---

Exhibit 99.2



|MANAGEMENT DISCUSSION AND ANALYSIS         
|-------------------------------------------
|For the nine months ended December 31, 2011
|                                           

The following Management Discussion and Analysis (MD&A)
for Timmins Gold Corp. together with its wholly owned subsidiaries (Timmins or
the Company) is prepared as of March 28, 2012 and relates to the financial
condition and results of operations. Past performance may not be indicative of
future performance. The MD&A should be read in conjunction with the audited
consolidated financial statements and related notes for the nine months ended
December 31, 2011 and the comparative year ended March 31, 2011. During the
three months ended December 31, 2011 (current period), the Company changed its
year-end from March 31 to December 31 to make the reporting period of the
Company coincide with other precious metal producing issuers, and is reporting
results for the nine months ended December 31, 2011.

On April 1, 2011, the Company adopted International Financial
Reporting Standards (GAAP or IFRS) as issued by the International Accounting
Standards Board (IASB), using a transition date of April 1, 2010 to
accommodate comparative periods. As a result, the audited consolidated financial
statements for the nine months ended December 31, 2011 (consolidated financial
statements) have been prepared in accordance with IFRS 1, First-time
Adoption of International Financial Reporting Standards as issued by the
IASB. Prior to April 1, 2011, the Company prepared its interim and annual
consolidated financial statements in accordance with Canadian generally accepted
accounting principles as included in Part V of the Canadian Institute of Chartered Accountants Handbook (Canadian GAAP or “CGAAP”). Detailed reconciliations of comparative
figures previously reported under Canadian GAAP to IFRS are provided in Note 23
to the consolidated financial statements. These differences have been identified
with reference to IFRS effective as of the date of this MD&A.

The first, second, third and fourth quarters of the Companys
fiscal year are referred to as Q1, Q2, Q3 and Q4, respectively. All
amounts are presented in United States dollars (US dollars or USD), the
Companys presentation currency, unless otherwise stated. References to C$ are
to Canadian dollars.

Statements are subject to the risks and uncertainties
identified in the Risks and Uncertainties and cautionary notes to U.S. investors
and Forward-Looking Statements sections of this document. Note that the Company
has included a non-GAAP performance measure, cash cost per gold ounce (oz),
throughout this document. For further information, see the Non-GAAP Measures
section of this document.

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

Timmins Gold Corp. is a publicly traded gold producer engaged
in mining, development, exploration and acquisition of resource properties in
Latin America. The Company owns and operates the San Francisco open pit gold
mine (the Mine) in the state of Sonora, Mexico. The Mine and the La Chicharra
open pit gold mine (La Chicharra) are collectively known as the San Francisco
Gold Project. The Company has title to the Timmins and Timmins II concessions
and the Timmins III fraction 1 and 2 located in Santa Ana, Sonora, Mexico and
are included in the San Francisco property. The Company has also entered into a
property option agreement to earn an interest in the San Onesimo, Zindy, and San
Fernando mineral concessions located in the State of Zacatecas, Mexico.

The Company also entered into a property option agreement to
earn an interest in the Quila mineral concession located in the State of
Jalisco, Mexico. The Company has received title to the Santa Maria de Oro claim
in Jalisco, Onesimo claims in Mazapil-Conception de Oro, and the Patricia and
Norma concessions in the Municipality of Trincheras, Sonora, Mexico.

The Companys common shares are listed on the Toronto Stock
Exchange (TSX:TMM) and the NYSE Amex LLC (NYSE Amex) (NYSE.A: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.

1

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

|THREE MONTHS
      ENDED DECEMBER 31, 2011 HIGHLIGHTS
|-----------------------------------------------------

- Metal revenues were $35.5 million, compared to $27.6 million during the
  same prior year period. This represents a 28% increase over the prior year.
- Profit from operations was $15.8 million, compared to $15.9 million during
  the same prior year period.
- Cash flows from operations were $10.7 million, compared to cash flows from
  operations of $15.3 million during the same prior year period.
- The Company produced 21,524 ounces of gold and sold 21,895 ounces of gold,
  compared to gold produced and sold during the same prior year period of 20,031
  ounces.
- The Companys cash cost per ounce was $662, compared to a cash cost per
  ounce during the same prior year period of $441. This increase is attributed
  to a planned lower grade ore being extracted year over year (see San Francisco
  Gold Project - Operations Review section below); additional replacement parts
  being installed to prepare for the upcoming crusher expansions; additional
  cyanide used in the heap leach process; added security presence at the Mine;
  and, the industry wide increases in key mining consumables prices due to
  global supply constraints and labour cost increases due to the demand for
  mining professionals.
- Increased solutions handling capacity by purchasing additional water
  concessions, adding new carbon columns and pumping capacity and by adding a
  mixing tank for the addition of high concentration solutions to the ore on the
  conveyors.
- Purchased an additional 700 hectares at La Chicharra for leach pad
  expansion and received permits for the expansion.
- Significant milestones:

- Timmins commenced trading on the NYSE Amex effective November 4, 2011.
- Completion and filing on November 23, 2011 of the technical report titled
  NI 43-101 F1 Technical Report Updated Resources and Reserves and Mine Plan,
  illustrating a 71% increase in the estimated mineral reserves at the San
  Francisco Gold Project to 1,330,000 contained gold ounces.
- Completion of the 2011 drilling program on December 1, 2011; a total of
  177,708 metres of drilling has been realized between January 1, 2011 and
  November 30, 2011 (110,755 metres between July 1, 2011 and November 30, 2011).
  The Company received the assays from the program and has incorporated them
  into a new resource estimate, which was released on March 14, 2012.

|NINE MONTHS
      ENDED DECEMBER 31, 2011 HIGHLIGHTS
|----------------------------------------------------

- Metal revenues were $90.8 million, compared to $61.1 million during the
  same prior year period. This represents a 49% increase over the prior year.
- Profit from operations was $36.6 million, compared to $27.5 million during
  the same prior year period. This represents a 33% increase over prior year.
- Generated record cash flows from operating activities before changes in
  non-cash working capital of $46.4 million, compared to $44.1 million during
  the year ended March 31, 2011. Cash flows from operations after changes in
  non- cash working capital were $24.0 million, compared to $42.7 million during
  the year ended March 31, 2011.

2

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

- The Company produced 55,487 ounces of gold and sold 56,777 ounces of gold,
  compared to gold produced and sold during the same prior year period of 47,032
  ounces. This represents an 18% increase in gold production and 21% increase in
  gold sold over the prior year. During the 12 month calendar year 2011, the
  Company produced a total of 74,241 ounces of gold.
- The Companys cash cost per ounce was $608, compared to a cash cost per
  ounce during the same prior year period of $526.
- Completion of crushing facility expansion from 14,000 tonnes per day
  (t/d) to 18,000 t/d in July, 2011.
- In June, 2011, the Company replaced and restructured the $15.0 million
  gold-linked debt facility (the Gold Loan) with a C$18.0 million debt
  agreement. The new debt agreement does not contain any payments which are
  indexed to movements in gold prices and thus allows the Company to freely
  realize current gold prices. In addition, the new facility does not carry a
  guaranteed minimum payment as outlined in the previous Gold Loan.
- In June, 2011, the Company announced the appointment of Colin P.
  Sutherland, CA as Chief Financial Officer. Mr. Sutherland previously held
  positions as President of Capital Gold Corp, President and CEO of Nayarit Gold
  Inc, and CFO of Aurico Gold Inc.
- In July, 2011, the Company facilitated the issuance of 25,205,090 special
  warrants, which allowed the holder to acquire shares directly from an existing
  shareholder. In August, 2011, these 25,205,090 special warrants were
  exercised. This was a non-dilutive event as no common shares of the Company
  were issued. The Company did not receive any proceeds from this transaction
  and did not issue any shares.
- In August, 2011, the Company announced the appointment of Paula Rogers, CA
  as a new member of the Board of Directors and Chair of the Audit Committee.
- In September, 2011, the Company announced an updated NI 43-101 reserve and
  resource estimate for the San Francisco Gold Project. The new estimate
  contains 1,330,000 proven and probable reserve ounces, 1,441,000 total
  measured and indicated resource ounces and 1,005,000 inferred ounces. This
  represents 71%, 46% and 383% increases, respectively, over the previous
  estimate.
- In September, 2011, the Company engaged an independent third party
  consultant to review the Companys leaching procedures, and accordingly, the
  Company made revisions to its leaching process. The Company believes this will
  assist in the recovery of gold at levels consistent with the metallurgy
  outlined in previous technical reports.

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

- Commencement of 100,000 metre drilling program on the San Francisco Gold
  Project as of March, 2012.
- On March 14, 2012, the Company announced an updated resource estimate for
  the San Francisco Gold Project. The new estimate contains 1,575,000 total
  measured and indicated resource ounces and 1,351,000 inferred ounces. This
  represents 9% and 34% increases, respectively, over the previous estimate,
  which was released September, 2011.

|OUTLOOK
|-------

The Companys growth strategy is to increase its production
profile (current guidance: 100,000 ounces for fiscal 2012), reduce cash cost per
gold ounce (current guidance: $650/oz) and increase its reserve base through a
number of initiatives, including the following:

- Realizing expansion opportunities at the San Francisco Gold Project,
  including a planned crushing expansion from 18,000 t/d to 25,000 t/d,
  estimated to be completed by June, 2012 (estimated cost of $2.2 million) and a
  further expansion going to 32,000 t/d, estimated to be completed by January,
  2013 (estimated cost of $7.7 million);

3

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

- The continuation of the Companys exploration program designed to convert
  resources to reserves, increase resources, and increase its production
  profile. The Company has commenced an additional 100,000 metre drilling
  program for an estimated cost of $10.0 million; and
- Actively pursuing accretive transactions to create value for shareholders.

These growth initiatives are expected to be supported by
internal cash flow generated from the operations at the San Francisco Gold
Project, together with the new debt agreement with Sprott Resource Lending
Partnership. The Company is committed to responsibly operating and growing to
become a profitable gold producer, creating value for all its stakeholders,
including shareholders, employees, suppliers, lenders, government, and the
communities in which the Company operates.

