---

Exhibit 99.2



|MANAGEMENTS DISCUSSION AND ANALYSIS                
|----------------------------------------------------
|For the years
      ended December 31, 2014 and 2013

The following Managements Discussion and Analysis
(MD&A) for Timmins Gold Corp. together with its wholly owned subsidiaries
(Timmins or the Company) is prepared as of March 9, 2015 and relates to the
financial condition and results of operations for the years ended December 31,
2014 and 2013. Past performance may not be indicative of future performance.
This MD&A should be read in conjunction with the audited consolidated
financial statements (consolidated financial statements) and related notes for
the years ended December 31, 2014 and 2013 which have been prepared using
accounting consistent with International Financial Reporting Standards as issued
by the International Accounting Standards Board (IFRS or GAAP).

The first, second, third and fourth quarters of the
Companys fiscal years are referred to as Q1, Q2, Q3 and Q4,
respectively. The years ended December 31, 2014 and 2013 are also referred to as
fiscal 2014 and fiscal 2013, respectively. All amounts are presented in
United States dollars, the Companys presentation currency, unless otherwise
stated. References to C$ and MXP are to Canadian dollars and Mexican pesos,
respectively.

Statements are subject to the risks and uncertainties
identified in the Risks and Uncertainties, Cautionary Note to U.S. Investors
and Cautionary Note Regarding Forward-Looking Statements sections of this
document. The Company has included the non-GAAP performance measures of cash
cost per gold ounce on a by-product basis, all-in sustaining cash cost per gold
ounce on a by-product basis, adjusted earnings and total comprehensive income
and adjusted earnings per share throughout this document. For further
information and detailed calculations of these measures, see the Non-GAAP and
additional GAAP Measures section of this document.

|FISCAL 2014
      HIGHLIGHTS
|----------------------------

|**-** | Metal revenues were $154.1 million, compared to
      $160.6 million during fiscal 2013. This represents a 4.1% decrease over
      the prior year, primarily due to a lower average realized gold price
      partially offset by an increase in the total ounces of gold sold. The average London
      PM Fix price was $1,266 per gold ounce, compared to $1,411 per gold ounce
      during fiscal 2013. This represents a 10.3% decrease over the prior year.                                                                                                                                                                                                                                                                                                                                                                
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|**-** | Earnings from operations were $22.2 million,
      compared to $41.1 million during fiscal 2013. This represents a 46.1%
      decrease over the prior year. This difference was mainly due to the
      decreased revenues resulting from a lower average realized gold price and
      an increase in production costs resulting from an increased number of
      ounces sold, decreased grade, record rainfall and higher diesel costs due to increased hauling distances.                                                                                                                                                                                                                                                                                                                                                     
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|**-** | Earnings and total comprehensive income were
      $9.2 million or $0.06 per share, compared to $15.3 million or $0.11 per
      share during fiscal 2013. This represents a 40.1% and 43.6% decrease,
      respectively, over the prior year. This decrease was mainly the result of
      lower earnings from operations which was partially offset by a significant
      decrease in tax expense compared to the prior year.                                                                                                                                                                                                                                                                                                                                                                                                  
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|**-** | Cash flows provided by operating activities
      were $33.1 million or $0.20 per share, compared to $52.4 million or $0.36
      per share during fiscal 2013. This represents a 36.9% and 43.7% decrease,
      respectively, over the prior year. Cash flows used in operating activities
      during Q4 2014 were $2.7 million, compared to cash flows provided by
      operating activities during Q4 2013 of $15.2 million. During Q4 2014, $9.2
      million (Q4 2013: $6.5 million) was spent on exploration, sustaining
      capital, expansion programs and deferred stripping. In addition, during Q4
      2014 the Company spent $10.8 million as part of the cash consideration
      paid on the acquisition of the Caballo Blanco gold project (Caballo
      Blanco) including associated transaction costs.
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|**-** | Cash and cash  equivalents at December 31, 2014 were $26.9 million after investing $6.8  million on exploration, $2.0 million on sustaining capital, $12.5 million on  expansion programs, $15.0 million on deferred stripping and $10.8 million as  part of the cash consideration paid on the acquisition of Caballo Blanco. In addition, the Company repaid $4.5 million (C$5.0  million) of its loan facility. Subsequent to December 31, 2014, the Company received  $4.0 million of its VAT receivable in cash.                                                                                                                                                                                                                                                                                                              

1

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

|      | Cash and cash equivalents at December 31, 2013
      were $22.8 million after investing $13.7 million on exploration, $4.6
      million on sustaining capital, $20.0 million on expansion programs and
      $14.3 million on deferred stripping.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|**-** | The Company produced a record 120,023 ounces of
      gold and sold a record 121,441 ounces of gold, compared to 119,655 and
      118,550, respectively, during fiscal 2013. The change from prior year is
      due to a decrease in processing grade partially offset by increased daily
      crushing throughput. As a result, although the processing grade decreased
      by 24.4%, production increased by 0.3%. The decrease in processing grade
      was mainly due to the record rainfall experienced during September 2014.
      This resulted in fewer ounces being produced during Q4 2014 than
      anticipated. Despite the amount of rainfall experienced at the San
      Francisco open pit gold mine (the Mine), an average crushing rate for
      the quarter of 22,846 tonnes per day (t/d) was achieved. This is a 4.3%
      increase from the prior year period.
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|**-** | The Companys cash cost per ounce on a
      by-product basis was $790 (all-in sustaining cash cost per ounce on a by-
      product basis - $925), compared to $717 (all-in sustaining cash cost per
      ounce on a by-product basis - $872) during fiscal 2013. This increase in
      cash costs is primarily driven by lower grades realized during the year of
      0.62 grams of gold per tonne (g/t Au) in accordance with the Companys
      mine plan, also impacted by the record rainfall, compared to the prior
      years grade of 0.82 g/t Au.                                                                                                                                                                                                                                                                                                                              
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|**-** | During December 2014, the Company acquired a
      100.0% interest in Caballo Blanco for consideration of $10.0 million in
      cash plus the issuance of 16,065,000 shares. The Company also agreed to
      pay a contingent payment of an additional $5.0 million when Caballo Blanco
      receives approval for its environmental permit or the Company undergoes a
      change of control. The additional payment, if made, can be paid at the
      Companys option in cash or shares. All shares issued in connection with
      the transaction will be subject to a hold period expiring four months and
      a day after issuance. Caballo Blanco is subject to a combined 2.0% NSR in
      favour of third parties.                                                                                                                                                              
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|**-** | During December 2014, the Company renegotiated
      the loan facility with an extension of the maturity date to December 31,
      2015 with the annual interest rate remaining at 9.0%. In consideration of
      the extension, the Company agreed to pay the lender a C$130,000 extension
    fee in
      cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|RECENT
      DEVELOPMENTS
|-------------------------

|**-** | On February 2, 2015, the Company converted its
      existing C$13.0 million loan facility into US dollars. Interest remains
      payable at the rate of 9.0% per annum, with payment of the principal
      amount outstanding to be made on December 31, 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|**-** | On February 11, 2015, the Company announced the
      filing of the National Instrument 43-101 technical report titled Preliminary Economic Assessment Caballo Blanco Gold Heap Leach, Veracruz,
      Mexico, related to the Caballo Blanco Gold Project. This report has an
      effective date of May 7, 2012, and was originally prepared for the prior
      owner of the Caballo Blanco Gold Project, and was readdressed to the
      Company on January 28, 2015.                                                                                                                                                                                                                                                                                                                                                         
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|**-** | On February 12, 2015, the Company announced the
      results of its drill program underneath and the edge of San Francisco Mine
      which confirmed the presence of at least three, high-grade, sub-parallel,
      gold bearing structures located approximately 50-100 metres (m) from
      surface along the south wall of the current open pit. Exploration
      information indicates that the lenses extend up to 300 m along strike and
      200 m down dip. Select results include: 4.5 m averaging 5.5 g/t Au at 9 m
      downhole; and 3.0 m averaging 6.2 g/t Au at 6 m downhole.                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|**-** | On February 17, 2015, the Company announced
      that it had entered into an agreement whereby the Company will acquire all
      of the issued and outstanding common shares of Newstrike Capital Inc.
      (Newstrike). The combination of the Company and Newstrike will create an
      emerging intermediate, Mexican-focused gold producer with a portfolio of
      high-quality production and development assets all based in Mexico. With
      the San Francisco mine providing a solid base of operations, the combined
      company will have a leading growth profile driven by what the Company
      believes are two economically robust development projects with manageable
      capital requirements, Newstrikes Ana Paula Gold Project (Ana Paula) and
      the Companys Caballo Blanco gold project.

2

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

|      | Under the terms of the arrangement, Newstrike
      shareholders will receive 0.90 (the Exchange Ratio) of a Company common
      share and C$0.0001 in cash for each Newstrike common share In addition,
      each outstanding option to purchase a Newstrike Share will be exchanged
      for an option to purchase a Company Share, based upon the Exchange Ratio.             
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                       
|**-** | On February 17, 2015, in connection with the
      Newstrike arrangement, the Company announced that it will undertake a
      non-brokered private placement of Company shares in an aggregate amount of
      up to C$10.0 million at a price of C$1.25 per share. The proceeds of the
      private placement will be used to support the continued development of Ana
      Paula.

|OVERVIEW OF THE
      BUSINESS
|------------------------------

Timmins Gold Corp. is a publicly traded gold producer engaged
in the operation, development, exploration and acquisition of resource
properties in Mexico. The Company owns and operates the Mine in the state of
Sonora, Mexico. The Mine and the La Chicharra pit are collectively known as the
Gold Property. The Company has title to approximately 200,000 hectares of
exploration claims in and around the Gold Property. The Company also has title
to the TIM claims located in the state of Zacatecas, Mexico.

The Company also holds 100.0% of the Caballo Blanco gold
project which is an advanced stage open pit, heap leach gold project located 65
km Northwest of Veracruz, Mexico. The project consists of two large areas of
epithermal gold mineralization, the Northern Zone and the Highway Zone,
contained within 13 mineral concessions covering over 54,000 hectares. Caballo
Blanco has easy access via paved roads, on-site power and clean water.

The Company believes that the current resource can be expanded
and the project economics described in the Preliminary Economic Assessment
(PEA) can be improved with additional drilling, metallurgical test work, and a
review of the capital expenditures. The Company plans to update the current
resource estimate of Caballo Blanco and carry out an extensive optimization of
the PEA in the coming months, including reviewing whether the project can become
a run of mine operation.

Management believes that the Companys ability to deliver
superior long-term financial returns creates value for all stakeholders. Strong
financial performance rewards the Companys shareholders and, at the same time,
allows the Company to focus on its broader social and environmental
responsibilities which contribute to the long-term prosperity of the communities
in which the Company operates.

Managements strategic approach is to maximize the gross margin
on sales by continuing to be a low cost gold producer and to build the Companys
position as a leading emerging gold producer whenever value-enhancing
opportunities arise. The Company also has a significant focus on community
involvement to ensure the successful integration of the local workforce and to
promote various technical skills within its operations.

In planning for the Companys future, management continuously
evaluates the Companys cash flow requirements and expects growth to be financed
by cash flow generated from the operations at the Mine. Management
bases investment decisions on cash flow return in excess of the Companys cost
of capital. Recent capital expenditures were incurred to expand gold processing
capabilities and such investments are proving to have a significant benefit on
the operating results of the Mine. Management looks to add shareholder value
from continued drilling of the Companys prospective land packages and through
other accretive means.

The Companys common shares are listed on the TSX (TMM) and the
NYSE MKT (TGD). Further details on Timmins Gold Corp. can be found in the
Companys associated documents, including its Annual Information Form, at
www.sedar.com or on the Companys website at www.timminsgold.com.

3

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

|OUTLOOK
|-------

The Companys immediate growth strategy is to produce between
115,000 and 125,000 gold ounces annually and to achieve cash cost guidance of
approximately $800 to $850 per gold ounce.

|REVIEW OF
      ANNUAL FINANCIAL RESULTS
|----------------------------------------

Year ended
    
    
    Year ended
    
    
    Year endedDecember 31,
    
    
    December 31,
    
    
    December 31,2014
    
    
    2013
    
    
    2012Gold sold(oz)
    
    121,441
    
    
    118,550
    
    
    94,128Silver sold(oz)
    
    85,262
    
    
    68,512
    
    
    56,252Average realized gold
      price(per oz)
    $
    1,269
    
    $
    1,358
    
    $
    1,661Average London PM fix gold price(per
      oz)
    $
    1,266
    
    $
    1,411
    
    $
    1,669Metal revenues
    $
    154,068
    
    $
    160,593
    
    $
    156,192Earnings from operations
    $
    22,167
    
    $
    41,141
    
    $
    62,938Earnings and total
      comprehensive income
    $
    9,187
    
    $
    15,343
    
    $
    37,732Earnings per share-Basic
    $
    0.06
    
    $
    0.11
    
    $
    0.26-Diluted
    $
    0.06
    
    $
    0.11
    
    $
    0.26Cash flows from
      operations
    $
    33,054
    
    $
    52,413
    
    $
    51,144Cash dividends declared
    $
    Nil
    
    $
    Nil
    
    $
    NilTotal assets
    $
    311,947
    
    $
    268,514
    
    $
    217,647Total long-term liabilities
    $
    60,446
    
    $
    57,721
    
    $
    33,712


Fiscal 2014 Results

Earnings for the Company decreased to $9.2 million, compared to
$15.3 million for fiscal 2013 as a result of the following factors:

Metal revenues

The Company sold 121,441 gold ounces at an average realized
gold price of $1,269 per ounce, compared to sales of 118,550 gold ounces at an
average realized gold price of $1,358 per ounce during fiscal 2013. This
represents an increase of 2.4% in gold ounces sold and a decrease of 6.6% in
realized gold price over fiscal 2013.

Total metal revenues from mining operations were $154.1
million, compared to $160.6 million during fiscal 2013. The average London PM
Fix price was $1,266 per gold ounce, compared to $1,411 per gold ounce during
fiscal 2013. This represents a 10.3% decrease over fiscal 2013.

Cost of sales

Production costs, which comprise the full cost of operations
less depreciation and depletion, form a component of cost of sales and were
$97.5 million, compared to $86.4 million during fiscal 2013. This increase is
substantially attributed to the increased number of tonnes mined and processed
with a lower average processing grade to 0.62 g/t, compared to 0.82 g/t during
fiscal 2013. In addition, limited access to certain phases of the pit during the
heavy rainfall that occurred in September 2014 resulted in the Company
processing ore from the unprocessed ore stockpile which is below the average
reserve grade.

4

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

During fiscal 2014, the Company also incurred higher diesel
costs due to increased hauling distances leading to a total diesel cost of $18.4
million, compared to $16.1 million during fiscal 2013. Additionally, higher
maintenance on equipment was necessary due to the increased crushing throughput.
The total cost for this maintenance was $7.1 million, compared to $5.9 million
during fiscal 2013.

