Company incurred non-cash
financing activities during the years ended December 31, 2011 and 2010 as follows:





|                                         |  | 2011 |     |  | 2010 |  
|---------------------------------------- |  | ---- | --- |  | ---- | -
|Non-cash financing activities:           |  |      |     |  |      |  
|Issue of warrants for agent’s commission |  | $    | 610 |  |      | $





27


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010








| | 21. | Segmented Information
| | --- | ---------------------



The Company’s
activities are all in the one industry segment of mineral property acquisition, exploration and development. Following is a summary
of assets and liabilities by geographic region:





|December 31, 2011                       |  | Canada |        |   | Argentina |   |        | Total | 
|--------------------------------------- |  | ------ | ------ | - | --------- | - | ------ | ----- | 
|Cash and cash equivalents               |  | $      | 24,586 |   |           | $ | 1,618  |       | 
|Amounts receivable and prepaid expenses |  |        | 521    |   |           |   | 1,177  |       | 
|Due from related party                  |  |        | -      |   |           |   | -      |       | 
|Property and equipment                  |  |        | 82     |   |           |   | 4,954  |       | 
|Mineral properties                      |  |        | -      |   |           |   | 124    |       | 
|                                        |  |        | 25,189 |   |           |   | 7,873  |       | 
|Current Liabilities                     |  |        | (987   | ) |           |   | (1,832 | )     | 
|                                        |  | $      | 24,202 |   |           | $ | 6,041  |       | 
|Net loss – Year ended December 31, 2011 |  | $      | 9,818  |   |           | $ | 45,628 |       | 







|December 31, 2010                       |  | Canada |        |   | Argentina |   |        | Total | 
|--------------------------------------- |  | ------ | ------ | - | --------- | - | ------ | ----- | 
|Cash and cash equivalents               |  | $      | 45,248 |   |           | $ | 854    |       | 
|Amounts receivable and prepaid expenses |  |        | 154    |   |           |   | 331    |       | 
|Due from related party                  |  |        | 22     |   |           |   | -      |       | 
|Property and equipment                  |  |        | 29     |   |           |   | 210    |       | 
|Mineral properties                      |  |        | -      |   |           |   | 2,847  |       | 
|                                        |  |        | 45,453 |   |           |   | 4,242  |       | 
|Current Liabilities                     |  |        | (613   | ) |           |   | (1,744 | )     | 
|                                        |  | $      | 44,840 |   |           | $ | 2,498  |       | 
|Net loss – Year ended December 31, 2010 |  | $      | 8,537  |   |           | $ | 24,628 |       | 







| | 22. | Income Taxes
| | --- | ------------



A reconciliation of consolidated
income taxes at statutory rates with the reported taxes is as follows:







|                                                                     |  | 2011 |         |   | 2010 |  
|-------------------------------------------------------------------- |  | ---- | ------- | - | ---- | -
|Net loss for the year before income tax                              |  | $    | 55,446  |   |      | $
|Combined federal and provincial tax rate                             |  |      | 26.50   | % |      |  
|Income tax recovery at statutory rates                               |  | $    | (14,693 | ) |      | $
|Losses and other deductions for which no benefit has been recognized |  |      | 13,443  |   |      |  
|Non-deductible share-based compensation                              |  |      | 3,386   |   |      |  
|Non-deductible mineral property exploration costs                    |  |      | 2,041   |   |      |  
|Foreign exchange rate and tax rate differences                       |  |      | (4,458  | ) |      |  
|Losses previously not recognized                                     |  |      | -       |   |      |  
|Expiry of losses                                                     |  |      | 257     |   |      |  
|Impact of tax rate reductions                                        |  |      | 24      |   |      |  
|Income tax recovery                                                  |  | $    | Nil     |   |      | $



The Canadian statutory tax rate decreased to 26.50%
due to legislated changes.



28


Extorre Gold Mines LimitedNotes to the Consolidated Financial Statements(Expressed in Thousands of Canadian Dollars, Except Share Data)For the years ended December 31, 2011 and 2010








| | 22. | Income Taxes (Continued)
| | --- | ------------------------



The significant components of
the Company’s consolidated future tax assets are as follows:







|                                            |  | 2011 |        |  | 2010 |  
|------------------------------------------- |  | ---- | ------ |  | ---- | -
|Non-capital loss carry forwards – Canada    |  | $    | 352    |  |      | $
|Non-capital loss carry forwards – Argentina |  |      | 2,561  |  |      |  
|Exploration and development deductions      |  |      | 28,394 |  |      |  
|Property and equipment – Canada             |  |      | 6      |  |      |  
|Share issue costs                           |  |      | 726    |  |      |  
|Unrecognised deferred tax asset             |  | $    | 32,039 |  |      | $



The Company has available non-capital
losses for Canadian income tax purposes which may be carried forward to reduce taxable income in future years. If not utilized,
the non-capital losses in the amount of $1,336 expire in 2030.



At December 31, 2011, the Company
also has tax loss carry forwards in Argentina totalling $6,486 that expire as follows:



| | 2012  |  |  |  | 47    | 
| | ----- |  |  |  | ----- | 
| | 2013  |  |  |  | 2,025 | 
| | 2014  |  |  |  | 2,494 | 
| | 2015  |  |  |  | 1,920 | 
| | 2016  |  |  |  | 302   | 
| | Total |  |  |  | 6,788 | 



Tax benefits have not been recorded
as it is not considered probable that they will be utilized.







| | 23. | Subsequent Events
| | --- | -----------------





On March 16, 2012, the Company
closed a bought deal private placement financing. The underwriter purchased 3,530,000 common shares of the Company at a price of
$7.10 per share for gross proceeds of $25.1 million. The underwriter received a cash commission of 5% of the gross proceeds raised.
The common shares issued with respect to the financing are subject to a four month hold period.







29