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

|                                          |  | Nine months ended |  |  | Year ended     |  |  | Year ended      | 
|----------------------------------------- |  | ----------------- |  |  | -------------- |  |  | --------------- | 
|                                          |  | December 31, 2011 |  |  | March 31, 2011 |  |  | March 31, 2010  | 
|Gold produced (oz)                        |  | 55,487            |  |  | 65,786         |  |  | 8,065           | 
|Gold sold (oz)                            |  | 56,777            |  |  | 62,762         |  |  | 8,065           | 
|Average realized gold price
      ($/oz)  |  | 1,599             |  |  | 1,324          |  |  | N/A             | 
|Average gold price (London PM Fix) ($/oz) |  | 1,634             |  |  | 1,294          |  |  | 1,023           | 
|Cash cost per gold ounce
      ($/oz)     |  | 608               |  |  | 530            |  |  | N/A             | 
|Metal revenues ($)                        |  | 90,768,679        |  |  | 83,080,428     |  |  | N/A             | 
|Profit from operations ($)                |  | 36,576,001        |  |  | 35,126,411     |  |  | N/A             | 
|Earnings ($)                              |  | 20,873,612        |  |  | 6,590,490      |  |  | C$ (8,615,920)  | 
|Earnings per share, basic ($)             |  | 0.15              |  |  | 0.05           |  |  | C$ (0.08)       | 
|Earnings per share, diluted ($)           |  | 0.15              |  |  | 0.05           |  |  | C$ (0.08)       | 
|Cash from operations ($)                  |  | 24,029,887        |  |  | 42,743,992     |  |  | C$ (15,793,611) | 
|Cash dividends declared ($)               |  | Nil               |  |  | Nil            |  |  | Nil             | 
|Total assets ($)                          |  | 162,219,914       |  |  | 113,709,656    |  |  | C$ 82,279,282   | 

As a result of the change in year-end from March 31 to December
31, the comparative period for the nine months ended December 31, 2011 is the
year ended March 31, 2011. Information for the year ended March 31, 2010 is
presented in accordance with Canadian GAAP, measured in Canadian dollars and was
not required to be restated to IFRS.

Earnings for the Company increased to $20.9 million for the
nine months ended December 31, 2011, compared to $6.6 million for the year ended
March 31, 2011 as a result of the following factors:

Gold price

The London PM Fix price of gold averaged $1,634 per ounce,
compared to $1,294 during the year ended March 31, 2011. This represents a 26%
increase year over year and is a significant contributing factor to the
increased revenues generated by the Company.

4

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

Metal revenues

The Company sold 56,777 gold ounces, compared to sales of
62,762 gold ounces during year ended March 31, 2011. The difference in gold
ounces sold over the comparative period is a result of the change in year-end,
which decreased the number of months in the current reporting period compared to
the year ended March 31, 2011. Total metal revenues from mining operations were
$90.8 million, compared to $83.1 million during the year ended March 31, 2011,
which is the result of realizing an average gold price per ounce of $1,599,
compared to $1,324 during the year ended March 31, 2011.

Cost of sales

Production costs form a component of cost of sales and were
$34.5 million, compared to $33.3 million during the year ended March 31, 2011.
This increase is attributed to a planned lower grade ore being extracted year
over year; additional replacement parts being installed to prepare for the
upcoming crusher expansions; additional cyanide consumption in the heap leach
process; added security presence at the Mine; and the industry wide increases in
key mining consumables prices due to global supply constraints and labour cost
increases due to the demand for mining professionals.

Depletion and depreciation costs form a component of cost of
sales and were $7.8 million, compared to $6.9 million during the year ended
March 31, 2011. The higher cost base of mineral properties, plant and equipment
on hand due to significant capital additions during the period, combined with
increased amortization relating to the site reclamation provision and long-term
demobilization costs were the main contributing factors to this increase.

Corporate and administrative expenses

Corporate and administrative costs were $11.9 million, compared
to $7.8 million during the year ended March 31, 2011. Share-based payment was
the significant driver of this increase as four million share options were
granted, compared to nil for the year ended March 31, 2011.Specifically,share-based payments increased to $5.4
million, compared to $0.7 million during the year ended March 31, 2011, which
resulted from the issuance and vesting of share options during the nine months
ended December 31, 2011 with higher fair values than those issued and vested
during the year ended March 31, 2011. Salaries also increased to $2.3 million,
compared to $0.9 million during the year ended March 31, 2011 as a result of
increased staff levels at the Canadian and Mexican offices. Offsetting these
increases are $nil asset write-down and $nil acquisition costs, compared to $1.4
million and $1.6 million, respectively, during the year ended March 31, 2011.

Finance expense

Finance expense decreased to $2.5 million, compared to $12.8
million during the year ended March 31, 2011, significantly due to the
replacement of the $15.0 million Gold Loan to Sprott Asset Management with a
C$18.0 million debt agreement with Sprott Resource Lending Partnership.
Specifically, the Gold Loan contained an embedded derivative (see Capital
Resources section below) which required revaluation each reporting period. The
increases in the London PM Fix prices from the inception of the Gold Loan up to
March 31, 2011 caused increased cash payments and substantial losses from the
revaluation of the embedded derivative. The smaller increases in the gold price
from April 1, 2011 to the refinancing date of June 1, 2011 resulted in a lower
loss on revaluation being incurred. The new debt agreement contains no such
embedded derivative, which has significantly reduced the finance expense year
over year, and carries a cash interest rate of 1% per month of its face value.

Loss on warrant liability

Loss on warrant liability decreased to $1.0 million, compared
to $3.7 million during the year ended March 31, 2011, due to the more consistent
share price of the Company on a year over year basis and fewer share purchase
warrants being outstanding during the nine months ended December 31, 2011. More
specifically, the share price increased from C$2.50 at April 1, 2011 to C$3.15
at September 22, 2011, compared to the increase from C$1.23 at April 1, 2010 to
C$2.50 at March 31, 2011. These factors are the significant inputs for the
Black-Scholes option pricing model, which was the model used to value the
2,000,000 Canadian dollar share purchase warrants. These share purchase warrants
were exercised on September 22, 2011.

5

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

Income tax expense

Income tax expense was $11.8 million, compared to $12.0 million
during the year ended March 31, 2011. This slight decrease was significantly due
to the deferred tax expense of $6.5 million, compared to $11.3 million during
the year ended March 31, 2011. During the year ended March 31, 2011, the Company
used up its loss carry forwards which were previously offsetting the Companys
deferred tax liability, and as a result was required to record the full deferred
tax liability at March 31, 2011 with the difference being recorded to deferred
tax expense. This decrease in deferred tax expense was partially offset by
increased current tax expense of $5.3 million resulting from increased
profitability of the Company, compared to $0.7 million during the year ended
March 31, 2011.

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

|                                           |  | Three      |  |  | Three      |  |  | Three      |  |  |            |  |  |            |  |  |            |   |  |            |   |  |              | 
|------------------------------------------ |  | ---------- |  |  | ---------- |  |  | ---------- |  |  | ---------- |  |  | ---------- |  |  | ---------- | - |  | ---------- | - |  | ------------ | 
|                                           |  | months     |  |  | months     |  |  | months     |  |  |            |  |  |            |  |  |            |   |  |            |   |  |              | 
|                                           |  | Dec. 31,   |  |  | Sept. 30,  |  |  | Jun. 30,   |  |  |            |  |  |            |  |  |            |   |  |            |   |  |              | 
|                                           |  | 2011       |  |  | 2011       |  |  | 2011       |  |  | Q4 2011    |  |  | Q3 2011    |  |  | Q2 2011    |   |  | Q1 2011    |   |  | Q4 2010      | 
|Accounting standard                        |  | IFRS       |  |  | IFRS       |  |  | IFRS       |  |  | IFRS       |  |  | IFRS       |  |  | IFRS       |   |  | IFRS       |   |  | CGAAP        | 
|Reporting currency                         |  | USD        |  |  | USD        |  |  | USD        |  |  | USD        |  |  | USD        |  |  | USD        |   |  | USD        |   |  | C$           | 
|                                           |  | Note 2     |  |  | Note 2     |  |  | Note 2     |  |  |            |  |  |            |  |  |            |   |  |            |   |  | Note 1       | 
|                                           |  |            |  |  |            |  |  |            |  |  |            |  |  |            |  |  |            |   |  |            |   |  |              | 
|Gold produced (oz)                         |  | 21,524     |  |  | 17,287     |  |  | 16,676     |  |  | 18,754     |  |  | 20,031     |  |  | 15,682     |   |  | 11,319     |   |  | 5,321        | 
|                                           |  |            |  |  |            |  |  |            |  |  |            |  |  |            |  |  |            |   |  |            |   |  |              | 
|Gold sold (oz)                             |  | 21,895     |  |  | 16,917     |  |  | 17,965     |  |  | 15,730     |  |  | 20,031     |  |  | 15,682     |   |  | 11,319     |   |  | 5,321        | 
|Average realized gold price ($/oz)         |  | 1,621      |  |  | 1,670      |  |  | 1,504      |  |  | 1,398      |  |  | 1,380      |  |  | 1,247      |   |  | 1,227      |   |  | N/A          | 
|Average gold price                         |  |            |  |  |            |  |  |            |  |  |            |  |  |            |  |  |            |   |  |            |   |  |              | 
|(London PM Fix) ($/oz)                     |  | 1,688      |  |  | 1,702      |  |  | 1,506      |  |  | 1,386      |  |  | 1,367      |  |  | 1,227      |   |  | 1,197      |   |  | 1,109        | 
|Cash cost per gold ounce
      ($/oz)      |  | 662        |  |  | 600        |  |  | 550        |  |  | 527        |  |  | 441        |  |  | 515        |   |  | 691        |   |  | Nil          | 
|                                           |  |            |  |  |            |  |  |            |  |  |            |  |  |            |  |  |            |   |  |            |   |  |              | 
|Metal revenues ($)                         |  | 35,495,049 |  |  | 28,248,994 |  |  | 27,024,636 |  |  | 21,992,953 |  |  | 27,642,118 |  |  | 19,562,230 |   |  | 13,883,127 |   |  | Nil          | 
|Profit from operations ($)                 |  | 15,793,428 |  |  | 10,333,849 |  |  | 10,448,724 |  |  | 7,595,775  |  |  | 15,851,248 |  |  | 7,897,971  |   |  | 3,781,417  |   |  | (2,413,925)  | 
|                                           |  |            |  |  |            |  |  |            |  |  |            |  |  |            |  |  |            |   |  |            |   |  |              | 
|Earnings (loss) ($)                        |  | 11,530,141 |  |  | 3,596,399  |  |  | 5,747,072  |  |  | 3,048,291  |  |  | 5,357,681  |  |  | (803,714   | ) |  | (1,011,768 | ) |  | (5,456,353)  | 
|Earnings (loss) per share,
      basic ($) |  | 0.08       |  |  | 0.03       |  |  | 0.04       |  |  | 0.03       |  |  | 0.04       |  |  | (0.01      | ) |  | (0.01      | ) |  | (0.04)       | 
|Earnings (loss) per share, diluted ($)     |  | 0.08       |  |  | 0.03       |  |  | 0.04       |  |  | 0.03       |  |  | 0.04       |  |  | (0.01      | ) |  | (0.01      | ) |  | (0.04)       | 
|Cash flows from operations
      ($)       |  | 10,741,740 |  |  | 7,262,371  |  |  | 6,025,776  |  |  | 14,184,790 |  |  | 15,273,994 |  |  | 4,563,735  |   |  | 4,975,742  |   |  | (13,082,573) | 
|Cash dividends declared ($)                |  | Nil        |  |  | Nil        |  |  | Nil        |  |  | Nil        |  |  | Nil        |  |  | Nil        |   |  | Nil        |   |  | Nil          | 