Depletion and depreciation costs form a component of cost of
sales and were $18.6 million, compared to $15.5 million during fiscal 2013. This
increase is substantially attributed to the higher number of ounces of gold sold
during the year, compared to fiscal 2013 as well as the higher cost base of
mineral properties, plant and equipment on hand, due to capital additions in the
periods since December 31, 2013

Corporate and administrative expenses

Corporate and administrative expenses increased to $14.0
million, compared to $11.2 million during fiscal 2013. The significant cash
components of these expenses include salaries and consulting and professional
fees. Salaries decreased to $3.8 million from $4.2 million during fiscal 2013
due to reductions in workforce. Consulting and professional fees increased
significantly to $5.3 million, compared to $2.0 million during fiscal 2013. This
increase is mainly attributable to $2.1 million in expenses related to a
shareholder proxy contest and other consulting fees incurred during the year.
The significant non-cash component of these expenses includes share-based
payments. This expense was $1.4 million, compared to $0.8 million during fiscal
2013 due to additional options being granted during fiscal 2014, compared to
fiscal 2013.

Write-off of exploration and evaluation properties

Write-off of exploration and evaluation properties was $1.8
million, compared to $nil during fiscal 2013. The Company wrote-off the San
Onesimo, El Capomo and Marisol exploration projects due to the decision to
allocate resources to the development of Caballo Blanco and the Gold Property in
the near and medium term.

Finance expense

Finance expense was $1.9 million, compared to $1.7 million in
fiscal 2013. Interest on the loan facility was $1.1 million, compared to $1.4
million during fiscal 2013 due to the Company having repaid C$5.0 million in
February 2014. This was offset by an increase in interest on the equipment
financing for $0.2 million, compared to less than $0.1 million during fiscal
2013 when this financing commenced.

Income taxes

Income tax expense was $10.8 million, compared to $24.9 million
during fiscal 2013. The current tax expense increased to $10.1 million from $3.1
million during fiscal 2013 due to a change in Mexican tax law effective January
1, 2014, resulting in fewer accelerated tax deductions being available that were
previously utilized by the Company. This was partially offset by the decline in
gold price since fiscal 2013 which reduced the taxable income. Deferred tax
expense was $0.6 million, compared to a deferred tax expense of $21.8 million
during fiscal 2013. This decrease was mainly due to the Mexican tax reform
effective January 1, 2014, which eliminated the accelerated tax deduction for
certain capital assets that was previously utilized by the Company. In addition,
the Company recognized during 2013 a one-time non-cash deferred income tax
expense of $8.6 million related to future income tax of the Special Mining Duty
(SMD). The effective tax rate for fiscal 2014 was impacted by the
non-deductibility of the share-based payments and an increase in unrecognized
tax assets of both the Canadian parent and non-operating Mexican subsidiary. The
Company continues to use its VAT receivable to settle Mexican income tax
instalment payments required on a monthly basis.

Total assets

Total assets increased to $311.9 million, compared to $268.5
million during fiscal 2013. This increase was primarily due to higher
exploration and investing activities related to mineral properties, plant and
equipment of $35.5 million (of which $29.2 million were related to the
acquisition of Caballo Blanco), an increase in inventories of $3.6 million and
an increase in cash and cash equivalents of $4.2 million. This was partially
offset by the decrease in non-current unprocessed ore stockpile of $0.3 million.

5

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

Total long-term liabilities

Total long-term liabilities increased to $60.4 million,
compared to $57.7 million during fiscal 2013. This increase was primarily due to
a $4.5 million provision for a contingent payment related to the acquisition of
Caballo Blanco, partially offset by the $1.4 million decrease in the provision
for site reclamation and closure. Additionally, the long-term portion of
equipment financing decreased by $1.1 million.

|REVIEW OF
      QUARTERLY FINANCIAL RESULTS
|-------------------------------------------

Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q12014
    
    
    2014
    
    
    2014
    
    
    2014
    
    
    2013
    
    
    2013
    
    
    2013
    
    
    2013Gold sold(oz)
    
    25,007
    
    
    26,671
    
    
    33,000
    
    
    36,763
    
    
    33,247
    
    
    28,637
    
    
    28,024
    
    
    28,642Silver sold(oz)
    
    16,322
    
    
    18,800
    
    
    23,493
    
    
    26,647
    
    
    21,847
    
    
    16,228
    
    
    16,124
    
    
    14,313Average realized gold price
      (per oz)
    $
    1,216
    
    $
    1,284
    
    $
    1,284
    
    $
    1,280
    
    $
    1,249
    
    $
    1,329
    
    $
    1,253
    
    $
    1,602Average London PM
      fix gold price (per oz)
    $
    1,201
    
    $
    1,282
    
    $
    1,288
    
    $
    1,294
    
    $
    1,276
    
    $
    1,326
    
    $
    1,415
    
    $
    1,632By-product cash cost (1) (per oz)
    $
    930
    
    $
    856
    
    $
    730
    
    $
    703
    
    $
    723
    
    $
    738
    
    $
    705
    
    $
    703Metal revenues
    $
    30,400
    
    $
    34,235
    
    $
    42,383
    
    $
    47,050
    
    $
    41,516
    
    $
    38,065
    
    $
    35,123
    
    $
    45,889(Loss) Earnings
      from operations
    $
    (1,854
    )
    $
    3,914
    
    $
    7,246
    
    $
    12,861
    
    $
    9,245
    
    $
    9,261
    
    $
    3,382
    
    $
    19,253(Loss) Earnings
    $
    (3,701
    )
    $
    1,567
    
    $
    3,216
    
    $
    8,105
    
    $
    (4,684
    )
    $
    4,764
    
    $
    972
    
    $
    14,291(Loss) Earnings per
      share-Basic
    $
    (0.02
    )
    $
    0.01
    
    $
    0.02
    
    $
    0.05
    
    $
    (0.03
    )
    $
    0.03
    
    $
    0.01
    
    $
    0.10-Diluted
    $
    (0.02
    )
    $
    0.01
    
    $
    0.02
    
    $
    0.05
    
    $
    (0.03
    )
    $
    0.03
    
    $
    0.01
    
    $
    0.10Cash flow (used in)
      provided by operating activities
    $
    (2,726
    )
    $
    4,819
    
    $
    18,702
    
    $
    12,259
    
    $
    15,243
    
    $
    10,668
    
    $
    4,678
    
    $
    21,824Cash dividends declared
    $
    Nil
    
    $
    Nil
    
    $
    Nil
    
    $
    Nil
    
    $
    Nil
    
    $
    Nil
    
    $
    Nil
    
    $
    Nil


|(1) | Refer to the Non-GAAP and Additional GAAP
      Measures section of the MD&A.
|--- | -------------------------------------------------------------------------------

Q4 2014 Results

The Company had a loss of $3.7 million, compared to a loss of
$4.7 million for Q4 2013 as a result of the following factors:

Metal revenues

The Company sold 25,007 gold ounces at an average realized gold
price of $1,216 per ounce, compared to sales of 33,247 gold ounces at an average
realized gold price of $1,249 per ounce during Q4 2013. This represents a
decrease of 24.8% in gold ounces sold and a decrease of 2.6% in realized gold
price. Gold production was significantly impacted by processing lower grade ore
in accordance with the Companys mine plan, in addition to the effects from the
record amount of rainfall during the September 2014.

6

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

As a result, total metal revenues from mining operations were
$30.4 million, compared to $41.5 million during Q4 2013. The average London PM
Fix price was $1,201 per gold ounce, compared to $1,276 per gold ounce during Q4
2013. This represents a 5.9% decrease over Q4 2013.

Cost of sales

Production costs, which comprise the full cost of operations
less depreciation and depletion, form a component of cost of sales and were
$23.5 million, compared to $24.5 million during Q4 2013. Impacting production
costs for the current quarter is the reduced number of ounces sold. Offsetting
this reduction are increases in costs due to limited access to certain phases of
the pit during the heavy rainfall that resulted in the Company processing ore
from the unprocessed ore stockpile, which is below the average reserve grade.
During the quarter, approximately 0.2 million tonnes of stockpiled ore were
processed which increased production costs by $0.2 million, compared to $nil for
Q4 2013. Further, due to increased haulage distance at the Mine, diesel
consumption increased over the prior year quarter.

Depletion and depreciation costs form a component of cost of
sales and were $4.4 million, compared to $4.5 million during Q4 2013. This
decrease resulted mainly from the decreased number of gold ounces sold compared
to the same prior year period. This was partially offset by a higher cost base
of mineral properties and plant and equipment additions in the periods since Q4
2013.

Write-off of exploration and evaluation properties

Write-off of exploration and evaluation properties was $1.8
million, compared to $nil during Q4 2013. The Company wrote-off the San Onesimo,
El Capomo and Marisol exploration projects due to the decision to allocate
resources to the development of Caballo Blanco and the Gold Property in the near
and medium term.

Corporate and administrative expenses

Corporate and administrative expenses were slightly higher at
$2.6 million, compared to $2.5 million during Q4 2013. The significant cash
components of these expenses include salaries and consulting and professional
fees. Salaries decreased to $0.8 million from $0.9 million during Q4 2013 due to
reduction in workforce. Consulting and professional fees decreased to $0.5
million, compared to $0.7 million during Q4 2013 as a result of fewer
consultants working for the Company. The significant non-cash component of these
expenses includes share-based payments. This expense was $0.5 million compared
to $0.1 million during Q4 2013 due to additional options being granted during Q4
2014, compared to Q3 2013.

Finance expense

Finance expense was $0.6 million, compared to $0.4 million
during Q4 2013. Interest on the loan facility was $0.2 million, compared to $0.3
million during Q4 2013 due to the repayment of C$5.0 million in February 2014.
This was offset by an increase in interest on the equipment financing for $0.2
million, compared to less than $0.1 million during Q4 2013 when this financing
commenced.

Income taxes

Income tax expense was $0.5 million, compared to $14.2 million
tax expense during Q4 2013. The current tax recovery for Q4 2014 was $1.8
million, compared to current tax expense of $2.5 million during Q4 2013. This
was the result of a decrease in gold ounces sold compared to the prior year
which reduced the taxable income. In addition, the SMD decreased by $1.6 million
after deducting allowable exploration expenses incurred in Q4 2014. Deferred tax
expense was $2.3 million, compared to a deferred tax expense of $11.7 million
during Q4 2013. This change is due primarily to the removal of accelerated tax
deductions on capital expenditures as a result of the Mexican tax reform
effective January 1, 2014. In addition, the Company recognized during Q4 2013
one-time non-cash deferred income tax of $8.6 million related to future income
tax of the SMD. The effective tax rate for Q4 2014 was impacted by the
non-deductibility of the share-based payments and an increase in unrecognized
tax assets of both the Canadian parent and non-operating Mexican subsidiary. The
Company continues to use its VAT receivable to settle Mexican income tax
instalment payments required on a monthly basis.

7

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

Q4 2014 vs. Q3 2014

The Company had a loss of $3.7 million, compared to earnings of
$1.6 million for Q3 2014 as a result of the following factors:

Metal revenues

The Company sold 25,007 gold ounces at an average realized gold
price of $1,216 per ounce, compared to sales of 26,671 gold ounces at an average
realized gold price of $1,284 per ounce during Q3 2014. This represents a
decrease of 6.2% in gold ounces sold and a decrease of 5.3% in average realized
gold price. As a result, total metal revenues from mining operations were $30.4
million, compared to $34.2 million during Q3 2014. The average London PM Fix
price was $1,201 per gold ounce, compared to $1,282 per gold ounce during Q3
2014. This represents a 6.3% decrease over the prior period.

Cost of sales

Production costs, which comprise the full cost of operations
less depreciation and depletion, form a component of cost of sales and slightly
increased to $23.5 million from $23.1 million during Q3 2014. This cost increase
was primarily the result of the incremental costs related to the rainfall and
longer haulage distances.

Depletion and depreciation costs form a component of cost of
sales and were  $4.4 million, compared to $4.1 million during Q3
2014. This was due to higher cost base of mineral properties and plant and
equipment additions during the period.

Write-off of exploration and evaluation properties

Write-off of exploration and evaluation properties was $1.8
million, compared to $nil during Q3 2014. The Company wrote-off the San Onesimo,
El Capomo and Marisol exploration projects due to the decision to allocate
resources to the development of Caballo Blanco and the Gold Property in the near
and medium term.

Corporate and administrative expenses

Corporate and administrative expenses decreased to $2.6
million, compared to $3.1 million during Q3 2014. The significant cash
components of these expenses include salaries and consulting and professional
fees. Salaries decreased to $0.8 million, compared to $1.2 million during Q3
2014 due to payments in connection to a proxy contest incurred during Q3 2014
not incurred in Q4 2014. Consulting and professional fees were consistent at
$0.5 million, compared to $0.5 million during Q3 2014. The significant non-cash
component of these expenses includes share-based payments. This expense was
consistent at $0.5 million, compared to $0.5 million during Q3 2014.

Finance expense

Finance expense was $0.6 million, compared to $0.4 million
during Q3 2014. Interest on the loan facility was consistent at $0.2 million for
both periods. Also impacting the finance expense for Q4 2014 is the inclusion of
the interest paid for the equipment financing of $0.2 million.

Income taxes

Income tax expense was $0.5 million, compared to $1.7 million
during Q3 2014. There was a current tax recovery of $1.8 million, compared to
current tax expense of $1.8 million during Q3 2014 due to a decrease in gold
ounces sold compared to the prior quarter which reduced the taxable income and
$1.6 million decrease in the SMD as a result of deducting allowable exploration
expenses incurred during Q4 2014. Deferred tax expense was $2.3 million,
compared to deferred tax recovery of $0.1 million during Q3 2014. This increase
was primarily the result of deducting allowable exploration expenses for the
purpose of the SMD and the impact of foreign exchange on the tax values of
capital assets during Q4 2014. The effective tax rate for Q4 2014 was impacted
by the non-deductibility of the share-based payments and an increase in
unrecognized tax assets of both the Canadian parent and non-operating Mexican
subsidiary.

8

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

|SAN FRANCISCO
      GOLD MINE - OPERATIONS REVIEW
|-------------------------------------------------

The Mine, which was commissioned in April 2010, is located in
the Arizona-Sonora desert in the northern portion of the Mexican state of
Sonora. The Mine is an open pit operation, with crushing and heap leach
processing facilities. The following is a summary of the Mines production
statistics:

|                                         |  | Three months
      ended December 31, |  |  | Years ended
      December 31, | 
|---------------------------------------- |  | ------------------------------------- |  |  | ------------------------------ | 
|                                         |  | 2014                                  |  |  | 2013                           | 
|Ore processed(t)                         |  | 2,101,873                             |  |  | 2,014,968                      | 
|Average ore processed grade(g/t Au)      |  | 0.56                                  |  |  | 0.87                           | 
|Ore mined(dry tonnes)                    |  | 1,944,436                             |  |  | 2,284,241                      | 
|Average ore mined grade(g/t Au)          |  | 0.65                                  |  |  | 0.74                           | 
|Ore from low grade
      stockpile(t)    |  | 260,406                               |  |  | -                              | 
|Average ore from stockpile grade(g/t Au) |  | 0.29                                  |  |  | -                              | 
|Ore stockpiled(t)                        |  | 158,625                               |  |  | 349,338                        | 
|Average ore stockpiled grade(g/t Au)     |  | 0.22                                  |  |  | 0.25                           | 
|Waste mined(t)                           |  | 6,417,044                             |  |  | 5,307,526                      | 
|Total mined(t)                           |  | 8,361,480                             |  |  | 7,591,767                      | 
|Strip ratio                              |  | 3.30                                  |  |  | 2.32                           | 
|Total days in period                     |  | 92                                    |  |  | 92                             | 
|Gold deposited on pad(oz)                |  | 38,078                                |  |  | 56,504                         | 
|Gold recovery                            |  | 65.7%                                 |  |  | 60.5%                          | 
|Average ore processed per
      day(t/d) |  | 22,846                                |  |  | 21,902                         | 
|Average total mined(t/d)                 |  | 90,886                                |  |  | 83,389                         | 
|Gold produced(oz)                        |  | 25,007                                |  |  | 34,164                         | 
|Silver produced(oz)                      |  | 16,322                                |  |  | 21,847                         | 

The Company produced 25,007 gold ounces and 16,322 silver
ounces during Q4 2014, compared to 34,164 gold ounces and 21,847 silver ounces
during the same prior year period.

The Company produced 120,023 gold ounces and 85,262 silver
ounces during fiscal 2014, compared to 119,655 gold ounces and 68,512 silver
ounces during fiscal 2013. The change from prior year is due to a planned
decrease in processing grade offset by increased daily crushing throughput. The
decrease in processing grade was mainly due to the record rainfall experienced
during September 2014. Due to the increased processing capacity, although the
processing grade decreased by 24.4%, production increased by 0.3% .

The Company mined a total of 8.4 million tonnes from the Mine
during Q4 2014, compared to 7.6 million tonnes during the same prior year
period. Dry tonnes of ore mined were 1.9 million tonnes of ore during Q4 2014,
compared to 2.3 million tonnes of ore during the same prior year period. The
strip ratio increased to 3.30 during Q4 2014 from 2.32 during the same prior
year period as a result of accessing certain phases of the Mine that have higher
strip ratios than other phases of the Mine which were accessed during the same
prior year period. The Company stockpiled 0.2 million tonnes during Q4 2014,
compared to 0.3 million tonnes during the same prior year period.

The Company mined a total of 32.8 million tonnes from the Mine
during fiscal 2014, compared to 32.1 million tonnes during fiscal 2013. Dry
tonnes of ore mined were 8.8 million tonnes of ore during fiscal 2014, compared
to 8.7 million tonnes of ore during fiscal 2013. The strip ratio increased to
2.72 during fiscal 2014 from 2.67 during the prior year period as a result of
accessing certain phases of the Mine that have higher strip ratios than other
phases of the Mine which were accessed during the prior year. The Company
stockpiled 0.9 million tonnes during fiscal 2014, compared to 1.7 million tonnes
during fiscal 2013.

9

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

The average grade of ore processed during Q4 2014 was 0.56 g/t
Au, compared to the same prior year period of 0.87 g/t Au due to a planned
change in processed ore grade and also impacted by processing low grade ore from
the stockpile. In accordance with the mine plan, the average grade of ore mined
during Q4 2014 was 0.65 g/t Au, compared to the same prior year period of 0.74
g/t Au. This was also affected by the heavy rainfall during September 2014
which prevented the Company from having access to higher grade ore.

The average grade of ore processed during fiscal 2014 was 0.62
g/t Au, compared to fiscal 2013 of 0.82 g/t Au due to a planned change in
processed ore grade and also impacted by processing low grade ore from the
stockpile. The average grade of ore mined from the Mine during fiscal 2014 was
0.64 g/t Au, compared to fiscal 2013 of 0.71 g/t Au as a result of planned mined
grade in accordance with the mine plan. This was also affected by the heavy
rainfall during September 2014 which prevented the Company from having access to
higher grade ore.

|GOLD PROPERTY -
      RESOURCE REVIEW
|-------------------------------------

On September 20, 2011, the Company announced an updated NI
43-101 resource and reserve update audited by MICON International Ltd (MICON),
with the actual report being released November 23, 2011. On March 14, 2012, the
Company released a further update to the resource estimate in which the measured
and indicated and inferred resources were increased to 1,575,000 ounces and
1,351,000 ounces, respectively, from 1,441,000 ounces and 1,005,000 ounces,
respectively. The March 14, 2012 resource estimate update was audited by MICON.
On November 5, 2013, the Company announced an updated NI 43-101 resource and
reserve and mine plan update audited by MICON, with the actual report being
released December 24, 2013. Measured and indicated and inferred resources were
increased to 1,868,000 ounces and 1,782,000 ounces, respectively, from 1,575,000
ounces and 1,351,000 ounces, respectively and the mine life was extended to
2022.

Mineral reserves for the Gold Property, which are part of the
mineral resources, are estimated to be:

|In pit reserves           |  | Tonnes (000 | ) |  | Grade (g/t Au) |  |  | Gold ounces | 
|------------------------- |  | ------------ | - |  | -------------- |  |  | ----------- | 
|Proven                    |  | 57,316       |   |  | 0.55           |  |  | 1,013,000   | 
|Probable                  |  | 33,883       |   |  | 0.53           |  |  | 576,000     | 
|Total proven and probable |  | 91,199       |   |  | 0.54           |  |  | 1,589,000   | 

Mineral reserves within the Gold Property pit design
(December 24, 2013) at $1,250/oz gold price and after mining recovery and
dilution.

The total resource of the Gold Property is estimated to be:

Resource classification
    
    Tonnes (000
    )
    
    Grade (g/t Au)
    
    
    Gold ouncesMeasured mineral resource
    
    63,778
    
    
    0.58
    
    
    1,189,000Indicated mineral resource
    
    37,940
    
    
    0.56
    
    
    679,000Total measured and indicated
    
    101,718
    
    
    0.57
    
    
    1,868,000Inferred mineral resource
    
    122,177
    
    
    0.45
    
    
    1,782,000


Mineral resource estimate for the Gold Property (inclusive
of mineral reserves).

Cut-off grade of 0.17 g/t Au and 0.15 g/t for the San
Francisco and La Chicharra pits, respectively at $1,250/oz gold price.

Mineral resources that are not mineral reserves do not have
demonstrated economic viability. Inferred mineral resources are considered too
speculative geologically to have the economic considerations applied to them
that would enable them to be categorized as mineral reserves.

As illustrated above, inferred resources are estimated to
contain approximately 1,782,000 ounces of gold.

10

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

|GOLD PROPERTY -
      DEVELOPMENT REVIEW
|----------------------------------------

San Francisco open pit gold mine

During 2014, the Company focused on the continued development
of the Mine and completed an additional drilling program with a total of 44,918
meters drilled as follows:

| | A total of 17,194 meters of drilling were
      completed in and around the Mine; and                               
|- | --------------------------------------------------------------------------------------------------------------------
| | A total of 27,724 meters were drilled in
      exploration areas outside of the San Francisco and La Chicharra pits.

Mineral reserves for the Mine, which are part of the mineral
resources, are estimated to be:

In pit reserves
    
    **Tonnes
      (000)**
    
    
    Grade (g/t Au)
    
    
    Gold ouncesProven
    
    44,952
    
    
    0.56
    
    
    808,000Probable
    
    26,420
    
    
    0.55
    
    
    465,000Total proven and probable
    
    71,372
    
    
    0.56
    
    
    1,273,000


The total resource of the Mine is estimated to be:

|Resource classification      | Tonnes (000) | Grade (g/t Au) | Gold ounces
|---------------------------- | ------------- | -------------- | -----------
|Measured mineral resource    | 50,351        | 0.60           | 968,000    
|Indicated mineral resource   | 26,093        | 0.59           | 496,000    
|Total measured and indicated | 76,444        | 0.60           | 1,464,000  
|Inferred mineral resource    | 95,830        | 0.46           | 1,431,000  

La Chicharra open pit gold mine

The Company also owns the La Chicharra open pit. La Chicharra is located 2 km west of the Mine. Discovered by Geomaque
Explorations Ltd. (Geomaque) in the late 1990s, it is estimated that
approximately 37,000 ounces of gold were extracted and processed during
Geomaques last year of operations.

The discovery of this deposit was the consequence of
exploration programs comprised of magnetic ground surveys and soil geochemistry,
using both conventional soil sampling and advanced surface exploration (Mobile
Metal Ion - MMI) techniques. In both cases, samples returned very high values
for the main mineralized zone in an area of low magnetics. Trenches were
excavated to conduct chip sampling, which confirmed the presence of gold
mineralization in the bedrock, and drilling delineated a deposit with a resource
of 60,000 to 70,000 ounces of gold. Strong gold geochemical anomalies suggest
that there is the possibility of further gold mineralization at depth.

Drilling was conducted in the west-northwest and north
area of the existing La Chicharra pit. The drilling in the west-northwest area
was focused on identifying continuity along strike of the known mineral body,
while drilling in the north was focused on identifying additional mineralization
at the wall of the existing La Chicharra mineral deposit.

Ongoing drilling continued in 2013 to the northwest of the La
Chicharra prospect with the objective of testing mineralization along a strike
length of over 600 meters. The result of this work was included in the NI 43-101
resource and reserve and mine plan update announced during November 2013.

11

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

Mineral reserves for La Chicharra, which are part of the
mineral resources, are estimated to be:

The total resource of La Chicharra is estimated to be:

|Resource classification      |  | **Tonnes
      (000)** |  |  | Grade (g/t Au) |  |  | Gold ounces | 
|---------------------------- |  | ----------------------- |  |  | -------------- |  |  | ----------- | 
|Measured mineral resource    |  | 13,427                  |  |  | 0.51           |  |  | 221,000     | 
|Indicated mineral resource   |  | 11,847                  |  |  | 0.48           |  |  | 183,000     | 
|Total measured and indicated |  | 25,274                  |  |  | 0.50           |  |  | 404,000     | 
|Inferred mineral resource    |  | 26,347                  |  |  | 0.41           |  |  | 351,000     | 

In pit reserves
    
    **Tonnes
      (000)**
    
    
    Grade (g/t Au)
    
    
    Gold ouncesProven
    
    12,364
    
    
    0.52
    
    
    205,000Probable
    
    7,463
    
    
    0.46
    
    
    111,000Total proven and probable
    
    19,827
    
    
    0.50
    
    
    316,000


|CABALLO BLANCO - DEVELOPMENT REVIEW
|-----------------------------------

During December 2014, the Company acquired 100.0% interest in
Caballo Blanco from subsidiaries of Goldgroup Mining Inc. for consideration of
$10.0 million in cash plus the issuance of 16,065,000 shares. The Company also
agreed to pay a contingent payment of an additional $5.0 million when Caballo
Blanco receives approval for its environmental permit or the Company undergoes a
change of control. The additional payment, if made, can be paid at the Companys
option in cash or shares. All shares issued in connection with the transaction
will be subject to a hold period expiring four months and a day after issuance.
The Caballo Blanco Project is subject to a 2.0% NSR in favour of third parties.

Caballo Blanco is an advanced stage open pit, heap leach gold
project located 65 km Northwest of Veracruz, Mexico. The project consists of two
large areas of epithermal gold mineralization, the Northern Zone and the Highway
Zone, contained within 13 mineral concessions covering over 54,000 hectares.
Caballo Blanco has easy access via paved roads, on-site power and clean water.

A Preliminary Economic Assessment was completed on Caballo
Blanco entitled Preliminary Economic Assessment Caballo Blanco Gold Heap Leach,
Veracruz, Mexico, dated May 7, 2012, (the PEA) and was readdressed to the
Company on January 28, 2015. The PEA discloses a Measured & Indicated
Resource of 575,000 oz Au (28.9 million tonnes grading 0.62 g/t Au) and an
Inferred Resource of 419,000 oz Au (24.0 million tonnes grading 0.54 g/t Au). To
the best of the Companys knowledge, information and belief there is no new
material scientific or technical information that would make the disclosure of
the mineral resources or the PEA inaccurate or misleading.

Highlights of the PEA include:

| | A pre-tax NPV of $128.2 million and IRR of
      37.5% at a gold price of $1,200 per ounce and a discount rate of 5.0%;                                                                    
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A pre-tax NPV of $283.8 million and IRR of
      66.4% at a gold price of $1,500 per ounce and a discount rate of 5.0%;                                                                    
| | A Life-of-Mine ("LOM") strip ratio of 1.66,
      with an initial strip ratio of 0.5 and 1.3 in years one and two,
      respectively;                                                     
| | Anticipated gold recovery of 80.7% based on
      current metallurgical testing;                                                                                                           
| | Expected annual production of ~90,000 ounces of
      gold, for a total production of 687,000 ounces of gold and 1.3 million
      ounces of silver over the current 7.5 year life of mine;
| | Total cash operating cost of $784 per ounce of
      gold; and                                                                                                                             
| | Initial capital costs of $84.8 million.                                                                                                                                                    

12

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

The Company believes that the current resource can be expanded
and the project economics described in the PEA can be improved with additional
drilling, metallurgical test work, and a review of the capital expenditures. As
more fully described below, the Company plans to update the current resource
estimate and carry out an extensive optimization of the PEA in the coming
months, including reviewing whether the project can become a run of mine
operation.

Estimated mineral resources for Caballo Blanco, as of May 10,
2012, are shown below.

Mineral
      Resources(1)Tonnes
    
    
    Metal Grade
    
    
    Contained Metal(M tonnes)
    
    
    Au (g/t)
    
    
    Ag (g/t)
    
    
    Au (oz)
    
    
    Ag (oz)Indicated Mineral Resources (2)
    
    28.9
    
    
    0.62
    
    
    2.32
    
    
    575,000
    
    
    2,150,000Inferred Mineral Resources (2)
    
    24.0
    
    
    0.54
    
    
    2.50
    
    
    419,000
    
    
    1,930,000


|(1) | As reported in the PEA, subject to rounding. The PEA is
      preliminary in nature, includes inferred mineral resources that are
      considered too speculative geologically to have the economic
      considerations applied to them that would enable them to be categorized as
      mineral reserves and there is no certainty that the PEA will be realized.
      Mineral resources that are not mineral reserves do not have demonstrated
      economic viability.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(2) | As disclosed in the PEA, Mineral Resources were estimated
      using cut-off grade of 0.20 g/t.                                                                                                                                                                                                                                                                                                                                                                              

|OTHER
      PROPERTIES - EXPLORATION REVIEW
|-------------------------------------------

La Pima target

The La Pima target consists of a series of northeast trending
limestone ridges at the central-west part of the claim of the same name, located
25 km northwest of the Mine and 13 km west of the town of Santa Ana. During Q4
2013, an initial program of mapping and rock sampling was performed along more
than 3 km of outcrops of the limestone trend identifying at least three mineral
targets where there exists evidence of silver and polymetallic mineralization
and erratic gold grades. Mapping and sampling was performed to identify the main
geological structures of the mineralization. Assay results show high silver
grades above 1.0 kilograms of silver per tonne (kg/t Ag) and anomalous gold
grades of 1.0 g/t Au.

No exploration was performed on this property during 2014 and
the Company has no plans for further exploration work while resources are
allocated to the development of the Gold Property.

TIM Claims

There are 5 mining concessions 100.0% owned by Timmins Goldcorp
Mexico, all within the region of Mazapil-Concepcion del Oro. This region is
located in the north of the state of Zacatecas, and has emerged over the last
few years as one of the most active mining exploration and development regions
in Mexico and all Latin America.