Note 1:Information for Q4 2010 and prior is
presented in accordance with Canadian GAAP, measured in Canadian dollars and was
not required to be restated to IFRS. Accordingly, the Company does not have
financial information to present prepared in accordance with IFRS.

Note 2: Due to the change in year-end from
March 31 to December 31 during the current period, there is no Q3 period for the
nine months ended December 31, 2011. Also, the previously reported Q1 2012 and
Q2 2012 periods have been renamed to three months June 30, 2011 and three
months September 30, 2011, respectively, so that the quarterly periods during
calendar 2012 can be named Q1 2012, Q2 2012, Q3 2012, and Q4 2012.

6

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

Metal revenues generally trended higher over the past eight
quarters as the Company has benefited from rising gold prices. Higher realized
gold prices and gold sales have resulted in generally improved financial
results.

Three months ended December 31, 2011
results

Gold price

The Company has continued to benefit from record gold prices
during the current period. The Companys performance is largely dependent on the
price of gold as it can directly impact the Companys profitability and cash
flow. The price of gold is subject to volatile price movements during short
periods of time and is affected by numerous factors such as the strength of the
US dollar, supply and demand, interest and inflation rates and geopolitical
risks, all of which are beyond the Companys control. The London PM Fix price of
gold averaged $1,688 per ounce, compared to $1,367 during the same prior year
period. The fluctuations in the daily London PM Fix prices were between $1,531
and $1,795 per ounce, compared to $1,314 and $1,421 during the same prior year
period.

Metal revenues

The Company sold 21,895 gold ounces, compared to sales of
20,031 gold ounces during the same prior year period. The increase in gold
ounces sold over the prior year is a result of the gradual ramp up of operations
at the Mine. Total metal revenues from mining operations were $35.5 million,
compared to $27.6 million during the same prior year period. The Company
realized an average gold price per ounce of $1,621, compared to $1,380 during
the same prior year period. The increase in ounces sold combined with record
quarterly gold prices realized attributed to the increase in metal revenues.

Cost of sales

Production costs were $14.5 million, compared to $8.8 million
during the same prior year period. This increase is attributed to a planned
lower grade ore being extracted year over year; additional replacement parts
being installed to prepare for the upcoming crusher expansions; additional
cyanide used in the heap leach process; added security presence at the Mine; and
the industry wide increases in key mining consumables prices due to global
supply constraints and labour cost increases due to the demand for mining
professionals. As a result of the cyanide supply constraint, during October,
2011, the Company was not able to apply the optimum solution flow of cyanide to
the heap leach pads (see San Francisco Gold Project - Operations Review section
below).

Depletion and depreciation costs form a component of cost of
sales and were $2.2 million, compared to $2.1 million during the same period
year period. The higher cost base of mineral properties, plant and equipment on
hand due to significant capital additions during the year, combined with
increased amortization relating to the site reclamation provision and long-term
demobilization costs were the main contributing factors to this increase.

Corporate and administrative expenses

Corporate and administrative costs were $3.0 million, compared
to $0.9 million during the same prior year period. Salaries expense along with
audit, legal and consulting work comprised the majority of corporate and
administrative expenses. Share-based payments also contributed to the increase
as the current period expense was $0.9 million, compared to $0.1 million during
the same prior year period. This resulted from the issuance and vesting of share
options with higher fair values than those issued and vested during the same
prior year period.

Finance expense

Finance expense decreased to $0.8 million, compared to $4.0
million during the same prior year period, significantly due to the replacement
of the $15.0 million Gold Loan to Sprott Asset Management with a C$18.0 million
debt agreement with Sprott Resource Lending Partnership. Specifically, the Gold
Loan contained an embedded derivative (see Capital Resources section below)
which required revaluation each reporting period. The increases in the London PM
Fix prices during the term of the Gold Loan caused substantial losses from the
revaluation of the embedded derivative. The new debt agreement contains no such
embedded derivative, which has reduced the finance expense year over year.

7

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

Loss on warrant liability

Loss on warrant liability decreased to $nil, compared to $1.0
million during the same prior year period, due to the underlying share purchase
warrants being exercised during the September, 2011.

Income tax expense

Income tax expense was $1.8 million, compared to $5.0 million
during the same prior year period. This decrease was significantly due to
deferred tax expense being incurred of $1.2 million, compared to $5.3 million
during the same prior year period. During the year ended March 31, 2011, the
Company used up its loss carry forwards which were previously offsetting the
Companys deferred tax liability, and as a result was required to record the
full deferred tax liability at March 31, 2011 with the difference being recorded
to deferred tax expense. For the three months ended December 31, 2010, the
Company recognized $5.3 million of this effect in deferred tax expense.

|SAN FRANCISCO
      GOLD PROJECT - OPERATIONS REVIEW
|----------------------------------------------------

The San Francisco Gold Project, 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 comprised of an open pit operation,
with crushing and heap leach processing facilities.

The Companys first year of operations in 2010 was a successful
transition from an advanced exploration and development company, to a junior
producer. Since commissioning the Mine, the Company has continued to ramp up
production, with increases in the average tonnes of ore processed per day
achieving record rates during the month of October, 2011 of 14,968 tonnes per
day. The Companys cash cost per ounce sold increased during the current period
to $662, compared to $441 during the same prior year period. The main factors
that contributed to this increase are the planned lower grade of ore being
extracted during the current period, additional cyanide solution being applied
to the heap leach pad, as well as industry wide supply issues of key consumables
used in the production of gold and labour cost increases due to the demand for
mining professionals.

The following is a summary of the Companys production
statistics:

Year endedThree months
      ended December 31
    
    
    Nine months
      ended December 31
    
    
    March 312011
    
    
    2010
    
    
    2011
    
    
    2010
    
    
    2011Ore processed (t)
    
    1,327,299
    
    
    1,208,678
    
    
    3,930,664
    
    
    3,204,742
    
    
    4,412,081Average ore processed grade (g/t Au)
    
    0.78
    
    
    0.94
    
    
    0.81
    
    
    0.84
    
    
    0.85Ore mined (dry tonnes)
    
    2,097,621
    
    
    1,208,678
    
    
    5,776,128
    
    
    3,204,742
    
    
    4,412,081Average ore mined grade (g/t Au)
    
    0.58
    
    
    0.94
    
    
    0.66
    
    
    0.84
    
    
    0.85Waste mined (t)
    
    4,160,488
    
    
    4,568,616
    
    
    13,496,919
    
    
    12,524,199
    
    
    17,621,131Total mined (t)
    
    6,258,109
    
    
    5,777,294
    
    
    19,273,047
    
    
    15,728,941
    
    
    22,033,212Strip ratio
    
    1.98
    
    
    3.70
    
    
    2.34
    
    
    3.91
    
    
    3.99Total days in period
    
    92
    
    
    92
    
    
    275
    
    
    275
    
    
    365Average ore processed per day
      (t/d)
    
    14,427
    
    
    13,138
    
    
    14,293
    
    
    11,654
    
    
    12,088Gold produced (oz)
    
    21,524
    
    
    20,031
    
    
    55,487
    
    
    47,032
    
    
    65,786


8

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

The Company produced 21,524 gold ounces and 11,664 silver
ounces during the current period, compared to 20,031 gold ounces and 10,699
silver ounces during the same prior year period. Total production for the nine
months ended December 31, 2011 was 55,487 gold ounces and 29,788 silver ounces,
compared to 47,032 gold ounces and 25,221 silver ounces during the same prior
year period, and 65,786 gold ounces and 33,874 silver ounces during the year
ended March 31, 2011.

During the three months ended September 30, 2011, the Company
was unable to apply the optimum solution flow of cyanide to the heap leach pads
due to an industry wide shortage of cyanide. The Company currently has a
sufficient supply of cyanide, and was able during the current period to increase
the concentration of cyanide and solution flow rates to the heap leach pads. The
Company engaged an independent third party consultant to review the Companys
leaching process. The consultant outlined several recommendations to assist in
the extraction of gold and silver, and the Company implemented these changes
during October, 2011.

The Company believes the improvements outlined will assist in
bringing recoveries closer to the metallurgical estimates outlined in previous
technical reports. The Company outlined the following solutions to rectify the
lower recoveries of gold and silver as follows:

- Increasing pumping capacity by 60% to match stacking rates of 18,000 t/d
  of ore;
- Increased pumping capacity will allow for the application of 10
  litres/hour/square meter (L/hr/m2) of irrigation compared to previous
  applications of 4-5 L/hr/m2;
- Increased irrigation capacity will allow for optimal leach cycle times of
  90 to 120 days, compared to previous leach time of 60 days;
- The Company has switched from top-stacking to retreat stacking which will
  allow for ore to be saturated quicker;
- An increase in the cyanide solution rate by 10% in order to achieve a
  minimum of 40 ppm in the return solution; and
- Construction of a cyanide and lime application method at various transfer
  points to achieve better saturation.