During prior years, the exploration activity in the southeast
portion focused on an area 2 by 2 km, which was initially defined for high gold
and silver values in two rock chip samples. Also, combined soil and rock chip
sampling was completed on the El Marmol and El Tecolote areas. Initial samples
were taken on isolated outcrops of assayed high silver values, and geology
mapping and interpretation of aerial photos was performed as well.

No exploration was performed on this property during 2014 and
the Company has no plans for further exploration work while resources are
allocated to the development of the Gold Property.

Patricia Property

The property is located in the north-central portion of the
state of Sonora, 50 km to the southwest of the Mine. The Company has undertaken
trenching and systematic sampling which has returned anomalous gold values of
between 1.0 to 2.0 g/t Au with potential silver and polymetallics.

No exploration was performed on this property during 2014 and
the Company has no plans for further exploration work while resources are
allocated to the development of the Gold Property.

13

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

Norma Property

The property is located 30 km northwest of the Mine. During
prior years, the Company completed 2,090 meters of reverse circulation drilling,
distributed in 16 drill holes along 2,000 meters of gold anomalous outcrops.
Drilling returned intercepts ranging from 0.32 g/t to 27 g/t Au hosted in veins,
veinlets and breccia, mainly in close contact to the sandstones and siltstones
with dikes of monzonite.

No exploration was performed on this property during 2014 and
the Company has no plans for further exploration work while resources are
allocated to the development of the Gold Property.

El Picacho Property

The property is located in the north-central portion of the
state of Sonora, 20 km southwest of the Mine. Exploration by the Company
included geological mapping, sampling and compilation of the exploration work
performed by previous exploration companies on the property. During prior years,
the Company drilled several holes on the property for a cumulative total of
1,478 meters.

No exploration was performed on this property during 2014 and
the Company has no plans for further exploration work while resources are
allocated to the development of the Gold Property.

El Durazno target

El Durazno target is located 10 km to the north of the Mine.
During prior years, the Company completed exploration work including
prospecting, geological mapping, rock and soil sampling and reverse circulation
drilling totalling 3,342 meters in 15 drill holes distributed over two mineral
targets within the project.

Drilling returned important mineral intersections in nine of
these drill holes, the most significant of which are in the following:

| | DRC13-005 an interval of 21.34 meters
      with a grade of 1.53 g/t Au including three mineral intervals of 10.67
      meters width at 2.91 g/t Au, 4.57 meters of 6.48 g/t Au and 1.52 meters of
      14.42 g/t Au. Along of the same hole at an interval of 10.67 meters of
      1.47 g/t Au including 1.52 meters of 8.78 g/t Au;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | DRC13-011 at an interval of 28.96 meters with a
      grade of 0.42 g/t Au including 9.14 meters of 1.11 g/t Au;                                                                                                                                                                                                                        
| | DRC13-004 an interval of 7.62 meters of 0.69
      g/t Au including 1.79 g/t Au over 1.52 meters; and                                                                                                                                                                                                                                   
| | DRC-009 intersected 6.10 meters of 0.39 g/t
      gold.                                                                                                                                                                                                                                                                                 

Although this is an initial drill campaign on a new area, the
results show that further exploration should be performed on the target however
the Company has no current plans for further exploration work while resources
are allocated to the development of the Gold Property.

La Mexicana target

The La Mexicana target is located 6.5 km north of the Mine.
Mapping and sampling was performed along the north portion of the metamorphic
precambrian belt of the San Francisco gold deposit, which includes systematic
sampling of the existing underground works on the La Mexicana target. The assays
included gold values as high as 28.91 g/t Au and generally showed consistency
along the old underground workings. During prior years, several holes were
drilled for a total of 2,669 meters to assist in further assessing the La
Mexicana exploration potential.

No exploration was performed on this property during 2014 and
the Company has no plans for further exploration work while resources are
allocated to the development of the Gold Property.

14

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

|LIQUIDITY, CASH
      FLOWS AND CAPITAL RESOURCES
|-------------------------------------------------

Liquidity

Liquidity risk is the risk that the Company will encounter
difficulties in meeting obligations associated with its financial liabilities
and other contractual obligations. The Companys strategy for managing liquidity
is based on achieving positive cash flows from operations to internally fund
operating and capital requirements.

Material increases or decreases in the Companys liquidity and
capital resources will be substantially determined by the success or failure of
the Companys operations, exploration, development and construction programs,
its ability to obtain equity or other sources of financing, and the price of
gold. Factors that can impact the Companys liquidity are monitored regularly
and include the market price of gold, production levels, cash cost per gold
ounce on a by-product basis, capital costs, exploration expenditures, and
foreign currency fluctuations.

The Company monitors and manages liquidity risk by preparing
regular periodic cash flow forecasts, and seeking flexibility in financing
arrangements. In todays metal price environment, the Company anticipates that
funding from operating cash flows should be sufficient to fund the Companys
commitments, working capital requirements and capital expenditures at its
existing mining interests. This leaves the Companys current cash balance
available to pursue future growth plans. The Company had cash and cash
equivalents on hand at December 31, 2014 of $26.9 million and VAT receivable of
$13.7 million. In addition, the Company has $25.5 million in trade payable and
accrued liabilities, $11.1 million (C$13.0 million) in debt related to the
Sprott loan facility, $2.1 million related to equipment financing, and a $4.5
million contingent liability for the acquisition of Caballo Blanco payable when
Caballo Blanco receives approval for its environmental permit or the Company
undergoes a change of control.

Cash flow provided by operating activities will vary depending
on the prices of gold, fluctuations in the Mexican peso value, and total
production during the year. The Company expects to generate positive cash flow
from operating activities over the next year achieved through strong production
results at the Mine.

Cash flow provided by operating activities will vary depending
on the prices of gold, operating costs, fluctuations in the Mexican peso value,
and total production during the year. The Company expects to generate positive
cash flow from operating activities over the year.

Various tax and legal matters are outstanding from time to
time. In the event that Managements estimate of the future resolution of these
matters changes, the Company will recognize the effects of these changes in the
financial statements on the date such changes occur.

A summary of non-discounted liabilities and future operating
commitments are as follows:

|                                                     |   |         |  |   | Within  |  |   | 2 - 5   |  |   | Greater than | 
|---------------------------------------------------- | - | ------- |  | - | ------- |  | - | ------- |  | - | ------------ | 
|                                                     |   | Total   |  |   | 1 year  |  |   | years   |  |   | 5 years      | 
|Trade payables and accrued
      liabilities         | $ | 25,520  |  | $ | 25,520  |  | $ | -       |  | $ | -            | 
|Loan facility (C$13,000)                             |   | 11,070  |  |   | 11,070  |  |   | -       |  |   | -            | 
|Equipment financing                                  |   | 2,079   |  |   | 1,134   |  |   | 945     |  |   | -            | 
|Interest payments on loan
      facility and         |   |         |  |   |         |  |   |         |  |   |              | 
|equipment financing                                  |   | 1,151   |  |   | 1,120   |  |   | 31      |  |   | -            | 
|Future operating commitments
      (1)(2)            |   | 189,634 |  |   | 77,347  |  |   | 112,287 |  |   | -            | 
|Provision for site
      reclamation and closure (3) |   | 2,312   |  |   | -       |  |   | -       |  |   | 2,312        | 
|Other provisions (4)                                 |   | 1,127   |  |   | -       |  |   | 1,127   |  |   | -            | 
|Provision for contingent payment                     |   | 5,000   |  |   | -       |  |   | 5,000   |  |   | -            | 
|                                                     | $ | 237,893 |  | $ | 116,191 |  | $ | 119,390 |  | $ | 2,312        | 

15

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

|(1) | The future operating commitments of the Company are
      mainly due to the mining contract with Peal de Mexico, S.A. de C.V.
      (Peal). The original Peal contract was for 42 months, however an
      addendum was signed effective November 1, 2012 for five years (December
      31, 2014 - 34 months remaining) and covers substantially all mining
      services at a cost of $1.59 per tonne of material mined ($1.64 per the
      original contract). The Peal commitment is based on the forecasted minimum
      tonnage and estimated price of $1.62 to be mined until the end of the
      mining contract, and would be significantly less in the event that mining
      activities at the Mine ceased. Operating commitments also includes a
      guarantee provided by the Company for the office premises at its corporate
      office.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(2) | Contractual commitments are defined as agreements that
      are enforceable and legally binding. Certain of the contractual
      commitments may contain cancellation clauses; however, the Company
      discloses the contractual maturities of the Company's operating
      commitments based on management's intent to fulfil the
contracts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(3) | Provision for site reclamation and closure represents the
      non-discounted amount of the estimated cash flows required to settle the
      retirement obligations of the Mine.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(4) | Other provisions represent the non-discounted amount of
      the demobilization costs related to the Peal contract, whereby the Company
      is responsible for demobilization costs of $0.9 million payable one month
      prior to the end of the mining contract. This obligation has been recorded
      at an annualized discount rate of 1.4%, reflecting the implied interest
      rate, and calculated according to the formula stipulated in the contract.
      At December 31, 2014, this obligation was determined to be $1.1
      million.                                                                                                                                                                                                                                                                                                      

Various tax and legal matters are outstanding from time to
time. In the event that managements estimate of the future resolution of these
matters changes, the Company will recognize the effects of these changes in the
consolidated financial statements on the date such changes occur.

Cash flow

Three months
      ended December 31,
    
    
    Years ended
      December 31,2014
    
    
    2013
    
    
    2014
    
    
    2013Cash flow (used in) provided by operating activities
    $
    (2,726
    )
    $
    15,243
    
    $
    33,054
    
    $
    52,413Cash flow used in investing activities
    $
    (20,012
    )
    $
    (6,498
    )
    $
    (47,113
    )
    $
    (52,572
    )Cash flow (used in) provided by
      financing activities
    $
    (226
    )
    $
    (346
    )
    $
    18,773
    
    $
    (1,233
    )


Cash flow used in operating activities was $2.7 million during
Q4 2014, compared to cash flow provided by operating activities of $15.2 million
during Q4 2013. The main drivers of this change over prior year are a decrease
in ounces sold and average realized gold price for the current period resulting
in a loss before income taxes of $3.2 million, compared to earnings before
income taxes of $9.5 million during Q4 2013. Movements in trade receivables
decreased cash flows by $4.6 million during Q4 2014 mainly due to an increase in
VAT receivable, compared to an increase of $5.3 million during Q4 2013, while
the movements in inventories decreased cash flows by $0.6 million in Q4 2014,
compared to a decrease of $2.8 million in Q4 2013. Movements in trade payables
and other liabilities increased cash flows by $0.2 million during Q4 2014,
compared to a decrease of $1.9 million during Q4 2013. Tax payments were $nil
during Q4 2014 (Q4 2013 - $nil) as a result of the Company continuing to use VAT
receivable to pay income tax balance instalments.

Similarly, cash flow from operating activities for fiscal 2014
was $33.1 million, compared to $52.4 million for fiscal 2013. The main drivers
of this change over prior year are the decrease in the average realized gold
price partially offset by increased ounces sold for the year, resulting in
earnings before income taxes of $19.9 million, compared to $40.2 million during
fiscal 2013. Movements in trade receivables reduced cash flows by $4.8 million
during fiscal 2014, compared to a decrease of $4.2 million during fiscal 2013,
while the movements in inventories decreased cash flows by $2.9 million in
fiscal 2014, compared to a decrease of $10.2 million in fiscal 2013. Movements
in trade payables and other liabilities decreased cash flows by $1.2 million
during fiscal 2014, compared to an increase of $1.2 million during fiscal 2013.
Tax payments were $nil during fiscal 2014 (fiscal 2013 - $nil) as a result of
the Company continuing to use VAT receivable to pay income tax balance
instalments.

16

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

Cash flow used in investing activities during Q4 2014 was $20.0
million, compared to $6.5 million during Q4 2013. This difference was mainly due
to $10.8 million cash paid in the acquisition of Caballo Blanco including
transaction costs and additional $2.7 million as a result of the timing of
payments to vendors related to capital expenditures.

Cash flow used in investing
activities for fiscal 2014 was $47.1 million, compared to $52.6 million for
fiscal 2013. These movements are the direct result of a decrease in total
capital projects during fiscal 2014, compared to fiscal 2013, offset by the
acquisition of Caballo Blanco.

Cash flow used in financing activities was $0.2 million during
Q4 2014 and cash flow provided by financing activities for fiscal 2014 was $18.8
million, compared to cash flow used in financing activities of $0.3 million and
$1.2 million during Q4 2013 and fiscal 2013, respectively. Cash flow from shares
issued for cash was $0.2 million during Q4 2014 and $0.4 million for fiscal
2014, compared to $nil and $0.2 million during Q4 2013 and fiscal 2013,
respectively. During 2014, the Company closed a bought deal financing issuing
shares for gross proceeds of $25.7 million with transaction cost of $1.5
million. In addition, the Company repaid $4.5 million (C$5.0 million) from its
loan facility.

At the Gold Property, a significant amount of the operating
expenditures are denominated in Mexican pesos, while a significant amount of
office costs in Vancouver, Canada are denominated in Canadian dollars.
Fluctuations in these currencies can have an impact on the Companys costs.
During Q4 2014, the Mexican peso averaged MXP 13.84 to $1.00, and the Canadian
dollar averaged C$1.13 to $1.00, compared to MXP 13.02 to $1.00, and C$1.05 to
$1.00 during Q4 2013. During fiscal 2014, the Mexican peso averaged MXP 13.30 to
$1.00, and the Canadian dollar averaged C$1.10 to $1.00, compared to MXP 12.76
to $1.00, and C$1.03 to $1.00 during fiscal 2013.

Capital resources

The capital of the Company consists of the consolidated equity
and the loan facility, net of cash and cash equivalents.

|                                |   | December 31, |   |   | December 31, |   |   | December 31, |  
|------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | -
|                                |   | 2014         |   |   | 2013         |   |   | 2012         |  
|Equity                          | $ | 213,777      |   | $ | 164,352      |   | $ | 148,060      |  
|Loan facility                   |   | 11,070       |   |   | 16,438       |   |   | 17,641       |  
|Equipment financing             |   | 2,079        |   |   | 3,214        |   |   | -            |  
|                                |   | 226,926      |   |   | 184,004      |   |   | 165,701      |  
|Less: Cash and cash equivalents |   | (26,952      | ) |   | (22,776      | ) |   | (24,188      | )
|                                | $ | 199,974      |   | $ | 161,228      |   | $ | 141,513      |  

At December 31, 2014, there were no externally imposed capital
requirements to which the Company is subject and with which the Company has not
complied. The capital resources of the Company have increased to $200.0 million
from $161.2 million at December 31, 2013 due to the continued profitability of
the Company, as well as the strategic acquisition of Caballo Blanco. In February
2014, the Company repaid C$5.0 million ($4.5 million) in principal of the C$18.0
million ($16.4 million) loan facility.