The Company has seen improvements in production rates during
the current period, and as a result, a portion of the production for the current
period was due to deferred gold production being realized. The Company expects
to see continued production improvements during 2012. Management is closely
monitoring the number of ounces in process on the heap leach pad, and will
evaluate formal re-leaching programs to further extract the accumulated ounces
in process in the event that the higher monthly recovery rates currently being
realized cease to continue.

The Company mined 6.3 million tonnes from the Mine during the
current period, compared to 5.8 million tonnes during the same prior year
period, an 8% increase. Dry tonnes of ore mined increased to 2.1 million tonnes
of ore during the current period from 1.2 million tonnes of ore during the same
prior year period; a 65% increase.

The Company has increased total tonnes mined quarter over
quarter through calendar 2010 and 2011, which led to a planned expansion of the
crushing facilities from 14,000 t/d to 18,000 t/d. The Company commissioned the
expansion in July, 2011 with successful testing through July and August, 2011.
The Company is currently installing a scalping system, which will sift out
material able to be placed directly on the heap leach pad and allow larger ore
fragments to be crushed. This will bring total crushing capacity to 25,000 t/d
and is expected to be commissioned in July, 2012. The total estimated capital
cost of this expansion is $2.2 million. Once the scalping system is installed,
crushing capacity is planned to be further increased to 32,000 t/d with the
installation of a portable crushing unit by January, 2013. The total estimated
capital cost of this expansion is $7.7 million, of which $3.7 million has
already been paid. The lower grade ore mined but not currently processed is
being stockpiled for future processing. The Company will continue to review
additional expansion opportunities in the future.

The average grade of ore mined from the Mine decreased during
the current period to 0.58 g/t Au, compared to 0.94 g/t Au for the same prior
year period. This decrease in average grade of ore mined is the result of the
recent drilling program of the Company whereby the ore body has been further
defined via the additional drill holes. While the additional drilling has
resulted in a more accurate ore grade which is lower than that of the prior NI
43-101 Technical Report, it is considered more homogenous. Additionally, as a
result of recent gold prices, low grade ore is being stockpiled as it is deemed
economic to process. Previously, the low grade ore was treated as waste. This
has had the effect of reducing the overall grade mined in comparison to prior
periods.

9

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

The average grade of ore processed has decreased to 0.78 g/t Au
in the current period, compared to 0.94 g/t Au for the same prior year period as
a result of management stockpiling the mined lower grade ore for processing upon
the completion of the 32,000 t/d crushing expansion. The average grade of ore
mined and ore processed during the nine months ended December 31, 2011 was 0.66
g/t Au and 0.81 g/t Au, respectively, compared to 0.84 g/t Au and 0.84 g/t Au,
respectively, for the year ended March 31, 2011.

This was due to ramping up of the grade placed on pads during
the six months ended September 30, 2011 and to the change in the mine model in
response to the new NI 43-101 Technical Report update.

The Company continued stripping activities at the Mine, with
the strip ratio higher than the estimated life of mine strip ratio of 1.73. The
Company expects the strip ratio to remain consistent with results in the current
period. During the current period, deferred stripping at the San Francisco Gold
Project represented a capital investment of $0.3 million, for a total of $6.0
million during the nine months ended December 31, 2011.

|SAN FRANCISCO
      GOLD PROJECT - RESOURCE REVIEW
|--------------------------------------------------

On September 20, 2011, the Company announced an updated NI
43-101 resource and reserve update prepared by MICON International, Ltd, 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.

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

|In pit reserves                 | Tonnes (000 t) | Grade (g/t Au) | Gold ounces
|------------------------------- | -------------- | -------------- | -----------
|Proven                          | 49,030         | 0.584          | 920,000    
|Probable                        | 23,361         | 0.546          | 410,000    
|Total proven and
      probable | 72,391         | 0.572          | 1,330,000  

Mineral reserves within the San Francisco pit design (June
30, 2011) at $1,100/oz gold price and after mining recovery and dilution.

|Resource classification            | Tonnes (000 t) | Grade (g/t Au) | Gold ounces
|---------------------------------- | -------------- | -------------- | -----------
|Measured mineral resource          | 58,010         | 0.610          | 1,131,000  
|Indicated mineral resource         | 23,787         | 0.580          | 444,000    
|Total measured and
      indicated | 81,797         | 0.600          | 1,575,000  
|Inferred mineral resource          | 93,202         | 0.450          | 1,351,000  

Mineral resource estimate for the San Francisco Gold Project
(inclusive of mineral reserves) (cut-off grade of 0.128 g/t Au, $1,200/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 1,005,000 ounces of gold.

|SAN FRANCISCO
      GOLD PROJECT - DEVELOPMENT REVIEW
|-----------------------------------------------------

The Companys budget for the next phase of exploration for the
San Francisco Gold Project is the result of the successful 2009-2011 drilling
program.

10

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

San Francisco open pit gold mine

The Company employed nine drill rigs at the Mine from July,
2011 to November, 2011 to complete 56,315 metres of drilling (225 holes), which
cost approximately $5.6 million. These metres are in addition to the 60,782
metres (441 holes) completed during January, 2011 to June, 2011, which cost
approximately $6.0 million and were included in the most recent NI 43-101
Technical Report Update filed on November 23, 2011. The 56,315 metres of
drilling are incorporated into the updated resource estimate, which was released
March 14, 2012.

The development program focused around the existing pit in a
zone 2 kilometres (km) east-west by 1 km north-south. The drill program
includes exploring below the currently planned pit bottom of 240 metres, using
reverse circulation drilling and core drilling for holes deeper than 250 metres
in depth. The returned assays indicate the mineralization is extending in
parallel mineral bodies up to 40 metres in width below the currently planned pit
bottom, and has shown mineralized zones at depths of 100 metres below the
currently planned pit bottom.

The current exploration below the planned pit bottom has
returned high grade intercepts, and supports the preliminary theory from the
Companys geological team, that the mineralized system may extend to greater
depths. This is consistent in mesothermal systems, which have significant
depth extent, and have the potential to yield high grade feeder systems at depth
and underscore the potential for further expansion of the long-term production
profile.

Results from deep core drilling underneath the planned pit
bottom were very encouraging. More specifically, a total of 117,044 metres of
drilling and a total of 666 holes were included in the drilling program from
January, 2011 to November, 2011, with the following highlights of meaningful
interceptions:

- TF-1280 intersected 4.57 metres of 11.932 g/t Au and 39.62 metres of 1.613
  g/t Au;
- TFD-90 intersected 4.50 metres of 2.219 g/t Au;
- TFD-80 intersected 1.50 metres of 3.097 g/t Au;
- TF-1246 intersected 12.19 metres of 1.031 g/t Au;
- TF-1279 intersected several intervals including 4.57 metres of 1.036 g/t
  Au, 4.57 metres of 1.89 g/t Au and 6.09 metres of 2.48 g/t Au;
- TF-1377 intersected 80.77 metres of 0.822 g/t Au, 1.52 metres of 3.547 g/t
  Au, 9.14 metres of 3.456 g/t Au, 3.05 metres of 2.075 g/t Au, and 1.52 metres
  of 52.66 g/t Au; and
- TF-1379 intersected 38.1 metres of 5.129 g/t Au; 1.52 metres of 25.42 g/t
  Au; 15.24 metres of 8.347 g/t Au; and 1.52 metres of 77.348 g/t Au.

The Company is focused on the continued development of the Mine
and has commenced an additional drilling program for 65,000 metres of reverse
circulation drilling at an approximate cost of $6.5 million as of March, 2012.
The results of this drill program will further define the ore body and be used
in a future resource update.

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

|In pit reserves                 | Tonnes (000 t) | Grade (g/t Au) | Gold ounces
|------------------------------- | -------------- | -------------- | -----------
|Proven                          | 42,850         | 0.604          | 831,000    
|Probable                        | 21,395         | 0.556          | 383,000    
|Total proven and
      probable | 64,245         | 0.588          | 1,214,000  

The total resource of the Mine is estimated to be:

|Resource classification            | Tonnes (000 t) | Grade (g/t Au) | Gold ounces
|---------------------------------- | -------------- | -------------- | -----------
|Measured mineral resource          | 46,614         | 0.630          | 949,000    
|Indicated mineral resource         | 22,482         | 0.590          | 426,000    
|Total measured and
      indicated | 69,096         | 0.620          | 1,375,000  
|Inferred mineral resource          | 79,456         | 0.450          | 1,156,000  

11

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

La Chicharra open pit gold mine

The Company has also commenced a new exploration program on the
La Chicharra open pit gold mine. La Chicharra is located 2 km west of the Mine.
Discovered by 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.

The most significant results obtained along the projection of
the La Chicharra mineral trend occurred in hole TFR-16 (see press release dated
May 13, 2010), located 500 metres to the south of the Mine and 1,200 metres to
the southeast of La Chicharra. This hole intercepted a mineral interval of 21
metres averaging 1.11 g/t Au, which included a 3 metre interval grading 5.28 g/t
Au. Four reverse circulation holes were drilled surrounding hole TFR-16 (TF-500,
501, 502 and 503). The assay results have been interpreted preliminarily as
confirmation of the south-eastern continuity of the La Chicharra mineral trend
for a further 1,400 metres from the existing La Chicharra open pit, or as
belonging to a parallel mineral system to the San Francisco deposit.

Drilling at La Chicharra commenced in June, 2011 and a total of
57,942 metres of reverse circulation drilling (286 holes) were completed by the
end of November, 2011. Drill results to date show similar grades and geological
characteristics to initial results obtained from the Mine in the late 1990s.
Results to date indicate the mineralized zone at La Chicharra extends down dip
from the existing open pit to a depth of 200 metres beneath the north wall, and
300 metres parallel from previously known gold mineralization.

Ongoing drilling continues to the northwest of the La Chicharra
prospect with the objective of testing mineralization along a strike length of
over 600 metres.

The Company is focused on the continued development of La
Chicharra and has commenced a drilling program for 35,000 metres of reverse
circulation drilling at an approximate cost of $3.5 million as of March, 2012.
The results of this drill program will further define the ore body and be used
in a future resource update.

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

|In pit reserves                 | Tonnes (000 t) | Grade (g/t Au) | Gold ounces
|------------------------------- | -------------- | -------------- | -----------
|Proven                          | 6,180          | 0.447          | 89,000     
|Probable                        | 1,966          | 0.439          | 27,000     
|Total proven and
      probable | 8,146          | 0.445          | 116,000    

The total resource of La Chicharra is estimated to be:

|Resource classification            | Tonnes (000 t) | Grade (g/t Au) | Gold ounces
|---------------------------------- | -------------- | -------------- | -----------
|Measured mineral resource          | 11,396         | 0.500          | 182,000    
|Indicated mineral resource         | 1,305          | 0.440          | 18,000     
|Total measured and
      indicated | 12,701         | 0.500          | 200,000    
|Inferred mineral resource          | 13,746         | 0.440          | 195,000    

12

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

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

San Onesimo

The signing of this property and the definition of at least
three specific exploration targets in the concessions owned by the Company in
the vicinity of the Peñasquito gold deposit is encouraging and the Company is
optimistic about the possible discovery of a new mineral deposit, which will
extend the operation of the Company to this region. The property is situated 16
km to the northeast of the Camino Rojo gold deposit and 45 km southeast of the
Peñasquito gold deposit.

During 2011, the Company completed preliminary exploration on
the La Noria and El Valle targets, consisting of MMI soil sampling followed by
magnetic and induced polarization surveys to define drill targets.

Timmins Claims

There are 5 mining concessions 100% owned by Timmins Goldcorp
Mexico, all within the region of Mazapil-Concepcion del Oro. This region is
located north of the state of Zacatecas, and has emerged over the last few year
as one of the most active mining exploration and development regions in Mexico
and all Latin America.

The objective is to demonstrate the presence of a gold
mineralized zone by way of soil and rock chip sampling. The Company has
commenced a systematic sampling program using MMI techniques in the southeast
portion of the Timmins 4 concession, which could be a justification for
geophysics and an initial drill program once a geochemical anomaly is
identified.

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. Results confirm the large tonnage, low gold
grade deposit, in order of 1 to 2 g/t Au with potential silver and
polymetallics.

Norma Property

The property is located 30 km northwest of the Mine. Three
targets were chosen for initial drilling. On the north target, the Company
completed 2,090 metres of reverse circulation drilling, distributed in 16 drill
holes along 2,000 metres of gold anomalous outcrops. Gold and silver values
hosted in veins, veinlets and breccia were intercepted by the drill holes,
mainly in close contact to the sandstones and siltstones with dikes of
monzonite.

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
includes geological mapping, sampling and compilation of the exploration works
done by previous exploration companies on the property. On this basis, a drill
program commenced in February, 2012. As of the date of this MD&A, a total of
1,478 metres have been drilled.

La Mexicana Property

The La Mexicana target is located only 6.5 km north of the
Mine. Mapping and sampling was done 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
returned assays include gold values as high as 28.908 g/t Au, in general showing
consistency along of the underground works.

In the trenches to the northeast of La Mexicana, the results of
the assays were within the range to be an exploration target for drilling. The
assay varies from 0.1 to 1.3 g/t Au. On this basis, a formal drill program is
pending; however, 16 holes were drilled in October, 2011 and November, 2011 for
a total of 2,669 metres to assist in further assessing the La Mexicana
exploration potential.

13

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

La Pima Property

The La Pima target consists of an outcrop on the large La Pima
claim and beyond that in a series northeast trending limestone ridges in the
southwest part of the claim, 25 km northwest of the Mine and 13 km west of the
Santa Ana town. The Company will decide shortly on the next stage of
exploration.

El Capomo

This target is located in the south of the state of Nayarit and
consists of six concessions covering more than 47,500 hectares. Prospecting work
done on the property has identified favourable geology for mineral discoveries
in at least five locations; the most significant is a series of quartz veins and
quartz outcrops along 1,200 metres with widths varying from 0.70 metres to 3
metres with gold and silver grades varying from 0.28 to 3.45 g/t Au and 15 to
240 g/t silver.

|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, 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 on hand at
December 31, 2011 of $9.9 million.

During calendar 2011, the Company reinvested and will continue
to reinvest funds generated from operations into the continued development, and
exploration at the San Francisco Gold Project. Cash flow provided by operating
activities will vary depending on the prices of gold, fluctuations in the
Mexican peso value, total production and the extent of expenditure on mine
development and other capital projects 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 San Francisco Gold Project.

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

Less than
    
    
    
    
    
    
    
    
    Greater than 5Total
    
    
    1 year
    
    
    1 - 3 years
    
    
    3 - 5 years
    
    
    yearsTrade payables and accrued
      liabilities
    $
    15,884,416
    
    $
    15,884,416
    
    $
    -
    
    $
    -
    
    $
    -Vendor loan
    
    1,725,000
    
    
    1,725,000
    
    
    -
    
    
    -
    
    
    -Long-term debt
    
    17,245,442
    
    
    17,245,442
    
    
    -
    
    
    -
    
    
    -Other long-term liabilities (1)
    
    1,233,392
    
    
    -
    
    
    1,233,392
    
    
    -
    
    
    -Future operating commitments
      (2)
    
    41,493,117
    
    
    30,774,291
    
    
    10,718,826
    
    
    -
    
    
    -Provision for site reclamation and closure (3)
    
    2,203,925
    
    
    -
    
    
    -
    
    
    -
    
    
    2,203,925$
    79,785,292
    
    $
    65,629,149
    
    $
    11,952,218
    
    $
    -
    
    $
    2,203,925


| | (1) | Other long term liabilities represents the non-discounted
      amount of the demobilization costs (see Note 21 of the consolidated
      financial statements).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

14

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

| | (2) | The future operating commitments of the Company are
      significantly due to the mining contract with Peal de Mexico, S.A. de C.V.
      (Peal). The Peal contract covers substantially all mining services at a
      cost of $1.64 (plus VAT) per tonne of material mined. As the total tonnes
      mined during the current period were 6.3 million, this mining service
      contract is the most significant component of the Companys commitments.
      The Peal commitment is based on the forecasted minimum tonnage 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. Another significant
      component of the future operating commitments of the Company is the
      mineral property obligations with regards to payments going to El Picacho,
      San Onesimo and Quila exploration properties at various dates until
      January, 2015.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (3) | Provision for site reclamation and closure represents the
      non-discounted amount of the stimated cash flows required to settle the
      retirement obligations of the San Francisco Property (see Note 11 of the
      consolidated financial statements).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

Management believes that the working capital at December 31,
2011, together with future cash flows from operations and available funding
facilities, is sufficient to support the Companys commitments for the next
twelve months.

Cash flow

|                                                               | Nine months ended | Year ended    
|-------------------------------------------------------------- | ----------------- | --------------
|                                                               | December 31, 2011 | March 31, 2011
|Cash flow provided by operating activities
      ($)           | 24,029,887        | 42,743,992    
|Cash flow used in investing activities ($)                     | 27,365,994        | 30,956,501    
|Cash flow provided by (used in) financing
      activities ($) | 7,631,460         | (9,066,318)   

Cash flow from operating activities for the nine months ended
December 31, 2011 was $24.0 million, compared to $42.7 million for the year
ended March 31, 2011. This decrease was primarily due to the increases in trade
and other receivables, inventories, advances and prepaid expenses, and trade
payables by $5.2 million, $16.6 million, $2.2 million, and $1.6 million,
respectively. The increase in net income before income tax expense of $32.7
million, compared to $18.6 million during the year ended March 31, 2011 was
significantly offset by the decreases in finance expense and loss on warrant
liability to $2.5 million and $1.0 million, respectively, during the nine months
ended December 31, 2011, compared to $12.8 million and $3.6 million,
respectively, during the year ended March 31, 2011. The change in cash flow from
operating activities for the nine months ended December 31, 2011 was also
impacted by the increase in share-based payments of $5.4 million, compared to
$0.7 million during the year ended March 31, 2011. Finance expenses and income
taxes were also paid for $1.3 million and $2.0 million, respectively, during the
nine months ended December 31, 2011, compared to $nil and $nil, respectively,
during the year ended March 31, 2011.

Cash flow used in investing activities for the nine months
ended December 31, 2011 was $27.4 million, compared to $31.0 million for the
year ended March 31, 2011 significantly as a result of expenditures on mineral
properties, plant and equipment. Capital expenditures for the nine months ended
December 31, 2011 were similar to those of the year ended March 31, 2011, and an
amount of restricted cash was released to the Company in July, 2011 which
reduced total cash flow used in investing activities by $1.8 million.

Cash flow from financing activities for the nine months ended
December 31, 2011 was $7.6 million, compared to cash flow used of $9.1 million
for the year ended March 31, 2011. This change is significantly due to the
proceeds of long-term debt of $18.2 million, compared to $nil during the year
ended March 31, 2011. Also, the amount of repayment towards long-term debt
decreased to $12.6 million during the nine months ended December 31, 2011,
compared to $15.6 million during the year ended March 31, 2011. Cash flow from
shares issued for cash decreased to $2.0 million during the nine months ended
December 31, 2011, compared to $6.5 million during the year ended March 31, 2011
as a result of fewer share purchase warrants and share options being exercised
during the current period.

At the San Francisco Gold Project, a significant portion of the
operating and capital expenditures are denominated in Mexican pesos, while a
significant amount of head office costs in Canada are denominated in Canadian
dollars. Fluctuations in these currencies can have an impact on the Companys
costs. During the current period, the Mexican peso averaged 13.64 Mexican pesos
to $1, and C$1.02 to $1. The Company does not manage foreign currency exposure
through the use of forward contracts.