During December 2014, the Company negotiated an extension of
the loan facility, extending the maturity date to December 31, 2015 with the
interest rate remaining at 9.0% per annum. In consideration of the extension,
the Company agreed to pay a C$130,000 extension fee in cash. During February 2015, the
Company made the payment of this fee. Under the terms of the loan facility,
the Company has pledged all of its assets (including the assets of its
subsidiaries) in favour of the Lender as security over the loan facility. In
addition, the subsidiaries have each provided guarantees to the Lender for the
repayment of any amounts advanced to the Company under the terms of the loan
facility.

Related party transactions

The Companys related parties include key management personnel
and any transactions with such parties for goods and/or services are made on
regular commercial terms and are considered to be at arms length. During fiscal
2014 and fiscal 2013, the Company did not enter into any transactions with
related parties.

17

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

Key management are those personnel having the authority and
responsibility for planning, directing, and controlling the Company. Salaries,
benefits and bonuses are included in corporate and administrative expenses.

18

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

Key management compensation includes:

|                      |   | Years ended
      December 31, | 
|--------------------- | - | ------------------------------ | 
|                      |   | 2014                           | 
|Salaries and benefits | $ | 1,569                          | 
|Bonuses               |   | 678                            | 
|Share-based payments  |   | 973                            | 
|                      | $ | 3,220                          | 

Dividends

No dividends were declared or paid during fiscal 2014.

Outstanding share data

The total number of outstanding common shares and share options
at March 9, 2015 are 179,877,379 and 12,900,000, respectively.

|NON-GAAP AND
      ADDITIONAL GAAP MEASURES
|-------------------------------------------

Non-GAAP Measures

Cash cost per gold ounce and cash cost per gold ounce on
a by-product basis

Cash cost per gold ounce and cash cost per gold ounce on a
by-product basis are non-GAAP performance measures that management uses to
assess the Companys performance and its expected future performance. The
Company has included the non-GAAP performance measures of cash cost per gold
ounce and cash cost per gold ounce on a by-product basis throughout this
document. In the gold mining industry, these are common performance measures but
do not have any standardized meaning. As such, they are unlikely to be
comparable to similar measures presented by other issuers.

Management believes that, in addition to conventional measures
prepared in accordance with GAAP, certain investors use this information to
evaluate the Companys performance and ability to generate cash flow.
Accordingly, it is intended to provide additional information and should not be
considered in isolation or as a substitute for measures of performance prepared
in accordance with GAAP.

The cash cost per gold ounce is calculated by dividing the
operating production costs by the total number of gold ounces sold. The cash
cost per gold ounce on a by-product basis is calculated by deducting the
by-product silver credits per gold ounce sold from the cash cost per gold ounce.
The following table provides a reconciliation of the cash cost per gold ounce
and cash cost per gold ounce on a by-product basis to the interim financial
statements:

|                                                   |   | Three months ended |   |   | Years ended  |  
|-------------------------------------------------- | - | ------------------ | - | - | ------------ | -
|                                                   |   | December 31,       |   |   | December 31, |  
|                                                   |   | 2014               |   |   | 2013         |  
|Production costs
      (1)                         | $ | 23,508             |   | $ | 24,453       |  
|Divided by gold sold (oz)                          |   | 25,007             |   |   | 33,247       |  
|Cash cost per gold ounce                           | $ | 940                |   |   | 735          |  
|Less: By-product silver credits per gold ounce (2) |   | (10                | ) |   | (12          | )
|Cash cost per gold ounce on a by-product basis     | $ | 930                |   | $ | 723          |  

19

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

|(1) | The Company includes in production costs all of the
      mining costs associated with the tonnes of ore stockpiled during the
      period. During Q4 2014 and fiscal 2014, mining costs associated with the
      tonnes of ore stockpiled included in production costs were $0.3 million
      and $1.8 million, respectively (Q4 2013 and fiscal 2013 - $0.4 million and
      $0.8 million, respectively).                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(2) | Management has determined that silver metal revenues when
      compared to the gold metal revenues, are immaterial and only identified
      after processing and therefore are considered a by-product of the
      production of gold. During Q4 2014 and fiscal 2014, total by-product
      silver credits were $0.2 million and $1.5 million, respectively (Q4 2013
      and fiscal 2013 - $0.4 million and $1.4 million,
  respectively).

For further details on the calculation of production costs,
refer to the notes to the consolidated financial statements. Cash cost per gold
ounce and cash cost per gold ounce on a by-product basis are not necessarily
indicative of earnings from operations or cash flow from operations as
determined under GAAP. Other companies may calculate these measures differently.

All-in sustaining cash cost per gold ounce

The Company has adopted an all-in sustaining cash cost per
ounce on a by-product basis performance measure which is calculated based on the
guidance note issued by the World Gold Council during Q2 2013. Management uses
this information as an additional measure to evaluate the Companys performance
and ability to generate cash flow.

All-in sustaining cash costs on a by-product basis include
total production cash costs, corporate and administrative expenses, sustaining
capital expenditures and accretion for site reclamation and closure costs. These
reclamation and closure costs represent the gradual unwinding of the discounted
liability to rehabilitate the area around the Mine at the end of the mine life.
The Company believes this measure to be representative of the total costs
associated with producing gold; however, this performance measure has no
standardized meaning. As such, there are likely to be differences in the method
of computation when compared to similar measures presented by other issuers.

The following table provides a reconciliation of the all-in
sustaining cash cost per gold ounce on a by-product basis to the interim
financial statements:

|                                                                       |   | Three months ended |   |   |              |   |   | Years ended |  
|---------------------------------------------------------------------- | - | ------------------ | - | - | ------------ | - | - | ----------- | -
|                                                                       |   |                    |   |   | December 31, |   |   |             |  
|                                                                       |   | 2014               |   |   | 2013         |   |   | 2014        |  
|Production costs                                                       | $ | 23,508             |   | $ | 24,453       |   | $ | 97,525      |  
|Unprocessed ore stockpile mining costs                                 |   | -                  |   |   | 343          |   |   | -           |  
|Corporate and administrative
      expenses (1)                        |   | 2,530              |   |   | 2,516        |   |   | 14,003      |  
|Sustaining capital expenditures                                        |   | 323                |   |   | 1,561        |   |   | 2,235       |  
|Accretion for site
      reclamation and closure                       |   | 26                 |   |   | 11           |   |   | 108         |  
|Less: By-product silver credits                                        |   | (248               | ) |   | (407         | ) |   | (1,535      | )
|All-in sustaining cash costs                                           |   | 26,139             |   |   | 28,477       |   |   | 112,336     |  
|Divided by gold sold (oz)                                              |   | 25,007             |   |   | 33,247       |   |   | 121,441     |  
|                                                                       |   |                    |   |   |              |   |   |             |  
|All-in sustaining cash
      cost per gold ounce on a by-product basis | $ | 1,045              |   | $ | 857          |   | $ | 925         |  

|(1) | For fiscal 2014, corporate and administrative expenses
      include $2.1 million in consulting and professional fees related to a
      proxy contest launched by a shareholder during Q2 2014. These costs
      increased the all-in sustaining cash cost per gold ounce on a by-product
      basis by $16 for fiscal 2014.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

20

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Management's Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

Adjusted earnings and total comprehensive
income

The Company has included the non-GAAP performance measure of
adjusted earnings and total comprehensive income and adjusted earnings and total
comprehensive income per share throughout this MD&A. Items are adjusted
where Management deems them unusual or non-recurring in nature based on the
historical and future performance of the Company.

The Company believes this measure to be representative of the
true earnings and total comprehensive income; however, this performance measure
has no standardized meaning. As such, there are likely to be differences in the
method of computation when compared to similar measures presented by other
issuers. Management believes that, in addition to conventional measures,
prepared in accordance with GAAP, certain investors use this information to
evaluate the Companys performance. Accordingly, it is intended to provide
additional information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP.

Three months ended
    
    
    Years endedDecember 31,
    
    
    December 31,2014
    
    
    2013
    
    
    2014
    
    
    2013(Loss) earnings and total
      comprehensive income
    $
    (3,701
    )
    $
    (4,684
    )
    $
    9,187
    
    $
    15,343Impairment of non-current unprocessed ore
      stockpile
    
    -
    
    
    794
    
    
    -
    
    
    6,340Write-off of exploration and
      evaluation properties
    
    1,808
    
    
    -
    
    
    1,808
    
    
    -Deferred tax expense related to SMD
    
    -
    
    
    8,605
    
    
    -
    
    
    8,605Adjusted (loss) earnings and total comprehensive
      (loss) income
    $
    (1,893
    )
    $
    4,715
    
    $
    10,995
    
    $
    30,288Adjusted (loss) earnings and total comprehensive
      (loss) income per share
    $
    (0.01
    )
    $
    0.03
    
    $
    0.07
    
    $
    0.21


Additional GAAP Measures

The Company has included additional GAAP measures which include
earnings from mine operations and earnings from operations throughout this
document. Management believes that, in addition to conventional measures
prepared in accordance with GAAP, certain investors use this information to
evaluate the Companys performance. Accordingly, they are intended to provide
additional information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP.

Earnings from mine operations

Earnings from mine operations represents the difference between
metal revenues and cost of sales (including depreciation and depletion).
Management believes that this presentation provides useful information to
investors to evaluate the Companys mine operating performance and to assess the
Companys ability to generate operating cash flow.

Earnings from operations

Earnings from operations represents the difference between
earnings from mine operations, corporate and administrative expenses and
impairment charges. Management believes that this presentation provides useful
information to investors to evaluate the Companys mine operating performance
when also taking into account certain costs not directly associated with
production.

The additional GAAP measures described above do not have a
standardized meaning prescribed by IFRS. As such, there are likely to be
differences in the method of computation when compared to similar measures
presented by other issuers.

21

---

|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

|OFF-BALANCE
      SHEET ARRANGEMENTS
|------------------------------------

The Company does not have any off-balance sheet arrangements.

|INTERNATIONAL
      FINANCIAL REPORTING STANDARDS
|-------------------------------------------------

The consolidated financial statements have been prepared in
accordance with IFRS as issued by the IASB, effective as of December 31, 2014.
The Companys significant accounting policies are described in note 3 of the
Companys consolidated financial statements for the years ended December 31,
2014 and 2013.

|CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES
|------------------------------------------------

The preparation of the Companys consolidated financial
statements in conformity with IFRS requires management to make estimates based
on assumptions about future events that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period.

The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results could differ from those
estimates. The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized prospectively in the
period in which the estimate is revised.

Management has made the following critical judgements and
estimates:

Critical judgements in applying accounting
policies

The critical judgements that the Companys management has made
in the process of applying the Companys accounting policies, apart from those
involving estimations, that have the most significant effect on the amounts
recognized in the Companys consolidated financial statements are as follows:

Functional currency

The functional currency of each entity is determined after
consideration of the primary economic environment of the entity, and is reviewed
when primary indicators change. The Company considers the impact of changes to
primary indicators such as the commencement of commercial operations and/or a
significant increase in sales in a currency other than the established
functional currency. Changes to a primary indicator which are considered to be
both substantive and ongoing may result in applying a change in functional
currency to the respective entity.

Business combination versus asset acquisition

The Company considered the applicability of IFRS 3 - Business
Combinations (IFRS 3) with respect to the acquisition of Caballo Blanco. IFRS
3 outlines a business as having a system where inputs enter a process to produce
outputs. The Company has determined that Caballo Blanco does not meet the
criteria for a business based on the indicators outlined by IFRS. As such the
Company has determined that the acquisition of Caballo Blanco not be treated as
a business combination but as an asset acquisition.

Economic recoverability and probability of future
economic benefits of exploration, evaluation and development costs

The Company has determined that exploratory drilling,
evaluation, development and related costs incurred which were capitalized as
exploration and evaluation have future economic benefits and are economically
recoverable. The Company uses several criteria in its assessments of economic
recoverability and probability of future economic benefit including geologic and
metallurgic information, history of conversion of mineral deposits to proven and
probable reserves, scoping and feasibility studies, accessible facilities,
existing permits and life of mine plans.

22

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

Key sources of estimation
uncertainty

The significant assumptions about the future and other major
sources of estimation uncertainty at the end of the reporting period that have a
significant risk of resulting in a material adjustment to the carrying amounts
of the Companys assets and liabilities are as follows:

Impairments

The Company assesses its mining interest assets annually to
determine whether any indication of impairment exists. Where an indicator of
impairment exists, a formal estimate of the recoverable amount is made, which is
considered to be the higher of the fair value less costs to sell and value in
use

In determining the recoverable amounts of the mineral
properties and plant and equipment assets, the Company makes estimates of the
discounted future cash flows expected to be derived from the Companys mining
properties, costs of disposal the mining properties and the appropriate discount
rate. Reductions in metal price forecasts, increases in estimated future costs
of production, increases in estimated future capital expenditures, reductions in
the amount of recoverable reserves, resources, and exploration potential, and/or
adverse current economics can result in an impairment of the carrying amounts of
the Companys property, plant and equipment and/or mining interests.

Mineral reserves

Proven and probable mineral reserves are the economically
mineable parts of the Companys measured and indicated mineral resources
demonstrated by at least a preliminary feasibility study. The Company estimates
its proven and probable reserves and measured and indicated and inferred mineral
resources based on information compiled by appropriately qualified persons.

The information relating to the geological data on the size,
depth and shape of the ore body requires complex geological judgements to
interpret the data. The estimation of future cash flows related to proven and
probable reserves is based upon factors such as estimates of foreign exchange
rates, commodity prices, future capital requirements and production costs along
with geological assumptions and judgements made in estimating the recovery rate,
size and grade of the ore body.

Changes in the proven and probable reserves or measured,
indicated and inferred mineral resource estimates may impact the carrying value
of exploration and evaluation properties, plant and equipment, site reclamation
and closure provisions, recognition of deferred tax amounts and depreciation and
depletion.

Depreciation and depletion

Plants and other facilities used directly in mining activities
are depreciated using the units-of-production (UOP) method over a period not
to exceed the estimated life of the ore body based on recoverable ounces to be
mined from proven and probable reserves.

Mobile and other equipment are depreciated, net of residual
value, on a straight-line basis, over the useful life of the equipment to the
extent that the useful life does not exceed the related estimated life of the
mine based on proven and probable reserves. The calculation of the UOP rate, and
therefore the annual depreciation and depletion expense, could be materially
affected by changes in the underlying estimates. Changes in estimates can be the
result of actual future production differing from current forecasts of future
production, expansion of mineral reserves through exploration activities,
differences between estimated and actual recovery rates and costs of mining and
differences in gold price used in the estimation of mineral reserves.

Significant judgement is involved in the estimation of useful
life and residual values for the computation of depreciation and depletion and
no assurance can be given that actual useful lives and residual values will not
differ significantly from current assumptions.

23

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

Deferred stripping costs

In determining whether stripping costs incurred during the
production phase of a mining property relate to reserves and resources that will
be mined in a future period and therefore should be capitalized, the Company
makes estimates of the stripping activity over the life of the mining property
(life of mine strip ratio). Changes in estimated life of mine strip ratios can
result in a change to the future capitalization of stripping costs incurred. At
December 31, 2014, the carrying amount of stripping costs capitalized was $43.4
million.

Inventories

Expenditures incurred, and depreciation and depletion of assets
used in mining and processing activities are accumulated as the cost of ore in
stockpiles, ore in process and finished metal inventory. These amounts are
carried at the lower of average cost or NRV and subject to significant
measurement uncertainty.