15

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

Capital resources

The capital of the Company consists of the items included in
the consolidated equity and long-term debt, net of cash.

|                                  |   | December 31, |   |   | March 31,  |   |   | April 1,   |  
|--------------------------------- | - | ------------ | - | - | ---------- | - | - | ---------- | -
|                                  |   | 2011         |   |   | 2011       |   |   | 2010       |  
|Equity                            | $ | 101,599,965  |   | $ | 68,147,642 |   | $ | 54,196,535 |  
|Current portion of long-term debt |   | 17,245,442   |   |   | 12,038,469 |   |   | 7,985,273  |  
|Long-term debt                    |   | -            |   |   | -          |   |   | 7,475,075  |  
|                                  |   | 118,845,407  |   |   | 80,186,111 |   |   | 69,656,883 |  
|Less: Cash                        |   | (9,865,007   | ) |   | (5,639,859 | ) |   | (2,674,764 | )
|                                  | $ | 108,980,400  |   | $ | 74,546,252 |   | $ | 66,982,119 |  

At December 31, 2011, 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 $109.0
million from $74.5 million at March 31, 2011 due to the increased profitability
of the Company and the refinancing of long-term debt. In June, 2011, the Company
restructured and replaced its previously outstanding Gold Loan with Sprott Asset
Management LP with a C$18.0 million debt agreement with Sprott Resource Lending
Partnership. The new debt agreement allowed the Company to repay the then
existing requirement to deliver the cash equivalent of 8,335 ounces of gold and
provided a further C$5.6 million in working capital. The new debt agreement
provides for a lump sum payment of principal on maturity in July, 2012, with
interest paid at the rate of 1% per month. The loan is secured by among other
things, a first charge on the assets of Molimentales del Noroeste, SA de CV.
Management is currently evaluating its financing alternatives upon maturity of
the debt agreement.

As a result of the indexation of the principal repayments to
the movement in the price of gold, the Company has determined that the Gold Loan
with Sprott Asset Management LP contained a derivative which is embedded in the
US dollar denominated debt instrument (the Embedded Derivative). This Embedded
Derivative was originally the equivalent of a series of 12 gold forward
contracts maturing on each of the principal dates. As a result, the value of the
loan was revalued each period to recognize the change in value of the derivative
with changes in the value being recorded as interest expense. In addition, the
debt discount is amortized using the effective interest method to each of the
scheduled principal payment dates.

The replacement debt agreement with Sprott Resource Lending
Partnership LP does not include an embedded derivative as a result of the
repayment terms not requiring a calculation associated with the price of
gold.

Dividends

No dividends were declared or paid during the nine months ended
December 31, 2011.

Outstanding share data

The total number of outstanding common shares and share options
at March 28, 2012 are 141,731,127 and 7,435,000, respectively.

|NON-GAAP
      MEASURES
|-----------------------

Cash cost per gold ounce

Cash cost per gold ounce is a non-GAAP performance measure that
management uses to better assess the Companys performance for the current
period and its expected performance in the future. The Company believes that, in
addition to conventional measures prepared in accordance with GAAP, certain
investors use this measure to evaluate the Companys performance and cash
generating capabilities.

16

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

Cash cost per gold ounce is calculated by dividing all of the
costs absorbed into inventory, excluding depletion, depreciation and
amortization, by applicable ounces sold.

The following provides a reconciliation of cash cost per gold
ounce to the consolidated financial statements:

Year endedThree months
      ended December 31
    
    
    Nine months
      ended December 31
    
    
    March 312011
    
    
    2011
    
    
    2011
    
    
    2010
    
    
    2011Production costs
    $
    14,496,814
    
    $
    8,831,925
    
    $
    34,535,248
    
    $
    24,734,932
    
    $
    33,257,616Divided by gold sold (oz)
    
    21,895
    
    
    20,031
    
    
    56,777
    
    
    47,032
    
    
    62,762$
    662
    
    $
    441
    
    $
    608
    
    $
    526
    
    $
    530


For further details on the calculation of production costs,
refer to Note 5 of the consolidated financial statements. In the gold industry,
cash cost per gold ounce is a common performance measure but does not have any
standardized meaning prescribed by GAAP, and should not be considered in
isolation of or as a substitute for performance measures prepared in accordance
with GAAP. This measure is not necessarily indicative of operating profit or
cash flow from operations as determined under GAAP. Other companies may
calculate this measure differently.

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

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

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

The Company has prepared its consolidated financial statements
in accordance with IFRS as issued by the IASB. IFRS represents standards and
interpretations approved by the IASB and are comprised of IFRS, International
Accounting Standards (IASs), and interpretations issued by the IFRS
Interpretations committee (IFRICs) and the former Standing Interpretations
Committee (SICs). The Company has restated its previously reported financial
statements under Canadian GAAP to reflect the adoption of IFRS in accordance
with IFRS 1 - First-time adoptions of International Financial Reporting
Standards, effective April 1, 2011 with a transition date of April 1, 2010
and the Companys consolidated financial statements have been prepared in
accordance with IFRS standards and interpretations effective at December 31,
2011. For further information on the Companys significant accounting policies
under IFRS, refer to Note 3 of the consolidated financial statements.

There were no changes to the accounting policies applied by the
Company to each of the unaudited condensed consolidated interim financial
statements, to those applied by the Company to the consolidated financial
statements for the nine months ended December 31, 2011.

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

The preparation of the Companys consolidated financial
statements in conformity with IFRS requires management to make critical
judgements, estimates and assumptions 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 judgments about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results could differ from those
estimates as the estimation process is inherently uncertain. The estimates and
underlying assumptions are reviewed on an on-going basis. Revisions to
accounting estimates are recognized in the period in which the estimate is
revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both current and future
periods.

Management has made the following critical judgements and
estimates:

17

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

Critical judgments 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.

Operating levels intended by management

Prior to reaching operating levels intended by management,
costs incurred are capitalized as part of the costs of related mining
properties.

Any proceeds generated from incidental metal sales prior to
reaching the intended operating levels are offset against the costs capitalized;
depletion of such capitalized costs commences upon reaching the intended
operating levels. The consolidated statement of earnings and comprehensive
income has been impacted by managements determination that the San Francisco
Mine reached the intended operating levels on April 1, 2010.

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. These assessments require the use of estimates and assumptions such as
long-term commodity prices, discount rates, future capital requirements,
exploration potential and operating performance.

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 judgments 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 judgments 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,
depletion and amortization.

18

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

Depreciation, depletion and amortization

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

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, 2011, the carrying amount of stripping costs capitalized was $21.3
million.

Inventories

Expenditures incurred, and depreciation, depletion and
amortization 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 net realizable value
(NRV) and subject to significant measurement uncertainty.

Write-downs of ore in stockpiles, 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, depletion and amortization
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 stockpiles, ore in process,
and finished metal inventory and the determination of NRV involve the use of
estimates. There is a high degree of judgment 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.

19

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

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 judgment 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.

The estimates of a future site reclamation and closure
provision are subject to change based on amendments to applicable laws and
legislation. Future changes in site reclamation and closure provisions, if any,
could have a significant impact and would be reflected prospectively, as a
change in accounting estimate.

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.

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 profit or loss 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.

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

A number of new standards, and amendments to standards and
interpretations, are not yet effective for the nine months ended December 31,
2011, and have not been applied in preparing the consolidated financial
statements. Those that are expected to be applicable to the consolidated
financial statements of the Company are discussed below.

20

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

Accounting standards effective January 1,
2012

Financial instruments disclosure

In October, 2010, the IASB issued amendments to IFRS 7 -
Financial Instruments: Disclosures that improve the disclosure
requirements in relation to transferred financial assets. The amendments are
effective for annual periods beginning on or after July 1, 2011, with earlier
adoption permitted.

The Company does not anticipate this amendment to have a
material impact on its consolidated financial statements.

Income taxes

In December, 2010, the IASB issued an amendment to IAS 12 -
Income Taxes that provides a practical solution to determining the
recovery of investment properties as it relates to the accounting for deferred
income taxes. This amendment is effective for annual periods beginning on or
after January 1, 2012, with earlier adoption permitted.

The Company does not anticipate this amendment to have a
material impact on its consolidated financial statements.

Accounting standards effective January 1,
2013

Consolidation

In May, 2011, the IASB issued IFRS 10 - Consolidated
Financial Statements, which supersedes SIC 12 - Consolidation - Special
Purpose Entities and the requirements relating to consolidated financial
statements in IAS 27 - Consolidated and Separate Financial Statements.
IFRS 10 is effective for annual periods beginning on or after January 1, 2013,
with earlier adoption permitted under certain circumstances. IFRS 10 establishes
control as the basis for an investor to consolidate its investees; and defines
control as an investors power over an investee with exposure, or rights, to
variable returns from the investee and the ability to affect the investors
returns through its power over the investee.

In addition, the IASB issued IFRS 12 - Disclosure of
Interests in Other Entities, which combines and enhances the disclosure
requirements for the Companys subsidiaries, joint arrangements, associates and
unconsolidated structured entities. The requirements of IFRS 12 include
reporting of the nature of risks associated with the Companys interests in
other entities, and the effects of those interests on the Companys consolidated
financial statements.

The Company is currently evaluating the impact that the above
standards are expected to have on its consolidated financial statements.

Joint arrangements

In May, 2011, the IASB issued IFRS 11 - Joint
Arrangements which supersedes IAS 31 - Interests in Joint Ventures
and SIC 13 - Jointly Controlled Entities - Non-Monetary Contributions by
Venturers. IFRS 11 is effective for annual periods beginning on or after
January 1, 2013, with earlier adoption permitted under certain circumstances.
Under IFRS 11, joint arrangements are classified as joint operations or joint
ventures based on the rights and obligations of the parties to the joint
arrangements. A joint operation is a joint arrangement whereby the parties that
have joint control of the arrangement (joint operators) have rights to the
assets, and obligations for the liabilities, relating to the arrangement. A
joint venture is a joint arrangement whereby the parties that have joint control
of the arrangement (joint venturers) have rights to the net assets of the
arrangement. IFRS 11 requires that a joint operator recognize its portion of
assets, liabilities, revenues and expenses of a joint arrangement, while a joint
venturer recognizes its investment in a joint arrangement using the equity
method.

The Company does not anticipate this amendment to have a
material impact on its consolidated financial statements.

21

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

Fair value measurement

In May, 2011, as a result of the convergence project undertaken
by the IASB and the US Financial Accounting Standards Board to develop common
requirements for defining and measuring fair value and for disclosing
information about fair value measurements, the IASB issued IFRS 13 - Fair
Value Measurement. IFRS 13 is effective for annual periods beginning on or
after January 1, 2013, with earlier adoption permitted. IFRS 13 defines fair
value and sets out a single framework for measuring fair value which is
applicable to all IFRSs that require or permit fair value measurements or
disclosures about fair value measurements. IFRS 13 requires that when using a
valuation technique to measure fair value, the use of relevant observable inputs
should be maximized while unobservable inputs should be minimized.