Write-downs of ore in stockpile, ore in process, and finished
metal inventory resulting from NRV impairments are reported as a component of
current period costs. The primary factors that influence the need to record
write-downs include prevailing and long-term metal prices and prevailing costs
for production inputs such as labour, fuel and energy, materials and supplies,
as well as realized ore grades and actual production levels. Costs are
attributed to the ore in process based on current mining costs, including
applicable depreciation and depletion relating to mining operations incurred up
to the point of placing the ore on the leach pad. Costs are removed from ore in
process based on the average cost per estimated recoverable ounce of gold on the
leach pad as the gold is recovered. Estimates of recoverable gold on the leach
pads are calculated from the quantities of ore placed on the pads, the grade of
ore placed on the leach pads and an estimated percentage of recovery. Timing and
ultimate recovery of gold contained on leach pads can vary significantly from
the estimates.

The quantities of recoverable gold placed on the leach pads are
reconciled to the quantities of gold actually recovered (metallurgical
balancing), by comparing the grades of ore placed on the leach pads to actual
ounces recovered. The nature of the leaching process inherently limits the
ability to precisely monitor inventory levels. As a result, the metallurgical
balancing process is constantly monitored and the engineering estimates are
refined based on actual results over time. The ultimate recovery of gold from a
pad will not be known until the leaching process is completed.

The allocation of costs to ore in stockpile, ore in process,
and finished metal inventory and the determination of NRV involve the use of
estimates. There is a high degree of judgement in estimating future costs,
future production levels, proven and probable reserves estimates, gold prices,
and the ultimate estimated recovery for ore in process. There can be no
assurance that actual results will not differ significantly from estimates used
in the determination of the carrying value of inventories.

Provision for site reclamation and closure

Site reclamation and closure provisions are recognized in the
period in which they arise and are stated as the present value of estimated
future costs. These estimates require extensive judgement about the nature, cost
and timing of the work to be completed, and may change with future changes to
costs, environmental laws and regulations and remediation practices. In view of
uncertainties concerning environmental rehabilitation, the ultimate costs could
be materially different from the amounts estimated.

It is possible that the Companys estimate of the site
reclamation and closure liability could change as a result of change in
regulations, the extent of environmental remediation required, the means and
technology of reclamation activities or cost estimates. Any such changes could
materially impact the estimated provision for site reclamation and closure.
Changes in estimates are accounted for prospectively from the period the
estimate is revised.

Deferred taxes

The Companys provision for income taxes is estimated based on
the expected annual effective tax rate. The current and deferred components of
income taxes are estimated based on forecasted movements in temporary
differences. Changes to the expected annual effective tax rate and differences
between the actual and expected effective tax rate and between actual and
forecasted movements in temporary differences will result in adjustments to the
Companys provision for income taxes in the period changes are made and/or
differences are identified.

24

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

In assessing the probability of realizing income tax assets
recognized, management makes estimates related to expectations of future taxable
income, applicable tax planning opportunities, expected timing of reversals of
existing temporary differences and the likelihood that tax positions taken will
be sustained upon examination by applicable tax authorities. In making its
assessments, management gives additional weight to positive and negative
evidence that can be objectively verified. Estimates of future taxable income
are based on forecasted cash flows from operations and the application of
existing tax laws in each jurisdiction.

Forecasted cash flows from operations are based on life of mine
projections internally developed and reviewed by management. Weight is attached
to tax planning opportunities that are within the Companys control, and are
feasible and implementable without significant obstacles. The likelihood that
tax positions taken will be sustained upon examination by applicable tax
authorities is assessed based on individual facts and circumstances of the
relevant tax position evaluated in light of all available evidence.

Where applicable tax laws and regulations are either unclear or
subject to ongoing varying interpretations, it is reasonably possible that
changes in these estimates can occur that materially affect the amounts of
income tax assets recognized. At the end of each reporting period, the Company
reassesses unrecognized income tax assets.

Share-based payments

Share-based payments are measured at fair value. Share options
and share purchase warrants are measured using the Black-Scholes option pricing
model based on estimated fair values of all share-based awards at the date of
grant and is expensed to earnings or loss from operations over each awards
vesting period. The Black-Scholes option pricing model utilizes subjective
assumptions such as expected price volatility and expected life of the option.
Changes in these input assumptions can significantly affect the fair value
estimate.

Contingencies

Due to the nature of the Companys operations, various legal
and tax matters can arise from time to time. In the event that managements
estimate of the future resolution of these matters changes, the Company will
recognize the effects of the changes in its consolidated financial statements
for the period in which such changes occur.

In the fourth quarter of 2012, the Mexican government amended
the Federal labour law regarding subcontracting arrangements in order to prevent
the use of service companies to evade labour and tax obligations. As is common
place, the Company currently operates in Mexico using these subcontracting
arrangements. The amendments set forth by the Mexican government also include
certain regulatory requirements regarding an employers obligation to compensate
employees with appropriate statutory profit sharing within the country.

The Company has assessed the implications of these amendments
and has determined that, other than what is presently recorded, it is probable
that no additional obligation for statutory profit sharing payments is required
to be recorded in the Companys consolidated financial statements as at and for
the year ended December 31, 2014.

|CHANGES IN
      ACCOUNTING STANDARDS
|-------------------------------------

Certain pronouncements were issued by the IASB or the IFRS
Interpretations Committee (IFRIC) that are mandatory for accounting periods
after December 31, 2013. Pronouncements that are not applicable to the Company
have been excluded.

|a) | IFRIC 21, Levies- the Interpretation is effective
      for annual periods beginning on or after January 1, 2014. This Standard
      provides clarification on the accounting for a liability to pay a levy.
      The Company adopted this standard as of January 1, 2014. The adoption of
      IFRIC 21 did not materially impact the consolidated financial
      statements.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following pronouncements have been issued but are not yet
effective:

|a) | IFRS 9, Financial Instruments- The standard is
      effective for annual reporting periods beginning January 1, 2018 for
      public entities. The Company is assessing the impact of this
    Standard.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

25

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

|b) | IFRS 15, Revenue from Contracts with Customers-
      The standard is effective for annual reporting periods beginning after
      December 15, 2016 for public entities with early adoption permitted.
      Entities have the option of using either a full retrospective or a
      modified retrospective approach to adopt the guidance. The Company is
      assessing the impact of this Standard.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|CONTROLS AND
      PROCEDURES
|-----------------------------

Disclosure controls and procedures

The Companys Chief Executive Officer (CEO) and Chief
Financial Officer (CFO) are responsible for establishing and maintaining
adequate disclosure controls and procedures. Disclosure controls and procedures
are designed to provide reasonable assurance that material information related
to the Company, including its consolidated subsidiaries, is made known to the
Companys certifying officers. The Companys CEO and CFO have concluded that the
Companys disclosure controls and procedures are effective in providing
reasonable assurance that information required to be disclosed under applicable
securities regulations is recorded, processed, summarized and reported within
the time periods specified.

Management regularly reviews the Companys disclosure controls
and procedures however, they cannot provide an absolute level of assurance
because of the inherent limitations in cost effective control systems to prevent
or detect all misstatements due to error or fraud. At December 31, 2014, under
the supervision and with the participation of the Companys CEO and CFO,
management conducted an evaluation of the design and operating effectiveness of
the Companys disclosure controls and procedures.

Based on this evaluation, management concluded that the
Companys disclosure controls and procedures are effective as of that date.

Internal control over financial reporting

Management is responsible for establishing and maintaining
adequate internal control over financial reporting to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of consolidated financial statements for external purposes in accordance with
IFRS.

Internal control over financial reporting includes those
policies and procedures that:

|- | pertain to the maintenance of records that in
      reasonable detail accurately and fairly reflect the transactions and
      dispositions of the assets of Timmins Gold Corp.;                                                                                                                                                                          
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | provide reasonable assurance that transactions
      are recorded as necessary to permit preparation of consolidated financial
      statements in accordance with IFRS, and that receipts and expenditures of
      Timmins Gold Corp. are being made only in accordance with authorizations
      of management and directors of Timmins Gold Corp.; and
|- | provide reasonable assurance regarding
      prevention or timely detection of unauthorized acquisition, use or
      disposition of Timmins Gold Corp.s assets that could have a material
      effect on the consolidated financial statements.                                                                                                        

The design of any system of controls and procedures is based in
part upon certain assumptions about the likelihood of future events. There can
be no assurance that any design will succeed in achieving its stated goals under
all potential future conditions, regardless of how remote. At December 31, 2014,
under the supervision and with the participation of our CEO and CFO, management
conducted an evaluation of the effectiveness of the Companys internal control
over financial reporting based on the framework in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on its evaluation, management concluded that
the Companys internal control over financial reporting was effective as of that
date.

There has been no change in the Companys internal control over
financial reporting during the year ended December 31, 2014 that has materially
affected, or is reasonably likely to materially affect, the Companys internal
control over financial reporting.

26

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

|RISKS AND
      UNCERTAINTIES
|-----------------------------

Risk Factors Relating to the Companys
Business

The Companys revenue is derived primarily from the sale
of gold, and therefore decreases in the price of gold may cause the Companys
revenue to decrease substantially.

The majority of the Companys revenue is derived from the sale
of gold, and therefore fluctuations in the price of gold represent one of the
most significant factors affecting the Companys operations and profitability.
To a lesser extent, the Company also generates revenue from other by-product or
co-product metals, such as silver.

The price of gold and other commodities has fluctuated widely
in recent years and is affected by numerous factors beyond the Companys
control, including:

|- | levels of supply and demand;                                                                       
|- | ---------------------------------------------------------------------------------------------------
|- | global or regional consumptive patterns;                                                           
|- | sales by government holders;                                                                       
|- | metal stock levels maintained by producers and
      others;                                       
|- | increased production due to new mine
      developments and improved mining and production methods;
|- | speculative activities;                                                                            
|- | inventory carrying costs;                                                                          
|- | availability and costs of metal substitutes;                                                       
|- | international economic and political
      conditions;                                             
|- | interest rates;                                                                                    
|- | currency values; and                                                                               
|- | inflation.                                                                                         

The market price of gold and other metals may decline from
current levels. Declining market prices for gold or other metals could
materially adversely affect the Companys operations and profitability. Further,
a decline in the market price of gold may also require the Company to write-down
its mineral reserves, which would have a material adverse effect on its earnings
and profitability. The Company currently does not enter into forward contracts
with respect to or otherwise hedge its potential future gold sales.

The Companys inability to access additional capital
could have a negative impact on its growth strategy.

The Company currently has limited financial resources and
operating income, and adequate funding may not be available to further its
exploration and development projects. The Company may need to raise additional
capital to fund its operations, and such capital may not be available on
commercially acceptable terms, if at all.

If the Company is unable to obtain additional capital on
commercially acceptable terms, the Company may be forced to reduce or curtail
its operations or its anticipated exploration activities. Although the Company
has been successful in the past in financing its activities through the sale of
equity securities, it may not be able to obtain sufficient financing in the
future. Our ability to arrange additional financing in the future will depend,
in part, on the prevailing capital market conditions as well as the business
performance of the Company.

The Company operates in a highly competitive industry
with many large competitors, and it expects that competition may intensify in
the future.

The gold mining industry is intensely competitive, and the
Company competes with other companies that have greater financial and human
resources and technical facilities. Competition is primarily for mineral-rich
properties which can be developed and produced economically; the technical
expertise to find, develop, and produce such properties; the labor and equipment
to operate such properties; and the capital to finance the development of such
properties. Many of the Companys competitors not only explore for and mine
precious metals, but conduct refining and marketing operations on a worldwide
basis and have far greater financial and technical resources than the Company.

27

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

In addition, the high price of gold is encouraging new entrants
to start competing companies and established companies to expand gold mining
operations significantly. Such competition may result in the Company being
unable to acquire desired properties, recruit or retain qualified employees or
acquire the capital necessary to fund its operations and develop its properties,
which could have an adverse effect on our results.

The Company has a limited operating history and therefore
cannot ensure the long-term successful operation of its business or the
execution of its business plan.

The Company was incorporated on March 17, 2005 and commenced
commercial production on April 1, 2010. As a result, the Company has a limited
operating history upon which stakeholders may evaluate its proposed business and
prospects. The Companys existing and proposed business operations will be
subject to numerous risks, uncertainties, and expenses. Difficulties associated
with early stage extractive operations and the exploration and development of
new mineral properties, are more fully described within other sections of risks
and uncertainties faced by the Company.

The Company is subject to particular risks associated
with doing business in Mexico, any of which could result in additional costs to
the Company and cause its operating results to suffer.

The Companys only operating mine and all of its exploration
properties are located in Mexico. In the past, Mexico has been subject to a
number of risks and uncertainties, including:

|- | terrorism and hostage taking;                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | expropriation or nationalization without
      adequate compensation;                                                                                                                      
|- | difficulties enforcing judgements obtained in
      Canadian or United States courts against assets located outside of those
      jurisdictions;                                          
|- | labor unrest;                                                                                                                                                                              
|- | high rates of inflation;                                                                                                                                                                   
|- | changes to royalty and tax regimes;                                                                                                                                                        
|- | substantial fluctuations in currency exchange
      rates;                                                                                                                                 
|- | volatile local political and economic
      developments;                                                                                                                                  
|- | difficulty understanding and complying with the
      regulatory and legal framework respecting the ownership and maintenance of
      mineral properties, mines and mining operations; and
|- | difficulty obtaining key equipment and
      components for equipment.                                                                                                                     

Any of these factors, among others, may cause changes in the
existing business or regulatory environment in Mexico with respect to mineral
exploration and mining activities, which could result in additional costs to the
Company and thereby cause its operating results to suffer. In addition, the
enforcement by the Company of its legal rights to exploit its properties may not
be recognized by the government of Mexico or by its court system.

These risks, along with any variation from the current
regulatory, economic and political climate may limit or disrupt the Companys
operations, restrict the movement of funds or result in the deprivation of
contractual rights.

The Companys business is subject to various governmental
regulations, and compliance with these regulations may cause the Company to
incur significant expenses. If the Company fails to maintain compliance with
applicable regulations, it may be forced to pay fines, be subject to civil
penalties or be forced to temporarily halt or cease operations.

The Companys business is subject to a variety of federal,
state, provincial and local laws and regulations in Mexico and Canada,
including:

|- | environmental protection;                                                        
|- | ---------------------------------------------------------------------------------
|- | management and use of toxic substances and
      explosives;                     
|- | management of natural resources;                                                 
|- | exploration, development, production and
      post-closure reclamation of mines;
|- | imports and exports;                                                             
|- | price controls or production restrictions;                                       
|- | taxation;                                                                        

28

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

|- | mining royalties;                                                                   
|- | ------------------------------------------------------------------------------------
|- | labor standards and occupational health and
      safety, including mine safety; and
|- | historical and cultural preservation.                                               

The Companys activities relating to the Mine are subject to,
among other things: regulations promulgated by SEMARNAP, Mexicos environmental
protection agency; DGM, the Mexican Department of Economy - Director General of
Mines; and the regulations of CONAGUA, the Comision Nacional del Agua with
respect to water rights. Mexican regulators have broad authority to shut down
and/or levy fines against facilities that do not comply with regulations or
standards.