The Company does not anticipate this amendment to have a
material impact on its consolidated financial statements.

Financial statement presentation

In June, 2011, the IASB issued amendments to IAS 1 -
Presentation of Financial Statements that require an entity to group
items presented in the statement of comprehensive income on the basis of whether
they may be reclassified to earnings subsequent to initial recognition. For
those items presented before taxes, the amendments to IAS 1 also require that
the taxes related to the two separate groups be presented separately. The
amendments are effective for annual periods beginning on or after July 1, 2012,
with earlier adoption permitted.

The Company does not anticipate this amendment to have a
material impact on its consolidated financial statements.

Stripping costs in the production phase of a surface mine

In October, 2011, the IASB issued IFRIC 20 - Stripping Costs
in the Production Phase of a Surface Mine. IFRIC 20 clarifies the
requirements for accounting for the costs of stripping activity in the
production phase when two benefits accrue: (i) usable ore that can be used to
produce inventory; and (ii) improved access to further quantities of material
that will be mined in future periods. IFRIC 20 is effective for annual periods
beginning on or after January 1, 2013, with earlier adoption permitted and
includes guidance on transition for pre-existing stripping assets.

The Company is currently evaluating the impact the new guidance
is expected to have on its consolidated financial statements.

Accounting standards effective January 1,
2015

Financial instruments

The IASB intends to replace IAS 39 - Financial Instruments:
Recognition and Measurement in its entirety with IFRS 9 - Financial
Instruments in three main phases. IFRS 9 will be the new standard for the
financial reporting of financial instruments that is principles-based and less
complex than IAS 39. In November, 2009 and October, 2010, phase one of IFRS 9
was issued and amended, respectively, which addressed the classification and
measurement of financial assets and financial liabilities. IFRS 9 requires that
all financial assets be classified and subsequently measured at amortized cost
or at fair value based on the Companys business model for managing financial
assets and the contractual cash flow characteristics of the financial assets.
Financial liabilities are classified and subsequently measured at amortized cost
except for financial liabilities classified as fair value through profit or
loss, financial guarantees and certain other exceptions. In response to delays
to the completion of the remaining phases of the project, on December 16, 2011,
the IASB issued amendments to IFRS 9 which deferred the mandatory effective date
of IFRS 9 from January 1, 2013 to annual periods beginning on or after January
1, 2015. The amendments also provided relief from the requirement to restate
comparative financial statements for the effects of applying IFRS 9.

The Company is currently evaluating the impact the final
standard is expected to have on its consolidated financial statements.

22

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

|TRANSITION TO
      INTERNATIONAL FINANCIAL REPORTING STANDARDS
|---------------------------------------------------------------

On January 1, 2011, the Canadian Accounting Standards Board
replaced Canadian GAAP with IFRS for publicly accountable enterprises, with a
transition date of January 1, 2010. IFRS represents standards and
interpretations approved by the IASB and are comprised of IFRSs, IASs, and
interpretations issued by the IFRIC or the former SIC.

The Company implemented its conversion from Canadian GAAP to
IFRS through a transition plan that involved several detailed steps including:
scoping and planning, detailed assessment, implementation; and post
implementation. All steps were completed by June 30, 2011. The post
implementation procedures involve the maintenance of sustainable IFRS compliant
financial data and processes for the period from April 1, 2011 to December 31,
2011 and beyond.

Management did not encounter any significant issues during the
reporting process for the Companys 2011 quarterly and nine months ended
December 31, 2011 consolidated financial statements.

The conversion from Canadian GAAP to IFRS as a primary basis
for preparing the Companys consolidated financial statements has resulted in
(a) changes in the Companys accounting policies; (b) changes to the Companys
financial reporting process and systems; (c) incremental controls relating to
the conversion and the design, implementation and testing of changes to the
Companys financial reporting process and systems; and (d) additional financial
expertise and training requirements. The conversion did not have any significant
impact on the Companys financial covenants, key financial performance ratios or
compensation plans.

The Companys consolidated financial statements as at and for
the nine months ended December 31, 2011 have been prepared in accordance with
existing IFRS standards with restatements of the comparative consolidated
statements of financial position at April 1, 2010 and March 31, 2011 and
consolidated statements of earnings and comprehensive income and cash flows for
the year ended March 31, 2011 as previously reported and prepared in accordance
with Canadian GAAP.

The following tables reconcile the Companys consolidated
statements of financial position, earnings and comprehensive income and cash
flows prepared in accordance with Canadian GAAP and as previously reported, to
those prepared and reported in the Companys consolidated financial statements
in accordance with IFRS:

23

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

Condensed consolidated statement of earnings and
comprehensive income

For the year ended March 31, 2011Canadian GAAP
    
    
    Translated to
    
    
    IFRSNote
    
    
    in C$
    
    
    US dollar
    
    
    adjustment
    
    
    IFRSGross profit
    
    
    
    
    43,466,198
    
    
    42,887,465
    
    
    -
    
    
    42,887,465Corporate and administrative expenses
    
    e)
    
    
    8,359,814
    
    
    8,323,028
    
    
    (561,974
    )
    
    7,761,054Profit from operations
    
    
    
    
    35,106,384
    
    
    34,564,437
    
    
    561,974
    
    
    35,126,411Other income, net
    
    
    
    
    20,036
    
    
    19,498
    
    
    -
    
    
    19,498Finance expense
    
    d),f),g)
    
    
    (12,604,760
    )
    
    (12,362,246
    )
    
    (448,184
    )
    
    (12,810,430
    )Loss on warrant liability
    
    c)
    
    
    -
    
    
    -
    
    
    (3,677,544
    )
    
    (3,677,544
    )Foreign exchange gain (loss)
    
    b)
    
    
    611,968
    
    
    620,846
    
    
    (667,336
    )
    
    (46,490
    )Profit before income tax
    
    
    
    
    23,133,628
    
    
    22,842,535
    
    
    (4,231,090
    )
    
    18,611,445Income tax expenseCurrent income tax
    
    
    
    
    659,047
    
    
    678,777
    
    
    -
    
    
    678,777Deferred income tax
    
    h)
    
    
    11,010,527
    
    
    10,821,947
    
    
    520,231
    
    
    11,342,17811,669,574
    
    
    11,500,724
    
    
    520,231
    
    
    12,020,955Earnings for the year
    
    
    
    
    11,464,054
    
    
    11,341,811
    
    
    (4,751,321
    )
    
    6,590,490Exchange differences on translating foreign operations, net of tax
    
    a)
    
    
    -
    
    
    2,868,674
    
    
    (2,868,674
    )
    
    -Total comprehensive income
    
    
    
    $
    11,464,054
    
    $
    14,210,485
    
    $
    (7,619,995
    )
    $
    6,590,490


24

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

Condensed consolidated statement of cash flows

For the year ended March 31, 2011Canadian GAAP
    
    
    Translated to
    
    
    IFRSNote
    
    
    in C$
    
    
    US dollar
    
    
    adjustment
    
    
    IFRSOPERATING ACTIVITIESProfit before income tax
    
    
    
    $
    23,133,628
    
    $
    22,842,535
    
    $
    (4,231,090
    )
    $
    18,611,445Items not affecting cash:Depletion and
      depreciation
    
    
    
    
    7,063,281
    
    
    6,935,347
    
    
    -
    
    
    6,935,347Finance
      expense
    
    
    
    
    12,542,177
    
    
    12,335,356
    
    
    475,074
    
    
    12,810,430Loss on warrant liability
    
    c)
    
    
    -
    
    
    -
    
    
    3,677,544
    
    
    3,677,544Share-based payments
    
    e)
    
    
    1,290,473
    
    
    1,249,902
    
    
    (561,974
    )
    
    687,928Foreign exchange (gain)
      loss
    
    b)
    
    
    (560,239
    )
    
    (573,215
    )
    
    640,446
    
    
    67,231Asset
      write-down
    
    
    
    
    1,338,978
    
    
    1,358,403
    
    
    -
    
    
    1,358,403Changes in non-cash working capital items
    
    
    
    
    (1,427,882
    )
    
    (1,404,336
    )
    
    -
    
    
    (1,404,336
    )Cash flows provided by operating activities
    
    
    
    
    43,380,416
    
    
    42,743,992
    
    
    -
    
    
    42,743,992INVESTING ACTIVITIESCash
      flows used in investing activities
    
    
    
    
    (31,396,124
    )
    
    (30,956,501
    )
    
    -
    
    
    (30,956,501
    )FINANCING ACTIVITIESCash flows used in financing activities
    
    
    
    
    (9,198,277
    )
    
    (9,066,318
    )
    
    -
    
    
    (9,066,318
    )Effects of exchange rate
      changes on the balance of cash held in foreign currencies
    
    
    
    
    -
    
    
    243,922
    
    
    -
    
    
    243,922Increase in cash
    
    
    
    
    2,786,015
    
    
    2,965,095
    
    
    -
    
    
    2,965,095Cash, beginning of period
    
    
    
    
    2,694,825
    
    
    2,674,764
    
    
    -
    
    
    2,674,764Cash, end of period
    
    
    
    $
    5,480,840
    
    $
    5,639,859
    
    $
    -
    
    $
    5,639,859


25

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

Condensed consolidated statements of financial position

At April 1, 2010Canadian GAAP
    
    
    Translated to
    
    
    IFRSNote
    
    
    in C$
    
    
    US dollar
    
    
    adjustment
    
    
    IFRSASSETSCurrent assets
    
    b)
    
    $
    16,182,922
    
    $
    16,062,453
    
    $
    -
    
    $
    16,062,453Non-current assets
    
    b),f),g)
    
    
    66,096,360
    
    
    65,604,327
    
    
    310,223
    
    
    65,914,550Total assets
    
    
    
    
    82,279,282
    
    
    81,666,780
    
    
    310,223
    
    
    81,977,003LIABILITIESCurrent liabilities
    
    
    
    
    14,207,105
    
    
    14,081,311
    
    
    -
    
    
    14,081,311Non-current liabilities
    
    b),f),h)
    