The costs associated with compliance with these laws and
regulations are substantial and possible future laws and regulations, changes to
existing laws and regulations or more stringent enforcement of current laws and
regulations by governmental authorities, could cause additional expense, capital
expenditures, restrictions on or suspensions of the Companys operations and
delays in the development of its properties. Moreover, these laws and
regulations may allow governmental authorities and private parties to bring
lawsuits based upon damages to property and injury to persons resulting from the
environmental, health and safety impacts of the Companys past and current
operations, or possibly even those actions of parties from whom the Company
acquired its properties, and could lead to the imposition of substantial fines,
penalties or other civil or criminal sanctions. It is difficult to strictly
comply with all regulations imposed on the Company, and even with the
application of considerable care the Company may inadvertently fail to comply
with certain laws. Such events can lead to fines, penalties, loss, reduction or
expropriation of entitlements, the imposition of additional local or foreign
parties as joint venture partners and other material negative impacts on the
Company.

If the Company is unable to hire, train, deploy and
manage qualified personnel in a timely manner, particularly in Mexico, its
ability to manage and grow its business will be impaired.

Recruiting and retaining qualified personnel is critical to the
Companys success. The Company is dependent on the services of key executives
including our President and Chief Executive Officer and other highly skilled and
experienced executives and personnel focused on managing the Companys
interests. The number of persons skilled in acquisition, exploration and
development of mineral properties is limited and competition for such persons is
intense. As the Companys business activity grows, the Company will require
additional key financial, administrative and mining personnel as well as
additional operations staff, particularly in Mexico. The Company may not be
successful in attracting, training and retaining qualified personnel as
competition for persons with these skill sets increases. If the Company is not
successful in attracting, training and retaining qualified personnel, the
efficiency of its operations could be impaired, which could have an adverse
impact on its future cash flows, earnings, results of operations and financial
condition. It may be particularly difficult to find or hire qualified personnel
in the mining industry who are situated in Mexico, to obtain all of the
necessary services or expertise in Mexico, or to conduct operations on the
Companys projects at reasonable rates.

If qualified personnel cannot be obtained in Mexico, the
Company may need to obtain those services outside of Mexico, which will require
work permits and compliance with applicable laws and could result in delays and
higher costs to the Company.

The Company may be unable to obtain or renew required
government permits, or may only be able to do so at significant expense, which
may harm its operating results.

In the ordinary course of business, the Company is required to
obtain and renew governmental permits and licenses for the operation and
expansion of existing operations or for the development, construction and
commencement of new operations. Obtaining or renewing the necessary governmental
permits and licenses is a complex and time-consuming process, often involving
public hearings and costly undertakings on the Companys part.

29

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

The duration and success of the Companys efforts to obtain and
renew permits and licenses are contingent upon many variables not within its
control, including the interpretation of applicable requirements implemented by
the permitting authority. The Company may not be able to obtain or renew permits
or licenses that are necessary to its operations, or the cost to obtain or renew
permits or licenses may exceed what the Company believes it can recover from a
given property once in production. Any unexpected delays or costs associated
with the permitting and licensing process, including challenges to the terms of
such permits or licenses, whether successful or unsuccessful, could delay the
development or impede the operation of a mine, which could adversely impact the
Company operations and profitability.

In order for the Company to carry out its mining activities,
its exploitation licenses must be kept current. There is no guarantee that the
Companys exploitation licenses will be extended or that new exploitation
licenses will be granted. In addition, such exploitation licenses could be
changed and applications to renew existing licenses may not be approved.

The Company may also be required to contribute to the cost of
providing the required infrastructure to facilitate the development of its
properties, and will also be required to obtain and comply with permits and
licenses that may contain specific conditions concerning operating procedures,
water use, waste disposal, spills, environmental studies, abandonment and
restoration plans and financial assurances. The Company may not be able to
comply with any such conditions.

Failure to discover new reserves, maintain or enhance
existing reserves or develop new operations could negatively affect the
Companys future results and financial condition.

The long-term operation of the Companys business and its
profitability is dependent, in part, on the cost and success of its exploration
and development programs. Most of the Companys properties are in the
exploration and development stages and only the San Francisco property has a
mineralization considered a probable mineral reserve pursuant to CIM standards.
Mineral exploration and development involves a high degree of risk and few
properties that are explored are ultimately developed into producing mines.

The Companys mineral exploration and development programs may
not result in any discoveries of bodies of commercially viable mineralization,
and even if commercial quantities of mineralization are discovered, the Company
may not be able to bring the mineral property into commercial production.
Development of the Companys mineral properties will follow only upon obtaining
satisfactory exploration results. Discovery of mineral deposits is dependent
upon a number of factors, not the least of which is the technical skill of the
exploration personnel involved.

The commercial viability of a mineral deposit once discovered
is also dependent upon a number of factors, some of which are the particular
attributes of the deposit (such as size, grade and proximity to infrastructure),
metal prices, anticipated capital and operating costs and government
regulations, including regulations relating to royalties, allowable production,
importing and exporting of minerals and environmental protection. Most of the
above factors are beyond the Companys control.

As a result, the Companys acquisition, exploration and
development programs may not yield new reserves to replace or expand current
reserves. Unsuccessful exploration or development programs could have a material
adverse impact on the Companys operations and profitability.In addition, the
Companys ability to sustain its present levels of gold production is dependent
upon the identification of additional reserves at the Mine. If the Company is
unable to develop new ore bodies, it may not be able to sustain or increase
present production levels. Reduced production would have a material and adverse
impact on future cash flows, results of operations and financial condition.

The Company is subject to various operating risks and
hazards associated with its exploration and mining operations, any of which
could cause it to incur substantial expenses or affect the economic feasibility
of its projects. The Company may be unable to insure against such risks, or to
insure against such risks at a reasonable cost.

The ownership, operation and development of a mine or mineral
property involves many risks which even a combination of experience, knowledge
and careful evaluation may not be able to overcome. These risks include:

|- | environmental hazards;                                                                                                              
|- | ------------------------------------------------------------------------------------------------------------------------------------
|- | industrial accidents, explosions and third
      party accidents;                                                                   
|- | the encountering of unusual or unexpected
      geological formations;                                                              
|- | ground falls, rock bursts, cave-ins and seismic
      activity including earthquakes;                                               
|- | fires and flooding;                                                                                                                 
|- | metallurgical and other processing problems,
      including the availability and costs of processing and refining
      facilities;
|- | availability of economic sources of power;                                                                                          
|- | variations in grade, deposit size, density and
      other geological problems;                                                     

30

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

|- | unanticipated adverse geotechnical
      conditions;                                              
|- | --------------------------------------------------------------------------------------------------
|- | incorrect data on which engineering assumptions
      are made;                                   
|- | mechanical equipment performance problems;                                                        
|- | unavailability or significant changes in the
      cost of materials and equipment including fuel;
|- | labor force disruptions;                                                                          
|- | title claims, including aboriginal land claims;                                                   
|- | unanticipated transportation costs; and                                                           
|- | periodic interruptions due to inclement or
      hazardous weather conditions.                    

These occurrences could result in:

|- | environmental damage and liabilities;                                                                                                                                       
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | work stoppages, delayed production and
      resultant losses;                                                                                                              
|- | increased production costs;                                                                                                                                                 
|- | damage to, or destruction of, mineral
      properties or production facilities and resultant losses;                                                                       
|- | asset write downs;                                                                                                                                                          
|- | monetary losses;                                                                                                                                                            
|- | claims for compensation of loss of life and/or
      damages in connection with accidents that occur on property, and punitive
  awards in connection with those claims; and
|- | other liabilities.                                                                                                                                                          

These factors, among others, may cause anticipated capital and
operating costs, production and economic returns, or other estimates to differ
significantly from the Companys actual capital and operating costs. It is not
always possible to fully insure against such risks and the Company may decide
not to insure against such risks due to high premiums or for other reasons.
Should any such uninsured liabilities arise, they could adversely impact the
Companys profitability.

The Companys operations are dependent on the
accessibility and reliability of existing local infrastructure, and its
exploration activities are dependent upon adequate infrastructure being
available in the future.

Mining, processing, development and exploration activities
depend, to one degree or another, on adequate infrastructure. Reliable roads,
bridges, power sources and water supply are important determinants, which affect
capital and operating costs. The lack of availability on acceptable terms or the
delay in the availability of any one or more of these items could prevent or
delay exploitation or development of the Companys projects. If adequate
infrastructure is not available in a timely manner, the exploitation or
development of the Companys projects may not be commenced or completed on a
timely basis, if at all.

In addition, the resulting operations may not achieve the
anticipated production volume, or the construction costs and ongoing operating
costs associated with the exploitation and/or development of the Companys
advanced projects will be higher than anticipated. In addition, unusual or
infrequent weather phenomena, sabotage, government or other interference in the
maintenance or provision of such infrastructure could adversely affect the
Companys operations and profitability.

The Company is subject to extensive environmental
regulation, and any failure of compliance could result in fines or government
sanctions, civil liabilities and damage to its reputation.

All phases of the Companys operations are subject to
environmental laws and regulations. These laws and regulations set certain
standards regarding health and environmental quality, and provide for penalties
and other liabilities for violations, as well as obligations to rehabilitate
current and former properties in certain circumstances.

Furthermore, operating permits could be temporarily withdrawn
where there is evidence of serious breaches of health and safety, or even
permanently, in the case of extreme breaches. Significant liabilities could be
imposed on the Company for damages, clean-up costs or penalties in the event of
certain discharges into the environment, environmental damage caused by previous
owners of acquired properties or noncompliance with environmental laws.

31

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

In addition, environmental legislation in Mexico is generally
evolving in a manner which will require stricter standards and will be subject
to increased enforcement, fines and penalties for non-compliance, more stringent
environmental assessments of proposed projects and a heightened degree of
responsibility for companies and their officers, directors and employees. Such
changes in environmental regulation, if any, may adversely impact the Companys
operations and profitability.

32

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

Land reclamation requirements may be burdensome.

Land reclamation requirements are generally imposed on
companies with mining operations in order to minimize the long- term effects of
land disturbance, and the Company is subject to such requirements at its mineral
properties. Reclamation obligations include requirements to:

|- | control dispersion of potentially harmful
      effluents; and          
|- | ------------------------------------------------------------------------
|- | reasonably re-establish pre-disturbance land
      forms and vegetation.

In order to carry out reclamation obligations arising from
exploration and development activities, the Company must allocate financial
resources that might otherwise be spent on further exploration and development
programs. If the Company is required to carry out unanticipated reclamation
work, its financial position could be adversely affected.

The Companys production and exploration depend on its
ownership of, or control over, the properties on which it operates, and
maintaining existing property rights or obtaining new rights is a highly
competitive and costly process.

The Companys ability to carry out successful mining activities
will depend in part on its ability to obtain tenure to its properties to the
satisfaction of international lending institutions. The issue of any such
licenses must be in accordance with Mexican law and, in particular, relevant
mining legislation. The validity of mining or exploration titles or claims or
rights, which constitute most of the Companys property holdings, can be
uncertain and may be contested. The Company has used reasonable commercial
efforts to investigate its title or claims to its various properties and, to its
knowledge, except where it has otherwise identified, those titles or claims to
material properties are in good standing.

However, the Company has not conducted surveys of all the
claims in which it holds direct or indirect interests and therefore, the precise
area and location of such claims may be in doubt. The Companys properties may
also be subject to prior unregistered liens, agreements or transfers, native
land claims or undetected title defects. The Mexican government may revoke or
significantly alter the conditions of the applicable exploration and mining
titles or claims, and such exploration and mining titles or claims may be
challenged or impugned by third parties, which could materially impact the
Companys rights to its various properties or interests. Title insurance is
generally not available for mineral properties, and the Companys ability to
ensure that it has obtained secure claims to individual mineral properties or
mining concessions may be severely constrained. Mines have limited lives and, as
a result, the Company continually seeks to replace and expand reserves through
the acquisition of new properties.

In addition, there is a limited supply of desirable mineral
lands available in areas where the Company would consider conducting exploration
and/or production activities. Because the Company faces strong competition for
new properties from other mining companies, some of which have greater financial
resources than it does, the Company may be unable to acquire attractive new
mineral properties on terms that it considers acceptable.

Competition in the mining business for limited sources of
capital could adversely impact the Companys ability to acquire and develop
suitable mines, developmental projects or properties having significant
exploration potential. As a result, the Companys acquisition and exploration
programs may not yield new mineral reserves to replace or expand current mineral
reserves.

The process of estimating mineral reserves and resources
is subject to inherent uncertainties, and reported reserves may not accurately
reflect the economic viability of the Companys properties.

There is a degree of uncertainty attributable to the
calculation of mineral reserves and mineral resources. Until mineral reserves or
mineral resources are actually mined and processed, the quantity of mineral and
reserve grades must be considered as estimates only. Levels of metals indicated
by such mineral reserves or mineral resources may not be produced, and the
Company may not receive the price assumed in determining its reserves.

33

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

These estimates are expressions of judgment based on knowledge,
mining experience, analysis of drilling results and industry practices. Valid
estimates made at a given time may significantly change when new information
becomes available. While the Company believes that the reserve and resource
estimates included in this MD&A are well established and reflect
managements best estimates, by their nature reserve and resource estimates are
imprecise and depend, to a certain extent, upon analysis of drilling results and
statistical inferences that may ultimately prove unreliable.

Furthermore, fluctuations in the market price of metals, as
well as increased capital or production costs or reduced recovery rates may
render ore reserves uneconomic and may ultimately result in a reduction of
reserves. The extent to which resources may ultimately be reclassified as proven
or probable reserves is dependent upon the demonstration of their profitable
recovery. The evaluation of reserves or resources is always influenced by
economic and technological factors, which may change over time. Resource
estimates may not ultimately be reclassified as proven or probable reserves. If
the Companys reserve or resource figures are inaccurate or are reduced in the
future, this could have an adverse impact on its future cash flows, earnings,
results of operations and financial condition.

In estimating its reserves and resources, the Company relies on
laboratory-based recovery models to project estimated recoveries by ore type at
optimal crush sizes. Actual gold recoveries in a commercial heap leach operation
may exceed or fall short of projected laboratory test results. In addition, the
grade of mineralization ultimately mined may differ from the one indicated by
the drilling results and the difference may be material. Production can be
affected by such factors as permitting regulations and requirements, weather,
environmental factors, unforeseen technical difficulties, unusual or unexpected
geological formations, inaccurate or incorrect geological, metallurgical or
engineering work and work interruptions, among other things. Short term factors,
such as the need for an orderly development of deposits or the processing of new
or different grades, may have an adverse effect on mining operations or the
results of those operations.

Minerals recovered in small scale laboratory tests may not be
duplicated in large scale tests under on-site conditions or in production-scale
operations. Material changes in proven and probable reserves or resources,
grades, waste-to-ore ratios or recovery rates may affect the economic viability
of projects. The estimated proven and probable reserves and resources the
Company discloses should not be interpreted as assurances of mine life or of the
profitability of future operations.

The Company has engaged expert independent technical
consultants to advise it on, among other things mineral reserves and resources
and project engineering at the Mine. The Company believes these experts are
competent and that they have and will carry out their work in accordance with
all internationally recognized industry standards. If, however, the work
conducted and to be conducted by these experts is ultimately found to be
incorrect or inadequate in any material respect, the Company may experience
delays and increased costs.