    
    14,020,596
    
    
    13,916,225
    
    
    (217,068
    )
    
    13,699,157Total liabilities
    
    
    
    
    28,227,701
    
    
    27,997,536
    
    
    (217,068
    )
    
    27,780,468EQUITYTotal equity
    
    b),c),d),e)
    
    
    54,051,581
    
    
    53,669,244
    
    
    527,291
    
    
    54,196,535Total liabilities and equity
    
    
    
    $
    82,279,282
    
    $
    81,666,780
    
    $
    310,223
    
    $
    81,977,003At March 31, 2011Canadian GAAP
    
    
    Translated to
    
    
    IFRSNote
    
    
    in C$
    
    
    US dollar
    
    
    adjustment
    
    
    IFRSASSETSCurrent assets
    
    b)
    
    $
    26,179,700
    
    $
    26,939,354
    
    $
    (432,733
    )
    $
    26,506,621Non-current assets
    
    b),f),g)
    
    
    87,495,140
    
    
    90,034,101
    
    
    (2,831,066
    )
    
    87,203,035Total assets
    
    
    
    
    113,674,840
    
    
    116,973,455
    
    $
    (3,263,799
    )
    
    113,709,656LIABILITIESCurrent liabilities
    
    g)
    
    
    10,913,716
    
    
    11,234,290
    
    
    15,590,200
    
    
    26,824,490Non-current liabilities
    
    b),f),g),h)
    
    
    29,214,892
    
    
    30,062,658
    
    
    (11,325,134
    )
    
    18,737,524Total liabilities
    
    
    
    
    40,128,608
    
    
    41,296,948
    
    
    4,265,066
    
    
    45,562,014EQUITYTotal equity
    
    b),c),d),e)
    
    
    73,546,232
    
    
    75,676,507
    
    
    (7,528,865
    )
    
    68,147,642Total liabilities and equity
    
    
    
    $
    113,674,840
    
    $
    116,973,455
    
    $
    (3,263,799
    )
    $
    113,709,656


26

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

|a) | Change in presentation currency                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company has changed its presentation currency from
      the Canadian dollar to the US dollar. Prior to performing the required
      reconciliations of the impact of adoption of IFRS, the Companys
      previously published consolidated financial statements (in accordance with
      Canadian GAAP) have been recast using methods consistent with IAS 21 -
      The Effects of Changes in Foreign Exchange Rates. Assets and
      liabilities have been recast to US dollars using period end exchange
      rates. Revenues, expenses, gains and losses have been recast into US
      dollars using the rate in effect on the date of the transaction or the
      average rate for the period. The effect of making these changes resulted
      in the recognition of an accumulated foreign currency translation reserve
      within equity of $3.8 million and $6.7 million at April 1, 2010 and March
      31, 2011, respectively, and $2.9 million for the year ended March 31,
      2011. The Company has elected to apply the IFRS 1 exemption and has deemed
      all cumulative translation differences to be $nil and reallocated the
      balance to deficit at the transition date.                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|b) | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | In connection with the adoption of IFRS, the Company
      assessed the functional currencies of each of its subsidiaries. The
      Company determined that under IFRS, the functional currency of the Company
      and each of its subsidiaries changed from Canadian dollars to US dollars
      effective April 1, 2010. The effect of this change resulted in changes to
      the measurement of non-monetary assets and liabilities for the periods
      subsequent to April 1, 2010. In addition, the amount of foreign exchange
      loss during the year ended March 31, 2011 relates to revaluation of non-US
      dollar monetary balances, while prior to the change in functional
      currency, the foreign exchange gain related to revaluation of non-Canadian
      dollar balances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|c) | Classification and measurement of share purchase
      warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | At April 1, 2010, 11,352,780 share purchase warrants were
      outstanding and exercisable at a weighted average exercise price of
      C$0.65. As the exercise price of the share purchase warrants is fixed in
      Canadian dollars and the functional currency of the Company is the US
      dollar, the conversion option is considered a derivative liability as the
      Company will receive a variable amount of USD equivalent cash when the
      share purchase warrants are exercised. Accordingly, the share purchase
      warrants have been reclassified as a warrant liability subsequent to the
      transition date and have been measured at fair value at the end of each
      reporting period with changes in fair value included in profit or loss.
      This resulted in a reclassification of $3.6 million to warrant liability
      at March 31, 2011 and a loss of $3.7 million during the year ended March
      31, 2011. The share purchase warrant elimination amount of $1.1 million at
      March 31, 2011 is the net figure resulting from exercises of the share
      purchase warrants during the year ended March 31, 2011. Under Canadian
      GAAP, these share purchase warrants were considered equity instruments and
      changes in fair value subsequent to initial recognition were not
      recognized. Note that this adjustment resulted from the change in
      functional currency of the Company, rather than from differences between
      Canadian GAAP and IFRS.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|d) | Recognition and amortization of transaction costs and
      reclassification of long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Under Canadian GAAP, the Company previously expensed all
      transaction costs related to the issuance of debt classified as other
      financial liabilities and measured at amortized cost. IFRS requires that
      such costs be accounted for as an adjustment to the recorded amount of the
      financial instrument at the time of initial recognition and amortized over
      the term of the instrument using the effective interest method. This
      resulted in $0.6 million and $0.1 million in transaction costs being
      reclassified to long-term debt at April 1, 2010 and March 31, 2011,
      respectively. The impact for the year ended March 31, 2011 was an increase
      in finance expense of $0.4 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|e) | Share-based payment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Certain previously issued share options had not yet fully
      vested at the transition date. Consequently, these equity instruments do
      not fall within the scope of the IFRS 1 exemption pertaining to
      share-based payments and must be re- measured in accordance with IFRS 2 on
      a retrospective basis. This resulted in a $0.6 million entry to
      share-based payment included in corporate and administrative expenses for
      the year ended March 31, 2011 and an adjustment to share-based payment
      reserve of $0.6 million at April 1, 2010. The $16,323 adjustment to
      share-based payment reserve is net of the $0.6 million effect of this IFRS
      at April 1, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

27

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

|f) | Measurement of provision for site reclamation and
      closure                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Under IAS 37, a change in the current market-based
      discount rate will result in a change in the measurement of this
      provision, whereas under Canadian GAAP, discount rates are not changed
      unless there is an increase in the estimated future cash flows in which
      case the incremental cash flows are discounted at current market-based
      rates. In addition, under Canadian GAAP, a credit adjusted risk-free
      discount rate is used whereas under IFRS, the discount rate reflects the
      current market assessments of the time value of money and the risks
      specific to the liability. This resulted in $0.3 million and $0.3 million
      adjustments to the provision and related asset at April 1, 2010 and March
      31, 2011, respectively. The impact for the year ended March 31, 2011 was
      an increase in finance expense of $40,189.                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|g) | Presentation of financial statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Certain differences exist between IFRS and Canadian GAAP
      with respect to how items are presented in the consolidated financial
      statements. A decision was made to combine equipment and resource
      properties as a single financial statement line item called mineral
      properties, plant and equipment resulting in a reclassification within
      long-term assets at the transition date and subsequent. In accordance with
      IAS 37, accretion of provision for site reclamation and closure was
      reclassified as finance expense as well as accretion of transaction costs
      now reclassified to long-term debt. Also, under Canadian GAAP, debt that
      was refinanced subsequent to a reporting period was allowed to be
      classified as non-current; IFRS does not include such considerations. As
      such, the Gold Loan, which was refinanced on June 1, 2011, is required to
      be classified as a current liability at March 31, 2011.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|h) | Taxation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Under IAS 12 - Income taxes, deferred tax has been
      recognized on temporary differences arising from differences between the
      functional currency in which an asset or liability is reported and its tax
      basis as determined in its local currency, translated at current exchange
      rates. Under Canadian GAAP, a deferred income tax asset or liability is
      not recognized for such temporary differences. In addition, under IFRS the
      re-measurement of the provision for closure and reclamation and the
      related asset resulted in changes to temporary differences and the
      deferred tax liability. The impact of this change resulted in adjustments
      of $25,984 and $0.6 million to the deferred tax liability at April 1, 2010
      and March 31, 2011, respectively.                                                                                                                                                                     

|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 believe 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. We regularly review our 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.

As at December 31, 2011, under the supervision and with the
participation of our 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 our 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 financial statements for external purposes in accordance with IFRS. The
Company uses the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") internal control framework to design internal controls over
financial reporting.

28

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

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 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 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.

As at December 31, 2011, 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
its evaluation, management concluded that our internal control over financial
reporting was effective as of that date.

|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.

29

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

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 intensity 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.
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 very
limited operating history upon which you may evaluate its proposed business and
prospects. The Companys existing and proposed business operations will be
subject to numerous risks, uncertainties, expenses and difficulties associated
with early stage extractive operations and the exploration and development of
new mining properties, as more fully described elsewhere herein.

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 judgments 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.

30

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

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;
- 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 National del Aqua 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 mining 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.

31

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|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

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.

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.

32

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

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;
- 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 company 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.

33

---

|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

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. 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.

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 mining 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
mining 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.

34

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|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

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.

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.

35

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|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

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 above
under 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. 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, for example, 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.

The expansion and development of the Companys mining
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 U.S. 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.

36

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|TIMMINS GOLD CORP.                         
|-------------------------------------------
|Management Discussion and Analysis         
|For the nine months ended December 31, 2011

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.

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;

37

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|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

- 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.

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 National
Instrument 43-101 Standards of Disclosure for Mineral Projects (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.

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|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

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.

U.S. GAAP

The consolidated financial statements of the Company have been
prepared by management in accordance with IFRS (Note 2 of the consolidated
financial statements), which differ in certain material respects from accounting
principles generally accepted in the United States of America (U.S. GAAP).
Accordingly, the financial data presented herein may not be comparable to the
financial data of U.S. companies.

|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. 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 information. 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

39

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|TIMMINS GOLD CORP.                               
|-------------------------------------------------
|Management Discussion and Analysis               
|For the nine
      months ended December 31, 2011

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 this MD&A.

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
|----------------------

Pursuant to National Instrument 43-101, Lawrence A. Dick, Phd,
P.Geo is the Qualified Person (QP) responsible for the technical disclosure in
this MD&A.

40

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