The process of estimating future mine production and
related costs are subject to inherent uncertainties, and actual results may
differ materially from such estimates.

The Company periodically prepares estimates of future mine
production and future production costs for the Mine. There can be no assurance
that the Company will achieve these production estimates. These production
estimates are dependent on, among other things: the accuracy of underlying
mineral reserve estimates; the accuracy of assumptions regarding ore grades and
recovery rates; ground conditions and physical characteristics of ores;
equipment and mechanical availability; labor availability; facilities and
infrastructure; having sufficient materials and supplies on hand; and the
accuracy of estimated rates and costs of mining and processing. Failure to
achieve production estimates could have a material and adverse effect on any or
all of the Companys future cash flows, results of operations and financial
condition.

The Companys actual production and costs may vary from its
estimates for a variety of reasons, including: actual ore mined varying from
estimates of grade, tonnage, dilution and metallurgical and other
characteristics; short-term operating factors, such as the need for sequential
development of ore bodies and the processing of new or different ore grades from
those planned; and the risks and hazards associated with mining described
throughout the Risk Factors Relating to the Companys Business. In addition,
metal recoveries in small scale laboratory tests may not be duplicated in larger
scale tests under on-site conditions or during production, and known and
experienced recoveries may not continue.

Costs of production may also be affected by changing stripping
ratios, ore grade metallurgy, labor costs, costs of supplies and services (such
as fuel and power), general inflationary pressures and currency exchange rates.
Failure to achieve cost estimates could have a material and adverse effect on
any or all of the Companys future cash flows, results of operations and
financial condition.

34

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

The expansion and development of the Companys mineral
properties is uncertain and subject to risk.

The development of the Companys properties that are found to
be economically feasible will require the expansion and improvement of existing
mining operations, as well as the construction and operation of additional
mines, processing plants and related infrastructure. As a result, the Company is
subject to all of the risks associated with establishing and expanding mining
operations and business enterprises including:

|- | the timing and cost, which will be
      considerable, of the construction of additional mining and processing
      facilities;                                           
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | the availability and costs of skilled labor,
      power, water, transportation and mining equipment;                                                                      
|- | the availability and cost of appropriate
      smelting and/or refining arrangements;                                                                                      
|- | the need to obtain necessary environmental and
      other governmental approvals, permits and licenses, and the timing of
      those approvals, permits and licenses; and
|- | the availability of funds to finance
      construction and development activities.                                                                                        

It is not unusual in new mining operations to experience
unexpected problems and delays during the construction and development of a
mine. In addition, delays in the commencement or expansion of mineral production
often occur and, once commenced or expanded, the production of a mine may not
meet expectations or estimates set forth in feasibility or other studies.
Accordingly, the Company may not be able to successfully develop and expand
mining operations or profitably produce precious metals at its exploration or
development-stage properties.

The Companys results may be negatively affected by
currency exchange rate fluctuations.

Fluctuations in currency exchange rates, particularly the
weakening or strengthening of the US dollar (being the currency in which the
Companys products are sold) against the Mexican peso (being the currency in
which the majority of the Companys capital and operating costs are incurred),
could have a significant impact on the Companys results of operations. The
Company does not currently have a formal policy of actively managing such
currency fluctuations, and therefore, such fluctuations may have a significant
impact on its financial results in any given period.

Some of the Companys directors and officers have
interests that may be different than the Companys interests.

Some of the Companys directors and officers are engaged and
will continue to be engaged in the search for additional business opportunities
on behalf of other companies, and situations may arise where these directors and
officers will be in direct competition with the Company. Conflicts, if any, will
be dealt with in accordance with the relevant provisions of the Business
Corporations Act (British Columbia). Some of the Companys directors and
officers are or may become directors or officers of other companies engaged in
other business ventures.

In order to avoid potential conflicts of interest which may
arise between the directors and officers duties to the Company and their
duties to other companies, the Companys directors and officers have agreed to
the following:

|- | participation in other business ventures will
      be allocated on the basis of prudent business judgment and the relative
      financial abilities and needs of the companies to participate;                                                                      
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | no commissions or other extraordinary
      consideration will be paid to such directors and officers; and                                                                                                                                                            
|- | business opportunities arising through other
      companies in which such directors and officers are involved will not be
      offered to the Company except on the same or better terms than the basis
      on which they are offered to third party participants.

In addition, the Companys Corporate Governance and Nominating
Committee has developed, and its board of directors has adopted, guidelines
which require all directors to disclose all conflicts of interest and potential
conflicts of interest to the Company.

35

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

The Company may pursue strategic transactions in the
future, which could be difficult to implement, disrupt its business or change
its business profile significantly.

The Company will continue to consider opportunistic strategic
transactions, which could involve acquisitions or dispositions of assets. Any
future strategic transaction could involve numerous risks, including:

|- | potential disruption of the Companys ongoing
      business and distraction of management;                                                                                                                          
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | difficulty integrating acquired businesses or
      segregating assets to be disposed of;                                                                                                                            
|- | exposure to unknown and/or contingent or other
      liabilities, including litigation arising in connection with the
      acquisition, disposition and/or against any businesses the Company may
      acquire; and
|- | changing the Companys business profile in ways
      that could have unintended consequences.                                                                                                                       

If the Company enters into significant strategic transactions
in the future, related accounting charges may affect its financial condition and
results of operations, particularly in the case of any acquisitions. In
addition, the financing of any significant acquisition may result in changes in
its capital structure, including the incurrence of additional indebtedness.

Conversely, any material disposition could reduce its
indebtedness or require the amendment or refinancing of a portion of its
outstanding indebtedness. The Company may not be successful in addressing these
risks or any other problems encountered in connection with any strategic
transactions.

Risk Factors Relating to the Companys Common
Shares

The Company does not intend to pay dividends for the
foreseeable future.

The Company has never declared or paid any cash dividends on
the Companys common shares and does not intend to pay any cash dividends in the
foreseeable future. The Company anticipates that it will retain all of its
future earnings for use in the development of its business and for general
corporate purposes. Any determination to pay dividends in the future will be at
the discretion of the Companys board of directors. In addition, from time to
time the Company may enter into agreements that restrict its ability to pay
dividends.

The price of the Companys common shares may be volatile.

The trading price of the Companys common shares has been and
may continue to be subject to material fluctuations and may increase or decrease
in response to a number of events and factors, including:

|- | changes in the market price of the commodities
      the Company sells and purchases, particularly gold and silver;                     
|- | ----------------------------------------------------------------------------------------------------------------------------------------
|- | current events affecting the economic situation
      and exchange rates in Canada, the United States, Mexico and
      internationally;
|- | changes in financial estimates and
      recommendations by securities analysts;                                                        
|- | acquisitions and financings;                                                                                                            
|- | quarterly variations in operating results;                                                                                              
|- | the operating and share price performance of
      other companies that investors may deem comparable;                                  
|- | the issuance of additional equity securities by
      the Company or the perception that such issuance may occur; and                   
|- | purchases or sales of blocks of the Companys
      common shares.                                                                      

Part of this volatility may also be attributable to the current
state of the stock market, in which wide price swings are common. This
volatility may adversely affect the prices of the Companys common shares
regardless of the Companys operating performance and could cause the market
price of the Companys common shares to decline.

The Company may issue additional equity securities which
may reduce the Companys earnings per share.

The Company has in the past issued and may continue to issue
equity securities to finance its activities, including in order to finance
working capital requirements, capital expenditures and acquisitions. If the
Company issues additional common shares, your percentage ownership of the
Company will decrease and you may experience dilution in the Companys earnings
per share. Moreover, as the Companys intention to issue any additional equity
securities becomes publicly known, the common share price may be materially and
adversely affected.

36

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|TIMMINS GOLD CORP.                                                                
|----------------------------------------------------------------------------------
|Managements Discussion and Analysis                                              
|For the years ended December 31, 2014 and 2013                                    
|(In United
      States dollars, tabular amounts in thousands, except where noted)

If securities analysts or industry analysts downgrade the
Companys common shares, publish negative research or reports, or do not publish
reports about the Companys business, the price of and trading volume of the
Companys common shares could decline.

The trading market for the Companys common shares will be
influenced by the research and reports that industry or securities analysts
publish about the Company, its business and its market. If one or more analysts
adversely change their recommendation regarding the Companys common shares or
its competitors securities, the price of the Companys common shares would
likely decline. If one or more analysts cease covering or fail to regularly
publish reports about the Company, it could lose visibility in the financial
markets, which in turn could cause its share price or trading volume to decline.
In addition, the Companys common shares price could be adversely affected by
negative stories written or broadcast about it.

Holders of the Companys common shares may experience
dilution when outstanding options and warrants are exercised, or as a result of
additional securities offerings.

There are a number of outstanding options and warrants pursuant
to which additional common shares of the Company may be issued in the future.
Exercise of such options and warrants may result in dilution to the Company
shareholders. In addition, if the Company raises additional funds through the
sale of equity securities, shareholders may have their investment further
diluted.

|CAUTIONARY NOTE
      TO U.S. INVESTORS
|---------------------------------------

The Company is subject to the reporting requirements of the
applicable Canadian securities laws, and as a result it reports its mineral
reserves and resources according to Canadian standards. Canadian reporting
requirements for disclosure of mineral properties are governed by NI 43-101. The
definitions of NI 43-101 are adopted from those given by the Canadian Institute
of Mining, Metallurgy and Petroleum. U.S. reporting requirements are governed by
Industry Guide 7 (Guide 7) of the Securities and Exchange Commission (the
Commission). These reporting standards have similar goals in terms of
conveying an appropriate level of confidence in the disclosures being reported,
but embody different approaches and definitions.

For example, under Industry Guide 7, mineralization may not be
classified as a reserve unless the determination has been made that the
mineralization could be economically and legally produced or extracted at the
time the reserve determination is made. In particular, the Company reports
resources in accordance with NI 43-101.

While the terms Mineral Resource, Measured Mineral
Resource, Indicated Mineral Resource and Inferred Mineral Resource are
recognized and required by Canadian regulations, they are not defined terms
under standards of the Commission and generally, U.S. companies are not
permitted to report resources in documents filed with the Commission. As such,
certain information contained in this MD&A concerning descriptions of
mineralization and resources under Canadian standards is not comparable to
similar information made public by United States companies subject to the
reporting and disclosure requirements of the Commission. In addition, an
Inferred Mineral Resource has a great amount of uncertainty as to its existence
and as to its economic and legal feasibility, and it cannot be assumed that all
or any part of an Inferred Mineral Resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of Inferred Mineral Resources may not
form the basis of feasibility or other economic studies. It cannot be assumed
that all or any part of Measured or Indicated Resources will ever be converted
into Mineral Reserves, and it cannot be assumed that all or any part of an
Inferred Mineral Resource exists, or is economically or legally mineable. In
addition, the definitions of Proven Mineral Reserves and Probable Mineral
Reserves under CIM standards differ in certain respects from the standards of
the Commission.

|CAUTIONARY NOTE
      REGARDING FORWARD-LOOKING STATEMENTS
|----------------------------------------------------------

Certain statements and information contained in this MD&A
and the documents incorporated by reference in this MD&A constitute
forward-looking statements within the meaning of applicable U.S. securities
laws and forward-looking information within the meaning of applicable Canadian
securities laws, which we refer to collectively as forward-looking statements.
Forward-looking statements are statements and information regarding possible
events, conditions or results of operations that are based upon assumptions
about future economic conditions and courses of action. All statements and information other than statements of historical fact may be forward-looking statements. In some cases, forward-looking statements can be identified by the use of words such as seek, expect, anticipate,
budget, plan, estimate, continue, forecast, intend, believe, predict, potential, target, may, could,
would, might, will and similar words or phrases (including negative variations) suggesting future outcomes or statements regarding an outlook.

37

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|TIMMINS GOLD CORP.                                                          
|----------------------------------------------------------------------------
|Managements Discussion and Analysis                                        
|For the years ended December 31, 2014 and 2013                              
|(In United States dollars, tabular amounts in thousands, except where noted)

Forward-looking statements in this MD&A and the documents incorporated herein by reference include, but are not limited to statements and information regarding: the Company's future mining activities, including mining capacity, recoveries, cash
costs, production and mine life; the Company's reserves and resources estimates; the Companys exploration and development plans, including anticipated costs and timing thereof; the Companys plans for growth through exploration
activities, acquisitions or otherwise; and expectations regarding future maintenance and capital expenditures, working capital requirements, the availability of financing and future effective tax rates. Such forward-looking statements are based on a
number of material factors and assumptions, including, but not limited to: that contracted parties provide goods and/or services in a timely manner, that no unusual geological or technical problems occur, that plant and equipment function as
anticipated and that there is no material adverse change in the price of gold, costs associated with production or recoveries. Forward-looking statements involves known and unknown risks, uncertainties and other factors which may cause actual
results, performance or achievements, or industry results, to differ materially from those anticipated in such forward-looking statements. The Company believes the expectations reflected in such forward-looking statements are reasonable, but no
assurance can be given that these expectations will prove to be correct and you are cautioned not to place undue reliance on forward-looking statements contained herein.

Some of the risks and other factors which could cause actual results to differ materially from those expressed in the forward-looking statements contained in this MD&A and the documents incorporated herein by reference include, but are not
limited to: risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits and conclusions of economic evaluations; results of initial feasibility, pre-feasibility and feasibility
studies, and the possibility that future exploration, development or mining results will not be consistent with the Companys expectations; risks relating to possible variations in reserves, resources, grade, planned mining dilution and ore
loss, or recovery rates and changes in project parameters as plans continue to be refined; mining and development risks, including risks related to accidents, equipment breakdowns, labour disputes (including work stoppages and strikes) or other
unanticipated difficulties with or interruptions in exploration and development; the potential for delays in exploration or development activities or the completion of feasibility studies; risks related to the inherent uncertainty of production and
cost estimates and the potential for unexpected costs and expenses; risks related to commodity price and foreign exchange rate fluctuations; the uncertainty of profitability based upon the cyclical nature of the industry in which the Company
operates; risks related to failure to obtain adequate financing on a timely basis and on acceptable terms or delays in obtaining governmental approvals or in the completion of development or construction activities; risks related to environmental
regulation and liability; political and regulatory risks associated with mining and exploration; risks related to the uncertain global economic environment; and other factors contained in the section entitled Risks and Uncertainties in
the MD&A for the year ended December 31, 2014.

Although the Company has attempted to identify important factors that could cause actual results or events to differ materially from those described in the forward-looking statements, you are cautioned that this list is not exhaustive and there may
be other factors that the Company has not identified. Furthermore, the Company undertakes no obligation to update or revise any forward-looking statements included in, or incorporated by reference in, this MD&A if these beliefs, estimates and
opinions or other circumstances should change, except as otherwise required by applicable law.

|QUALIFIED PERSON
|----------------

Scientific and technical information contained in this MD&A was reviewed and approved by Taj Singh, M.Eng, CPA, and Jose Vizquerra Benavides, MSc, CPG, both of whom are a qualified person as defined by National Instrument 43-101 -
Standards of Disclosure for Mineral Projects.

38

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